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FACTS: Abuda loaned P250,000.00 to Vitug and his wife, Narcisa Vitug. As
security for the loan, Vitug mortgaged to Abuda his property in Tondo
Foreshore. The property was then subject of a conditional Contract to Sell
between the National Housing Authority and Vitug. The parties then executed a
"restructured" mortgage contract on the property to secure the amount of
P600,000.00 representing the original P250,000.00 loan, additional loans, and
subsequent credit accommodations given by Abuda to Vitug with an interest of
five (5) percent per month. By then, the property was covered by Transfer
Certificate of Title No. 234246 under Vitug's name. Spouses Vitug failed to pay
their loans despite Abuda's demands. Abuda filed a Complaint for Foreclosure
of Property before the Regional Trial Court ofManila. The Regional Trial Court
promulgated a Decision in favor of Abuda. Vitug appealed the December 19,
2008 Regional Trial Court Decision before the Court of Appeals. He contended
that the real estate mortgage contract he and Abuda entered into was void on
the grounds of fraud and lack of consent under Articles 1318, 1319, and 1332
of the Civil Code. He alleged that he was only tricked into signing the mortgage
contract, whose terms he did not really understand. Hence, his consent to the
mortgage contract was vitiated. The Court of Appeals found that all the
elements of a valid mortgage contract were present in the parties' mortgage
contract. Hence, this petition, where Vitug contends that a mortgagor must
have free disposal of the mortgaged property and that the restriction clause in
their contract has rendered the same void.
The Principle of In Pari Delicto is an equitable principle that bars parties from
enforcing their illegal acts, assailing the validity of their acts, or using its
invalidity as a defense
Article 155 of the Family Code explicitly provides that debts secured by
mortgages are exempted from the rule against execution, forced sale, or
attachment of family home.
Parties are free to stipulate interest rates in their loan contracts in view of the
suspension of the implementation of the Usury Law ceiling on interest effective
January 1, 1983.
Iniquitous or unconscionable interest rates are illegal and, therefore, void for
being against public morals.
Even if the parties voluntarily agree to an interest rate, courts are given the
discretionary power to equitably reduce it if it is later found to be iniquitous or
unconscionable.
FACTS: Barbara Perez and Rebecca Viloria were able to obtain a loan from
China Banking Corporation with the property of Rosalina Carodan (Petitioner)
as security. Barbara and Rebecca failed to pay the loan. China Bank
extrajudicially foreclosed the mortgage but was only able to realize P1.5 Million
which left a deficiency balance of P365,345.77. Hence, in the complaint for
sum of money that China Bank has filed against Barbara, Rebecca and
petitioner Rosalina, the former prayed that the RTC order the payment of the
deficiency amount with interest at 12% per annum, attorney’s fees equal to
10% of the deficiency amount, and litigation expenses and costs of suit. The
RTC ruled in favor of China Bank. Rosalina Carodan appealed before the CA,
but the latter affirmed the decision of the RTC. Hence, this petition, where
Rosalina imputes error to the CA' s affirmance of the RTC Decision. She says
that the CA Decision was not in accord with law and jurisprudence in holding
that petitioner, jointly and severally with Barbara and Rebecca, was liable 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 Rosalina's
property to the risk of foreclosure despite the indivisible character of the Real
Estate Mortgage supposedly violated Article 2089 of the New Civil Code. Here,
Rosalina protests her liability for the deficiency. She claims that China Bank
cancelled the mortgage lien and released the. principal borrowers from liability.
She contends that this act violated Article 2089 of the Civil Code on the
indivisibility of mortgage and ultimately discharged her from liability as a
surety.
ISSUE: Whether China Bank may still recover the deficiency balance of the
loan.
HELD: Yes. 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.
If the proceeds of the sale are insufficient to cover the debt in an extrajudicial
foreclosure of mortgage, the mortgagee is entitled to claim the deficiency from
the debtor.
