Development Bank of the Philippines v.

Alejandro and Adelaida Licuanan

J. Corona | February 26, 2007 | Petition for Review on Certiorari

Facts:
1. Respondent spouses Licuanan acquired a piggery loan with petitioner and
such was secured by a real estate mortgage over a parcel of land with a two-
storey building
2. In 1970, petitioners granted respondents an additional loan. This transaction
was secured by a real estate mortgage covering four parcels of land
3. Subsequently, petitioners again granted respondents another loan. This time,
such was secured by a real estate mortgage over three parcels of land
4. Petitioner and respondents eventually restructured the second loan. They
agreed to extend the date of maturity of the same
5. Two years later, petitioner informed respondents that as a consequence of
the breach which they committed, they have no choice but to have the
mortgaged properties for all three loan transactions sold at an auction sale
6. Petitioner then filed an application for extrajudicial sale
7. The properties were then sold at a public auction where petitioner emerged
as the highest bidder, and thereafter the certificate of sale evincing the same
was registered.
8. Consequently, petitioner consolidated its ownership over the said properties.
9. After the passage of more than a year, petitioners wrote respondents
informing them that said properties were set to be sold at a public auction by
oral bidding.
10.During the scheduled date of said auction however, no bidders came.
11.Petitioners then told respondents through a letter that they could reacquire
such properties and payment may be made in cash or in instalments
12.Days later however, said properties were sold to a certain Peralta
13.Such compelled respondents to file a complaint for recovery of real properties
and damages with the regional trial court with petitioner and Peralta, the
purchaser, as defendants.
14.The trial court rendered judgment in favour of respondents. Such was
subsequently affirmed by the appellate court.
15.Hence, this petition for review on certiorari

WON DEMAND WAS MADE BEFORE THE FORECLOSURE WAS EFFECTED?

1. No. both the trial court and the appellate court found that no demand was
ever made.
2. Since, demand was never made, the application for extrajudicial foreclosure
filed by petitioner was premature.

WON DEMAND IS NECESSARY?

1. YES.
2. Jurisprudence has declared that demand is a condition precedent for
default to ensue. And default is the catalyst for the accrual of a creditor-
mortgagees cause of action, giving the same a right of action to
commence an action for foreclosure of a real estate mortgage. Demand
can only be dispensed with if the parties agree on a no-demand clause or
 if the nature of the obligation itself calls for the dispensation of the act of
making a demand, or if the obligation is reciprocal.
3. In the instant case, since none of the exceptions provided for by law
applies, petitioners cause of action only arose when its demand for Home
Notes was refused by respondents and not on the maturity date of said
notes.

TERESA BIACO V. PHILIPPINE COUNTRYSIDE RURAL BANK

J. TINGA | FEBRUARY 8, 2007

FACTS:
1. Petitioners husband, an employee of respondent bank, incurred several loans
from the same.
2. As security for said loans, Ernesto, petitioners husband, executed a real
estate mortgage over a parcel of land in favour respondent. Said real estate
mortgage bore the signatures of both spouses
3. When Ernesto failed to pay when said loans became due and demandable,
respondent bank sent him a written demand. Despite such however, Mr.
Biaco failed to settle his loans.
4. As a consequence thereof, respondent bank filed a complaint for foreclosure
of real estate mortgage against the spouses before the RTC of Misamis
5. Summons was served to the spouses; in fact, Ernesto received such
summons, however for some reason, he failed to file an answer
6. The court then declared the spouses to be in default and then allowed the
bank to present its evidence ex parte
7. The court rendered a decision in favour of respondent bank
8. The sheriff personally served said judgment to Ernesto at his office. The
spouses did not interpose an appeal
9. Then respondent bank filed an ex parte motion for execution to direct the
sheriff to sell the mortgaged lot at public auction. The respondent bank
alleged that the order of the court requiring the spouses Biaco to pay within a
period of 90 days had passed, thus making it necessary to sell the mortgaged
lot at public auction, as previously mentioned in the order of the court. The
motion for execution was granted
10.The sheriff thereafter served a copy of the writ of execution to the spouses;
such was personally received by Ernesto
11.In accordance with said order, the mortgaged property was eventually sold at
a public auction
12.The amount of the property sold at public auction being insufficient to cover
the full amount of the obligation, the respondent bank filed an ex
parte motion for judgment praying for the issuance of a writ of execution
against the other properties of the spouses Biaco for the full settlement of the
remaining obligation; such motion was granted
13.Petitioner sought the annulment of the Regional Trial Court decision
contending that extrinsic fraud prevented her from participating in the
judicial foreclosure proceedings. According to her, she came to know about
the judgment in the case only after the lapse of more than six (6) months
 after its finality. She claimed that extrinsic fraud was perpetrated against her
because the bank failed to verify the authenticity of her signature on the real
estate mortgage and did not inquire into the reason for the absence of her
signature on the promissory notes. She moreover asserted that the trial court
failed to acquire jurisdiction because summons were served on her through
her husband without any explanation as to why personal service could not be
made.
14.The CA ruled that there was no extrinsic fraud. She then filed an motion for
reconsideration; such was likewise denied.
15.Hence, this petition

