ASG Law

Tag: foreclosure

  • Possession Rights After Foreclosure: When Subsequent Purchasers Can Obtain a Writ of Possession

    In the case of Javate v. Tiotuico, the Supreme Court clarified the rights of subsequent purchasers of foreclosed properties. The Court held that a subsequent purchaser, after the redemption period, can obtain a writ of possession, even if they were not the original mortgagee-purchaser. This decision provides clarity on the process by which new owners can legally claim possession of their property, balancing the rights of the mortgagor with those of the new owner. The ruling emphasizes that the remedy of a writ of possession, typically available to the original mortgagee, extends to those who later acquire the property, provided certain conditions are met, including a hearing to determine possession.

    From Bank to Buyer: Can New Owners Claim Possession After Foreclosure?

    The central issue in this case revolves around whether spouses Renato and Lerma Tiotuico, as subsequent purchasers of a foreclosed property, were entitled to a writ of possession. Norma Javate, the original owner, had mortgaged her land to Guagua Rural Bank, which later foreclosed on the property due to Javate’s failure to repay her loan. After the bank consolidated its ownership and sold the property to the Tiotuicos, they sought a writ of possession to legally claim the land. Javate contested this, arguing that only the original mortgagee-purchaser (the bank) was entitled to such a writ as a matter of right. The Supreme Court’s decision addresses this question, providing guidance on the rights of subsequent purchasers in foreclosure scenarios.

    The core of Javate’s argument rested on the premise that the Tiotuicos, as subsequent buyers, should have pursued either an ejectment action or an accion reivindicatoria—a suit to recover ownership—rather than seeking a writ of possession. She contended that the right to a writ of possession was exclusive to the bank, the original purchaser at the foreclosure sale. However, the Supreme Court disagreed, clarifying that while judicial process is indeed necessary for subsequent purchasers to obtain possession, the writ of possession is not an exclusively reserved remedy for the original mortgagee. The court underscored the importance of the writ of possession as an efficient means for the new owners to assert their rights, preventing unnecessary delays and prolonged legal battles.

    The Supreme Court leaned on its previous ruling in Okabe v. Saturnino, which extended the application of Section 33, Rule 39 of the Rules of Court—pertaining to execution sales—to extrajudicially foreclosed properties acquired by third-party purchasers after the redemption period. This application is not without conditions. The Okabe ruling emphasizes that:

    The remedy of a writ of possession, a remedy that is available to the mortgagee-purchaser to acquire possession of the foreclosed property from the mortgagor, is made available to a subsequent purchaser, but only after hearing and after determining that the subject property is still in the possession of the mortgagor.

    The Court clarified that unlike the original mortgagee, who can obtain a writ of possession ex parte (without a hearing), subsequent purchasers must undergo a hearing to determine the current possessor of the property. If the property remains in the possession of the original mortgagor, a writ of possession is appropriate. Otherwise, the purchaser must pursue an ordinary action of ejectment. This distinction balances the rights of all parties involved, ensuring that the mortgagor’s possessory rights are not disregarded without due process, while also providing an avenue for the new owner to assert their ownership.

    In Javate’s case, the Court noted that while the Tiotuicos initially filed an ex parte petition for a writ of possession, a hearing did occur, satisfying the requirement outlined in Okabe. Javate was given the opportunity to contest the petition through various pleadings. The court stated that “to be heard” does not require verbal argumentation alone but can be achieved through written submissions, pleadings, and explanations. Since Javate demonstrably remained in possession of the property, the Court affirmed that the Tiotuicos’ approach in seeking a writ of possession was appropriate. This interpretation provides a pragmatic approach to procedural requirements, ensuring that the essence of due process—an opportunity to present one’s case—is upheld without rigid adherence to formalities.

    Building on this principle, the Supreme Court also referenced its prior decision in Roxas v. Buan, which held that a writ of possession obtained by a mortgagee-purchaser can be enforced against the successor-in-interest of the mortgagor. This decision bolsters the argument that rights related to property ownership, including the right to seek a writ of possession, extend to successors-in-interest. Conversely, the Court reasoned that if the mortgagee-purchaser’s rights can be enforced against the mortgagor’s successors, then the rights of the mortgagee-purchaser’s successors (like the Tiotuicos) should also be enforceable against the mortgagor (Javate). This reciprocal application of rights ensures fairness and consistency in property law.

    The Court also highlighted the practical implications of requiring subsequent purchasers to file a separate ejectment case, noting that it would prolong the proceedings and unduly deny the purchaser the possession of the property they rightfully acquired. This pragmatic view recognizes that the right to possession is a natural and necessary incident of property ownership. The Court’s intention is to streamline the process and prevent unnecessary delays, aligning legal remedies with the practical realities of property transactions.

    Moreover, the Court addressed the issue of delay, concurring with the Court of Appeals’ assessment that Javate’s certiorari petition was a tactic to postpone the implementation of the writ of possession. Given that the writ had been issued almost ten years prior, and Javate had already been given ample opportunity to challenge its legality, the Court emphasized that the implementation should proceed without further obstruction. The Court underscored the importance of respecting final and executory judgments, warning against actions that render court decisions meaningless.

    This comprehensive analysis of the Javate v. Tiotuico case clarifies the rights of subsequent purchasers in foreclosure scenarios. It affirms the availability of a writ of possession as a legitimate remedy, subject to the condition of a hearing to determine possession. The decision balances the rights of the mortgagor and the purchaser, streamlines the process of obtaining possession, and underscores the importance of respecting final court judgments. This ruling provides valuable guidance for those involved in property transactions, particularly in the context of foreclosure and subsequent sales.

    FAQs

    What was the key issue in this case? The key issue was whether subsequent purchasers of a foreclosed property are entitled to a writ of possession. The original owner argued that only the initial mortgagee-purchaser had that right.
    Who were the parties involved? The petitioner was Norma Javate, the original owner of the property. The respondents were spouses Renato and Lerma Tiotuico, who purchased the property after it was foreclosed.
    What is a writ of possession? A writ of possession is a court order directing the sheriff to place someone in possession of a property. It is often used after a foreclosure sale to allow the purchaser to take control of the property.
    What did the Supreme Court decide? The Supreme Court ruled in favor of the Tiotuicos, holding that subsequent purchasers can obtain a writ of possession after a hearing. This decision clarified the rights of subsequent purchasers in foreclosure scenarios.
    What is the difference between the original mortgagee and subsequent purchaser in getting a writ of possession? The original mortgagee-purchaser can typically obtain a writ of possession ex parte (without a hearing). Subsequent purchasers must undergo a hearing to determine who is currently in possession of the property.
    What is an ‘accion reivindicatoria’? An accion reivindicatoria is a legal action to recover ownership of real property. It is a more extensive legal process than a simple petition for a writ of possession.
    Why didn’t the Court require the new owners to file an ejectment case? The Court reasoned that requiring a separate ejectment case would prolong the proceedings and unduly deny the subsequent purchaser the possession of the property they had already bought. It is a more efficient means to assert rights.
    What was the significance of the ‘Okabe v. Saturnino’ case? Okabe v. Saturnino extended the application of rules on execution sales to extrajudicially foreclosed properties. It paved the way for subsequent purchasers to obtain a writ of possession under certain conditions.

    In conclusion, the Supreme Court’s decision in Javate v. Tiotuico offers crucial guidance on the rights of subsequent purchasers of foreclosed properties. It balances the need for efficient property transfer with the protection of due process rights for the original mortgagor. The ruling reinforces the importance of seeking legal remedies that align with the practical realities of property ownership and foreclosure proceedings.

    For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

    Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
    Source: Norma V. Javate v. Spouses Renato J. Tiotuico and Lerma C. Tiotuico, G.R. No. 187606, March 09, 2015

  • Estate Liability and Foreclosure: Heirs’ Rights and Obligations in Mortgage Disputes

    The Supreme Court, in Berot v. Siapno, addressed the complexities of impleading a deceased person in a foreclosure suit and the nature of obligations in loan agreements. The Court ruled that while a deceased person cannot be a party to a lawsuit, the heirs’ voluntary participation in the case constitutes a waiver of formal substitution. This means the case can proceed, binding the heirs to the judgment. The Court also clarified that unless expressly stated, loan obligations are presumed to be joint, not solidary. This decision underscores the importance of understanding the legal implications of estate administration and the specific terms of loan agreements, offering clarity on the rights and responsibilities of heirs in mortgage disputes.

    From Beyond the Grave: Can a Deceased Party Be Sued in a Mortgage Foreclosure?

    The case arose from a loan obtained by Macaria Berot and her spouse, Rodolfo and Lilia Berot, from Felipe Siapno. As security, they mortgaged a portion of land co-owned by Macaria and her deceased husband, Pedro. After Macaria’s death, Siapno filed a foreclosure action against her and the spouses. Despite Macaria’s death, the action was pursued against her estate, represented by Rodolfo. This led to a legal challenge regarding the propriety of suing a deceased person and the nature of the loan obligation. The petitioners, the Berot spouses, argued that the estate lacked legal personality to be sued, the obligation was merely joint, and the mortgage was void due to the lack of consent from the beneficiaries of their family home.

