Tabuada vs Tabuada

FACTS: The petitioners, commenced Civil Case No. 0528420 in the RTC against the
aforementioned respondents regarding the mortgage of the property of late Loreta Tabuada. In the
proceeding, the petitioner filed a Motion to Declare Defendants in Default and for Judgment Based
on Complaint for the respondents’ failure to file their answer within the reglementary period. Hence,
the trial court proceeded the case based solely on the complaint of the petitioner.
Based on their complaint, petitioner alleged that the property which they were residing and
which was inherited by her late husband from his mother was mortgaged by the respondents to the
spouses Certeza without their knowledge. And when the petitioner inquired from respondents
Eleanor Tabuada and Trabuco about the mortgage both admitted that they had mortgaged the
property to the Spouses Certeza. She also claimed that it is impossible for Loreta Tabuada to sign
the Mortgage of Real Rights executed on July 1, 1994 and the Promissory Note dated July 4, 1994
because the latter had died on April 16, 1990.
The RTC ruled in favor of the defendant granting their petition to declare the Mortgage of
Real Rights and the Promissory Note null and void. Further it opined that the respondents, without
having the legal authority to mortgage said property had misrepresented themselves as the deceased
Loreta Tabuada and mortgaged the property without the knowledge of herein plaintiffs, and
benefited from said mortgage to the detriment of the rights and interests of plaintiffs. The
respondents appealed to the CA and the latter reversed the decision of the RTC. Thus, prompting the
petitioners to move for reconsideration but to no avail.
ISSUE: Whether or not real mortgage is null and void?
HELD: AFFIRMATIVE. Under Article 2085 of the Civil Code, a mortgage, to be valid, must
have the following requisites, namely: (a) that it be constituted to secure the fulfillment of a
principal obligation; (b) that the mortgagor be the absolute owner of the thing mortgaged; and (c)
that the person constituting the mortgage has free disposal of the property, and in the absence of the
right of free disposal, that the person be legally authorized for the purpose.
It is uncontested that the late Loreta Tabuada had died in 1990, or four years before the
mortgage was constituted; and that Eleanor Tabuada and Trabuco admitted to petitioner Sofia
Tabuada that they had mortgaged the property to the Spouses Certezas. Accordingly, the RTC was
fully justified in declaring the nullity of the mortgage based on its finding that Eleanor Tabuada had
fraudulently represented herself to the Spouses Certeza as the late Loreta Tabuada, the titleholder.
That the titleholder had been dead when the mortgage was constituted on the property by Eleanor
Tabuada was not even contested by Eleanor Tabuada and Tabuco. In any event, Eleanor Tabuada
had not been legally authorized to mortgage the lot to the Spouses Certeza.

DBP vs CA
Development Bank of the Philippines v. Court of appeals

GR No. 118342, 5 January 1988

Nature: Petition for review of a decision of the Court of Appeals

Ponente: DAVIDE, JR.

FACTS:

These two consolidated cases stemmed from a complaint filed against the Development Bank of the
Philippines (hereafter DBP) and Agripina Caperal filed by Lydia Cuba (hereafter CUBA) on 21 May
1985 with the Regional Trial Court of Pangasinan, Branch 54. The said complaint sought (1) the
declaration of nullity of DBP’s appropriation of CUBA’s rights, title, and interests over a 44-hectare
fishpond located in Bolinao, Pangasinan, for being violative of Article 2088 of the Civil Code; (2) the
annulment of the Deed of Conditional Sale executed in her favor by DBP; (3) the annulment of
DBP’s sale of the subject fishpond to Caperal; (4) the restoration of her rights, title, and interests
over the fishpond; and (5) the recovery of damages, attorney’s fees, and expenses of litigation.

Plaintiff Lydia P. Cuba is a grantee of a Fishpond Lease Agreement No. 2083 (new) dated May 13,
1974 from the Government. Plaintiff obtained loans from the Development Bank of the Philippines in
the amounts of P109,000.00; P109,000.00; and P98,700.00 under the terms stated in the
Promissory Notes dated September 6, 1974; August 11, 1975; and April 4, 1977;

As security for said loans, plaintiff Lydia P. Cuba executed two Deeds of Assignment of her
Leasehold Rights, plaintiff failed to pay her loan on the scheduled dates thereof in accordance with
the terms of the Promissory Notes.

