Tag Archives: foreclosure

Chua, et al. v. United Coconut Planters Bank, et al., G.R. No. 215999, 16 August 2017

Third Division


FACTS: It is undisputed that petitioners Spouses Chua and LGCTI as well as respondents Jose Go, had existing loan obligations with UCPB prior to the March 1997 JVA. As an offshoot of the JVA, two deeds of trust were executed by the parties involving petitioners’ 44-hectare property covered by 32 titles. The deeds of trust were neither expressly cancelled not rescinded despite the fact that the project under the JVA never came to fruition. On March 21, 2000, UCPB and petitioners entered into the MOA consolidating the outstanding obligations of the Spouses Chua and LGCTI.

Petitioners exchanged their 30 parcels of land to effectively reduce their total unpaid obligations to only P68,000,000.00. To settle the balance, they agreed to convert it into equity in LGCTI in case they would default in their payment. To implement the MOA, they signed the REM drafted by UCPB, which included the properties listed in the MOA as security for the credit accommodation of P404,597,177.04. Unknown to them, however, Jose Go, acting in behalf of Revere, likewise executed another REM covering the properties that Revere was holding in trust for them. When UCPB foreclosed the mortgages, it applied about P75.09 million out of the P227,700,000.00 proceeds of the foreclosure sale to the obligations of Revere and Jose Go. Moreover, UCPB pursued petitioners for their supposed deficiency amounting to P68,000,000.00, which was meanwhile assigned to respondent Asset Pool A by UCPB.


ISSUE#1: Did the REM subsist even after the foreclosure sale of the subject properties?


A review of the MOA dated March 21, 2000 would reveal that petitioners’ outstanding obligation referred to, after deducting the amount of the thirty properties, was reduced to only P68,000,000.00. To settle this balance, petitioners agreed to convert this into equity in LGCTI in case they defaulted in their payment. In this case, what prompted the foreclosure sale of the mortgaged properties was petitioners’ failure to pay their obligations. When the proceeds of the foreclosure sale were applied to their outstanding obligations, the payment of the balance of the P68,000,000.00 was deliberately left out, and the proceeds were conveniently applied to settle P75,000,000.00 of Revere and/or Jose Go’s unpaid obligations with UCPB. This application was in blatant contravention of the agreement that Revere’s or Jose Go’s obligations would be paid only if there were excess in the application of the foreclosure proceeds. Accordingly, the CA should have applied the proceeds to the entire outstanding obligations of petitioners, and only the excess, if any, should have been applied to pay off Revere and/or Jose Go’s obligations.

ISSUE#2: Was the deed of assignment covering the deficiency in petitioner’s obligations to UPCB valid?


Based on the foregoing, therefore, we conclude that the deed of assignment of liabilities covering the deficiency in its obligation to UCPB in the amount of P68,000,000.00 was null and void. According to the apportionment of bid price executed by UCPB ‘s account officer, the bidamounting to P227,700,000.00 far exceeded the indebtedness of the Spouses Chua and LGCTI in the amount of P204,597,177.04, which was inclusive of the P68,000,000.00 subject of the deed of assignment of liabilities as well as the P32,703,893,450.00 corresponding to the interests and penalties that UCPB waived in favor of petitioners.

It can be further concluded that UCPB could not have validly assigned to Asset Pool A any right or interest in the P68,000,000.00 balance because the proper application of the proceeds of the foreclosure sale would have necessarily resulted in the full extinguishment of petitioners’ entire obligation. Otherwise, unjust enrichment would ensue at the expense of petitioners. 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 the concurrence of two conditions, namely: (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 main objective of the principle against unjust enrichment is to prevent a person from enriching himself at the expense of another without just cause or consideration. This principle against unjust enrichment would be infringed if we were to uphold the decision of the CA despite its having no basis in law and in equity.

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Posted by on January 27, 2018 in Case Digests, Civil Law


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Social Security System v. Court of Appeals, G.R. No. L-41299, 21 February 1983

En Banc


FACTS: Spouses David B. Cruz and Socorro Concio Cruz applied for and were granted a real estate loan by the SSS with their residential lot located at Lozada Street, Sto. Rosario, Pateros, Rizal. Claiming that the conditions of mortgage have been broken, SSS filed an application for foreclosure of real estate mortgage.

The Cruz spouses, together with their daughter Lorna C. Cruz, instituted before the Court of First Instance of Rizal an action for damages and attorney’s fees against the Social Security System (SSS) and the Provincial Sheriff of Rizal alleging, among other things, that they had fully and religiously paid their monthly amortizations and had not defaulted in any payment.

ISSUE: Can the SSS, exercising governmental functions, be held liable for damages?


