Republic of the Philippines

Second Judicial Region

REGIONAL TRIAL COURT
Branch 9
Aparri, Cagayan

JUNIOR DELA CRUZ, Civil Case No. 4869

Plaintiff,
-For-
-versus-
DECLARATION OF NULLITY OF
THIM MICKEY BANK THE TRANSFER CERTIFICATE
Defendant. OF TITLE WITH PRAYER FOR
x------------------------------------------x TEMPORARY RESTRAINING
ORDER/INJUCTION

ANSWER WITH COUNTER-CLAIM

DEFENDANT Thim Mickey Bank, through the undersigned
counsel, unto this Honorable Court, most respectfully states
that;

PREFATORY STATEMENT

The State hereby recognizes the need to promote

comprehensive rural development with the end in view of
attaining acquitable distribution of opportunities, income and
wealth; a sustained increase in the amount of goods and
services produced by the nation of the benefit of the people; and
in expanding productivity as a key raising the quality of life for
all, especially the underprivileged.

Towards these ends, the State hereby encourages and assists in

the establishment of rural banking system designed to make
needed credit available and readily accessible in the rural areas
on reasonable terms.

PRELIMINARY STATEMENT

The defendant bank likewise reserves all available remedies

under Banking Laws, Manual Operations for Banks and other
relevant laws in support of its defenses.
 TIMELINESS

Defendant received the Summons dated October 25, 2018 of

the Honorable Court on November 15, 2018 requiring him to
file their Answer within 15 days from receipt thereof or until
November 30, 2018. Thus, the Answer is timely filed as it is
filed today, November 28,2018.

ADMISSIONS AND DENIALS

1. Defendant ADMITS the allegations contained in

paragraph 1 of the Complaint;

2. Defendant partially DENIES the allegations in paragraph 2

of the Complaint insofar on the allegation that the
defendant is the successor-in-interest of Pheening de
Garcia of Caramagui. The truth of the matter is that the
defendant is the subsidiary bank of Pheening de Garcia of
Caramagui;

3. Defendant ADMITS the allegation in paragraph 4 that a

Real Estate Mortgage of the Seven Thousand Three
Hundred (7,300) square meters in favor of Pheening de
Garcia to secure the payment of loan amounting to One
Thousand Pesos (P1,000.00);

4. Defendant DENIES the allegation in paragraph (5) of the

complaint. The truth of the matter being, when Senior
Dela Cruz defaulted in his payments, First demand and
Final demand were sent to him to his address registered
in the records of the bank before instituting an
Extrajudicial Foreclosure of the mortgage (Copies First
and Final Demand are hereto attached as ANNEX “1” and
ANNEX “2” respectively and made integral part hereof);

5. Defendant DENIES the allegations in paragraph (6) and

paragraph (9) of the Complaint. The truth of the matter
being, the plaintiff cannot transfer the property under his
name considering that the subject property and its
 Original Certificate of Title was held and kept by the
defendant bank as collateral of the Real Estate Mortgage
upon the grant by Ministry of Natural Resources Bureau
of Lands its homestead patent registered in the name of
Senior Dela Cruz. Plaintiff subsequently filed before the
Honorable Court a Petition for Re-Issuance of Loss
Owner’s Duplicate Copy of OCT P-67833. The petition
was granted but subsequently recalled because the
Owner’s Duplicate Copy was found in the possession of
the defendant; (Copies of the Electronic Copy of the
Original Certificate of Title No. P-67833 and the Decision
of the Regional Trial Court Branch 01 dismissing the
Petition filed by the plaintiff are hereto attached as
ANNEX “3” and ANNEX “4” respectively and made integral
part hereof);

6. Defendant ADMITS the allegations contained in

paragraphs (7), (8), (9) of the Complaint;

7. Defendant DENIES the rest of the allegations contained I

the complaint for being false, inaccurate and baseless in
fact and in law, the truth discussed herein below.

IV. AFFIRMATIVE AND SPECIAL DEFENSES

Defendant repleads the foregoing averments and further states

THAT:

8. On July 5, 1973, A Real Estate Mortgage was entered into

between Senior Dela Cruz and Pheening de Garcia Bank
for the security of the payment of loan. As a well-
established standard policy of Pheening de Garcia Bank, a
mortgagor must deposit a collateral as security for the
payment of said loan;

9. In compliance to the said policy of Pheening de Garcia

Bank, Senior dela Cruz, deposited the original copy of
Transfer Certificate of Title(TCT) No. P-67833;

10. Senior dela Cruz, thereafter, defaulted in the payment of

his loan obligations to Bank;
11. The 9th paragraph of the Real Estate Mortgage
Agreement contains the proviso that;

