Etcuban vs. Court of Appeals, and Songalia

Etcuban vs. Court of Appeals, and Songalia
148 SCRA 507
March 1987
FACTS:

Petitioner Dominico Etcuban (petitioner) inherited a piece of land together with his co-heirs (the spouse of the deceased, Demetria Initan, and Pedro, Vicente, Felicitas, Anastacio, Froilan, Alfonso. Advincula, Anunciacion, Jesus, Aguinaldo, all surnamed Etcuban) from their deceased father. Said piece of land was declared in their names as the heirs of Eleuterio Etcuban under Tax Declaration No. 06837. Thereafter the eleven co-heirs executed in favor of Jesus C. Songalia and Guadalupe S. Songalia (private respondents Songalia) eleven deeds of sale of their respective shares in the co-ownership for the total sum of P26,340.00. The earliest of the eleven deeds of sale was made on December 9, 1963 and the last one in December 1967.

In his complaint before the trial court, petitioner alleged that his coowners leased and / or sold their respective shares without giving due notice to him as a co-owner notwithstanding his intimations to them that he was willing to buy all their respective shares. Private respondents Songalia, in denying the material allegations of the complaint, argued that petitioner came to know of the sale of the subject property to them in August 1968 or sometime earlier; that acting on this knowledge, petitioner thru his lawyers wrote private respondents Songalia on August 15, 1968 about the matter; that Jesus Songalia personally went to the office of Atty. Vicente Faelner or counsel for petitioner to inform him of the sale of the subject property; that petitioner took no action despite the information he received from private respondents Songalia thru his counsel; and that, consequently, petitioner lost his right to redeem under Art. 1623 of the new Civil Code because the right of redemption may be exercised only within 30 days from notice of sale and petitioner was definitely notified of the sale years ago as shown by the records.

The trial court allowed petitioner his right of redemption over the subject property and ordered the private respondents Songalia to accept the redemption price of P26,340.00. The Court of Appeals, on the other hand, ruled that petitioner is barred from redeeming the subject property for his failure to make a valid tender of the sale price of the land paid by the defendants within the period fixed by Art. 1623 of the Civil Code.

ISSUE:

Who has the right of redemption over the subject property?

COURT RULING:

The Supreme Court dismissed herein petition and affirmed the decision of the appellate court. Petitioner contends that vendors (his co-heirs) should be the ones to give him written notice and not the vendees (defendants or private respondent herein). However, while it is true that written notice is required by the law (Art. 1623), it is equally true that the same Art. 1623 does not prescribe any particular form of notice, nor any distinctive method for notifying the redemptioner. So long therefore, as the latter is informed in writing of the sale and the particulars thereof, the 30 days for redemption start running, and the redemptioner has no real cause to complain.

In the case at bar, where the vendors or co-owners of petitioner stated under oath in the deeds of sale that notice of sale had been given to prospective redemptioners in accordance with Article 1623 of the Civil Code. "A sworn statement or clause in a deed of sale to the effect that a written notice of sale was given to possible redemptioners or co-owners might be used to determine whether an offer to redeem was made on or out of time, or whether there was substantial compliance with the requirement of said Art. 1623."

Flores vs. So

Flores vs. So
162 SCRA 117
June 1988
FACTS:

On August 2, 1958, plaintiff-appellee Johnson So filed an action for specific performance before the CFI of Sorsogon, against defendant-appellant Alfonso Flores to effect the redemption of a parcel of coconut and rice land in Matnog, Sorsogon. It was alleged that one Valentin Gallano sold to Flores the said parcel of land on February 27, 1950, with right of repurchase within 4 years from the date of the sale, for a price of P2,550.00. Valentin Gallano sold in an absolute manner the same land to Johnson So on February 26, 1958 for the price of P5,000.00. On the allegation that the Pacto de Retro Sale did not embody the real intent and nature of the agreement between the parties, the transaction being a mere mortgage to secure a loan, Johnson So prayed that the court declare the said Pacto de Retro Sale as a mere equitable mortgage and order Alfonso Flores to receive the sum of P2,550.00 deposited with the court and to consider the land in question as redeemed from the latter for all legal purposes.