There should be no question on this score considering that the SSS is a juridical entity with a personality of its own. It has corporate powers separate and distinct from the Government. SSS’ own organic act specifically provides that it can sue and be sued in Court. These words “sue and be sued” embrace all civil process incident to a legal action. So that, even assuming that the SSS, as it claims, enjoys immunity from suit as an entity performing governmental functions, by virtue of the explicit provision of the aforecited enabling law, the Government must be deemed to have waived immunity in respect of the SSS, although it does not thereby concede its liability. That statutory law has given to the private-citizen a remedy for the enforcement and protection of his rights. The SSS thereby has been required to submit to the jurisdiction of the Courts, subject to its right to interpose any lawful defense. Whether the SSS performs governmental or proprietary functions thus becomes unnecessary to belabor. For by that waiver, a private citizen may bring a suit against it for varied objectives, such as, in this case, to obtain compensation in damages arising from contract and even for tort.


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Robles v. Yapcinco, G.R. No. 169568, October 22, 2014.


FACTS: Petitioner argues that the non-registration of the certificate of sale did not affect the title acquired by Apolinario Cruz as the purchaser in the judicial foreclosure of mortgage  and that the finality of the judgment rendered in the judicial action for foreclosure of mortgage was valid and binding on the respondents as the successors-in interest of the judgment debtor. In contrast, the respondents maintain that they were lawfully entitled to the property in litis because there was no registration of the certificate of sale or confirmation from the court and that with the release of mortgage being validly registered in the Office of Registry of Deeds, thereby rendering the title free from any lien and encumbrances, they already had the right to transfer the property in their names.

ISSUE: Is non-registration of property after judicially foreclosure and sale had the effect of invalidating the foreclosure proceedings, such that ownership reverts to the original owner?


The effect of the failure of Apolinario Cruz to obtain the judicial confirmation was only to prevent the title to the property from being transferred to him. For sure, such failure did not give rise to any right in favor of the mortgagor or the respondents as his successors-in-interest to take back the property already validly sold through public auction. Nor did such failure invalidate the foreclosure proceedings. To maintain otherwise would render nugatory the judicial foreclosure and foreclosure sale, thus unduly disturbing judicial stability. The non-transfer of the title notwithstanding, Apolinario Cruz as the purchaser should not be deprived of the property purchased at the foreclosure sale. With the respondents having been fully aware of the mortgage, and being legally bound by the judicial foreclosure and consequent public sale, and in view of the unquestioned possession by Apolinario Cruz and his successors-in-interest (including the petitioner) from the time of the foreclosure sale until the present, the respondents could not assert any better right to the property. It would be the height of inequity to still permit them to regain the property on the basis alone of the lack of judicial confirmation of the sale. After all, under the applicable rule earlier cited, the judicial confirmation operated only “to divest the rights of all the parties to the action and to vest their rights in the purchaser, subject to such rights of redemption as may be allowed by law.”

Consequently, the late Fernando F. Yapcinco and the respondents as his successors-in-interest were divested of their right in the property, for they did not duly exercise the equity of redemption decreed in the decision of the trial court. With Yapcinco having thereby effectively ceased to be the owner of the property sold, the property was taken out of the mass of the assets of Yapcinco upon the expiration of the equity of redemption.


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Posted by on September 1, 2016 in Case Digests, Civil Procedure, Remedial Law


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San Agustin vs. Court of Appeals (371 SCRA 346)

JESUS SAN AGUSTIN, petitioner,

vs. HON. COURT OF APPEALS and MAXIMO MENEZ, respondents.

[G.R. No. 121940.  December 4, 2001]


Government Service Insurance System (GSIS) sold to a certain Macaria Vda. de Caiquep a parcel of residential land evidenced by a Deed of Absolute Sale. The following encumbrance was annotated at the back of the title, not to sell, convey, lease or sublease, or otherwise encumber the property. A day after the issuance of TCT Macaria Vda. de Caiquep sold the subject lot to private respondent, Maximo Menez, Jr.,  as evidenced by a Deed of Absolute Sale. Said TCT was lost, but private respondent subsequently obtained a duplicate after judicial proceedings. Petitioner was not notified. Both RTC and CA ruled in favor of private respondent.


Whether or not the petitioner is correct that Deed of Sale between Macaria Vda. de Caiquep and private respondent is null and void in accordance with Par.7 Art.1409 of the New Civil Code.


NO. Petitioner’s contention is less than meritorious.  In this case, the GSIS, the proper party, has not filed any action for the annulment of Deed of Sale between them and Macaria Vda. de Caiquep, nor for the forfeiture of the lot in question.  The contract of sale remains valid between the parties, unless and until annulled in the proper suit filed by the rightful party, the GSIS.  The said contract of sale is binding upon the heirs of Macaria Vda. de Caiquep, including petitioner who alleges to be one of her heirs, in line with the rule that heirs are bound by contracts entered into by their predecessors-in-interest. Since, both were aware of the existence of the stipulated condition in favor of the original seller, GSIS, yet both entered into an agreement violating said condition and nullifying its effects, said parties should be held in estoppel to assail and annul their own deliberate acts.