    The central legal issue revolved around whether the lower court acquired jurisdiction over the estate of Macaria Berot, given that she was already deceased when the suit was filed. Petitioners contended that the substitution of Macaria with her estate was improper, as an estate lacks legal personality. The Supreme Court acknowledged the general rule that a deceased person cannot be a party to a lawsuit. Citing Ventura v. Militante, the Court reiterated that a decedent lacks the capacity to sue or be sued.

    A deceased person does not have such legal entity as is necessary to bring action so much so that a motion to substitute cannot lie and should be denied by the court. Considering that capacity to be sued is a correlative of the capacity to sue, to the same extent, a decedent does not have the capacity to be sued and may not be named a party defendant in a court action.

    However, the Court emphasized that the petitioners’ actions constituted a waiver of this defense. Despite the initial error of impleading a deceased person, the petitioners failed to object when the complaint was amended to include Macaria’s estate, represented by Rodolfo Berot. Section 1, Rule 9 of the Rules of Court stipulates that defenses and objections not pleaded in a motion to dismiss or in the answer are deemed waived.

    Building on this principle, the Court highlighted that Rodolfo Berot, as Macaria’s son and compulsory heir, was a real party in interest under Section 2, Rule 3 of the Revised Rules of Court. He stood to be benefited or injured by the judgment in the suit. Moreover, Rodolfo was also a co-defendant in his capacity as a co-borrower. This dual role further solidified the Court’s view that his participation in the proceedings implied a waiver of any objection to the court’s jurisdiction over the estate.

    The Supreme Court also addressed the nature of the loan obligation, clarifying that it was joint rather than solidary. Article 1207 of the Civil Code establishes the presumption that an obligation is joint when there are multiple debtors unless solidarity is expressly stated, required by law, or dictated by the nature of the obligation.

    Art. 1207.  The concurrence of two or more creditors or of two or more debtors in one and the same obligation does not imply that each one of the former has a right to demand, or that each one of the latter is bound to render, entire compliance with the prestations. There is a solidary liability only when the obligation expressly so states, or when the law or the nature of the obligation requires solidarity.

    In this case, the real estate mortgage did not contain any explicit statement indicating that the obligation was solidary. Despite the trial court’s initial finding, the Supreme Court emphasized that solidary obligations cannot be inferred lightly and must be positively and clearly expressed. As such, the petitioners were only liable for their proportionate share of the debt.

    The Court affirmed the propriety of the foreclosure suit, citing Section 7, Rule 86 of the 1997 Revised Rules of Court, which allows a mortgagee to foreclose on a property to recover a debt. However, it also clarified that the estate of Macaria Berot was only liable for a proportionate share of the loan, reflecting the joint nature of the obligation.

    The Supreme Court’s ruling in Berot v. Siapno provides clarity on several key aspects of estate law and obligations. The Court’s emphasis on the importance of timely objections to jurisdiction and the express declaration of solidary obligations serves as a guide for parties involved in similar disputes. Furthermore, the decision underscores the rights and responsibilities of heirs in managing estate liabilities, particularly in the context of mortgage foreclosures.

    FAQs

    What was the key issue in this case? The key issue was whether the trial court had jurisdiction over the estate of a deceased person who was improperly impleaded in a foreclosure suit, and whether the loan obligation was joint or solidary.
    Can a deceased person be sued in court? Generally, a deceased person cannot be sued. However, if the heirs voluntarily participate in the case without objecting, they may be deemed to have waived this defense.
    What is the difference between a joint and solidary obligation? In a joint obligation, each debtor is liable only for a proportionate part of the debt. In a solidary obligation, each debtor is liable for the entire obligation.
    How is a solidary obligation created? A solidary obligation must be expressly stated in the contract, required by law, or dictated by the nature of the obligation itself.
    What happens if a debtor dies in a joint obligation? The deceased debtor’s estate is liable for their proportionate share of the debt. The remaining debtors are not responsible for the deceased debtor’s share.
    What is the effect of participating in a lawsuit without objecting to jurisdiction? Participating in a lawsuit without objecting to the court’s jurisdiction can be considered a waiver of the right to challenge jurisdiction later.
    What is a real party in interest? A real party in interest is someone who stands to benefit or be injured by the judgment in the suit. In this case, it was Rodolfo Berot, who was Macaria’s son and therefore entitled to inherit.
    What options does a mortgagee have when a debtor dies? Under Rule 86 of the Rules of Court, the mortgagee may abandon the security and file a claim against the estate, foreclose the mortgage in court making the executor/administrator a party, or rely solely on the mortgage.

    In conclusion, the Supreme Court’s decision in Berot v. Siapno clarifies critical aspects of estate liability and the interpretation of loan obligations. The ruling underscores the significance of understanding procedural rules and contractual terms to protect one’s rights and interests in legal proceedings.

    For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

    Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
    Source: Spouses Rodolfo Berot and Lilia Berot vs. Felipe C. Siapno, G.R. No. 188944, July 09, 2014

  • Redemption Rights: Clarifying Repurchase Price After Foreclosure of Public Land

    In a case involving the right to repurchase property acquired under a free patent, the Supreme Court clarified the computation of the repurchase price after the property’s foreclosure. The court held that while the mortgagor retains the right to repurchase within five years after the one-year redemption period, the repurchase price includes the original debt, interest, foreclosure expenses, and certain taxes paid by the mortgagee, but excludes excessive or unconscionable penalties. This ruling ensures that borrowers have a fair opportunity to recover their land while protecting the lender’s legitimate financial interests, establishing a balanced approach in cases involving public land and mortgage agreements.

    From Free Patent to Foreclosure: Determining a Fair Repurchase Price

    Spouses Rodolfo and Marcelina Guevarra obtained a loan from The Commoner Lending Corporation, Inc. (TCLC), secured by a real estate mortgage on their land, which was originally acquired under a free patent. After the Spouses Guevarra defaulted on their loan payments, TCLC foreclosed the mortgage and eventually acquired the title to the property. The spouses then sought to exercise their right to repurchase the property, leading to a dispute over the correct repurchase price. The central legal question was whether the Court of Appeals erred in ruling that TCLC could unilaterally fix the repurchase price. The Supreme Court ultimately addressed this issue, providing clarity on how to calculate the repurchase price in such cases.

    The Supreme Court began by emphasizing the importance of Section 119 of the Public Land Act, which grants the original applicant, their widow, or legal heirs the right to repurchase land acquired under free patent or homestead provisions within five years from the date of conveyance. The Court clarified that this right exists even after the expiration of the standard redemption period following a foreclosure. It cited previous cases equating this right of repurchase to a “right of redemption” and the repurchase price to a “redemption price.” The Court also noted that the tender of the repurchase price is not necessary to preserve the right of repurchase, as the filing of a judicial action within the five-year period is sufficient.

    However, the Court also acknowledged that redemptions from lending institutions like TCLC are governed by Section 47 of the General Banking Law of 2000, which specifies how the redemption price should be calculated. This section provides that the mortgagor can redeem the property by paying the amount due under the mortgage deed, with interest at the rate specified in the mortgage, and all costs and expenses incurred by the bank due to the sale and custody of the property, less any income received from the property.

    The Court then addressed TCLC’s argument that it was entitled to its total claims under the promissory note and mortgage contract. It firmly stated that an action to foreclose must be limited to the amount specified in the mortgage. Amounts not stated in the mortgage, such as penalty charges, must be excluded from the repurchase price. In this case, the penalty charges of three percent per month were deemed unenforceable as they were not explicitly part of the mortgage agreement. A penalty charge, designed to compensate for breach of obligation, must be specific and agreed upon by both parties to be enforceable.

    Furthermore, the Court addressed the stipulated interest rate of three percent per month, finding it excessive and unconscionable. Referencing numerous precedents, the Court affirmed that such high-interest rates are illegal and void for being contrary to morals.

    Settled is the principle which this Court has affirmed in a number of cases that stipulated interest rates of three percent (3%) per month and higher are excessive, iniquitous, unconscionable, and exorbitant. Since the stipulation on the interest rate is void for being contrary to morals, if not against the law, it is as if there was no express contract on said interest rate; thus, the interest rate may be reduced as reason and equity demand.

    As a result, the Court equitably reduced the interest rate to one percent per month or twelve percent per annum, calculated from the execution of the mortgage until the filing of the petition for redemption. This adjustment ensures fairness and prevents unjust enrichment by the lender.

    In addition to the principal and interest, the Court specified that the repurchase price should include all foreclosure expenses, such as the Judicial Commission, Publication Fee, and Sheriff’s Fee, as stipulated in Section 47 of the General Banking Law of 2000. Given that the Spouses Guevarra failed to redeem the property within the initial one-year period, they were also required to reimburse TCLC for the Documentary Stamp Tax (DST) and Capital Gains Tax (CGT) it paid. The Court reasoned that since CGT and DST are expenses incident to TCLC’s custody of the property, they are appropriately included in the repurchase price.

    The Supreme Court then provided a detailed calculation of the repurchase price, including the principal amount, interest, Capital Gains Tax, Documentary Stamp Tax, Judicial Commission, Publication Fee, and Sheriff’s Fee. From the total repurchase price, the amount already consigned to the RTC by the Spouses Guevarra was deducted. The final ruling allowed the spouses to repurchase the property within thirty days from the finality of the decision upon payment of the net amount.

