16
AUTOCORP GROUP and PETER Y. RODRIGUEZ vs INTRA STRATA ASSURANCE CORPORATION and
BUREAU OF CUSTOMS,
G.R. No. 166662 June 27, 2008
FACTS
Petitioner Autocorp Group, represented by its President, petitioner Peter Rodriguez, secured an
ordinary re-export bind from private respondent Intra Strata Assurance Corporation (ISAC). This bind
was in favor of public respondent Bureau of Customs (BOC) to export one unit of Hyundai Excel 4-door
1.5 LS and/or to pay the taxes and duties thereon. Another ordinary re-export bond from ISAC in favor
of the BOC was obtained to guarantee the re-export of one unit of Hyundai Sonata 2.4 GLS and/or to pay
the taxes and duties thereon.
Petitioners executed and signed two Indemnity Agreements with identical stipulations in favor
of ISAC, agreeing to act as surety of the subject bonds. Petitioner Rodriguez signed the Indemnity
Agreements both as President of the Autocorp Group and in his personal capacity. In sum, ISAC issued
the subject bonds to guarantee compliance by petitioners with their undertaking with the BOC to re-
export the imported vehicles within the given period and pay the taxes and/or duties due thereon. In
turn, petitioners agreed, as surety, to indemnify ISAC for the liability the latter may incur on the said
bonds.
Petitioner Autocorp Group failed to execute the aforesaid agreements despite the repeated
demands made by the BOC, as well as by ISAC. Hence, ISAC filed with the RTC a complaint against
petitioners. The RTC ruled in favor ISAC, which was subsequently affirmed by the Court of Appeals.
ISSUE
Whether or not petitioner Peter Rodriquez is jointly liable when amendments were introduced,
without his consent and approval?
HELD
Yes. The Court of Appeals assailed in its decision that even granting arguendo that there was a
modification as to the effectivity of the bonds, petitioners would still not be absolved from liability since
they had authorized ISAC to consent to the granting of any extension, modification, alteration and/or
renewal of the subject bonds. An agreement whereby the sureties bound themselves to be liable in case
of an extension or renewal of the bond, without the necessity of executing another indemnity
agreement for the purpose and without the necessity of being notified of such extension or renewal, is
valid; and that there is nothing in it that militates against the law, good customs, good morals, public
order or public policy.
22
FELICIDAD L. ORONCE vs. COURT OF APPEALS
G.R. No. 125766. October 19, 1998
FACTS:
Private respondent Priciliano B. Gonzales Development Corporation was the registered owner of
a parcel of land with an area of 2,000 square meters. The land with improvements, covered by Transfer
Certificate of Title No. RT-54556 (383917) situated at No. 52 Gilmore Street, New Manila, Quezon City.
In June 1988, private respondent obtained a four million peso — (P4,000,000.00) loan from the China
Banking Corporation. To guarantee payment of the loan, private respondent mortgaged the Gilmore
property and all its improvements to said bank. Due to irregular payment of amortization, interests and
penalties on the loan accumulated through the years. On April 13, 1992, private respondent, through its
president, Antonio B. Gonzales, signed and executed a Deed of Sale with Assumption of Mortgage
covering the Gilmore property and its improvements, in favor of petitioners Rosita Flaminiano and
Felicidad L. Oronce.
The deed, which states that the sale was in consideration of the sum of P5,400,000.00 with the
condition that possession of said premises shall be delivered to the vendees at the expiration of one
year from the date of the signing and execution of this Deed of Sale with Assumption of Mortgage. On
the other hand, petitioners bound themselves to pay private respondent's indebtedness with China
Banking Corporation.
More than one year after the execution of the Deed, On November 12, 1993, petitioners sent
private respondent a demand letter asking it to vacate the premises. Said letter, just like three other
consecutive notices sent through the Quezon City post office, was unclaimed. Hence, on April 11, 1994,
petitioners filed before the Metropolitan Trial Court of Quezon City, a complaint for unlawful detainer
against private respondent.
