G.R. No. L-24571. December 18, 1970
JOSE L. PONCE DE LEON, PLAINTIFF-APPELLANT, VS. REHABILITATION FINANCE CORPORATION, DEFENDANT-APPELLANT AND THIRD PARTY DEFENDANT-APPELLANT, ROSALINA SORIANO, TEOFILA SORIANO A…
CONCEPCION, C.J.:
Appeal from a decision of the Court of First Instance of Rizal, the dispositive part of
which reads:
“IN VIEW OF THE FOREGOING, the Court hereby renders judgment
dismissing plaintiffs complaint with costs against plaintiff; ordering
plaintiff Jose Ponce de Leon to pay the defendant RFC the amount of FIVE
HUNDRED TWENTY-NINE THOUSAND TWO HUNDRED SIXTY FIVE PESOS AND FIFTY FOUR
(P529,265.54) CENTAVOS, with interest at six percent Per annum from November
24, 1954 until fully paid, the further sum of ONE HUNDRED EIGHTY (P180.00)
PESOS per month from May 20, 1955 until plaintiff vacates the house and lot at
Taft Avenue, Pasay City, and FIVE THOUSAND
(P5,000.00) PESOS as damages for the injunction and costs.
“The Court declares the
mortgage of one-half of the lot covered by Original transfer certificate of
title No. 8094 of the land records of Rizal Province
belonging to the third party plaintiffs, namely Rosalina Soriano,
Rev. Fr. Eugenio Soriano
and Teofila Soriano del
Rosario null and void and the sheriff’s sale in favor of the RFC of said
one-half share likewise null and void.”[1]
As correctly set forth in said decision, the main facts are:
“On August 14, 1945, herein plaintiff Jose L. Ponce de Leon
and Francisco Soriano, father of third-party
plaintiffs Teofila Soriano
del Rosario, Rosalina Soriano and Rev. Fr. Eugenio Soriano, obtained a loan
for P10,000.00 from the Philippine National Bank (PNB), Manila, mortgaging a
parcel of land situated at Barrio Ibayo, Municipality
of Parañaque, Rizal,
covered by original certificate of title No. 8094 of the land records of Rizal Province in the name of Francisco Soriano,
married to Tomasa Rodriguez, as security for the loan
(Exhibit 15-Soriano). On August 16, 1945, Ponce de Leon gave
P2,000.00 to Soriano from the proceeds of the loan
(Exhibit ‘N’). The loan was subsequently
increased to P17,500.00 and an amendment to the real estate mortgage, Exhibit
’15-Soriano’, was executed by Jose L. Ponce de Leon and Francisco Soriano on March 13, 1946 (Exhibit ’16-Soriano’).
“On May 4, 1951, Jose L. Ponce de Leon filed with the
Rehabilitation Finance Corporation (RFC for short) Manila, his loan
application, Exhibit ‘1-RFC’, for an industrial loan, for putting up a sawmill,
in the amount of P800,000.00 offering as security certain parcels of land,
among which, was the parcel which Ponce de Leon and Soriano
mortgaged to the PNB. The application
stated that the properties offered for security for the RFC loan are encumbered
to the PNB, Bacolod,
and to Cu Unjieng Bros. The properties offered for security to the
RFC were inspected by the appraisers of the latter, who submitted the following
appraisals:
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(Exh.
‘6-aRFC’)
“The application was approved for P495,000.00 and the mortgage
contract (Exhibit ‘A’, also ’16-RFC & ’33-Soriano’) was executed on October 8,1951 by Jose L. Ponce de
Leon, his wife Carmelina Russel,
and Francisco Soriano. The same parties signed a promissory note
(Exhibit ‘A’) for P495,000.00, with interest at 6% per annum, payable on
installments every month for P28,831.64 in connection with the mortgage
deed. Before the mortgage deed was
signed, the Notary Public, Felipe Cuaderno, Jr.
before whom it was acknowledged, translated it in Tagalog
to Francisco Soriano, who thereafter affixed his
signature to the document. At the time
that Francisco Soriano signed the mortgage deed,
Exhibit ‘A’, his spouse Tomasa Rodriguez was already
dead leaving as her heirs, her children namely, Rosalina, Teofila
and Rev. Fr. Eugenio Soriano,
none of whom signed the said mortgage deed or the promissory note.
“The mortgage deed specifically stipulated that the proceeds
thereof shall be used exclusively for the purchase of machinery and equipment,
construction of buildings and the payment of obligations and that the release
of the amounts loaned shall be at the discretion of the RFC. In view of these conditions, the RFC paid
Ponce de Leon’s obligations of P100,000.00 to the PNB; P30,000.00 to Cu Unjieng Bros; and P5,000.00 to Arturo Colmenares. From the balance of P360,000.00, the sum of
P352,000.00 was released to Jose L. Ponce de Leon at various amounts during the
period from December, 1951 to July 1952.
The checks covering these releases were issued to Jose L. Ponce de Leon
in view of the authority given to him in writing by Francisco Soriano and Carmelina Russell
(Exhibit ’33-A-Soriano’, Exhibit ‘A’ and Exhibit ’16-RFC’),
“On March 12, 1952,
Jose L. Ponce de Leon and his wife Carmelina Russell
executed an addendum to the chattel mortgage for machineries and equipments
(Exhibit “F”).
“None of the amortization and interests which had become due
was paid and, for this reason, the RFC took steps for the extra-judicial
foreclosure of the mortgaged properties consisting of real estates and the
sawmill and its equipments of Ponce de Leon situated in two places in Samar.
The RFC was the purchaser of all the mortgaged properties in the ensuing
sheriff’s sales, with the exception of two parcels of land situated in Bacolod City
which were purchased by private individuals.
Many items of the mortgaged machineries and equipments could not be
found. The parcels of land mortgaged
were sold as follows:
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“The Sheriff sold the land covered by original certificate of
Title No. 8094 in the name of Francisco Soriano,
married to Tomasa Rodriguez, on June 15, 1954 and the
deed of sale, dated April 19, 1955 was executed by the sheriff in favor of the
purchaser thereof, the RFC, including all the other properties sold (Exhibit
’15-RFC; also ’54-Soriano’).