    FAQs

    What was the key issue in this case? The central issue was determining the correct repurchase price for land acquired under a free patent after it had been foreclosed by a lending corporation. This involved clarifying the application of the Public Land Act and the General Banking Law.
    What is the significance of Section 119 of the Public Land Act? Section 119 grants the original applicant, their widow, or legal heirs the right to repurchase land acquired under free patent or homestead provisions within five years from the date of conveyance. This right exists even after the standard redemption period following foreclosure has expired.
    How did the Court address the stipulated interest rate? The Court found the stipulated interest rate of three percent per month to be excessive and unconscionable. It equitably reduced the interest rate to one percent per month or twelve percent per annum to ensure fairness.
    What expenses are included in the repurchase price? The repurchase price includes the principal amount, interest, foreclosure expenses (Judicial Commission, Publication Fee, and Sheriff’s Fee), Capital Gains Tax, and Documentary Stamp Tax paid by the lending institution. However, it excludes penalty charges not specified in the mortgage agreement.
    Is it necessary to tender the repurchase price to preserve the right to repurchase? No, the tender of the repurchase price is not necessary. The filing of a judicial action for repurchase within the five-year period under Section 119 of the Public Land Act is sufficient to preserve the right.
    What is the effect of Section 47 of the General Banking Law of 2000? Section 47 of the General Banking Law governs redemptions from lending institutions and specifies the calculation of the redemption price. It requires the mortgagor to pay the amount due under the mortgage deed, with interest, and all costs and expenses incurred by the bank.
    Can the lending institution unilaterally fix the repurchase price? No, the lending institution cannot unilaterally fix the repurchase price. The price must be calculated according to Section 47 of the General Banking Law of 2000, and the court has the power to review and adjust the price to ensure fairness.
    What happens if the mortgagor fails to redeem the property within the one-year period? If the mortgagor fails to redeem the property within the one-year period, they still have the right to repurchase it within five years from the expiration of the redemption period, as provided by Section 119 of the Public Land Act.
    Why were the penalty charges excluded from the repurchase price? The penalty charges were excluded because they were not specified in the mortgage agreement. The Court emphasized that an action to foreclose must be limited to the amount stated in the mortgage, and unstated penalty charges cannot be included.

    The Supreme Court’s decision offers a balanced approach, ensuring that borrowers have a reasonable opportunity to recover their land while protecting the legitimate financial interests of lenders. The clarification on the calculation of the repurchase price, particularly the exclusion of excessive interest and unenumerated penalties, provides a fairer framework for resolving disputes in cases involving foreclosed properties acquired under free patents.

    For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

    Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
    Source: Guevarra vs. The Commoner Lending Corporation, Inc., G.R. No. 204672, February 18, 2015

  • Foreclosure Sales: Strict Compliance with Publication Requirements

    In Atty. Leo N. Caubang v. Jesus G. Crisologo and Nanette B. Crisologo, the Supreme Court ruled that failure to strictly comply with publication requirements in extrajudicial foreclosure sales invalidates the sale. The Court emphasized that notices must be published in a newspaper of general circulation to properly inform the public, and failure to do so constitutes a jurisdictional defect. This decision protects borrowers by ensuring transparency and preventing lenders from taking undue advantage during foreclosure proceedings.

    Transparency or Trap? Questioning Foreclosure Publication Practices

    The case revolves around a dispute concerning the extrajudicial foreclosure of a property owned by respondents spouses Jesus and Nanette Crisologo. The spouses had obtained loans from PDCP Development Bank Inc., secured by a mortgage on their property. After defaulting on their loan payments, the bank initiated foreclosure proceedings, with Atty. Leo N. Caubang acting as the notary public who prepared the notices of sale. The critical issue arose when the Spouses Crisologo challenged the validity of the foreclosure, alleging that the publication of the notice of sale did not comply with the requirements of Act No. 3135, which governs extrajudicial foreclosures.

    Specifically, the law mandates that if the property’s value exceeds four hundred pesos, the notice of sale must be published once a week for at least three consecutive weeks in a newspaper of general circulation in the municipality or city where the property is located. The Spouses Crisologo argued, and the lower courts agreed, that the Oriental Daily Examiner, the newspaper used for publication, did not qualify as a newspaper of general circulation. This discrepancy formed the crux of the legal battle, raising questions about the adequacy of notice to the public and the fairness of the foreclosure process. The controversy highlights the critical importance of adhering to procedural requirements in foreclosure proceedings to protect the rights of property owners.

    The central legal question was whether the publication of the notice of sale in the Oriental Daily Examiner satisfied the requirement of publication in a newspaper of general circulation as mandated by Section 3 of Act No. 3135. The petitioner, Atty. Caubang, argued that the publication was valid, while the respondents contended that the newspaper did not meet the legal standard. The Regional Trial Court (RTC) and the Court of Appeals (CA) sided with the Spouses Crisologo, declaring the extrajudicial foreclosure sale null and void due to improper publication. The Supreme Court was then tasked with resolving this issue.

    In its analysis, the Supreme Court delved into the purpose of the publication requirement in extrajudicial foreclosure sales. The Court emphasized that the principal object of a notice of sale is not merely to notify the mortgagor but to inform the public generally of the nature and condition of the property to be sold, and of the time, place, and terms of the sale. This is to secure bidders and prevent a sacrifice of the property. The Court then quoted Section 3 of Act No. 3135, which states:

    Section 3. Notice of sale; posting; when publication required. – Notice shall be given by posting notices of the sale for not less than twenty days in at least three public places of the municipality or city where the property is situated, and if such property is worth more than four hundred pesos, such notices shall also be published once a week for at least three consecutive weeks in a newspaper of general circulation in the municipality or city.

    Building on this principle, the Supreme Court underscored that the statutory provisions governing publication of notice of mortgage foreclosure sales must be strictly complied with. Any slight deviations from these requirements invalidate the notice and render the sale, at the very least, voidable. The Court noted that Atty. Caubang failed to ascertain whether the Oriental Daily Examiner was indeed a newspaper of general circulation. Evidence presented showed that the newspaper was not on the list of newspapers accredited to publish legal notices in the Davao RTC’s Office of the Clerk of Court. It also lacked paying subscribers and only published when it had customers.

    The Supreme Court emphasized that the failure to properly publish the notice of sale prejudiced the Spouses Crisologo and the general public. Without proper publication, potential bidders were unaware of the foreclosure, resulting in PDCP Bank becoming the sole bidder. This allowed the bank to bid for a very low price and pursue the spouses for a larger deficiency. This situation highlighted the importance of strict compliance with publication requirements to ensure fairness and transparency in foreclosure proceedings.

    Furthermore, the Court affirmed the CA’s decision to hold Atty. Caubang liable for the Spouses Crisologo’s litigation expenses and attorney’s fees. The Court reasoned that Caubang’s improper publication of the notices forced the Spouses Crisologo to litigate to protect their property rights, thereby incurring expenses. The Court, therefore, found it just and equitable that Caubang should bear the costs associated with the litigation. This aspect of the ruling underscores the responsibility of notaries public and other professionals involved in foreclosure proceedings to ensure compliance with legal requirements.

    The ruling reinforces the importance of strictly adhering to the requirements of Act No. 3135 to protect the rights of mortgagors and ensure fairness in foreclosure proceedings. It serves as a reminder to lenders and those involved in foreclosure sales to verify that all publication requirements are met to avoid potential legal challenges. The case highlights that even seemingly minor procedural lapses can have significant consequences, potentially invalidating the entire foreclosure process. The implication is that foreclosure sales must be conducted with utmost diligence and transparency.

    Moreover, this decision has broader implications for the real estate and banking industries. It underscores the need for institutions involved in foreclosure to exercise due diligence in ensuring compliance with all legal requirements. Failure to do so can result in costly litigation and the potential invalidation of foreclosure sales, leading to financial losses and reputational damage. The case also serves as a cautionary tale for notaries public, reminding them of their duty to ensure the accuracy and validity of the documents they prepare and the procedures they oversee.

    FAQs

    What was the key issue in this case? The key issue was whether the publication of the notice of sale in the Oriental Daily Examiner satisfied the requirement of publication in a newspaper of general circulation as mandated by Act No. 3135.
    What is Act No. 3135? Act No. 3135 is a law that regulates the sale of property under special powers inserted in or annexed to real-estate mortgages. It outlines the requirements for extrajudicial foreclosure sales, including the publication of notices.
    What does “newspaper of general circulation” mean? A “newspaper of general circulation” is a publication that is widely read by the public in the area where it is published. It typically has a substantial number of paying subscribers and is recognized as a source of news and information.
    Why is proper publication important in foreclosure sales? Proper publication is crucial because it informs the public about the foreclosure sale, allowing potential bidders to participate and ensuring a fair price for the property. It also protects the rights of the mortgagor by giving them an opportunity to redeem the property.
    What happens if the publication requirement is not met? If the publication requirement is not met, the foreclosure sale can be declared null and void. This means the sale is invalid, and the property may revert to the original owner, subject to the mortgage.
    Who is responsible for ensuring proper publication? The responsibility for ensuring proper publication typically falls on the mortgagee (the lender) or their representative, such as the notary public or attorney handling the foreclosure.
    What was Atty. Caubang’s role in this case? Atty. Caubang was the notary public who prepared the notices of sale and oversaw the publication. He was found liable for failing to ensure that the publication was done in a newspaper of general circulation.
    What damages were awarded to the Spouses Crisologo? The Court of Appeals ordered Atty. Caubang to pay the Spouses Crisologo P41,500.00 as attorney’s fees and P30,248.50 as litigation expenses.
    Can this ruling affect future foreclosure sales? Yes, this ruling serves as a reminder to strictly comply with the publication requirements outlined in Act No. 3135 to ensure fairness and transparency in foreclosure proceedings.