Without foreclosure proceedings, whether judicial or extra-judicial, defendant DBP appropriated the
Leasehold Rights of plaintiff Lydia Cuba over the fishpond in question. After defendant DBP has
appropriated the Leasehold Rights of plaintiff Lydia Cuba over the fishpond in question, defendant
DBP, in turn, executed a Deed of Conditional Sale of the Leasehold Rights in favor of plaintiff Lydia
Cuba over the same fishpond in question;

In the negotiation for repurchase, plaintiff Lydia Cuba addressed two letters to the Manager DBP,
Dagupan City dated November 6, 1979 and December 20, 1979. DBP thereafter accepted the offer
to repurchase in a letter addressed to plaintiff dated February 1, 1982. After the Deed of Conditional
Sale was executed in favor of plaintiff Lydia Cuba, a new Fishpond Lease Agreement No. 2083-A
dated March 24, 1980 was issued by the Ministry of Agriculture and Food in favor of plaintiff Lydia
Cuba only, excluding her husband. Plaintiff Lydia Cuba failed to pay the amortizations stipulated in
the Deed of Conditional Sale. After plaintiff Lydia Cuba failed to pay the amortization as stated in
Deed of Conditional Sale, she entered with the DBP a temporary arrangement whereby in
consideration for the deferment of the Notarial Rescission of Deed of Conditional Sale, plaintiff Lydia
Cuba promised to make certain payments as stated in Temporary Arrangement dated February 23,
1982;

Defendant DBP thereafter sent a Notice of Rescission thru Notarial Act dated March 13, 1984, and
which was received by plaintiff Lydia Cuba. After the Notice of Rescission, defendant DBP took
possession of the Leasehold Rights of the fishpond in question; That after defendant DBP took
possession of the Leasehold Rights over the fishpond in question, DBP advertised in the SUNDAY
PUNCH the public bidding dated June 24, 1984, to dispose of the property; That the DBP thereafter
executed a Deed of Conditional Sale in favor of defendant Agripina Caperal on August 16, 1984.
Thereafter, defendant Caperal was awarded Fishpond Lease Agreement No. 2083-A on December
28, 1984 by the Ministry of Agriculture and Food.

ISSUE:

Whether or not the assignment constituted dation in payment under Article 1245 of the Civil Code?
HELD:

NO. Decision Reversed

RATIO:

The Court held that the assignment did constitute dation in payment under Article 1245 of the Civil
Code, which reads: “Dation in payment, whereby property is alienated to the creditor in satisfaction
of a debt in money, shall be governed by the law on sales.”

It bears stressing that the assignment, being in its essence a mortgage, was but a security and not a
satisfaction of indebtedness.

MILAGROS HERNANDEZ vs. EDWINA OCAMPO, et. al.

G.R. No. 181268
AUGUST 15, 2016

FACTS:
Petitioner Hernandez alleges that sometime in 1985, she bought from Romeo An 2 parcel
of lands Lot 8 and Lot 6. From 1985, she was in continuous, open and adverse possession of these
lots. 1985, she was in continuous, open and adverse possession of these lots. Until now, her
daughter, Fe Hernandez-Arceo and her family occupy them.
Sometime in 2002, Hernandez and her family received a letter from respondent Mendoza,
demanding that they vacate lot 8. Upon investigation, they discovered that the titles to the lots
were registered in the names of Mendoza and respondent Edwina Ocampo by virtue of a Deed of
Absolute Sale executed by An. Hernandez also discovered that the lots were mortgaged. Lot 8 was
mortgaged with Metrobank and Lot 6 was mortgaged wit
Eventually, the mortgages were extrajudicially foreclosed and the lots were separately sold
at public auctions with the 2 banks emerging as the highest bidders.
PSB filed a petition for the issuance of writ of possession before the RTC, the latter granted
the writ. Meanwhile, Hernandez filed a Complaint for Cancellation of TCT with the same court
against Mendoza, Ocampo, Metrobank, PSB and RD of Calamba. Hernandez then filed a Motion for
TRO or Preliminary Injunction to stop PSB and Sheriff from enforcing the writ.
Metrobank filed a petition for the issuance of writ of possession before the same RTC, the
same was granted.
RTC denied Hernandez’s Motion for TRO or Preliminary Injunction.

ISSUE: Whether Hernandez was entitled to the issuance of a preliminary injunction.

RULING: No. The petition is unmeritorious. The writs of possession can be issued and
implemented.

