Case Digest (G.R. No. 172227)
Facts:
Spouses Wilfredo Palada and Brigida Palada v. Solidbank Corporation and Sheriff Mayo dela Cruz, G.R. No. 172227, June 29, 2011, the Supreme Court First Division, Del Castillo, J., writing for the Court.In early 1997 petitioners Wilfredo Palada and Brigida Palada applied for a P3,000,000 loan from Solidbank Corporation broken down into three lines (bills discounting P1,000,000; bills purchase P500,000; and time loan P1,500,000). On March 17, 1997 the bank released only P1,000,000 to petitioners, who executed a promissory note and, on the same day, a real estate mortgage in the bank's favor covering several parcels in Santiago City, including those under Transfer Certificate of Title (TCT) Nos. T-225131 and T-225132. Petitioners later defaulted and the bank foreclosed; a sheriff’s public auction and issuance of a certificate of sale followed (certificate dated October 7, 1998).
On August 19, 1999 petitioners filed a complaint in the Regional Trial Court (RTC), Branch 35, Santiago City (Civil Case No. 35-2779), seeking nullity of the real estate mortgage and the sheriff’s certificate of sale and praying for damages. They alleged that the bank included TCT Nos. T-225131 and T-225132 among the mortgaged properties without their knowledge or consent, that those titles were then encumbered by a prior mortgage to the Philippine National Bank (PNB), and that the sheriff proceeded with the sale despite their objections and in violation of any venue stipulation in the mortgage.
Solidbank answered, denying material allegations and asserting that petitioners offered the four identified titles as additional collateral when they became collaterally deficient, that the bank accepted them with petitioners’ knowledge and consent and caused annotation of the mortgage, and that the titles were delivered to the bank when petitioners extinguished their obligation to PNB.
The RTC, in a Decision dated October 21, 2004, declared the mortgage and the sheriff’s certificate of sale null and void for lack of sufficient consideration because the bank allegedly failed to deliver the full P3,000,000; the trial court also found fraud and bad faith by the bank, awarding moral and exemplary damages and attorney’s fees to petitioners. On appeal, the Court of Appeals (CA), in a Decision dated January 11, 2006 (CA‑G.R. CV No. 84236), reversed the RTC, held that the mortgage secured the P1,000,000 actually released, found the auction sale proper under Act No. 3135 (Sections 1 and 2), and declined to find fraud or bad faith; it set aside the RTC decision, dismissed the complaint, and declared the mortgage and certificate of sale valid. The CA d...(Subscriber-Only)
Issues:
- Did the Court of Appeals err or gravely abuse its discretion in annulling the RTC’s findings and dismissing petitioners’ complaint?
- Is the real estate mortgage and the sheriff’s certificate of sale valid despite petitioners’ claim that the bank failed to deliver the full P3,000,000 and that certain titles were included without their consent?
- Did the Court of Appeals misappreciate the RTC’s findings of fact, particularly as to a...(Subscriber-Only)
Ruling:
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Ratio:
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Doctrine:
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