GALLENT VS.

VELASQUEZ
GR NO. 203949, April 06, 2016

FACTS:

George A. Gallent, Sr. was the registered owner of a residential property covered
by Transfer Certificate of Title (TCT) No. S-99286, located at No. 3, Angeles
Street, Alabang Hills Village, Muntinlupa City, with improvements thereon
consisting of a two-storey house and a swimming pool. On December 20, 1996,
the Spouses George and Mercedes Gallent mortgaged the said property to
Allied Banking Corporation (Allied Bank) as security for a loan of P1.5 Million.
The Spouses however failed to pay their loan, thus, Allied Bank extrajudicially
foreclosed the mortgaged property. At the public auction, Allied Bank emerged as
the highest bidder and was issued a corresponding certificate of sale dated
September 25, 2000. Since the Spouses Gallent failed to redeem the subject
property after one year, Allied Bank consolidated its ownership over the subject
property.

On June 11, 2003, Allied Bank agreed to sell back the foreclosed property to the
Spouses Gallent for P4 Million, wherein the Spouses Gallent paid a down
payment of P3.5 Million, and the balance thereof was payable in 12 monthly
amortizations. It was also stipulated that the Spouses Gallent would be allowed
to keep the possession of the subject property as tenants or lessees of Allied
Bank.

On October 24, 2003, the Spouses Gallent executed a Deed of Assignment of

Rights whereby they assigned to Velasquez all their rights, interests, and
obligations under their Agreement to Sell with Allied Bank.

On November 5, 2003, Allied Bank and Velasquez executed a Deed of Absolute

Sale over the subject property for the price of P4 Million, wherein George himself
signed as an instrumental witness. However, the said instrument was not
registered. Subsequently, Velasquez caused another Deed of Sale dated
November 19, 2003, over the subject property which showed a lower selling price
of P1.2 Million to be registered, purportedly for tax purposes.

After more than four years, or on June 27, 2008, Velasquez sent a demand
letter to the Spouses Gallent to vacate the subject property, but the latter refused
to do so. On July 6, 2009, Velasquez filed an ex parte petition for issuance of a
writ of possession.

By virtue of the sale of the properties involved, became the new owner of the lots
entitled to all rights and interests its predecessor had therein, including the right
to file an application for writ of possession. The RTC of Muntinlupa therefore
finds the petition to be sufficient in form and substance.

ISSUE

Whether or not 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 parte petition by the new owner as
a matter of right.

HELD

The Court grants the petition of the Spouses Gallent, but denies the petition of
Velasquez.

It is well-settled that the purchaser in an extrajudicial foreclosure of real property

becomes the absolute owner of the property if no redemption is made within one
year from the registration of the certificate of sale by those entitled to redeem. As
absolute owner, he is entitled to all the rights of ownership over a property
recognized in Article 428 of the New Civil Code, not least of which is possession,
or jus possidendi:46
A torrens title recognizes the owner whose name appears in the certificate as
entitled to all the rights of ownership under the civil law. The Civil Code of the
Philippines defines ownership in Articles 427, 428 and 429. This concept is
based on Roman Law which the Spaniards introduced to the Philippines through
the Civil Code of 1889. Ownership, under Roman Law, may be exercised over
things or rights. It primarily includes the right of the owner to enjoy and dispose of
the thing owned. And the right to enjoy and dispose of the thing includes the right
to receive from the thing what it produces, [jus utendi; jus fruendi] the right to
consume the thing by its use, [jus abutendi] the right to alienate, encumber,
transform or even destroy the thing owned, [jus disponendi] and the right to
exclude from the possession of the thing owned by any other person to whom the
owner has not transmitted such thing [jus vindicandi].ChanRoblesVirtu
Possession being an essential right of the owner with which he is able to
exercise the other attendant rights of ownership, after consolidation of title the
purchaser in a foreclosure sale may demand possession as a matter of
right. This is why Section 7 of Act No. 3135, as amended by Act No. 4118,
imposes upon the RTC a ministerial duty to issue a writ of possession to the new
owner upon a mere ex parte motion.
 CARODAN v. CHINA BANKING CORPORATION
G.R. No. 210542, February 24, 2016

