48. Pineda v. Zuniga Vda.

de Vega
GR No. 233774 | April 10, 2019 | Caguioa, J.
Alba | Real Estate Mortgage

Case Summary: ​Pineda lent a sum of money to Zuniga and it was secured by a real estate
mortgage upon a parcel of land. Upon failure to pay, Pineda filed a complaint for payment OR
foreclosure. The RTC granted and ordered the payment and if unpaid, the foreclosure of the real
estate mortgage. The CA reversed as there was no showing that the demand letter was actually
received by Zuniga.

The SC held that although extrajudicial demand was not established, the filing of the complaint
constitutes judicial demand. They also corrected the RTC in ordering both collection and
foreclosure as they are mutually exclusive remedies. Instead, they ordered the payment of the loan
plus interest.

Doctrine: RTC erred in granting both demand of collection and foreclosure simultaneously.
Collection and foreclosure are ​MUTUALLY EXCLUSIVE​. Invocation of one precludes the other.
The filing of a collection suit bars the foreclosure of mortgage.

Facts​:
1. Pineda filed a complaint against Zuniga praying for the payment of Zuniga’s principal obligation
+ interest OR in default of such payment, the ​foreclosure ​of property subject of a real estate
mortgage.
2. March 25, 2003: Zuniga borrowed P500k from Pineda payable within 1 year with an interest
rate of 8% per month.
- To secure the loan, Zuniga executed a real estate mortgage (​2003 Agreement​) over a
parcel of land together with the buildings and improvements existing thereon in Pineda’s
favo
- Zuniga failed to pay despite demand from Pineda → May 2005: unpaid accumulated
interest is P232k
3. Zuniga’s Answer​: denied the allegations. She added that the complaint was dismissible for
lack of prior barangay conciliation proceeding and for failure to join her husband as a party.
- Interest rate: excessive and unconscionable = ILLEGAL
- Denied receiving 500k. The amount was the ​accumulated amount of another
obligation ​she earlier secured from Pineda
4. Pineda’s Reply​: Zuniga’s husband did not need to be joined. The transaction did not involve
him.
- Although the agreement was to charge an interest rate of 8% per month, what was
actually charged was just 4% per month.
- Admitted that there was an original loan which Zuniga obtained in 2000, but it was only
worth P200k with 3% monthly interest.
5. In the ​written interrogatories ​addressed to Pineda, she admitted that the P500k indicated in
the 2003 Agreement ​referred to a previously executed undated real estate mortgage
(​Undated Agreement​) between the parties which secured Zuniga’s loan of P200k from her
6. After unsuccessful mediation proceedings, the case was set for hearing. Zuniga failed to
formally offer her evidence.
7. RTC​: RULED IN FAVOR OF PINEDA
 a. The the existence of the loan and the real estate mortgage had been established an,
judicial foreclosure would be proper given Zuniga’s non-compliance
b. Since the undated Agreement had no provision on the payment of interest, the legal
interest of 12% per annum should be imposed;
c. 2003 agreement’s interest rate was unconscionable
d. The non-joinder of respondent's husband was not a jurisdictional defect and did not
warrant the complaint's dismissal;
e. The non-referral to the barangay conciliation proceeding did not prevent the court from
exercising its jurisdiction
f. Must pay P200k + 12% interest per annum. In default, mortgaged property shall be fore
8. CA​: REVERSED THE RTC = DISMISSED THE CASE
- Pineda failed to prove that prior demand had been made for the full payment of the the
obligation.
- While the complaint alleged and petitioner testified that demand was sent by registered
mail and received on September 7, 2004, the registry return card evidencing such
receipt was ​not specifically and formally offered in evidence​.
- Pineda only presented a copy of the demand letter with only a photocopy of the face of
a registry return card which was claimed to refer to the said letter.
- There was no reference to the registry receipt card or any competent proof, like a
postman certificate or the testimony of the postman, that the letter was actually
received.
- For failure to prove demand, Zuniga could not be considered in default

Issue/s:​ ​Was a demand letter sent by petitioner to respondent and was it received by the latter?

Holding:
Petitioner’s Arguments: (cited exceptions to the rule that only questions of law may be raised
in a Rule 45 certiorari petition)
- (1) the judgment is based on misapprehension of facts; (2) the inference is manifestly
mistaken, absurd or impossible; (3) the findings of the CA are contrary to those of the trial
court; (4) the CA manifestly overlooked certain relevant and undisputed facts that, if properly
considered, would justify a different conclusion; and (5) the findings of the CA are contrary to
the admission of the parties.

Respondent’s Arguments:
1. Petition was belatedly filed
- SC: it was seasonably filed within the 30 day extension granted by the SC
2. Fails to pose a question of law

On the Issue
1. Even if it is conceded that the exceptions cited by Pineda are applicable, the Court is not
persuaded by her argument that Zuniga had admitted in her answer and pre-trial brief that she
received on September 3, 2004 the demand letter dated August 4, 2004.
- Zuniga’s admission is at most an admission of the ​demand letter's existence (Annex
C) ​and due execution.
- Since there was no allegation of receipt ​by Zuniga of Annex C in the complaint, such
fact had to be established by Pineda
- The CA said that the Original Registry Receipt would have been the best evidence of
mailing, but they did not present the original.
 - If he fails to present such evidence, the presumption arises that the evidence, if
produced, would operate to his prejudice, and support the case of his adversary
- CA is ​CORRECT re: factual finding​, but LEGAL CONCLUSION IS FLAWED
2. Pineda seeks to enforce a ​contract of loan​ secured by a real estate mortgage.
- The obligation ​arises from contract
- Liability for damages arises pursuant to Article 1170 of the Civil Code against "[t]hose
who in the performance of their obligations are guilty of fraud, negligence, or ​delay​, and
those who in any manner contravene the tenor thereof."
- Delay or mora is governed by Art. 1169
3. Default or mora = a kind of voluntary breach of an obligation → signifies the idea of ​delay in
fulfillment​ with respect to time.
- In positive obligations, the debtor incurs delay upon the demand for fulfillment by the
creditor
- Such demand may be judicial (complaint for fulfillment) or extrajudicial (demands
fulfillment orally or in writing)
4. While delay on part of Zuniga was not triggered by an extrajudicial demand (fail to establish
receipt of demand letter), it was ​triggered judicially ​when Pineda demanded the payment of
the loan.
- Filing the complaint on June 10, 2005 constituted judicial demand
5. The Court also noted that ​it cannot uphold the RTC decision in toto
6. RTC erred in granting both demand of collection and foreclosure simultaneously. Collection
and foreclosure are ​MUTUALLY EXCLUSIVE​. Invocation of one precludes the other.
- The filing of a collection suit bars the foreclosure of mortgage.
7. RTC also erred regarding the applicable rate of interest
- The Undated Agreement HAD NO STIPULATION ON INTEREST
- The 2003 Agreement’s interest rate was UNCONSCIONABLE
- Interest should be 12% per annum from judicial demand or filing of original complaint
until June 30, 2013 and 6% per annum from July 1, 2013 until full satisfaction.
8. RTC erred in in reckoning the imposition of interest from extrajudicial demand because the
finding of the CA in this respect is upheld.
9. Nominal damages are deleted as it cannot co-exist with compensatory damages. Attorney’s
fees are sustained.

Ruling:​ PARTLY GRANTED. CA = Reversed and Set Aside. RTC = Partially Reinstated
- P200k + 30k atty’s fees
- 12% per annum from filing → 6/30/13
- 6% per annum from 7/01/13 → fulfillment