GRAND FARMS, INC. and PHILIPPINE SHARES CORPORATION, petitioners, vs. COURT OF APPEALS, UDGE ADRIAN R. OSORIO, as Presidin! "d!e o# t$e Re!iona% Tria% Co"rt, &ran'$ ()(, *a%en+"e%a, Metro Mani%a ESPERAN-A ECHI*ERRI, as C%er o# Co"rt / E01O2'io S$eri3 o# t$e Re!iona% Tria% Co"rt o# *a%en+"e%a, Metro Mani%a SERGIO CA&RERA, as Dep"t4 S$eri31in1C$ar!e and &ANCO FILIPINO SA*INGS AND MORTGAGE &AN5, respondents. Fa'ts6 Petitioner Grand Farms Farms Inc. fled an annulment and/or declaration o nullity o the extrajudicial oreclosure proceedings over their mortgaged properties, with damages in !" #alen$uela, #alen$uela, %% against respondents cler& o court, deputy sheri' and P (anco Filipino )avings and %ortgage (an& eason* no #or7a% noti'e o# intention to #ore'%ose t$e rea% estate 7ort!a!e 8as sent 94 private respondent to petitioners. P +thorugh its deputy liuidator- responded and said petitioners 8ere :noti;ed o# t$e a"'tion sa%e 94 t$e postin! o# noti'es and t$e p"9%i'ation o# noti'e in t$e Metropo%itan Ne8s8ee , a newspaper o general circulation in the province where the suject properties are located and in the Philippines on Feruary 0, 12 and 13, 433.5 (ecause o alleged implied admission y P Petitioners fled a motion or summary judgment contending that the oreclosure was violative o the provisions o the mortgage contract specifcally paragraph +&
&A%% 'orresponden'e re%ative to t$is Mort!a!e, Mort!a!e , including demand letters, summons, supoena or notifcations o any judicial or extrajudical actions shall e sent to t$e Mort!a!or at t$e address !iven a9ove or a9ove or at t$e address t$at 7a4 $erea#ter 9e !iven in 8ritin! 94 t$e Mort!a!or to t$e Mort!a!ee, Mort!a!ee , and the 7ere a't o# sendin! an4 'orresponden'e 94 7ai% or 94 persona% de%iver4 to t$e said address s$a%% 9e va%id and e3e'tive noti'e to t$e Mort!a!or #or a%% %e!a% p"rposes, p"rposes , and the act that any communication is not actually received y the %ortgagor, or that it has een returned unclaimed to the %ortgagee, or that no person was ound at the address given, or that the address is fctitious, or cannot e located, shall not excuse or relieve the %ortgagor rom the e'ects o such notice6 P opposed the motion argued that petitioners< re%ian'e on said para!rap$ => o# t$e 7ort!a!e 'ontra't #ai%s to 'onsider para!rap$s =9> and =d> o# t$e sa7e 'ontra't, 'ontra't , which respectively provide as ollows*
. . . For the p"rpose o# e0tra1?"di'ia% #ore'%os"re, #ore'%os"re , the Mort!a!or =p%ainti3> $ere94 appoints t$e Mort!a!ee =&F> $is attorne41in1#a't to se%% t$e propert4 7ort!a!ed, 7ort!a!ed , to si!n a%% do'"7ents and do'"7ents and per#or7 an4 a't re@"isite and ne'essar4 to
a''o7p%is$ said p"rpose and p"rpose and to appoint its s"9stit"tes as s"'$ attorne41in1#a't, with attorne41in1#a't, with the same powers as aove7specifed. !he %ortgagor herey expressly expressly waives the term o thirty +02- days or any other term granted or which may hereater e granted him y law as the period which must elapse eore the %ortgagee shall e entitled to oreclose this mortgage, it eing specifcally understood and agreed that the said %ortgagee may oreclose this mortgage at any time ater the reach o any conditions hereo. hereo. . . . dE3e'tive "pon t$e 9rea'$ o# an4 'onditions o# t$e 7ort!a!e and in addition to t$e re7edies $erein stip"%ated, stip"%ated , the %ortgagee is herey li &ewise appointed attorne41in1#a't o# t$e Mort!a!or 8it$ #"%% po8ers and a"t$orit4, a"t$orit4 , with the use o orce, i necessary, to tae a't"a% possession o# t$e 7ort!a!ed propert4, propert4, 8it$o"t t$e ne'essit4 #or an4 ?"di'ia% order or order or any permission o power to collect rents, to eject tenants, to lease or sell the mortgaged property, or any part thereo, at pulic or private sale without previous notice or adverstisement o any &ind and execute the corresponding ills o sale, lease or other agreement that may e deemed convenient, to ma&e repairs or improvement to the mortgaged property and pay or the same and perorm any other act which the %ortgagor may deem convenient . . . !"* !"