Korean Exchange Bank v. Filkor (2002) Quisumbing, J.

FACTS Respondent Filkor entered into a number of transactions with Korea Exchange Bank: Borrowed $140k. Defaulted. Only paid 40K. Executed 9 trust receipts, but failed to turn over proceeds from the sale of goods or the goods themselves, as agreed. Negotiated the proceeds of seventeen letters of credit issued by the Republic Bank of New York and the Banque Leumi France to pay for goods which Folkor sold. LoC were dishonored for discrepancies. o In order to secure payment of all, Filkor executed a REM over improvements on the lot it was leasing at the Cavite Export Processing Zone Authority. o Respondets Joe and Sang also executed Continuing Suretyships. Filkor defaulted on all obligations, and petitioner filed with the RTC for payment and foreclosure of mortgaged property in case respondents fail to pay. RTC ruled in favor of petitioner Bank granting its prayers. However, it did not order that the property mortgaged be foreclosed. On motion for partial reconsideration to include the foreclosure, the RTC denied said. o In opting to file a civil action for the collection, petitioner thereby abandoned its mortgage lien on the property. o The rule is now settled that a mortgage creditor may bring an ordinary action to recover the indebtedness with the right to execute a judgment thereon, subject to the qualification that if he fails in the remedy by him elected, he cannot pursue further the mortgage. ISSUES + RULING: WoN the banks petitioner was an action for foreclosure or for collection of a sum of money. (Foreclosure) Sec 1, Rule 68 of the 1997 Rule of Court require that a complaint for forclosure state the date and due execution of the mortgage; its assignments, if any; the names and residences of the mortgagor and the mortgagee; a description of the mortgaged property; a statement of the date of the note or other documentary evidence of the obligation secured by the mortgage, the amount claimed to be unpaid thereon; and the names and residences of all persons having or claiming an interest. Paragraph 183 of the complaint, the date and due execution of the real estate mortgage are alleged. The properties mortgaged are stated and described therein as well. In addition, the names and residences of respondent Filkor, as mortgagor, and of petitioner, as mortgagee, are alleged in paragraphs 1 and 2 of the complaint. The dates of the obligations secured by the mortgage and the amounts unpaid thereon. o In gist, Sec. of Rule 68 was satisfied. Moreover, the very complaint prayed that the property mortgaged be foreclosed. The action being one for foreclosure, it was incumbent upon the trial court to order that the mortgaged property be foreclosed. o Sec 2. Of Rule 68: If upon the trial in such action the court shall find the facts set forth in the complaint to be true, it shall ascertain the amount due and shall render judgment for the sum so found due and order that the same be paid to the court or to the judgment obligee within a period of not less than 90 days nor more than one hundred twenty 120 days from entry of judgment, and that in default of such payment the property shall be sold at public auction. GRANTED

Huerta Alba v. CA & syndicated management group, inc. (2000) Purisima, J.

