FIRST DIVISION
|
FAR EAST
BANK AND TRUST COMPANY (NOW BANK OF THE PHILIPPINE Petitioners, -
versus - SPS. ERNESTO
AND LEONOR C. CAYETANO, Respondents. |
G.R. No. 179909 Present: PUNO, C.J., Chairperson, CARPIO MORALES, LEONARDO-DE CASTRO, BERSAMIN, and VILLARAMA, JR., JJ. Promulgated: January 25, 2010 |
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DECISION
VILLARAMA,
JR., J.:
This
is a petition for review[1]
under Rule 45 of the 1997 Rules of Civil Procedure, as amended, of the
December 8, 2006 Decision[2] of
the Court of Appeals in CA-G.R. CV No. 76382 which affirmed the May 24, 2002
Decision[3] of
the Regional Trial Court (RTC) of Naga City, Branch 61 and dismissed petitioner
Far East Bank and Trust Company’s appeal. The appellate court likewise denied its
motion for reconsideration in a Resolution[4]
dated
The
undisputed facts of the case are summarized as follows:
Respondent
Leonor C. Cayetano (Cayetano) executed a special power of attorney in favor of
her daughter Teresita C. Tabing (Tabing) authorizing her to contract a loan
from petitioner in an amount not more than three hundred thousand pesos (P300,000.00)
and to mortgage her two (2) lots located in Barangay Carolina, Naga City with
Transfer Certificate of Title Nos. 12304 and 11621.[5]
For the approval of the loan, Cayetano also executed an affidavit of
non-tenancy.[6] Petitioner loaned Tabing one hundred thousand
pesos (P100,000.00) secured by two (2) promissory notes and a real
estate mortgage over Cayetano’s two (2) properties.[7] The mortgage document was signed by Tabing and
her husband as mortgagors in their individual capacities, without stating that
Tabing was executing the mortgage contract for and in behalf of the owner
(Cayetano).[8]
Petitioner
foreclosed the mortgage for failure of the respondents and the spouses Tabing
to pay the loan. A notice of public auction sale, to be conducted on P160,000.00).[11]
Subsequently, petitioner consolidated its title and obtained new titles in its
name after the redemption period lapsed without respondents taking any action.
More than
five (5) years later, Tabing, on behalf of Cayetano, sent a letter dated P250,000.00) with proposed terms of payment.[12]
Petitioner refused the offer stating that the minimum asking price for the
properties was five hundred thousand pesos (P500,000.00) and it was not
amenable to the proposed terms of payment. Petitioner nevertheless gave
respondents the chance to buy back the properties by joining a bidding to be
set in some future date.[13] However, respondents filed on
After trial,
the RTC rendered judgment in favor of the respondents, holding that the
principal (Cayetano) cannot be bound by the real estate mortgage executed by the
agent (Tabing) unless it is shown that the same was made and signed in the name
of the principal; hence, the mortgage will bind the agent only. The trial court
also found that there was no compliance with the requirement of publication of
the foreclosure sale in a newspaper of general circulation as provided in Act
No. 3135, as amended. Such requisite must be strictly complied with as any
slight deviation therefrom will render the sale voidable.[15]
The Court of
Appeals affirmed the RTC’s ruling. It held that it must be shown that the real
estate mortgage was executed by the agent on-behalf of the principal, otherwise
the agent may be deemed to have acted on his own and the mortgage is void.
However, the appellate court further declared that the principal loan agreement
was not affected, which had become an unsecured credit. The Court of Appeals
denied petitioner’s motion for reconsideration.[16]
Hence,
the present petition.
The
only issue before us is whether or not the principal is bound by the real
estate mortgage executed by the authorized agent in her own name without
indicating the principal.
The
issue is not novel. The RTC and the Court of Appeals are both correct in
holding that our decision in The Philippine Sugar Estates Development Co.,
Ltd., Inc. v. Poizat, et al.[17] (Poizat Case), as reiterated in the case of Rural Bank of Bombon (Camarines Sur), Inc. v. Court of Appeals[18] (Bombon Case),
finds application in the instant case. The factual circumstances of said cases
are similar to the case at bar, where an authorized agent executed a real
estate mortgage on the principal’s property in her own name without indicating
that she was acting on behalf of the principal.