* denied petitioner8s motion or summary judgment 79 genuine and sustantial issues exist which reuire the presentation o evidence during the trial, to wit* +a- whether or not the loan has matured6 +- whether or not private respondent notifed petitioners o the oreclosure o their mortgage6 +c- whether or not the notice y pulication o the oreclosure constitutes su:cient notice to petitioners under the mortgage contract6 +d- whether or not the applicant or oreclosure o the mortgage was a duly authori$ed representative o private respondent6 and +e- whether or not the oreclosure was enjoined y a resolution o this "ourt. Petitioners fled petition or certiorari orders o denial as having een issued with grave ause o discretion 8$en it dis7issed t$e petition, petition , holding that no persona% noti'e 8as re@"ired to #ore'%ose sin'e private respondent 8as 'onstit"ted 94 petitioners as t$eir attorne41in1#a't to se%% t$e 7ort!a!ed propert4. propert4 . ;hen it held that para!rap$ => o# t$e 7ort!a!e 'ontra't 7ere%4 spe'i;ed t$e address 8$ere 'orresponden'e s$o"%d 9e sent and sent and did not i7pose an additiona% 'ondition on t$e part o# private respondent to noti#4 petitioners persona%%4 o# t$e #ore'%os"re. #ore'%os"re.
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;<= a summary judgment may e promulgated y the !", given that there was no notice o oreclosure sent y the mortgagee to the mortgagor >?)
!he ules o "ourt authori$e the rendition o a summary judgment i the pleadings, depositions and admissions on fle, together with the a:davits, show that, except as to the amount o damages, there is no iss"e as to an4 7ateria% #a't and that the 7ovin! part4 is entit%ed to a ?"d!7ent as a 7atter o# %a8. @lthough an issue may e raised ormally y the pleadings ut there is no genuine issue o act, and all the acts are within the j udicial &nowledge o the court, summary judgment may e granted. eal test* whether the pleadings, a:davits and exhiits in support o the motion are s"2'ient to over'o7e t$e opposin! papers and to ?"sti#4 a ;ndin! as a 7atter o# %a8 that there is no de#ense to t$e a'tion or that the '%ai7 is '%ear%4 7eritorio"s. "ase at ar* petitionersA action in the court elow or annulment and/or declaration o nullity o the oreclosure proceedings and damages ripe #or s"77ar4 ?"d!7ent. P tacitly admitted in its answer that it did not send any ormal notice o oreclosure to petitioners omission +y itsel- rendered the oreclosure deective and irregular no #"rt$er ne'essit4 to in@"ire into t$e ot$er iss"es 'ited 94 t$e tria% 'o"rt, or the #ore'%os"re 7a4 9e ann"%%ed so%e%4 on t$e 9asis o# s"'$ de#e't.
;hile private respondent was constituted as their attorney7in7act y petitioners, the in'%"sion o# t$e a#ore@"oted para!rap$ => in t$e 7ort!a!e 'ontra't nonet$e%ess rendered persona% noti'e to t$e %atter indispensa9%e. Community Savings & Loan Association, Inc., et al. vs. Court of Appeals, et al.,* "@ ruled that provision in the contract is an additional stipulation etween the parties. @s such, it is the %a8 9et8een t$e7 and as it not 'ontrar4 to %a8, 7ora%s, !ood '"sto7s and p"9%i' po%i'4, t$e sa7e s$o"%d 9e 'o7p%ied 8it$ #ait$#"%%4 +@rticle 02B, =ew "ivil "ode o the Philippines-. !hus, 8$i%e p"9%i'ation o# t$e #ore'%os"re pro'eedin!s in t$e ne8spaper o# !enera% 'ir'"%ation 8as 'o7p%ied 8it$ , persona% noti'e is sti%% re@"ired , as in the case at ar, when the sa7e 8as 7"t"a%%4 a!reed "pon 94 t$ e parties as additiona% 'ondition o# t$e 7ort!a!e 'ontra't. Failure to comply with this additional stipulation would render illusory @rticle 02B o the =ew "ivil "ode o the Philippines +p. 0C, ollo-. )" does not agree with "@ that paragraph +&- o the mortgage contract in uestion was intended merely to indicate the address to which the communications stated therein should e sent. already een interpreted
in previous jurisprudence interpretation
no reason to deviate rom previous
!here is no irre'on'i%%a9%e 'oni't 9et8een , as in act a reconciliation should e made o, the provisions o# para!rap$s =9> and =d> 8$i'$ appear ;rst in t$e 7ort!a!e 'ontra't and t$ose in para!rap$ => which ollow thereater and necessarily too& into account the provisions o the preceding two paragraphs. !he noti'es respe'tive%4 7entioned in para!rap$s =d> and => are addressed to t$e parti'"%ar p"rposes 'onte7p%ated t$erein. !hose 7entioned in para!rap$ => are spe'i;' and additiona% re@"ire7ents intended #or t$e 7ort!a!ors so t$at, thus apprised, t$e4 7a4 tae t$e ne'essar4 %e!a% steps #or t$e prote'tion o# t$eir interests such as the payment o the loan to prevent oreclosure or to suseuently arrange or redemption o the property oreclosed. P having 'a"sed t$e #or7"%ation and preparation o# t$e printed 7ort!a!e 'ontra't in @"estion, an4 o9s'"rit4 t$at it i7p"tes t$ereto or 8$i'$ s"pposed%4 appears t$erein s$o"%d not #avor it as a 'ontra'tin! part4. De'ision6 decision appealed rom is herey RE*ERSED and SET ASIDE and this case is REMANDED to t$e 'o"rt o# ori!in or urther proceedings in conormity with this decision. !his judgment is immediately executory.