“Previous to the expiration of the one-year period of
redemption, Francisco Soriano, through Teofila Soriano del Rosario
offered to repurchase the Soriano lot for P14,000.00
and on June 14, 1955, the last day for the redemption of the lot, Francisco Soriano, in company with his daughter, Rosanna and Teofila, went to see Mr. Bernardo, Chief of the assets
department of the RFC, and offered to redeem said lot for P14,000.00 but the
offer was rejected and they were told to participate in the public sale of the
land to be conducted by the RFC. Jose L.
Ponce de Leon did not offer to redeem the mortgaged properties sold at anytime
before the expiration of the period of redemption.
“The RFC scheduled a public sale of the lot registered in the
name of Francisco Soriano and of the other lots which
the RFC acquired in the Sheriff’s sale for February 20, 1956 in view of the
inability of Ponce de Leon or Soriano to legally
redeem the properties sold by the Sheriff within the one year period after the
sale.
“On February 18, 1956, Jose L. Ponce de Leon instituted the
present action alleging that there was delay in the releases of the amount of
the loan; that the RFC withheld the amount of P19,000.00 from the loan until it
had verified whether Ponce de Leon had still an unpaid indebtedness to the
defunct Agricultural and Industrial Bank, the AFC’s predecessor, and this was
paid only after one year had passed; that the typhoon in October and November,
1952 had caused destructions to his sawmills and hampered his operations for
which reason, he asks, in his complaint, that the amortizations on his
obligations which became due since October, 1952 be declared extinguished; that
the sheriff’s sales be declared null and void because the properties were sold
at grossly inadequate prices and that said sales were not conducted in
accordance with law; that the RFC be compelled to account for his machineries
and equipments at his lumber mill in Calbayog and to
reimburse him for the value of the unaccounted machineries and equipments; that
the RFC be ordered to pay him actual and moral damages for P105,000.00 and
costs. De Leon
asked for the issuance of a writ of preliminary injunction to restrain the RFC
from carrying out its contemplated public sale.
The Court set the petition for injunction for hearing but no one
appeared for the RFC at the hearing thereof so that the Court had to issue the
preliminary injunction prayed for. De Leon
caused notice of lis pendens
to be recorded in relation with this case.
“The RFC filed its answer sustaining the legality of the
mortgage and Sheriff’s sales and counterclaimed that Ponce de Leon be ordered
to pay the deficiency claim representing the balance of the latter’s
indebtedness, rental of the lot and house at Taft Avenue, Pasay
City occupied by Ponce de Leon and damages.
“Subsequent to the filing of Ponce de Leon’s complaint against
the RFC, Francisco Soriano wrote a letter, dated
February 20, 1956, to the President asking the latter’s intervention so that
the projected sale on the same date to be conducted by the RFC may be suspended
insofar as the lot in his name is concerned and that he be allowed to redeem
it (Exhibit ’27-Soriano’). This letter
was referred by the Executive Office to the RFC, which sent a letter, Exhibit
’29-Soriano’, to Francisco Soriano informing the
latter that he could redeem his former property for not less than its appraised
value of P59,647.05, payable 20% down and the balance in ten years, with 6%
interest. Soriano
did not redeem the lot under the conditions of the RFC. He then filed a third-party complaint in this
case with the RFC and Jose L. Ponce de Leon as the third-party defendants. Due to the death of Francisco Soriano, he was substituted as third-party plaintiff by his
children, namely, Teofila Soriano
del Rosario, Rosalina Soriano and Rev. Fr. Eugenio Soriano.
“The Sorianos contend that the
mortgage in favor of the RFC and promissory note signed by Francisco Soriano lacked the latter’s consent and was without consideration
insofar as Francisco Soriano is concerned and hence
null and void as to him and his children; that the lot covered by original
certificate of title No. 8094 in the name of Francisco Soriano
belonged to the conjugal partnership of the latter and his wife, Tomasa Rodriguez, now deceased, and since the latter was
already dead when the mortgage was executed and her children who have thus
inherited her share have not signed the mortgage contract and promissory note,
at least,, the one-half share of the lot belonging now to the Soriano sisters and brother, the third-party plaintiffs,
have not been legally included in the mortgage to the RFC so that the latter
had not acquired said one-half share in the sheriff’s sale. The Sorianos
further ask that they be allowed to redeem the remaining one-half share, that
which belonged to their father, for one-half of P10,000.00 which was the amount
for which the RFC acquired the whole lot in the sheriff’s sale. The third party-plaintiffs also ask that
Ponce de Leon be ordered to reimburse them for whatever amount they may use in
redeeming the lot and expenses incident thereto and that Ponce de Leon and the
RFC be made to pay them moral damages which their father suffered and attorney’s
fees.
“Answering the third-party complaint, the RFC and Ponce de
Leon affirm the legality of the mortgage deed insofar as Soriano
is concerned. The RFC further contends
that the mortgage was binding on the whole Soriano
lot and that there was no valid redemption of this lot.
“Ponce de Leon interposed a counterclaim for various sums of
money allegedly received from him by Francisco Soriano
and the present third-party plaintiffs.”1
In due course, the lower court rendered judgment the dispositive part of which is quoted at the beginning of
this decision. Said court held that the
typhoons in October and November 1952 did not relieve the plaintiff from his
obligations under the promissory note and the deed of mortgage in favor of the
RFC; that the sheriff’s sale of the mortgaged properties is valid; that the RFC
need not account for the machineries and equipment of the sawmill in Samar or reimburse the value of such machinery and
equipment as may be unaccounted for, they having become property of the RFC,
owing to plaintiff’s failure to exercise the right of redemption in accordance
with law; that neither may he recover damages from the RFC for the alleged
delay in the releases made by the same, since their contract stipulates that
the proceeds of the loan shall be released at the discretion of the Mortgagee
and plaintiff’s offer of redemption came long after the expiration of the
period therefor, and was not for the full amount of
plaintiff’s liability, which he, moreover, asked to be reduced and wanted to
pay in installments; and that, accordingly, plaintiff has no right to recover
any damages.