FACTS Petitioner loaned from Intercon 8.5M. To secure said loan, it executed an REM over four parcels of land. Intercon later assigned its rights to herein respondent which now seeks to foreclose the mortgaged lots. Summary: A series of MRs and appeals were filed by petitioner. Respondent belatedly invoked the General Banking Act which granted the 1 year right of redemption to mortgagors of banks. Hence, given that Intercon was such, the writ of possession petitioned by petitioner was premature. RTC ruled in their favor, finding the assignment to respondent from bank did not change the vested right of petitioner. CA reversed on estoppel. SC upheld. Only an equity of redemption therefore existed, however the same has also expired. RTC: Petitioner questioned the assignment by Intercon on the ground that the same was ultra vires (beyond their power). o Trial court granted respondents claim for foreclosure. Ruling that petitioner must pay within a period of not less than 150 days. In default of such payment, the four parcels of land, shall be sold. o CA: Dismissed. SC. Dismissed. Respondent filed with the court of origin a motion for execution of the Decision promulgated on April 30, 1992. Said was granted. Petitioner filed to Set aside the Writ of execution arguing that writ of execution was premature since the 150-day period had not yet lapsed and petitioner, and had not yet defaulted since no demand for its payment was made. Dispute: When the 150-day period should be counted. RTC2: Dismissed Motion to Quash. Appealed to the CA2. o In the mean time, auction took place. Respondent was the highest bidder. Certificate of Sales was registered with Registry of Deeds on Oct. 21, 1994. o Petitioner presented an Ex-Parte Motion for Clarification asking WoN the 12 month period of redemption for ordinary execution be applied in the case. o RTC3: Property should be governed by the rule on judicial foreclosure under Rule 68. o Petitioner then filed an Exception to the Order contending that the April 30 Decision, which ruled that the regulation that govern sale of real estate under execution, should govern. Meanwhile, CA2 ruled that the 150 period should be computed from the date petitioner was notified of the Entry of Judgment and thereby had already expired. o Petitioner MRed arguing that the period should be counted from receipt by the trial court. o Further argued that it may not be considered in default because prior demand to pay was never made. Writ of Exectuon therefore premature. CA2 denied petitioners MR. o RTC3: Confirmed the sale of subject properties to the private respondent. All pending incidents relating had become moot and academic. Filed with CA3 Motion for Clarification as to the commencement of the one year period. The 150 day period should be counted from the date petitioner was notified of the entry of judgment made by the appellate court. Furthermore, no pronouncement was made re. 1 year right of redemption because the foreclosure in this case is judicial, hence mortgagor has only the equity. Though the General Bank Act allows a mortgagor of a bank, banking or credit institution a 1 year right of redemption whether the foreclosure be judicial or extra judicial, the question of whether respondent is a bank or credit institution was never brought up. Hence they cannot do so now. Respondent filed a Motion for Issuance of Writ of Possession. During the hearing, petitioned opposed and filed a Motion to Compel Private Respondent to Accept Redemption under the General banking Act. It was the first time petitioner ever asserted the right to redeem under the General Banking Act; the original mortgagee (INTERCON), being a credit institution, its assignment of the mortgage credit to petitioner did not remove petitioner from the coverage. RTC4 ruled for respondent ruling that it had not lost the right of redemption. Since the period to the right of redemption has not yet expired, the petition for writ of possession is premature. Respondent appealed to the CA which set aside the RTC order. o CA4: The equity of redemption is different from the right of redemption. o Right of Redemption: Exists only in extrajudicial foreclosure, except in judicial where the mortgagee is the Philippine National Bank or a bank or banking institution. In both cases, mortgagor may redeem within 1 year from the registration of the sheriffs certificate of foreclosure sale. o Judicial foreclosure operates to divest the rights of all the parties to the action. There then exists only an equity of redemption. Rule 68: The right of the mortgagor to extinguish the mortgage and retain ownership by paying the secured debt within the 90days after the judgment becomes final, or even after the foreclosure sale but prior to its confirmation.

ISSUES + RULING: WoN petitioner is entitled to the 1 year redemption period granted under the General Banking Act (Yes) WoN estopped from invoking it. (Yes) Petitioner failed to seasonably invoke its purported right. In light of the aforestated facts, it was too late in the day for petitioner to invoke a right to redeem. The applicability of Section 78 of R.A. No. 337 hinges on the factual question of whether or not private respondents predecessor was a credit institution o The law entitles the mortgagor, his successors in interest or any judgment creditor of the mortgagor, the right to redeem the property sold on foreclosure after confirmation by the court of the judicial foreclosure sale. However, failure of petitioner to seasonably assert its alleged right precludes it from so doing at this late stage. Estoppel may be successfully invoked. Only an equity of Redemption exists. However, the CA had ruled that the same had already expired. WHEREFORE, the petition is DENIED