The lower court ruled that there was a indeed a contract of sale of a parcel of land with the reservation in favor of Gallano a retro of the right to repurchase it within a period of four (4) years from execution thereof; that Flores’ execution of the affidavit of consolidation of ownership on March 6, 1958 and its subsequent registration in the Office of the Register of Deeds of Sorsogon did not make his ownership over the subject land absolute for non-compliance with Articles 1606 and 1607 of the New Civil Code; and that Johnson So has already acquired the right of redemption belonging to Valentin Gallano when he bought the subject property. Thus, the Court ordered Alfonso Flores to deliver the possession of the land in question to Johnson So and to execute the necessary deed of resale in favor of the latter and authorized Flores to withdraw for his own use and benefit the redemption money in the sum of P2,550.00. Valentin Gallano was absolved from liability. The Court of Appeals certified the instant case to the Supreme Court for it involves purely a question of law.

ISSUE:

Who should be the absolute owner of the subject property?

COURT RULING:

The Supreme Court reversed the decision appealed from and declared Alfonso Flores the absolute owner of the subject property. In a sale with the right of redemption, the ownership over the thing sold is transferred to the vendee upon execution of the contract, "subject only to the resolutory condition that the vendor may exercise his right of repurchase within the period agreed upon." Consequently, since the pacto de retro sale in question, which was executed in February of 1950 before the effectivity of the New Civil Code in August of 1950, was a contract with a resolutory condition, and the condition was still pending at the time the new law went into effect, the provisions of the old Civil Code should still apply.

The trial court erred in allowing Johnson So to redeem the subject property. Valentin Gallano was no longer the owner of the same at the time of sale to Johnson So, thus, no right whatsoever was transmitted to the latter, except the right to redeem the property. Ownership over the subject property had long vested upon the defendant-appellant Alfonso Flores.

Villostas vs. Court of Appeals, and Tensuan

Villostas vs. Court of Appeals, and Tensuan
210 SCRA 490
June 1992
FACTS:

Petitioner Natividad Villostas and her husband decided to buy a water purifier. Private respondent Electrolux Marketing, Inc.'s (Electrolux) sales agents assured Villostas of the very special features of their brand of water purifier so she ordered one unit. On September 13, 1986, an Electrolux Aqua Guard water purifier was delivered and installed at Villostas's residence. Consequently, petitioner Villostas signed the Sales Order and the Contract of Sale with Reservation of Title in October 1986. Electrolux issued a warranty certificate which provided that it warrants the quality product to perform efficiently for 1 full year from the date of its original purchase. The purchase of said unit was on installment basis under which Villostas would pay the amount of P16,190.00 in 20 monthly installments of P635.00 per month.

After two weeks, the unit began to perform badly and dirty water started coming out of it. Upon Villostas complaint, Electrolux’s technician changed the unit’s filter, without any charge. Villostas, then, paid the amount of P1,650.00 on November 18, 1986 which included the first amortization of P700.00. However, dirty water still came out of the unit after the replacement of the filter. Villostas complained for the 2nd and the 3rd time, and, after being advised that the filter should be changed every 6 months which costs P300, she finally decided to return the unit as early as December 9, 1986 and demand a refund for the amount paid. Electrolux offered to change the water purifier with another brand of any of its appliance of the unit in her favor, but Villostas did not accept it as she was disappointed with the original unit which did not perform as warranted. Consequently, Villostas refused pay any more the subsequent installments in the amount of P14,540.00 exclusive of interests when Electrolux demanded her payment.

Electrolux filed a complaint against Villostas with the MTC of Makati for the recovery of the sum of P14,540.00 as the unpaid balance of the purchase price of the water purifeir plus interest at the rate of 42% per annum. The MTC rendered its judgment in favor of Electrolux, and upon appeal, the RTC of Makati affirmed said decision, and the Court of Appeals denied her petition for review.

ISSUE:

Is the petitioner entitled to rescind the contract on the basis of a violation of the warranty of the article delivered by the respondent?

COURT RULING:

The Supreme Court dismissed the complaint of private respondent and declared the contract of sale of the water purifier as rescinded.

Electrolux’s contention that the action for rescission is barred by prescription under Article 1571 of the Civil Code providing for a prescriptive period of six months is bereft of merit. A cursory reading of the ten preceding articles to which Article 1571 refers will reveal that said rule may be applied only in cases of implied warranties. The Warranty Certificate that Electrolux issued to Villostas when the unit was delivered is an example of an express warranty, and consequently, the general rule on rescission of contracts, which is four years (Article 1389, Civil Code) should apply in the case at bar.

