Case Digest (G.R. No. 123492)
Facts:
Erlinda Gajudo, Fernando Gajudo, Jr., Estelita Gajudo, Baltazar Gajudo and Danilo Arahan Chua v. Traders Royal Bank, G.R. No. 151098, March 21, 2006, Supreme Court First Division, Panganiban, C.J., writing for the Court.Petitioners (the Gajudos and Danilo Chua) sued Traders Royal Bank (respondent), the City Sheriff of Quezon City and the Register of Deeds of Quezon City, initially in RTC Branch 90 (Civil Case No. Q-41203) seeking annulment of an extrajudicial foreclosure and auction sale of land under TCT No. 16711, conventional redemption, damages and a preliminary injunction. They alleged that Chua obtained a loan in 1977 secured by the property, that the mortgaged property was foreclosed and sold at auction (with a low bid), that the redemption period ran but petitioners lacked notice and education to redeem, and that the bank later agreed to sell the property back to Chua for P40,135.53, of which Chua paid P4,000 by check.
After pre-trial and protracted proceedings, a 1988 fire destroyed the City Hall records; the case was re-filed on June 11, 1990 (Civil Case No. 90-5749, Branch 98) with additional parties (Cerrofer Realty Corp. and spouses Roque) and a new claim of conspiracy to cancel a lis pendens. Summons to Traders Royal Bank was served on September 26, 1990. Petitioners moved to proceed after the bank failed to file an answer; the trial court declared the bank in default on January 16, 1992, and allowed petitioners to present ex parte evidence on January 7, 1993. On February 8, 1993 the trial court issued a Partial Decision awarding petitioners damages (actual/market value P500,000; compensatory P70,000; P200,000 to Chua’s heirs; attorney’s fees P30,000) while deferring relief requiring reconveyance because the property had been conveyed to Cerrofer.
Respondent bank moved to set aside the default and admit its answer, alleging clerical error and inadvertence; the trial court denied the motion (Order July 26, 1993). The bank appealed the Partial Decision to the Court of Appeals (CA). While the appeal was pending, Cerrofer and the Roces sought and obtained discharge as parties in the CA on the basis of a compromise agreement. The CA, however, reviewed the record, found the bank’s explanation for non-filing not meritorious, and held that petitioners failed to prove grounds to set aside the foreclosure sale or to prove a binding agreement for conventional redemption; it vacated the Partial Decision and dismissed the complaint, and denied...(Pro-only)
Issues:
- Whether the Court of Appeals erred in applying Section 3, Rule 9 of the Rules of Court instead of Section 1, Rule 133 as to the quantum of proof required after a default.
- Whether petitioners proved they were entitled to conventional redemption under Article 1601 of the Civil Code.
- Whether this Court should re-evaluate the appellate factual findi...(Pro-only)
Ruling:
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Ratio:
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Doctrine:
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