G.R. No.

167098 March 28, 2008

PHILIPPINE VETERANS BANK, Petitioner,

vs.
BENJAMIN MONILLAS, Respondent.

DECISION

Facts: Benjamin executed a deed of sale of his share over the property which they inherited from their father,
to his brother Ireneo. Ireneo then caused the transfer of the title in his name, the property’s subdivision into
several lots, and the issuance of individual titles therefor.

Ireneo mortgaged 22 lots to Philippine Veterans Bank (PVB). Three years after, Benjamin filed a case with the
RTC for the nullification of the deed of sale, the recovery of the property, and the payment of damages.While
the case remained pending, PVB foreclosed the mortgage. In the foreclosure sale, PVB was the highest
bidder.

Then Bejamin caused the annotation of notices of lispendens on the titles of the lots. The RTC then ruled in
favor of Benjamin. This was affirmed by the CA. The case has attained finality.

The Sheriff’s Certificate of Sale and the Affidavit of Consolidation of Ownership were annotated on the titles
covering the lots. The titles were then cancelled and new titles were issued in PVB’s name. Thus, Benjamin
sued PVB and the Register of Deeds for the cancellation of the mortgage, the invalidation of the foreclosure,
and the declaration of the nullity of the titles issued in PVB’s name.

The RTC ruled in favor of Benjamin, holding thatPVB was bound by the outcome of the first civil case because
notices of lispendens were annotated in the titles. Motion for reconsideration denied.

Issue: W/N the prior registered mortgage and the already concluded foreclosure proceedings should prevail
over the subsequent annotation of the notices of lispendens on the lot titles.

Ruling: Yes. Oft-repeated is the rule that the foreclosure sale retroacts to the date of the registration of the
mortgage. Thus, it no longer matters that the annotation of the sheriff’s certificate of sale and the affidavit of
consolidation of ownership was made subsequent to the annotation of the notice of lispendens.
 [G.R. No.L-19468. October 30, 1964.]

SALVADOR PIANSAY and CLAUDlA V. VDA. DE UY KIM, Plaintiffs-Appellants, v. CONRADO S. DAVID

and MARCOS MANGUBAT, Defendants-Appellees.

Facts:Conrado S. David obtained a loan from Claudia Vda. deUy Kimand to secure the payment of the same,
Conrado executed a chattel mortgage on a house. The chattel mortgage was registered with the Register of
Deeds of Manila.

The mortgaged house was sold at public auction to satisfy the indebtedness to Vda. deUy Kim, and the house
was sold to her in the said foreclosure proceedings. She then sold the same house to Salvador Piansay.

However, prior to this, Davidmortgaged the said house to Marcos Mangubat who then filed a complaint against
Davidfor the collection of the loan. Piansayand Vda.deUy Kimwere later impleaded as defendants, and
Mangubat prayed that the auction sale and the deed of absolute sale executed by in favor of Piansaybe
annulled.

The lower court ruled against David. The CA affirmed the decision. In the execution of the judgment, the house
was levied upon at the instance of the Mangubat.

However, to prevent the sale at public auction of the house, the plaintiffs filed a petition for certiorari and
mandamus with preliminary injunction in the CA. However, the CA denied the petition.

Thus, plaintiffs instituted the present actionwith the lower court against defendants, praying for the issuanceof
a writ of preliminary injunction to restrain the levy and sale at public auction of the house. The lower court
dismissed the complaint. Motion for reconsideration denied.

Issue: W/N the chattel mortgage is valid and binding on Mangubat

Ruling: No.

Where the chattel mortgage and sale in favor of a party had been annulled in the decision in one case, which
order became final and executory, it is held that said party is now barred from asserting against the same
adverse party in another case that the said chattel mortgage and sale are valid.
At any rate, regardless of the validity of a contract constituting a chattel mortgage on a house, as between the
parties to said contract, the same cannot and does not bind third persons, who are not parties to the
aforementioned contract or their privies. As a consequence, the sale of the house at public auction is null and
void insofar as Mangubat is concerned, and did not confer upon Mrs. Uy Kim, any dominical right in and to said
house, so that she could not have transmitted to Piansay any such right as against Mangubat.
 G.R. No. 201417

ORIX METRO LEASING AND FINANCE CORPORATION, Petitioner,

vs.
CARDLINE INC., MARY C. CALUBAD, SONY N. CALUBAD, and NG BENG SHENG, Respondents.