“All correspondence relative to this mortgage shall

be sent to the Mortgagor at the address
hereinabove given and the mere act of sending
any correspondence by mail or personal delivery
shall be effectively valid notice to the Mortgagor
for all legal purposes, and the fact that any
communication is not actually received by the
Mortgagor, or that it has been returned unclaimed
to the Mortgagee, or that no person was actually
found at the given address, or that the address is
fictitious, or cannot be located, SHALL NOT
EXCUSE OR RELIEVE THE MORTGAGOR FROM
EFFECT OF SUCH NOTICE”

(A copy of the Real Estate Mortgage is hereto

attached as ANNEX “5” and the 9th paragraph of
the proviso of the same is sub-marked as ANNEX “5-
1” and made integral part hereof;

12. In accordance with the foregoing provision, the Bank

sent notices and final demands to Senior dela Cruz for
his failure to fulfill his obligations in the payment of his
obligations;

13. The aforementioned notices, however, fell into deaf

ears. Hence, the property was then calendared for auction
sale and constrained to foreclosed the property;

14. Again, the Bank sent a Notice of Extrajudicial

Foreclosure of Mortgage, Execution of Judgment to Senior
dela Cruz informing him that the aforementioned
property was already subject to auction sale. The same
copy of the Notice of Extrajudicial Foreclosure Mortgage
and Execution of Judgment was published in a newspaper
of general circulation and was posted in three (3)
conspicuous places particularly in Barangay Di
Masarsakan, Cagayan, Municipality of Aparri, Cagayan,
and Provincial Capitol of Cagayan;
 (Notice of Extrajudicial Foreclosure of Mortgage, Execution
of Judgment and Certification of Publication of Manila
Bulletin, Barangay Di Masarsakan, Cagayan, Municipality
of Aparri, Cagayan, and Provincial Capitol of Cagayan
are hereto attached as ANNEXES “6”, “7”, “8”, “9”, “10”
and “11” respectively and made integral part hereof)

15. While it may be true that Public Land Act (PLA) prohibits
the alienation or encumbrance of lands, a rural bank like
the defendant in this case shall be allowed to foreclose
lands mortgaged to it: Provided, That said lands shall be
covered under Republic Act No. 66571;

16. Republic Act 73532 states that:

“The foreclosure of mortgage covering loans

granted by rural banks and executions of
judgment thereon involving real properties levied
upon by a sheriff shall be exempt from the
publications in newspaper now required by law
where the total amount of loan, excluding interest
due and unpaid, does not exceed One hundred
thousand pesos (P100,000) or such amount as the
Monetary Board may prescribe as may be
warranted by prevailing economic conditions. It
shall be sufficient publication in such cases if the
notices of foreclosure and execution of judgment are
posted in the most conspicuous area of the
municipal building, the municipal public market, the
rural bank, the barangay hall, the barangay public
market, if any, where the land mortgaged is situated
during the period of sixty (60) days immediately
preceding the public auction or execution of
judgment. Proof of publication as required herein
shall be accomplished by an affidavit of the sheriff
1
AN ACT INSTITUTING A COMPREHENSIVE AGRARIAN REFORM PROGRAM TO
PROMOTE SOCIAL JUSTICE AND INDUSTRIALIZATION, PROVIDING THE MECHANISM
FOR ITS IMPLEMENTATION, AND FOR OTHER PURPOSES
2
An Act Providing for the Creation, Organization and Operation of Rural Banks, and for Other
Purposes
 or officer conducting the foreclosure sale or
execution of judgment and shall be attached with
the records of the case: Provided, That when a
homestead or free patent is foreclosed, the
homesteader or free patent holder, as well as his
heirs shall have the right to redeem the same
within one (1) year from the date of the
registration of the foreclosure in the case of land
covered by a Torrens Title: Provided, finally, That
in any case, borrowers, especially those who are
mere tenants, need only to secure their loans with
the procedure corresponding to their share.”
(Emphasis Ours)

Despite the provision above that publication may be

dispensed with, the defendant bank still managed to let
the Foreclosure of Mortgage and Execution Judgment be
published in General Circulation for purposes of
convenience;

17. It is well-established as held in the case of PNP vs. Heirs

of Militar3 that “publication, likewise, operated as
constructive notice to all persons who would be
adversely affected by the impending foreclosure of the
property.” Further, The requirements for the
extrajudicial foreclosure of mortgage such as publication
and notice appear to have been religiously complied with
by Pheening de Garcia;

18. Pheening de Garcia Bank was the highest bidder for

P1,200.00. A Certificate of Sale over the property was
issued in favor of the Bank as the highest bidder in the
auction sale;

(A copy of a Certification of Sale is hereto attached as

ANNEX “12” and made integral part hereof)

19. A Deed of Sale was then executed in favor of Pheening

de Garcia Bank after Senior dela Cruz failed to redeem
the disputed property;

