Bank of the Philippine Islands v. LCL Capital, Inc. [G.R. Nos. 243396 & 243409, September 14, 2021]

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Bank of the Philippine Islands v. LCL Capital, Inc.

G.R. Nos. 243396 & 243409, [September 14, 2021]

FIRST DIVISION, LOPEZ, M.V

 

Foreclosure; Redemption price; Interest

 

Section 78 of the General Banking Act governs redemption price computation in cases where the mortgagee is a bank, which states that redemption price should include the principal loan amount, the stipulated interest rate, and foreclosure expenses.

 

 

In 1997, LCL Capital obtained a loan from Far East Bank & Trust Co. (FEBTC) secured by a real estate mortgage on two condominium units, with a 17% annual interest. When LCL failed to repay the loan, BPI, which had absorbed FEBTC, foreclosed on the properties and acquired them at a public auction. LCL contested the foreclosure, claiming it was premature and filed a case. The later court ruled that the consolidation of ownership by BPI was void, ordering the restoration of LCL's certificates of title, subject to the right of redemption. 

The parties now in disarray as to the proper computation of redemption price, particularly the interest rate to be applied (17% stipulated by the mortgage vs. 6% imposed by the court), the inclusion of real estate taxes in the redemption price. 

 

What should be the correct calculation of the redemption price in cases where the mortgagee is a bank? 

The Supreme Court ruled that in cases involving banking institutions like BPI, the computation of the redemption price should be based on Section 78 of the General Banking Act, and not the Rules of Court. As part of the redemption price, said law is explicit that the principal obligation shall earn interest at the rate specified in the mortgage contract. Thus, the Court affirms the imposition of interest rate at 17% per annum which the parties specified in the contract of loan and the mortgage deed.

Therefore, the redemption price shall consists of the principal obligation (P3,000,000.00) with the stipulated 17% interest rate, including foreclosure expenses, but excluding real estate taxes. Such real estate taxes must be paid by the party having actual possession and should not be included in the redemption price. The case was remanded to the trial court for an accurate computation of the redemption price based on these principles.

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RAMA V. SPOUSES NOGRA [G.R. No. 219556, September 14, 2021]

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RAMA V. SPOUSES NOGRA

 G.R. No. 219556 [September 14, 2021]

FIRST DIVISION, LOPEZ, M.V

 

Right of Redemption; 30-day written notice requirement 

The written notice of sale is mandatory. For the right of legal pre-emption or redemption to be exercised, written notice by the seller is indispensable for the 30-day redemption period to commence.

 

The case involves a disputed property, an undivided portion of Lot No. 6034-C-2-H-4, registered under the Heirs of Felix Rama. Ricardo Rama sold his one-fourth undivided share to Spouses Nogra in 2001, but other co-owners, including Hermelina Rama, claim they were not aware of this sale until 2007 when it was revealed during barangay conciliation proceedings. Ricardo admitted the sale, but the copy of the Deed of Absolute Sale was only given to Rama on September 26, 2007. Rama attempted to redeem the property, but her offer was rejected by Spouses Nogra claiming that the right to redeem had lapsed. 

Rama filed a Complaint for Annulment of Sale, Redemption, and Other Reliefs in 2007 and consigned the redemption price on October 16, 2007, asserting that a written notice was essential for the redemption period to start under Article 1623 of the New Civil Code.

 

Whether Hermelina validly exercised her redemption right by the filing of the complaint before the RTC on October 16, 2007.

 

YES. The 30-day written notice requirement under Article 1623 of the New Civil Code is mandatory for the commencement of the redemption period. The Court has upheld the principle that even if a co-owner has actual knowledge of the sale, the written notice is still indispensable. In this case, there is no evidence of sufficient knowledge of the sale before Hermelina's receipt of the Deed of Absolute Sale on September 26, 2007. Hermelina's exercise of her redemption right by filing the complaint on October 16, 2007, and consigning the redemption price on October 26, 2007, falls within the 30-day period under Article 1623.

 

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GOZUM V. PAPPAS [G.R. No. 197147, February 3, 2021]

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GOZUM V. PAPPAS

G.R. No. 197147 (Resolution), [February 3, 2021]

SECOND DIVISION, LOPEZ, M.V

 

Succession; Wills; Letters of administration; Special Administrator 

An alien can be appointed as administrator of an estate. The Rules of Court require residency in the Philippines for administrators, not Filipino citizenship.

 

In December 1993, Edmundo Cea passed away without a will. He left behind his wife Gloria Novelo and their children. A dispute emerged regarding the administration of his estate. Later, Gloria also died, leaving a will naming Salvio Fortuno as the executor. Salvio sought the probate of Gloria's will and was appointed as a special administrator for her estate. Norma, another child of Edmundo and Gloria, opposed this and sought her appointment as administrator. The cases were consolidated, and Norma was appointed as administratrix for Edmundo's estate after removal of Salvio, the original administrator, for perceived neglect of duties. Later, Norma was also appointed as special administrator for Gloria's estate. 

This present petition raised the propriety of the issuance of new letters of special administration in favor of Norma in lieu of Salvio involving Gloria's estate. Diana and Salvio challenged Norma's status as administratrix for being an American Citizen.

