G.R. No. 136100 - Uy vs. Land Bank of the Philippines

Case Summary (G.R. No. 136100)

Applicable Law

This case primarily invokes provisions from the Civil Code of the Philippines, particularly Article 1676 regarding the rights of the purchaser at a foreclosure sale and the propriety of unregistered leases, as well as other procedural rules related to appeals and petitions.

Factual Background

On February 24, 1988, the Land Bank filed an unlawful detainer complaint against Felipe Uy before the Metropolitan Trial Circuit Court of Iloilo City. The Land Bank claimed ownership of two parcels of land previously owned by Tia Yu and subsequently mortgaged by Gold Motors Parts Corporation to secure a loan from the bank. Following Gold Motors' default, the Land Bank acquired the properties through foreclosure, consolidating the titles in its name in October 1986. Uy contended that he had an agreement with Tia Yu, in which he occupied the house on the premises as a lessee in lieu of unpaid debt for construction materials.

MTCC Decision

The MTCC ruled in favor of Uy on March 31, 1989, asserting that the bank was aware of the lease when it obtained the mortgage and therefore, could not disregard Uy's occupancy. It dismissed the Land Bank's complaint and ordered it to pay attorney's fees and litigation expenses to Uy.

RTC Findings and Appeal

Land Bank's appeal to the Regional Trial Court confirmed the MTCC's decision. The RTC mentioned that the mortgage was void under Article 2085 of the Civil Code due to the lack of absolute ownership by the mortgagor, though this point was not included in the dispositive portion of its ruling.

Court of Appeals Proceedings

On December 12, 1996, Land Bank sought a 30-day extension to file a petition for review after receiving a resolution denying its motion for reconsideration. The Court of Appeals initially granted it a 15-day extension but later admitted the petition filed on January 11, 1997, despite being outside of this period.

CA’s Reversal of RTC Order

On July 1, 1998, the Court of Appeals reversed the RTC ruling favoring Land Bank, claiming it had a superior title due to the Transfer Certificate of Title. It further ruled that the issue of mortgage validity was irrelevant to the appeal.

Motions and Further Proceedings

Both parties filed motions for reconsideration which were denied by the CA. Uy submitted a petition for review to the Supreme Court, which faced initial rejection due to procedural issues such as the lack of verification and certification against forum shopping.

Reinstatement of Petition

Upon reconsideration, the Supreme Court acknowledged the lack of verification as a formal defect, allowing for corrective measures. The court ruled that, despite the p

Case Syllabus (G.R. No. 136100)

Factual Background

On February 24, 1988, Land Bank of the Philippines initiated an unlawful detainer case against Felipe Uy before the Metropolitan Trial Circuit Court (MTCC) of Iloilo City.
The properties involved were two parcels of land located on Quezon Street, Iloilo City, originally owned by Tia Yu, including a two-story house built thereon.
Tia Yu gave Gold Motors Parts Corporation a special power of attorney to mortgage the properties as security for a loan from Land Bank.
On August 19, 1980, Gold Motors mortgaged the properties to Land Bank but defaulted on the loan, leading Land Bank to foreclose and become the highest bidder.
Land Bank received certificates of sale and consolidated ownership titles over the properties in October 1986.
Felipe Uy claimed he supplied building materials for the house; due to partial nonpayment by Tia Yu, Uy agreed to occupy the house and offset rental payments against the P400,000 debt.
This agreement was formalized in a Lease Contract dated June 6, 1982.

Proceedings at Trial and First Appeal

The MTCC ruled in favor of Felipe Uy on March 31, 1989, dismissing Land Bank's complaint and confirming Uy’s right to possession based on the Lease Contract.
The MTCC found Land Bank had knowledge of the lease at the time of the mortgage and was bound by its terms.
Land Bank was ordered to pay attorney's fees of P10,000 and litigation expenses of P5,000.
On appeal, the Regional Trial Court (RTC) affirmed the MTCC decision entirely.
The RTC noted in its decision that the mortgage was void under Article 2085 of the Civil Code because the mortgagor must be the absolute owner, but this did not affect the dispositive portion of the decision.
The RTC confirmed Land Bank could not claim possession of the properties.

Filing Before the Court of Appeals and Issues of Timeliness

Land Bank filed a motion on December 12, 1996, seeking a 30-day extension to file a petition for review with the Court of Appeals (CA), citing delay in receiving complete records and the short preparation time.
The CA granted only a 15-day extension until December 27, 1996.
Land Bank failed to file within this extension, submitting the petition on January 11, 1997, exceeding the granted time by 15 days.
Land Bank claimed delays due to late receipt of documents (only on December 26), late receipt of the CA's extension Resolution (January 20), and heavy workload of counsel.
Land Bank moved the CA to reconsider and admit the late petition.
The CA granted the motion, admitted the petition, and ordered Felipe Uy to comment.
Uy opposed, raising issues including the petition’s timeliness.

Court of Appeals Decision on the Merits

On July 1, 1998, the CA reversed the RTC decision, ruling that Land Bank, as owner with consolidated Transfer Certificates of Title (TCT), had superior right to the property.
The CA found the RTC erred when it declared the mortgage void, stating that the mortgage’s validity was not properly an issue in the MTCC proceedings.
The CA ordered Felipe Uy to surrender possession to Land Bank.
Both parties filed motions for reconsideration—Land Bank sought reasonable rent; Uy opposed. Both motions were denied on October 2, 1998.

Petition for Review to the Supreme Court and Procedural Hurdles