Case Summary (G.R. No. 196323)
Applicable Law and Authorities
Governing procedural provisions and authorities relied upon include: Rule 45, Section 1 of the Rules of Court (limits of certiorari by petition for review); Rule 3, Sections 2 and 3 of the Rules of Court (real parties in interest; representatives and agents); Article 1882 of the Civil Code (limits of agent’s authority); Section 112 of the Land Registration Act as interpreted in jurisdictional jurisprudence; and cited precedents such as Tongonan Holdings v. Escano, Jr., Salcedo v. People, Gatan v. Vinarao, Diokno v. Cacdac, Hernandez v. Rural Bank of Lucena, Inc., Rehabilitation Finance Corporation v. Alto Surety & Insurance Co., Inc., and other procedural jurisprudence referenced by the courts below.
Factual Background — Loans and Mortgages
Between 1979 and 1984, respondent obtained multiple sugar crop loans from Maybank (P142,500 in 1979; P307,700 in 1982 jointly with her son; P110,000 in 1984). Each loan was due within one year. The loans were secured by Real Estate Mortgages (REMs) executed through Special Powers of Attorney (SPAs) on specified titled parcels owned by third parties (listed by lot numbers and TCTs in the record). Maybank did not demand payment, initiate collection, or foreclose on these loans for many years.
Transfer of Receivables and Assignment Allegation
Maybank asserted that its assets and liabilities, including receivables, had been assigned to PNB by a Deed of Assignment dated July 20, 1998, and subsequently transfers of receivables to BSP were referenced in the record. The Deed of Assignment was presented to the RTC and to the appellate courts as proof when petitioner sought substitution of parties or asserted indispensability of BSP.
Trial Court Petition and Early Proceedings
After a lapse of approximately 17 years from the loans’ due dates, Remedios and Roy filed a petition in the RTC of Himamaylan to cancel the mortgage annotations on grounds of prescription and extinction of the loan obligations. Maybank attempted to have PNB substituted as respondent based on the Deed of Assignment; the RTC required further proof and denied substitution. A motion to dismiss on demurrer by counsel purportedly appearing for PNB was denied for lack of proof of authority to represent Maybank. Proceedings continued and evidence was taken.
RTC Ruling
On June 24, 2003, the RTC granted the petition, declaring the enumerated mortgage contracts unenforceable and of no force and effect due to prescription, and ordering the cancellation of the annotated mortgage entries on the specified titles without the need to present original duplicate titles to the Registers of Deeds. The RTC treated the petition as within its cadastral and substantive jurisdiction under the circumstances presented.
Issues Raised on Appeal to the Court of Appeals
Maybank appealed raising, among others, that (1) the case was not filed in the name of real parties in interest and thus the RTC had no jurisdiction to act; (2) respondent lacked cause of action and authority to sue; and (3) indispensable parties—specifically BSP as assignee and the registered owners of the mortgaged properties—were not impleaded, rendering any judgment void.
Court of Appeals Decision
The CA denied Maybank’s appeal and affirmed the RTC in toto. The CA analyzed whether the appeal presented questions proper for appellate review, evaluated the probative value of the Deed of Assignment, and found the principal loan obligations prescribed. The CA applied pertinent rules on real parties in interest, agents suing in their own names for undisclosed principals, and the nature of an action to cancel a mortgage as personal rather than real.
Questions Presented to the Supreme Court
Maybank’s Rule 45 petition to the Supreme Court essentially challenged (1) whether the CA erred in affirming judgment despite respondent not being the real party in interest; (2) whether respondent had legal capacity or authority to sue; and (3) whether the CA erred in affirming cancellation of mortgage liens when an indispensable party (BSP) was not included.
Rule 45 Threshold: Questions of Law vs. Fact
The Supreme Court first addressed whether the petition raised reviewable questions of law under Section 1, Rule 45. It explained the established test distinguishing questions of law from questions of fact: an issue is one of law if resolution rests solely on legal principles applied to undisputed facts and does not require reweighing the evidence. The Court found that many of petitioner’s issues invoked legal principles applied to undisputed facts and therefore were proper for review. The Court noted recognized exceptions allowing limited review of factual findings in a Rule 45 petition where grave abuse, contradiction, speculation, or other enumerated defects are present; none of those exceptions justified reexamination of the CA’s factual findings here.