Facts: Cardline leased four machines from Orix as evidenced by lease agreements. Cardline’s principal
stockholders and officers - Mary C. Calubad, Sony N. Calubad, and Ng Beng Sheng (individual
respondents)signed the suretyship agreements in their personal capacities to guarantee Cardline’s obligations.

Cardline defaulted in paying the rent. Orix formally demanded payment from Cardline but the latter refused to
pay.

Thus, Orix filed a complaint for replevin, sum of money, and damages with an application for a writ of seizure
against Cardline and the respondentsbefore the RTC. The RTC rendered judgment in Orix’s favor.

The CAand subsequently the SC denied the respondents’ appeal. The SC’s denial became final and
executory.

On Orix’s motion, the RTC issued a writ of execution. Thereafter, the respondents filed a petition for prohibition
before the CA.They assailed the issuance of the RTC’s order, arguing that their rental obligations were offset
by the market value of the returned machines and by the guaranty deposit.

The CA granted the petition, annulled the RTC’s order and prohibited the sheriff from executing the judgment.

Issue: W/N the individual respondents are entitled to the benefit of excussion.

Ruling:

No. The terms of a contract govern the parties’ rights and obligations. When a party undertakes to be "jointly
and severally" liable, it means that the obligation is solidary. Furthermore, even assuming that a party is liable
only as a guarantor, he can be held immediately liable without the benefit of excussion if the guarantor agreed
that his liability is direct and immediate. In effect, the guarantor waived the benefit of excussion pursuant to
Article 2059(1) of the Civil Code.

The records show that the individual respondents bound themselves solidarily with Cardline. The lease
agreements provide that they shall be jointly and severally liable with Cardline.

Even assumingarguendo that they signed the continuing surety agreements merely as guarantors, they still
cannot invoke the benefit of excussion. The surety agreements provide that the individual respondents’ liability
is "solidary, direct, and immediate and not contingent upon"22 Orix’s remedies against Cardline. The
continuing suretyship agreements also provide that the individual respondents "individually and
collectively waive(s) in advance the benefit of excussion xxx under Articles 2058 and 2065 of the Civil Code."
 G.R. No. 210542 February 24, 2016

ROSALINA CARODAN vs. CHINA BANKING CORPORATION

Facts:Barbara Perez (Barbara) andRebecca Perez-Viloria (Rebecca)obtained a loan from respondent

evidenced by a promissory note under which they bound themselves solidarily to pay. As security for the
payment of the loan, Barbara, Rebecca and petitioneralso executed a Real Estate Mortgage over a property
registered in the name of Rosalina. Asurety agreement was also executed by Barbara and Rebecca as
principals and petitioner and her niece Madeline as sureties.

Barbara and Rebecca failed to pay their loan obligation despite repeated demands from China Bank. Thus,
respondentinstituted extrajudicial foreclosure proceedings on the mortgaged property. The proceeds from the
extrajudicial foreclosure, however, did not satisfy the entire obligation. For this reason, respondent bank
instituted a complaint for a sum of money against Barbara and Rebecca as principals and petitioner as surety.

The RTC ordered Rebecca, Barbara and Rosalina to be jointly and severally liable to China Bank for the
deficiency claim.On appeal, the CA affirmed the RTC Decisionand denied the Motion for
Reconsideration.Hence, this Petition.

Petitionercontends that she cannot be held liablesolidarily with Barbara and Rebecca, to pay China Bank's
deficiency claim after the bank's release of the collateral of the principal debtors. Respondent bank's alleged
act of exposing her property to the risk of foreclosure despite the indivisible character of the Real Estate
Mortgage supposedly violated Article 2089 of the New Civil Code.

Issue: W/N petitioner is liable jointly and severally with Barbara and Rebecca for the payment of respondent
China Bank's claims.

Ruling: Yes. She is liable as an accommodation mortgagor in accordance with Article 2085 of the Civil Code
and as a surety defined under Article 2047 of the Civil Code.

