11. Sps. Gonzales vs. GSIS, G.R. No.
L-51997, September 10, 1981
1. BPI vs. Vda de Coscolluela, G.R. No. 167724, June 27, 2006
2. Spouses Viola vs. Equitable PCI Bank, Inc., G.R. No. 177886, November
27, 2008
3. Prudential Bank vs. Alviar, G.R. No. 150197, July 28, 2005
4. Vda. de Delfin vs. Dellota, G.R. No. 143697, January 28, 2008
5. Erena vs. Querrer-Kauffman, G.R. No. 165853, June 22, 2006
[ G.R. No. L-51997, September 10, 1981 ]
SPOUSES INOCENCIO H. GONZALES AND ROSARIO ESQUIVEL GONZALES,
PETITIONERS, VS. THE GOVERNMENT SERVICE INSURANCE SYSTEM THRU GENERAL
MANAGER ROMAN A. CRUZ, JR. AND THE MANAGER, RESIDENTIAL LOANS
DEPARTMENT, RESPONDENTS.
FACTS:
On April 2, 1968, August 14, 1968 and November 7, 1968, petitioner-
spouses Inocencio H. Gonzales and Rosario Esquivel Gonzales obtained a housing
loan of P80,000.00 from the respondent GSIS. This was to be repayable within
fifteen years at 6% interest per annum for the first P30,000.00 and pay for the
balance. GSIS accepted as collaterals two (2) residential lots located in Quezon City,
and two (2) agricultural lands located in Jaen, Nueva Ecija. Petitioners were able to
pay several monthly installments of P814.38 until both of them retired compulsorily
from government service in 1973, leaving an unpaid obligation of over P73,000.00,
which, as of May 31, 1978, amounted to P 135,884.87 because of accumulated
interests or arrearages. By virtue of PD No. 27 (Tenants' Emancipation Act), the
agricultural lands of petitioners were subdivided and awarded to the tenant-farmers
therein. It was only in May of 1979, however, that payment by the Land Bank
became remittable covering in particular, the 15- hectare land of petitioners in Jaen.
The land, having been appraised, that sum was tendered by the Land Bank to the
GSIS. The GSIS refused acceptance unless the payment in bonds was to be. In
effect, the bonds were given a creditable value of only P41,775.00 compared to its
face value of P93,500.00.
The instant Petition for mandamus was filed, with petitioners praying that the GSIS
be directed to accept the payment of Land Bank bonds at par value, without any
discount whatsoever, so that an of petitioners collaterals could be released.
ISSUE:
Whether or not the divisibility of the agricultural land affects the mortgage.
HELD:
No. The fact that only one agricultural land of the four securities was placed
under land reform should make no difference. Although it may be conceded that the
obligation of the petitioners is, in a sense, divisible because it can be settled
partially according to current practice, it does not render the mortgage of four (4)
parcels of land also divisible. Generally the divisibility of the principal obligation is
not affected by the indivisibility of the mortgage. The mortgage obligation is
indivisible; that is, it cannot be divided among the different lots. A real estate
mortgage voluntarily constituted by the debtor on two or more parcels of land is
one and indivisible. Each and every parcel under mortgage answers for the totality
of the debt. Being indivisible, the full value of the one parcel being paid for by the
Land Bank should be applied in full to the outstanding loan obligation without any
discounting.
BPI Family Savings Bank, Inc. vs. Margarita Vda. De Coscolluela:
A Case on Mortgage Credit, Foreclosure, and the Doctrine of a Single Cause of
Action
### Facts: Margarita Coscolluela and her husband, Oscar, secured an agricultural
sugar crop loan from Far East Bank & Trust Co. (FEBTC), later merged with Bank of
the Philippine Islands (BPI), for crop years 1997 and 1998, amounting to PHP
13,592,492.00, as supported by 67 Promissory Notes. Additionally, they executed a
real estate mortgage over their Bacolod City property to secure the loan and future
obligations that may be extended, fixed at PHP 7,000,000.00. Due to non-payment,
FEBTC issued a final demand on March 10, 1999. On June 10, 1999, FEBTC initiated
extrajudicial foreclosure proceedings for part of the debt (covered by the first 33
promissory notes), excluding Nos. 2 and 10. Concurrently, BPI filed a separate
action in RTC Makati for the collection of the remainder of the loan amount
indicated in Promissory Note Nos. 34 to 67, as well as Nos. 2 and 10 from December
6, 1996, and September 23, 1996. The RTC Makati denied Coscolluela’s demurrer,
prompting her certiorari petition with the CA, which granted her petition based on
the principles of antidote alternative and noncumulative remedies for mortgage
credit transactions.