FACTS

On 6 June 2000, China Banking Corporation (China Bank) instituted a

Complaint for a sum of money against Barbara Perez (Barbara), Rebecca
Perez-Viloria (Rebecca), Rosalina Carodan (Rosalina) and Madeline Carodan
(Madeline). China Bank claimed that on 15 January 1998, Barbara and Rebecca,
for value received, executed and delivered Promissory Note to respondent bank
under which they promised therein to jointly and severally pay the amount of
P2.8 million. China Bank further claimed that as security for the payment of the
loan, Barbara, Rebecca and Rosalina also executed a Real Estate
Mortgage over a property registered in the name of Rosalina. Respondent
alleged that a Surety Agreement in favor of China Bank as creditor was also
executed by Barbara and Rebecca as principals and Rosalina and her niece
Madeline as sureties.

Barbara and Rebecca failed to pay their loan obligation despite repeated
demands from China Bank. Their failure to pay prompted the bank institute
extrajudicial foreclosure proceedings on the mortgaged property on 26 November
1999. From the extrajudicial sale, it realized only PI.5 million as evidenced by a
Certificate of Sale.

Barbara and Rebecca filed their Answer. They interposed the defense that
although they both stood as principal borrowers, they had entered into an oral
agreement with Madeline and Rosalina. Under that agreement which was
witnessed by China Bank's loan officer and branch manager, they would equally
split both the proceeds of the loan and the corresponding obligation and interest
pertaining thereto, and they would secure the loan with the properties belonging
to them.

ISSUE

Whether petitioner Rosalina is liable jointly and severally with Barbara and
Rebecca for the payment of respondent China Bank's claims.

RULING

Yes. Rebecca, Barbara and Rosalina are held jointly and severally liable to China
Bank for the deficiency amount of P365,345.77 and interest thereon at the rates
of 12% per annum from 13 January 2000 until 30 June 2013 and 6% per annum
from 1 July 2013 until full payment; and that Rebecca and Barbara are also
ordered to reimburse Rosalina for the amount charged against her including
interests thereon.

Loan transactions in banking institutions usually entail the execution of loan

documents, typically a promissory note, covered by a real estate mortgage
and/or a surety agreement. In the instant case, petitioner Rosalina admitted that
she was a party to these loan documents although she vehemently insisted that
she had received nothing from the proceeds of the loan. Meanwhile, respondent
bank offered in evidence the Promissory Note, the Real Estate Mortgage and the
Surety Agreement signed by the parties.

A surety is an insurer of the debt, whereas a guarantor is an insurer of the

solvency of the debtor. A suretyship is an undertaking that the debt shall be paid;
a guaranty, an undertaking that the debtor shall pay. Stated differently, a surety
promises to pay the principal's debt if the principal will not pay, while a guarantor
agrees that the creditor, after proceeding against the principal, may proceed
against the guarantor if the principal is unable to pay.A surety binds himself to
perform if the principal does not, without regard to his ability to do so. A
guarantor, on the other hand, does not contract that the principal will pay, but
simply that he is able to do so. In other words, a surety undertakes directly for the
payment and is so responsible at once if the principal debtor makes default, while
a guarantor contracts to pay if, by the use of due diligence, the debt cannot be
made out of the principal debtor.
 PHILIPPINE NATIONAL BANK v. VENANCIO C. REYES, JR.
G.R. No. 212483, October 05, 2016

FACTS

This resolves a dispute between petitioner Philippine National Bank and

respondent Venancio C. Reyes, Jr. Philippine National Bank filed a Petition for
Review on Certiorari assailing the Decision dated August 22, 2013 and the
Resolution dated May 5, 2014 of the Court of Appeals. The assailed Court of
Appeals Decision affirmed the Decision and Order of Branch 81 of the Regional
Trial Court of Malolos, Bulacan, which annulled the real estate mortgage and the
certificate of sale issued under the extrajudicial foreclosure conducted, and
ordered Lilia Reyes (Lilia) to reimburse to Philippine National Bank the total loan
amount she borrowed from the bank.