In the Poizat Case, Gabriela Andrea de
Coster (Coster) executed a general power of attorney authorizing her husband,
Juan Poizat (Poizat), to obtain a loan and to secure the same with mortgage,
pledge or personal securities. Poizat obtained a credit of ten thousand
(10,000) Pounds
It
is a general rule in the law of agency that, in order to bind the principal by
a mortgage on real property executed by an agent, it must upon its face purport
to be made, signed and sealed in the name of the principal, otherwise, it will
bind the agent only. It is not enough
merely that the agent was in fact authorized to make the mortgage, if he has
not acted in the name of the principal. Neither is it ordinarily sufficient
that in the mortgage the agent describes himself as acting by virtue of a power
of attorney, if in fact the agent has acted in his own name and has set his own
hand and seal to the mortgage. This is especially true where the agent himself
is a party to the instrument. However
clearly the body of the mortgage may show and intend that it shall be the act
of the principal, yet, unless in fact it is executed by the agent for and on
behalf of his principal and as the act and deed of the principal, it is not
valid as to the principal. [EMPHASIS SUPPLIED]
Thus, while
Poizat may have had the authority
to borrow money and mortgage the real property of his wife, the law specifies
how and in what manner it must be done, and the stubborn fact remains that, as
to the transaction in question, that power was never exercised. The mortgage in
question was executed by him and him only, and for such reason, it is not
binding upon the wife, and as to her, it is null and void.
In Bombon,
respondent Ederlinda M. Gallardo (Gallardo) authorized Rufino S. Aquino
(Aquino) to contract a loan from any bank and secure it with mortgage on her
property. Gallardo also delivered her owner’s copy of Transfer Certificate of
Title to Aquino. Aquino obtained a loan from petitioner bank and executed a
deed of real estate mortgage without indicating that he was acting in behalf of
Gallardo. At the beginning of the mortgage deed, it was mentioned that the
mortgage was executed by Aquino, attorney-in-fact of Gallardo, together with a
description of his legal capacity to contract. Gallardo and her husband filed a
complaint for annulment of mortgage against the petitioner and Aquino and one
(1) of the grounds raised was that the mortgagor in the deed was Aquino instead
of Gallardo. The trial court ordered the suspension of the foreclosure of the
real estate mortgage until after the decision in the annulment case shall have
become final and executory. The dismissal of the complaint for annulment of
mortgage was appealed to the Court of Appeals which reversed the trial court
and declared the mortgage contract void and unenforceable against Gallardo.
Upon elevation to this Court, we held that “Aquino’s act of signing the Deed of
Real Estate Mortgage in
his name alone as mortgagor, without any indication that he was signing for and
in behalf of the property owner, Ederlinda M. Gallardo, bound himself alone in
his personal capacity as a debtor of the petitioner Bank and not as the agent
or attorney-in-fact of Gallardo.”[19]
In the fairly recent case of Gozun v. Mercado,[20] respondent Mercado denied having authorized
his sister-in-law (Lilian) to borrow money from petitioner who gave her “cash
advance” of P253,000.00 allegedly for allowances of poll watchers. Petitioner sued respondent to collect on
various sums due from the latter including the “cash advance” obtained by
Lilian. The trial court found for the
petitioner and ordered the respondent to pay all amounts being claimed by the
petitioner. The Court of Appeals
reversed the trial court’s decision and dismissed the complaint for lack of
cause of action. When the case reached
this Court, petitioner argued that respondent had informed him that he had
authorized Lilian to obtain the loan and hence, following Macke v. Camps which held that one who clothes another with
apparent authority as his agent, and holds him out to the public as such,
respondent cannot be permitted to deny the authority. We sustained the Court of Appeals’ ruling on
the matter and held that respondent was not liable for the “cash advance” given
by petitioner to Lilian who signed the receipt in her name alone, without
indicating therein that she was acting for and in behalf of respondent. She
thus bound herself in her personal capacity and not as an agent of respondent
or anyone for that matter.[21]
Notwithstanding
the nullity of the real estate mortgage executed by Tabing and her husband, we
find that the equity principle of laches is applicable in the instant case.
