.PART IX P.

Vega vs. SSS

G.R. No. 181672

Facts:
Magdalena V. Reyes (Reyes) owned a piece of titled land[1] in Pilar Village, Las Pias City. On
August 17, 1979 she got a housing loan from respondent Social Security System (SSS) for which
she mortgaged her land. In late 1979, however, she asked the petitioner spouses Antonio and
Leticia Vega (the Vegas) to assume the loan and buy her house and lot since she wanted to
emigrate.

Upon inquiry with the SSS, an employee there told the Vegas that the SSS did not approve of
members transferring their mortgaged homes. The Vegas could, however, simply make a private
arrangement with Reyes provided they paid the monthly amortizations on time. Armed with this
information, the Vegas agreed for Reyes to execute in their favor a deed of assignment of real
property with assumption of mortgage and paid Reyes P20,000.00 after she undertook to update
the amortizations before leaving the country. The Vegas then took possession of the house in
January 1981.

But Reyes did not readily execute the deed of assignment. She left the country and gave her
sister, Julieta Reyes Ofilada (Ofilada), a special power of attorney to convey ownership of the
property. Sometime between 1983 and 1984, Ofilada finally executed the deed promised by her
sister to the Vegas. Ofilada kept the original and gave the Vegas two copies. The latter gave one
copy to the Home Development Mortgage Fund and kept the other.[6] Unfortunately, a storm in
1984 resulted in a flood that destroyed the copy left with them.

Meanwhile, on April 16, 1993 respondent Pilar Development Corporation (PDC) filed an action for
sum of money against Reyes. PDC claimed that Reyes borrowed from Apex Mortgage and Loans
Corporation (Apex) P46,500.00 to buy the lot and construct a house on it. Apex then assigned
Reyes credit to the PDC, hence, the suit by PDC for the recovery of the unpaid debt. RTC
rendered judgment, ordering Reyes to pay the PDC the loan of P46,398.00 plus interest and
penalties. Unable to do so, the RTC issued a writ of execution against Reyes and its Sheriff levied
on the property.

The Vegas requested the SSS to acknowledge their status as subrogees and to give them an
update of the account so they could settle it in full. The SSS did not reply. Meantime, the RTC
sheriff published a notice for the auction sale of the property.

The Vegas requested the SSS in writing for the exact computation of the indebtedness and for
assurance that they would be entitled to the discharge of the mortgage and delivery of the proper
subrogation documents upon payment. They also sent a P37,521.95 managers check that the
SSS refused to accept.

On November 8, 1994 the Vegas filed an action for consignation, damages, and injunction with
application for preliminary injunction and temporary restraining order against the SSS, the PDC,
the sheriff of RTC Branch 19, and the Register of Deeds. Still, while the case was pending, the
SSS released the mortgage to the PDC. A writ of possession subsequently evicted the Vegas
from the property.

On May 8, 2002 the RTC decided in favor of the Vegas. It ruled that the SSS was barred from
rejecting the Vegas final payment of P37,521.95 and denying their assumption of Reyes debt,
given the SSS previous acceptance of payments directly from them. The Vegas were subrogated
to the rights of Reyes and substituted her in the SSS housing loan and mortgage contract. That
the Vegas had the receipts show that they were the ones who made those payments. The RTC
ordered the PDC to deliver to the Vegas the certificate of title covering the property.

The SSS appealed to the Court of Appeals (CA) in CA G.R. CV 77582. On August 30, 2007 the
latter court reversed the RTC decision[24] for the reasons that the Vegas were unable to produce
the deed of assignment of the property in their favor and that such assignment was not valid as to
PDC. Their motion for reconsideration having been denied, the Vegas filed this petition for
review on certiorari under Rule 45.

Issue:
Whether or not the Vegas presented adequate proof of Reyes sale of the subject property to
them.

Ruling:
The CA ruled that the Vegas were unable to prove that Reyes assigned the subject property to
them, given that they failed to present the deed of assignment in their favor upon a claim that they
lost it. But the rule requiring the presentation of the original of that deed of assignment is not
absolute. Secondary evidence of the contents of the original can be adduced, as in this case,
when the original has been lost without bad faith on the part of the party offering it.