3
G.R. No. 164801, June 30, 2006
 (A copy of a Deed of Sale is hereto attached as ANNEX
“13” and made integral part hereof)

20. On October 5, 1993, the title over the subject property

was issued to Pheening de Garcia Bank. Said Certificate of
Sale was again registered and annotated in the title of the
property. Again, Pheening de Garcia Bank had
constructive notice of the said registration;

(A copy of Constructive Notice is hereto attached as

ANNEX “14” and made integral part hereof)

21. Unknown to the Bank and failure of the heirs of Senior

dela Cruz to inform the former, Senior dela Cruz died
after the redemption period lapsed. It was provided
above That when a homestead or free patent is
foreclosed, the homesteader or free patent holder, as
well as his heirs shall have the right to redeem the
same within one (1) year from the date of the
registration of the foreclosure in the case of land
covered by a Torrens Title4;

22. Since the heirs failed to redeem such property despite

notices thereto were sent, their right for redemption has
lapsed. It is already 25 years since then. Plaintiff has
neglected, for unreasonable and unexplained length of
time to file for Declaration of Nullity of Title and for
quieting of the same which by exercising due diligence,
could or should have been done earlier within the
redemption period. The negligence or omission to assert
a right within a reasonable time, warranting a
presumption that the party entitled to assert it either has
abandoned it or declined to assert it;

23. Senior Dela Cruz has always been in default the

payment of his loan account. Neither has he completed
the payment of his loan. On this basis there is no rhyme
nor reason to release the mortgage or the title covering
the mortgage property;

4
R.A. 7353
 24. Plaintiff has absolutely no cause of action against
defendant and no right was transgressed by the
defendant;

25. Defendant is only a subsidiary bank and a mere branch

of Pheening de Garcia of Caramagui. When considered in
relation to the parent bank, the branch is not
independent agency; it is, as what its name imports, a
mere branch and is therefore subject to the supervision
and control of parent bank. The business conduct of the
branch is controlled by the parent bank and its assets
and property, if any belong to the parent bank. Thus,
unless and until the parent bank is impleaded, any action
against the branch could not prosper and enforced. On
this score, the complaint should be dismissed.

COUNTERCLAIM

Defendant additionally submits that it is entitled to

relief arising from precipitous filing of this case, as follows:

26. Due to the filing of the baseless and unwarranted

complaint, the name and reputation of defendant were
besmirched for which the plaintiff should compensate it
by way of compensatory damages in the amount subject
to the discretion of the court.

27. To serve an example to those similarly inclined and to

deter others from filing similar actions that are inimical
to public good, plaintiff should be held liable to pay the
defendant the amount of FIFTY THOUSAND PESOS
(PHP50,000.00) by way of exemplary damages;

28. In order to protect its rights and interest, defendant was

compelled to litigate and hire the services of the
undersigned counsel for a fee in the agreed amount of
ONE HUNDRED THOUSAND PESOS (PHP100,000.00) plus
appearance fees in the amount of FIVE THOUSAND PESOS
(PHP5,000.00) plus travel and incidental expenses for
every court hearing.
 PRAYER

WHEREFORE, premises considered, defendant

respectfully prays of the Honorable Court that, after due
hearing, judgment be rendered dismissing the complaint for
lack of merit; and on the Counter-Claim ordering the plaintiff
to pay the defendant the following:

1. Compensatory damages in the amount subject to the

discretion of the court;

2. Exemplary Damages amounting to FIFTY THOUSAND

PESOS (PHP50,000.00);

3. The amount of ONE HUNDRED THOUSAND PESOS

(PHP100,000.00) plus appearance fees in the amount of
FIVE THOUSAND PESOS (PHP5,000.00) plus travel and
incidental expenses for every court hearing.

Other reliefs just and equitable under the premises are

likewise prayed for.

Tuguegarao City, Cagayan for Aparri, Cagayan. 28 November

2018.

ATTY. MICHAEL JAMES ROSS

Counsel for the Defendant

Ground Floor, Patupat Building, Maharlika Highway,

Barangay Pingi Ruyu, Tuguegarao City, Cagayan

Roll No. 67890

IBP OR No. 1063451-01/04/18 Cagayan
PTR No. 98764532-01/05/18 Cagayan
MCLE Compliance No. V-0006726
Pasig City, 15 August 2016
Mobile No. (0097)123 4567
Email: attymikeross@gmail.com
Office No. (078)-123-0341
Copy Furnished:

ATTY. MAKAULAW _______________________

Cagayan State University-Andrews
Tuguegarao City, Cagayan

EXPLANATION

Copy of the foregoing Answer with Counter-Claim was served

and filed to the Honorable Court and furnished to the
plaintiff’s counsel through registered mail due to lack of
manpower to effect personal service.

ATTY. JAMES ROSS