SECOND DIVISION
REPUBLIC
PLANTERS BANK G.R.
No. 170785
(now
known as MAYBANK
PHILIPPINES,
INC.) and
PHILMAY
PROPERTY, INC., Present:
Petitioners,
QUISUMBING,
J.,
Chairperson,
- versus - CARPIO,
CARPIO
MORALES,
TINGA,
and
VIVENCIO T. SARMIENTO, VELASCO,
JR., JJ.
JESUSA N. SARMIENTO, JOSE
N.
SARMIENTO AND ELIZABETH
B.
SARMIENTO, Promulgated:
Respondents.
x-------------------------------------------------------------------------------------x
D E C I S I O N
Tinga, J.:
This is an appeal by certiorari under Rule 45 of the
1997 Rules of Civil Procedure assailing the Decision[1] of
the Court of Appeals in CA-G.R. CV No. 74451. The Court of Appeals’ decision
affirmed the
decision[2] of
the Regional Trial Court (RTC) of Parañaque City, Branch 258, which ordered
petitioner Maybank Philippines, Inc. (Maybank) to execute in favor of
respondents a deed of redemption covering two pieces of mortgaged realty and rescinded
the deeds of sale executed by Maybank in favor of petitioner Philmay Property,
Inc. (Philmay) and Clara Fabra (Fabra).
As
found by the Court of Appeals, the factual antecedents are as follows:
On
13 March 1979, respondents spouses Vivencio and Jesusa Sarmiento, their son,
Jose, and the latter’s spouse, Elizabeth, executed a promissory note,
obligating themselves to pay Maybank, then known as Republic Planters Bank, the
amount of P80,000.00 due 360 days after date plus interest at the rate
of 12 percent per annum.[3]
Earlier, on P80,000.00 and
all other obligations, overdrafts and other credit accommodations obtained and
those that may be obtained in the future from Maybank.[4]
On
P100,000.00 plus
14% interest per annum on or before April 1981.[5] In
the same month, all four respondents executed an amendment to the real estate mortgage
changing the consideration of the mortgage from P80,000.00 to P100,000.00
but adopting all the terms and conditions of the previous mortgage as integral
parts of the later one.[6]
Vivencio was the owner of V.
Sarmiento Rattan Furniture, a sole proprietorship engaged in export business. On
various occasions in 1981, he incurred loan obligations from Maybank by way of
export advances. As of P1,281,748.03.
On P100,000.00 plus all obligations which the latter
incurred or would incur from Maybank.
Respondents defaulted in the payment
of the export advances, prompting Maybank to institute an extrajudicial
foreclosure of the real estate mortgage on P254,000.00 and issued a
certificate of sale. The certificate of sale was registered with the Register
of Deeds on
Maricel Sarmiento, sister of
respondent Jose, purchased a manager’s check from Maybank in the amount of P300,000.00
on P12,000.00.[10]
Maybank treated the total amount of P312,000.00 as a deposit and did not
grant respondents’ request for certificate of redemption releasing the foreclosed
property. Sometime in November 1983, Maybank demanded the payment of all outstanding
loans under the export bills transactions. On P302,333.33 in the name of V.
Sarmiento Rattan Furniture.
On
On
On
WHEREFORE, viewed in the
light of the foregoing, the plaintiffs having been able to preponderantly prove
their case against the defendants, judgment for specific performance is hereby
rendered ordering defendant Maybank to execute in favor of the plaintiffs a
Deed of Redemption covering the two (2) parcels of land formerly embraced in
and covered by Transfer Certificates of Title Nos. 5281 and 145850 of the
Register of Deeds of the City of Parañaque together with all the improvements
existing thereon free from all liens and encumbrances and once accomplished, to
immediately deliver the said document to plaintiffs.
Likewise, the Deed of Sale
executed by Republic Planters Bank, now Maybank, in favor of Philmay Property,
Inc., and thereafter, from Philmay Property, Inc. to Clara Fabra, are hereby
revoked and rescinded as well as Certificate of Title No. 139161 registered in
the latter’s name for being null and void.
So also, Phimay Property is
hereby directed to reimburse Clara Fabra, now represented by Kim Caro, the
amount of P4,200,000.00[,] representing the purchase price of the
property plus interest thereon at the legal rate computed from the filing of
the complaint until fully paid.
Defendants are likewise
ordered to pay plaintiffs jointly and severally the following, to wit:
1. The amount of P100,000.00
as moral damages;
2. The amount of P50,000.00
as exemplary damages;
3. The amount of P100,000.00
as and by way of attorney’s fees; and
4. The cost of suit.
The counterclaims of the defendants
are DISMISSED.
SO ORDERED.[12]
The RTC based its finding that respondents were able to
tender to Maybank within the redemption period the redemption price of P312,000.00
on the testimony of respondent Jose on and the official bank receipts evidencing
the separate payments totaling said amount made by Maricel Sarmiento and
respondent Jesusa. Upon this finding, the trial court held that Maybank had no
justifiable legal reason to refuse the execution of documents reconveying the
titles of the mortgaged property to respondents. Thus, the trial court
concluded that the subsequent transfers of the mortgaged property to Philmay
and then to Fabra were void because Maybank had not acquired any rights thereto
in the first place. The trial court, however, declared Fabra as a purchaser in
good faith and, therefore, entitled to reimbursement of the purchase price.