WON THE TRIAL COURT ACQUIRED JURISDICTION OVER THE CASE?

1. YES.
2. A judicial foreclosure proceeding is an action quasi in rem. As such,
jurisdiction over the person of petitioner is not required, it being sufficient
that the trial court is vested with jurisdiction over the subject matter.
3. In a proceeding in rem or quasi in rem, jurisdiction over the person of the
defendant is not a prerequisite to confer jurisdiction on the court provided
that the court acquires jurisdiction over the res. Jurisdiction over the res is
acquired either (1) by the seizure of the property under legal process,
whereby it is brought into actual custody of the law; or (2) as a result of the
institution of legal proceedings, in which the power of the court is recognized
and made effective; summons must be served upon the defendant not for the
purpose of vesting the court with jurisdiction but merely for satisfying the due
process requirements
4. Without ruling on petitioners allegation that her husband and the sheriff
connived to prevent summons from being served upon her personally, we can
see that petitioner was denied due process and was not able to participate in
the judicial foreclosure proceedings as a consequence. The violation of
petitioners constitutional right to due process arising from want of valid
service of summons on her warrants the annulment of the judgment of the
trial court.
5. There is more, the trial court granted respondent PCRBs ex-parte motion for
deficiency judgment and ordered the issuance of a writ of execution against
the spouses Biaco to satisfy the remaining balance of the award. In short, the
trial court went beyond its jurisdiction over the res and rendered a personal
judgment against the spouses Biaco. This cannot be countenanced.
6. Similarly, in this case, while the trial court acquired jurisdiction over the res,
its jurisdiction is limited to a rendition of judgment on the res. It cannot
extend its jurisdiction beyond the res and issue a judgment enforcing
petitioners personal liability. In doing so without first having acquired
jurisdiction over the person of petitioner, as it did, the trial court violated her
 constitutional right to due process, warranting the annulment of the
judgment rendered in the case.

FLORES V. LINDO, JR.

J. CARPIO | APRIL 13, 2011 | PETITION FOR REVIEW

FACTS:
1. Edna Lindo obtained a loan from petitioner Flores; to secure said loan, Lindo
executed a Deed of Real Estate Mortgage covering a property in her name
and in the name of her husband, Enrico
2. Edna then issued three checks as partial payments for the loan. However all
of them were dishonoured
3. Petitioner then filed a complaint for foreclosure of mortgage with damages
against respondents. The complaint was raffled to the RTC of Manila
4. The RTC found that petitioner was not entitled to judicially foreclosure the
mortgage for it was executed without the consent of Enrico. Petitioners
motion for reconsideration was likewise denied.
5. Petitioner then proceeded to file a complaint for sum of money with damages
against respondents
6. Respondents filed their Answer and subsequently filed for a Motion to Dismiss
7. The trial court denied such motion to dismiss, but the appellate court
rendered judgment in favour of spouses Lindo and decided to set aside the
trial courts decision on the ground that it committed grave abuse of
discretion in promulgating the same

WON THE CA COMMITTED A REVERSIBLE ERROR IN DISMISSING THE COMPLAINT

FOR COLLECTION OF SUM OF MONEY ON THE GROUND OF MULTIPLICITY OF SUITS?
1. YES.
2. The mortgagee essentially has a single cause of action against the
mortgagor to collect the unpaid debt already due and demandable. The
action for foreclosure of the real estate mortgage is one of the two alternative
recourses which the mortgagee can avail of. If the mortgagee chooses
foreclosure, he waives his right to file an action for collection of debt. This is
because both actions are complete in themselves.
3. Although petitioners action for foreclosure of the mortgaged property was
dismissed for being premature, the trial court rendered such decision without
prejudice to petitioners right to file a personal action for collection of debt.
Moreover, the same also ruled that Edna Lindos liability is not abolished by
the nullity of the real estate mortgage for want of consent of her spouse. And
lastly, the Court applied the principle of unjust enrichment. It opined that in
light of Ednas admission the she in fact incurred a loan from petitioner, and
the same was still unpaid, it is indubitably prudent that the procedural rules
barring the multiplicity of suits be relaxed, and the proceedings as regards to
the personal action filed against Edna, commence.