    In conclusion, the Supreme Court’s decision in Caubang v. Crisologo underscores the critical importance of adhering to procedural requirements in extrajudicial foreclosure sales. The ruling serves as a cautionary tale for lenders and those involved in foreclosure proceedings, emphasizing the need for strict compliance with publication requirements to protect the rights of borrowers and ensure fairness in the process.

    For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

    Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
    Source: Atty. Leo N. Caubang v. Jesus G. Crisologo and Nanette B. Crisologo, G.R. No. 174581, February 04, 2015

  • Pactum Commissorium: Debt Security vs. Automatic Property Appropriation in Philippine Law

    The Supreme Court ruled that a creditor cannot automatically appropriate property used as security for a debt without proper foreclosure proceedings. This decision protects debtors from unfair loss of assets, ensuring that creditors follow legal procedures to recover debts, thus upholding the principle that security arrangements should not become disguised mechanisms for automatic ownership transfer upon default.

    Debt Default and Asset Seizure: Unpacking Pactum Commissorium

    This case, Home Guaranty Corporation vs. La Savoie Development Corporation, revolves around La Savoie’s financial difficulties and subsequent petition for corporate rehabilitation. When La Savoie defaulted on its obligations, Home Guaranty Corporation (HGC) made payments as guarantor to certificate holders. Following this, Planters Development Bank (PDB) executed a Deed of Assignment and Conveyance, transferring assets from La Savoie’s asset pool to HGC. The central legal question is whether this transfer, bypassing standard foreclosure, constitutes pactum commissorium, which is prohibited under Philippine law.

    The prohibition against pactum commissorium is rooted in Articles 2088 and 2137 of the Civil Code. Article 2088 states that “[t]he creditor cannot appropriate the things given by way of pledge or mortgage, or dispose of them. Any stipulation to the contrary is null and void.” Similarly, Article 2137 clarifies that “[t]he creditor does not acquire the ownership of the real estate for non-payment of the debt within the period agreed upon… Every stipulation to the contrary shall be void.” These provisions ensure that creditors cannot automatically seize assets pledged as security without undergoing proper legal procedures, such as foreclosure. This protection exists to prevent abuse and unjust enrichment by creditors at the expense of debtors.

    To fully understand this, let’s consider the elements of pactum commissorium, as identified in Garcia v. Villar. The elements include: (1) the existence of a property mortgaged as security for a principal obligation; and (2) a stipulation allowing the creditor to automatically appropriate the mortgaged property if the principal obligation isn’t paid within the agreed timeframe. These stipulations are deemed unlawful because they circumvent the required process of foreclosure, which provides safeguards for the debtor. Foreclosure allows the debtor to potentially recover equity in the property and ensures a fair valuation through public auction.

    In Nakpil v. Intermediate Appellate Court, a similar scenario was discussed where a property was considered automatically sold to the creditor if the debtor failed to reimburse advances. The Supreme Court deemed this arrangement a pactum commissorium, expressly prohibited by Article 2088 of the Civil Code, because it involved automatic appropriation of property upon default. This prohibition prevents creditors from circumventing the legal requirements for foreclosure, which are designed to protect debtors’ rights and ensure fair valuation of assets.

    Here, the Supreme Court scrutinized Sections 13.1 and 13.2 of the Contract of Guaranty, which stipulated that upon payment by HGC, Planters Development Bank, as trustee, would promptly convey all properties in the Asset Pool to HGC without needing foreclosure. The court found that these sections effectively allowed automatic appropriation by the guarantor, violating the essence of pactum commissorium. Therefore, the transfer of assets to HGC was deemed void, not vesting ownership in HGC, and resulting in a constructive trust where HGC held the properties for La Savoie.

    Analyzing the events surrounding La Savoie’s petition for rehabilitation is crucial. Initially, the trial court issued a Stay Order, but later lifted it. During the period the Stay Order was lifted, HGC made payments to the certificate holders, leading to the transfer of assets via the Deed of Conveyance. The Supreme Court noted that while the trial court’s order dismissing the petition for rehabilitation was in effect, creditors were free to enforce their claims. However, this freedom did not legitimize an unlawful arrangement like pactum commissorium.

    The Court emphasized that the prohibition against preference among creditors is particularly relevant when a corporation is under receivership. Citing Araneta v. Court of Appeals, the Court reiterated that during rehabilitation receivership, assets are held in trust for the equal benefit of all creditors, preventing any one creditor from gaining an advantage through attachment or execution. This principle seeks to provide a level playing field for all creditors, ensuring that no single creditor can deplete the debtor’s assets to the detriment of others.

    Moreover, the Court addressed HGC’s simultaneous pursuit of Civil Case No. 05314, an action for injunction and specific performance. The Court determined that HGC was guilty of forum shopping because it sought similar reliefs based on the same claim of ownership in both cases, illustrating an attempt to obtain favorable outcomes across different venues. This procedural lapse further weakened HGC’s position in its attempt to exclude the properties from the rehabilitation proceedings.

    In its final determination, the Supreme Court underscored that the restoration of La Savoie’s status as a corporation under receivership meant the rule against preference of creditors came into effect, necessitating that HGC, like all other creditors, subject itself to the resolution of La Savoie’s rehabilitation proceedings. Thus, the decision reinforces the safeguards provided by corporate rehabilitation and upholds principles of equity and fairness in debt resolution.

    FAQs

    What is pactum commissorium? Pactum commissorium is a stipulation that allows a creditor to automatically appropriate the property given as security for a debt upon the debtor’s failure to pay. This is prohibited under Philippine law to prevent unjust enrichment and abuse by creditors.
    What are the key elements of pactum commissorium? The elements include: (1) a property mortgaged or pledged as security; and (2) a stipulation for automatic appropriation by the creditor in case of non-payment. Both elements must be present for a stipulation to be considered pactum commissorium.
    Why is pactum commissorium prohibited in the Philippines? It is prohibited because it circumvents the legal requirements for foreclosure, which are designed to protect the debtor’s rights and ensure a fair valuation of the assets. Foreclosure proceedings allow debtors to recover equity and prevent creditors from unjustly enriching themselves.
    What is a Stay Order in corporate rehabilitation? A Stay Order suspends the enforcement of all claims against a debtor under rehabilitation, providing the debtor with breathing room to reorganize its finances. The Stay Order is crucial in ensuring the rehabilitation process is not disrupted by creditor actions.
    What happens when a guarantor pays the debt of a company under rehabilitation? The guarantor is subrogated to the rights of the creditor and becomes a creditor of the company. However, this does not give the guarantor preference over other creditors in the rehabilitation proceedings.
    What is the significance of a Deed of Assignment and Conveyance in this context? It is a document transferring ownership of assets from one party to another. In this case, the Deed was meant to transfer assets from La Savoie’s asset pool to HGC, but it was deemed void due to pactum commissorium.
    What is forum shopping, and why was HGC accused of it? Forum shopping occurs when a party files multiple suits in different courts seeking the same relief, hoping one court will rule favorably. HGC was accused of forum shopping because it filed a separate case seeking similar relief as the rehabilitation proceedings.
    What is the effect of a constructive trust in this case? The constructive trust means HGC holds the properties transferred as a trustee for La Savoie, the trustor. This prevents HGC from claiming full ownership and subjects the properties to the rehabilitation proceedings.
    How does this case affect creditors in corporate rehabilitation? It clarifies that creditors must adhere to the rehabilitation process and cannot circumvent legal safeguards like foreclosure. This ensures fairness and equity among all creditors involved in the rehabilitation proceedings.

    This case serves as a reminder of the legal safeguards in place to protect debtors from unfair creditor practices. The prohibition against pactum commissorium and the principles governing corporate rehabilitation ensure that debt resolution is conducted equitably and transparently. Companies and individuals facing financial difficulties should seek legal advice to understand their rights and obligations.

    For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

    Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
    Source: HOME GUARANTY CORPORATION VS. LA SAVOIE DEVELOPMENT CORPORATION, G.R. No. 168616, January 28, 2015

  • Writ of Possession: Subsequent Purchaser’s Right After Foreclosure

    The Supreme Court held that a subsequent purchaser of foreclosed property from a bank is entitled to a writ of possession, even if they were not the original buyer at the public auction. This ruling clarifies that the right to the writ of possession transfers to the subsequent purchaser, allowing them to enforce their ownership and take control of the property. This decision ensures that the benefits of acquiring foreclosed property extend to those who purchase it from the original foreclosing party, streamlining the process of property ownership transfer and enforcement.

