Philippine National Bank vs. Spouses Bernard and Cresencia Maraon GR No.

189316 July 01, 2013

Facts: A 152 square meter lot in downtown Bacolod with a building leased to various tenants was subjected to a loan and mortgage by Spouses Montealegre with Philippines National Bank. The property was under the name of Emolie Montalegre under TCT 156512. The Spouses Montealegre failed to pay the loan and PNB foreclosed on said lot and building. During auction sale PNB was the highest bidder on August 16, 1991, then was issued a Certificate of Sale on December 17, 1991 and registered on February 4, 1992.

Spouses Maraon filed on July 29, 1992 before the RTC a complaint for Annulment of Title, Reconveyance and Damages against the Montealegres, PNB, the Register of Deeds and Provincial Sherriff. The civil case alleged that the Maraons are rightful owners of the lot and the Montealegres forged their names in a Deed of Sale to transfer the property to the Montealegres. PNB averred it is a mortgagee in good faith and the mortgage is binding and valid.

During the trial Paterio Tolete deposited with the Clerk of Court of Bacolod P144,000 and P30,000 with PNB of rental payments.

RTC found in favor of the Maraon after it was determined that their signatures were in deed forged and the conveyance to the Montealegres was null and void. PNB was also adjudged as a mortgagee in good faith and to respect the lien on the property. Neither parties dissented.

Current controversy is the rental monies deposited.

Maraons filed an Urgent Motions for Withdrawal of Deposited Rental for the P144,000 and P30,000 deposited by Tolete. The RTC granted the motion for both rental payments

because the Spouses are the rightful owners and they are entitled to the civil fruits of their property. The RTC issued Orders to return the P30,000 to the Spouses.

PNB dissented saying the mortgage lien was decided to be respected and they are entitled to both the P144,000 and the P30,000 rental payments and filed petitions for certiorari and mandamus to the Court of Appeals.

Court of Appeals denied the petition rationalizing that the mortgage transaction was not between the current petitioners and respondents and that PNB was not a mortgagee in good faith because as a financial institution should have looked beyond the title presented by the Montealegres. Motion for reconsideration was denied.

Issues: #1 Whether or not that the mortgage the RTC decided should be respected should also include the fruits deposited to answer for the debt.

#2 Whether or not the CA erred in reversing the RTC decision that PNB was a mortgagee in good faith.

Decision:

#1 No.

Rent as an accessory follows the principal is the general rule. Normally when the principal property is mortgaged and there is failure of the mortgagor to pay, the fruits pass on to the mortgagee as accorded by the Article 2127 of the Civil Code. But this is subject to qualfications.

This rule is under the presumption that the mortgagor was the rightful owner to encumber such property. There was no juridical tie made between PNB and the

Maraons because of the fraudulent acts of the Montealegres. The building and fruits are not subjected to the lien, only the lot. Thus the rents paid are not subjected to be passed upon to PNB.

#2 Yes, well sort of.

The RTC has already determined that PNB was a mortgagor in good faith and was given finality because it was not disputed by the parties at present. This is called the Doctrine of Immutability of Judgements.

The doctrine espouses two purposes:

(1) to avoid delay in the administration of justice and thus, procedurally, to make orderly the discharge of judicial business; and

(2) to put an end to judicial controversies, at the risk of occasional errors, which is precisely why courts exist.

The Supreme Court though agreed in toto the resolutions given the CA, although the High Court opined that PNB is in good faith, for the sake of reiterating that the Maraons are the rightful owners. The standing as purchaser of PNB has not been yet decided and cannot be entertained yet by the SC.

The petition is denied.