  

Whether Norma, an American citizen, be appointed as administrator of the estates.

YES. Norma could be appointed as administrator despite her American citizenship. The Rules of Court require residency in the Philippines for administrators, not Filipino citizenship. Records show that she has been residing at Canaman, Camarines Sur since her return sometime in 2003. The court ruled that Norma's appointment was reasonable and valid, given her residence in the Philippines.

 

Whether the appointment of Norma as special administrator reasonable,  and was Salvio's removal justified.

YES. The removal was justified as court determines Salvio unfit to be a special administrator for Gloria's estate given his earlier abandonment of duties as an administrator of Edmundo's estate.

The court justified Norma's appointment as special administrator for Gloria's estate due to her familiarity with the assets and the need to divide the conjugal properties. The Court found it logical, practical, and economical to appoint Norma as special administratrix of Gloria's estate. After all, she was already appointed as administratrix of Edmundo's estate and that the conjugal properties of Edmundo and Gloria remained undivided. With this setup, she could better facilitate the requisite division of the estates.

 

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National Power Corp. v. Benguet Electric Cooperative, Inc. [G.R. No. 218378 (Resolution), June 14, 2021]

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National Power Corp. v. Benguet Electric Cooperative, Inc.

G.R. No. 218378 (Resolution), [June 14, 2021]

SECOND DIVISION, LOPEZ, M.V

 

Unjust Enrichment; Contractual Liability 

The principle of unjust enrichment under Article 22 of the Civil Code is not a catch-all provision that can be conveniently invoked when a party has suffered a loss. Unjust enrichment doesn't apply when a contract governs the relationship between parties.

 

The National Power Corporation (NPC) sought to recover underbilled power charges from Benguet Electric Cooperative, Inc. (BENECO) for a period spanning May 2000 to February 2004. The underbilling arose due to NPC's failure to use the correct Current Transformer Ratio (CTR) setting, resulting in a wrong billing multiplier for calculating electricity consumption. BENECO discovered the error in 2004 and informed NPC. NPC argued that BENECO should pay the underbilled amount to avoid unjust enrichment. But BENECO refused to pay the underbilling, arguing that NPC's negligence was the cause and that NPC's claims were waived under their Transition Contract. 

 

Is BENECO liable to pay the underbilled amount claimed by NPC under the principle of unjust enrichment. 

NO. BENECO’s liability to pay underbilled amount is based on contract and not from unjust enrichment doctrine. The Court found that the principle of unjust enrichment does not apply because a contract existed between the parties, and the claim must be based on the contract's provisions. The Transition Contract allowed NPC to correct erroneous billings within 90 days, and BENECO is liable only for the underbilling related to corrected billings within that period. 

While NPC attempted to shift blame to BENECO for not promptly detecting the error, the Court found NPC solely responsible for the error due to its negligence in maintaining accurate billing systems. The Court also affirmed BENECO's entitlement to a 3% prompt payment discount on current bills, as it had been promptly paying its current obligations. The Court emphasized the importance of diligence in public service and remanded the case to determine the exact underbilling amount during the relevant period.

 

 

 

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Jimenez v. Jimenez, Jr. [G.R. No. 228011, February 10, 2021]

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Jimenez v. Jimenez, Jr.

G.R. No. 228011, February 10, 2021

SECOND DIVISION, LOPEZ, M.V

 

Mortgagee in good faith; Purchaser in good faith; Notice of Lis Pendens

The protection granted to mortgagees in good faith extends even if they have knowledge of adverse claims or ongoing litigation related to the property. And the foreclosure sale retroacts to the mortgage's registration date, making the sale superior to the subsequent adverse claim.

 

Corona F. Jimenez owned a property covered by TCT No. RT-122097. Her children discovered a Deed of Donation allegedly forged in favor of Damian F. Jimenez, Jr. This deed led to the issuance of a new title, TCT No. N-217728, in Damian's name. Damian then mortgaged the property to Arturo S. Calubad and Antonio Keh for a P7,000,000.00 loan. The mortgage was registered. The Jimenez siblings, however, filed a case to annul the forged Deed of Donation and the new title along with the mortgage.

Despite their efforts, the foreclosure auction proceeded, and Calubad and Keh emerged as the highest bidders, leading to the issuance of new titles in their names. The RTC and CA both ruled that the Deed of Donation was forged but upheld Calubad and Keh's rights as innocent mortgagees for value and good faith. Danilo, one of the Jimenez siblings, appealed, arguing that Calubad and Keh were not purchasers in good faith because they were aware of the adverse claim before the public auction.

 

Whether the highest bidders could be considered mortgagees in good faith despite having notice of an adverse claim.

 

YES. The mortgagee in good faith is based on the rule that all persons dealing with property covered by a Torrens Certificate of Title, as buyers or mortgagees, are not required to go beyond what appears on the face of the title. SC clarified that even if a mortgagee has notice of an adverse claim, their rights can still be protected if they satisfy the requirements of being mortgagees in good faith. 

