Case on receivership

Alfeo Vivas, on his behalf and on behalf of the Shareholders of the Eurocredit Community Bank, Petitioner, vs. The Monetary Board of the BSP and the PDIC, Respondents.

GR No. 191424; August 7, 2013

Facts: The Monetary Board placed the Eurocredit Community Bank under Prompt Corrective Action framework on account of the findings of serious findings and supervisory concerns. Vivas moved for the reconsideration of such action. ECBI also unjustly refused to allow the BSP examiners from inspecting its books and records. The MB issued Resolution No. 276 placing ECBI under receivership, because of its inability to pay its liabilities, insufficient realizable assets and violation of cease and desist order of the MB for acts constituting unsound banking practices. Vivas argued that the MB committed grave abuse of discretion for placing ECBI under receivership without prior notice and hearing, pursuant to RA 7353, Sec. 11.

Issue:  Whether or not the MB committed grave abuse of discretion in placing ECBI under receivership without notice and hearing.

Ruling:     No, the MB did not gravely abuse its discretion. The ECBI was given every chance to be heard and improve its financial standing. Moreover, the MB has the power to forbid a bank from doing business and place it under receivership without prior notice and hearing, when the circumstances warrant it. Under RA 7653, the MB was given with more power of closure and placement of a bank in receivership for insolvency or if the continuance in the business would result in the loss of depositors or creditors. The ‘close now, hear later” doctrine was justified on practical and legal considerations to preclude unwarranted dissipation of the bank’s assets and as valid exercise of police power to protect creditors, depositors, stockholders and the general public.

Case on indefeasibility of torrens titles

Spouses Alfonso and Maria Angeles Cusi, Petitioners, vs. Lilia V. Domingo, Respondent.

G.R. No. 195825; February 27, 2013

Ramona Liza L. De Vera, Petitioner, vs. Lilia V. Domingo and Spouses Radella and Alfred Sy, Respondents

G.R. No. 195871

Facts: Lilia Domingo owned a certain real property which was vacant and unfenced. After some time, a construction activities were being undertaken on her property without her knowledge and more so, without her consent. She soon was able to discover a series of anomalous transactions involving her property. It turned out that Radella Sy was able to execute a falsified deed of sale and thereafter, acquired a valid title to the property. Sy then divided the property into two and sold each half to spouses De Vera and Spouses Cusi, and both buyers were able to have valid titles to the property on their names. All of the said transactions took place without the knowledge of the real owner Lilia Domingo. Upon learning of the circumstances, Domingo filed a case at the RTC seeking annulment or cancellation of the titles issued. The RTC rendered a decision, affirmed by the CA in favor of Lilia Domingo.

Issue:  What is the effect of acquiring a real property under the Torrens System of Land Registration?

Ruling:  Under the Torrens system of land registration, the State is required to maintain a register of landholdings that guarantees indefeasible title to those included in the register. The State issues an official certificate of title to attest to the fact that the person named is the owner of the property described therein, subject to such liens and encumbrances as thereon noted or what the law warrants or reserves. One of the guiding tenets underlying the Torrens system is the curtain principle, in that one does not need to go behind the certificate of title because it contains all the information about the title of its holder. This principle dispenses with the need of proving ownership by long complicated documents kept by the registered owner, which may be necessary under a private conveyancing system, and assures that all the necessary information regarding ownership is on the certificate of title. Consequently, the avowed objective of the Torrens system is to obviate possible conflicts of title by giving the public the right to rely upon the face of the Torrens certificate and, as a rule, to dispense with the necessity of inquiring further; on the part of the registered owner, the system gives him complete peace of mind that he would be secured in his ownership as long as he has not voluntarily disposed of any right over the covered land.

           

The petitioners were shown to have been deficient in their vigilance as buyers of the property. It was not enough for them to show that the property was unfenced and vacant; otherwise, it would be too easy for any registered owner to lose her property, including its possession, through illegal occupation. In view of the foregoing, the court affirmed the decision of the lower courts and restores to Domingo her rights of dominion over the property.
           

PNB vs Maranon GR 189316

Case on rent and mortgage.

Philippine National Bank, Petitioner, vs.

