Case Digest (G.R. No. 132115)
Facts:
Teofilo C. Villarico (Petitioner) filed a petition for review challenging the decision of the Court of Appeals, which upheld the findings of the Regional Trial Court (RTC) of Makati in Civil Case No. 17696 and LRC Case No. M-1035. The controversy arose over a house and lot located at No. 714 Cheerful St., Happyville Subdivision, Talon, Las Piñas, Metro Manila, owned by spouses Diosdado and Lolita Acebo Azarraga (Respondents). The property was covered by Transfer Certificate of Title (TCT) No. 44412-A in the name of Diosdado Azarraga. In August 1985, Lolita obtained a loan amounting to PHP 172,500 from Teofilo and mortgaged the property as security. When Lolita defaulted, Teofilo foreclosed the mortgage, won the auction, and was issued a Sheriff’s Certificate of Sale, leading to a transfer of title to him. After the redemption period lapsed, Teofilo filed for a writ of possession. Diosdado then initiated Civil Case No. 17696 to nullify the mortgage, arguing that he did not sign tCase Digest (G.R. No. 132115)
Facts:
- Parties and Subject Property
- Petitioner: Teofilo C. Villarico.
- Private Respondents: Diosdado Azarraga and Lolita Acebo Azarraga.
- The disputed property is a house and lot located at No. 714 Cheerful St., Happyville Subdivision, Talon, Las Piñas, Metro Manila; originally titled in the name of Diosdado Azarraga (TCT No. 44412-A).
- Loan Transaction and Mortgage Execution
- In August 1985, Lolita Azarraga obtained a loan amounting to P172,500 from petitioner Teofilo Villarico.
- To secure the loan, Lolita executed a real estate mortgage over the subject property.
- A controversy arose regarding the execution of the mortgage deed:
- Petitioner claimed that both Lolita and a man purported to be Diosdado Azarraga signed the deed on September 16, 1985.
- Diosdado Azarraga contended he did not sign the document as he was in Malaysia at that time.
- Lolita later admitted in her answer that she received only P80,000, alleging that she executed no formal document aside from endorsing a blank piece of paper, contending that the title was merely pledged to secure the loan.
- Extrajudicial Foreclosure and Its Aftermath
- Petitioner, after Lolita’s failure to remit payment, extrajudicially foreclosed the mortgage.
- Being the highest bidder in the public auction, petitioner was issued a Sheriff’s Certificate of Sale, which he duly registered in the Register of Deeds of Rizal.
- Upon expiration of the redemption period without any redemption, petitioner filed an ex-parte petition for the issuance of a writ of possession.
- Parallel Litigation and Trial Court Decision
- Civil Case No. 17696: Diosdado Azarraga filed an action seeking nullification of the disputed real estate mortgage, along with claims for injunction, a restraining order, and damages, arguing that the mortgage was simulated and fraudulent.
- LRC Case No. M-1035: Petitioner’s ex-parte petition for the issuance of a writ of possession was simultaneously pending.
- On April 27, 1992, the trial court issued its judgment:
- Declaring the real estate mortgage null and void.
- Denying the petition for the issuance of a writ of possession.
- Ordering the cancellation of the title in petitioner’s name and reissuance to Diosdado Azarraga.
- Ordering Lolita Azarraga to pay petitioner P210,000 plus legal interest on a third-party complaint.
- Imposing an order for petitioner and Lolita to pay Diosdado Azarraga P10,000 as attorney’s fees.
- Appeals and Contentions Raised
- Petitioner appealed against the trial court’s decision.
- Diosdado Azarraga also appealed, alleging that the extrajudicial foreclosure was not properly invalidated and that damages should have been awarded.
- On January 5, 1998, the Court of Appeals affirmed the trial court’s decision in toto.
- In his petition for review, petitioner raised the following contentions:
- That he is a mortgagee-purchaser in good faith and for value, having verified the title and relied on assurances regarding Diosdado’s signature.
- That the trial court erred in denying the writ of possession.
- That he should not be held liable for attorney’s fees since he acted in good faith and had no participation in the alleged fraud.
- That Diosdado Azarraga’s negligence in retaining the title facilitated the fraud.
Issues:
- Validity of the Real Estate Mortgage
- Is the real estate mortgage valid such that petitioner is deemed a mortgagee-purchaser in good faith and for value?
- Do the facts support petitioner’s claim regarding reliance on the title and the assurances provided?
- Denial of the Writ of Possession
- Did the trial court err in denying petitioner’s petition for the issuance of a writ of possession, especially given the provisions of Act No. 3135?
- Is the issue of the writ moot in view of the declared nullity of the mortgage deed?
- Award of Attorney’s Fees
- Is petitioner liable to pay attorney’s fees to respondent Diosdado Azarraga?
- Does the conduct of petitioner, specifically regarding the alleged bad faith and participation in the execution of the fraudulent mortgage, justify such an award?
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)