A surety is distinguished from a guaranty in that a guarantor is the insurer of the solvency of the debtor and
thus binds himself to pay if the principal is unable to pay while a surety is the insurer of the debt, and he
obligates himself to pay if the principal does not pay.

When petitioner affixed her signature to the Real Estate Mortgage as mortgagor and to the Surety Agreement
as surety she thereby bound herself to be liable to respondent in case the principal debtors, Barbara and
Rebecca, failed to pay. She consequently became liable to respondent for the payment of the debt of Barbara
and Rebecca when the latter two actually did not pay.

Also, as provided in the Surety Agreement, petitioner not only waived the rights to demand payment and to
receive notice of nonpayment and protest, but she also expressly agreed that the time for payment may be
extended. More significantly, she agreed that the securities may be "substituted, withdrawn or surrendered at
any time" without her consent or without notice to her. That China Bank indeed surrendered the properties of
the principal debtors was precisely within the ambit of this provision in the contract. She cannot now contest
that act in light of her express agreement to that stipulation.

As the court ruled in various jurisprudence, a surety may only be discharged for the following reasons: a) the
creditor has acted negligently or has caused the material alteration of the contract; or b) the creditor has
granted the principal debtor an extension of time to pay for a definite period, pursuant to an enforceable
agreement, which was made without the consent of the surety or with the reservation of rights with respect to
him. None of the following reasons apply in this case.
 G.R. No. 206584 January 11, 2016

MAE FLOR GALIDO

vs.
NELSON P. MAGRARE, EVANGELINE M. PALCAT, RODOLFO BAYOMBONG, and REGISTER OF
DEEDS OF ANTIQUE, San Jose, Antique

Facts:Andigan sold undivided portions of Lot 1052-A to Respondents Magrare, Palcat and Bayombong.
Andigan caused the subdivision of Lot 1052-A into five lots and TCT No. T-24815covering Lot 1052-A was
cancelled and new certificates were issued for the subdivided portions, all in the name of Andigan. Andigan did
not turn over the new TCTs to respondents, and the latter were unaware of the subdivision.

Then, Andigan mortgaged the same three lots to petitioner and the latter came into possession of the owner’s
duplicate copies of the new TCTs.

Respondents registered their respective adverse claims on the TCTs in question. Petitioner also registered her
mortgage on the same TCTs. Thus, annotations were made on the certificates in the custody of the Register of
Deeds (RD).

Respondents filed before the RTC of San Jose, Antique a Petition to Compel the Surrender to the RD of
Antique the owner’s duplicate copies of the TCTs against Spouses Andigan. The RTC granted the petition.

Spouses Andigan appealed to the CA. However, they failed to timely file their appellants’ brief, and the appeal
was dismissed. Upon motion, the RTC issued the Writ of Execution of its order. For failure to gain satisfaction
of the order from the Spouses Andigan, the RD was notified and ordered to annul the duplicate copies of the
TCTs and new ones were issued in lieu thereof.

Petitioner filed a Third Party Claimant’s Affidavit before the RTC after learning of the Notification and Writ of
Execution.

Meanwhile, petitioner also filed with the RTC a case for foreclosure of mortgage against the heirs of Andigan.
Petitioner prevailed; thus, the Sheriff issued a Certificate of Sale in favor of petitioner of the properties covered
by the TCTs.

Hence, petitioner filed a petition seeking to cancel all entries appearing on the TCTsand to annul TCT No. T-
24815 and all other titles issued pursuant to the civil case instituted by the respondents.

The trial court ruled in favor of respondents, dismissing the case. The CA denied petitioner’s appeal.Hence, the
instant petition.

Issue: Who has a better right to the properties concerned: petitioner on the one hand, orrespondents on the
other?

Ruling: The respondents. The mortgage executed in favor of petitioner was not valid.

Petitioner derives her title from Andigan, as mortgagor. However, at the time Andigan mortgaged the lots to
petitioner he had already sold the same to respondents. Hence, when Andigan mortgaged the lots to petitioner,
he no longer had any right to do so. Nothing was mortgaged to petitioner because IsaganiAndigan was no
longer the owner of the mortgaged real property. Under Art. 2085 of the Civil Code, two of the prescribed
requisites for a valid mortgage are, that, the mortgagor be the absolute owner of the thing mortgaged and, that,
he has the free disposal thereof. These requisites are absent when IsaganiAndigan and his wife mortgaged the
lots alluded to above to the herein petitioner.