In this case, Calubad and Keh met the requisites of being mortgagees in good faith. They relied on the title's face value, conducted an ocular inspection that confirms Damian’s possession and occupation, found nothing on TCT No. N-217728 that would have notified them of Damian's invalid title or reason to inquire further into Damian's title's status. 

The adverse claim could not affect the rights of the mortgagee. The Court emphasized that the foreclosure sale retroacts to the date of the mortgage's registration, making it prior in time to any subsequent liens or claims. The fact that the adverse claim was recorded after the mortgage did not affect the rights of Calubad and Keh as innocent mortgagees. Thus, their rights as innocent mortgagees were upheld.

 

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Quiambao v. China Banking Corp. [G.R. No. 238462, May 12, 2021]

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Quiambao v. China Banking Corp.

G.R. No. 238462, May 12, 2021

SECOND DIVISION, LOPEZ, M.

 

Obligations and Contracts; Foreclosure; Blanket Mortgage Clause; Contract of Adhesion 

Under the concept of contracts of adhesion, contracts are interpreted strictly against the drafting party, especially when there's ambiguity. The presence of a "blanket mortgage clause" does not automatically guarantee that all subsequent obligations will be covered; the wording must be explicit.

 

Elena R. Quiambao obtained a loan from China Banking Corporation, secured by a Real Estate Mortgage (REM) over her property. The REM contained a "blanket mortgage clause" stating that it would secure current and future debts. Later, the bank initiated a foreclosure for unpaid loans under eight promissory notes (PNs). Elena challenged the foreclosure, claiming that the REM only covered the initial loan, and not the subsequent loans. She also claimed she signed blank documents without understanding, and the foreclosure was invalid.

  

Whether the blanket mortgage clause in the REM secured the subsequent loans, allowing for their valid foreclosure.

  

NO. The Supreme Court ruled in favor of Quiambao. It highlighted that contracts of adhesion, where one party has more power, should be interpreted against the drafting party. While blanket mortgage clauses, also known as dragnet clauses, can encompass both existing and future debts, the clause's specific language must be examined meticulously to determine its scope. The Court found that the language of the clause did not unequivocally cover the subsequent loans linked to the eight PN.

At the trial, it was established that Elena and Daniel signed the amendments to the REM in blank. It was China Banking Corporation which drafted and prepared the standard forms on which Elena and Daniel merely affixed their signatures. Corollarily, any ambiguity in the provisions of these documents must be interpreted against China Banking Corporation, the party who prepared the contracts. Moreover, Elena's limited education and the complex nature of the transactions were considered.

Therefore, the bank cannot validly foreclose a mortgage based on non-payment of unsecured PNs. As such, the foreclosure proceedings are void.

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Quiogue, Jr. v. Quiogue [G.R. No. 203992, August 22, 2022]

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Quiogue, Jr. v. Quiogue

G.R. No. 203992, [August 22, 2022]

SECOND DIVISION, LOPEZ, M.

 

Persons and Family Relations; Marriages; Psychological Incapacity; Chronic Infidelity 

Psychological incapacity is determined by clear acts of dysfunctionality that undermine the marital union, and it need not be medically diagnosed. Chronic infidelity is a manifestation of psychological incapacity.

 

Antonio S. Quiogue, Jr. filed a Petition for Declaration of Nullity of Marriage against his wife, Maria Bel B. Quiogue (Maribel). They were married on October 16, 1980, and have four children. They separated in 1998 after Maribel drove Antonio out of their conjugal home due to his infidelity. Antonio claimed that both he and Maribel were psychologically incapacitated to fulfill their marital obligations. Maribel denied driving Antonio out and accused him of chronic womanizing, nocturnal gambling, and abusive behavior. After referral to the public prosecutor and failed attempts at reconciliation, the case proceeded to trial.

 

Whether the marriage between Antonio and Maribel should be declared null and void based on the ground of psychological incapacity.

 

YES. The court ruled in favor of Antonio, declaring the marriage null and void due to his psychological incapacity. The court clarified that psychological incapacity, as defined under Article 36 of the Family Code, requires the presence of gravity, juridical antecedence, and incurability. It emphasized that psychological incapacity need not be medically diagnosed, and the assessment can be based on the totality of evidence.

Antonio's chronic infidelity was considered a manifestation of his psychological incapacity. His behavior, deeply rooted in his upbringing and personality structure, indicated his inability to maintain monogamous relationships and his distorted understanding of marital obligations. Antonio's inability to maintain a faithful and committed relationship with Maribel was rooted in a dysfunctional personality structure that preexisted their marriage. Antonio's lack of genuine remorse and unwillingness to change further supported his psychological incapacity. 

Maribel's retaliatory acts and evicting Antonio from the conjugal home, were deemed a reaction to Antonio's philandering and not a basis for psychological incapacity. Admittedly, Maribel's vengeful stance contributed to the collapse of the marriage as it aggravated Antonio's psychological incapacity. Despite Maribel's belligerent attitude and verbal offensives towards Antonio, the Court rules that these do not amount to psychological incapacity. 

Thus, the court concluded that Antonio's psychological incapacity rendered the marriage null and void.

 

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