February 1, 2011 VIA OVERNIGHT MAIL Montreal Bank 111 Dela Cruz Street Sampaloc, Manila RE: Opinion

on the parcel of land in Willyvile Subdivision which is under contention between Roman and Nathalie Flores vs. Montreal Bank Dear Mr. Luis Santos, as Chief Executive Officer of Montreal Bank: You have requested our advice regarding the parcel of land on Willyville Subdivision mortgaged by Villarica Corporation to Montreal Bank, and which is presently under contention of the Flores spouses. This letter is furnished by us in response to your request. FOREWORD: The land under contention is located in a subdivision mortgaged by Villarica Corporation to Montreal Bank, such parcel of land is contested by Flores spouses. This legal opinion shall address legal matters pertaining to such parcel of land. In preparing this Opinion Letter, we reviewed the following documents: 1. The contract to sale between Mr. Roman Flores and Villarica Corporation executed on January 9, 1993. 2. The deed of mortgage between Villarica Corporation and Montreal Bank executed on August 24, 1998. 3. The copy of receipts obtained by Mr. Roman Flores from Villarica Corpation regarding the payment in installments in said property. SCOPE OF LEGAL OPINION: This opinion is confined to matters of Philippine Law and we express no opinion with regard to any system of law other than the laws of the Philippines. The analysis of this Legal opinion is based solely on the stated facts, reviewed documents, and standing Legal Jurisprudence in the Philippines.

FACTS: We understand that Montreal Bank wants the foreclosure of said property located in WIllyville Subdivision after such subdivision was mortaged by Villarica Corporation on August 24, 1998 and having failed to pay the loan in the prescribed duration agreed upon. Said parcel of land located in Willyville subdivision was previously purchased by the Flores spouses from Villarica Corporation on January 9, 1993 and had already paid the annual installments before Villarica Corpotaion mortgaged the said subdivision to Montreal Bank.
apos luzon development bank v enriquez 1548, 1478, 1991, 2145, 2148 civil

OPINIONS: 1. The sale of the parcel of land between the Flores spouses and Villarica Corporation, that being executed with a proper contract and prescription of payment of annual installments has not prescribed yet and such being paid in good faith by the Flores spouses. 2. The act of Villarica Corporation mortgaging the subdivision including the parcel of land of the Flores is not valid, that being executed with the knowledge that payment of such parcel of land by installments stipulated in the contract had not prescribed yet, there being bad faith and without the proper diligence of a good father of the family. 3. The right of the parcel of land under contention belongs to the Flores spouses, the latter paying annual installments in good faith making such mortgage by Villarica Corporation to Montreal bank invalid. 4. The Flores spouses may ask the rescission or fulfillment of the contract towards said land, both having indemnities for damages. In light of the foregoing analysis, we advise that Montreal Bank file the proper suit of action against the invalid mortgage executed In bad faith by Villarica Corporation. The said land in contention to be foreclosed properly belongs to the Flores spouses, such legal actions pertaining to the land in contention against the Flores spouses is not advised and recommended. Sincerely, Atty. Elijah B. Del Rosario Atty. Philip Altares