A spring cannot rise higher than its source. Since Andigan no longer had any interest in the subject properties
at the time he mortgaged them to her, petitioner had nothing to foreclose.
 G.R. No. 160408 January 11, 2016

SPOUSES ROBERTO and ADELAIDA PEN vs. SPOUSES SANTOS and LINDA JULIAN

Facts: Spouses Julian obtained several loans from Adelaida Pen. As security, Spouses Julian executed a Real
Estate Mortgage over their property covered by TCT No. 327733. The owner's duplicate of TCT No. 327733
was delivered to the appellants.

At the time the mortgage was executed, Spouses Julian wererequired by Adelaida to sign a blankdeed of
sale,which did not contain any consideration, and was "undated, unfilled and unnotarized".

Linda Julian offered to pay Adelaida the amount of P150,000.00. The latter refused to accept the offer and
demanded that she be paid the amount of P250,000.00. Unable to meet the demand, Linda desisted from the
offer and requested that she be shown the land title which she conveyed to the Adelaida, but the latter refused.
Upon verification with the Registry of Deeds of Quezon City, she was informed that the title to the mortgaged
property had already been registered in the name of appellee Adelaida under TCT No. 364880. A reconstituted
titlealso appeared on file in the Registry of Deeds replacing TCT No. 364880.

Thus,Spouses Julian filed an Affidavit of Adverse Claim. Their counsel formally demanded the reconveyance
of the title and/or the property to them, but Spouses Pen refused. Spouses Julian further discovered that
Spouses Pen have obtained several Declarations of Real Property, and a Deed of Sale which was notarized.

Hence, appellees filed a suit for the Cancellation of Sale, Cancellation of Title issued to Spouses Pen;
Recovery of Possession; Damages with Prayer for Preliminary Injunction.

In their respective rulings, the CA and the RTC both declared the deed of sale as void and inexistent. The CA
pronounced the deed of sale as void but not because of the supposed lack of consideration as the RTC had
indicated, but because of the deed of sale having been executed at the same time as the real estate mortgage,
which rendered the sale as a prohibited pactumcommissorium.

Issue: W/N the CA erred in ruling against the validity of the deed of sale

Ruling: No.

Article 2088 of the Civil Code prohibits the creditor from appropriating the things given by way of pledge or
mortgage, or from disposing of them; any stipulation to the contrary is null and void. The elements
for pactumcommissorium to exist are as follows, to wit: (a) that there should be a pledge or mortgage wherein
property is pledged or mortgaged by way of security for the payment of the principal obligation; and (b) that
there should be a stipulation for an automatic appropriation by the creditor of the thing pledged or mortgaged in
the event of non-payment of the principal obligation within the stipulated period. The foregoing elements are
present in the case.

The haste with which the transfer of property was made upon the default by Linda on her obligation, and the
eventual transfer of the property in a manner not in the form of a valid dacionenpago ultimately confirmed the
nature of the transaction as a pactumcommissorium.
 G.R. No. 194964-65 January 11, 2016

UNIVERSITY OF MINDANAO, INC.

vs.
BANGKO SENTRAL NG PILIPINAS, ET AL.

Facts: Guillermo and Dolores incorporated and operated two thrift banks: (1) First Iligan Savings & Loan
Association, Inc. (FISLAI); and (2) Davao Savings and Loan Association, Inc. (DSLAI). Guillermo chaired both
thrift banks.

BangkoSentral ng Pilipinas(BSP) issued a P1.9M standby emergency credit to FISLAI. Petitioner’s Vice
President for Finance, SaturninoPetalcorin, executed a deed of real estate mortgage (in favor of BSP) over
petitioner’sproperty in Cagayan de Oro City. The mortgage served as security for FISLAI’s loan.

Saturninoshowed a Secretary’s Certificate signed by petitioner’s Corporate Secretary, Aurora de Leon. The
certificate provides that there was a board resolution giving Saturnino authority to execute the mortgage
contract on behalf of petitioner.