Wellex filed a Civil Case with the trial court for the recovery of the possession of
the WPI shares. In essence, Wellex claims that it is the owner of the WPI
Shares; that it fully paid its loan obligation and that it is entitled to the return
thereof. Wellex prayed that the trial court issue a temporary restraining order
and a writ of preliminary injunction against the Sandiganbayan to enjoin them
from selling the WPI shares at a public auction. Wellex alleged that it instituted
the case as a third (3rd) party claimant because the Sandiganbayan failed to
observe the requirements under Section 16, Rule 39 of the Rules of Court, and
that Wellex was left with no recourse but to file an action with a competent
court to recover ownership of the WPI shares by virtue of the extinguishment of
the obligation through payment. The trial court directed the dismissal of the
Civil Case on the ground of lack of jurisdiction based on the principle of
hierarchy of courts. The same court denied the motion for reconsideration filed
by Wellex. Hence, this petition.
ISSUE: Whether the State as a subrogee of BDO as the creditor of Wellex may
sell the WPI shares.
HELD: No. Considering that the loan obligation of petitioner is valid and
existing, it necessarily follows that Banco de Oro (BDO), the creditor, or its
successor-in-interest, cannot be allowed to unilaterally sell the chattel securing
the loan and apply the proceeds thereof as payment, full or partial, to the said
loan. This would constitute a clear case of pactum commissorium, which is
expressly prohibited by Article 2088 of the Civil Code.
Given that the subrogee merely steps into the shoes of the creditor, he acquires
no right greater than those of the latter.
In its answer, UCPB averred that it had no legal obligation to deliver the unit to
Liam because it is not the developer of the condominium project. UCPB
maintained that it is merely a creditor of PPGI. UCPB explained that it only
acquired PPGI's right to collect its receivables from Liam and other
condominium buyers. UCPB denied giving a specific date for the completion of
Liam's unit because such matter was beyond its control but rather devolved
upon PPGI as the developer.
The HLURB ruled in favor of Liam. UCPB appealed but the same was denied.
The OP likewise affirmed the decision of the HLURB. However, the CA reversed
the decision of the OP. The CA ruled that Liam had no right to demand for
specific performance from UCPB because it was not a privy to the contract to
sell. The obligations of PPGI to Liam remained subsisting and it continued to
be Liam's obligor with respect to the delivery of the condominium units even
after the assignment. Thus, UCPB cannot be held liable for PPGI's breach of its
obligation to Liam. Hence, this petition.
ISSUE: Whether UCPB may be held liable for PPGI’s breach of its contract with
Liam by virtue of subrogation?
Petitioner contends that, contrary to the ruling of the CA, it has the right to
collect from respondents the remainder of their obligation after deducting the
amount obtained from the extrajudicial foreclosure sale. On the other hand,
respondent avers that since the supposed value of the subject property shows
that it is more than the amount of their outstanding obligation, then
respondents can no longer be held liable for the balance, especially because it
was petitioner who bought the property at the foreclosure sale.
ISSUE: Whether Metrobank may recover the deficiency balance from Chuy Lu
Tan, including penalty charge.
Inadequacy of the price at a forced sale is immaterial and does not nullify a
sale since, in a forced sale, a low price is more beneficial to the mortgage
debtor.
Equity is available only in the absence of law and not as its replacement.
Obligations arising from contracts have the force of law between the
contracting parties and should be complied with in good faith.
The rate of penalty charge is reduced from eighteen percent (18%) per annum
to twelve percent (12%) per annum.
FACTS: During the union of Venancio and Lilia, they acquired three (3) parcels
of land in Malolos, Bulacan. The properties were mortgaged to Philippine
National Bank to secure a loan worth P1,100,000.00, which was increased to
P3,000,000.00. When the Reyes Spouses failed to pay the loan obligations,
Philippine National Bank foreclosed the mortgaged real properties. The auction
sale was held. PNB emerged as the highest bidder, and a certificate of sale was
issued in its favor.
Venancio filed before the RTC 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.
Article 122 applies to debts that were contracted by a spouse and redounded to
the benefit of the family.