Radiowealth Finance Co. vs. Palileo

Radiowealth Finance Co. vs. Palileo
197 SCRA 245
May 1991
FACTS:

In April 1970, defendant spouses Enrique Castro and Herminio R. Castro (spouse Castro) sold to herein respondent Manuelito Palileo a parcel of unregistered coconut land in Surigao del Norte. The sale is evidenced by a notarized Deed of Absolute Sale, but the deed was not registered in the Registry of Property for unregistered lands in the province of Surigao del Norte. Since the execution of the deed of sale, Palileo who was then employed in Lianga, Surigao del Sur, exercised acts of ownership over the land through his mother Rafaela Palileo, as administratrix or overseer. Manuelito Palileo has continuously paid the real estate taxes on said land from 1971 until the present.

In November 1976, the CFI of Manila rendered a judgment was rendered against defendant Enrique T. Castro to pay herein petitioner Radiowealth Finance Company (Radiowealth), the sum of P22,350.35 with interest rate of 16% per annum from November 2, 1975 until fully paid, and upon the finality of the judgment, a writ of execution was issued. The Provincial Sheriff Marietta E. Eviota, through defendant Deputy Provincial Sheriff Leopoldo Risma, levied upon and finally sold at public auction the subject land that defendant Enrique Castro had sold to Palileo in 1970. The said Provincial Sheriff executed a certificate of sale was by the in favor of Radiowealth as the only bidder, and upon expiration of the redemption period, she also executed a deed of final sale. Both documents were registered with the Registry of Deeds.

Learning of what happened to the land, Palileo filed an action for recovery of the subject property. The court a quo rendered a decision in favor of Palileo, which the Court of Appeals affirmed.

ISSUE:

Who is the rightful owner of the subject property?

COURT RULING:

The Supreme Court likewise affirmed the appellate court’s decision on this case. There is no doubt that had the subject property been a registered land, this case would have been decided in favor of Radiowealth since it was the company that had its claim first recorded in the Registry of Deeds for it is the act of registration that operates to convey and affect registered land. Therefore, a bonafide purchaser of a registered land at an execution sale acquires a good title as against a prior transferee, if such transfer was unrecorded.

However, a different set of rules applies in the case at bar which deals with a parcel of unregistered land. Under Act No. 3344, registration of instruments affecting unregistered lands is "without prejudice to a third party with a better right." The aforequoted phrase has been held by the Supreme Court to mean that the mere registration of a sale in one's favor does not give him any right over the land if the vendor was not anymore the owner of the land having previously sold the same to somebody else even if the earlier sale was unrecorded. Applying this principle, the Court of Appeals correctly held that the execution sale of the unregistered land in favor of petitioner is of no effect because the land no longer belonged to the judgment debtor as of the time of the said execution sale.

Nuguid vs. Court of Appeals, and Guevarra

Nuguid vs. Court of Appeals, and Guevarra
171 SCRA 213
March 1989
FACTS:

The deceased spouses Victorino and Crisanta dela Rosa (spouses dela Rosa) were registered owners of a parcel of land in Orani, Bataan, and covered by OCT No. 3778. On or about May 4, 1931, Victorino dela Rosa (widowed by then) sold one-half of the said property to Juliana Salazar for P95.00. This sale between him and Salazar, though evidenced by a document, was not registered. Nevertheless, Juliana Salazar constructed a house on the lot she purchased immediately after the sale. On March 10, 1964, petitioner spouses Diosdado Nuguid and Marqiueta Venegas (spouses Nuguid) caused the registration of a document entitled "Kasulatan ng Partihan at Bilihan" (Kasulatan) dated June 6, 1961. In this document, Marciana dela Rosa, together with the heirs of Victorino and Crisanta dela Rosa, sold to spouses Nuguid the entire area of the property for the sum of P300.00. Subsequently, OCT No. 3778 was cancelled by the Register of Deeds of Bataan, and TCT No. T-12782 was issued in the spouses Nuguid’s names.