Grand Farms Inc. v. CA & Banco Filipino Savings And Mortgage Bank. (1991) Regalado, J. FACTS Petitioners filed for annulment and/or declaration of nullity of the extrajudicial foreclosure proceedings over their mortgaged properties for failure to give notice of foreclosure against respondents clerk of court, deputy sheriff and herein private respondent Banco Filipino Savings and Mortgage Bank (BF) BF filed its answer, which did not deny that it gave no notice. Petitioner sought to have said tacit admission submitted. BF, through its deputy liquidator, responded under oath, that notice was given by the posting of notices and the publication of notice in the Metropolitan Newsweek, a newspaper of general circulation on February 13, 20 and 28 Petitioner filed for summary judgment contending that the foreclosure was violative of the provisions of the mortgage contract, specifically paragraph (k) which reads: All correspondence relative to this Mortgage, including demand letters and notifications of any judicial or extrajudical actions shall be sent to the Mortgagor at the address given above or at the address that may hereafter be given. BF argues that paragraphs (b) and (d) allow them to act, for extra judicial foreclosure, to act as attorney-in-fact to sell the property mortgaged, and perform any act requisite and necessary to accomplish said purpose. And that, in case of breach, Mortgagee may take actual possession of the mortgaged property, without the necessity for any judicial order, to sell the mortgaged property, or any part thereof, at public or private sale without previous notice or advertisement of any. RTC: Denied motion for summary judgment because substantial issues exist which require the presentation of evidence o Such as WoN loan had matured, WoN notice was given, WoNpublication is sufficient notice CA: Likewise dismissed because no personal notice was required to foreclose since BF was constituted by petitioners as their attorney-in-fact to sell the mortgaged property. (K) merely specified the address where correspondence should be sent and did not impose an additional condition on (b) and (d). ISSUES + RULING: WoN summary of judgment should be granted (Yes) RoC authorize the rendition of a summary judgment if the pleadings where the moving party is entitled to a judgment as a matter of law. Where pleadings overcome the opposing papers and to justify a finding as a matter of law that there is no defense. BFs tacitly admitted failure to give notice, hence summary judgm ent was warranted. o No denial by BF that no personal notice of the extrajudicial foreclosure was ever sent to petitioners prior thereto. (k) rendered personal service indispensable. (d) and (k) are specific for their purpose. Hence, (k) cannot be overcome by the other. o To apprise so petitioners may take the necessary legal steps for the protection of their interests.

Furthermore the contract is one of adhesion, and therefore any obscurity should not favor it as a contracting party

WHEREFORE, the decision appealed from is hereby REVERSED

Sps. Rabat v. PNB (2012) Bersamin, J. FACTS Petitioner Rabats applied for medium term loan with PNB of 4M. Said was secured by a Real Estate Mortgage of 12 parcels of land. Rabats executed another document denominated as Amendment to the Credit Agreement to increase the interest rate. Also Mortgaged 9 other parcels of land as additional security. Several availments of the loan accommodation were made amounting to 3.5M as evidenced by the several promissory notes. PNB informed the RABATs that their request for more time had been denied and gave the RABATs until 30 August 1986 to settle. Letter was sent to 197 Wilson Street. For failure to pay, PNB filed petition for the extrajudicial foreclosure. After due notice and publication, the mortgaged parcels of land were sold at a public auction where PNB won with bid of 3.8M. Proceeds were not enough to satisfy debt which had amounted to 14M. Hence, PNB sent demand letters to 197 Wilson St, Sanjuan, and subsequently to 197 Wilson Street, Greenhills, San Juan and Mati, Davao Oriental. PNB eventually filed a complaint for a sum of money. RABATs filed their answer with counterclaim to which PNB filed its Reply. Rabats filed an amended answer where they admitted their loan and default but assailed the validity of the auction sales for want of notice before and after the foreclosure sales. o Claimed they lived at Mati, Davao Oriental, and therefore received any notice about the foreclosure. Further claimed that publication in the San Pedro Times, which is not a newspaper of general circulation, was not valid notice. Claimed that the bid price was grossly inadequate. RTC dismissed principle complaint, and ruled for the counterclaim, that the auction sales be set aside and for PNB to reconvey the remaining properties after the sale [of] sufficient properties for the satisfaction of the obligation. PNB appealed. On appeal, Rabat simply urged that the decision of the RTC be entirely affirmed. CA initially upheld the RTC decision but on a different ground o That the Sps Rabat could not have known of the foreclosure sales because they had not actually received personal notices having lived in Mati and not Wilson St. PNB appealed that the Rabats had not appealed regarding the lack of notice, hence the CA should not have resolved the issue. o CA: Granted the appeal , but nonetheless affirmed the RTCs decision declaring that the bid price had been very low and that a reappraisal was needed. On MR, CA once again amended its decision because mere inadequacy of price per se will not set aside a judicial sale. Nevertheless, where the inadequacy of the price is purely shocking, the sale shall be declared null and void. o Said rule, however, does not strictly apply in the case of extrajudicial foreclosure. An alleged gross inadequacy is immaterial when the law gives the owner the right to redeem as when a sale is made at a public auction the lesser the price the easier it is for the owner to effe ct the redemption. o Besides, after 7 years, it is not strange that the mortgaged properties may have indeed appreciated in value. o Also, in extrajudicial foreclosure of mortgage, where the proceeds of the sale are insufficient, the mortgagee has the right to recover the deficiency from the debtor. ISSUES + RULING: WoN CA erred in reversing the RTC (No) WoN the inadequacy of the bid price of PNB invalidated the forced sale of the properties (No)