Private respondent raised the issue of ownership over the property. It impugned petitioners'
right to eject, alleging that petitioners had no cause of action against it because it was merely a
mortgagee of the property. It argued that when the parties executed the Deed of Sale with Assumption
of Mortgage, its real intention was to forge an equitable mortgage and not a sale.
ISSUE:
Whether or not the parties’ real intent was to execute an equitable mortgage as opposed to a
sale?
HELD:
Yes, the parties only intended to execute or forge an equitable mortgage and not a sale. Article
1602 of the Civil Code provides that a contract shall be presumed to be an equitable mortgage by the
presence of any of the following: "(1) When the price of a sale with right to repurchase is unusually
inadequate; (2) When the vendor remains in possession as lessee or otherwise; CD Technologies Asia,
Inc. 2018 cdasiaonline.com (3) When upon or after the expiration of the right to repurchase another
instrument extending the period of redemption or granting a new period is executed; (4) When the
purchaser retains for himself a part of the purchase price; (5) When the vendor binds himself to pay the
taxes on the thing sold; (6) In any other case where it may be fairly inferred that the real intention of the
parties is that the transaction shall secure the payment of a debt or the performance of any other
obligation. After careful examination, two of the circumstances enumerated in Article 1602 are manifest
in the Deed of Sale with Assumption of Mortgage, namely: (a) the vendor would remain in CD
Technologies Asia, Inc. 2018 cdasiaonline.com possession of the property (no. 2), and (b) the vendees
retained a part of the purchase price (no. 4). On its face, therefore, the document subject of controversy
is actually a contract of equitable mortgage.
Article 1604 of the Civil Code provides that the provisions of Article 1602 "shall also apply to a
contract purporting to be an absolute sale." The presence of even one of the circumstances in Article
1602 is sufficient basis to declare a contract as one of equitable mortgage. The explicit provision of
Article 1602 that "any" of those circumstances would suffice to construe a contract of sale to be one of
equitable mortgage is in consonance with the rule that the law favors the least transmission of property
rights.
The denomination of the contract as a deed of sale is not binding as to its nature. The decisive
factor in evaluating such an agreement is the intention of the parties, as shown, not necessarily by the
terminology used in the contract, but by their conduct, words, actions and deeds prior to, during and
immediately after executing the agreement. Private respondent's possession over the property was not
denied by petitioners as in fact it was the basis for their complaint for unlawful detainer.
The Court of Appeals failed to determine that even on its face, the document was actually one
of equitable mortgage and not of sale
27
INSULAR LIFE ASSURANCE COMPANY, LTD vs. ROBERT YOUNG
G.R. No. 140964. January 16, 2002
FACTS:
Respondent Robert Young and his associates, herein co-respondents, filed withthe Regional Trial
Court (RTC), Branch 142, Makati City, a complaint against the petitioner Insular Life and its counsel, Atty.
Jacinto Jimenez, for annulment of notarial sale, specific performance and damages. Respondents allege
that the notarial sale conducted by petitioner Atty. Jacinto Jimenez on the shares of stock pledged by
respondent Young to secure his debt with the bank did not comply with the requirement of notice of the
second auction sale. Respondents also allege that Young was forced by the officers of Insular Life to sign
letters to enable them to have control of the Bank; that under the Memorandum of Agreement (MOA),
Insular Life should apply the purchase price of P198,000,000.00 (corresponding to the 55% of the
outstanding capital stock of the Bank) to Young's loan of P200,000,000.00 and pay the latter
P162,000,000.00 representing the remaining 45% of its outstanding capital stock, which must be set-off
against the loans of the other respondents.
The RTC dismissed the complaint ruled that the MOA is binding between the parties as it was
not validly rescinded. Hence, the petition before the Court.