Private respondents claimed that the presented by spouses Nuguid was forged. They also allegedly discovered the forged deed as well as the certificate of title in the name of the petitioners much later, that is, on February 28, 1978, when respondents Amorita Guevarra and Teresita Guevarra thought of having the title of their grandmother Juliana Salazar, registered. On the other hand, spouse Nuguid assert that in the latter part of 1960, Nicolas dela Rosa, uncle of respondent Marciana dela Rosa and grandfather of the other heirs-signatories, offered to sell the subject land to them. Apparently, Nicolas dela Rosa claimed that he had already purchased the shares of the heirs over the subject property as evidenced by a private document entitled "Kasunduan" (Kasunduan) dated August 31, 1955, and as a matter of fact, he had in his possession the original certificate of title covering the property in the name of the deceased Victorino and Crisanta dela Rosa.

The CFI of Bataan dismissed the complaint filed by private respondents, but the Court of Appeals reversed said decision and ordered the spouses Nuguid to execute a deed of reconveyance in favor of herein respondents.

ISSUE:

Who is the rightful owner of the subject property?

COURT RULING:

The Supreme Court reinstated the decision of the CFI of Bataan. The basis for the Court of Appeals' conclusion that petitioners were buyers in bad faith is ambiguous because said court relied on the singular circumstance that the petitioners are from Orani, Bataan, and should have personally known that the private respondents were the persons in actual possession. However, at the time of the purchase, the spouses Nuguid dealt with Pedro Guevarra and Pascuala Tolentino, the latter being the actual occupants. The respondents Guevarras, children of the said Pedro and Pascuala Guevarra, came into the picture only after their parents died. As for the respondent heirs of Victorino dela Rosa, their being in actual possession of any portion of the property was, likewise, simply presumed or taken for granted by the Court of Appeals.

The private respondents cannot also honestly claim that they became aware of the spouses Nuguid’s title only in 1978, because ever since the latter bought the property in 1961, the spouse Nuguid have occupied the same openly, publicly, and continuously in the concept of owners, even building their house thereon. For seventeen years they were in peaceful possession, with the respondents Guevarras occupying less than one-half of the same property.

Cruz vs. Cabaña / Cruz vs. Cabana

Cruz vs. Cabaña
129 SCRA 656
June 1984
FACTS:

In June 1965, respondent Leodegaria Cabaña sold the subject property to respondent spouses Teofilo Legaspi and Iluminada Cabaña (spouses Legaspi) under their contract entitled “Bilihang Muling Mabibili” which stipulated that Cabaña can repurchase the land within one year from December 31, 1966. The said land was not repurchased, however, so the spouses Legaspi took possession of the said property. Later, Cabaña requested that the land title be lent to her in order to mortgage the property to the Philippine National Bank (PNB), to which the spouses Legaspi yielded. On October 21, 1968, Cabaña formally sold the land to spouses Legaspi by way of an absolute sale. The spouses Legaspi then attempted to register the deed of sale, but failed because they could not present the owner's duplicate of title which was still in the possession of the PNB as mortgage. Subsequently, they were able to register the document of sale on May 13, 1969 under Primary Entry No. 210113 of the Register of Deeds of Quezon Province.

On November 29, 1968, Cabaña sold the same property to herein petitioner Abelardo Cruz (now deceased), who, in turn, tried to register the deed of sale on September 3, 1970. However, he was informed that Cabaña had already sold the property to the spouses Legaspi, so he was only able to register the land in his name on February 9, 1971. The CFI of Quezon Province declared the spouses Legaspi as the true and rightful owners of the subject property and the land title that Cruz had acquired as null and void. The Court of Appeals affirmed said decision, but ordered Cabaña reimburse to Cruz's heirs the amounts of P2,352.50, which the late petitioner Abelardo Cruz paid to PNB to discharge the mortgage obligation of Cabaña in favor of said bank, and the amount of P3,397.50, representing the amount paid by said Abelardo Cruz to her as consideration of the sale with pacto de retro of the subject property.

ISSUE:

Who is the rightful owner of the subject property?

COURT RULING:

The Supreme Court affirmed the decision of the appellate court with modification ordering and sentencing respondent Leodegaria Cabaña to reimburse and pay to petitioner's heirs the total sum of P5,750.00.