BSP granted FISLAI an additional loan, covered by another deed of real estate mortgage executed by
Saturnino, allegedly on behalf of petitioner, over its two properties in Iligan City. BSP also granted emergency
advances to DSLAI.

Then, FISLAI, DSLAI, and Land Bank of the Philippines entered into a Memorandum of Agreement intended to
rehabilitate the thrift banks, which had been suffering from their depositors’ heavy withdrawals. Among the
terms of the agreement was the merger of FISLAI and DSLAI, with DSLAI as the surviving corporation. DSLAI
later became known as Mindanao Savings and Loan Association, Inc. (MSLAI).

Guillermo died and MSLAI failed to recover from its losses and was liquidated.

BSP sent a letter to petitioner, informing it that the bank would foreclose its properties if MSLAI’s total
outstanding obligation remained unpaid.

Petitioner denied that its properties were mortgaged. It also denied having received any loan proceeds from
BSP.

Petitioner filed two Complaints for nullification and cancellation of mortgage. One Complaint was filed before
the RTC of Cagayan de Oro City, and the other Complaint was filed before the RTC of Iligan City.

Two trial courts ruled in favor of petitioner and found that the Secretary’s Certificate and the board resolution
were either non-existent or fictitious.

The CA ruled in favor of BSP. Motion for reconsideration denied. Hence, petitioner filed this Petition for
Review.

Issues: (1) W/NBSP’s action to foreclose the mortgaged properties had already prescribed; and (2) W/N
petitioner is bound by the real estate mortgage contracts executed by Petalcorin.

Ruling: (1) No. BSP’s action was filed well within the prescriptive period.

Under Article 1155 of the Civil Code, prescription of actions may be interrupted by (1) the filing of a court
action; (2) a written extrajudicial demand; and (3) the written acknowledgment of the debt by the debtor.

Therefore, the running of the prescriptive period was interrupted when respondent sent its demand letter to
petitioner in 1999. This eventually led to petitioner’s filing of its annulment of mortgage complaints also in 1999.
(2) No. They were executed without authority from petitioner.

The relationship between a corporation and its representatives is governed by the general principles of
agency.Article 1317 of the Civil Code provides that there must be authority from the principal before anyone
can act in his or her name.

Hence, without delegation by the board of directors or trustees, acts of a person—including those of the
corporation’s directors, trustees, shareholders, or officers—executed on behalf of the corporation are generally
not binding on the corporation.114

Under the Civil Code, contracts entered into in another’s name, without authority or valid legal representation,
are generally unenforceable.
 G.R. No. 198745 January 13, 2016

BANCO DE ORO UNIBANK, INC. (Formerly Banco De Oro-EPCI, Inc.), Petitioner,

vs.
SUNNYSIDE HEIGHTS HOMEOWNERS ASSOCIATION, INC., Respondent.

Facts: Mover Enterprises, Inc. (Mover) is the owner and developer of the Sunnyside Heights Subdivision.
Mover mortgaged Lot 5, Block 10 of Phase I of the said subdivision to the Philippine Commercial International
Bank (PCIB) to secure a loan of P1.7 M. Mover failed to pay its loan and PCIB foreclosed on the mortgage.
After title was consolidated in PCIB, the Registry of Deeds of Quezon City issueda TCT to PCIB.

PCIB advertised the aforesaid lot for sale in the newspapers. This prompted respondent SHHA to file before
the Housing and Land Use Regulatory Board (HLURB) a complaint to declare the mortgage between Mover
and PCIB void on the ground that the subject propertyhas been allocated as SHHA’s open space pursuant to
law. SHHA thus sought reconveyance of the property.

PCIB maintained that the mortgaged lot is different from the lot referred to in SHHA’s complaint, and moreover,
the mortgaged lot has not been reserved as open space. Claiming to be an innocent mortgagee in good faith
and for value, PCIB insisted that under the law,the complaint should have been filed with the regular courts.

The BLURB Arbiter dismissed SHHA's complaint for lack of cause of action, finding that the property claimed
by SHHA to be an open space is not the same as the property registered in the name of Mover, and now titled
to PClB.