Indispensable Party Argument and Evidence Appraisal
The Court declined to re-evaluate the lower courts’ factual appraisal of the Deed of Assignment purporting to show BSP’s interest, noting that the probative value of that document was a factual matter outside the scope of Rule 45 review. The Court observed the Deed as presented did not clearly demonstrate the assignment of the specific sugar crop loans, and the lower courts legitimately found it lacking in probative value. Because the indispensability argument hinged on that factual assessment, the Supreme Court declined to disturb the finding that BSP was not shown to be an indispensable party on the record.
Real Parties-in-Interest, Agency, and Authority to Sue
The Court examined Sections 2 and 3, Rule 3 of the Rules of Court regarding real parties in interest and representatives. It explained that an agent may sue or be sued in his or her own name for the benefit of an undisclosed principal except when the contract involves things belonging to the principal. The Court reasoned that mortgage contracts are accessory to the principal loan contract and do not themselves “involve” the mortgaged real property in the sense that would mandate joining the owners when an agent sues to cancel the mortgage. Jurisprudence was cited distinguishing an action to cancel a mortgage (personal action) from an action to foreclose (real action affecting title). On this basis, respondent validly instituted the petition in her own name as agent acting within the scope of authority conferred by the SPAs.
Scope of Agent’s Authority and Ratification
Relying on Article 1882 of the Civil Code, the Court found that the special authority granted to respondent to encumber the owners’ titles implicitly included authority to perform acts advantageous to the principals, including acts to disencumber the titles. The record reflected that the registered owners did not object to respondent’s authority during proceedings, and their failure to challenge the agency effectively ratified respondent’s action. Thus, the absence of joinder of the mortgagor-owners was not fatal to the petition.
Prescription of Principal Obligations and Effect on Mortgages
The Court emphasized that the principal loan obligations had become unenforceable by prescription, and because the REMs are accessory to those loans,
...continue readingCase Syllabus (G.R. No. 196323)
Case Caption and Procedural Posture
- Third Division, G.R. No. 196323; Decision promulgated February 8, 2021.
- Petitioner: PNB-Republic Bank (Maybank Philippines, Incorporated; herein referred to as Maybank).
- Respondent: Remedios Sian-Limsiaco (Remedios).
- Relief sought: Petition for Review on Certiorari under Rule 45 of the Rules of Court seeking to set aside the Court of Appeals (CA) Decision dated April 30, 2010 in CA-G.R. CV No. 80268 and the CA Resolution of March 16, 2011 denying Maybank’s Motion for Reconsideration.
- Disposition of the Supreme Court: Petition denied; CA Decision and Resolution affirmed; costs against petitioner. Panel concurrence listed as Leonen (Chairperson), Lazaro-Javier, Delos Santos, and Lopez, JJ., with a footnoted designation concerning membership by raffle.
Factual Antecedents — Loans, Mortgages, and Titles
- 1979 sugar crop loan: Remedios obtained a loan of P142,500.00 from Maybank, payable within one year.
- Security for 1979 loan: Remedios, through a Special Power of Attorney (SPA), executed a Real Estate Mortgage (REM) encumbering:
- Lot 8, TCT No. T-74488 (owned by Sian Agricultural Corporation); and
- Lot 1, TCT No. 55619 (owned by spouses Sebastian and Marina de la Pena).
- 1982 sugar crop loan: Remedios and her son Roy Sian-Limsiaco secured a loan of P307,700.00, due after one year; Roy, through SPA, executed REMs on properties owned by spouses Jerome Gonzales and Perla Sian-Gonzales:
- Lot 214, TCT No. T-121539;
- Lot 215, TCT No. T-121540;
- Lot 213-B, TCT No. T-121541; and
- Lot 96, TCT No. T-80515.
- 1984 sugar crop loan: Remedios obtained another loan of P110,000.00, likewise secured by REM on Lot 8 (TCT No. T-74488) owned by Sian Agricultural Corporation.
- Maybank’s inaction: Maybank never demanded payment of these sugar crop loans nor filed actions for collection or foreclosure for an extended period.