The
RTC rejected Maybank’s defense that the suretyship agreement signed by
respondents Vivencio, Jose and Elizabeth also constituted the mortgaged property
as security for the export advances incurred in the name of V. Sarmiento Rattan
Furniture because the real estate mortgage documents were signed by respondents
in their personal capacity, whereas the suretyship agreement was signed by
Vivencio in his capacity as manager of V. Sarmiento Rattan Furniture. The trial
court noted that the suretyship agreement was not even annotated in the titles
of the mortgaged property.
On
Only
petitioners Maybank and Philmay appealed from the decision of the Court of
Appeals. In the instant petition, they raise the following arguments:
THE TRIAL COURT AND THE COURT OF APPEALS ERRED IN
FINDING THAT PETITIONERS HAVE PROPERLY REDEEMED THE FORECLOSED PROPERTIES.
THE TRIAL COURT AND COURT OF APPEALS ERRED IN NOT
TREATING RESPONDENTS’ EXPORT ADVANCES AS SECURED BY THE REAL ESTATE MORTGAGE
AND THUS SHOULD ALSO BE PAID.
THE TRIAL COURT AND COURT OF APPEALS ERRED IN NOT
RULING THAT THE RESPONDENTS’ CLAIM IS ALREADY BARRED BY LACHES.
THE TRIAL COURT AND COURT OF APPEALS ERRED IN NOT
CONSIDERING AND FINDING THAT PHILMAY AND DEFENDANT CLARA FABRA ARE BUYERS IN
GOOD FAITH.
THE
RESPONDENTS ARE NOT ENTITLED TO MORAL AND EXEMPLARY
DAMAGES AS
In a nutshell, the instant petition
raises the issue of whether the deposits made by respondents constituted a
valid tender of the redemption price. Essential to the resolution of this issue
is the determination of the amount of indebtedness that respondents were
legally obligated to satisfy in order to consider the payment thereof as a
valid redemption of the foreclosed property.
Maybank argues that respondents’ outstanding
obligation amounted to more than P1 million as of the date of the
foreclosure sale. Hence, the tender by respondents of an amount less than that
did not constitute a valid redemption of the foreclosed property. For their
part, respondents contend that the factual finding of both the trial court and
the Court of Appeals to the effect that they were able to make a valid tender
of the redemption price, is binding on this Court.
The petition is meritorious.
The crux of the controversy pertains not
to the amount of redemption price tendered by respondents but rather to the
sufficiency of the amount tendered that would warrant the redemption of the
foreclosed property. The determination of whether the amount tendered by
respondents was enough to redeem the foreclosed property calls for the ascertainment
of the liabilities covered and secured by the mortgage based on the text of the
mortgage deed. Both the trial court and the appellate court concurred in
concluding that the export advances obtained by respondent Vivencio from
Maybank did not belong to the species of obligations secured by the mortgage and
that, hence, respondents’ tender of an amount exceeding the principal loan of P100,000.00
was sufficient. Whether or not this conclusion is correct is a question of law[15]
that is within the purview of a Rule 45 petition.
The real estate mortgage provides:
x x x
That, for and in consideration of certain loans,
overdrafts and other credit accommodations obtained from the Mortgagee, and to
secure the payment of the same and those that may hereafter be obtained,
the principal of all of which is hereby fixed as EIGHTY THOUSAND ONLY Pesos (P80,000.00),
Philippine Currency, as well as those that the Mortgagee may extend to the
Mortgagor, including interest and expenses or any other obligation owing to the
Mortgagee, whether direct or
indirect, principal or secondary, as appears in the accounts, books and records
of the Mortgagee, the Mortgagor does hereby transfer and convey by way
of mortgage unto the Mortgagee, its successor or assigns, the parcels of land
which are described in the list inserted on the back of this document, and/or
appended hereto; x x x (Emphasis supplied)[16]
The aforementioned clause is a “blanket
mortgage clause.” A blanket mortgage clause, also known as a dragnet clause in
American jurisprudence, is one that is specifically phrased to subsume all
debts of past or future origins. Such clauses are carefully scrutinized
and strictly construed. Mortgages of this character enable the parties to provide
continuous dealings, the nature or extent of which may not be known or
anticipated at the time, and they avoid the expense and inconvenience of
executing a new security on each new transaction. A dragnet clause
operates as a convenience and accommodation to the borrowers as it makes
available additional funds without their having to execute additional security
documents, thereby saving time, travel, loan closing costs, costs of extra
legal services, recording fees, etc.[17]
It is basic in the interpretation and
construction of contracts that the literal meaning of the stipulations shall
control if the terms of the contract are clear and leave no doubt on the
intention of the contracting parties.[18] It is only when the words appear to
contravene the evident intention of the parties that the latter shall prevail
over the former. The real nature of a contract may be determined from the
express terms of the agreement and from the contemporaneous and subsequent acts
of the parties thereto.[19]
Although at the time of the execution
of the real estate mortgage the export advances had not yet been incurred and
the principal obligation was fixed at P80,000.00 and thereafter amended
to P100,000.00, the express tenor of the mortgage contract contemplated
the inclusion of future loans and obligations obtained from Maybank to be
secured by the mortgaged property. Nothing in the mortgage contract would suggest
that the parties actually intended to limit the security to only the principal
amount of the loan fixed therein. The stipulations of the mortgage contract
being clear, there is no necessity to ascertain the real intention of the
parties. Be that as it may, nothing in the records would reveal that by the
parties’ acts contemporaneous and subsequent to the execution of the real
estate mortgage, they intended to be bound by terms and conditions other than
those provided in the mortgage contract.