ISSUE:Whether or not there was sufficient notice for the auction sale of the thing pledged
HELD:
Yes, the notice requirement for the auction sale was sufficiently complied with. There was no
need to send separate notices for the first and second auction sale. Article 2112 of the Civil Code
provides: "The creditor to whom the credit has not been satisfied in due time, may proceed before a
Notary Public for the sale of the thing pledged. The sale shall be made at public auction and with
notification to the debtor and the owner of the thing pledged in a proper case, stating the amount for
which the public sale is to be held. If at the first auction the thing is not sold, a second one with the
same formalities shall be held; and if at the second auction there is no sale either, the creditor may
appropriate the thing pledged. In this case he shall be obliged to give an acquittance for his entire
claim." Under the aforementioned provision of law, there is no prohibition against the sending of one
notice for the first and second public auction as was done here by petitioner Insular Life. The purpose of
the law in requiring notice is to sufficiently apprise the debtor and the pledgor that the thing pledged to
secure payment of the loan will be sold in a public auction and the proceeds thereof shall be applied to
satisfy the debt. When petitioner Insular Life sent a notice to Young informing him of the public auction
scheduled on October 28, 1991, and a second auction on the next day, October 29, in the event that the
shares are not sold on the first auction, the purpose of the law was achieved. The Court
rejectedrespondents' argument that the term "second one" refers to a separate notice which requires
the same formalities as the first notice.
32
TAMBUNTING PAWNSHOP, INC. vs COMMISSIONER OF INTERNAL REVENUE
G.R. No. 179085 January 21, 2010
FACTS
Respondent Commissioner of Internal Revenue issued an assessment to petitioner Tambunting
Pawnshop for its value-added tax deficiency, documentary stamp tax on pawn tickets, withholding tax
on compensation, and deficiency expanded withholding tax, all inclusive of interests and surcharges for
the taxable year 1999. Petitioner protested the assessment. As the protest merited no response, it filed a
Petition for Review with the Court of Tax Appeals (CTA) pursuant to Section 228 of the National Internal
Revenue Code, raising the following arguments:
(1) Pawnshops are not subject to Value Added Tax pursuant to Section 108 of the
National Internal Revenue Code.
(2) Petitioner properly withheld and remitted to the respondent the correct amount of
expanded withholding tax for taxable year 1999. [6]
(3) Petitioner has already paid the assessed amount of P14,398.38 [sic], representing
deficiency withholding tax on compensation, thus, assessment on withholding on
compensation must be cancelled.
(4)Petitioner's pawn tickets are not subject to documentary stamp tax pursuant to
existing laws and jurisprudence.
The First Division of the CTA ruled that petitioner is liable for VAT and documentary stamp tax
but not for withholding tax on compensation and expanded withholding tax. The petitioner filed a
petition for review on certiorari with the Supreme Court. It argued that a pawnshop is not enumerated
as one of those engaged in "sale or exchange of services" in Section 108 of the National Internal Revenue
Code.
ISSUE
Whether or not the petitioner is liable for the documentary stamp tax?
HELD
Yes.. In dodging liability for documentary stamp tax on its pawn tickets, petitioner argues that
such tickets are neither securities nor printed evidence of indebtedness. The Court found this argument
void of merit. The Court held in Michel J. Lhuillier Pawnshop, Inc. v. Commissioner of Internal Revenue
that a Documentary Stamp Tax (DST) is an excise tax on the exercise of a right or privilege to transfer
obligations, rights or properties incident thereto. The law does not consider said ticket as an evidence of
security or indebtedness. However, for purposes of taxation, the same pawn ticket is proof of an
exercise of a taxable privilege of concluding a contract of pledge. There is therefore no basis in
petitioner's assertion that a DST is literally a tax on a document and that no tax may be imposed on a
pawn ticket.
38
PRUDENTIAL BANK vs. DON A. ALVIAR and GEORGIA B. ALVIAR, Respondents.
G.R. No. 150197 July 28, 2005
FACTS:
Spouses Alviar executed a deed of mortgage in favor of Prudential Bank. They issued
three promissory notes namely: ; (1) PN BD#75/C-252; (2) PN BD#76/C-345; and (3) PN BD#76/C-430.
The first promissory note was issued to cover the aforesaid loan in which a “blanket mortgage clause” or
“dragnet clause” was indicated. The subsequent promissory note was furnished in favor of Prudential
Bank secured by a "hold-out" on the mortgagor's (Alviar's) foreign currency savings account with
Prudential Bank and Alviar's passbook is to be surrendered to Prudential Bank until the amount secured
by the holdout is settled. The last note was executed by the Spouses, this time, in behalf of DONALCO
trading (the spouses are the Chairman and the VP of the company). This was secured by "Clean Phase
out of TOD CA 3923: meaning that the temporary overdraft incurred by DONALCO trading is to be
converted into an ordinary loan. Prudential bank approved the straight loan.