Inadequacy of the bid price at a forced sale, unlike that in an ordinary sale, is immaterial. In fact, the lower the price the more beneficial it is for the mortgagor to exercise his right to redemption. At any rate, bid price of P3,874,800.00 is not outrageously low. As the CA noted, the bid price was equal to the 4M applied for, and similar to the total sum of 3.5 actually availed. WoN PNB was entitled to recover any deficiency from the Spouses Rabat (Yes) It is settled that if the proceeds of the sale are insufficient to cover the debt in an extrajudicial foreclosure, mortgagee is entitled to claim the deficiency from the debtor. When law intends to deny the right of a creditor to sue for any deficiency,it expressly provides as in the case of pledges. Also, the Rabats did not challenge the additional liabilities being charged by PNB, they could not now bar PNB from recovering the deficiency. WoN the CA validly rendered its second amended decision. (Yes) All courts of law have the unquestioned power to alter, modify, or set aside their decisions before they become final. The doctrine of immutability and inalterability of a final judgment has a two-fold purpose, namely: o (a) to avoid delay in the administration of justice o (b) to put an end to judicial controversies, at the risk of occasional errors, which is precisely why courts exist. B timely filed its motion for reconsideration vis - -vis the amended decision, the CAs reversal was therefore valid WHEREFORE: AFFIRMED

Goldenway Merchandising Corp. v. Equitable PCI Bank (2013) Villarama, J. FACTS Petitioner Goldenway Merchandising executed an REM in favor of Equitable PCI Bank (respondent) to secure a 2M loan. The contract expressly stipulated that foreclosure of the real estate mortgage shall be in accordance with Act No. 3135. Act 3135 which provided a general 1 year period for the right of redemption. Later on, RA8791 provided a shorter period with regard to juridical persons. Goldenway failed to settle the loan so Equitable PCI extrajudicially foreclosed the mortgage in which it won through its 3.5M bid. o Certificate of Sale was registered by Feb 16, 2001. By March 8, 2001, tendered a check in the amount of 3.5M to redeem via Atty. Vera. o Informed that redemption was no longer possible because the certificate of sale had already been registered. Hence, Titles were already in Equitables name. Petitioner filed a complaint claiming that the 1year period of redemption under Act No. 3135 should apply and not RA8791. Claimed that applying RA8791 constitutes impairment of obligation of contracts and violation of the equal protection clause under the Constitution. Further alleged that PCI failed to give a statement of account of expenses, hence, it could not exercise its right to redeem. RTC: Dismissed complaint. Constitutional issue was never raised in trial, hence cannot be reviewed. Atty. Vera was not an authorized agent having been appointed by the President, and not by the board of directors. CA: Affirmed. ISSUES + RULING: WoN RA8791 could avalidly apply (Yes) The law governing cases of extrajudicial foreclosure of mortgage is Act 3135 which gives a one-year period of redemption counted from the date of the registration of the certificate. However, RA8791 (The General Banking Law of 2000) amended Act 3135 insofar that an exception was provided to the general rule. o Notwithstanding Act 3135, juridical persons whose property is being sold pursuant to an extrajudicial foreclosure, shall have the right to redeem the property in accordance with this provision until, but not after, the registration of the certificate, which in no case shall be more than three (3) months after foreclosure, whichever is earlier.

Until registration but not more than 3 months.

As to constitutional issues No impairment of contracts. Contracts are subject to police power. Section 47 did not divest a right to redeem but only modified the time No retroactive application. Law exempts properties already foreclosed. No violation of equal protection. Valid classification. Same treatment for those under same conditions. o The difference whether it is for residential or commercial purposes. WHEREFORE, Having ruled that the assailed Section 47 of R.A. No. 8791 is constitutional, we find no reversible error committed by the CA. DENIED