Case Digest (G.R. No. 173856)
Facts:
The case involves Dao Heng Bank, Inc., now Banco de Oro Universal Bank (“petitioner”), and Spouses Lilia and Reynaldo Laigo (“respondents”). The respondents obtained loans totaling ₱11 million from Dao Heng Bank, secured by three real estate mortgages covering two parcels of land registered in Lilia Laigo’s name in Quezon City. These mortgages were allegedly forged on October 28, 1996, November 18, 1996, and April 18, 1997. The loans were payable within twelve months, but as of 2000, respondents failed to pay the outstanding obligation. The respondents verbally offered to cede one of the two mortgaged lots as full payment (dacion en pago).
Dao Heng Bank commissioned an appraiser for the properties, whose fees were paid by both parties. No further action followed the appraisal. In August 2000, petitioner demanded full payment and later filed for foreclosure. The mortgaged properties were auctioned and sold for ₱10,776,242 to petitioner, the highest bidder. Respondents later atte
Case Digest (G.R. No. 173856)
Facts:
- Parties and Loan Transaction
- Spouses Lilia and Reynaldo Laigo (respondents) obtained loans totaling P11 million from Dao Heng Bank, Inc. (Dao Heng), now Banco de Oro Universal Bank (petitioner).
- To secure repayment, respondents executed three real estate mortgages on October 28, 1996, November 18, 1996, and April 18, 1997, covering two parcels of land registered under Lilia Laigo’s name, located in Quezon City (one lot of 569 sq.m., the other 537 sq.m.).
- Mortgages were duly registered with the Registry of Deeds of Quezon City.
- Loans were payable within 12 months from execution of promissory notes.
- Failure to Pay and Negotiations for Dacion en Pago
- By 2000, respondents defaulted on loan payments.
- Respondents verbally offered to cede one lot by way of dacion en pago (delivery in payment) to settle their obligations.
- Dao Heng commissioned an appraiser; appraisal fees were shared with respondents.
- No further action materialized following appraisal.
- Foreclosure and Auction
- Dao Heng demanded settlement by letter dated August 18, 2000, indicating an outstanding balance of P10,385,109.92 (inclusive of interest and charges).
- Respondents failed to comply.
- Dao Heng applied for foreclosure in September 2000.
- The mortgaged properties were publicly auctioned on December 20, 2000, and were sold for P10,776,242 to Banco de Oro Universal Bank (petitioner).
- Proposal for Redemption
- Respondents negotiated redemption of the mortgages.
- By June 29, 2001 letter, petitioner (through its VP on Property Management & Credit Services) set redemption conditions:
- Redemption price of P11.5 million plus 12% diminishing balance interest, payable in staggered payments until January 2, 2002.
- Partial redemption values specified for the two properties (TCT No. 92257 at P7.5 million and TCT No. N-146289 at P4 million, excluding interest).
- Payments to be covered by post-dated checks; first property released upon initial payment.
- Agreement to formalize arrangement.
- Respondents did not respond to this offer.
- Consolidation of Titles and Court Proceedings
- On December 26, 2001, petitioner informed respondent Lilia Laigo of intention to consolidate titles after the redemption period expired on January 2, 2002.
- Respondents filed a complaint on December 27, 2001 before the Regional Trial Court (RTC) Quezon City for annulment of foreclosure and injunction; prayed to deliver one mortgaged property as full payment via dacion en pago and sought temporary restraining order (TRO) against consolidation.
- Respondents alleged that Dao Heng verbally agreed to settle via dacion en pago.
- Lower Courts’ Decisions and Contentions
- RTC denied TRO and granted petitioner’s motion to dismiss the complaint on the ground that the dacion en pago agreement was unenforceable under the Statute of Frauds for lack of writing; partial performance claimed by respondents was rejected as the titles were delivered due to the mortgage agreement, not dacion en pago.
- Respondents petitioned for review to the Court of Appeals (CA).
- CA reversed RTC’s dismissal, reinstating respondents’ complaint on grounds that:
- Complaint stated a cause of action.
- Partial performance (commission and payment for appraisal, property appraisal itself) took the alleged verbal dacion en pago out of the Statute of Frauds under Article 1403 of the Civil Code.
- Petitioner’s motion for reconsideration was denied by CA.
- Petition for Review to the Supreme Court
- Petitioner challenged the CA ruling, arguing:
- No perfected dacion en pago contract was alleged or proved.
- Absence of a written, binding agreement rendered the alleged dacion en pago unenforceable under the Statute of Frauds.
- Complaint failed to state a cause of action.
Issues:
- Whether respondents’ alleged oral agreement with petitioner on dacion en pago constituted a valid cause of action despite non-compliance with the Statute of Frauds.
- Whether partial performance (including appraisal commissioned by petitioner and payment of appraisal fee by respondents, and delivery of titles) can take the alleged oral dacion en pago agreement out of the Statute of Frauds.
- Whether the petitioner was obligated to accept the property as full payment by dacion en pago or had the right to foreclose the mortgage.
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)