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Posted by on March 6, 2013 in Case Digests, Civil Law


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Philippine Savings Bank vs. Mañalac, Jr. (457 SCRA 203)


Respondent spouses obtained a loan from petitioner covered by promissory note. As a security for the loan, respondent executed a Real Estate Mortgage in favor of the petitioner over eight parcels of land. Respondents were unable to pay the installments so that the loan obligations were restructured. Respondent entered into Deed of Sale with Assumption of Mortgage on 3 real properties (and another property) with spouses Galicia. Respondent’s repeated default in payment of past due obligations prompted the petitioner to file for extrajudicial foreclosure of remaining mortgaged properties. Respondent asked for partial release of mortgage after enclosing a cashier check payment. Petitioner sold some mortgaged properties that prompted respondent to institute action for damages. Trial court annulled the sale of mortgaged properties. The Court of appeals affirmed with modification the decision of trial court requiring indemnification of the respondent by petitioner.



Whether or not there was novation in applying the payment made by respondent to loan account of Galicia.



NO. Novation is never presumed. Novation is the extinguishment of an obligation by the substitution or change of the obligation by a subsequent one which extinguishes or modifies the first, either by changing the object or principal conditions, or, by substituting another in place of the debtor, or by subrogating a third person in the rights of the creditor. It is obvious that there was no agreement to form a new contract by novating the mortgage contracts of the Mañalacs and the Galicias. Neither can Mañalac be deemed substitute debtor within the contemplation of Article 1293 of the Civil Code. The Decision of the Court of Appeals was reversed and set aside.

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Posted by on January 14, 2013 in Case Digests, Civil Law


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Iloilo Traders Finance. Inc. vs. Heirs of Oscar Soriano, Jr. (404 SCRA 67)


Respondents executed two promissory notes secured by real property mortgages in favor of petitioner. The respondents defaulted and petitioner moved for extra-judicial foreclosure of the mortgages. Respondent filed a complaint against petitioner. The parties later entered into “amicable settlement” and submitted it to the trial court for approval. The trial court required the parties to give some clarifications on several issues that were not complied.  The amicable settlement was disapproved and the court proceeded. Respondents withdrew the case and filed a (new) case for novation and specific performance which was decided favorably for the respondents. The Court of Appeals affirmed the judgment.



Whether or not the amicable settlement entered into between parties has novated the original obligation.



NO. The parties entered into the agreement basically to put an end to Civil Case No. 14007 then pending before the Regional Trial Court.Concededly, the provisions of the settlement were beneficial to the respondent couple. The compromise extended the terms of payment and implicitly deferred the extrajudicial foreclosure of the mortgaged property. It was well to the interest of respondent spouses to ensure its judicial approval; instead, they went to ignore the order of the trial court and virtually failed to make any further appearance in court. This conduct on the part of respondent spouses gave petitioner the correct impression that the Sorianos did not intend to be bound by the compromise settlement, and its non-materialization negated the very purpose for which it was executed.

The decision of the court of the Court of Appeals affirming that of the trial court was reversed and set aside.

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Posted by on January 14, 2013 in Case Digests, Civil Law


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Ramos vs. Mañalac, 89 Phil. 270


Petition for certiorari was filed seeking annulment of the decision of the Court of First Instance of Pangasinan regarding a foreclosed parcel of land. Petitioners question the validity of the CFI ruling that they will be held in contempt for refusing to vacate the land. The said property, being collateral for a loan to a Mr. Rivera, was foreclosed due to non-payment of loan amount and its interest within the prescribed periods. Mr. Rivera later sold the property to Ms. Lopez, who later filed petition that she be placed in possession of the land. The petitioners question the ruling of the court.


Whether or not:

(1)  The decision of the lower court (CFI) is valid;

(2)  Directing the issuance of a writ of possession in favor of Felipa Lopez is valid; and,

(3)  (Possible Legal Ethics Issue) the term “appearance” would include only presence in courts.


YES on first two issues. NO on the third issue. Petition was dismissed. Cost against the petitioners.


Claim of the petitioners as to the validity of the decision cannot be sustained for the reason that it is in a nature of collateral attack to judgment which on its face is valid and regular for a long time. It is a well known rule that a judgment, which on its face is valid and regular, can only be attacked in separate action brought principally for the purpose (Gomez vs. Concepcion, 47 Phil. 717).

The second issue was also not taken for the simple reason that the issuance of writ of possession in foreclosure proceedings is not an execution of judgment within the purview of Section 6 Rule 39 of the Rules of Court, but is merely ministerial and complementary duty of the court.

In the third issue, the word or term “appearance” includes not only arguing a case before any such body but also filing a pleading in behalf of a client as “by simply filing a formal motion, plea or answer”.

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Posted by on July 24, 2012 in Case Digests, Civil Law, Legal Ethics


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