Case Digest (G.R. No. 161417) Core Legal Reasoning Model
Core Legal Reasoning Model
Facts:
In Ma. Teresa Chaves Biaco v. Philippine Countryside Rural Bank, decided on February 8, 2007, petitioner Ma. Teresa Chaves Biaco sought annulment of judgment in a judicial foreclosure of mortgage case initiated by respondent Philippine Countryside Rural Bank (PCRB). Petitioner’s husband, Ernesto Biaco, was branch manager of PCRB and obtained seven loans between February and September 1998 totaling ₱820,000. As security for these obligations, both spouses executed a real estate mortgage over Lot 35802, Cad. 237 (TCT No. P-14423) in Gasi, Laguindingan. After Ernesto defaulted, PCRB sent a demand letter on September 28, 1999, but received no payment. On February 22, 2000, PCRB filed a foreclosure complaint before the Regional Trial Court (RTC) of Misamis Oriental, Branch 20. Summons were served to Ernesto at his office; neither spouse filed an answer, leading to default. The RTC appointed a commissioner, received ex parte evidence, and on July 11, 2000 rendered judgment ordering pa Case Digest (G.R. No. 161417) Expanded Legal Reasoning Model
Expanded Legal Reasoning Model
Facts:
- Loan Transactions and Mortgage
- Ernesto R. Biaco, branch manager of Philippine Countryside Rural Bank (PCRB), obtained seven loans between February and September 1998, evidenced by promissory notes totaling ₱820,000 (principal).
- As security, spouses Ernesto and Ma. Teresa Chaves Biaco executed a real estate mortgage over a parcel of land under Original Certificate of Title No. P-14423.
- Default and Foreclosure Proceedings
- After Ernesto failed to pay, PCRB’s counsel sent a demand letter (September 28, 1999) calling for ₱1,080,676.50; no payment followed.
- PCRB filed a complaint for judicial foreclosure (February 22, 2000) in the RTC of Misamis Oriental. Summons were served on both spouses via substituted service on Ernesto at his office; neither spouse answered, and they were declared in default.
- Trial Court Ex Parte Hearing and Judgment
- Ex parte testimony established a total indebtedness of ₱1,260,304.33 (inclusive of interests, penalties, service charges), plus litigation expenses of ₱7,640 and attorney’s fees of ₱252,030.43; the mortgaged land was appraised at ₱150,000.
- The RTC ordered spouses Biaco to pay within 90–100 days, otherwise to auction the mortgaged lot; any deficiency would be a personal liability.
- Execution, Auction Sale, and Deficiency Judgment
- Writ of execution was issued (October 2000) and served on Ernesto; the auction sale realized ₱150,000, leaving a deficiency.
- By ex parte motion, PCRB obtained a deficiency judgment for ₱1,369,974.70 and caused notices of levy on properties registered in Teresa’s name, which failed registration because she had sold them to her daughters.
- Annulment Proceedings
- Teresa filed a petition for annulment of judgment (October 2001), alleging extrinsic fraud (forged signature on mortgage, non-service of summons) and deprivation of due process.
- The Court of Appeals denied relief, ruling that (a) judicial foreclosure is quasi in rem, requiring jurisdiction over the res but not the person, and (b) any concealment by Ernesto did not constitute extrinsic fraud by the bank.
Issues:
- Whether extrinsic fraud or lack of valid service of summons on Ma. Teresa Chaves Biaco justifies annulment of the foreclosure and deficiency judgments.
- Whether the RTC validly rendered a personal (deficiency) judgment in quasi in rem foreclosure proceedings without acquiring jurisdiction over the person of the defendant.
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)