LANGKAAN REALTY DEVELOPMENT, INC. V. UNITED COCONUT PLANTERS BANK

J. GONZAGA-REYES | DECEMBER 8, 2000 | PETITION FOR REVIEW ON CERTIORARI

FACTS:
1. Petitioner Langkaan Realty executed a real estate mortgage over a parcel of
land in favour of UCPB as a security for the loan obtained from the same by
Guimaras Agricultural Development, Inc.
2. It appears that Langkaaan Realty and Guimaras Agricultural Development
agreed to share in the proceeds from the loan obtained by the latter from
respondent
3. Guimaras incurred another loan, the same shall be covered by the real estate
mortgage instituted for the first loan
4. Their mortgage agreement also provided for an acceleration clause which
stated that any default in payment of the secured obligations will render all
such obligations due and payable, and that UCPB may immediately foreclose
the mortgage
5. Unfortunately, Guimaras defaulted
6. UCPB then filed a petition for sale under Act 3135 with the Office of the Clerk
of Court and Ex-officio Sheriff of RTC Imus
7. The petition was given due course, it was then followed by the issuance of
the notice of extrajudicial sale of Langkaans property. The notice was
published in the Record Newsweekly, and was certified by the court deputy
sheriff to have been duly posted
8. The mortgaged property was eventually sold at a public auction wheren
respondent emerged as the highest bidder
9. In consonance to such, a certificate of sale was issued in favour of UCPB
10.Langkaan Realty failed to redeem the subject property before the lapse of the
redemption period.
11.As a consequence thereof, the title of the property was consolidated in the
name of UCPB,; such came with the issuance of a new transfer certificate of
title in UCPBs name
12.Langkaan Realty, through counsel, wrote UCPB, offering to buy back said
property; such offer however was rejected by respondent bank
13.Petitioner then proceeded to file a complaint for annulment of extrajudicial
foreclosure and sale with damages with the RTC Imus
14.The RTC dismissed such complaint for lack of merit. Such decision was
subsequently affirmed by the appellate court.
15.Hence, this petition

WHETHER OR NOT THE EXTRA-JUDICIAL FORECLOSURE SALE IS VALID AND LEGAL

ON ACCOUNT OF THE ALLEGED NON-COMPLIANCE WITH THE PROVISIONS OF ACT
NO. 3135 ON VENUE, POSTING AND PUBLICATION OF THE NOTICE OF SALE, AND OF
THE ALLEGED DEFECTS IN SUCH NOTICE?
1. Yes
2. It has been our consistent ruling that the question of compliance or non-
compliance with notice and publication requirements of an extra-judicial
foreclosure sale is a factual issue binding on this Court. In the case of Reyes
vs. Court of Appeals, we declined to entertain the petitioners argument as to
lack of compliance with the requirements of notice and publication prescribed
 in Act No. 3135, for being factual. Hence, the matter of sufficiency of posting
and publication of a notice of foreclosure sale need not be resolved by this
Court, especially since the findings of the Regional Trial Court thereon were
sustained by the Court of Appeals. Well-established is the rule that factual
findings of the Court of Appeals are conclusive on the parties and carry even
more weight when the said court affirms the factual findings of the trial court.
3. Assuming arguendo, that the notice was not posted in three public places as
required by Act 3135, such would not affect the validity of the foreclosure.
The Court, citing Olizon v. CA, stated that in cases where the notice
requirement was not satisfied but the publication requirement was fulfilled,
the publicity effected shall still be considered sufficient. It is because
publication in newspapers, as in this case, have more far-reaching effects
than posting notices on public places. Additionally, clerical errors in said
notices will not also invalidate said notices, and by extension, the subject
sale.
4. The Court however conceded that the extrajudicial foreclosure of sale was
conducted in the wrong venue. Such sale should have been conducted in
Trece Martires, not in Imus.
5. Despite such error however, the Court still ruled that petitioner is bound by
the sale for it was informed that such auction was to be held in Imus, not in
Trece Martires, which was the undoubtedly the proper venue of the sale, and
yet it failed to interpose an objection and such is tantamount to a waiver.