Upon the other hand, the court found that plaintiff should
pay: (1) rentals for the use of the
mortgaged property (house and lot) at Pasay City,
after the title thereto had passed to the RFC, and (2) the sum of P529,265.54,
representing the balance of plaintiff’s obligation in favor of the RFC – which,
as of November 24,1954, amounted to P583,270.49, plus 10% thereof, as
stipulated penalty, or the aggregate sum of P641,597.54 – after deducting therefrom the sum of P112,332.00 for which the mortgaged
properties had been sold, (3) apart from the sum of P5,000.00, as damages for
the injunction issued, at his behest, and the costs.
As regards the third party complaint of the Sorianos,
the lower court: (1) overruled their
claim to the effect that Francisco Soriano had signed
the promissory note and the deed of mortgage in favor of the RFC without
knowledge of the contents thereof and without any consideration therefor; but (b) held that, being registered in the name
of “Francisco Soriano, married to Tomasa Rodriguez,” the property covered by original
certificate of title No. 8094 – hereinafter referred to as the Parañaque property – is presumed to be long to the conjugal
partnership of said spouses, and that, the RFC having failed to offset this
presumption, the mortgage on and the sale of the property by the sheriff are
null and void as to one-half (1/2) thereof.
Moreover, the court declared:
(a) that the RFC was justified in rejecting the offer, made by the Sorianos, to redeem said property for, pursuant to section
78 of Republic Act No. 337, redemption could be effected “only by paying
the amount fixed in the order of execution”; (b) that plaintiff’s
counterclaim against the Sorianos is barred by the
statute of limitations; (c) that neither may he recover damages from the Sorianos, their alleged bad faith not having been
established; and (d) that, similarly, the Sorianos
are not bound to pay damages to the RFC, the action of the former against the
latter not being altogether unjustified.
All of the parties – namely, plaintiff, Jose Ponce de Leon,
defendant, Rehabilitation Finance Corporation, hereinafter referred to as RFC
(now Development Bank of the Philippines), and Rosalina Soriano,
Fr. Eugenio Soriano and Teofila Soriano del Rosario, hereinafter
referred to as the Sorianos – have appealed from said
decision.
Appeal of the Sorianos
The Sorianos maintain that the lower
court erred: (1) in holding that the
promissory note and the deed of mortgage executed by Francisco Soriano in favor of the RFC are valid as regards one-half
of the Parañaque property; (2) in ruling that the
extra-judicial sale thereof to the RFC is valid as to the aforementioned
one-half of said property; (3) in not sentencing the RFC to allow the
redemption of such half of said property by the Sorianos,
as heirs of the deceased Francisco Soriano, for
one-half of the sum of P10,000 for which the whole lot was sold to the RFC, or,
at least, for the whole sum of P10,000;
(4) in not declaring that section 78 of Rep. Act No. 337 is unconstitutional
and in holding that the same, instead of Act No. 3135, as amended by Act No.
4118, is the law applicable to the case; (5) in considering that the case of Villar v. de Paderanga1 is authoritative or controlling in
the case at bar; (6) in not sentencing the plaintiff and the RFC to pay damages
to the Sorianos; (7) in not ordering the RFC to
return OCT No. 8094, covering the Parañaque property,
to the Sorianos, free from any lien or encumbrance;
and (8) in denying the motion for reconsideration of the Sorianos.
The latter’s first assignment of error is predicated upon the
theory that, when the promissory note and the deed of mortgage in question were
executed by Francisco Soriano, he was somewhat
absent-minded, owing to senility, he being then a septuagenarian, apart from
illiterate, for he could write only his name; that he was persuaded to sign
said promissory note and deed of mortgage thru fraud, deceit and undue
influence, and did not know the true nature of these instruments when he
affixed his signatures thereon; and that said instruments are also null and
void for lack of cause and consideration.
In this connection, the appealed decision has the following to say:
“The third-party plaintiffs ask that the mortgage deed and
promissory note be declared null and void with respect to Francisco Soriano for lack of consent and consideration. It is claimed that Francisco Soriano was made to believe by Ponce de Leon when he
signed, the mortgage deed and the promissory note that these were documents
releasing his land from the previous mortgage in favor of the PNB and that
Francisco Soriano did not receive a single centavo
out of the RFC loan.
“The principal witness on the above allegation of the
third-party plaintiffs is Rosalina Soriano, who testified
that her father, Francisco was an old man who was absent-minded; that in 1945,
Ponce de Leon merely borrowed her father’s certificate of title on the pretext
that he would see if it were valid; that she gave it to Ponce de Leon who never
returned the certificate and it turned out that the latter mortgaged it to the
PNB by deceiving her father in signing the mortgage contract; that in 1951, her
father received a sheriff’s notice that the land would be foreclosed; that her
father went to see Ponce de Leon in Negros but the latter
assured him that nothing would happen to his land; that in October, 1951, she
and her father went to see Ponce de Leon; that when the latter told her father
that the property was mortgaged to the RFC, her father got angry at Ponce de
Leon saying that the latter fooled him but Ponce de Leon’ assured him that he
would redeem the land but he failed to do so.
“Ponce de Leon denied having deceived Francisco Soriano into signing the mortgage deed covering his land,
saying that the transaction was with the full and complete knowledge and
understanding of Francisco Soriano. He was supported by Felipe Cuaderno, Jr., the Notary Public, who notarized the
mortgage deed, who said that he explained and translated into Tagalog, a language known and spoken by Francisco Soriano, the mortgage deed.
“The fact that Francisco Soriano may
have been absent-minded could not be said to have the effect of vitiating his
consent to the mortgage deed because the execution and signing of a contract
is not a matter that concerns past events in which absent-mindedness may be
taken into account. Besides, the
testimony of Rosalina Soriano to the effect that her
father told Ponce de Leon that the latter fooled him shows that the old man Soriano could remember past events, for if truly
absent-minded, Francisco would not recollect what he claims to be what really
took place at the RFC office as testified to by Rosalina.
“Neither could Francisco Soriano be
considered feeble-minded if we believe the testimony of Rosalina which shows Soriano’s determination to see to it that the wrong done
him was righted and that his property may not be taken away from him, for
according to Rosalina, he even went to Negros alone
to see Ponce de Leon he received the Sheriff’s notice of foreclosure and as shown
by his alleged going to see Ponce de Leon a number of times about his land and
of his enlisting the aid of Ramon Lacson.