Laches is negligence or omission to assert a right within a reasonable time,
warranting a presumption that the party entitled to assert it either has abandoned
it or declined to assert it.[22]
Its essential elements are: (1) conduct on the part of the defendant, or of one
under whom he claims, giving rise to the situation complained of; (2) delay in
asserting complainant’s right after he had knowledge of the defendant’s conduct
and after he has an opportunity to sue; (3) lack of knowledge or notice on the
part of the defendant that the complainant would assert the right on which he
bases his suit; and (4) injury or prejudice to the defendant in the event
relief is accorded to the complainant.[23]
There is no
absolute rule on what constitutes laches. It is a creation of equity and
applied not really to penalize neglect or sleeping upon one’s rights but rather
to avoid recognizing a right when to do so would result in a clearly
inequitable situation. The question of laches, we said, is addressed to the
sound discretion of the court and each case must be decided according to its
particular circumstances.[24]
Verily, in a number of cases, it had been held that laches, the essence of
which is the neglect to assert a right over a long period of time, may prevent
recovery of a titled property.[25]
In the
present case, records clearly show that respondents could have filed an action
to annul the mortgage on their properties, but for unexplained reasons, they
failed to do so. They only questioned
the loan and mortgage transactions in December 1996, or after the lapse of more
than five (5) years from the date of the foreclosure sale. It bears noting that the real estate mortgage
was registered and annotated on the titles of respondents, and the latter were
even informed of the extrajudicial foreclosure and the scheduled auction.
Instead of impugning the real estate mortgage and opposing the scheduled public
auction, respondents’ lawyer wrote a letter to petitioner and merely asked that
the scheduled auction be postponed to a later date. Even after five (5) years,
respondents still failed to oppose the foreclosure and the subsequent transfer
of titles to petitioner when their agent, Tabing, acting in behalf of Cayetano,
sent a letter proposing to buy back the properties. It was only when the
negotiations failed that respondents filed the instant case. Clearly,
respondents slept on their rights.[26]
WHEREFORE, the petition is GRANTED. The Decision dated December 8, 2006 and the
Resolution dated September 6, 2007 of the Court of Appeals in CA-G.R. CV No.
76382, as well as the Decision dated May 24, 2002 in Civil Case No. 96-3684 of
the Regional Trial Court, Branch 61, Naga City, are hereby SET ASIDE.
The complaint
for annulment of mortgage and extrajudicial foreclosure with damages and
cancellation of titles filed by respondents is hereby DISMISSED.
No
costs.
SO
ORDERED.
|
|
MARTIN S. VILLARAMA, JR. Associate Justice |
|
WE
CONCUR: REYNATO S. PUNO Chief Justice Chairperson |
|
|
CONCHITA CARPIO MORALES Associate Justice |
TERESITA J. LEONARDO-DE CASTRO Associate Justice |
|
LUCAS P. BERSAMIN Associate Justice |
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C E R T I F I C A T I O N
Pursuant to Section 13, Article VIII
of the Constitution, 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. 10-26.
[2]
“IN VIEW OF THE FOREGOING, the decision appealed from is MODIFIED in that the interest rate shall be the stipulated 23 percent per annum instead of 12 percent. All other aspects of the decision are AFFIRMED.
SO ORDERED.”
[3]
“WHEREFORE, the real estate mortgage executed in favor of the defendant Bank is hereby declared void and unenforceable against plaintiffs. Consequently, the Transfer Certificates of Title Nos. 24272 and 24273 are hereby ordered annulled.
“The loan however, of the spouses Tabing in the amount of Php. 100.000.00 shall remain valid and enforceable against them solodarily, as stated in the two promissory notes they executed (Exhs. A& B).
“Applying
the ruling of the Supreme Court in the case of Medel vs. Court of Appeals, G.R.
No. 131622,
“For insufficiency of evidence, the complaint against Sheriff Rolando Borja is hereby dismissed.
“SO ORDERED.”
[4]
[5]
[6]
[7]
[8]
[9]
[10]
[11]
[12]
[13]
[14]
[15]
[16]
[17] 48 Phil. 536 (1925).
[18] G.R. No. 95703,
[19]
[20] G.R. No. 167812,
[21] Id., pp. 314-316, citing Rural Bank of Bombon v. Court of Appeals (supra), Philippine Sugar Estates Development Co. v. Poizat, (supra) and Aguenza v. Metropolitan Bank and Trust Co., 337 Phil. 448, 457 (1997).
[22] Republic
v. Sandiganbayan, G.R. Nos.
112708-09,
[23] Catholic Bishop of Balanga v. Court of Appeals, G.R. No. 112519, November 14, 1996, 264 SCRA 181, 194.
[24] Chavez v. Bonto-Perez, G.R. No.
109808,
[25] Ignacio v. Basilio, G.R. No. 122824,
[26] Vide: Carpo v. Chua, G.R. Nos. 150773 & 153599, September 30, 2005, 471 SCRA 471, 483; Landrito, Jr. v. Court of Appeals, G.R. No. 133079, August 9, 2005, 466 SCRA 107, 115; and Navarro v. Metropolitan Bank and Trust Company, G.R. No. 165697, August 4, 2009.