    From Foreclosure to Possession: Can a Subsequent Buyer Evict Occupants?

    This case revolves around spouses Jose and Ermila Gatuslao who contested an order granting Leo Ray Yanson, the respondent, a writ of possession over properties they occupied. The properties were initially owned by Ermila’s father, Felicisimo Limsiaco, who mortgaged them to the Philippine National Bank (PNB). Upon Limsiaco’s failure to pay, PNB foreclosed the mortgage and acquired the properties at a public auction. After the redemption period expired, PNB sold the properties to Yanson, who then sought a writ of possession to evict the Gatuslao spouses. The spouses argued that Yanson, as a subsequent purchaser, was not entitled to the writ and that a pending annulment case concerning the foreclosure barred its issuance. This legal battle reached the Supreme Court, which had to determine whether a subsequent buyer stands in the shoes of the original purchaser in foreclosure proceedings, with the right to a writ of possession.

    The Supreme Court addressed the procedural issue raised by the petitioners, noting their direct appeal violated the hierarchy of courts. Typically, appeals from the Regional Trial Court (RTC) should first go to the Court of Appeals. However, given the time elapsed and the fact that the Court had already given due course to the petition, the decision was made to resolve the case on its merits. This highlights the Court’s discretion to address significant legal questions even when procedural rules are not strictly followed, especially when a case has been pending for a considerable period.

    The Court firmly rejected the petitioners’ argument that a pending action for annulment of mortgage or foreclosure sale could prevent the issuance of a writ of possession. Citing BPI Family Savings Bank, Inc. v. Golden Power Diesel Sales Center, Inc., the Court reiterated that a pending annulment case does not stay the issuance of a writ of possession. The Court emphasized the ministerial nature of the writ, meaning the trial court’s role is to grant the writ upon proper application and proof of title, without delving into the validity of the mortgage or foreclosure.

    [I]t is settled that a pending action for annulment of mortgage or foreclosure sale does not stay the issuance of the writ of possession. The trial court, where the application for a writ of possession is filed, does not need to look into the validity of the mortgage or the manner of its foreclosure. The purchaser is entitled to a writ of possession without prejudice to the outcome of the pending annulment case.

    This principle ensures the purchaser’s right to possess the property is promptly enforced, while the annulment case proceeds separately. To further underscore the ministerial nature of the writ, the Court referenced Bank of the Philippine Islands v. Tarampi, affirming that the issuance of a writ of possession cannot be enjoined or stayed by a pending annulment action. This clear stance reinforces the purchaser’s immediate right to possession unless the foreclosure sale is definitively annulled by a competent court.

    To stress the ministerial character of the writ of possession, the Court has disallowed injunction to prohibit its issuance, just as it has held that its issuance may not be stayed by a pending action for annulment of mortgage or the foreclosure itself.

    Addressing the claim that the petitioners were deprived of due process, the Supreme Court clarified their status in relation to the foreclosure proceedings. The Court referenced Section 7 of Act No. 3135, outlining the procedure for obtaining a writ of possession in extrajudicial foreclosures. While this provision typically applies during the redemption period, the same procedure extends to cases where the redemption period has expired without the debtor redeeming the property. In such instances, no bond is required, as established in China Banking Corporation v. Lozada.

    The Court acknowledged an exception where the property is held by a third party adversely to the judgment debtor or mortgagor, such as a co-owner or tenant. In those cases, the RTC’s duty to issue a writ of possession ceases to be ministerial, requiring a hearing to determine the nature of the adverse possession. However, in this case, the petitioners, as heirs of the mortgagor, did not possess an independent right adverse to the mortgagor’s interests. They merely stepped into the shoes of the mortgagor, bound by the mortgage agreement.

    Furthermore, the Supreme Court addressed the core issue of whether a subsequent purchaser, like Yanson, could avail of the writ of possession under Section 7 of Act No. 3135. Petitioners argued that only the actual purchaser at the public auction could seek the writ. The Court found this argument untenable, asserting that Yanson, as a transferee of PNB’s rights through the Deed of Absolute Sale, inherited PNB’s entitlement to the writ. This aligns with the principle that a successor-in-interest acquires all the rights and titles of the predecessor. The Deed of Absolute Sale explicitly conveyed all of PNB’s rights and title to Yanson, including the right to eject any occupants, thus solidifying Yanson’s claim to the writ of possession.

    The Supreme Court supported this conclusion by referencing its ruling in Ermitaño v. Paglas. Although the facts differed, the underlying principle applied: a subsequent purchaser of foreclosed property is entitled to possess the property after the redemption period expires without redemption. This highlights the practical implications of the ruling, ensuring that the benefits of acquiring foreclosed property extend to those who purchase it from the original foreclosing party.

    FAQs

    What was the key issue in this case? The main issue was whether a subsequent purchaser of foreclosed property, who was not the original buyer at the public auction, is entitled to a writ of possession. The petitioners argued that only the original purchaser at the auction could avail of this writ.
    What is a writ of possession? A writ of possession is a court order directing the sheriff to place someone in possession of a property. It is often used in foreclosure cases to allow the purchaser of the property to take control of it.
    Does a pending case for annulment of foreclosure bar the issuance of a writ of possession? No, the Supreme Court has consistently held that a pending action for annulment of mortgage or foreclosure sale does not prevent the issuance of a writ of possession. The writ is considered a ministerial duty of the court.
    Who is considered a third party holding the property adversely? A third party holding the property adversely is someone like a co-owner, agricultural tenant, or usufructuary who possesses the property with a claim of right independent of the mortgagor. In such cases, a hearing is required to determine the nature of the possession.
    What was the basis for the Supreme Court’s decision? The Court based its decision on the principle that a transferee or successor-in-interest steps into the shoes of the original owner. As Yanson acquired all rights and title from PNB, he was entitled to the writ of possession.
    What is the significance of Section 7 of Act No. 3135? Section 7 of Act No. 3135 outlines the procedure for obtaining a writ of possession in extrajudicial foreclosures. While it primarily applies during the redemption period, the same process extends to cases where the redemption period has expired.
    Did the petitioners’ due process rights get violated? The Court ruled no due process violation occurred, as petitioners were not considered third parties holding the property adversely. Although the proceedings were ex parte, petitioners were given opportunities to present their side.
    What is the practical implication of this ruling? This ruling makes it easier for subsequent purchasers of foreclosed properties to gain possession, promoting smoother property transfers. It reinforces the rights of those who acquire property from banks or other entities that have foreclosed on it.

    In summary, the Supreme Court’s decision in Gatuslao v. Yanson clarifies that the right to a writ of possession transfers to subsequent purchasers of foreclosed property. This ruling streamlines the process of property ownership transfer, ensuring that those who acquire property from the original foreclosing party can enforce their ownership rights effectively.

    For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

    Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
    Source: Spouses Jose O. Gatuslao and Ermila Leonila Limsiaco-Gatuslao vs. Leo Ray V. Yanson, G.R. No. 191540, January 21, 2015

  • Unconscionable Interest Rates: Protecting Borrowers from Exploitative Lending Practices

    The Supreme Court ruled that imposing a 5% monthly interest rate on a loan, whether compounded or simple, is unconscionable and violates Article 1306 of the New Civil Code, which prohibits stipulations contrary to law, morals, good customs, public order, or public policy. This decision emphasizes the court’s commitment to protecting borrowers from excessively high interest rates that can lead to financial exploitation. The ruling ensures that lenders cannot impose unjust terms, safeguarding borrowers’ rights and promoting fairness in financial transactions.

    When Loan Extensions Lead to Excessive Interest: Can Foreclosure Be Justified?

    This case revolves around a loan agreement between Spouses Tagumpay and Aida Albos (petitioners) and Spouses Nestor and Iluminada Embisan (respondents). The petitioners obtained a loan of P84,000.00 from the respondents, secured by a real estate mortgage. Over time, due to repeated defaults and extensions, the interest on the loan ballooned to an exorbitant amount, leading the respondents to extra-judicially foreclose the mortgaged property. The central legal question is whether the foreclosure proceedings were valid, considering the alleged unconscionable interest rates imposed on the loan.

    The factual backdrop begins on October 17, 1984, when the petitioners and respondents entered into a “Loan with Real Estate Mortgage” agreement. The loan was for P84,000.00, payable within 90 days at a 5% monthly interest rate, secured by a parcel of land. The petitioners failed to settle their account upon maturity and were granted several extensions. After the third extension, the respondents allegedly imposed a compounded monthly interest of 5%, although this was not documented in writing. This led to a significant increase in the outstanding debt. The absence of a written agreement specifying the compounding of interest became a crucial point of contention.

    On February 9, 1987, the respondents demanded payment of P234,021.90, which later increased to P258,009.15 by April 14, 1987. To prevent foreclosure, the petitioners paid P44,500.00 on October 2, 1987. However, the respondents proceeded with the extra-judicial foreclosure on October 12, 1987, eventually consolidating ownership of the property. Subsequently, the petitioners claimed they were pressured into signing a Contract of Lease for the same property. This series of events led the petitioners to file a complaint seeking the annulment of the mortgage, certificate of sale, and other related documents.

