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For this purpose, petitioners submit three propositions: (1) their right as Independently of the foregoing, it is logical to presume that for about the same
mortgagee to take possession of the period that she has been deprived of the use of the property the respondent may
202 have suffered damages by way of the rentals she may have paid for the premises
202 SUPREME COURT REPORTS ANNOTATED she has occupied to settle herself in the meantime. On that basis, whatever amount
Cosio and de Rama vs. Palileo the respondent will therefore receive from the petitioner as rentals for the property
house; (2) their right as mortgagee to take possession of the house because it was in question would but be a reimbursement of what she had paid as rentals for
abandoned; (3) their right as mortgagee, who may, “if [they] can make a peaceable another place.
entry upon the mortgaged premises after condition [is] broken, x x x maintain such Parenthetically, and on the point that Palileo would in effect be “absolved” from
possession against the mortgagor,” petitioners citing Cook v. Cooper, 18 Or. 142, 22 paying the loan, we note that the petitioner had already collected the insurance
P. 945 (1889) for the last proposition. proceeds from the Associated Insurance & Surety Company which should be
The first proposition is contrary to settled law, according to which a simple deemed in payment of the loan. Aside therefrom, the petitioner may again collect
mortgage does not give the mortgagee the right to the possession of the mortgaged the amount of P12,297.00 with legal interest thereon, this time from the respondent
property unless the contract contains some special provision (Alvano v. Batoon, 25 by virtue of the assignment of the credit (originally P13,107.00 but reduced by
Phil, 178 [1913]); the second proposition is contrary to the facts as found by both P8,100.00 paid thereon) which was assigned to the petitioner by the Associated
the trial and the appellate courts to the effect that, at the time of the fire, the house Insurance & Surety Company for P1.00 (Exh. “T") which assignment we have
was being rented by Mary Icard as tenant of Palileo. If at the time petitioners upheld by affirming the decision of the Court of Appeals on the matter.
entered the premises no one was in actual possession of the house, it was because In the letter Exhibit “L", the “Associated Insurance & Surety Company
of the fire that destroyed part of it. This fact did not certainly give petitioners a considers the payment made of the in-
right to enter the premises. The third proposition is non-sequitur for at the time 204
petitioners took possession of the house. no condition of the loan had been broken. 204 SUPREME COURT REPORTS ANNOTATED
At any rate, after claiming the right to possession as incident of ownership, Cosio and de Rama vs. Palileo
petitioners should not claim the right of possession as mortgagee. A mortgagee in surance policy as insurance risk and therefore its policy precludes it from
possession is one “who has lawfully acquired actual or constructive possession of recovering what has been paid on account of the risk attaching to an insurance
the premises mortgaged to him, standing upon his rights as mortgagee and not policy.” It would therefore appear that the petitioner would be collecting the
claiming under another title, for the purpose of enforcing his security upon such mortgage indebtedness twice since it is apparent from the letter Exhibit “L",
property or making its income help to pay his debt” (Diaz v. de Mendezona, 48 Phil. pertinent portion of which is quoted above, and from the deed of assignment Exhibit
666, 669 [1926]). “T" that the only consideration for the assigned credit is P1.00.
In Polileo v. Cosio, supra, we upheld Cosio de Rama’s right to the proceeds of Nor is it fair to say that the decision in this case would hand over to Palileo a
the fire insurance even as we held that her claim against Palileo on the loan of “completed house” at absolutely “no expense to her” considering that the decision
P12,000 was to be deemed assigned to the insurer, the Associated Insurance & orders Palileo to reimburse Cosio de Rama the expenses incurred by the latter in
Surety Company. It is now contended that, with the decision in this case, the right repairing the house.