### Issues: 1. Whether the CA correctly treated the RTC’s order as subject to
certiorari despite being ostensibly interlocutory. 2. Whether the initiation of both
extrajudicial foreclosure proceedings and separate collection action constitutes
splitting a single cause of action, thereby violating doctrines against such practices.
3. Whether the remedies of real action to foreclose the mortgage or a personal
action to collect the debt are alternative and not cumulative.
### Court’s Decision: 1. The CA properly addressed the RTC’s denial of the
demurrer through certiorari due to its grave abuse of discretion, marking an
exception to the general non-appealability of interlocutory orders. 2. The Supreme
Court upheld CA’s decision, stating the remedies against a mortgage debtor—
personal action for debt collection or real action for foreclosure—are alternative but
not cumulative. Opting for foreclosure bars subsequent collection actions and vice
versa. 3. The petitioner (BPI) erred in attempting to split the cause of action by first
pursuing extrajudicial foreclosure for a portion of the debt, then a collection action
for the remainder, violating the doctrine against splitting a single cause of action.
### Doctrine: Under Philippine law, a mortgage creditor has a single cause of
action against a debtor in default and must choose between personal action for
debt collection or real action to foreclose the mortgage. These remedies are
alternative and not cumulative, and the selection of one bars recourse to the other.
Attempting to pursue both for the same debt constitutes splitting a single cause of
action, which is prohibited.
### Class Notes: – **Single Cause of Action**: In a default scenario, the creditor
can only pursue one course of action: collect the debt or foreclose the mortgage. –
**Non-cumulative Remedies**: The decision to pursue one remedy negates the
availability of the other. – **Splitting a Cause of Action**: Initiating both a collection
case and a foreclosure for the same debt violation the rule against splitting a single
cause of action.
### Historical Background: This case illustrates the legal principles governing
mortgage loans and the remedies available to creditors against defaulting debtors
in the Philippines. It reaffirms the doctrine against splitting a single cause of action,
emphasizing the need for creditors to choose their legal recourse wisely, without
oppressing debtors with multiple actions for the same obligation.
SPOUSES LEOPOLDO S. VIOLA and MERCEDITA VIOLA v.
EQUITABLE PCI BANK, INC.
572 SCRA 245 (2008)
A mortgage must sufficiently describe the debt sought to be secured, which
description must not be such as to mislead or deceive. An obligation is not secured
by a mortgage unless it comes fairly within the terms of the mortgage
Spouses Leopoldo and Mercedita Viola of Leo-Mers Commercial, Inc. obtained a loan
through a credit line facility from the Philippine Commercial
International Bank (PCI Bank), which was later merged with Equitable Bank and
became known as Equitable PCI Bank, Inc. To secure the payment of the loan, a
―Real Estate Mortgage‖ in favor of PCI Bank was executed. Spouses Viola made
partial payments therein; PCI Bank contends however, that Spouses Viola made no
further payments despite demands. Thus, PCI Bank extrajudicially foreclosed the
mortgage before the Regional Trial Court (RTC) and that the mortgaged properties
were sold at a public auction. Spouses Viola filed a complaint for annulment of
foreclosure sale, accounting and damages before the RTC. They alleged that they
had made substantial payments of P3,669,210.67, receipts of which were issued
without PCI Bank specifying “whether the payment was for interest, penalty or the
principal obligation”. Based on PCI Bank‘s statement of account, not a single
centavo of their payments was applied to the principal obligation, that the
foreclosure proceedings and auction sale were null and void because the mortgage
debt is only P2,224,073.31, for the principal obligation, and P1,455,137.36, on the
interest, but the mortgaged properties were sold to satisfy an inflated of
P4,783,254.69, plus 3% penalty fee per month year and 15% interest per year,
which amounted to P14,024,623.22.
The RTC upheld the position of the PCI Bank but reduced the interest of the
principal. Spouses Viola filed a Motion for Reconsideration but it was denied. On
appeal, the Court of Appeals (CA) dismissed the petition for lack of merit.
ISSUE:
Whether or not the mortgage contract also secured the penalty fee per month on
the outstanding amount as stipulated in the Credit Line Agreement.
HELD:
A mortgage must sufficiently describe the debt sought to be secured, which
description must not be such as to mislead or deceive, and an obligation is not
secured by a mortgage unless it comes fairly within the terms of the mortgage.
