Credit and Transactions Case Digest

Spouses Canlas vs. CA Facts: Canlas agreed to sell the said parcels of land to Mañosca. Canlas delivered to Mañosca the TCT. Mañosca , issued two postdated checks which was not sufficiently funded. On September, 1982, Mañosca was able to mortgage the same parcels of land to Attorney Manuel Magno, with the help of impostors who misrepresented themselves as the spouses Canlas. On September 1982, Mañosca was granted a loan by ASB with the use of subject parcels of land as security, and with the involvement of the same impostors as the Canlas spouses. When the loan it extended was not paid, respondent bank extra judicially foreclosed the mortgage. On January 1983, Canlas informed the respondent bank that the execution of subject mortgage was without their authority, and request to annul and/or revoke the questioned mortgage. On January 1983, petitioner Canlas also wrote the office of Sheriff Contreras, asking that the auction sale scheduled be cancelled or held in abeyance. But respondents Contreras and ASB refused to heed petitioner Canlas ‘stance and proceeded with the scheduled auction sale. Consequently, on February 1983 the herein petitioners instituted the present case for annulment of deed of real estate mortgage with prayer for the issuance of a writ of preliminary injunction; and on May 1983, the trial court issued an Order restraining the respondent sheriff from issuing the corresponding Certificate of Sheriff's Sale. For failure to file his answer, despite several motions for extension of time for the filing thereof, Mañosca was declared in default. On June 1, 1989, the lower court a quo came out with a decision annulling subject deed of mortgage and disposing. Asian Savings Bank appealed to the Court of Appeals.

Issue: Whether or not the mortgage of the property subject of this case was valid?

Held: No. Settled is the rule that a contract of mortgage must be constituted only by the absolute owner on the property mortgaged; a mortgage, constituted by an impostor is void. Considering that it was established indubitably that the contract of mortgage sued upon was entered into and signed by impostors who misrepresented themselves as the spouses Canlas, the Court is of the ineluctible conclusion and finding that subject contract of mortgage is a complete nullity.

Pineda vs. CA Facts: Spouses Virgilio and Benitez mortgaged a house and lot in favor of Pineda and Sayoc. The real estate mortgage secured the Spouses Benitez’s loan. Pineda and Sayoc did not register the mortgage. Spouses Benitez delivered the owner’s duplicate to Pineda. On November 1983, with the consent of Pineda, the Spouses Benitez sold the house to Mojica. On the same date, Mojica filed a petition for the issuance of a second owner’s duplicate, the trial court granted the petition. The ROD issued TCT in the name of Mojica. On February 1985, Mojica obtained a loan from Gonzales. Mojica executed a promissory note and a deed of mortgage in favor of Gonzales. Gonzales registered this deed of mortgage with the ROD who annotated the mortgage on TCT. On May 1985, Pineda and Sayoc filed a cancellation of the second owner’s duplicate against the Spouses Benitez and Mojica. The trial court rendered a Decision declaring the second owner’s duplicate as null and void. On December 1987, Mojica defaulted in paying her obligation to Gonzales. Gonzales extrajudicially foreclosed the mortgage. On January 1988, Gonzales purchased at public auction the Property. For failure of Mojica to redeem the Property, Gonzales consolidated the title to the Property. The Spouses Benitez and Mojica appealed to the Court of Appeals. On January 1991, the Court of Appeals rendered a Decision affirming the trial court’s decision declaring void the second owner’s duplicate. Gonzales filed an appealed.

Issue: Whether TCT 13138 and TCT 16084, being derived from the void second owner’s duplicate of TCT 8361, are also void.

Held: No. The nullity of TCT 13138 did not affect the validity of the title or ownership of Mojica or Gonzales as subsequent transferees of the Property. What is void is the transfer certificate of title, not the title or ownership itself of Mojica or Gonzales. The notice of lis pendens could not defeat Gonzales’ rights over the Property for two reasons. First, Gonzales registered in good

faith her mortgage before the notation of the lis pendens, making the registration of her mortgage valid despite the invalidity of TCT 13138. Second, since Gonzales’ mortgage was valid, the auction sale retroacted to the date of registration of her mortgage, making the auction sale prior in time to the notice of lis pendens. Thus, TCT 16084, issued to Gonzales as a result of the foreclosure sale, is valid.

