G.R. No. 129070 - People vs. Cabais y Gamuela

Petitioner: Catherine Hiponia-Mayuga, married to the late Fernando J. Mayuga.
Respondents: Metropolitan Bank and Trust Co. (Metrobank), its branch head Thelma T. Mauricio, and Belle U. Avelino.
Subject property: A parcel of land covered by Transfer Certificate of Title (TCT) No. 116396 (70508) located in Barangay Tambo, ParaAaque City.
Nature of the case: A cancellation action for a real estate mortgage.

Fernando, engaged in the business of buying, selling, and repairing motorcycles, met Belle Avelino in the course of his business activities.
Belle proposed obtaining a loan to fund business ventures such as neon advertisement and meat delivery.

On March 28, 1996, with Catherine’s consent, Fernando secured a loan from Metrobank in the amount of P2,200,000.00 by executing a real estate mortgage (REM) over the subject property.
On July 3, 1996, the loan amount was increased to P3,200,000.00 through an amendment to the original REM.

Catherine alleged that the proceeds of the loan went directly to Belle, despite Fernando receiving P100,000.00 on two separate occasions from Belle.

Fernando J. Mayuga died on November 17, 1996.
Catherine inquired about the release of the mortgage under a purported mortgage redemption insurance (MRI), but was informed by Metrobank that Belle was the principal borrower.

On August 5, 1998, Catherine filed a complaint for cancellation of the mortgage and release of the title, seeking damages against Belle, Metrobank, and Thelma.
The property was foreclosed as Belle failed to remit payments, with Metrobank emerging as the sole and highest bidder and being issued a Certificate of Sale on October 16, 1998.

The Regional Trial Court (RTC) ruled that the mortgage was valid, and that foreclosure by Metrobank was proper since Belle failed to pay the loan.
The complaint against Metrobank and Thelma was dismissed for lack of evidence showing collusion in executing the mortgage.
Belle was held liable and ordered to pay damages to Catherine (actual, moral, and attorney’s fees).

Catherine filed a motion for partial reconsideration, which was denied by the RTC on February 22, 2010.
Catherine then elevated a partial appeal to the Court of Appeals (CA); notably, Belle did not file an appeal, while Metrobank and Thelma did raise issues in their appellee’s brief.

The CA modified the RTC decision by deleting the award of damages against Belle.
The CA held that Fernando was merely an accommodation mortgagor and that the mortgage was executed with valid consent from Catherine and Fernando, thus negating the basis for awarding damages against Belle.

Catherine sought reconsideration of the decision in a Resolution dated February 24, 2014, which was ultimately denied.

Catherine argued that the award of damages against Belle was final and should not have been modified.
She further contended that the CA erred in finding no connivance between Belle and Thelma, and in ruling that Metrobank was not negligent for failing to secure a Mortgage Redemption Insurance for Fernando.

Whether the Court of Appeals erred in modifying the Regional Trial Court’s decision by deleting the award of damages in favor of Catherine against Belle, given that Belle did not appeal the RTC’s ruling.
Whether the CA erred in upholding the RTC’s finding of no connivance between Belle Avelino and Metrobank’s branch head, Thelma T. Mauricio, in the execution of the real estate mortgage.
Whether the CA erred in affirming the RTC’s ruling that Metropolitan Bank was not negligent despite its failure to secure a Mortgage Redemption Insurance (MRI) for Fernando J. Mayuga.