“The Sorianos stress that, according
to Felipe Cuaderno, Jr., the Notary Public, when the
latter asked Francisco Soriano, after he had
translated the mortgage deed into Tagalog if he
(Francisco) understood it, it was Ponce de Leon who said that the old man
already (k)new it. But, granting that
this was what happened, yet, Francisco Soriano would
certainly have protested against the statement of Ponce de Leon if Francisco
did not really know what the transaction was about or he would have told Cuaderno that the document was not in accordance with the
agreement between him and Ponce de Leon considering that the document was
already translated to the old man by Cuaderno in the Tagalog language which Soriano
understood.
“Besides, if Ponce de Leon really deceived Francisco Soriano into signing the mortgage deed and promissory note
so much so that in October, 1951, the old man Soriano
was so angry at Ponce de Leon that he told the latter that he fooled him as
testified to by Rosalina Soriano, then why was it
that Ponce de Leon was made one of the sponsors of the thanksgiving mass of
Neo-Prysbeter Rev. Fr. Eugenio
Soriano, the old man’s son and one of the present
third-party plaintiffs? The conduct of
the Sorianos in making Ponce de Leon one of the
sponsors in the thanksgiving mass of Rev. Fr. Eugenio
Soriano in which Ponce de Leon ‘spent a
considerable amount for the big feast that followed the mass is inconsistent
with the Sorianos‘ claim that Ponce de Leon had
hoodwinked Francisco Soriano into signing the
mortgage instrument and the promissory note.
“Moreover, the mere oral unsupported testimony of Rosalina Soriano, an interested party and one of the plaintiffs
herein, is not sufficient to overcome the legal presumption of the regularity
of the mortgage deed, a contract celebrated with all the legal requisites under
the safeguard of a notarial certificate (Naval, et
al. v. Enriquez, 3 Phil. 670-72). Such
unsupported testimony of the interested party Rosalina Soriano
is not that clear, strong and convincing evidence beyond mere preponderance of
evidence, required to show the falsity or nullity of a notarial
document (Sigue, et al., v. Escaro,
CA, 53 Q. C. 1161; Jocson v. Ratacion,
G. R. No. 41687; Palanca v. Chillanchin
v. Coquinco, G. R. No. L-1355; Robinson v. Villafuerte, 18 Phil. 171).
“With reference to the contention that there was no
consideration received by Francisco Soriano out of the
mortgage contract and the promissory note executed in connection therewith,
this is a matter which concerned merely Francisco Soriano
and Jose L. Ponce de Leon for Francisco Soriano had
expressly in writing (Exhibit ’33a-Soriano’) authorized Jose L. Ponce de Leon
to have the check or checks covering the amount of the mortgage issued in the
name of said Jose L. Ponce de Leon. Whatever
arrangements the latter and Francisco Soriano may
have had with respect to the amounts thus given by the RFC on account of the
mortgage is not the concern of the RFC if Ponce de Leon did not in fact give
any portion of the amount to Francisco Soriano. At any rate, there is ample evidence to
show that Francisco Soriano received part of the
consideration of the loan from the RFC.
It will be recalled that part of this loan was paid for the
obligation of Francisco Soriano and Ponce de Leon to
the Philippine National Bank secured by a mortgage of the lot in the name
of Francisco Soriano.
That Francisco Soriano received portions of
this PNB loan from Ponce de Leon is shown by the fact that on August 16,
1945, Francisco Soriano received the amount of
P2,000.00 from Ponce de Leon, evidenced by the receipt exhibit ‘N’, and
this amount must have been part of the P10,000.00 consideration of the PNB
mortgage because this mortgage was executed on August 11, 1945 or two days
before Soriano
received from Ponce de Leon the amount of
P2,000.00 on August 16, 1945.
And two days thereafter, on August 18, 1945, Francisco Soriano again received from Ponce de Leon the amount of
P350.00 as shown by the receipt exhibit ‘0-3’ and, on April 27, 1945,
the amount of P1,000.00 was received by Francisco Soriano
from Ponce de Leon as shown by his receipt exhibit ‘0-1’ to pay the
mortgage on his lot to Apolonio Pascual. On March 12, 1952, Francisco Soriano received the amount of P3,000.00 from de Leon
as shown by the check exhibit ‘X-2’ and on June 3, 1952, the amount of
P50.00 as shown by the check exhibit ‘X-6’ and P200.00 on October 22,
1952 as shown by the check exhibit ‘X-7’.
Rosanna Soriano herself received P50.00 on
March 30, 1952 from Ponce de Leon as shown by the check marked Exhibit
‘X-3’ and third-party plaintiff Rev. Eugenio Soriano received P100.00 on March 3, 1952 as shown by
the check exhibit ‘X-1’ and P50.00 on March 31, 1952 as shown by exhibit
‘X-4’. There is therefore no grounds for
declaring the mortgage contract and promissory note invalid for lack of
consideration insofar as Francisco Soriano and his
children are concerned.”1
The facts thus relied upon by His Honor, the Trial Judge, are
borne out by the record, and We are fully in accord with the conclusions drawn
therefrom.
In support of their second
assignment of error, the Sorianos maintain that the
sum of P10,000, for which the Parañaque property was
sold to the RFC, is ridiculously inadequate, considering that said property had
been assessed at P59,647.05. This
pretense is devoid of merit, for said property was subject to redemption and:
“x x x
where there is the right to redeem x x x – inadequacy of price Should not be material, because the
judgment debtor may re-acquire the property or else sell his right to
redeem and thus recover any loss he
claims to have suffered by reason of the price obtained at the
execution sale.”2
Then, again, as the trial court had correctly observed:
“But, mere inadequacy of the price obtained at the sheriff’s
sale unless shocking to the conscience will not be sufficient to set aside the
sale if there is no showing that, in the event of a regular sale, a better
price can be obtained. The reason is
that, generally, and, inforced sales, low prices are
usually offered (1 Moran’s Rules of Court, pp. 834-835). Considering that in Gov’t
of P. I. v. Sorna, G. R. No. 32196, wherein property
worth P120,000.00 was sold for only P15,000.00, in Philippine National Bank v.