On petition for review to the HLURB Board of Commissioners,SHHA presented a certification that the HLURB
had approved an alteration in the subdivision plan whereby the former Block 10, the subdivision's open space,
had been renamed as Block 7.

The HLURB Board of Commissioners ruled in favor of SHHA. It ruled that the said open space, now registered
in the name of PCIB, can neither be mortgaged nor foreclosed, being inalienable, non-buildable and beyond
the commerce of man.

The Office of the Presidentdismissed PCIB’s appeal and ruled that the HLURB has jurisdiction over the subject
matter.

Meanwhile, PCIB merged with Equitable Banking Corporation to become the Equitable PCIBank. Then it
merged with Banco de Oro Universal Bank and became the Banco de Oro-EPCI, Inc.; now it is known as
Banco de Oro Unibank, Inc. (BDO).

The CA upheld HLURB’s jurisdiction over complaints for annulment of mortgage.

Issue: W/N the HLURB has jurisdiction over SHHA’s complaint for annulment of mortgage

Ruling: Yes. HLURB has exclusive jurisdiction over "any claims filed by subdivision lot or condominium unit
buyer against the project owner, developer, dealer, broker or salesman; and cases involving specific
performance of contractual and statutory obligations filed by buyers of subdivision lot or condominium unit
against the owner or developer. "

As the agency tasked to oversee the specific compliance by developers with their contractual and statutory
obligations, such as maintaining the open space as non-alienable and non-buildable, there is no doubt that the
HLURB is empowered to annul the subject mortgage.
 G.R. No. 168078 January 13, 2016

CAHAYAG and RIVERA vs.

COMMERCIAL CREDIT CORPORATION, et al.

G.R. No. 168357

DULOS REALTY & DEVELOPMENT, et al.

vs.
COMMERCIAL CREDIT CORPORATION, et al.

Facts:Dulos Realty was the registered owner of certain residential lots located at Airmen's Village Subdivision,
PulangLupa II, Las Pinas, Metro Manila. Dulos Realty obtained a loan from respondent CCC andto secure the
same,Dulos Realty executed a Real Estate Mortgage over the subject properties in favor of CCC.

Dulos Realty entered intoseparate Contracts to Sell with Cahayag and Rivera over some of the properties
mortgaged to CCC.

Dulos Realty defaulted in the payment of the loan, prompting respondent CCC to initiate extrajudicial
foreclosure proceedings.The auction sale was held, where CCC was the highest bidder.

A Certificate of Sale covering the properties, together with all the buildings and improvements existing thereon,
was issued in favor of CCC. The Certificate of Sale was annotated on the corresponding titles to the properties.

Thereafter, Dulos Realty entered into a Contract to Sell with Escalona over the house and lot that was also
mortgaged and now belongs to CCC.

The TCTs over the properties, all in the name of Dulos Realty were cancelled and new TCTs were issued in
the name of CCC.

Dulos Realty entered into a Deed of Absolute Sale with Baldoza over the property (together with the
improvements existing thereon) that was also mortgaged and now belongs to CCC.

CCC then sold to Qua the same subject properties. The sale was duly annotated on the corresponding titles to
the properties.

Accordingly, TCTs in the name of CCCwere cancelled and new TCTs were issued to Qua.

Subsequently, Qua filed ejectment suits against Dulos Realty,Cahayag, Escalona, and Riverabefore the MTC
of Las Piñas City.The MTC ruled in favor of Qua.

Petitioners filed a Complaint against respondents for the annulment of the foreclosure proceedings before the
RTC of Makati City.The RTC ruled in favor of petitioners. However, respondents proceeded to the CA, where
they secured a favorable ruling.

Issues: Who, as between petitioners and Qua, has a better right over the properties?

Ruling:Qua. The Contracts to Sell were all executed after the registration of the mortgage. Consequently,
Cahayag, Rivera and Escalona were bound to the mortgage executed between Dulos Realty and CCC, by
virtue of its registration. Definitely, the buyers each had constructive knowledge of the existence of the
mortgage contract when they individually executed the Contracts to Sell.