    The Regional Trial Court (RTC) dismissed the complaint, siding with the respondents. The RTC found that the petitioners had not sufficiently proven their claim that only P60,000.00 of the loan was released. It also noted that the payments made were insufficient to cover the principal and accrued interest. Aggrieved, the petitioners appealed to the Court of Appeals (CA), which affirmed the RTC’s decision, stating that the agreement to compound the interest was just and reasonable given the repeated extensions. Dissatisfied with the CA’s ruling, the petitioners elevated the case to the Supreme Court.

    The Supreme Court addressed the core issue of whether the extra-judicial foreclosure proceedings should be nullified due to an allegedly erroneous computation of the loan’s interest. The Court emphasized that, according to Article 1956 of the New Civil Code, no interest shall be due unless it has been expressly stipulated in writing. The Court noted that while the initial loan agreement stipulated a 5% monthly interest, the agreement to compound this interest was not put in writing. This lack of written agreement on the compounding of interest became a significant factor in the Court’s decision.

    Article 1956. No interest shall be due unless it has been expressly stipulated in writing.

    The Court clarified that the requirement for an express stipulation for the payment of interest entails not only reducing the interest rate in writing but also specifying the manner of earning the same, especially if it is to be compounded. The absence of such a specification means that simple interest should accrue rather than compounded interest. Building on this principle, the Court invoked the rule that ambiguities in a contract are interpreted against the party that caused the ambiguity. Since the respondents unilaterally imposed the compounded interest rate, they had the responsibility to clarify and document how the interest would be earned.

    Moreover, the Supreme Court found that the 5% monthly interest rate, whether simple or compounded, was unconscionable and violated Article 1306 of the New Civil Code. This article allows contracting parties to establish stipulations, provided they are not contrary to law, morals, good customs, public order, or public policy. The imposition of an unconscionable rate of interest on a money debt, even if knowingly and voluntarily assumed, is considered immoral and unjust. This aligns with established jurisprudence, as illustrated in Castro v. Tan, where the Court emphasized that while parties have the latitude to stipulate interest rates, such rates should not be so high as to enslave borrowers or lead to a hemorrhaging of their assets.

    The contracting parties may establish such stipulations, clauses, terms and conditions as they may deem convenient, provided they are not contrary to law, morals, good customs, public order, or public policy.

    The Court referenced several cases, including Medel v. Court of Appeals and Ruiz v. Court of Appeals, where excessive interest rates were annulled and reduced to 12% per annum. In this case, the 5% monthly interest rate, or 60% per annum, compounded monthly, was deemed excessive, iniquitous, unconscionable, and exorbitant. The Court held that it was void ab initio for being violative of Article 1306 of the Civil Code. Consequently, the Court replaced the excessive interest with a simple interest of 12% per annum.

    Given these findings, the Supreme Court nullified the foreclosure proceedings, citing the doctrine in Heirs of Zoilo and Primitiva Espiritu v. Landrito. In Heirs of Espiritu, the Court nullified a foreclosure proceeding because the debtors were deprived of the opportunity to settle the debt at the correct amount, without the iniquitous interest imposed. Similarly, in the present case, the petitioners were not given a chance to settle their debt at a fair amount. As a result, the extra-judicial foreclosure of the mortgaged property dated October 12, 1987, was declared null, void, and of no legal effect.

    FAQs

    What was the key issue in this case? The central issue was whether the extra-judicial foreclosure proceedings were valid, considering the allegedly unconscionable interest rates imposed on the loan and the lack of a written agreement specifying the compounding of interest.
    What did the Supreme Court rule regarding the interest rate? The Supreme Court ruled that the 5% monthly interest rate, whether simple or compounded, was unconscionable and violated Article 1306 of the New Civil Code, rendering it void. The Court replaced the excessive interest with a simple interest of 12% per annum.
    Why was the foreclosure sale nullified? The foreclosure sale was nullified because it was based on an incorrect computation of the outstanding loan, which included an unconscionable interest rate. The petitioners were not given an opportunity to settle the debt at a fair amount.
    What is the significance of Article 1956 of the New Civil Code? Article 1956 mandates that no interest shall be due unless it has been expressly stipulated in writing. This provision protects borrowers from hidden or unagreed-upon interest charges.
    What constitutes an unconscionable interest rate? An unconscionable interest rate is one that is excessively high and unjust, violating morals, good customs, public order, or public policy, as stated in Article 1306 of the New Civil Code. The court determines this on a case-by-case basis.
    What is the effect of an agreement to compound interest not being in writing? If the agreement to compound interest is not in writing, simple interest accrues instead, protecting the borrower from potentially excessive charges.
    What is the legal interest rate imposed by the court in this case? The court imposed a simple interest rate of 12% per annum in place of the 5% monthly interest rate stipulated in the loan agreement.
    What does this ruling mean for lenders? This ruling underscores the importance of transparency and fairness in lending practices. Lenders must ensure that all interest agreements, especially those involving compounding, are clearly stipulated in writing and are not unconscionable.

    In conclusion, the Supreme Court’s decision in this case serves as a crucial reminder of the judiciary’s role in protecting borrowers from exploitative lending practices. By invalidating the unconscionable interest rate and the subsequent foreclosure proceedings, the Court reinforces the principles of fairness and equity in financial transactions.

    For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

    Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
    Source: Spouses Tagumpay N. Albos and Aida C. Albos v. Spouses Nestor M. Embisan and Iluminada A. Embisan, G.R. No. 210831, November 26, 2014

  • Mortgagee Beware: Lis Pendens Prevails Over Good Faith in Property Foreclosure

    In the case of Homeowners Savings and Loan Bank vs. Felonia, the Supreme Court clarified that a mortgagee who purchases property with a prior notice of lis pendens (pending litigation) on the title is not considered a purchaser in good faith. This means that even if the bank initially acted in good faith when granting the mortgage, its rights are subject to the outcome of the pending litigation. The Court emphasized that a notice of lis pendens serves as a warning to prospective buyers, and failing to heed this warning means assuming the risks of the ongoing legal battle. Ultimately, this decision underscores the importance of due diligence in real estate transactions, especially regarding potentially encumbered properties.

    Navigating Title Disputes: When Does “Good Faith” Protect a Mortgage?

    This case revolves around a property dispute between Asuncion Felonia and Lydia de Guzman (respondents) and Marie Michelle Delgado, with Homeowners Savings and Loan Bank (HSLB) entering the picture as a mortgagee. The core legal question is whether HSLB, as a mortgagee, can claim protection as a “mortgagee in good faith” despite a prior notice of lis pendens annotated on the property’s title.

    The dispute began when Felonia and De Guzman mortgaged their property to Delgado. Instead of executing a real estate mortgage, they signed a Deed of Absolute Sale with an Option to Repurchase. Subsequently, Felonia and De Guzman filed a case for Reformation of Contract, arguing that the true intention was a mortgage, not a sale. The Regional Trial Court (RTC) ruled in their favor, directing the parties to execute a deed of mortgage. Delgado appealed, but the Court of Appeals (CA) affirmed the RTC’s decision. Despite the pending Reformation case, Delgado filed a Petition for Consolidation of Ownership, which the RTC granted, leading to a new title under Delgado’s name.

    In the meantime, Delgado mortgaged the subject property to HSLB, and the mortgage was annotated on the title. Later, Felonia and De Guzman annotated a Notice of Lis Pendens on Delgado’s title, informing the public of the ongoing legal dispute. HSLB foreclosed the property and consolidated ownership in its favor, obtaining a new title. However, the CA later annulled the RTC’s decision in the Consolidation case, declaring Felonia and De Guzman as the absolute owners. This prompted Felonia and De Guzman to file a complaint against Delgado and HSLB, seeking the nullification of the mortgage and foreclosure sale. HSLB argued that it was a mortgagee in good faith and should not be bound by the previous court decisions.

    The RTC ruled in favor of Felonia and De Guzman, declaring the mortgage and foreclosure sale null and void, and ordering the cancellation of Delgado’s and HSLB’s titles. The CA affirmed the RTC’s decision with modifications. HSLB appealed to the Supreme Court, arguing that its mortgage lien should be carried over to the restored title of Felonia and De Guzman, citing the protection afforded to a mortgagee in good faith. The Supreme Court denied HSLB’s petition.

    Arguably, HSLB was initially a mortgagee in good faith. The Court cited the doctrine of “mortgagee in good faith” as explained in Bank of Commerce v. San Pablo, Jr.:

    There is, however, a situation where, despite the fact that the mortgagor is not the owner of the mortgaged property, his title being fraudulent, the mortgage contract and any foreclosure sale arising there from are given effect by reason of public policy. This is the doctrine of “the mortgagee in good faith” based on the rule that all persons dealing with property covered by the Torrens Certificates of Title, as buyers or mortgagees, are not required to go beyond what appears on the face of the title. The public interest in upholding indefeasibility of a certificate of title, as evidence of lawful ownership of the land or of any encumbrance thereon, protects a buyer or mortgagee who, in good faith, relied upon what appears on the face of the certificate of title.