Gonzales, 45 Phil. 693, wherein property valued at P45,000.00 was sold for
P15,000.00 and in Cu Unjieng & Sons v. Mabalacat Sugar Co. 58 Phil. 439, property worth
P300,000.00 to P400,000.00 was sold for P177,000.00, the Court cannot consider
the sale of the Bacolod properties, the Taft Avenue
house and lot and the Parañaque property of the Sorianos null and void for having been sold at inadequate
prices shocking to the conscience and there being no showing that in the
event of a resale, better prices can be obtained.”1
The third, fourth and fifth assignments of error of the Sorianos refer to the amount for which they feel entitled
to redeem the aforementioned property.
It will be recalled that, before the expiration of the redemption
period, Teofila Soriano del
Rosario offered to repurchase said property for P14,000; that she and her
sister Rosalina reiterated the offer on the last day of said period; and that
.the offer was rejected by the RFC, whose action was upheld by the lower court,
inasmuch as sec. 78 of Rep. Act 337 provides that, “(i)n
the event of foreclosure x x x
the mortgagor or debtor whose real property has been sold at public auction x x x for the x x
x payment of an obligation to any bank, banking, or
credit institution, x x x
shall have the right x x x
to redeem the property by paying the amount fixed by the court in the order of execution, x x
x, ” not the amount for which it had been purchased
by the buyer at public auction. We have
already declared that “x x x
(o)nly foreclosure of mortgages to banking
institutions (including the Rehabilitation Finance Corporation) and those made extrajudicially are subject to legal redemption, by
express provision of statute, x x x”2
and, although neither an ordinary bank nor the RFC was involved in the case in
which this pronouncement had been made, the same was relevant to the
subject-matter of said case and to the issue raised therein. At any rate, We reiterate the aforementioned
pronouncement, it being in accordance with law, for, pursuant to Rep. Act No.
337:
“x x x The
terms ‘banking institution’ and ‘bank’, as used in this Act, are synonymous and
interchangeable and specifically include banks, banking institutions,
commercial banks, savings banks, mortgage banks, trust companies, building and
loan associations, branches and agencies in the Philippines of foreign banks,
hereinafter called Philippine branches, and all other corporations,
companies, partnerships; and associations performing banking functions in
the Philippines.”1
The Sorianos insist that the present
case is governed, not by Rep. Act No. 337, but by Act No. 3135, as amended by
Act No. 4118 – pursuant to which, in relation to section 465 of Act No. 190,
the redemption may be made by “paying the purchaser the amount of his
purchase,” with interest and taxes – the deed of real estate mortgage
in favor of the RFC having allegedly been executed and the aforementioned property
having been sold pursuant to said Acts Nos. 3135 and 4118.
The conclusion drawn by the Sorianos
from these facts is untenable. As set
forth in its title, Act No. 3135 was promulgated “to regulate the sale
of property under special powers inserted in or annexed to real estate
mortgages,” Section 6 thereof provides that in all cases of
“extrajudicial sale x x x
made under the special power he reinbefore referred
to,” the property sold may be redeemed within “one year from and
after the date of the sale x x x ” Act No. 4118 amended Act No. 3135 by
merely adding thereto three (3) new sections.
Upon the other hand, Rep. Act No. 337, otherwise known as “The
General Banking Act,” is entitled “An Act Regulating Banks and
Banking Institutions and for other purposes.” Section 78 thereof
limits the amount of the loans that may be given by banks and banking or credit
institutions on the basis of the appraised value of the property given as
security, as well as provides that, in the event of foreclosure of a real
estate mortgage to said banks or institutions, the property sold may be
redeemed “by paying the amount fixed by the court in the order of
execution,” or the amount judicially adjudicated to the creditor
bank. This provision had the effect of
amending section 6 of Act No. 3135, insofar as the redemption price is
concerned, when the mortgagee is a bank or a banking or credit institution,
said section 6 of Act No. 3135 being, in this respect, inconsistent with the
above-quoted portion of section 78 of Rep. Act No. 337, In short, the Parañaque property, was sold pursuant to said Act No: 3135,
but the sum for which it is redeemable shall be governed by Rep. Act No. 337, which
partakes of the nature of an amendment to Act No. 3135, insofar as
mortgages to banks or banking or credit institutions are concerned; to which
class the RFC belongs. At any rate, the
conflict between the two (2) laws must be resolved in favor of Rep. Act No.
337, both as a special and as the subsequent legislation.1
The sixth, seventh and eighth assignments of error made by the Sorianos are mere consequences of those already disposed
of. Hence, no further discussion thereof
is necessary.
Plaintiff’s Appeal
Plaintiff Ponce de Leon alleges that the lower court has
erred: (1) “in not setting aside
the foreclosure sales on the mortgage contract dated October 8, 1951”;
(2) “in stating that the proceeds of the foreclosure sales were
conscionable”; (3) in not granting Ponce de Leon’s claim for adjustment
and not “giving him a reasonable time to pay whatever obligations he may
have”; (4) in not granting him damages nor directing the return of his
properties; (5) “in not ordering a new trial for the purpose of
adjusting” his “obligations and determining the terms and conditions
of his obligation”; and (6) in not granting his claim against the Sorianos.
With respect to his first assignment of error, plaintiff maintains
that his promissory note Exhibit A was not yet overdue when the mortgage was
foreclosed, because the installments stipulated in said promissory note have
“no fixed or determined dates of payment,” so that the note is
unenforceable and “the RFC should have first asked the court to determine
the terms, conditions and period of maturity thereof.”
In this connection, it should be noted that, pursuant to Exhibit
A, the total sum of P495,000 involved therein shall be satisfied in quarterly
installments of P28,831.64 each – representing interest and amortization – and
that, although the date of maturity of the first installment was left blank,
the promissory note states that the “date of maturity (was) to be fixed as
of the date of the last release,” completing the delivery to the
plaintiff of the sum of P495,000 lent to him by the RFC. He now says that this sum of P495,000 has
not, as yet, been fully released by the RFC.