MANUEL D. MEDIDA, Dep"t4 S$eri3 o# t$e Provin'e o# Ce9", CITB SA*INGS &AN5 =#or7er%4 Ce9" Cit4 Savin!s and Loan Asso'iation, In'.> and TEOTIMO A&ELLANA, petitioners, vs. COURT OF APPEALS and SPS. ANDRES DOLINO and PASCUALA DOLINO, respondents. Gines N. Abellana for petitioners. Dionisio U. lores for private respon!ents.
)pouses Dolino +private respondents- mortgaged their lot o the "eu "ity "adastre to "eu "ity Development an& oreclosed Gandioncho ought it in a oreclosure sale Plainti spouses, alarmed o losing their right o redemption, went to @ellana +president o "eu "ity )avings and Eoan @ssociation- to o9tain a %oan o# P Prior to this, their son Do%ino ;%ed a si7i%ar %oan app%i'ation #or P and o'ered the s"9?e't %ot as se'"rit4 or the P02& loan rom "")E@
1 +2-@ll correspondence relative to this mortgage, including demand letters, summons, supoenas, or noti;'ations o# an4 ?"di'ia% or e0tra?"di'ia% a'tions s$a%% 9e sent to t$e Mort!a!or at t$e address !iven a9ove or at t$e address t$at 7a4 $erea#ter 9e !iven in 8ritin! 94 t$e Mort!a!or to t$e Mort!a!ee , and the mere act o sending any correspondence y mail or y personal delivery to the said address shall e valid and e'ective notice to the %ortgagor or all legal purposes,
(oth documents indicated that the principal oligation is or the P02& pesos payale in year with 1 per annum interest ;hen the loan ecame due and demandale +)pouses ailed to pay"")E@ extrajudicially oreclosed the mortgage. @ter the posting and pulication reuirements were complied with the %and 8as so%d at p"9%i' a"'tion to "")E@ +eing the highest idder !he 'erti;'ate o# 8as iss"ed t$e da4 a#ter and re!istered on %ay 2 4CB with the egister o Deeds o "eu
"@ modifed the decision o !" de'%arin! as void and ine3e'tive t$e rea% estate 7ort!a!e e0e'"ted 94 t$e spo"ses in #avor o# CCSLA Petitioners fled %
denied
I))H?* - ;<= respondent court erred in de'%arin! t$e rea% estate 7ort!a!e void 1- ;<= ?"d!7ent o# t$e tria% 'o"rt de'%arin! ine3e'tive t$e e0tra?"di'ia% #ore'%os"re o# said 7ort!a!e and orderin! t$e 'an'e%%ation o# TCT iss"ed in #avor o# CCSLA > CA ERRED IN DECLARING THE REAL ESTATE MORTGAGE *OID "@ declared the ?% void ecause the mortgagor spouses, at the time when the said mortgage was executed, were no longer the owners o the lot, having supposedly lost the same when the lot was so%d to a p"r'$aser in t$e #ore'%os"re sa%e "nder t$e prior 7ort!a!e. )ince it wasn8t raised in the lower court cannot e raised or the frst time in appeal (H! since "@ too& cogni$ance thereo )" may consider such procedure analogous to the rule that an unassigned error closely related to an error properly assigned, or upon which the determination o the uestion properly assigned is dependent, may e considered y an appellate court.