Venancio is married to Lilia since 1973. During their union, they acquired three
(3) parcels of land in Malolos, Bulacan. The properties were mortgaged to
Philippine National Bank on August 25, 1994 to secure a loan worth
P1,100,000.00, which on October 6, 1994 was increased to
P3,000,000.00. According to Philippine National Bank, the Reyes Spouses
contracted and duly consented to the loan.

When the Reyes Spouses failed to pay the loan obligations, Philippine National
Bank foreclosed the mortgaged real properties. The auction sale was held on
September 19, 1997. Philippine National Bank emerged as the highest bidder,
and a certificate of sale was issued in its favor.

On September 22, 1998, Venancio filed before the Regional Trial Court a
Complaint (or Annulment of Certificate of Sale and Real Estate Mortgage against
Philippine National Bank. Upon order of the trial court, Venancio amended his
Complaint to include Lilia and the Provincial Sheriff of Bulacan as defendants.

In assailing the validity of the real estate mortgage, Venancio claimed that his
wife undertook the loan and the mortgage without his consent and his signature
was falsified on the promissory notes and the mortgage.

Since the three (3) lots involved were conjugal properties, he argued that the
mortgage constituted over them was void.

On May 27, 2009, Branch 81 of the Regional Trial Court of Malolos, Bulacan
ordered the annulment of the real estate mortgage and directed Lilia to reimburse
Philippine National Bank the loan amount with interest.
ISSUES

Whether or not the court erred in declaring the real estate mortgage void and
whether the conjugal partnership can be held liable for the loan contracted
unilaterally by Lilia C. Reyes.

RULING

The real estate mortgage over the conjugal properties is void for want of consent
from respondent. The Family Code is clear: the written consent of the spouse
who did not encumber the property is necessary before any disposition or
encumbrance of a conjugal property can be valid.

In the event that one spouse is incapacitated or otherwise unable to participate in

the administration of the conjugal properties, the other spouse may assume sole
powers of administration. These powers do not include disposition or
encumbrance without authority of the court or the written consent of the other
spouse. In the absence of such authority or consent, the disposition or
encumbrance shall be void. However, the transaction shall be construed as a
continuing offer on the part of the consenting spouse and the third person, and
may be perfected as a binding contract upon the acceptance by the other spouse
or authorization by the court before the offer is withdrawn by either or both
offerors.

According to petitioner, the Regional Trial Court found 49 that the loan was used
as additional working capital for respondent's printing business. As held in Ayala
Investment, since the loaned money is used in the husband's business, there is a
presumption that it redounded to the benefit of the family; hence, the conjugal
partnership may be held liable for the loan amount.50 Since there is a legal
presumption to this effect, there is no need to prove actual benefit to the family.

What the lower courts declared void was the real estate mortgage attached to the
conjugal property of the Reyes Spouses. Since the real estate mortgage was an
encumbrance attached to a conjugal property without the consent of the other
spouse, it is void and legally inexistent. Although petitioner cannot foreclose the
mortgage over the conjugal property in question, it can still recover the loan
amount from the conjugal partnership.

In Philippine National Bank v. Banatao,51 "a mortgage is merely an accessory

agreement and does not affect the principal contract of loan. The mortgages,
while void, can still be considered as instruments evidencing the indebtedness.
 JONSAY and MOMARCO IMPORT CO., INC. vs. SOLID BANK
(METROPOLITAN BANK AND TRUST COMPANY)

G.R. No. 206459, April 6, 2016

FACTS

Momarco, controlled and owned by the Spouses Jonsay, is an importer,

manufacturer and distributor of animal health and feedmill products catering to
cattle, hog and poultry producers. On November 9, 1995, and again on April 28,
1997, Momarco obtained loans of P40,000,000.00 and P20,000,000.00,
respectively, from Solidbank for which the Spouses Jonsay executed a blanket
mortgage over three parcels of land they owned in Calamba City, Laguna.