A writ of possession is generally understood to be an order whereby the sheriff is

commanded to place a person in possession of a real or personal property. It may be issued in: (1)
land registration proceedings under Section 17 of Act No. 496; (2) judicial foreclosure, provided the
debtor is in possession of the mortgaged realty and no third person, not a party to the foreclosure
suit, had intervened; (3) extrajudicial foreclosure of a real estate mortgage under Section 7 of Act
No. 3135, as amended by Act No. 4118; and (4) execution sales.
 In cases of extrajudicial foreclosure sales of real estate mortgage under Section 747 of Act
No. 3135, as amended, the purchaser or the mortgagee who is also the purchaser in the
foreclosure sale may apply for a writ of possession either: (1) within the one-year redemption
period, upon the filing of a bond; or (2) after the lapse of the redemption period, without need of a
bond.

We have consistently held that the duty of the trial court to grant a writ of possession to a
purchaser in a public auction is a ministerial function of the court, which cannot be enjoined or
restrained, even by the filing of a civil case for the declaration of nullity of the foreclosure and
consequent auction sale.
Moreover, any question regarding the regularity and validity of the sale, as well as the
consequent cancellation of the writ, is to be determined in a subsequent proceeding as outlined in
Section 8 of Act No. 3135. Such question cannot be raised to oppose the issuance of the writ, since
the proceeding is ex parte.
However, this rule admits of an exception.
The provision of Section 33 of Rule 39 of the Rules of Court relative to an execution sale
applies to extrajudicial foreclosure of real estate mortgages by virtue of Section 6 of Act No. 3135,
as amended. Upon the expiration of the right of redemption, the purchaser or redemptioner shall
be substituted to and acquire all the rights, title, interest and claim of the judgment debtor to the
property, and its possession shall be given to the purchaser or last redemptioner. It is but logical
that Section 33, Rule 39 of the Rules of Court be applied also to cases involving extrajudicially
foreclosed properties that were bought by a purchaser and later sold to third-party-purchasers
after the lapse of the redemption period. The possession of the property, however, will not be
given to either the purchaser, redemptioner or third-party-purchaser when a third party is actually
holding the property adversely to the judgment debtor. In which case, the issuance of the writ of
possession ceases to be ex-parte and non-adversarial.

Thus, where the property levied upon on execution is occupied by a party other than a
judgment debtor, the procedure is for the court to conduct a hearing to determine the nature of
said possession, i.e., whether or not he is in possession of the subject property under a claim
adverse to that of the judgment debtor.

In Philippine National Bank v. Court of Appeals and Royal Savings Bank v. Asia, we held that
the obligation of a court to issue an ex parte writ of possession in favor of a purchaser in an
extrajudicial foreclosure sale ceases to be ministerial once it appears that there is a third party in
possession of the property who is claiming a right adverse to that of the debtor. This is because a
third party, who is not privy to the debtor, is protected by law and can only be ejected from the
premises after he has been given an opportunity to be heard, to comply with the time-honored
principle of due process.

Under the law, the third party's possession of the property is legally presumed to be
pursuant to a just title, which may only be overcome by the purchaser in a judicial proceeding for
recovery of the property. It is only through such a judicial proceeding that the nature of the
adverse possession by the third party is determined, according such third party due process and
the opportunity to be heard.

The question now is whether Hernandez is a third party in possession of the property
claiming a right adverse to that of the debtor/mortgagor. We rule in the negative. Who holds actual
possession of the property in this case is uncertain and disputed.
 In Gopiao v. Metropolitan Bank & Trust Co., we ruled that there should be certainty of
possession before applying the exception to the general rule in issuing writs of possession.

Hernandez claims actual possession of the lots involved since 1985 through her daughter.
However, in their comments, both banks alleged that they are mortgagees in good faith. They both
alleged that they conducted ocular inspection on the lots and found both lots unoccupied. 64 They
likewise made verifications with the Registry of Deeds of Calamba, Laguna, Municipal Assessor, and
Treasurer's office, and found out that the TCTs and tax declarations were still registered in the
name of Ocampo and Mendoza, without any annotations as to the existence of any encumbrances
or liens, including adverse claims. Following the case of Gopiao, the exception to the general rule
does not apply in this case; hence, the issuance of the writs of possession continues to be
ministerial.

However, we note that Hernandez is not without any remedy. A third person, who is not
the judgment debtor, or his agent, can vindicate his claim to a property levied through the
remedies of ( 1) terceria66 to determine whether the sheriff has rightly or wrongly taken hold of
the property not belonging to the judgment debtor or obligor and (2) an independent "separate
action."
By the terceria, the officer shall not be bound to keep the property and could be
answerable for damages. A third-party claimant may also resort to an independent "separate
action," the object of which is the recovery of ownership or possession of the property seized by
the sheriff, as well as damages arising from wrongful seizure and detention of the property despite
the third-party claim. If a "separate action" is the recourse, the third-party claimant must institute
in a forum of competent jurisdiction an action, distinct and separate from the action in which the
judgment is being enforced, even before or without need of filing a claim in the court that issued
the writ. Both remedies are cumulative and may be availed of independently of or separately from
the other.