As the foreclosure sale took place prior to the advent of the General Banking Law of 2000 (which shortens the
redemption period to within three months after the foreclosure sale or until the registration of the certificate of
sale, whichever comes first), the applicable redemption period is one year. In this case, the period of
redemption lapsed without any right of redemption having been exercised by Dulos Realty. Consequently, the
right of CCC, as purchaser of the subject lots, became absolute. As a matter of right, it was entitled to the
consolidation of the titles in its name and to the possession of those lots. Further, the right of CCC over the lots
was transferred to Qua by virtue of the Deed of Sale executed between them.

Given the foregoing considerations, respondent Qua, who now has title to the properties subject of the various
Contracts to Sell, is the lawful owner thereof.

While there was a valid sale to Baldoza, there was no valid transfer of title to him since Dulos Realty was no
longer the owner at the time of the execution of the Deed of Absolute Sale.
 G.R. No. 203949 April 6, 2016

SPOUSES GEORGE A. GALLENT, SR. and MERCEDES M. GALLENT, Petitioners,

vs.
JUAN G. VELASQUEZ, Respondent.

G.R. No. 205071

JUAN G. VELASQUEZ, Petitioner,

vs.
SPOUSES GEORGE A. GALLENT, SR. and MERCEDES M. GALLENT, Respondents.

Facts:Spouses Gallentobtained a loan from Allied Bank. To secure the loan, they executed a mortgage on
George’s residential property with all the improvements thereon.

Spouses Gallent failed to pay their loan; thus, Allied Bank extrajudicially foreclosed the mortgaged property. At
the public auction, Allied Bank was the highest bidder and was issued a corresponding certificate of sale.

Spouses Gallent failed to redeem the property after one year; thus, Allied Bank consolidated its ownership over
the subject property. Accordingly, the TCT in the name of George was cancelled and a new TCT in the name
of Allied Bank was issued.

Allied Bank agreed to sell back the foreclosed property to Spouses Gallent for P4 M. Spouses Gallent paid a
down payment of P3.5 Million and the balance thereof was payable in 12 monthly amortizations. Spouses
Gallentwere allowed to keep the possession of the subject property as lessees of Allied Bank.

Due to financial difficulties, Spouses Gallent sought the help of their close family friend, Juan Velasquez, to
help them settle their remaining monthly amortizations.

Spouses Gallentthen executed a Deed of Assignment of Rightswhereby they assigned to Velasquez all their
rights, interests, and obligations under their Agreement to Sell with Allied Bank. Velasquez paid Allied Bank the
remaining balance amounting to P216,635.97.

Allied Bank and Velasquez executed a Deed of Absolute Sale over the subject property. However, the deed
was not registered. Subsequently, Velasquez caused another Deed of Sale which showed a lower selling price
of P1.2 Million to be registered, purportedly for tax purposes.

Velasquez demanded Spouses Gallent to vacate the subject property, but the latter refused to do so. Thus,
Velasquez filed an ex parte petition for issuance of a writ of possessionin the RTC of Muntinlupa City. The RTC
granted the petition.

Thus, Spouses Gallent filed a petition for certiorari before the CA (4th division), seeking to annul the RTC
Orders. Spouses Gallent argued, among others, that the RTC has no jurisdiction to issue an ex parte writ of
possession to Velasquez since he did not acquire the property at a foreclosure sale, but purchased the same
from the mortgagee, winning bidder and purchaser, Allied Bank, and only after it had consolidated its title
thereto.

Spouses Gallent filed another petition for certiorari before the CA (10th division), arguing that the deed of sale
between Velasquez and Allied Bank was a forgery.

Two conflicting decisions were rendered by two different divisions of the CA on the same question of whether
the Regional Trial Court (RTC) may validly issue an ex parte writ of possession to the transferee of the winning
bidder at the extrajudicial foreclosure sale of mortgaged real property.
Issue: W/N the RTC may validly issue an ex parte writ of possession to the transferee of the winning bidder at
the extrajudicial foreclosure sale of mortgaged real property.

Ruling:No. As a general rule in extrajudicial

foreclosure of mortgage, after the consolidation of the title over the foreclosed property in the
buyer, it is the ministerial duty of the court to issue a writ of possession upon an ex partepetition44 by the new
owner as a matter of right.