of Cosio de Rama as adjudged in the earlier case would be lost. More specifically, it It is finally contended that at any rate rents should run up to June 1958 only
is claimed that under the decision in this case, Palileo would “not only find herself when Cosio de Rama died, because bad faith is personal and intransmissible (Civil
in effect absolved from paying her mortgage indebtedness but she gets in Code, Art. 534). The short answer to this would be that, under the Code, it is
203 presumed that possession continues to be enjoyed in the same character in which
VOL. 17, MAY 20, 1966 203 it was acquired, until the contrary is proved (Art. 529). We have already shown that
Cosio and de Rama vs. Palilio petitioners'” possession has been in bad faith and we have not been shown the
addition, at absolutely no expense to her, a completed house plus several thousand contrary.
pesos in the form of rentals for the house which fire destroyed and which she did Moreover, the finding on the liability for the payment of rental is applicable not
not rebuild.” only to the deceased Cosio de Rama but also to the petitioner Augusto Cosio during
This is a gross misrepresentation.—Nowhere in the decision in this case do we all the time that the respondent has been deprived of the possession of the premises
“in effect” absolve Palileo from her indebtedness on the loan. If the point which in question.
petitioners wish to make is that after offsetting Palileo’s obligation on the loan with In any case, and in so far as petitioner Beatriz Cosio de Rama is concerned,
the amount of rentals due her (which according to petitioners now total P46,800) since the latter’s estate should be deemed in possession of the premises and is
there would still be left a balance in her favor, then the situation is one that cannot enjoying the benefit of such possession, it (the estate) should be held liable for the
be questioned. A possessor in bad faith is liable for rent during all the time he rental of the house. Whether part of the rentals accrued during the lifetime of the
deprived the owner of the use of the property. (Lerma v. De la Cruz, 7 Phil. petitioner Cosio de Rama and the other part, to her estate, would be of no serious
580[1907].) consequence since the ultimate result will practically be the same, namely, the total
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amount of the rentals should now be paid by Beatriz Cosio de Rama’s estate. It was situated, and paid the rents therefor in the sum of P135.00 a quarter. On
would be an empty formality to require the respondent Palileo to file a separate February 17, 1952 respondent wrote a letter to Sor Consuelo of the Hospicio de San
claim for the rentals Jose, stating that under her contract with petitioner, “Miss Cosio is the temporary
205 owner of my house until December 31, 1952 or until I can pay her back P12,000.00
VOL. 17, MAY 20, 1966 205 before that time.”
Cosio and de Rama vs. Palileo After the house was partially burned on October 25, 1952, it was petitioner who
that accrued after the death of petitioner Beatriz Cosio de Rama against the latter’s reconstructed it. Nobody was then in occupancy. It was entirely proper that
estate instead of joining said rentals as all due under the instant case since it will petitioner should take charge to protect her interest. If she knew or thought then
be the same estate that will pay for it. that she had no right to be in possession, as the decision under consideration says,
The motion for reconsideration is denied. there would be no point in reconstructing the house at all: she had collected the
Chief Justice Cesar Bengzon and Justices Bautista insurance proceeds and the loan she had extended to respondent was still
Angelo and Zaldivar, concur. Justices J.P. Bengzon and Sanchez, took no part. outstanding and therefore supposed to be collectible, even if the property set up as
Motion denied. guarranty had been damaged. Indeed, respondent herself considered it the duty of
petitioner to rebuild the house as shown by a pleading she filed in the first case,
MAKALINTAL, J., dissenting: wherein she complained that “x x x defendant (Cosio de Rama) did not rebuild said
building notwithstanding that she had received the aforesaid sum of P13,107.00
I am for reconsidering the decision by eliminating therefrom the adjudication of from the insurance company,” and alleged that she was willing to pay her
rents in favor of respondent Cherie Palileo at the rate of P300.00. To date the indebtedness of P12,000.00 “provided the defendant first rebuild the building in
aggregate amount of such rents is over P46,000.00 and it seems to me that to award question to its original condition before its destruction by fire.”