On November 3, 1997, the loans were consolidated under one promissory

note for the combined amount of P60,000,000.00, signed by Florante as
President of Momarco, with his wife Luzviminda also signing as co-maker.The
stipulated rate of interest was 18.75% per annum, along with an escalation
clause tied to increases in pertinent Central Bank-declared interest rates, by
which Solidbank was eventually able to unilaterally increase the interest charges
up to 30% per annum.

Momarco religiously paid the monthly interests charged by Solidbank from

November 1995 until January 1998. Claiming business reverses brought on by
the 1997 Asian financial crisis, Momarco tried unsuccessfully to negotiate a
moratorium or suspension in its interest payments. Due to persistent demands by
Solidbank, Momarco made its next, and its last, monthly interest payment in April
1998 in the amount of Pl,000,000.00. Solidbank applied the said payment to
Momarco's accrued interest for February 1998. Momarco sought a loan from
Landbank of the Philippines to pay off its aforesaid debt but its application fell
through. The anticipated expropriation by the Department of Public Works and
Highways of the mortgaged lots for the extension of the South Luzon
Expressway (SLEX) also did not materialize.

Solidbank proceeded to extrajudicially foreclose on the mortgage, and at the

auction sale.

On March 9, 2000, a month before the expiration of the period to redeem the lots,
the petitioners filed a Complaint15against Solidbank, Sheriff Perocho and the
Register of Deeds of Calamba, Laguna.

The RTC ruled that the mortgage contract and the promissory notes prepared by
Solidbank, which the Spouses Jonsay signed in blank, were contracts of
adhesion; that Solidbank failed to take into account Momarcos payments in the
two years preceding 1998 totaling P24,277,293.22.

ISSUE

Whether or not the RTC gravely erred in nullifying the foreclosure proceedings
conducted against [the petitioners'] properties on the ground that the real estate
mortgage executed by the parties was a contract of adhesion.

Whether or not the RTC gravely erred in nullifying the foreclosure proceedings
conducted against [the petitioners'] properties on the grounds that the interest
rates, penalties, attorney's fees charged are excessive, unconscionable and
immoral and that the [solidbank] did not take into account [the petitioners']
previous payment[s] in the amount of p24,277,293.27.

RULING

The court held that the loans due from the petitioners, the CA noted that under
the proforma promissory note which Solidbank prepared and which the Spouses
Jonsay signed in blank, Solidbank enjoyed unrestrained freedom to unilaterally
increase the interest rate in any month. The note gave it authority to increase or
decrease the interest rate from time to time, "without any advance notice" and "in
the event the Monetary Board of the Central Bank of the Philippines raises or
lowers the interest rates on loans." According to the CA, this provision violated
the principle of mutuality of contracts embodied in Article 130830 of the Civil
Code.

On April 27, 2012, the CA rendered judgment affirming the RTC in toto. It agreed
that Solidbank did not comply with the publication requirements under Section 3,
Act No. 3135.

In Metropolitan Bank and Trust Company, Inc. v. Peafiel, cited by the CA, the
Court explained that: (1) the object of a notice of sale is to achieve a reasonably
wide publicity of the auction by informing the public of the nature and condition of
the property to be auctioned, and of the time, place and terms of the sale, and
thereby secure bidders and prevent a sacrifice of the property; (2) a newspaper
to be considered one of general circulation need not have the largest circulation
but must be able to appeal to the public in general and thus ensure a wide
readership, and must not be devoted solely to entertainment or the interest of a
particular class, profession, trade, calling, race, or religious denomination; and
(3) Section 3 of Act No. 3135, as amended by Act No. 4118, does not only
require the newspaper to be of general circulation but also that it is circulated in
the municipality or city where the property is located.
 OSCAR S. VILLARTA v. GAUDIOSO TALAVERA, JR.
G.R. No. 208021, February 03, 2016

FACTS

Appellant Oscar Villarta filed the complaint a quo for reformation of contracts,
moral damages, and attorney's fees against appellee Gaudioso Talavera, Jr. He
alleged he owned four parcels of land, all situated in Santiago City.