But, this is contrary to the facts of record, for, during the trial, his
counsel, Atty. Jose Orozco, made the following admission:
“Out of the loan of P495,000.00, the following were paid to
the creditors of Jose Ponce de Leon: P100,000.00 to the PNB, P30,000.00 to Cu Unjieng Bros, P5,000.00 to Arturo Colmenares,
P1,000.00 to Lorenzo Balagtas. The total amount paid to the creditors is
P136,000.00 which were taken out of the proceeds of P495,000.00. The rest were all paid in the
name of Jose Ponce de Leon.”1
In short, part of the sum of P495,000 had been delivered by the
RFC to the creditors of the plaintiff and Francisco Soriano,
as agreed upon by them, in payment of their outstanding obligations, and the
balance of said sum of P495,000 was turned over to the plaintiff, with the
written authorization and conformity of Francisco Soriano. This is borne out by the fact that, prior to
the institution of this case, plaintiff had not complained of failure of the
RFC to fully release the aforementioned sum of P495,000. Indeed, in his own complaint herein, he
merely alleged a “delay in the release.” Even so, he impliedly
admitted that the first installment was due in October 1952 – or, more
specifically, on October 24, 1952, this being the date given therefor in the letter-demands of the RFC, the accuracy of
which were not questioned by the plaintiff – so that the last release made by
the RFC to complete the sum of P495,000 must have taken place on July 24, 1952,
although, in answer to a question propounded to him, by his own counsel, as
regards the date he “received the total amount granted by the
RFC,” plaintiff said – on the witness stand – he “believed that it
was in the last part or quarter of 1953.” At this juncture, it is noteworthy
that plaintiff claims the right to a suspension of payment or an extension of
the period to pay the RFC owing to the typhoons that had lashed his sawmill in
October and November 1952, thus indicating clearly that the amount of the loan
extended to him and Francisco Soriano had then been fully
released by the RFC three (3) months before October 1952 and that the first
installment under the promissory note Exhibit A was due that month, as claimed
by the RFC.
At any rate, Annex A, in effect, authorized the RFC to fix the
date of maturity of the installments therein stipulated, which is allowed by
the Negotiable Instruments Law2 and when a promissory note
expresses “no time for payment, it is deemed “payable on
demand.”1
Under his second assignment of error, plaintiff maintains that
the aggregate price of P112,332.00, for which the mortgaged properties had been
sold at public auction, is unconscionable, said properties being allegedly
worth P1,202,976. This premise is inaccurate.
It should be noted that plaintiff and Francisco Soriano were granted a P495,000 loan on the security, not
only, of the existing properties offered as guarantee, but, also, on
that of assets – appraised at P570,000 – yet to be acquired by
plaintiff, partly with money thus received from the RFC and partly with his own
funds. After obtaining said loan and
receiving the amount thereof, less the sum of P136, 000 applied to the payment
of outstanding obligations, plaintiff failed to purchase the machinery and
equipment he had promised to get, or to set up the constructions he had
undertaken to make. Moreover, the RFC
found that the mortgaged lots in the cities of Pasay and Bacolod, which were originally
appraised at P492,288.00, were actually worth P172,530.00 only. Again, a good part of the machinery and
equipment existing in one of the mortgaged lands, when it was inspected before
the granting of the loan, were subsequently lost or missing, and those that
remained were, at the time of the sale to the RFC, in bad shape, so that the
appraised value thereof was then estimated at P10,000 only. Under these circumstances, it is clear that
the lower court did not err in approving the sale of the mortgaged properties
for the aggregate sum of P112, 332.
As regards his third assignment of error, it is urged by the
plaintiff that he is entitled to a “suspension of payment,” or a
postponement of the date of maturity of his obligation to pay, in view of the
typhoons that had “practically wiped out” his sawmill in Samar during the months of October and November 1952. This claim is predicated upon Article 1174 of
our Civil Code, reading:
“x x x
Except in cases expressly specified by the law, or when it is otherwise
declared by stipulation, or when the nature of the obligation requires the
assumption of risk, no person shall be responsible for those events which
could not be foreseen, or which, though foreseen, were inevitable.”
Plaintiff cannot avail of the benefits of this provision since he
was not bound to deliver the aforementioned sawmill, or any other the specific
thing damaged or destroyed by typhoons, to the RFC. His obligation was merely generic, namely, to
pay certain sums of money to the RFC, at stated intervals. As His Honor, the Trial Judge, had aptly put
it:
“x x
x in the instant case, ‘there was an obligation on
the part of the debtor to pay his loan; independently of the purpose for
Which the money loaned, was intended to be used arid this obligation to pay
continues to subsist notwithstanding the fact that it may have become
impossible for the debtor to use the money loaned for the particular purpose
that was intended (Milan v. Rio y Olabarrieta, 45
Phil. 718). There is hence no ground for
declaring the amortizations due on the principal loan since October, 1952 as
extinguished due to fortuitous event or to grant plaintiff a reasonable time to
pay the due amortizations as asked for by Ponce de Leon in his, complaint.”1
Being mere corollaries to his first three assignments of error,
which cannot be sustained, plaintiff’s fourth, fifth and sixth assignments of
error must have the same fate.
Defendant’s Appeal
The RFC contends that the lower court erred: (1) in holding that the Parañaque
property is presumed to belong to the conjugal partnership of Mr. and Mrs.
Francisco Soriano; (2) in failing to give due weight
to the testimony of Gregorio Soriano, and in holding
that the same is insufficient to overcome the presumption in favor of the
conjugal nature of said property; (3) in failing to consider that the Sorianos are now estopped from
questioning the validity of the mortgage on and the foreclosure sale of said
property; (4) in annulling the mortgage insofar as one-half of said property
is concerned, despite the finding that part of the proceeds of the RFC loan was
paid to settle the PNB loan secured by the same property; and (5) in holding
that the mortgage thereon and the sheriff’s sale thereof to the RFC are null
and void as regards one-half of said property.
These assignments of error may be reduced to one, namely, that the lower
court erred in voiding the sale to the RFC of the Parañaque
property, upon the ground that the same formed part of the conjugal partnership
of Mr. and Mrs. Francisco Soriano.
In this connection, it appears that the property was registered
in the name of “Francisco Soriano, married to Tomasa Rodriguez,” and that based upon this fact alone
– without any proof establishing satisfactorily that the property had been acquired
during coverture the lower court presumed that it
belongs to the conjugal partnership of said spouses. We agree with the RFC that the lower court
has erred in applying said presumption.
We should not overlook the fact that the title to said property
was not a transfer certificate of title, but an original one, issued in
accordance with a decree which, pursuant to law, merely confirms a pre-existing
title.1
Said original certificate of title does not establish, therefore, the time
of acquisition of the Parañaque property by the
registered owner thereof.