There are two (2) scenarios considered: one is when the husband, or in this
case, the wife, contracts a loan to be used for the family business and the other
is when she acts as a surety or guarantor.
FACTS: Westmont alleged that, petitioners, doing business under the trade
name of Moondrops General Merchandising (Moondrops), obtained a loan in
the amount of P2,429,500.00, evidenced by Promissory wherein a month after
it obtained another loan from Westmont Bank in the amount of P4,000,000.00,
evidenced by another Promissory Note. Disclosure Statements on the
Loan/Credit Transactions were signed by the parties. Earlier, a Continuing
Suretyship Agreement was executed between Westmont and petitioners for the
purpose of securing any future indebtedness of Moondrops. Westmont averred
that petitioners defaulted in the payment of their loan obligations. It sent a
Demand Letter to petitioners, but it was unheeded. Hence, Westmont filed the
subject complaint. However, petitioners insisted that their loan applications
from Westmont were denied and it was Chua who lent them the money.
Petitioners claimed that they paid Chua the total amount of their loans. Thus,
they contended that Westmont could not demand the payment of the said
loans.
HELD: No. A simple loan is a real contract and it shall not be perfected until
the delivery of the object of the contract.
April 19, 2017
G.R. No. 202573
BANKARD, INC. vs. LUZ P. ALARTE
DEL CASTILLO, J.:
HELD: This Court cannot completely blame the MeTC, RTC, and CA for their
failure to understand or realize the fact that a monthly credit card statement of
account does not always necessarily involve purchases or transactions made
immediately prior to the issuance of such statement; certainly, it may be that
the card holder did not at all use the credit card for the month, and the
statement of account sent to him or her refers to principal, interest, and
penalty charges incurred from past transactions which are too multiple or
cumbersome to enumerate but nonetheless remain unsettled by the card
holder.
Credit card arrangements are simple loan arrangements between the card
issuer and the card holder.
ISSUE: Whether or not Londres should be held administratively liable for her
failure to pay her debts in full.
HELD: Londres' alleged financial difficulty due to the sickness and untimely
death of her father and sister-in-law cannot justify her non-payment of the
loan for a long period of time. Financial difficulty is not an excuse to renege on
one's obligation.
PSBank filed a complaint for sum of money against KT Construction that due
to the acceleration clause, the loan became due and demandable upon KT
Construction's failure to pay an installment.
KT Construction asserts that the complaint was premature because it was not
alleged that it had defaulted in paying any of the installments due and that it
had received a demand letter from PSBank. It reiterates that the promissory
note was null and void for being a contract of adhesion.
PSBank countered that Go and Go-Tan were solidarily liable with KT
Construction because they signed the promissory note in favor of PSBank as
officers of the corporation and in their personal capacities. It averred that the
obligation was already due and demandable in view of the acceleration clause
in the promissory note. Further, PSBank pointed out that the promissory note
was consensual as the parties voluntarily signed the same.
HELD: It has long been settled that an acceleration clause is valid and
produces legal effects.
DAR, through its Provincial Agrarian Reform Officer (PARO), requested the
Office of Provincial Agrarian Reform Adjudicator (PARAD) for Kalinga for
preliminary determination of just compensation.
PARAD noted that since the property was taken in 2000, the unit market value
(UMV) for the year 2000 which is Php 18,940/ha as certified by the Municipal
Assessor of Tabuk, Kalinga should have been applied instead of the 1994
Schedule of Base UMV of Php 15,780/ha used by petitioner. The PARAD
further noted that the selling price of palay per kilo in 2000 as certified by the
National Food Authority (NFA) in the amount of Php 10 should have been used
in the computation of the Capitalized Net Income (CNI) and not petitioner's
baseless valuation of Php 6.50/k. Finally, the PARAD sustained petitioner's
valuation of the idle portion of four has, the same not having been contested by
respondent.
ISSUE: Whether or not the six percent (6%) interest on the amount of just
compensation pursuant to DAR A.O. No. 13-94 should be imposed.