There is no question that spouses Legaspi were the first buyers, first on June 1, 1965 under a sale with right of repurchase and later on October 21, 1968 under a deed of absolute sale and that they had taken possession of the land sold to them; that Abelardo Cruz was the second buyer under a deed of sale dated November 29, 1968, which to ail indications, contrary to the text, was a sale with right of repurchase for ninety (90) days. There is no question, either, that spouses Legaspi were the first and the only ones to be in possession of the subject property.

The knowledge of the first sale Abelardo Cruz had gained defeats his rights even if he is first to register the second sale, since such knowledge taints his prior registration with bad faith. This is the price exacted by Article 1544 of the Civil Code. Before the second buyer can obtain priority over the first, he must show that he acted in good faith throughout (i.e. in ignorance of the first sale and of the first buyer's rights) - from the time of acquisition until the title is transferred to him by registration or failing registration, by delivery of possession. The second buyer must show continuing good faith and innocence or lack of knowledge of the first sale until his contract ripens into full ownership through prior registration as provided by law."

Dagupan Trading vs. Macam

Dagupan Trading vs. Macam
14 SCRA 99
May 1965
FACTS:

Sammy Maron and his seven brothers and sisters were pro-indiviso owners of a parcel of unregistered land located in barrio Parayao, Binmaley, Pangasinan. In 1955, while their application for registration of said land under Act No. 496 was pending, they executed, on June 19 and on September 21, two deeds of sale conveying the property to herein respondent Rustico Macam who thereafter took possession of the property and made substantial improvements upon it. On October 14, 1955, OCT No. 6942 covering the land was issued in the name of the Marons, free from all liens and encumbrances.

On August 4, 1956, however, by virtue of a final judgment of the Municipal Court of Manila in a civil case in favor of Manila Trading and Supply Co. (Manila Trading) against Sammy Maron, levy was made upon whatever interest he had in the subject property. Thereafter, said interest was sold at public auction to the judgment creditor Manila Trading. The corresponding notice of levy, certificate of sale and the sheriff's certificate of final sale in favor of Manila Trading - because nobody exercised the right of redemption - were duly registered, and on March 1, 1958, the latter sold all its rights and title in the property to herein petitioner Dagupan Trading Company (Dagupan Trading).

On September 4, 1958, Dagupan Trading filed an action against Macam, praying that it be declared owner of one-eighth portion of the subject property. The CFI of Pangasinan dismissed the said complaint, and the Court of Appeals affirmed its decision.

ISSUE:

Who has the superior right over the one-eight portion of the subject property?

COURT RULING:

The Supreme Court likewise affirmed both decisions of the lower courts. At the time of the levy, Sammy Maron already had no interest on the one-eight portion of the property he and his siblings have inherited because for a considerable time prior to the levy, said interest had already been conveyed upon Macam "fully and irretrievably" - as the Court of Appeals held. Consequently, the subsequent levy made on the property for the purpose of satisfying the judgment rendered against Sammy Maron in favor of the Manila Trading Company was void and of no effect.

The unregistered sale and the consequent conveyance of title and ownership in favor Macam could not have been cancelled and rendered of no effect upon the subsequent issuance of the Torrens title over the entire parcel of land. Moreover, upon the execution of the deed of sale in his favor by Sammy Maron, Macam had immediately taken possession of the land conveyed as its new owner and introduced considerable improvements upon it himself. To deprive him, therefore, of the same by sheer force of technicality would be against both justice and equity.

Carbonell vs. Court of Appeals, and Poncio

Carbonell vs. Court of Appeals, and Poncio
69 SCRA 99
January 1976
FACTS:

On January 27, 1955, respondent Jose Poncio executed a private memorandum of sale of his parcel of land with improvements situated in San Juan, Rizal in favor of petitioner Rosario Carbonell who knew that the said property was at that time subject to a mortgage in favor of the Republic Savings Bank (RSB) for the sum of P1,500.00. Four days later, Poncio, in another private memorandum, bound himself to sell the same property for an improved price to one Emma Infante for the sum of P2,357.52, with the latter still assuming the existing mortgage debt in favor of the RSB in the amount of P1,177.48. Thus, in February 2, Poncio executed a formal registerable deed of sale in her (Infante's) favor. So, when the first buyer Carbonell saw the seller Poncio a few days afterwards, bringing the formal deed of sale for the latter's signature and the balance of the agreed cash payment, she was told that he could no longer proceed with formalizing the contract with her (Carbonell) because he had already formalized a sales contract in favor of Infante.