Then, again, the lower court applied said presumption, having in
mind, presumably, Article 160 of our Civil Code, which reads:
“x x x All
property of the marriage is presumed to belong to the conjugal partnership,
unless it be proved that it pertains exclusively to the husband or to the
wife.”
This provision must be construed in relation to Articles 153 to
159 of the same Code, enumerating the properties “acquired x x x during the marriage”
that constitute the conjugal partnership.
Consistently therewith, We have held that “the party who invokes
this presumption must first prove that the property in controversy was acquired
during the marriage. In other words,
proof of acquisition during coverture is a
condition sine qua non for the operation of the presumption in favor of
conjugal partnership.”1 It had, earlier, been declared,2
that “(t)he presumption under Article 160 of the Civil Code refers to
property acquired during-the marriage x x x.” We even, added that, there being “no showing
as to when the property in question was acquired x x
x the fact that the title is in the wife’s name
alone is determinative.” This is borne out by the fact that, in the
previous cases applying said presumption,3 it was duly established that
the property in question therein had been acquired during. coverture. Such
was, also, the situation obtaining in Servidad v.
Alejandrino4
cited in the decision appealed from.
The case at bar is differently situated. The Sorianos have not
succeeded in proving that the Parañaque property was
acquired “during the marriage” of their parents. What is more, there is substantial
evidence to the contrary.
Gregorio Soriano testified that his
first cousin, Francisco Soriano, had acquired said
property from his parents, long before he got married. In this connection, the lower court, however,
said that:
“x x x the
credibility of this witness is subject to doubt for it was shown that he had an
improper motive in testifying against the third-party plaintiffs because he
had a niece who was prosecuted by the third party plaintiffs for estafa, x x x.”5
This observation is, to our mind, hardly justifiable. To begin with, when counsel for the Sorianos asked the witness whether or not his grandchild or
grandniece Flordeliza Clemente
had been accused of “estafa” by the Sorianos, counsel for the RFC objected thereto, and the
court sustained the objection, upon the ground that the question was
“irrelevant.” As a consequence, there is no evidence of the
prosecution of Flordeliza Clemente
by the Sorianos. What is more, the ruling of the court
declaring the matter “irrelevant” to the present case
rendered it unnecessary for the RFC to prove that said prosecution – if it were
a fact – had nothing to do with the testimony of Gregorio Soriano. It would, therefore, be less than fair to the
RFC to draw an inference adverse thereto resulting from the absence of
evidence to this effect. At any rate,
said prosecution does not necessarily warrant the conclusion that Gregorio Soriano was impelled by an “improper motive” in
testifying as he did. After all, the Sorianos are, likewise, nieces of Gregorio Soriano and he was not the party allegedly accused by them.
Again, this witness testified in a straightforward manner, and
disclosed a good number of details bearing the earmarks of veracity. What is more, his testimony was
corroborated, not only by Felipe Cuaderno,
Jr. and OCT No. 8094, but, also, by the testimony of third-party
plaintiff Rosalina Soriano. Indeed, Felipe Cuaderno,
Jr. – an assistant attorney and notary public of the RFC, before whom the deed
of mortgage was acknowledged – testified that, in a conference he had before
the execution of the promissory note and the deed of mortgage in favor of said
institution, Francisco Soriano assured him that the Parañaque property was “his own separate property,
having acquired it from his deceased father by inheritance and that his
children have nothing to do with the property.” This was, in
effect, confirmed by no less than Rosalina Soriano,
for she stated, on cross-examination, that her father, Francisco Soriano, “was born and x x
x raised” in said property, so that –
contrary to her testimony in chief – he could not have told her that he and his
wife had bought it, as the Sorianos would have Us
believe.
Needless to say, had the property been acquired by them during coverture, it would have been registered, in the name not
of “Francisco Soriano, married to Tomasa Rodriguez,” but of the spouses
“Francisco Soriano and Tomasa
Rodriguez.” In Litam v. Espiritu,1 We
quoted with approval the following observation made in the decision under
review therein:
“Further strong proofs that the properties in question are the
paraphernal properties of Marcosa
Rivera, are the very Torrens Titles covering said properties. All the said properties are registered in the
name of ‘Marcosa Rivera, married to Rafael Litam.’ This circumstance indicates that the properties in
question belong to the registered owner, Marcosa
Rivera, as her paraphernal properties, for if they
were conjugal, the titles covering the same should have been issued in the
names of Rafael Litam and Marcosa
Rivera. The words ‘married to Rafael
Litam‘ written after the name of Marcosa
Rivera, in each of the above mentioned titles are merely descriptive of the
civil status of Marcosa Rivera, the registered owner
of the properties covered by said titles.”
The records further show that on August 16, 1945 – or two (2)
days after the execution of the deed of mortgage for P10,000 in favor of the
PNB – Francisco Soriano received P2,000 from plaintiff
herein; that, early in 1951, Francisco Soriano
received a letter informing him that the PNB mortgage on the Parañaque property would be foreclosed, unless the debt
guaranteed therewith were settled; that,
accordingly, his children came to know of the mortgage in favor of the PNB;
that on October 8, 1951, said mortgage was transferred to the RFC; that,
thereafter, or from March to October 1952, Francisco Soriano
and his children, Rosalina Soriano and Eugenio Soriano, received several
sums of money, aggregating P3,450, from plaintiff herein; that the latter,
moreover, spent over P6,000 on the occasion of the ordination of third-party
plaintiff, Eugenio Soriano,
as a priest, on April 20, 1952; that plaintiff, also, paid the bills of
Francisco Soriano in the Singian
Clinic when he fell sick in 1953; and that the former had, likewise, paid the
real estate tax on the Parañaque property from 1947
to 1952.
Under these circumstances, it is difficult to believe that the Sorianos did not know then of the mortgage constituted by
Francisco Soriano, on October 8, 1951, in favor of the RFC. In fact, Rosalina Soriano
testified that when, that month, Francisco Soriano
and she conferred with the plaintiff, he stated that the Parañaque
property was mortgaged to the RFC, whereupon her father got angry at the
plaintiff and said that he had fooled him (Francisco Soriano). Being thus aware of said mortgage since
October 1951, the Sorianos did not question its
validity – until January 12, 1957,
when they filed in this case their third-party complaint in intervention – as
regards, at least, one-half of the Paranaque
property, which they now claim to be their mother’s share in the conjugal
partnership. Worse still, after the
foreclosure sale in favor of the RFC, they tried to redeem the property
for P14,000, and, when the RFC did not agree thereto, they even sought the help
of the Office of the President to effect said redemption.