In this case, Hernandez has already filed a separate action of annulment of title, which was
a separate and distinct action from the ex parte petitions for issuance of writ of possession filed by
PSB and Metro bank. It is in this action of annulment of title that Hernandez filed her urgent
motion for issuance of a writ of temporary restraining order or preliminary injunction.

Spouses Limso v. Philippine National Bank

G.R. Nos. 158622, 169441, 172958, 173194, 196958, 197120, 205463
January 27, 2016 | Leonen, J.
FACTS:

 Spouses Limso and Davao Sunrise Investment and Development Corporation took
out a loan of P700 million divided into two kinds (300 million revolving credit ine and
a P 400 million seen year long term loan) with Philippine National Bank (PNB) and
secured it with real estate mortgage
 After having difficulty in paying the loan they requested to restructure their loan.
PNB then executed a Conversion, Restructuring and Extension Agreement which
totaled to 1.067 billion which included the unpaid interest. A provision under the
loan contract was that the interest rate shall be determined "at the rate per annum
to be set by the Bank. The interest rate shall be reset by the Bank every month."
The restructured loan was secured with the properties which are 4 parcels of land
registered under Davao Sunrise.
  Spouses Limso and Davao Sunrise failed to pay even after PNB sent demand
letters. On August 21, 2000 PNB filed a Petition for Extrajudicial Foreclosure of
Real Estate Mortgage before the Sheriff’s Office in Davao. PNB was declared the
highest bidder.
 Before the Sherriff could issue the provisional Certificate of Sale, spouses Limso
and Davao Sunrise filed a Complaint for reformation or Annulment of Contract
against PNB and the sheriff of Davao City. After its filling the executive judge of
RTC Davao City issued a restraining order against PNB. The Sps. and Davao
Sunrise files a complaint in court praying for the declaration of nullity of unilateral
imposition and increases of interest rates.
ISSUE:
Whether the provision under the loan contract regarding the unilateral imposition
and increases of interest rates violates the principle of mutuality of contract.
HELD
The Supreme Court ruled that the provision violated the principle of mutuality of
contracts. There is no mutuality of contract when the determination of interest rates are at
the sole discretion of one party. It was further held that escalation clauses in contracts are
void when they allow the creditor to unilaterally adjust the interest rates without the consent
of the debtor. The principle of mutuality of contracts dictates that a contract must be
rendered void when the execution of its terms is skewed in favor of one party. The
importance of the principle of mutuality of contracts was discussed in Juico v. China
Banking Corporation. “The binding effect of any agreement between parties to a contract is
premised on two settled principles: (1) 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. Any contract which appears to be heavily weighed in
favor of one of the parties so as to lead to an unconscionable result is void. Any stipulation
regarding the validity or compliance of the contract which is left solely to the will of one of
the parties, is likewise, invalid’
Article 1318 of the Civil Code states that “there is no contract unless the following
requisites concur: (1) consent of the contracting parties; (2) object certain which is the
subject matter of the contract; (3) cause of the obligation which is established. When one
of the elements is not present the contract cannot be perfected. In this case, petitioner
Sps. Limso and Davao Sunrise gave no consent as to the increase in the interest rates.
Since there was no room for negotiation regarding the interest rates, the principal of
mutuality of contracts was violated. There was no meeting of the mind and consequently
PNB’s unilateral imposition on the increases in the interest rates are not valid.

Ermitano case

Facts:
Petitioner, through her representative, Isabelo R. Ermitaño, executed a Contract of Lease
wherein petitioner leased in favor of respondent a 336 square meter residential lot and a house
standing thereon located at No. 20 Columbia St., Phase 1, Doña Vicenta Village, Davao City. The
contract period is one year, which commenced on November 4, 1999, with a monthly rental rate
of P13,500.00.

Subsequent to the execution of the lease contract, respondent received information that
sometime in March 1999, petitioner mortgaged the subject property in favor of a certain Charlie
Yap and that the same was already foreclosed with Yap as the purchaser of the disputed lot in an
extrajudicial foreclosure sale which sale was subsequently registered.