    However, the Court distinguished between a mortgagee in good faith and a purchaser in good faith. The Court emphasized that the rights of the parties in this case are defined not by whether HSLB was initially a mortgagee in good faith, but by whether HSLB became a purchaser in good faith. A purchaser in good faith is defined as one who buys a property without notice that some other person has a right to, or interest in, the property and pays a full and fair price at the time of purchase or before they have notice of the claim or interest of other persons in the property. When a prospective buyer is faced with facts and circumstances as to arouse his suspicion, he must take precautionary steps to qualify as a purchaser in good faith.

    The Court underscored the importance of the Notice of Lis Pendens. The Supreme Court held that HSLB could not be considered a purchaser in good faith because the Notice of Lis Pendens was already annotated on the title at the time HSLB purchased the property. As defined by the court, a lis pendens is a Latin term which literally means, “a pending suit or a pending litigation” while a notice of lis pendens is an announcement to the whole world that a real property is in litigation, serving as a warning that anyone who acquires an interest over the property does so at his/her own risk, or that he/she gambles on the result of the litigation over the property. It is a warning to prospective buyers to take precautions and investigate the pending litigation.

    The purpose of a notice of lis pendens is to protect the rights of the registrant while the case is pending resolution or decision. With the notice of lis pendens duly recorded and remaining uncancelled, the registrant could rest secure that he/she will not lose the property or any part thereof during litigation. The Court cited Rehabilitation Finance Corp. v. Morales to emphasize the significance of a lis pendens:

    The notice of lis pendens in question was annotated on the back of the certificate of title as a necessary incident of the civil action to recover the ownership of the property affected by it. The mortgage executed in favor of petitioner corporation was annotated on the same title prior to the annotation of the notice of lis pendens; but when petitioner bought the property as the highest bidder at the auction sale made as an aftermath of the foreclosure of the mortgage, the title already bore the notice of lis pendens. Held: While the notice of lis pendens cannot affect petitioner’s right as mortgagee, because the same was annotated subsequent to the mortgage, yet the said notice affects its right as purchaser because notice of lis pendens simply means that a certain property is involved in a litigation and serves as a notice to the whole world that one who buys the same does so at his own risk.

    In conclusion, the Supreme Court ruled that HSLB’s rights as a mortgagee were subject to the final outcome of the Reformation case. The Court also stated that the mortgage of real property executed by one who is not an owner thereof at the time of the execution of the mortgage is without legal existence. HSLB was not entitled to have its mortgage lien carried over to the restored title of Felonia and De Guzman.

    FAQs

    What was the key issue in this case? The central issue was whether a mortgagee who foreclosed and purchased a property with a prior notice of lis pendens on the title could claim protection as a purchaser in good faith.
    What is a notice of lis pendens? A notice of lis pendens is a warning to the public that a property is involved in a pending litigation. It serves as a caution to prospective buyers that they acquire the property at their own risk, subject to the outcome of the lawsuit.
    What is the difference between a mortgagee in good faith and a purchaser in good faith? A mortgagee in good faith refers to someone who, in good faith, relies on the certificate of title of the mortgagor when granting a mortgage. A purchaser in good faith is one who buys a property without notice of any other person’s right or interest in the property and pays a fair price.
    Why was HSLB not considered a purchaser in good faith? HSLB was not considered a purchaser in good faith because at the time it purchased the property through foreclosure, a Notice of Lis Pendens was already annotated on the title, indicating pending litigation concerning the property.
    What is the significance of annotating a Notice of Lis Pendens? Annotating a Notice of Lis Pendens protects the rights of the party who registered it by warning potential buyers that the property is subject to a legal dispute. This ensures that the buyer is aware of the risk involved in acquiring the property.
    What happens if a mortgage is executed by someone who is not the owner of the property? If a mortgage is executed by someone who is not the owner of the property, the mortgage is considered without legal existence. The ownership of the property is an essential requisite for the validity of a mortgage contract.
    Can a mortgagee rely solely on the certificate of title? While a mortgagee has the right to rely on the certificate of title, they must also exercise due diligence. If there are circumstances that should arouse suspicion, the mortgagee should investigate further to ensure they are acting in good faith.
    What was the final ruling of the Supreme Court in this case? The Supreme Court denied HSLB’s petition, affirming the decision of the Court of Appeals. The Court ruled that HSLB was not entitled to have its mortgage lien carried over to the restored title of Felonia and De Guzman.

    This case underscores the critical importance of conducting thorough due diligence before engaging in real estate transactions. The presence of a Notice of Lis Pendens should serve as a clear warning to prospective buyers, compelling them to investigate the underlying legal dispute and assess the risks involved. Failing to do so may result in the loss of their investment, as demonstrated in this case.

    For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

    Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
    Source: HOMEOWNERS SAVINGS AND LOAN BANK vs. ASUNCION P. FELONIA, G.R. No. 189477, February 26, 2014

  • Housing Loan Foreclosure: Employee Rights and Lender Obligations Under Philippine Law

    In a housing loan obtained as an employee benefit, the protection of the Realty Installment Buyer Protection Act (Republic Act No. 6552) does not apply. The Supreme Court has clarified that this law safeguards buyers acquiring property through installment sales, not borrowers who receive loans, even if used for housing, from their employers. This distinction is crucial, as the rights and obligations of borrowers are governed by the terms of their loan agreements, not the provisions of RA 6552, which is designed to protect installment purchasers of real estate.

    When Employment Ends: Can Banks Foreclose on Employee Housing Loans?

    Spouses Jaime and Evangeline Sebastian, former employees of BPI Family Bank, availed themselves of a housing loan as an employee benefit. The loan was secured by a real estate mortgage. After their employment was terminated, BPI Family Bank sought to foreclose on the mortgage due to non-payment, arguing that the loan became due and demandable upon their separation from the bank. The Sebastians contested the foreclosure, arguing it was premature due to a pending illegal dismissal case and invoking the protections of Republic Act No. 6552, which provides grace periods for real estate installment buyers. The central legal question was whether RA 6552 applied to a housing loan granted as an employee benefit, or if the loan was governed solely by the terms of the loan agreement.

    The Supreme Court ruled against the Sebastians, affirming the decisions of the lower courts. The Court emphasized that Republic Act No. 6552 is designed to protect buyers of real estate on installment, not borrowers who obtain loans to finance property purchases. In the Sebastians’ case, their obligation to BPI Family Bank arose from a loan agreement, not a sale of real estate. This distinction is paramount, as it determines the applicability of RA 6552’s provisions regarding grace periods and cash surrender values. The Court cited its previous ruling in Luzon Brokerage Co., Inc. v. Maritime Building Co., Inc., highlighting that the Maceda Law (RA 6552) specifically addresses the rights of buyers of real estate on installment, while the Sebastians were borrowers under a loan agreement.

    Congress in enacting in September 1972 Republic Act 6552 (the Maceda law), has by law which is its proper and exclusive province (and not that of this Court which is not supposed to legislate judicially) has taken care of Justice Barredo’s concern over “the unhappy and helpless plight of thousands upon thousands of subdivision buyers” of residential lots.

    The Court further noted that the Sebastians purchased the real estate from PHILVILLE Realty, not BPI Family Bank, thus lacking the buyer-seller relationship necessary to invoke the protections of RA 6552. Because there was no buyer-seller relationship, the provisions of Republic Act No. 6552 were inapplicable. Moreover, Jaime Sebastian had signed a letter authorizing BPI Family Bank to deduct loan amortizations from his salary and declaring that the entire loan would become due and demandable upon termination of his employment. This acknowledgement further weakened their case, as it demonstrated their understanding that their loan terms were tied to their employment status.

    The Sebastians also argued that BPI Family Bank’s acceptance of late payments estopped it from enforcing sanctions and that the conditions on the official receipt constituted a contract of adhesion. The Supreme Court dismissed these arguments, reiterating that RA 6552 did not apply and that the bank’s actions were consistent with the loan agreement. Importantly, the Court highlighted that the foreclosure was justified because the Sebastians were in default, a fact they judicially admitted during trial. The Court also noted that the terms and conditions of the loan agreement were not contracts of adhesion, considering that both spouses were bank employees familiar with such documents. Specifically, Jaime Sebastian was a branch manager, suggesting a high level of understanding of banking procedures and loan agreements.

    The Court referred to the loan agreement’s provision regarding Events of Default, which allowed the bank to declare all amounts owing to be immediately due and payable if the borrower failed to pay any installment when due. In such instances, the bank may, by written notice to the Borrower cancel the Commitment and/or declare all amounts owing to the Bank under this Agreement and the Note(s), whether of principal, interest or otherwise, to be forthwith due and payable. Even if their dismissal was deemed illegal, the Court pointed out that reinstatement was not the only possible outcome, as separation pay could be awarded instead. Because the legality of their termination from employment was not determinative, the Court ultimately concluded that BPI Family Bank had the right to foreclose on the mortgage due to the Sebastians’ default on their loan obligations.