Filing of the Petition and Early Procedural Events in the RTC
- June 29, 2001: After lapsing approximately 17 years from the loans’ due dates, Remedios and Roy filed a petition before the Regional Trial Court (RTC), Branch 56, Himamaylan, Negros Occidental, seeking cancellation of the mortgage annotations on the titles on grounds of prescription and extinction of the loan obligations.
- Maybank’s initial procedural stance: Maybank referred the case to Philippine National Bank (PNB) asserting a Deed of Assignment (dated July 20, 1998) assigning assets and liabilities, including receivables, thereby arguing PNB should be treated as substitute respondent.
- RTC requirement and denial of substitution: The RTC required additional documents to support substitution; PNB failed to provide such documents, resulting in denial of the Motion for Substitution (March 12, 2002 Order; June 6, 2002 Order).
- Counsel’s authority challenged: Atty. Kenneth Alovera filed a Motion to Dismiss on Demurrer to Evidence on behalf of PNB/Maybank; the trial court denied the motion due to failure to prove authority to appear for Maybank (February 5, 2003 Order).
- Transfer of receivables: At some point during proceedings, the receivables were transferred to the Bangko Sentral ng Pilipinas (BSP), as asserted in the record.
RTC Ruling (June 24, 2003) — Relief Granted and Specific Directives
- RTC Order: Petition granted; mortgage contracts enumerated and annotated on the respective Certificates of Title declared unenforceable and of no force and effect due to prescription.
- Specific directives to Registers of Deeds:
- Bacolod City Register of Deeds ordered to cancel Entry Nos. 99726, 122381, 130934 annotated on the backs of TCT No. T-74488 (Lot 8) and TCT No. T-55619 (Lot 1) without requiring presentation of the original owner’s duplicate titles.
- Register of Deeds of the Province of Negros Occidental ordered to cancel Entry No. 288015 annotated on the back of TCT No. T-121539 (Lot 214); same entry number annotated on TCT No. T-121543 (Lot 215); TCT No. T-121541 (Lot 213-B); and TCT No. T-80515 (Lot 96), all of Himamaylan Cadastre, likewise without need to present original owner’s duplicate titles.
- RTC Judge: Order penned by Presiding Judge Edgardo L. Catilo.
Issues Raised on Appeal to the Court of Appeals
- Maybank’s appellate contentions distilled by the CA:
- Whether the trial court erred in taking cognizance and granting the petition when the action was not filed in the name of the real parties-in-interest (registered owners of the mortgaged properties) and when BSP, as assignee of the receivables, was not made party — allegedly violating Section 2, Rule 3 of the Rules of Court.
- Whether the trial court erred in granting the petition when Remedios had no cause of action against Maybank.
- Whether the owners of the mortgaged properties are bound by the trial court’s judgment despite their non-joinder as parties.
Court of Appeals Decision and Subsequent Proceedings
- CA Decision (April 30, 2010): Appeal denied; RTC Order of June 24, 2003 affirmed in toto. No costs awarded by the CA.
- CA Resolution (March 16, 2011): Motion for Reconsideration by Maybank denied.
- Resulting action: Maybank filed the Rule 45 petition before the Supreme Court raising legal issues derived from the CA affirmation.
Issues Presented to the Supreme Court
- Questions pressed in the Rule 45 petition:
- Whether the CA erred in affirming the RTC judgment despite the respondent not being the real parties-in-interest and hence lacking cause of action.
- Whether the CA erred in affirming the judgment despite respondents lacking authority to institute suit and therefore lacking capacity to sue.
- Whether the CA erred in affirming the cancellation of Maybank’s mortgage liens despite the non-inclusion of an indispensable party, the BSP.
Preliminary Procedural Threshold — Questions of Law vs. Questions of Fact (Rule 45)
- Rule 45 limitation reiterated: Petition for review on certiorari shall raise only questions of law (Section 1, Rule 45).
- Distinction applied:
- Legal questions can be resolved without re-weighing evidence; factual questions invite examination of probative value.
- Cited jurisprudence: Tongonan Holdings v. Escano, Jr.; Malabanan; Salcedo v. People enumerating exceptions permitting Supreme Court factual review under certain circumstances.
- Court