Respondent bought the subject property from Yap for P950,000.00. A Deed of Sale of Real
Property was executed by the parties as evidence of the contract. However, it was made clear in
the said Deed that the property was still subject to petitioner’s right of redemption.

Prior to respondent’s purchase of the subject property, petitioner filed a suit for the declaration of
nullity of the mortgage in favor of Yap as well as the sheriff’s provisional certificate of sale which
was issued after the disputed house and lot were sold on foreclosure.

Petitioner sent a letter demanding respondent to pay the rentals which are due and to vacate the
leased premises. A second demand letter was sent. Respondent ignored both letters.

MTCC – DAVAO CITY

Petitioner filed a case of unlawful detainer against respondent. The MTCC, dismissed the case
filed by petitioner and awarded respondent the amounts of P25,000.00 as attorney’s fees and
P2,000.00 as appearance fee.

RTC – DAVAO CITY

On appeal, the RTC affirmed the MTCC insofar as it dismissed the case for unlawful detainer but
modified it in that the award of attorney’s fees in respondent’s favor is deleted. The respondent is
ordered to pay petitioner the unpaid rentals on the property.
COURT OF APPEALS
The CA affirmed the RTC’s decision with modifications that respondent is not obliged to pay rent.
The CA ruled that respondent did not act in bad faith when she bought the property in question
because she had every right to rely on the validity of the documents evidencing the mortgage and
the foreclosure proceedings. MR denied. Hence the present petition.

Issue: (1) WON the respondent (lessee) is not permitted to deny petitioner’s (lessor) title to the
property? -- NO

(2) WON the respondent should pay the rent to petitioner despite respondent’s purchase of the property
from the mortgagee? -- YES

Ruling:
1. In the instant petition, petitioner’s basic postulate is that she remains the owner of the subject
property. Based on her contract of lease with respondent, petitioner insists that respondent is
not permitted to deny her title over the said property in accordance with the provisions of
Section 2 (b), Rule 131 of the Rules of Court.

The conclusive presumption found in Section 2 (b), Rule 131 of the Rules of Court, known as
estoppel against tenants, provides as follows:

(b) The tenant is not permitted to deny the title of his landlord at the time of the commencement of the
relation of landlord and tenant between them.

It is clear from the above-quoted provision that what a tenant is estopped from denying is the title
of his landlord at the time of the commencement of the landlord-tenant relation. If the title
asserted is one that is alleged to have been acquired subsequent to the commencement of that
relation, the presumption will not apply. Hence, the tenant may show that the landlord’s title has
expired or been conveyed to another or himself; and he is not estopped to deny a claim for rent, if
he has been ousted or evicted by title paramount.

In the present case, what respondent is claiming is her supposed title to the subject property
which she acquired subsequent to the commencement of the landlord-tenant relation between
her and petitioner. Hence, the presumption under Section 2 (b), Rule 131 of the Rules of Court
does not apply.

2. Under Act. No. 3135, the purchaser in a foreclosure sale has, during the redemption period, only an
inchoate right and not the absolute right to the property with all the accompanying incidents. He only
becomes an absolute owner of the property if it is not redeemed during the redemption period.

As a consequence of the inchoate character of the purchaser’s right during the redemption
period, Act. No. 3135, as amended, allows the purchaser at the foreclosure sale to take
possession of the property only upon the filing of a bond, in an amount equivalent to the use of
the property for a period of twelve (12) months, to indemnify the mortgagor in case it be shown
that the sale was made in violation of the mortgage or without complying with the requirements of
the law.

In the instant case, there is neither evidence nor allegation that respondent, as purchaser of the
disputed property, filed a petition and bond in accordance with the provisions of Section 7 of Act
No. 3135. In addition, respondent defaulted in the payment of her rents. Thus, absent
respondent’s filing of such petition and bond prior to the expiration of the period of redemption,
coupled with her failure to pay her rent, she did not have the right to possess the subject property.

The situation became different, however, after the expiration of the redemption period on
February 23, 2001. Since there is no allegation, much less evidence, that petitioner redeemed the
subject property within one year from the date of registration of the certificate of sale, respondent
became
the owner thereof. Consolidation of title becomes a right upon the expiration of the redemption period.

As a consequence, petitioner’s ejectment suit filed against respondent was rendered moot when the
period of redemption expired on February 23, 2001 without petitioner having redeemed the subject
property, for upon expiration of such period petitioner lost his possessory right over the same.

Dispositive: the Decision and Resolution of the Court of are AFFIRMED. Respondent is ORDERED to
pay petitioner P108,000.00 as and for unpaid rentals.