 Spouses Bernard and Cresencia Maranon, Respondents

G.R.  No. 189316, July 01, 2013

Facts:  The case is a petition for review on certiorari under Rule 45 of the Rules of Court. The antecedent events being the Spouses Maranon, owner of a piece of real property, erected with a building occupied by various tenants. Said subject property was among the properties mortgaged by spouses Montealegre to PNB as a security for a loan. Spouses Montealegre, through a falsified Deed of Sale, acquired title to the property and used the property’s title which was purportedly registered in the name of Emelie Montealegre. However, due to failure to pay the loan, said property was foreclosed by PNB, and upon auction, was thereafter acquired by the same bank, PNB. Spouses Maranon filed before the RTC a complaint for Annulment of Title, Reconveyance and Damages against spouses Montealegre. Judgment of RTC was rendered in favour of spouses Maranon, and also stipulated that the Real Estate Mortgage lien of PNB shall stay and be respected. Such decision prompted PNB to also seek for entitlement to the fruits of the property such as rentals paid by the tenants.

Issue:  Whether or not is PNB entitled to fruits of the disputed property.

Ruling:  No. Rent is a civil fruit that belongs to the owner of the property producing it by right of accession. The rightful recipient of the disputed rent in this case should be thus the owner of the lot at the time the rent accrued. It is beyond question that spouses Maranon never lost ownership over the subject lot, and that technically, there is no juridical tie created by a valid mortgage contract that binds PNB to the subject lot because the mortgagors Montealegre were not the true owners. PNB’s lien as a mortgagee in good faith pertains to the subject lot alone and not on the erected building which was not foreclosed and still remained to be a property of Maranon. Thus, PNB’s claim for the rents paid by the tenants has no basis.

Jurisprudence on Foreclosure Sale

Foreclosure Sale; Effect of failure to send personal notice to the mortgagor, Credit; Loan Interests, Penalty Rates

Carlos Lim, Consolacion Lim, Edmundo Lim, Carlito Lim, Shirley Leodadia Dizon, and Arleen Lim Fernandez, Petitioners, vs. Development Bank of the Philippines, Respondent

G.R. No. 177050; July 01, 2013

Facts:  The petitioners obtained two loans from DBP to finance a cattle-raising business and executed therein a promissory note undertaking to pay the annual amortizations. To secure the loans, the petitioners executed a mortgage in favour of DBP over real properties. However, due to conflict between the government troops and the Muslim rebels in Mindanao, they were forced to abandon their cattle ranch which led to collapse of the business and failure to pay amortizations. Such financial demise of the business led to foreclosure and eventual auction of a part the mortgaged properties. But such auction of properties did not prove sufficient to cover the entire amount loaned as well as the penalties and interests thereof. The bank offered restructuring schemes to the petitioners, which were later on, cancelled by the bank due to failure to comply on the part of the petitioners. Demand letters were sent by the bank, and still, no definite response from petitioners was received, until such time that the remaining properties were auctioned, with DBP also as the highest bidder.

Issue: 

1.   Whether the foreclosure sale made by DBP was valid.
2.  Whether the penalty rates imposed was valid.

Ruling:           

1

1.     The foreclosure sale was not valid due to the bank’s failure to send a notice of foreclosure to petitioners. Such failure of DBP to comply with their actual agreement with petitioner, such as to send a notice, is a breach sufficient to invalidate the foreclosure sale. In this case, the parties stipulated in their contract of mortgage that “all correspondence relative to the mortgage including demand letters, summons or subpoenas or notification of any extra-judicial action shall be sent to the mortgagor. “ it was said that a contract is the law between the parties, and failure to comply with it constitutes a breach.

1. 2      Article 1956 of the Civil code specifically states that “no interest shall be due unless it has been expressly stipulated in writing.” Thus, the payment of interest and penalties in loans is allowed only if the parties agreed to it and reduced their agreement in writing. In this case, the petitioners never agreed to pay additional interest and penalties, thus, penalty rates imposed by DBP are illegal, and thus, void.

