ARTURO SARTE FLORES, Petitioner, vs.SPOUSES ENRICO L. LINDO, JR. and EDNA C. LINDO,Respondents.

G.R. No. 183984

April 13, 2011
Carpio, J.:

Topic: Unjust Enrichment

Ownership, Administration, Enjoyment, and Disposition of the Community Property
Administration of the Conjugal Partnership of Gains
Real Mortgage

FACTS:

Edna Lindo obtained a loan from Arturo Flores amounting to Php 400,000.00 with monthly interest and surcharge in
case of late payment. Edna executed a deed of real mortgage and promissory note to secure the said loan.

Edna issued three checks as partial payments which were dishonored later for insufficiency of funds. This prompted
petitioner to file a complaint for the foreclosure of mortgage with damages against the respondents.
RTC branch 33 held that Flores was not entitled to judicial foreclosure of the mortgage because it found out that the
Deed was executed by Edna without her husband’s consent. Special Power of Attorney by Enrico was only
constituted days after the Deed. However, it further ruled that petitioner Flores was not precluded from recovering the
loan from Edna as he could file a personal action against her.

Petitioner then filed a complaint for Sum of Money with damages against respondents. It was raffled to Branch 42.
Respondents admitted their loan but in the tune of Php340,000.00 and prayed for dismissal on the grounds of
improper venue, res judicata, and forum shopping. RTC Branch 42 denied the motion to dismiss. CA set aside
decision of RTC Branch 42 for having been issued with grave abuse of discretion. CA ruled in general that the
creditor may institute two alternative remedies: either a personal action for the collection of debt or a real action to
foreclose the mortgage, but not both.

Issue: Whether or not petitioner can no longer file complaint for collection of sum of money on the ground of
multiplicity of suits

Held: The Court ruled that generally, it is true that the mortgage-creditor has the option of either filing a personal
action for collection of sum of money or instituting a real action to foreclose on the mortgage security.An election of
the first bars recourse to the second, otherwise there would be multiplicity of suits in which the debtor would be
tossed from one venue to another depending on the location of the mortgaged properties and the residence of the
parties. In this case, however, there are circumstances that the Court takes into consideration.

Accordingly since the Deed was executed by respondent Edna without the consent and authority of her husband, it is
void pursuant to Article 96 of the Family Code. Any disposition or encumbrance without the written consent shall be
void. However, both provisions also state that "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 x x x before the offer is withdrawn by either or both offerors." The execution of the SPA is the
acceptance by the other spouse that perfected the continuing offer as a binding contract between the parties, making
the Deed of Real Estate Mortgage a valid contract. But, as noted by CA, petitioner allowed the the decision of RTC
Branch 33 to become final and executory without asking for an alternative relief. Nevertheless, the petitioner is not
without remedy. The principle that no person may unjustly enrich himself at the expense of another applies. Article 22
of the Civil Code provides: Every person who through an act of performance by another, or any other means,
acquires or comes into possession of something at the expense of the latter without just or legal ground, shall return
the same to him.

There is unjust enrichment "when a person unjustly retains a benefit to the loss of another, or when a person retains
money or property of another against the fundamental principles of justice, equity and good conscience." The
principle of unjust enrichment requires two conditions: (1) that a person is benefited without a valid basis or
justification, and (2) that such benefit is derived at the expense of another.

The principle against unjust enrichment, being a substantive law, should prevail over the procedural rule on
multiplicity of suits.

The Court directed RTC Branch 42 to proceed with the trial of collection of sum.