In the case at bar, the parties executed two separate documents on March 31, 1997
– the Credit Line Agreement granting the Client a loan through a credit facility in the
maximum amount of P4,700,000.00, and the Real Estate Mortgage contract
securing the payment thereof.
As the Credit Line Agreement specifically defined ―a penalty fee of three percent
(3%) per month of the outstanding amount to be computed from the day deficiency
is incurred up to the date of full payment thereon,‖ the provision of the mortgage
contract does not specifically mention that.
Since an action to foreclose ―must be limited to the amount mentioned in the
mortgage‖ and the penalty fee of 3% per month of the outstanding obligation is not
mentioned in the mortgage, it must be excluded from the computation of the
amount secured by the mortgage.
―Penalty fee is entirely different from ―bank charges. The phrase ―bank charges‖
is normally understood to refer to compensation for services. A ―penalty fee‖ is
likened to a compensation for damages in case of breach of the obligation. Being
penal in nature, such fee must be specific and fixed by the contracting parties,
unlike in the present case which slaps a 3% penalty fee per month of the
outstanding amount of the obligation.
Moreover, the ―penalty fee‖ does not belong to the species of obligation
enumerated in the mortgage contract, namely: “loans, credit and
other banking facilities obtained x x x from the Mortgagee, . . . including the interest
and bank charges, . . . the costs of collecting the same and of taking possession of
and keeping the mortgaged properties, and all other expenses to which the
Mortgagee may be put in connection with or as an incident to this mortgage . . .”
In Philippine Bank of Communications v. Court of Appeals which raised a similar
issue, the Court held that there is also sufficient authority to declare that any
ambiguity in a contract whose terms are susceptible of different interpretations
must be read against the party who drafted it.
Prudential Bank v. Alviar and Alviar G.R. NO. 150197 July 28, 2005 Petitioners:
PRUDENTIAL BANK Respondents: DON A. ALVIAR and GEORGIA B. ALVIAR Ponente:
TINGA, J. DOCTRINE:
FACTS: Respondents, spouses Don A. Alviar and Georgia B. Alviar, are the registered
owners of a parcel of land in San Juan, Metro Manila. On 10 July 1975, they
executed a deed of real estate mortgage in favor of petitioner Prudential Bank to
secure the payment of a loan worth P250,000.00. On 4 August 1975, respondents
executed the corresponding promissory note, PN BD#75/C-252, covering the said
loan, which provides that the loan matured on 4 August 1976 at an interest rate of
12% per annum with a 2% service charge, and that the note is secured by a real
estate mortgage with a blanket mortgage clause or dragnet clause Thereafter, the
Spouses executed other promissory note: PN BD#76/C-345 for P2,640,000.00,
secured by D/A SFDX #129, signifying that the loan was secured by a "hold-out" on
the mortgagor's foreign currency savings account with the bank under Account No.
129. The spouses executed for Donalco Trading, Inc., of which the husband and wife
were President and Chairman of the Board and Vice President,6 respectively, PN
BD#76/C-430 covering P545,000.000. As provided in the note, the loan is secured
by "Clean-Phase out TOD CA 3923," which means that the temporary overdraft
incurred by Donalco Trading, Inc. with petitioner is to be converted into an ordinary
loan in compliance with a Central Bank circular directing the discontinuance of
overdrafts. The Bank also mentioned in their approval letter that the securities for
the loan were the deed of assignment on two promissory notes executed by
Bancom Realty Corporation with Deed of Guarantee in favor of A.U. Valencia and
Co. and the chattel mortgage on various heavy and transportation equipment. On
06 March 1979, Spouses Alviar paid petitioner P2,000,000.00, to be applied to the
obligations of G.B. Alviar Realty and Development, Inc. and for the release of the
real estate mortgage for the P450,000.00 loan covering the two (2) lots located at
Vam Buren and Madison Streets, North Greenhills, San Juan, Metro Manila. The
payment was acknowledged by petitioner who accordingly released the mortgage
over the two properties. On 15 January 1980, Prudential Bank moved for the
extrajudicial foreclosure of the mortgage on the property covered by TCT No.