HELD: While the debt incurred by the government on account of the taking of
the property subject of an expropriation constitutes a forbearance,
nevertheless, in line with the recent circular of the Monetary Board of the
Bangko Sentral ng Pilipinas No. 799, Series of 2013, effective July 1, 2013, the
prevailing rate of interest for loans or forbearance of money is six percent
(6%) per annum, in the absence of an express contract as to such rate of
interest.
FACTS: This case involves the validity of the real estate mortgage of petitioner
Vicente L. Luntao's (Vicente) property in favor of respondent BAP. The mortgage
was executed by petitioner Nanette L. Luntao by virtue of a Special Power of
Attorney that Vicente issued in her favor.
Vicente was the owner of a real property and he executed a Special Power of
Attorney in favor of his sister Nanette. Nanette applied for a loan with BAP and
used Vicente's property as collateral. The loan was for the improvement of the
facilities of her business, the Holy Infant Medical Clinic. According to Nanette,
she was introduced to the lending institution by her sister Eleanor Luntao, who
allegedly had a personal loan with it and whose office was located in the same
building where BAP's office was.
Upon approval of the loan, the amount of P900,000.00, representing the loan
proceeds, was ordered to be released to the clinic through Security Bank. When
the loan obligation became due, BAP sent demand letters. In a letter, Nanette
and Eleanor's brother Jesus Luntao (Jesus) wrote BAP, asking for additional
time to settle his sisters’ accounts. He cited cash leakages and pending
accreditation with life insurers as reasons for the clinic’s substantial losses.
However, Nanette's loan was still left unpaid. As a result, BAP applied for
Extra-Judicial Foreclosure of Vicente's property. RTC issued a Notice of
Foreclosure and a Notice of Extrajudicial Sale.
Vicente and Nanette filed a Complaint for Declaration of Nullity of Real Estate
Mortgage with a prayer for the issuance of a Temporary Restraining Order and
Writ of Preliminary Injunction against BAP.
Vicente and Nanette claimed that Eleanor's alleged debt with BAP was separate
from Nanette's debt and was not secured by Vicente's property, which should
not be foreclosed if Eleanor failed to pay her alleged debt.
Petitioners argue that they did not receive any amount from the allegedly
approved loan application, thus they should not be held liable for its payment.
They contend that it was respondent BAP's negligence that caused the release
of the loan proceeds to a person not authorized by petitioners. Petitioners add
that neither of them gave authorization for BAP to release the loan proceeds
through Security Bank. There was also no evidence showing that the power
and authority to receive the loan proceeds under the Special Power of Attorney
were delegate to Eleanor.
According to petitioners, the contract was not consummated since they did not
receive the loan proceeds, and therefore, null and void. The principal contract
being void, the accessory contract of mortgage was also null and
void. Petitioners add that the mortgage contract also contained a pactum
commissorium provision.
BAP counters that the loan proceeds "were duly received, credited and
transferred to the Holy Infant Medical Clinic/Nanette L. Luntao/Eleonor L.
Luntao under Security Bank and Trust Company Account. Respondent BAP
also maintains that Eleanor has no separate personal loan with them.
Respondent BAP contends that the assailed mortgage provision is not pactum
commissorium since it does not "automatically allow the mortgagee to
appropriate or own the mortgage property without the need of ... foreclosure
proceedings.”
ISSUE: Whether or not the Real Estate Mortgage executed by Vicente L. Luntao
and Nanette L. Luntao should be nullified.
HELD: No. The CA ruled that prescription commences only upon the accrual of
the cause of action, and that a cause of action in a written contract accrues
only when there is an actual breach or violation. Thus, the appellate court
surmised that no prescription had set in against GSIS because it has not made
a demand to Mercene.
In order for cause of action to arise, the following elements must be present: (1)
a right in favor of the plaintiff by whatever means and under whatever law it
arises or is created; (2) an obligation on the part of the named defendant to
respect or not to violate such right; and (3) an act or omission on the part of
such defendant violative of the right of the plaintiff or constituting a breach of
obligation of the defendant to the plaintiff.