Here, not only did the Vegas prove the loss of the deed of assignment in their favor and what the
same contained, they offered strong corroboration of the fact of Reyes sale of the property to
them. They took possession of the house and lot after they bought it. Indeed, they lived on it and
held it in the concept of an owner for 13 years before PDC came into the picture. They also paid
all the amortizations to the SSS with Antonio Vegas personal check, even those that Reyes
promised to settle but did not. And when the SSS wanted to foreclose the property, the Vegas
sent a managers check to it for the balance of the loan. Neither Reyes nor any of her relatives
came forward to claim the property. The Vegas amply proved the sale to them.

Q.

JUANITA P. PINEDA, assisted by her husband, CRISPIN PINEDA, and LILIA SAYOC, vs.
COURT OF APPEALS and TERESITA A. GONZALES, assisted by her husband,
FRANCISCO G. GONZALES

FACTS:
The spouses Virgilio and Adorita Benitez mortgaged a house and lot covered by Transfer
Certificate of Title No. T-8361 (TCT 8361) in favor of Juanita P. Pineda and Leila P. Sayoc. The
real estate mortgage secured the spouses Benitezs loan of P243, 000 with a one-year maturity
period. Pineda and Sayoc did not register the mortgage with the Register of Deeds. The spouses
Benitez delivered the owners duplicate of TCT 8361 to Pineda.
On 9 November 1983, with the consent of Pineda, the Spouses Benitez sold the house,
[6]
which was part of the Property, to Olivia G. Mojica (Mojica). On the same date, Mojica filed a
petition for the issuance of a second owners duplicate of TCT 8361 alleging that she purchased
a parcel of land[7] and the owners duplicate copy of TCT No. T-8361 was lost.[8]
On 7 December 1983, the trial court granted the petition. The Register of Deeds of Cavite
City issued the second owners duplicate of TCT 8361 in the name of the Spouses Benitez.
On 12 December 1983, the Spouses Benitez sold the lot [9] covered by TCT 8361 to Mojica.
With the registration of the deed of sale and presentation of the second owners duplicate of TCT
8361, the Register of Deeds cancelled TCT 8361 and issued Transfer Certificate of Title No. T-
13138 (TCT 13138) in the name of Mojica.
On 22 February 1985, Mojica obtained a loan of P290,000 from Teresita A. Gonzales
(Gonzales). Mojica executed a promissory note and a deed of mortgage over the Property in
favor of Gonzales. Gonzales registered this deed of mortgage with the Register of Deeds of
Cavite City who annotated the mortgage on TCT 13138 as Entry No. 33209.
Meanwhile, on 8 May 1985, Pineda and Sayoc filed a complaint before the Regional Trial
Court[10] of Cavite City, docketed as Civil Case No. 4654, against the Spouses Benitez and
Mojica. The complaint prayed for the cancellation of the second owners duplicate of TCT 8361
and the award of moral damages and attorneys fees.
In their answer, the Spouses Benitez admitted selling to Mojica the Property which was
already subject to a previous mortgage in favor of Pineda and Sayoc. The Spouses Benitez
claimed that under theAcknowledgment of Indebtedness,[11] Mojica, with the conformity of Pineda
and Sayoc, agreed to assume the balance of the mortgage debt of the Spouses Benitez to
Pineda and Sayoc.

Held:

Mojicas Title

The prior mortgage of the Property by the Spouses Benitez to Pineda and Sayoc did not
prevent the Spouses Benitez, as owners of the Property, from selling the Property to Mojica. A
mortgage is merely an encumbrance on the property and does not extinguish the title of the
debtor who does not lose his principal attribute as owner to dispose of the property. [22] The law
even considers void a stipulation forbidding the owner of the property from alienating the
mortgaged immovable.[23]

Since the Spouses Benitez were the undisputed owners of the Property, they could validly
sell and deliver the Property to Mojica. The execution of the notarized deed of sale between the
Spouses Benitez and Mojica had the legal effect of actual or physical delivery. Ownership of the
Property passed from the Spouses Benitez to Mojica. [24] The nullity of the second owners
duplicate of TCT 8361 did not affect the validity of the sale as between the Spouses Benitez and
Mojica.

PART IX R.