438157. Per the Bank's computation, respondents had the total obligation of
P1,608,256.68, covering the three (3) promissory notes plus assessed past due
interests and penalty charges. The public auction sale of the mortgaged property
was set on 15 January 1980. Respondents filed a complaint for damages with a
prayer for the issuance of a writ of preliminary injunction with the RTC of Pasig,11
claiming that they have paid their principal loan secured by the mortgaged
property, and thus the mortgage should not be foreclosed. The Court of Appeals
affirmed the Order of the trial court but deleted the award of attorney's fees. It
ruled that while a continuing loan or credit accommodation based on only one
security or mortgage is a common practice in financial and commercial institutions,
such agreement must be clear and unequivocal. In the instant case, the parties
executed different promissory notes agreeing to a particular security for each loan.
Thus, the appellate court ruled that the extrajudicial foreclosure sale of the property
for the three loans is improper.
ISSUE: W/N the real estate mortgage secures only the first loan of php250, 000?
YES HELD: While the existence and validity of the "dragnet clause" cannot be
denied, there is a need to respect the existence of the other security given for PN
BD#76/C-345. The foreclosure of the mortgaged property should only be for the
P250,000.00 loan covered by PN BD#75/C-252, and for any amount not covered by
the security for the second promissory note. As held in one case, where deeds
absolute in form were executed to secure any and all kinds of indebtedness that
might subsequently become due, a balance due on a note, after exhausting the
special security given for the payment of such note, was in the absence of a special
agreement to the contrary, within the protection of the mortgage, notwithstanding
the giving of the special security.50 This is recognition that while the "dragnet
clause" subsists, the security specifically executed for subsequent loans must first
be exhausted before the mortgaged property can be resorted to.
One other crucial point. The mortgage contract, as well as the promissory notes
subject of this case, is a contract of adhesion, to which respondents' only
participation was the affixing of their signatures or "adhesion" thereto.51 A contract
of adhesion is one in which a party imposes a ready-made form of contract which
the other party may accept or reject, but which the latter cannot modify.52 The
real estate mortgage in issue appears in a standard form, drafted and prepared
solely by petitioner, and which, according to jurisprudence must be strictly
construed against the party responsible for its preparation.53 If the parties intended
that the "blanket mortgage clause" shall cover subsequent advancement secured
by separate securities, then the same should have been indicated in the mortgage
contract. Consequently, any ambiguity is to be taken contra proferentum, that is,
construed against the party who caused the ambiguity which could have avoided it
by the exercise of a little more care.54 To be more emphatic, any ambiguity in a
contract whose terms are susceptible of different interpretations must be read
against the party who drafted it,55 which is the petitioner in this case. Even the
promissory notes in issue were made on standard forms prepared by petitioner, and
as such are likewise contracts of adhesion. Being of such nature, the same should
be interpreted strictly against petitioner and with even more reason since having
been accomplished by respondents in the presence of petitioner's personnel and
approved by its manager, they could not have been unaware of the import and
extent of such contracts.
DISPOSITIVE: WHEREFORE, the petition is DENIED. The Decision of the Court of
Appeals in CA-G.R. CV No. 59543 is AFFIRMED.
Vda. de Delfin vs. Dellota
Facts:
Parties Involved:
Dionisia Dorado Vda. de Delfin (petitioner) represented by her heirs.
Spouses Ildefonso Dellota and Patricia Delfin.
Gumersindo Deleña.
Salvador Dellota represented by his heirs.
Property Details:
Lot No. 1213 in Panitan, Capiz.
Total area of 143,935 square meters.
Transactions:
June 16, 1929: Dionisia executed an "Escritura De Venta Con Pacto de Retro" over a
50,000-square meter portion to the Dellota spouses; not redeemed.
June 9, 1949: Dionisia sold another 50,000-square meter portion to Gumersindo
Deleña with a "Deed of Sale with Right of Redemption"; not redeemed.
October 12, 1956: Dionisia executed a "Deed of Mortgage and Promise To Sell" in
favor of Salvador over a 90,000-square meter portion.
Legal Actions:
June 8, 1964: Dionisia filed for recovery of possession and damages (Civil Case No.
V-2760) against Salvador Dellota’s heirs.
April 30, 1991: Trial court decision ordered redemption of a 40,000-square meter
portion, declared ownership of the 50,000-square meter portion to Gumersindo’s
heirs, and ordered plaintiffs to pay costs.
Appeal: Court of Appeals affirmed the trial court’s decision.
Issue:
Did the Court of Appeals err in not holding that the Deed of Sale with Right of
Redemption dated June 9, 1949, was an equitable mortgage under Article 1602 of
the Civil Code?
Ruling:
The Supreme Court denied the petition and affirmed the decision of the Court of
Appeals, which upheld the trial court’s ruling.
