ROWENA R.

CABAS
Obligations and Contracts
G.R. No. 141851. January 16, 2002.
Direct Funders Holdings Corporation, petitioner.

vs.
Judge Celso D. Lavia, Presiding Judge of RTC Branch 71,
Pasig City and Kambiak Chan, Jr., respondents.

FACTS OF THE CASE:

A real estate mortgage was entered by Sps. Espino with
UCPB Savings Bank. Subsequently, a Deed of Assignment was
executed on Janaury 15, 1997 wherein the spouses assigned
to UCPB Savings Bank and its successors-in-interest the right
of redemption and later on UCPB conveyed such rights to the
petitioner, Direct Funders Holdings Corporation. A Certificate of
Sale was issued and the property was conveyed to Direct
Funders Holdings Corporation on October 23, 1997 by virtue of
a decision in RTC Branch 157, Pasig City by way of writ of
porssession.
Kambiak Chanm Jr. filed a case for annulment of
documents, reconveyance, recovery of possession, damages
with TRO and Preliminary Injunction before RTC Branch 71,
Pasig City presided by respondent Judge Cesar Lavia. Chan
had for hs proof a conditional sale agreement. O December 8,
1997, the TRO was issued and subsequently on January 21,
1998, a writ of preliminary injunction was issued. The Motion
for Reconsideration of Direct Funders was denied. Likewise, the
Motion to Dismiss, Motion for Inhibition and the Motion to
Dissolve Preliminary Injunction were also denied. Hence, a
petition for certiorari and prohibition was filed before the Court

of Appeals. The Court of Appeals dismissed the petition citing

that the court had jurisdiction and did not interfere with the
Writ of Possession in its decision promulgated on September
28, 1999.
The Motion for Reconsideration was denied, hence this
appeal.

ISSUE:
1. Whether or not the Court of Appeals erred in
affirming the trial courts ruling issuing a writ of
injunction restraining a writ of possession in another
case to place Kambiak Chan, Jr. back in possession of
the property or in the alternative, who between
Direct Funders Holdings Corporation and Kambiak
Chan, Jr. has a better right to the possession of the
subject property.

RULING:

Yes. The Court of Appeals erred in affirming the trial courts

decision placing Kambiak Chan, Jr., back in possession of the
property. The only document presented before the said court is
a conditional sale agreement which is inofficious and
ineffectual because 1) it was not consummated; 2) not
registered and annotated in the TCT No. 12357; and 3) it was
executed 8 years after the execution of the real estate
mortgage over the subject property.
To emphasize, the mortgagee did not give its consent to
the change of debtor. It is a fundamental axiom in the law on
contracts that a person not a party to an agreement cannot be
affected thereby. Worse, not only was the conditional sale

agreement executed without the consent of the mortgageecreditor, United Savings Bank, the same was also a material
breach of the stipulation of the real estate mortgage over the
subject property.
The conditions of the conditional sale agreement were not
fulfilled, hence the respondents claim to the subject property
as heretofore stated is ineefectual.
Article 1181 of the Civil Code reads: In conditional
obligations, the acquisition of right, as well as the
extinguishments or loss of those already acquired, shall
depend upon the happening of the event which
constitutes the condition.
Direct Funders Holdings Corporations right to redeem,
however defeasible is binding as it is simply an option to buy
governed by Article 1479: A promise to buy and sell a
determinate thing for a price certain is binding upon the
promissor if the promise is supported by a consideration
distinct from the price.
The Supreme Court reversed the decision of the Court of
Appeals and in lieu thereof, the decision in RTC Branch 71 was
dismissed including counterclaims.