As an exception, this ministerial duty ceases once it appears that a third party, not the debtor-mortgagor, is in
possession of the property under a claim of title adverse to that of the applicant.

In regard to the deed of assignment in favor of Velasquez, the Spouses Gallent may be
considered as adverse possessors in their own right, the said agreement being in essence an equitable
mortgage.

The substantial payment for the repurchase from Allied Bank of the subject property, P3,790,500.00 out of the
price of P4 Million, as against Velasquez's assumption of the remaining balance of P216,635.97, entitles the
Spouses Gallent to the legal presumption that their assignment to Velasquez of all their interest under their
Contract to Sell with Allied Bank was an equitable mortgage. In a contract of mortgage, the mortgagor retains
possession of the property given as security for the payment of the sum borrowed from the mortgagee. When
the vendor remains in possession of the property sold as lessee or otherwise, or the price of the sale is
unusually inadequate, as in this case, the law deems the contract as an equitable mortgage.
 G.R. No. 214752 March 9, 2016

EQUITABLE SAVINGS BANK, (now known as the merged entity "BDO Unibank, Inc.") vs. ROSALINDA
C. PALCES, Respondent.

Facts: Respondent purchased a vehicle through a loan granted by petitioner in the amount of P1,196, 100. To
secure the loan, respondent executed a Promissory Note with Chattel Mortgage in favor of petitioner.

Respondentwas regularly paying its monthly installments. However, she failed to pay two monthly installments,
thereby triggering the acceleration clause contained in the Promissory Note with Chattel Mortgage and
prompting petitioner to send a demand letter to compel respondent to pay the remaining balance of the loan.

As the demand went unheeded, petitioner filed the instant Complaint for Recovery of Possession with Replevin
with Alternative Prayer for Sum of Money and Damages against respondent before the RTC, praying that the
court: (a) issue a writ of replevin ordering the seizure of the subject vehicle and its delivery to petitioner; or (b)
in the alternative as when the recovery of the subject vehicle cannot be effected, to render judgment ordering
respondent to pay the remaining balance of the loan.

While admitting that she defaulted on her installments, respondent nevertheless insisted that she had already
paid petitioner the total amount of P103,000.00.

The RTC ruled in petitioner's favor and, accordingly, confirmed petitioner's right and possession over the
subject vehicle.

Respondent appealed to the CA. Citing Article 1484 of the Civil Code, the CA ruled that petitioner had already
waived its right to recover any unpaid installments when it sought - and was granted - a writ of replevin in order
to regain possession of the subject vehicle. As such, petitioner is no longer entitled to receive respondent's late
partial payments in the aggregate amount of P103,000.00.

Issue: W/N the CA is correct.

Ruling: No. Article 1484 of the Civil Code governs the sale of personal properties in installments. In this case,
there was no vendor-vendee relationship between respondent and petitioner.

Respondent never bought the subject vehicle from petitioner but from a third party, and merely sought
financing from petitioner for its full purchase price. A loan contract with the accessory chattel mortgage contract
- and not a contract of sale of personal property in installments - was entered into by the parties with
respondent standing as the debtor-mortgagor and petitioner as the creditor-mortgagee. Therefore, the
conclusion of the CA that Article 1484 finds application in this case is misplaced, and thus, must be set aside.

In accordance with the Promissory Note with Chattel Mortgage subject of this case,petitioner is justified in filing
his Complaint before the RTC seeking for either the recovery of possession of the subject vehicle so that it can
exercise its rights as a mortgagee, i.e., to conduct foreclosure proceedings over said vehicle; or in the event
that the subject vehicle cannot be recovered, to compel respondent to pay the outstanding balance of her loan.
Since it is undisputed that petitioner had regained possession of the subject vehicle, it is only appropriate that
foreclosure proceedings, if none yet has been conducted/concluded, be commenced in accordance with the
provisions of The Chattel Mortgage Law as intended.

Otherwise, respondent will be placed in an unjust position where she is deprived of possession of the subject
vehicle while her outstanding debt remains unpaid, either in full or in part, all to the undue advantage of
petitioner - a situation which law and equity will never permit.