Ratio:
Article 1602: Presumes a contract to be an equitable mortgage if certain conditions
are met.
Arguments:
Dionisia's heirs argued the price of P5,300.00 for the five-hectare portion was
grossly inadequate, suggesting an equitable mortgage.
Court Findings:
No cogent reason to conclude the price was unusually inadequate.
Dionisia failed to prove the inadequacy of the price at the trial court.
Dionisia understood the ramifications of signing the "Deed of Sale with Right of
Redemption."
Jurisprudence Cited:
de Ocampo and Custodio v. Lim: Price in sales denominated as pacto de retro
should not generally be considered the just value of the thing sold.
Buenaventura v. Court of Appeals: Tax receipts are not conclusive evidence of land
ownership.
Conclusion: No evidence of threat, force, or fraud was found in the contract,
upholding the validity of the sale with right of redemption.
EREÑA v. QUERRER-KAUFFMAN
FACTS: Vida Dana Querrer-Kauffman is the owner of a residential lot with a house
constructed thereon located at Las Piñas City. The owner’s duplicate copy of the
title as well as the tax declaration covering the property, were kept in a safety
deposit box in the house. Sometime in February 1997, as she was going to the
United States, Kauffman entrusted her minor daughter, Vida Rose, to her live-in
partner, Eduardo Victor. She went back to the Philippines to get her daughter and
again left for the U.S. on the same day. Later on, Victor also left for the U.S. and
entrusted the house and the key thereto to his sister, Mira Bernal. On October 25,
1997, Kauffman asked her sister, Evelyn Pares, to get the house from Bernal so that
the property could be sold. Pares did as she was told. Kauffman then sent the key to
the safety deposit box to Pares, but Pares did not receive it. Kauffman then asked
Pares to hire a professional locksmith who could open the safe. When the safe was
broken open, however, Pares discovered that the owner’s duplicate title and the tax
declarations, including pieces of jewelry were missing. Kauffman learned about this
on October 29, 1997 and returned to the Philippines. She and Pares went to the
Register of Deeds of Las Piñas City and found out that the lot had been mortgaged
to Rosana Ereña. It appeared that a "Vida Dana F. Querrer" had signed the Real
Estate Mortgage as owner-mortgagor, together with Jennifer V. Ramirez, Victor’s
daughter, as attorneyin-fact. Kauffman and Pares were able to locate Bernal who,
when asked, confirmed that Ramirez had taken the contents of the safety deposit
box. When Kauffman told Bernal that she would file a case against them, Bernal
cried and asked for forgiveness. Bernal admitted that Jennifer Ramirez had been in
a tight financial fix and pleaded for time to return the title and the jewelry.
Kauffman however still filed a complaint against Ereña, Bernal and Ramirez for the
nullification of Real Estate Mortgage and Damages. Ereña countered that she was a
mortgagee in good faith.
ISSUE: Whether or not the Real Estate Mortgage is valid
HELD: No. According to Article 2085 (2), a pledgor or mortgagor has to be absolute
owner of the thing pledged or mortgaged for a contract of pledge and mortgage to
be valid. Both the trial court and the appellate courts found that Kauffman is the
true owner of the property and that the signatures on the Special Power of Attorney
and Real Estate Mortgage are not her genuine signatures. The evidence on record
shows that Ramirez and her husband used an impostor who claimed she was the
owner of the property. This impostor was the one who signed the Real Estate
Mortgage and showed to Ereña the owner's duplicate copy of the title. When the
instrument presented for registration is forged, even if accompanied by the owner's
duplicate title, the registered owner does not lose his title and neither does the
mortgagee acquire any right to the property. In such case, the mortgagee based on
a forged instrument is not even a purchaser or a mortgagee for value protected by
law. Ereña is not a mortgagee in good faith. The doctrine of mortgagee in good faith
does not apply to a situation where the title is still in the name of the
rightful owner and the mortgagor is a different person pretending to be the owner.
In such case, the mortgagee is not an innocent mortgagee for value and the
registered owner will generally not lose his title. The petition is DENIED
NOTE: Doctrine of "mortgagee in good faith" is based on the rule that all persons
dealing with the property covered by a Torrens Certificate of Title, as buyers or
mortgagees, are not required to go beyond what appears on the face of the title.
The public interest in upholding the indefeasibility of a certificate of title, as
evidence of lawful ownership of the land or of any encumbrance thereon, protects a
buyer or mortgagee who, in good faith, relied upon what appears on the face of the
certificate of title
