Case Digest (G.R. No. 193804)
Facts:
In the case of Spouses Nilo Ramos and Eliadora Ramos v. Raul Obispo and Far East Bank and Trust Company (FEBTC), the petitioners, spouses Ramos, and respondent Obispo were friends who met while working abroad in Saudi Arabia. After returning to the Philippines, Obispo operated a hardware store. In August 1996, petitioners executed a notarized Real Estate Mortgage (REM) over their property in favor of FEBTC to secure credit accommodations extended to Obispo amounting to Php 1,159,096.00. The REM was registered and annotated on the property title.
In September 1999, petitioners informed FEBTC that they only consigned their property as collateral for a loan of Php 250,000.00, which they claimed to have fully paid through Obispo, but Obispo failed to return their title. They discovered that the REM was actually for a loan of Php 1,159,096.00 secured by their property. Petitioners demanded that FEBTC release all documents related to the mortgage, but the bank failed to act.
Petition
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Case Digest (G.R. No. 193804)
Facts:
- Parties and Relationship
- Petitioners Spouses Nilo Ramos and Eliadora Ramos were former contract workers in Saudi Arabia who became best friends with respondent Raul Obispo.
- Obispo had a hardware store in the Philippines.
- Petitioners executed a Real Estate Mortgage (REM) in August 1996 over their property in favor of respondent Far East Bank and Trust Company (FEBTC) to secure credit accommodations extended to Obispo.
- The Real Estate Mortgage and Loan Transactions
- The REM covered a property under Transfer Certificate of Title No. RT-64422 and secured a loan amount of ₱1,159,096.00 allegedly obtained by Obispo.
- The REM was notarized, registered, and annotated on the title the same day it was executed.
- Petitioners claimed they only authorized a loan of ₱250,000.00, and that Obispo filled in the REM for a much larger loan without their consent.
- Petitioners fully paid the ₱250,000.00 loan through Obispo and demanded the release of their title, which was not returned by Obispo who then became uncooperative.
- On September 17, 1999, petitioners notified FEBTC that Obispo used their property as collateral beyond the agreed loan amount and demanded documents related to the mortgage. FEBTC took no action.
- Judicial Proceedings
- Petitioners filed a complaint for annulment of the REM and damages against FEBTC and Obispo on October 12, 1999.
- FEBTC, in its answer, claimed the REM was executed as partial security for Obispo’s loans with a principal balance of ₱2,500,000.00, denied any defect, and prayed for dismissal of the complaint; it also filed a cross-claim against Obispo.
- Obispo was declared in default for failing to file a responsive pleading.
- The Regional Trial Court (RTC) ruled in favor of petitioners, declaring the REM void, ordering the cancellation of the mortgage and return of the title, and awarding moral damages, attorney’s fees, and costs against respondents.
- FEBTC appealed to the Court of Appeals (CA) which reversed the RTC’s decision, ruling that petitioners were accommodation mortgagors under Article 2085 of the Civil Code, and dismissed the complaint.
- Petitioners’ motion for reconsideration before the CA was denied.
- Petitioners filed a petition for review on certiorari before the Supreme Court, contesting:
Issues:
- Whether the Real Estate Mortgage executed by petitioners is valid or should be declared void due to lack of consent and fraud.
- Whether petitioners were accommodation mortgagors securing Obispo’s personal loan under Article 2085 of the Civil Code.
- Whether FEBTC exercised the diligence required of a mortgagee in good faith.
- Whether damages, attorney’s fees, and costs awarded by the RTC should stand.
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)