Prudential Bank pushed through the foreclosure of the mortgaged property despite the
payment of Spouses Alviar. Hence, Spouses Alviar complaint for damages with a prayer for the issuance
of a writ of preliminary injunction with the RTC of Pasig claiming that they have paid their principal loan
secured by the mortgaged property, and thus the mortgage should not be foreclosed. For its part,
petitioner averred that the payment of ₱2,000,000.00 made on 6 March 1979 was not a payment made
by respondents, but by G.B. Alviar Realty and Development Inc., which has a separate loan with the bank
secured by a separate mortgage.
ISSUE:
Whether or not the real estate mortgage only covers the first loan?
HELD:
Yes. A “blanket mortgage clause” or “dragnet clause subsumes all debts of past or future origins.
It operates as a convenience and accommodation to the borrowers as it makes available additional
fundswithout their having to execute another security documents. In the case at bar, the existence of
such clause is undeniably present, however, the subsequent loans obtained by the petitioner were
secured by other securities. Thus, foreclosure of the mortgaged property should only be for the first loan
obtained by the spouses and for any amount not covered by the security for the second promissory
note.
43
PHILIPPINE NATIONAL BANK vs GREGORIO B. MARAYA, JR. and WENEFRIDA MARAYA
G.R. No. 164104 September 11, 2009
FACTS
Spouses Maraya secured a loan from petitioner Philippine National Bank (PNB) and constituted a
real estate mortgage of their aforesaid property. Due to the failure of respondent spouses to pay their
obligation, petitioner bank in extrajudicial foreclosure of the mortgaged property without having the
intended foreclosure sale published in the newspaper of general circulation. PNB emerged as the
highest bidder.
For failure of the spouses Maraya to redeem the property and their failure to buy back the same
despite several periods granted by PNB after one year allowed by law, PNB decided to sell the property.
On May 11, 1993, a public bidding was conducted for the said purpose with defendant appellant Jesus
Cerro as the successful bidder.
The subject land was sold in favor of Jesus Cerro. However, the spouses Maraya refused to
vacate the premises, hence, he filed a complaint before the Municipal Trial Court of Maasin. Southern
Leyte for unlawful detainer against them. The MTC rendered the decision in favor of Cerro. Spouses
Maraya appealed the decision and filed the complaint for Annulment of Sale and Quieting of Title
against [PNB and the spouses Cerro] before the Regional Trial Court. The RTC ruled in favor of the
spouses MAraya due to the failure of PNB to comply with the substantive requirement of the law under
Section 3, Act No. 3135 as to publication of the notice of sale once a week for at least three consecutive
weeks in a newspaper of general circulation. The Court of Appeals, on appeal, affirmed the decision of
the RTC. Hence, this petition.
ISSUE
Whether or not extrajudicial foreclosure sale conducted is valid even in the absence of publication of the
notice of foreclosure of mortgage
HELD
No. Pursuant Section 3 of Act No. 3135 which reads. Notice shall be given by posting notices of
the sale for not less than twenty (20) days in at least three public places of the municipality or city where
the property is situated, and if such property is worth more than four hundred pesos, such notice shall
also be published once a week for at least three consecutive weeks in a newspaper of general circulation
in the municipality or city, the Court ruled that statutory provisions governing publication of notice of
mortgage foreclosure sales must be strictly complied with, and that even slight deviations therefrom will
invalidate the notice and render the sale at least voidable.
