Case Digest (G.R. No. 197857)
Facts:
Spouses Francisco Sierra, et al. v. Paic Savings and Mortgage Bank, Inc., G.R. No. 197857, September 10, 2014, First Division, Perlas-Bernabe, J., writing for the Court. Petitioners are several owners of parcels in Antipolo City who sued Paic Savings and Mortgage Bank, Inc. (PSMB, formerly First Summa Savings and Mortgage Bank) to annul a deed of real estate mortgage and its extrajudicial foreclosure; PSMB is the respondent.In May 1983, Goldstar Conglomerates, Inc. (GCI) obtained a P1,500,000 loan from Summa Bank (which had changed its name to PSMB) secured by promissory notes and a deed of real estate mortgage over GCI property; as additional security, petitioners Francisco Sierra, Rosario Sierra, and spouses Gatlabayan and Salome Sierra mortgaged four parcels (the subject properties). Petitioners received four manager's checks totaling P200,000 and several postdated checks. GCI later defaulted and PSMB foreclosed extrajudicially under Act No. 3135, purchased the properties at public auction on June 27, 1984, and had the titles transferred to its name.
On September 16, 1991 petitioners filed a complaint in the Regional Trial Court (RTC), Civil Case No. 91-2153, seeking declaration that the mortgage and the extrajudicial foreclosure were null and void ab initio, reconveyance of the properties, and damages. Petitioners alleged they were misled into signing the mortgage as accommodation mortgagors by a group that represented it had connections with the bank; they argued the document was not explained in a language they understood, checks were dishonored, they were not furnished loan documents or notice of assignment, and foreclosure notice and posting were defective.
PSMB answered denying liability, asserted it and Summa Bank were the same entity, contended the mortgage and foreclosure were regular and that petitioners knowingly executed the mortgage, and counterclaimed for damages. The RTC, in a Decision dated April 24, 2006, declared the deed and foreclosure null and void, cancelled PSMB's titles and ordered reinstatement of petitioners' titles, but held petitioners liable for the P200,000 partial proceeds and awarded moral/exemplary damages and attorney’s fees against PSMB.
PSMB moved for reconsideration and then appealed to the Court of Appeals (CA). The CA, in CA-G.R. CV No. 91999, Decision dated June 27, 2011, reversed the RTC, dismissed petitioners’ complaint for lack of merit, found petitione...(Subscriber-Only)
Issues:
- Did the Court of Appeals err in finding that petitioners knowingly acted as accommodation mortgagors and therefore that their consent to the mortgage was not vitiated?
- Did the Court of Appeals err in ruling that petitioners’ action to annul the mortgage had prescribed?
- Did the Court of Appeals err in concluding that petitioners’...(Subscriber-Only)
Ruling:
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Ratio:
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Doctrine:
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