Their aforementioned failure to contest the legality of the mortgage
for over five (5) years and these attempts to redeem the property constitute
further indicia that the same belonged exclusively to Francisco Soriano, not to the conjugal partnership with his deceased
wife, Tomasa Rodriguez. Apart from the fact that said attempts to
redeem the property constitute an implied admission of the validity of
its sale – and, hence, of its mortgage to the RFC – there are
authorities to the effect that they bar the Sorianos
from assailing the same.
“x x x
defendants, by their repeated requests for time to redeem had impliedly
admitted – and were estopped to
question – the validity and regularity of the Sheriff’s sale.”1
“The petitioner himself believed that the company had a right
to cancel, because in March, 1943, i.e., after the cancellation, he proposed
the repurchase of the property, and the company agreed to resell it to him
x x x. Unluckily he could make no down payment and
the repurchase fell through. Wherefore,
it is now too late for him to question the cancellation, inasmuch as he
practically ratified it, x x x.”2
“The fact that Mallorca
failed to exercise right of redemption, which she sought to enforce in a
judicial court, ends her interest to the land she claims, and, doubtless, estops her from denying PNB’s
mortgage lien thereon.”3
It is thus clear that the lower court erred in annulling the RFC
mortgage on the Parañaque property and its sale to
the RFC as regards one-half of said property, and that the decision appealed
from should, accordingly, be modified, by eliminating therefrom
the second paragraph of its dispositive part, quoted
earlier in this decision.
With this modification and that of other pertinent parts of the
decision appealed from, the same is hereby affirmed in all other respects, with
the costs of this instance against plaintiff, Jose Ponce de Leon and
third-party plaintiffs, Rosalina Soriano, Teofila Soriano del Rosario and
Father Eugenio Soriano.
IT IS SO ORDERED.
Reyes, Makalintal, Zaldivar, Castro, Fernando, Teehankee,
Barredo, and Villamor, JJ., concur.
Dizon and
Makasiar, JJ., on
leave.
[1]
Record on Appeal, p. 133.
1
Record on Appeal, pp. 103-112.
1
97 Phil. 604, 609.
1
Record on Appeal, pp. 120-127. Underscoring ours.
2
Barrozo v. Macaraeg,
83 Phil. 378, 381. Underscoring ours.
1
Record on Appeal, pp. 115-116. Underscoring ours.
2
Villar v. de Paderanga,
97 Phil. 604, 609.
1
Rep. Act No..337, Sec. 2. Underscoring ours.
1
Nepomuceno v. RFC (DBP), G.R. No. L-14897, November 23, 1960.
1 T.s..n. pp. 4-5-, hearing
of Jan. 3, 1957.
Underscoring ours.
2 Sec. 13. When
date may be inserted. – Where an
instrument expressed to be payable at a fixed period after date is issued
undated, or where the acceptance of an instrument payable at a fixed period
after sight is undated, any holder may insert therein the true date of issue or
acceptance, and the instrument shall be payable accordingly. The insertion of a wrong date does not avoid
the instrument in the hands of a subsequent holder in due course; but as to him
the date so inserted is to be regarded as the true date.
Sec. 14. Blanks, when may be
filled. – Where the instrument is wanting in any material particular, the
person in possession thereof has a prima facie authority to complete it by
filling up the blanks therein. And a
signature on a blank paper delivered by the person making the signature in
order that the paper may be converted into a negotiable instrument operates as
a prima facie authority to fill it up as such for any amount. In order,
however, that any such instrument, when completed, may be enforced against any
person who became a party thereto prior to its completion, it must be filled up
strictly in accordance with the authority given and within a reasonable
time. But if any such instrument after
completion, is negotiated to a holder in due course, it is valid and effectual
for all purposes in his hands, and he may enforce it as if it had been filled
up strictly in accordance with the authority given and within a reasonable
time.
1 Sec. 7. When
payable on demand. – An instrument
is payable on demand?
(a)
Where it is expressed to be payable on demand,
or at sight or on presentation; or
(b)
In which no time for payment is expressed.
Where an
instrument is issued, accepted, or indorsed when overdue, it is, as regards the
person so issuing, accepting, or indorsing it, payable on demand.
1 Record on Appeal, p. 114. Underscoring ours.
1 Section 38, Act 496, Maloles
v. Director of Lands, 25 Phil. 548, Verzosa v.
Nicolas, 29 Phil. 425; Government v. Triño, 50
Phil. 708; Misamis Lumber Co. v. Director of
Lands, 57 Phil. 881.
1 Cobb-Perez v. Lantin,
G.R. No. L-22320, May 22, 1968.
2 Maramba v. Lozano, G.R.
No. L-21533, June 29, 1967.
3 Flores v. Flores, 48 Phil. 288, 289-290; Pratts v. Menzi, 53 Phil.
51, 53; Espiritu v. Bernardino, 58 Phil. 902;
– Benayides v. Tordilla,
59 Phil. 918; Reyes v. Ilano, 63 Phil. 629,
639; Commonwealth v. Sandiko, 72 Phil. 258,
259; Guinoo v. Court of Appeals, 97 Phil. 235,
238.
4 52 O. G. 2031.
5 Record on Appeal, pp. 128-129.
1 100 Phil. 364, 376., Underscoring ours.
1 Tiaoqui v. Chaves, G.R.
No. L-10086, May 20, 1957, quoting from 59 C. J. S. p. 1372: “By
claiming a right to redeem, or availing himself of a statutory stay, or by
seeking to impress a trust on the property in the hands of the purchaser, one affirms
the validity of the sale and may not assail it; x x
x.” Underscoring ours.
2 Tolentino v.
Philippine Land Improvement Co., Inc. , G.R. No. L-2469, September 30, 1950 (Unreported). Underscoring
ours.
3 Philippine National Bank v. Mallorca, G.R. No. L-22538, October 31, 1967. Underscoring ours.