FACTS: Petitioner was a member of the bar who obtained two loans totaling
₱34,000.00 from respondent Government Service Insurance System (GSIS). To
secure the performance of his obligations, he mortgaged two parcels of land
registered under his and his wife Marcelina Mallari’s names. However, he paid
GSIS about ten years after contracting the obligations only ₱10,000.00 on May
22, 1978 and ₱20,000.00 on August 11, 1978. What followed thereafter was
the series of inordinate moves of the petitioner to delay the efforts of GSIS to
recover on the debt, and to have the unhampered possession of the foreclosed
property. Resulting to his disbarment case for neglecting the rules of court. The
petitioner claims that he had not been notified of the motion seeking the
issuance of the writ of execution cum writ of possession; hence, the writ was
invalid.
The redemption period envisioned under Act 3135 is reckoned from the date of
the registration of the sale not from and after the date of the sale.
Court cannot exercise any discretion to determine whether or not to issue the
writ, for the issuance of the writ to the purchaser in an extrajudicial
foreclosure sale becomes a ministerial function.
ISSUE: Whether the present suit should be deemed abated by the revocation
by the SEC of the Certificate of Registration issued to Bancom.
It is evident from the foregoing discussion of law and jurisprudence that the
mere revocation of the charter of a corporation does not result in the
abatement of proceedings. Since its directors are considered trustees by legal
implication, the fact that Bancom did not convey its assets to a receiver or
assignee was of no consequence. It must also be emphasized that the
dissolution of a creditor-corporation does not extinguish any right or remedy in
its favor.
The terms of the promissory notes and "Continuing Guaranty" are clear and
unequivocal, leaving no room for interpretation. For not being contrary to law,
morals, good customs, public order and public policy, defendants' obligation
has the force of law and should be complied with in good faith.
Considering the lapse of time since the filing of the petitioners' Withdrawal of
Petition and the lack of action on respondent's part, it appears that the instant
Petition has been rendered moot and academic, and is thus ripe for dismissal.
Since the withdrawal of the Petition came upon the initiative of petitioners,
respondent's inaction may be considered to be an implied concurrence or
approval of the same. Thus, the Petition is dismissed.
FACTS: Security Bank granted spouses Mercado a revolving credit line in the
amount of P1,000,000.00.In their terms, for late payment the penalty is 2% per
month. To secure the credit line, the spouses Mercado executed a Real Estate
Mortgage in favor of Security Bank. Subsequently, the spouses Mercado
defaulted in their payment under the revolving credit line agreement. Security
Bank requested the spouses Mercado to update their account, and sent a final
demand letter. Thereafter, it filed a petition for extrajudicial foreclosure. The
foreclosure sale of the parcel of land in Lipa City, Batangas was held wherein
Security Bank was adjudged as the winning bidder. Not one year after, the
spouses Mercado offered to redeem the foreclosed properties for
P10,000,000.00. However, Security Bank allegedly refused the offer and made
a counter-offer in the amount of P15,000,000.00.The spouses file a petition to
nullify the foreclosure.
HELD: Yes. The foreclosure sales of the properties in Batangas City and San
Jose, Batangas are void for non-compliance with the publication requirement
of the notice of sale.
Act No. 3135, as amended, provides for the statutory requirements for a valid
extrajudicial foreclosure sale. Among the requisites is a valid notice of sale.
Section 3, as amended, requires that when the value of the property reaches a
threshold, the notice of sale must be published once a week for at least three
consecutive weeks in a newspaper of general circulation. The Notice of Sheriff['s
Sale in this case, did not state the correct number of the transfer certificate of
title of the property to be sold. This is a substantial and fatal error which
resulted in invalidating the entire Notice.
The interest rate provisions in the parties' agreement violate the principle of
mutuality of contracts.
The principle of mutuality of contracts is found in Article 1308 of the New Civil
Code, which states that contracts must bind both contracting parties, and its
validity or compliance cannot be left to the will of one of them. The binding
effect of any agreement between parties to a contract is premised on two settled
principles: (I) that any obligation arising from contract has the force of law
between the parties; and (2) that there must be mutuality between the parties
based on their essential equality.