Sometime in 1993, he ventured into treasure hunting activites; in order to infuse

his much needed capital, he obtained several loans from appellee who was a
distant relative; as of 1996, his loan already reached P800,000.00, inclusive of
3% interest per month; he religiously paid the interest, but when the 1997
financial crisis struck, appellee raised the interest to a rate between 7% and 10%;
in 1995, appellee employed insidious words and machinations in convincing him
to execute a deed of absolute sale over one of his lands.

However, the real agreement was that the lot would only serve as security for the
several loans he obtained; in 1997, he was again convinced to execute two more
deeds of conveyance over the two lots. In 2001, he was informed that his loan
had already reached P2,000,000.00 and since the 3 parcels of land were no
longer sufficient to cover the loan, he was further convinced to mortgage to
Maybank additional real properties, on top of the 3 parcels of land, to secure a
P50 million loan; when appellee realized that his loan was going to be approved,
the former demanded that he execute a deed of absolute sale over the lot under
TCT T-214950, yet, the real agreement was that the lot would only serve as
collateral; TCT T-53252 and T-12142 were returned to him.

When he requested appellee to remove the encumbrance on TCTs T-130095

and T-214950 so that the bank could process the loan, appellee suddenly
demanded P5,000,000.00; when the bank learned of it, he was advised not to
pursue the loan because he would no longer have the means to pay it; appellee
took advantage of the situation and caused the cancellation of TCT T-214950, by
utilizing the deed of absolute sale, contrary to their real agreement that the
property should only serve as collateral.

The Deeds of Absolute Sale dated March 1995 and May 18, 2001 were in reality
an equitable mortgage; the P500,000.00 consideration for the Deed of Absolute
Sale dated May 18, 2001 was grossly inadequate because the actual market
value of the subject land was P5,900,000.00; despite the execution of the two
deeds of absolute sale, he still had possession of the subject lots and even
leased them to Wellmade Manufacturing Corp.; because of appellee's fraudulent
act of transferring titles of the two lots to his name, he suffered sleepless nights
and serious anxiety; and, he also prayed for attorney's fees and costs of suit.

G.R. No. 208021 is a petition for review assailing the Decision promulgated on
22 November 2012 as well as the Resolution promulgated on 18 June 2013 by
the Court of Appeals (CA) in CA-G.R. CV No. 96732. The CA affirmed the
Decision dated 26 October 2010 and the Resolution dated 8 February 2011 of
Branch 35 of the Regional Trial Court of Santiago City (RTC) in Civil Case No.
35-3306.

In its 26 October 2010 Decision, the RTC rendered judgment in favor of

respondent Gaudioso Talavera, Jr. (respondent) and against petitioner Oscar S.
Villarta (petitioner). The RTC dismissed petitioner's action for reformation of two
deeds of absolute sale to that of equitable mortgage due to want of evidence,
and ordered petitioner and all other persons acting for and in his behalf to vacate
the land subject of the complaint and peacefully surrender it to respondent. The 8
February 2011 Resolution denied petitioner's motion for reconsideration.

ISSUE

Whether or not the Honorable Court of Appeals likewise erred in holding that the
petitioner's request for recomputation to determine his correct obligation must fail
in view of said Honorable Court's findings that there is no equitable mortgage
despite the clear presence of the circumstances mentioned under Article 1602 of
the Civil Code.