49
BENJAMIN BELISARIO, PACITA B. PINAR, VICTORIA BELISARIO, SILVERIO BELISARIO, FRANCISCO
BELISARIO, ANATOLIA B. JACULAN, FELIPE BELISARIO and TERESITA B. ALKUINO vs.THE INTERMEDIATE
APPELLATE COURT, LOURDES CABRERA, VICENTE CABRERA, JR., ROBERTO CABRERA, MANUEL
CABRERA and PNB, Cagayan de Oro Branch,
G.R. No. 73503 August 30, 1988
FACTS
Sometime in 1950, petitioner siblings mortgaged a land which was extrajudicially settled among
them upon the death of their father. The aforementioned land was mortgaged with the Philippine
National Bank (PNB) in order to secure a promissory note. The mortgage was extrajudicially foreclosed
upon the default of petitioner-mortgagors to secure payment of the loan. On April 1971, petitioner
made known to PNB their desire to redeem or repurchase the said property same as the auction price.
Petitioners also enclosed therein a postal money order in the amount of P630.00 as partial payment,
with the balance to be paid in twelve equal monthly installments. At the time petitioners offered to
redeem the subject property, the Sheriff's Certificate of Sale covering the sale at public auction to the
respondent PNB was not yet registered.
Having been apprised of the non-registration, the respondent PNB caused the registration of the
Sheriff's Certificate of Sale with the Register of Deeds of Bukidnon on July 22, 1971 and Transfer
Certificate of Title No. T-6834 was later issued in the name of respondent bank.
On August 1971, PNB sent a reply to petitioner siblings indicating their refusal to accept their
offer and informing them that the property is already sold to responder Vicente Cabrera. Subsequently,
respondent Cabrera filed an action for Recovery of Possession and Damages against herein petitioners,
together with their tenants, who were actual possessors of the land, with the Court of First Instance of
Bukidnon. In return, the sibling petitioner filed an action for Repurchase of Homestead against
respondents PNB and Cabrera. The trial court dismissed the petition and was later affirmed by the Court
of Appeals.
ISSUE:
Whether or not the petitioner siblings can validly exercise their right to repurchase the subject
property?
HELD:
Yes. Under the law, the redemption period should be reckoned from the date of the registration
of the Certificate of Sale in the Office of the Register of Deeds and not from the date of public auction. In
the case at bar, the subject property was sold at public auction on January 21, 1963 and it was only
registered on July 22, 1971. The sibling petitioners may validly redeem the property since they informed
the repurchase of the property within the five-year redemption period.
54
EMMANUEL C. VILLANUEVA vs CHERDAN LENDING INVESTORS CORPORATION
G.R. No. 177881 October 13, 2010
FACTS
Spouses Peñaredondo obtained from respondent Cherdan Lending Investors Corporation a loan
amounting to ₱2.2 million, secured by a real estate mortgage. Due to the failure of Spouses
Peñaredondo to pay their obligation despite demand, respondent extrajudicially foreclosed the
mortgage. At the auction sale, respondent was declared as the highest bidder.
Upon the expiration of the redemption period., respondent filed a Writ of Possession over the
real property. However, Petitioner Villanueva moved for the reconsideration of the order and the setting
aside the writ of possession. He alleged that he is the owner and is in actual possession of the subject
property. He notified the court that he had filed criminal and civil cases relative to the fraudulent
transfer of ownership of the subject property from him to Spouses Peñaredondo. The said order was
granted by the RTC and the writ of possession issued in favor of Cherdan was cancelled.
The Court of Appeals annulled and set aside the decision of the lower court. It held that the
pendency of the case for annulment of the foreclosure proceedings was not a bar to the issuance of the
writ of possession. It refused to apply Section 33, Rule 39 of the Rules of Court, which authorizes the
giving of possession of the property to the purchaser or last redemptioner unless a third party is actually
holding the property adverse to the judgment obligor, ratiocinating that the provision applies only to
execution sales and not to extrajudicial foreclosures of real estate mortgage under Act 3135.
ISSUE
Whether or not an annulment for foreclosure is a bar to issuance of writ of possession
HELD
YES. The general rule is that buyer in a foreclosure sale becomes the absolute owner of the
property purchased if it is not redeemed within one year after the registration of the sale. Exception to
this is provided by the law under Section 33, Rule 39 of the Rules of Court which states that the
possession of the mortgaged property may be awarded to a purchaser in the extrajudicial foreclosure
unless a third party is actually holding the property adversely to the judgment debtor.