Spouses Ricardo Rosales and Erlinda Sibug vs Spouses Alfonso and Lourdes Suba

FACTS:
The spouses Ricardo Rosales and Erlinda Sibug were indebted to a certain Felicisimo Macaspac.
Later, Macaspac sued the spouses for their failure to pay. During trial, it was found out that there
existed an equitable mortgage between the spouses and Macaspac. The court ordered the
spouses to pay Macaspac and if they fail to do so, their property shall be foreclosed.

The spouses failed to pay Macaspac hence the court ordered the sale at a public auction of their
land in May 1998. The highest bidder was the spouses Alfonso and Lourdes Suba. In June 1998,
the trial court issued an order confirming the sale made to the spouses Suba. The spouses
Rosales then filed a motion for reconsideration. The trial court ruled against their motion as it
ruled that there is no right of redemption in judicial foreclosures. The Court of Appeals affirmed
the decision of the trial court.

ISSUE: Whether or not the debtor-mortgagor can exercise the right of redemption in judicial
foreclosure.

HELD: No. There is no right of redemption in judicial foreclosure. What can be exercised is equity
of redemption.
Equity of redemption is simply the right of the mortgagor to extinguish the mortgage and retain
ownership of the property by paying the secured debt within the 90-day period after the judgment
becomes final, in accordance with Rule 68 of the Rules of Court, or even after the foreclosure
sale but prior to its confirmation by the court (prior to the courts confirmation of the sale).

In this case, unfortunately, the spouses Rosales never exercised their equity of redemption.

When can equity of redemption be exercised?

The mortgagor may exercise his equity of redemption even beyond the 90-day period from the
date of service of the order, and even after the foreclosure sale itself, provided it be before the
order of confirmation of the sale.
Are there any exceptions to the rule that there is no right of redemption in judicial foreclosure?
Yes, the only exemption is when the mortgagee is the Philippine National Bank or a bank or a
banking institution. In such cases, the mortgagor can exercise the right of redemption.

S
G.R. No. 125838. June 10, 2003
DEVELOPMENT BANK OF THE PHILIPPINES vs CA and EMERALD RESORT HOTEL CORP

Facts:
Private respondent Emerald Resort Hotel Corporation (ERHC) obtained a loan from petitioner
Development Bank of the Philippines (DBP).

To secure theloan, ERHC mortgaged its personal and real properties to DBP. On 5 June 1986,
alleging that ERHC failed to pay its loan, DBP filed with the Office of the Sheriff, Regional Trial
Court of Iriga City, an Application for Extra- judicial Foreclosure of Real Estate and Chattel
Mortgages. Sheriffs issued the required notices of public auction sale of the personal and real
properties. However, they failed to execute the corresponding certificates of posting of the
notices. The Office of the Sheriff scheduled on 12 August 1986 the public auction sale of
the real properties. The first scheduled public auction was publish.
However, the Office of the Sheriff postponed the auction sale on 12 August 1986 to 11 September
1986 at the request of ERHC. DBP did not republish the notice of the rescheduled auction sale
because DBP and ERHC signed an agreement to postpone the 12 August 1986 auction sale.

Issue: WON the extrajudicial foreclosre of real and chattel mortgage are valid.

Held: Valid as to chattel mortgage. Void as to real estate mortgage. There is no question that DBP
published the notice of auction sale scheduled on 12August 1986. However, no auction sale took
place on 12 August 1986 because DBP, at the instance of ERHC, agreed to postpone the same
to 11 September 1986. Publication, therefore, is required to give the foreclosure sale a
reasonably wide publicity such that those interested might attend the public sale. To allow the
parties to waive this jurisdictional requirement would result in converting into a private sale what
ought to be a public auction. DBP, however, complied with the mandatory posting of the notices
of the auction sale of the personal properties. Under the Chattel Mortgage Law, the only
requirement is posting of the notice of auction sale. There was no postponement of the auction
sale of the personal properties and the foreclosure took place as scheduled. Thus, the
extrajudicial foreclosure of the chattel mortgage in the instant case suffers from no procedural
infirmity.

WHEREFORE, the Joint Decision of the Court of Appeals in CA-G.R. CV Nos.38569 and 38604
is AFFIRMED with MODIFICATION. The extrajudicial foreclosure of the chattel mortgage is valid
whereas the extrajudicial foreclosure of the real estate mortgage is void. The award of moral
damages is deleted for lack of basis. No costs