The trial court reached the
conclusion that the export advances were excluded from the security of the real
estate mortgage based on the theory that respondent Vivencio agreed to be bound
as surety for the payment of the export advances in his capacity as manager of
V. Sarmiento Rattan Furniture, whereas he signed the real estate mortgage in
his personal capacity.
This theory is defensible if V.
Sarmiento Rattan Furniture were a corporation having a personality distinct and
separate from its corporate officers and Vivencio signed merely as a corporate
representative of V. Sarmiento Rattan Furniture. Even then, a corporate officer
may still be held personally liable for the debts of the corporation if he
bound himself to pay the debt of the corporation under a separate contract of
surety or guaranty.
For its part, the Court of Appeals
opined that the dragnet clause in the subject real estate mortgage should be
strictly construed and, therefore, the subsequent export advances obtained from
Maybank should not be included in the obligation secured by the mortgage
contract.
It is well settled that mortgages
given to secure future advancements or loans are valid and legal contracts, and
that the amounts named as consideration in said contracts 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.[20] 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 is paid.[21]
At the time of the foreclosure sale of
the mortgaged property, the outstanding obligation arising from the export
bills transactions had already amounted to more than P1 million. In
accordance with Section 78 of the General Banking Act, as amended,[22]
then governing the foreclosure of the mortgaged property, redemption may only
be made by paying the amount due under the mortgage deed within one year from
the sale of the property. Since respondents failed to satisfy the full amount
of the indebtedness to Maybank, the latter was justified in refusing to grant
respondents’ demand for redemption of the foreclosed property.
WHEREFORE, the instant petition for
review on certiorari is GRANTED and the Decision of the Court of Appeals in
CA-G.R. CV No. 74451 is hereby REVERSED and SET ASIDE. The complaint
in
Civil Case No. 98-0323 before the
Regional Trial Court, Branch 258,
SO ORDERED.
DANTE O. TINGA Associate Justice
WE CONCUR:
LEONARDO A. QUISUMBING
Associate Justice
Chairperson
ANTONIO T. CARPIO CONCHITA CARPIO MORALES
Associate Justice Associate Justice
PRESBITERO J. VELASCO,
JR.
Associate Justice
ATTESTATION
I attest that the conclusions in the above
Decision had been reached in consultation before the case was assigned to the
writer of the opinion of the Court’s Division.
LEONARDO A. QUISUMBING
Associate
Justice
Chairperson,
Second Division
CERTIFICATION
Pursuant to Section 13, Article VIII
of the Constitution, and the Division Chairperson’s Attestation, it is hereby
certified that the conclusions in the above Decision had been reached in
consultation before the case was assigned to the writer of the opinion of the
Court’s Division.
REYNATO S. PUNO
Chief Justice
[1]Rollo, pp. 44-49.
Penned by Associate Justice Eliezer R. De Los Santos, and concurred in
by Associate Justices Eugenio S. Labitoria and Jose C. Reyes, Jr.
[15]There is a question of law when the issue does not
call for an examination of the probative value of evidence presented, the truth
or falsehood of facts being admitted and the doubt concerns the correct
application of law and jurisprudence on the matter. On the other hand, there is
a question of fact when the doubt or controversy arises as to the truth or
falsity of the alleged facts. When there is no dispute as to fact, the
question of whether or not the conclusion drawn therefrom is correct is a
question of law. Gomez v. Sta. Ines, G.R. No. 132537,
[22]SECTION 78. x x x
In the event of foreclosure, whether judicially or extrajudicially, of
any mortgage on real estate which is security for any loan granted before the
passage of this Act or under the provisions of this Act, the mortgagor or
debtor whose real property has been sold at public auction, judicially or
extrajudicially, for the full or partial payment of an obligation to any bank,
banking or credit institution, within the purview of this Act shall have the
right, within one year after the sale of the real estate as a result of the
foreclosure of the respective mortgage, to redeem the property by paying the
amount fixed by the court in the order of execution, or the amount due under
the mortgage deed, as the case may be, with interest thereon at the rate
specified in the mortgage, and all the costs, and judicial and other expenses
incurred by the bank or institution concerned by reason of the execution and
sale and as a result of the custody of said property less the income received
from the property. x x x Presidential
Decree No. 1828 (1981), Sec. 78,
Amendments to R.A. No. 337 As Amended (General Banking Act).