"ourt 7held validity o the loan and the ?% &UT ann"%%ed #ore'%os"re sa%e 9e'a"se t$e4 #ai%ed to 'o7p%4 8it$ t$e noti'e re@"ire7ents 7
)" adopted this approach since oth lower courts a!reed "pon t$e inva%idit4 o# t$e e0tra?"di'ia% #ore'%os"re ut di3ered on%4 on t$e 7atter o# t$e va%idit4 o# t$e rea% estate 7ort!a!e "pon 8$i'$ t$e e0tra?"di'ia% #ore'%os"re 8as 9ased. "@ relied on an oiter dictum laid down in Di"on vs. Gaborro, et al. which we shall analy$e. For, as explicitly stated therein y the "ourt, 5+t-he asic issue to e resolved in this case is 8$et$er t$e )aid documents were execute and the payments made y Gaorro or the det o Di$on to the said an&s AFTER D&P $ad #ore'%osed t$e 7ort!a!e e0e'"ted 94 Di+on and DURING t$e period o# rede7ption a#ter t$e #ore'%os"re sa%e o# t$e 7ort!a!ed propert4 to said 'reditor 9an.
RTC said that the true agreement was that Gaorro would ass"7e and pa4 t$e inde9tedness o# Di+on to t$ e 9ans and, in consideration thereo, Ga9orro 8as !iven t$e possession and en?o47ent o# t$e properties in @"estion "nti% Di+on s$a%% $ave rei79"rsed $i7 #or t$e a7o"nt paid to t$e 'reditor 9ans. !" ordered the reormation o the documents to the extent i ndicated and such particular relie was a:rmed y the "ourt o @ppeals. !his "ourt held that the a!ree7ent 9et8een t$e parties is one o# t$ose inno7inate 'ontra'ts "nder Arti'%e () o# t$e Civi% Code 8$ere94 t$e parties a!reed :to !ive and to do: 'ertain ri!$ts and o9%i!ations, 9"t partain! o# t$e nat"re o# anti'$resis.
)uch an instrument cannot e legally considered a real and unconditional sale o the parcels o land, - ecause there was a9so%"te%4 no 7one4 'onsideration thereor, as admittedly stipulated, the sum o P0,30.4 mentioned in the document as the consideration 5receipt o which was ac&nowledged5 was not actually paid6 and, 1- ecause the properties $ad a%read4 9een previo"s%4 so%d 94 t$e s$eri3 at t$e #ore'%os"re sa%e, t$ere94 divestin! t$e petitioner o# $is #"%% ri!$t as o8ner t$ereo# to dispose and se%% t$e %ands. <iter was unnecessary ecause no sale was concluded and it was also inaccurate i admitted, purchaser at a oreclosure sale mere acuired an inchoate right to the property which could ri pen into ownership only upon the lapse o the redemption period without his credit having een discharged Illogical to hold that during that same period o twelve months the mortgagor was 5divested5 o his ownership, since the asurd result would e that the %and 8i%% 'onse@"ent%4 9e 8it$o"t an o8ner a%t$o"!$ it re7ains re!istered in t$e na7e o# t$e 7ort!a!or.
"@ !he t8o instr"7ents so"!$t to 9e re#or7ed in this case appear to stip"%ate ri!$ts and o9%i!ations 9et8een t$e parties thereto pertaining to and involving parcels o land that had a%read4 9een #ore'%osed and so%d e0tra?"di'ia%%4, and p"r'$ased 94 t$e 7ort!a!e 'reditor, a third party. necessary, to deter7ine t$e %e!a%it4 o# said ri!$ts and o9%i!ations arisin! #ro7 t$e #ore'%os"re and sa%e pro'eedin!s not on%4 9et8een t$e t8o 'ontra'tin! parties to t$e instr"7ents e0e'"ted 9et8een t$e7 9"t a%so in so #ar as t$e a!ree7ent a3e'ts t$e ri!$ts o# t$e t$ird part4, t$e p"r'$aser &an.
