Case Digest (G.R. No. 174096)
Facts:
Spouses Divinia C. Publico and Jose T. Publico v. Teresa Bautista, G.R. No. 174096, July 20, 2010, Supreme Court Third Division, Carpio Morales, J., writing for the Court. Petitioners are spouses Divinia and Jose Publico (Jose later died and was substituted by his heirs); respondent is Teresa Bautista.On April 12, 1996 petitioners obtained a P200,000 loan from respondent secured by a real estate mortgage over the property covered by TCT No. T-244828 under a document titled "Kasulatan ng Pagkakautang na may Panagot" (Kasulatan). The Kasulatan provided for interest and penalties and contemplated sale under Act 3135 if petitioners defaulted. Petitioners delivered the owner’s copy of TCT No. T-244828 to respondent.
In September 1996 petitioners requested and received the owner’s copy to re-mortgage the same property to Hiyas Savings and Loan Bank, Inc. (Hiyas Bank) to obtain funds to pay respondent. Divinia executed a Pagpapatunay that constituted a conditional promise to pay (including leaving a vehicle as pledge) but did not unequivocally state that the prior obligation was extinguished. Petitioners obtained a P200,000 loan from Hiyas Bank but later defaulted. Fearing foreclosure, respondent offered to pay Hiyas Bank; the bank agreed provided respondent also pay obligations secured by two other REMs covering TCT Nos. T-265662(M) and T-265663.
In the presence of petitioner Jose, respondent paid Hiyas Bank P697,714.58. The official receipts bore Jose’s name but contained dorsal annotations acknowledging that respondent advanced the payments; Jose and respondent signed those annotations. Petitioners did not reimburse respondent despite demands; respondent filed a complaint for foreclosure of mortgage, sum of money and damages before the Regional Trial Court (RTC) of Bulacan on February 1, 1999.
Branch 19, RTC rendered judgment on May 16, 2002 in favor of respondent ordering petitioners to pay the P200,000 loan with interest and penalty (default to trigger foreclosure), to pay P697,714.58 with interest, to pay P20,000 attorney’s fees, and to return two TCTs to petitioners; other claims and petitioners' counterclaim were dismissed. On motion, the trial court amended the decision to set interest at 12% per annum.
The Court of Appeals affirmed by Decision dated November 29, 2005, holding that the Pagpapatunay was a conditional obligation that did not effect novation of the original Kasulatan because its condition was never fulfilled, and that respondent’s payment to Hiyas Bank gave rise to a separate obligation by petitioners to respondent (supported by the annotated receipts), not to subrogation of respondent to the bank’s rights. The CA also held that petitioners were not deprived of their equity of redemption and modified the judgment to specify payment "within ninety (90) days from finality of judgment" in accordance with Rule 68, Sec. 2 of the 1997 Rules of Civil Procedure. Petitioners’ motion for reconsideration was denied.
Petitioners filed a petition for review with the Supreme Court raising, inter alia, whether respondent could ju...(Subscriber-Only)
Issues:
- Could respondent still judicially foreclose on the basis of the Kasulatan despite the subsequent execution of the Pagpapatunay and the delivery of the owner’s copy of the title to petitioners?
- Were petitioners deprived of the equity of redemption by the trial court’s judgment?
- Was there valid subrogation in favor of respondent under Article 1294 of the Civil Code when respondent paid Hiyas Bank?
- Was the a...(Subscriber-Only)
Ruling:
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Ratio:
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Doctrine:
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