To protect her legal rights as the first buyer, Carbonell registered on February 8, 1955 with the Register of Deeds her adverse claim as first buyer entitled to the property. Meanwhile, Infante, the second buyer, was able to register the sale in her favor only on February 12, 1955, so that the transfer certificate of title issued in her name carried the duly annotated adverse claim of Carbonell as the first buyer. The trial court declared the claim of the second buyer Infante to be superior to that of the first buyer Carbonell, a decision which the Court of Appeals reversed. Upon motion for reconsideration, however, Court of Appeals annulled and set aside its first decision and affirmed the trial court’s decision.

ISSUE:

Who has the superior right over the subject property?

COURT RULING:

The Supreme Court reversed the appellate court’s decision and declared the first buyer Carbonell to have the superior right over the subject property, relying on Article 1544 of the Civil Code. Unlike the first and third paragraphs of said Article 1544, which accord preference to the one who first takes possession in good faith of personal or real property, the second paragraph directs that ownership of immovable property should be recognized in favor of one "who in good faith first recorded" his right. Under the first and third paragraphs, good faith must characterize the prior possession, while under the second paragraph, good faith must characterize the act of anterior registration.

When Carbonell bought the lot from Poncio on January 27, 1955, she was the only buyer thereof and the title of Poncio was still in his name solely encumbered by bank mortgage duly annotated thereon. Carbonell was not aware - and she could not have been aware - of any sale to Infante as there was no such sale to Infante then. Hence, Carbonell's prior purchase of the land was made in good faith which did not cease after Poncio told her on January 31, 1955 of his second sale of the same lot to Infante. Carbonell wanted to meet Infante but the latter refused so to protect her legal rights, Carbonell registered her adverse claim on February 8, 1955. Under the circumstances, this recording of Carbonell’s adverse claim should be deemed to have been done in good faith and should emphasize Infante's bad faith when the latter registered her deed of sale 4 days later.

Dizon vs. Suntay

Dizon vs. Suntay
47 SCRA 160
September 1972
FACTS:

Respondent Lourdes G. Suntay and one Clarita R. Sison entered into a transaction wherein the Suntay’s three-carat diamond ring, valued at P5,500.00, was delivered to Sison for sale on commission. Upon receiving the ring, Sison executed and delivered to the receipt to Suntay. After the lapse of a considerable time without Clarita R. Sison having returned to the ring to her, Suntay made demands on Clarita R. Sison for the return of said jewelry. Clarita R. Sison, however, could not comply with Suntay’s demands because on June 15, 1962, Melia Sison, niece of the husband of Clarita R. Sison, evidently in connivance with the latter, pledged the ring with the petitioner Dominador Dizon's pawnshop for P2,600.00 without Suntay’s knowledge. When Suntay found out that Clarita R. Sison pledged the ring, she filed a case of estafa against the latter with the fiscal's office. Subsequently, Suntay wrote a letter to Dizon on September 22, 1962 asking for the return of her ring which was pledged with the latter’s pawnshop under its Pawnshop Receipt serial B No. 65606, dated June 15, 1962.

Dizon refused to return the ring, so Suntay filed an action for its recovery with the CFI of Manila, which declared that she had the right to its possession. The Court of Appeals likewise affirmed said decision.

ISSUE:

Who has the right title over the subject property?

COURT RULING:

The Supreme Court affirmed the decision of the lower courts. The controlling provision is Article 559 of the Civil Code which provides that “[T]he possession of movable property acquired in good faith is equivalent to a title. Nevertheless, one who has lost any movable or has been unlawfully deprived thereof may recover it from the person in possession of the same. If the possessor of a movable lost of which the owner has been unlawfully deprived, has acquired it in good faith at a public sale, the owner cannot obtain its return without reimbursing the price paid therefor.” The only exception the law allows is when there is acquisition in good faith of the possessor at a public sale, in which case the owner cannot obtain its return without, reimbursing the price. Hanging on to said exception as his basis, Dizon insisted that the principle of estoppel should apply in this case but the Supreme Court ruled otherwise.