Thus, Spouses Rodrigo and Erlinda Mercado are hereby ordered to pay
Security Bank Corporation the sum of P8,317,756.71 representing the amount
of deficiency, inclusive of interest and penalty.
G.R. No. 211206, November 07, 2018
ROSEMARIE Q. REY v. CESAR G. ANSON
PERALTA, J.:
ISSUE: Whether the interest rates in the first and second land are
unconscionable and contrary to morals.
Bangis vs. Heirs of Serafin and Salud Adolfo, 672 SCRA 468, June 13,
2012 Syllabi Class: Civil Law|Interest Rates|Loans
FACTS: Respondent heirs filed a complaint for annulment of deed of sale and
declaration of the purported contract of sale as antichresis against Petitioner
when respondents’ predecessor-in-interest mortgaged their owned lot to
petitioner’s predecessor-in-interest without reducing it into writing. Petitioner
claimed prescription and the transaction was one of sale by presenting a
photocopy of Extra-Judicial Settlement with Absolute Deed of Sale without
presenting the title during trial.
HELD: For the contract of antichresis to be valid, Article 2134 of the Civil Code
requires that “the amount of the principal and of the interest shall be specified
in writing; otherwise the contract of antichresis shall be void.”
Trade and Invt Devt Corp of the Phil vs. Asia Paces Corporation, 716
SCRA 67, Feb 12, 2014 Syllabi Class :Civil Law|Suretyship|Guaranty|
Guarantor
FACTS: TIIDCORP filed a collection case against: (a) ASPAC, PICO, and
Balderrama on account of their obligations under the deeds of undertaking;
and (b) the bonding companies on account of their obligations under the Surety
Bonds.
ASPAC eventually defaulted on its loan obligations to Banque Indosuez and PCI
Capital, prompting them to demand payment from TIDCORP under the Letters
of Guarantee.
TIDCORP and its various creditor banks, such as Banque Indosuez and PCI
Capital, forged a Restructuring Agreement extending the maturity dates of the
Letters of Guarantee. The bonding companies were not privy to the
Restructuring Agreement and, hence, did not give their consent to the payment
extensions granted by Banque Indosuez and PCI Capital, among others, in
favor of TIDCORP. Nevertheless, following new payment schedules, TIDCORP
fully settled its obligations under the Letters of Guarantee to both Banque
Indosuez and PCI Capital.
ISSUE: Whether or not the bonding companies’ liabilities to TIDCORP under
the Surety Bonds have been extinguished by the payment extensions granted
by Banque Indosuez and PCI Capital to TIDCORP under the Restructuring
Agreement.
Since the surety is a solidary debtor, it is not necessary that the original debtor
first failed to pay before the surety could be made liable; it is enough that a
demand for payment is made by the creditor for the surety’s liability to attach.
Article 2079 of the Civil Code, which pertinently provides that “[a]n extension
granted to the debtor by the creditor without the consent of the guarantor
extinguishes the guaranty,” equally applies to both contracts of guaranty and
suretyship.
Centennial Guarantee Assurance Corp vs. Universal Motors Corp, 737
SCRA 654, Oct 8, 2014
The temporary restraining order (TRO) prayed for was eventually issued by the
RTC upon the posting by NSSC and Orimaco of a _1,000,000.00 injunction
bond issued by their surety, CGAC. The TRO enjoined respondents UMC,
Rolida, Gelle, Janeo, Jr., NCOD, and Yap (respondents) from selling, dealing,
and marketing all models of motor vehicles and spare parts of Nissan, and from
terminating the dealer agreement between UMC and NSSC. It likewise
restrained UMC from supplying and doing trading transactions with NCOD,
which, in turn, was enjoined from entering and doing business on Nissan
Products within the dealership territory of NSSC as defined in the Dealer
Agreement. The TRO was converted to a writ of preliminary injunction on April
2, 2002.
ISSUE: Whether or not good reasons exist to justify execution pending appeal
against CGAC which is a mere surety