it to her is in effect to put a pre-mium on her own default, for if she had paid her The inference as to possession that might be derived from the judicial
indebtedness on time (within one year from December 18, 1951) she would not have construction of’ the sale as an equitable
had such rents at all. 207
The main ground upon which petitioner Beatriz Cosio de Rama’s liability is VOL. 17, MAY 20, 1966 207
based is that she was a possessor of the house in bad faith, and this finding in turn Cosio and de Rama vs. Palileo
is based on the decision of this Court in the first case between the parties (Palileo mortgage cannot in my opinion, overthrow the clear agreement of the parties,
vs. Cosio, 97 Phil. 919) that their contract executed on December 18, 1951, while implemented by their conduct, that such possession should be in the vendee
denominated a sale with the right of repurchase, was in reality an equitable (equitable mortgage); and to make her pay rents would be rewarding the defaulting
mortgage. That case was for reformation of instrument, filed sometime towards the debtor unjustly, since it was precisely her default which assured her of such rents
end of 1952. I do not believe, in view of the circumstances, that just because the month after month for many years without having to comply with the obligations
transaction was held to be an equitable mortgage petitioner Cosio de Rama of a lessor with respect to the maintainance of the house in good condition, and to
necessarily had no right to the possession of the house and was aware of it from the the payment of taxes, of premiums on the insurance and of the rents of the lot on
very moment the instrument was executed. The obvious, and to my mind the only, which the said house is situated.
effect of that decision is that non-payment of the obligation within the period Justices Concepcion, J.B.L. Reyes and Dizon, concur in the dissent of Justice
stipulated—one year from December 18, 1951—did not preclude redemption of the Makalintal.
property ostensibly sold nor result in the consolidation of the ownership thereof in Motion for reconsideration denied.
the vendee. The agreement concerning possession of the house—explicit in the RESOLUTION ON SECOND MOTION
contract and implicit in the con- FOR RECONSIDERATION
206 November 28, 1966.
206 SUPREME COURT REPORTS ANNOTATED
Cosio and de Rama vs. Palileo REGALA, J.:
temporaneous acts of the parties—was in no wise affected by our decision.
The deed of sale itself, of course, presupposed delivery of the house to the Petitioners have filed a second motion for reconsideration based on substantially
vendee. Such delivery was confirmed simultaneously by the lease of the house to the same grounds advanced by them in their first motion for reconsideration,
the vendor, pursuant to which the latter remained in occupancy as tenant for five grounds which were already considered in both the resolution of May 20, 1966 and
(5) months, leaving the place in May, 1952, The day after the sale, that is, on in the dissenting opinion of Mr. Justice Makalintal. Thus, the following
December 19, 1951 petitioner Cosio de Rama insured the house for her own account circumstances are cited as basis for petitioners’ claim of good faith in taking
and paid the corresponding premium on the policy. She likewise secured a new possession of the house.
contract of lease with the Hospicio de San Jose, owner of the lot on which the house
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1. 1.The agreement of the parties whereby respondent Palileo was allowed to “WHEREFORE, with the modification that petitioner Cosio de Rama should be
remain in possession of the house, ostensibly as lessee, after it was reimbursed her necessary expenses in the amount of P1 2,000 by respondent
allegedly sold to petitioner Cosio de Rama. Palileo, and that petitioners, for their possession of the house, are ordered to pay
2. 2.The alleged impression of the parties that their transaction was one of respondent Palileo a monthly rental of P300 starting from the time the decision in
conditional sale, by virtue of which petitioner Cosio de Rama became the Palileo v. Cosio, 96 Phil. 9.19 [1955] became final on December 15, 1955 the
“temporary owner” of the house, evident in the act of petitioner Cosio de judgment of the Court of’ Appeals is affirmed in all other respects, without any
Rama of insuring the house against fire, renewing the lease of the land pronouncement as to costs.”
on which it was built and repairing the house when it was partly Justices J.B.L. Reyes, Dizon and Zaldivar, concur. Messrs. Justices J.P.
destroyed by fire. Bengzon, Sanchez and Castro did not take part.
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