    What was the key issue in this case? The key issue was whether Republic Act No. 6552, which protects real estate installment buyers, applies to a housing loan obtained as an employee benefit and secured by a real estate mortgage.
    What is Republic Act No. 6552 (Maceda Law)? RA 6552, also known as the Maceda Law, protects buyers of real estate on installment payments by providing rights such as grace periods and cash surrender values in case of default. However, these protections apply specifically to installment sales, not loan agreements.
    Why was RA 6552 deemed inapplicable in this case? RA 6552 was deemed inapplicable because the Sebastians’ obligation arose from a loan agreement with BPI Family Bank, not from a direct sale of real estate on installment. The Court found that there was no buyer-seller relationship between the parties.
    What was the significance of Jaime Sebastian’s letter to BPI Family Bank? Jaime Sebastian’s letter acknowledged that the loan would become due and demandable upon termination of his employment. This letter demonstrated his understanding that the loan terms were tied to his employment status, weakening their defense.
    What constitutes an ‘Event of Default’ under the loan agreement? An Event of Default includes failure to pay any loan installment when due, allowing the bank to declare all amounts owing to be immediately due and payable. This clause was critical in justifying the foreclosure.
    Did the pending illegal dismissal case affect the foreclosure? The pending illegal dismissal case did not prevent the foreclosure because the loan agreement stipulated that the loan became due upon termination of employment, regardless of the legality of the termination. Furthermore, the Court noted that reinstatement was not guaranteed.
    What is a ‘contract of adhesion,’ and why was it not applicable here? A contract of adhesion is one drafted by one party and signed by another with weaker bargaining power. The Court found that because the Sebastians were bank employees, they were familiar with such documents and thus the loan agreement was not considered a contract of adhesion.
    What should employees consider when taking out housing loans from their employers? Employees should carefully review the terms of the loan agreement, especially clauses related to loan maturity upon termination of employment. It is crucial to understand that these loans are governed by contract law, not by laws protecting installment buyers.

    This case underscores the importance of understanding the specific nature of financial agreements. While Republic Act No. 6552 offers protection to real estate installment buyers, it does not extend to borrowers of housing loans, even if used for property acquisition. The terms of the loan agreement, particularly those related to default and loan maturity, govern the rights and obligations of the parties. The Supreme Court’s decision reinforces the principle that contractual obligations must be honored, and that borrowers must be aware of the potential consequences of default.

    For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

    Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
    Source: Spouses Jaime Sebastian and Evangeline Sebastian vs. BPI Family Bank, Inc., Carmelita Itapo and Benjamin Hao, G.R. No. 160107, October 22, 2014

  • Breach of Loan Agreement: When a Bank’s Failure to Release Full Loan Invalidates Mortgage

    In Philippine National Bank vs. Spouses Tajonera, the Supreme Court ruled that a bank’s failure to release the full amount of an agreed-upon loan constitutes a breach of contract, invalidating the mortgage intended to secure the loan. This decision underscores the principle that in reciprocal obligations, neither party can demand performance from the other if they themselves have not fulfilled their end of the agreement. The ruling protects borrowers from unfair foreclosure when banks fail to uphold their financial commitments, ensuring that mortgages are only enforceable when the underlying loan agreements are fully honored.

    Mortgage Invalidated: Did PNB’s Unfulfilled Loan Justify Foreclosure on the Tajoneras’ Property?

    Eduarosa Realty Development, Inc. (ERDI), along with Spouses Eduardo and Ma. Rosario Tajonera, entered into a series of credit agreements with Philippine National Bank (PNB) to finance their condominium project. These agreements included multiple amendments for additional loans, with the spouses’ Greenhills property serving as collateral. When ERDI faced financial difficulties and PNB foreclosed on the Greenhills property, the spouses Tajonera challenged the foreclosure, arguing that PNB had not fully released the agreed-upon loan amount. The central legal question was whether PNB’s failure to fully disburse the loan justified the annulment of the mortgage and the subsequent foreclosure.

    The Supreme Court sided with the Tajoneras, affirming the Court of Appeals’ decision. The Court emphasized the reciprocal nature of loan agreements, stating that:

    Under the law, a loan requires the delivery of money or any other consumable object by one party to another who acquires ownership thereof, on the condition that the same amount or quality shall be paid. Loan is a reciprocal obligation, as it arises from the same cause where one party is the creditor, and the other the debtor. The obligation of one party in a reciprocal obligation is dependent upon the obligation of the other, and the performance should ideally be simultaneous.

    Because PNB did not release the entire loan amount stipulated in the Third Amendment, the Court found that the bank was not entitled to demand compliance from the Tajoneras. This is rooted in the principle that in reciprocal contracts, one party’s obligation is contingent upon the other’s fulfillment of their corresponding duty.

    The Court further elaborated on the concept of reciprocal obligations, noting:

    In reciprocal obligations, the obligation or promise of each party is the consideration for that of the other; and when one party has performed or is ready and willing to perform his part of the contract, the other party who has not performed or is not ready and willing to perform incurs in delay.

    The Tajoneras’ promise to pay served as the consideration for PNB’s obligation to provide the additional loan. When PNB failed to fully release the agreed-upon amount, it breached its contractual duty, rendering the mortgage unenforceable.

    PNB argued that the Supplement to Real Estate Mortgage (REM) was supported by sufficient consideration because a substantial portion of the loan had been released. However, the Court rejected this argument, stating that the full release of the loan was a prerequisite for the validity of the mortgage. Because PNB failed to fulfill its obligation, the Supplement to REM lacked sufficient valuable consideration, justifying its cancellation.

    The Court also dismissed PNB’s justification for withholding the remaining loan balance, which was based on the Tajoneras’ alleged failure to settle their amortization payments. The Court pointed out that the Tajoneras’ obligation to pay amortization arose after PNB’s obligation to release the full loan amount. PNB could not demand payment before fulfilling its own contractual duty. The Supreme Court referenced witness testimony and specific dates in the Third Amendment to reinforce their stance.

    This decision distinguishes itself from Sps. Omengan v. Philippine National Bank, where there was no perfected agreement for the additional loan. In the Tajonera case, the Third Amendment constituted a perfected contract, and PNB’s failure to fully release the loan was therefore unjustified. The Court highlighted that unlike the Omengan case, the Tajoneras were the unquestionable owners of the mortgaged property, further solidifying the validity of their claim.

    The Supreme Court underscored the principle that a mortgage is an accessory contract, dependent on the principal obligation. The Court explained that:

    By its nature, however, a mortgage remains an accessory contract dependent on the principal obligation, such that enforcement of the mortgage contract depends on whether or not there has been a violation of the principal obligation. While a creditor and a debtor could regulate the order in which they should comply with their reciprocal obligations, it is presupposed that in a loan the lender should perform its obligation – the release of the full loan amount.

    Because PNB failed to fulfill its principal obligation, the mortgage over the Greenhills property became unenforceable. The Court also noted that PNB’s interest was adequately protected by the Paranaque properties, rendering the foreclosure of the Greenhills property unnecessary and legally unfounded.

    Finally, the Court emphasized the high standards of integrity and performance expected of banking institutions, noting that:

    [T]he stability of banks largely depends on the confidence of the people in the honesty and efficiency of banks.

    PNB’s failure to comply with the terms of its credit agreements eroded public confidence and justified the Court’s decision to uphold the cancellation of the mortgage.

    FAQs

    What was the central issue in this case? The main issue was whether PNB’s failure to release the full loan amount invalidated the mortgage on the Tajoneras’ Greenhills property. The court examined the principle of reciprocal obligations in loan agreements.
    What is a reciprocal obligation? A reciprocal obligation is one where the obligation of one party is dependent on the performance of the other. In a loan, the lender’s duty to provide the funds is linked to the borrower’s promise to repay.
    Why did the court rule in favor of the Tajoneras? The court sided with the Tajoneras because PNB did not fulfill its obligation to release the full loan amount. This breach of contract rendered the mortgage unenforceable, as the Tajoneras’ obligation to pay was contingent on PNB’s performance.
    What was the significance of the Third Amendment? The Third Amendment to the credit agreement outlined the terms of the additional loan. This document served as evidence that PNB had a contractual obligation to provide the full loan amount, which it failed to do.
    How did this case differ from Sps. Omengan v. PNB? Unlike the Omengan case, the Tajonera case involved a perfected contract for the additional loan. Additionally, the Tajoneras’ ownership of the mortgaged property was not in question, unlike the situation in Omengan.
    What is a supplement to a real estate mortgage? A supplement to a real estate mortgage is an additional agreement that modifies or adds to an existing mortgage. In this case, it was intended to secure the additional loan.
    Why was the supplement to the REM canceled? The supplement to the REM was canceled because PNB failed to release the full loan amount. Without the lender fulfilling its obligation, there was no sufficient consideration for the mortgage.
    What are the obligations of banking institutions? Banking institutions must observe high standards of integrity and performance due to the public interest nature of their business. This includes complying with the terms of credit agreements and avoiding actions that erode public confidence.
    What happened to the claim for damages? The Court of Appeals removed the RTC’s award of moral and exemplary damages, which the Supreme Court upheld. The appellate court found no bad faith on the part of PNB, which is required to award such damages in contract breach claims.

    The Supreme Court’s decision in Philippine National Bank vs. Spouses Tajonera serves as a reminder to lending institutions of their obligations under loan agreements. It reinforces the principle of reciprocity in contracts, ensuring that borrowers are protected from unfair foreclosure practices when lenders fail to fulfill their financial commitments. This ruling emphasizes the importance of upholding contractual obligations and maintaining public trust in the banking system.

    For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

    Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
    Source: PNB vs. Spouses Tajonera, G.R. No. 195889, September 24, 2014