Title
Parcon-Song vs. Parcon
Case
G.R. No. 199582
Decision Date
Jul 7, 2020
Julie Parcon-Song claimed ownership of land registered under her mother’s name, alleging unauthorized mortgage by her parents to Maybank. The Supreme Court upheld Maybank’s foreclosure as valid, ruling it acted in good faith and complied with laws allowing foreign banks to temporarily hold foreclosed properties.
annulment of title
annulment of mortgage
foreclosure proceedings
A

Case Digest (G.R. No. L-2954)

Facts:

  • Parties and Initial Transaction
    • Julie Parcon-Song (Julie) is the daughter of Spouses Joaquin and Lilia Parcon.
    • In 1995, the Parcon Spouses obtained two loans from Maybank Philippines, Inc. (Maybank) and executed a real estate mortgage over a property covered by Transfer Certificate of Title (TCT) No. 107064, registered in Lilia Parcon's name. The mortgage was annotated on the title.
  • Foreclosure Proceedings
    • In 2001, upon the Parcon Spouses’ default, Maybank foreclosed the mortgage, emerged as the highest bidder, and was issued a certificate of sale, registered with the Register of Deeds.
  • Julie’s Complaint
    • On March 4, 2003, Julie filed a complaint to:
a) Declare void: the title, the mortgage, and the foreclosure proceedings; b) Reconvey the property to her as the true owner; c) Declare the property as the family home; d) Award damages against Maybank.
  • She claimed to have purchased the property in August 1983 from PACE Realty Investment, Inc., paying in full, but registered the title under her mother’s name as a form of trust.
  • Julie alleged her parents claimed ownership and mortgaged the property without her consent.
  • Trial Court Proceedings
    • The Parcon Spouses were declared in default for failure to answer.
    • Maybank claimed to be a mortgagee in good faith, having verified the title with the Register of Deeds, and counterclaimed for damages and attorney’s fees.
    • The trial court initially dismissed the complaint for petitioner’s failure to prosecute but later allowed evidence presentation, which Julie failed to continue due to non-appearance of counsel.
    • Julie moved for judicial admission that Maybank, a foreign corporation, was disqualified to own land under the Constitution; the court took judicial notice of Maybank’s corporate documents.
    • On July 14, 2008, the Regional Trial Court (RTC) dismissed Julie’s complaint, ruling:
a) The mortgage was valid; b) No trust relationship existed between Julie and her parents; c) The title was unannotated, barring third-party claims; d) The foreclosure proceedings were valid; e) Maybank’s status as a foreign bank was irrelevant to the validity of the sale.
  • Court of Appeals Decision
    • On August 17, 2011, the Court of Appeals (CA) affirmed the RTC ruling, holding that:
a) The title was clean and registered in Lilia Parcon’s name; b) Maybank was a mortgagee in good faith relying on the title; c) Foreclosure was valid under Act No. 3135, and family home exemption did not prevent mortgaging and foreclosure; d) Maybank was authorized to operate as foreign bank under RA 7721 with equal treatment as domestic banks and could acquire mortgaged property upon foreclosure.
  • The CA denied motion for reconsideration on November 28, 2011.
  • Petition for Review
    • Julie argued the mortgage was void since she was the true owner, holding title via trust; Maybank was not a mortgagee in good faith because it failed to investigate adverse possession;
    • Argued Maybank, as a foreign corporation, was constitutionally barred from owning land and had not complied with the applicable laws on foreign bank entry;
    • Maybank maintained it was a mortgagee in good faith, duly authorized foreign bank, had license to operate, and possession of the property was only temporary.
  • Solicitor General and Bangko Sentral Comments
    • Solicitor General argued foreclosure and acquisition by Maybank did not violate Constitution, pointing to RA 7721 and RA 10641 allowing foreign banks to foreclose and possess mortgaged property temporarily, with obligation to sell to qualified Philippine nationals.
    • Bangko Sentral maintained foreign banks are authorized to foreclose but not to acquire ownership of land, emphasizing separation of owning land and banking business, and that RA 7721 and 10641 are constitutional.
  • Bankers Association Position
    • Supported Maybank’s right to participate in foreclosure and temporary possession of property;
    • Explained that limiting foreclosure rights of foreign banks would disincentivize their entry and harm credit availability;
    • Noted that at time of foreclosure (2001) RA 10641 was not yet law and RA 7721 applied.
  • Issues Raised for Resolution
    • Whether the Parcon Spouses hold the property in trust for Julie;
    • Whether Maybank is a mortgagee in good faith;
    • Whether Maybank is an authorized foreign bank;
    • Whether Maybank’s foreclosure and acquisition of properties is constitutional despite being foreign-owned.

Issues:

  • Whether the Parcon Spouses hold the property in trust for Julie Parcon-Song.
  • Whether Maybank Philippines, Inc. is a mortgagee in good faith.
  • Whether Maybank Philippines, Inc. is authorized by the Monetary Board to operate as a foreign bank in the Philippines.
  • Whether Maybank’s foreclosure and acquisition of the property is constitutional despite its status as a fully-owned foreign corporation.

Ruling:

  • (Subscriber-Only)

Ratio:

  • (Subscriber-Only)

Doctrine:

  • (Subscriber-Only)
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