ROC R"%e , Se'tion , the ?"d!7ent de9tor re7ains in possession o# t$e propert4 #ore'%osed and so%d, d"rin! t$e period o# rede7ption. I# t$e ?"d!7ent de9tor is in possession o# t$e propert4 so%d, $e is entit%ed to retain it, and re'eive t$e #r"its, t$e p"r'$aser not 9ein! entit%ed to s"'$ possession. Hpon #ore'%os"re and sa%e, the p"r'$aser is entit%ed to a 'erti;'ate o# sa%e e0e'"ted 94 t$e s$eri3. +)ection 1C, evised ules o "ourt-. @ter the ter7ination o# t$e period o# rede7ption and no rede7ption $avin! 9een 7ade, the purchaser is entitled to a deed o# 'onve4an'e and to t$e possession o# t$e properties. +)ection 0J, evised ules o "ourt-. #$e %eig$t of aut$ority is to t$e eect t$at t$e purchaser of land sold at public auction under a writ of execution has only an inchoate right to the property, subject to be defeated and terminated within the period of 12 months from the date of sale, by a redemption on the part of the owner . !hereore, the ?"d!7ent de9tor in possession o# t$e propert4 is entit%ed to re7ain t$erein d"rin! t$e period #or rede7ption . ater the extrajudicial oreclosure and sale o his properties petitioner Di$on retained the right to redee7 t$e %ands, the possession, "se and en?o47ent o the same during the period o redemption under instrument captioned Deed o )ale with @ssumption o %ortgage
;hat is divested rom the mortgagor is on%4 $is :#"%% ri!$t as o8ner t$ereo# to dispose =o#> and se%% t$e %ands,5 merely clariying that the 7ort!a!or does not $ave t$e "n'onditiona% po8er to a9so%"te%4 se%% t$e %and sin'e t$e sa7e is en'"79ered 94 a %ien o# a t$ird person 8$i'$, i# "nsatis;ed, 'o"%d res"%t in a 'onso%idation o# o8ners$ip in t$e %ien$o%der 9"t on%4 a#ter t$e %apse o# t$e period o# rede7ption. ;hat is delimited is NOT t$e 7ort!a!or
Sti%% not app%i'a9%e to t$e 'ase 9e'a"se what is presently involved is a 7ort!a!e, not a sa%e, to petitioner 9an . does not involve a transer, cession or conveyance o the property ut only constitutes a l ien thereon. no ostacle to the legal creation o such a l ien even ater the auction sale o the property ut during the redemption period, since no distinction is made etween a mortgage constituted over the property eore or ater the auction sale thereo. Rede7p tioner 6 is defned as a 'reditor $avin! a %ien 94 atta'$7ent, ?"d!7ent or mortgage on t$e propert4 so%d, or on some part thereo, subsequent to t$e ?"d!7ent "nder 8$i'$ t$e propert4 8as so%d.
< course, while in extrajudicial oreclosure the sale contemplated is not under a judgment ut the proceeding pursuant to which the mortgaged property was sold, a suseuent mortgage could nevertheless e legally constituted thereater with the suseuent mortgagee ecoming and acuiring the rights o a redemptioner, aside rom his right against the mortgagor. In either case, what ears attention is that since the mortgagor remains as the asolute owner o the property during the redemption period and has
the ree disposal o his property, there would e compliance with the reuisites o @rticle 123J o the "ivil "ode or the constitution o another mortgage on the property. !o hold otherwise would 'reate t$e ine@"ita9%e sit"ation 8$erein t$e 7ort!a!or 8o"%d 9e deprived o# t$e opport"nit4, which may e his last recourse, to raise #"nds 8$ere8it$ to ti7e%4 redee7 $is propert4 t$ro"!$ anot$er 7ort!a!e t$ereon. I= !K? P?)?=! "@)? REM in avor o petitioner an& was executed d"rin! t$e period o# rede7ption. During the said period, the 7ort!a!or is sti%% t$e o8ner o# t$e #ore'%osed propert4 since t$e ri!$t o# t$e p"r'$aser at a #ore'%os"re sa%e is 7ere%4 in'$oate "nti% t$e period o# rede7ption e0pires 8it$o"t t$e ri!$t 9ein! e0er'ised !he tit%e to %and so%d "nder 7ort!a!e #ore'%os"re re7ains in t$e 7ort!a!or or $is !rantee "nti% t$e e0piration o# t$e rede7ption period and 'onve4an'e 94 t$e 7aster
!he e'ect o the exercise o the right o redemption y the mortgage detor is NOT t$e re'over4 o# o8ners$ip o# $is %and, which o8ners$ip $e never %ost, ut the e%i7ination #ro7 $is tit%e t$ereto o# t$e %ien 'reated 94 t$e %ev4 on atta'$7ent or ?"d!7ent or t$e re!istration o# a 7ort!a!e t$ereon. edemption o property sold under a oreclosure sale DEFEATS t$e in'$oate ri!$t o# t$e p"r'$aser and restores t$e propert4 to t$e sa7e 'ondition as i# no sa%e $ad 9een atte7pted . Further, it does =