In the present case not only has the ownership and the origin of the jewels misappropriated been unquestionably proven but also that Clarita R. Sison, acting fraudulently and in bad faith, disposed of them and pledged them contrary to agreement with no right of ownership, and to the prejudice of Suntay, who was illegally deprived of said jewels and who, as the owner, has an absolute right to recover the jewels from the possession of whosoever holds them, which in this case is Dizon’s pawnshop. Dizon ought to have been on his guard before accepting the pledge in question, but evidently there was no such precaution availed of and he has no one to blame but himself. While the activity he is engaged in is no doubt legal, it is not to be lost sight of that it thrives on taking advantage of the necessities precisely of that element of our population whose lives are blighted by extreme poverty. From whatever angle the question is viewed then, estoppel certainly cannot be justly invoked.

Fiestan vs. Court of Appeals, and Developmentt Bank of the Philippines

Fiestan vs. Court of Appeals, and Developmentt Bank of the Philippines
185 SCRA 751
May 1990
FACTS:

For failure of petitioner spouses Dionisio Fiestan and Juanita Arconada (spouses Fiestan) to pay their mortgage indebtedness to respondent Development Bank of the Philippines (DBP), the latter was able to acquire at a public auction sale on August 6, 1979 the parcel of land (Lot No. 2-B covered by TCT No. T-13218) that the spouses Fiestan owned in Ilocos Sur after extrajudicial foreclosure of said property. The Provincial Sheriff issued a certificate of sale that same day which was registered on September 28 in the Office of the Register of Deeds of Ilocos Sur. Earlier, or on September 26, spouses Fiestan also executed a Deed of Sale in favor of DBP which was likewise registered on September 28, 1979. When spouses Fiestan failed to redeem their parcel of land within the 1 year period which expired on September 28, 1980, the Register of Deeds cancelled their title over the subject property and issued TCT No. T-19077 to DBP upon the latter’s duly executed affidavit of consolidation of ownership.

On April 13, 1982, the DBP sold the lot to Francisco Peria, so the Register of Deeds of Ilocos Sur cancelled DBP’s title over said property and issued TCT No. T-19229 to Peria’s name, who later secured a tax declaration for said lot and accordingly paid the taxes due thereon. He thereafter mortgaged said lot to the PNB-Vigan Branch as security for his loan of P115,000.00. Since the spouses Fiestan were still in possession of the property, the Provincial Sheriff ordered them to vacate the premises, but instead of leaving, they filed a complaint in the RTC of Vigan, Ilocos Sur for annulment of sale, mortgage and cancellation of transfer certificates of title against the DBP-Laoag City, PNB-Vigan Branch, Ilocos Sur, Francisco Peria and the Register of Deeds of Ilocos Sur.

The lower court dismissed said complaint, declaring valid the extrajudicial foreclosure sale of the mortgaged property in favor of the DBP and its subsequent sale to Francisco Peria as well as the real estate mortgage constituted in favor of PNB-Vigan. The Court of Appeals likewise affirmed said decision. The spouses Fiestan herein seek to annul the extrajudicial foreclosure sale of the mortgaged property on the ground that the Provincial Sheriff conducted the foreclosure without first effecting a levy on said property before selling the same at the public auction sale.

ISSUE:

Who has the right to acquire by purchase the subject property?

COURT RULING:

In denying the petition, the Supreme Court reiterated that the formalities of a levy, which the Provincial Sheriff of Ilocos Sur allegedly failed to comply with, are not basic requirements before an extrajudicially foreclosed property can be sold at public auction. The spouses Fiestan insisted that what prevails over the case are par. (2) of Article 1491 and par. (7) of Article 1409 of the Civil Code which prohibits agents from acquiring by purchase, even at a public or judicial auction either in person or through the mediation of another, the property whose administration or sale may have been entrusted to them unless the consent of the principal has been given. However, the Supreme Court ruled that the power to foreclose is not an ordinary agency that contemplates exclusively the representation of the principal by the agent but is primarily an authority conferred upon the mortgagee for the latter's own protection, as provided under Section 5 of Act No 3135, as amended, which is a special law that must prevail over the Civil Code which is a general law. Even in the absence of statutory provision, there is authority to hold that a mortgagee, and in this case the DBP, may purchase at a sale under his mortgage to protect his own interest or to avoid a loss to himself by a sale to a third person at a price below the mortgage debt.