Asian Terminals Inc vs PhilAm Insurance

Case on Letter of Credit

Asian Terminals, Inc., Petitioner, vs. Philam Insurance Co., Inc., (now Chartis Philippines Insurance, Inc.), Respondent

G.R. No. 181163, July 24, 2013

Philam Insurance Co., Inc., (now Chartis Philippines Insurance Inc.), Petitioner, vs. Westwind Shipping Corporation and Asian Terminals, Inc., Respondents

G.R. 181262

Westwind Shipping Corporation, Petitioner, vs. Philam Insurance Co., Inc. (now Chartis Philippines Insurance Inc.), Respondent

G.R. 181319

Facts:  The case is a consolidation of three petitions for certiorari assailing the Decision and Resolution of the Court of Appeals where Nichimen Corporation shipped to consignee Universal Motors Corporation packages of automobiles, where upon delivery, said goods were found to have sustained damages. However, being insured with Philam against all risks, said insurance agency compensated Universal Motors and a subrogation receipt was issued thereafter to the insurance company. Philam, now the subrogee of Universal Motors went after Westwind and Asian Terminal for reparation of compensated amount given to Universal Motors.

Issue: What document may be effective used to prove loss and/or damages on the part of the shipper or consignee?

Ruling:    A letter of credit may be used. A letter of credit is a financial device developed by merchants as a convenient and relatively safe mode of dealing with sales of goods to satisfy the seemingly irreconcilable interests of a seller, who refuses to part with his goods before he is paid, and a buyer, who wants to have control of his goods before paying. Letters of credit are employed by the parties desiring to enter into commercial transaction, mainly for the benefit of the parties to the original transaction. Accordingly, for purposes of reckoning when notice of loss or damage should be given to the carrier or its agent, the date of delivery to Universal Motors is controlling.

Recio vs. Aguedo, Altamarino

Agency: Apparent Authority of an Agent based on Estoppel

Reman Recio, Petitioner, vs.

Heirs and the Spouses Aguedo and Maria Altamirano, Respondents.

G.R. No. 182349; July 24, 2013

Facts:  Nena Recio, mother of Reman Recio leased from the Altamiranos a parcel of land with improvements. The Altamiranos inherited the subject land from their deceased parents, the spouses Aguedo Altamirano and Maria Vaduvia. The sale of the land to Nena Recio did not materialize. The Altamiranos consolidated the two parcels of land covered by the TCT and subdivided into 3 parcels of lands. Reman and his family remained in the peaceful possession of Lot 3. He renewed Nena’s option to buy the subject property. They conducted negotiations with Alejandro who introduced himself as representing the other heirs. After which, the Altamiranos through Alejandro entered into an oral contract of sale with the petitioner and made partial payments which Alejandro received.  Then, the petitioner offered to pay the remaining balance, but Alejandro kept on avoiding the petitioner. Recio filed a case and while its pending, it was discovered that the property was sold to respondents Spouses Lajarca.

The RTC ruled that the Absolute Sale between Altamiranos and the Lajarcas was Null and Void, but the Court of Appeals modified that the sale between Alejandro and Recio is valid only with respect to the aliquot share of Alejandro. CA held that Alejandro’s sale of Not. No. 3 did not bind his co-owners because a sale of real property by one purporting to be an agent of the owner without any written authority from the latter is null and void. An SPA from co-owners pursuant to Art 1878 of the NCC is necessary.

Issue: Can the contract of sale between Alejandro (representing the share of his co-owners) and Recio be held valid pursuant to Apparent Authority of an Agent based on Estoppel?

Ruling:  No. Woodchild Holdings, Inc. vs. Roxas Electric and Construction Company, Inc. stressed that apparent authority based on estoppel can rise from the principal who knowingly permit the agent with indicia of authority that would lead a reasonable prudent person to believe that he actually has such authority. Apparent authority of an agent arises only from acts or conducts on the part of the principal and such act or conduct of the principal must have been known and relied upon in good faith and as a result of the exercise of a reasonable prudence by a third person as claimant and such must have produced a change of position to its detriment. In this case, there was no evidence on record of specific acts which the Altamiranos made before the sale to the petitioner, indicating that they fully knew of the representation of Alejandro. All that the petitioner relied upon were acts that happened after the sale to him. Absent the consent of Alejandro’s co-owners, the Court held that the sale between the other Altamarinos and the petitioner was null and void.