RULING

Respondent was able to sufficiently explain why the presumption of an equitable

mortgage does not apply in the present case. The inadequacy of the purchase
price in the two deeds of sale dated 18 May 2001 was supported by an Affidavit
of True Consideration of the Absolute Sale of the Property. Respondent did not
tolerate petitioner's possession of the lots. Respondent caused the registration
and subsequent transfer of TCT No. T-214950 to TCT No. T-333921 under his
name, and paid taxes thereon. There were no extensions of time for the payment
of petitioner's loans; rather, petitioner offered different modes of payment for his
loans. It was only after three instances of bounced checks that petitioner offered
TCT Nos. T-130095 and T-214950 as payment for his loans and executed deeds
of sale in respondent's favor.

The transaction between petitioner and respondent is thus not an equitable

mortgage, but is instead a dacion en pago.

Dacion en pago is the delivery and transmission of ownership of a thing by the

debtor to the creditor as an accepted equivalent of the performance of an existing
obligation. It is a special mode of payment where the debtor offers another thing
to the creditor who accepts it as equivalent to the payment of an outstanding
debt. For dacion en pago to exist, the following elements must concur: (a)
existence of a money obligation; (b) the alienation to the creditor of a property by
the debtor with the consent of the former; and (c) satisfaction of the money
obligation of the debtor.
In view of the foregoing, we see no reason to depart from the findings of fact and
conclusions of the lower courts.
 LOUH v. BANK OF THE PHILIPPINE ISLANDS

G.R. No. 225562, March 08, 2017

FACTS

Bank of the Philippine Islands (BPI), issued a credit card in William's name, with
Irene as the extension card holder. Pursuant to the terms and conditions of the
cards' issuance, 3.5% finance charge and 6% late payment charge shall be
imposed monthly upon unpaid credit availments.

The Spouses Louh made purchases from the use of the credit cards and paid
regularly based on the amounts indicated in the Statement of Accounts (SOAs).
However, they were remiss in their obligations starting October 14, 2009. As of
August 15, 2010, their account was unsettled prompting BPI to send written
demand letters dated August 7, 2010, January 25, 2011 and May 19, 2011.

On August 4, 2011, BPI filed before the Regional Trial Court (RTC) of Makati
City a Complaint for Collection of a Sum of Money.

On February 21, 2012, William filed before the RTC a Motion for Extension of
Time to File an Answer or Responsive Pleading. In its Order dated February 27,
2012, the RTC granted an extension of 15 days or up to March 4, 2012, but the
Spouses Louh still failed to comply within the prescribed period.

On June 11, 2012, BPI filed a motion to declare the Spouses Louh in
default. Before the RTC can rule on BPI's motion, the Spouses Louh filed an
Answer on July 20, 2012 or more than three months after the prescribed period,
which ended on March 4, 2012.

On July 24, 2012, the RTC issued an Order declaring the Spouses Louh in
default and setting BPI's ex-parte presentation of evidence on August 7, 2012.
The Branch Clerk of Court thereafter submitted a Commissioner's Report dated
September 7, 2012, and the RTC considered the case submitted for decision on
November 27, 2012.

ISSUE

Whether or not the court erred in sustaining BPI s complaint.

RULING

In the case at bench, BPI imposed a cumulative annual interest of 114%, plus
25% of the amount due as attorney's fees. Inevitably, the RTC and the CA aptly
reduced the charges imposed by BPI upon the Spouses Louh. Note that
incorporated in the amount of P533,836.27 demanded by BPI as the Spouses
Louh's obligation as of August 7, 2010 were the higher rates of finance and late
payment charges, which the courts a quo had properly directed to be reduced.

In the SOA42 dated October 14, 2009, the principal amount indicated was
P113,756.83. In accordance with Macalinao, the finance and late payment
charges to be imposed on the principal amount of P113,756.83 are reduced to
12% each per annum, reckoned from October 14, 2009, the date when the
Spouses Louh became initially remiss in the payment of their obligation to BPI,
until full payment.

Anent BPI's litigation expenses, the Court retains the RTC and CA's disquisition
awarding P8,064.00 as filing or docket fees, and costs of suit. However, the
Court reduces the attorney's fees to five percent (5%) of the total amount due
from the Spouses Louh pursuant to MCMP43 and Article 2227 of the New Civil
Code.