Mojica vs. CA Facts: Plaintiff Leonardo Mojica (now deceased) contracted a loan of P20,000.00 secured by a real estate mortgage from defendant Rural Bank. The loan by the plaintiffs spouses was fully and completely paid. On March, 1974, a new loan of P18,000.00 was obtained by plaintiffs spouses from the defendant Rural Bank which loan matured on March 1975. No formal deed of real mortgage was constituted, although the former promissory note dated March 5, 1974, contained the following notation. “This promissory note is secured by a Real Estate Mortgage executed before the Notary Public of the Municipality of Kawit, Mrs. Felisa Senti under Doc. No. 62, Page No. 86, Book No.__, Series of 1971”. The spouses failed to pay their obligation. Respondent rural bank extrajudicially foreclosed the real estate mortgage. The subject property was set for auction sale and the defendant rural bank was the highest bidder. On July, 1980, the son of petitioners-spouses, in an apparent attempt to pay the debt of made a partial payment in the amount of P24,658.00 (P19,958.00 of this amount in check bounced) which the defendant rural bank received and accepted. On August 1980, another partial payment was made by Dionisio Mojica in the amount of P9,958.00 was received by the defendant rural bank. These payments were, however, considered by the bank as deposit for the repurchase of the foreclosed property. On August 1981, upon inquiry by Dionisio Mojica on the unpaid balance of the loan, the respondent rural bank issued a 'Computation Slip" indicating therein, that as of August , 1981, the outstanding balance plus interest computed was P21,272.50 On November 10, 1981, After having consolidated its ownership over the foreclosed property, defendant bank scheduled the parcel of land to be sold at public auction on February 1982. Dionisio Mojica and one Teodorico Rufido, brother-in-law of plaintiff Leonardo Mojica, were notified of such auction sale However, no sale was consummated during that scheduled sale and the property concerned up to now still remains in the possession of respondent bank.

The refusal of the same bank to allow Dionisio Mojica to pay the unpaid balance of the loan as per the "Computation Slip" amounting to P21,272.50, resulted in the filing of a complaint. On September, 1984, the trial court rendered judgment dismissing the complaint. Petitioner filed a motion for reconsideration but was denied. On January 2, 1985, a notice of appeal was filed in the IAC. On February 1990, the Appellate Court, rendered its decision, aiming in to the decision of the trial court finding no reversible error in the decision appealed.

Issue: whether or not the foreclosure sale by the Sheriff on June 1979, had for its basis, a valid and subsisting mortgage contract.

Held: Yes. As earlier stated, the Real Estate Mortgage in the case at bar expressly stipulates that it serves as guaranty — ... for the payment of the loan ... of P20,000.00 and such other loans or other advances already obtained or still to be obtained by the mortgagors as makers ... It has long been settled by a long line of decisions that mortgages given to secure future advancements are valid and legal contracts; that the amounts named as consideration in said contract do not limit the amount for which the mortgage may stand as security if from the four corners of the instrument the intent to secure future and other indebtedness can be gathered. A mortgage given to secure advancements is a continuing security and is not discharged by repayment of the amount named in the mortgage, until the full amount of the advancements are paid (Lim Julian v. Lutero, 49 Phil. 704-705 [1926]). In fact, it has also been held that where the annotation on the back of a certificate of title about a first mortgage states "that the mortgage secured the payment of a certain amount of money plus interest plus other obligations arising there under' there was no necessity for any notation of the later loans on the mortgagors' title. It was incumbent upon any subsequent mortgagee or encumbrances of the property in question to

the books and records of the bank, as first mortgagee, regarding the credit standing of the debtors Tady-Y v. PNB, 12 SCRA 19-20 [1964]).