G.R. No.

211499, June 22, 2015

Catherine Hiponia-Mayuga, petitioner vs Metropolitan Bank & Trust Co., et
al., respondents
Facts:
Petitioner Catherine was married to Fernando Mayuga. In the course of
his business dealings, Fernando met private respondent Belle Avelino (Belle) who
proposed to him to secure a loan. Consequently, with Catherines consent, Fernando
obtained a loan from respondent Metrobank (Metro) and, as security thereof, he
executed a real estate mortgage over a parcel of land owned by him and Catherine.
Catherine claimed that the proceeds of the loan went directly to Belle,
admitting that on two occasions, Belle gave Fernando certain amounts. Thereafter,
Fernando passed away. Catherine inquired from Metro if the property could be
released from the mortgage, because it was covered by a mortgage redemption
insurance (mri) that paid off the obligation upon the mortgagors death. Metro,
however, replied that Belle was the principal borrower.
Catherine instituted a complaint for the cancellation of the real estate
mortgage and the release of the property against Belle, Metro and its branch head
on the ground of collusion between Belle and the branch head and negligence on
the part of the bank . Meanwhile, the mortgage property was foreclosed and
subsequently sold to Metro for being the highest bidder.
Issue:

Whether or not the mortgage was valid

Held: Yes. Under Article 2085 of the Civil Code, third parties who are not parties to
the principal obligation may secure the latter by pledging or mortgaging their own
property.
In the case at bar, as affirmed by the Supreme Court, the Court of Appeals
found that Belle was the principal debtor and Fernando was an accommodation
mortgagor for such loan, securing the same by mortgaging is own property. This
kind of agreement is expressly sanctioned by the aforementioned provision allowing
a person to mortgage is property so that a third person could obtain a loan.

G.R. No. 187487, June 29, 2015

Go Tong Electrical Supply Co., Inc. & George Co, petitioners vs BPI Family
Savings Bank Inc.
Facts:
Petitioner Go Tong Electrical (Go Tong) obtained a loan from then Bank
of South East Asia (BSA). Subsequently, DBS Bank became BSAs successor-ininterest. The loan was renewed for which Go Tong executed a promissory note. As
additional security, George Go (Go), Go Tongs president, executed a
comprehensive surety agreement (CSA), covering the renewed loan and any and all
obligations undertaken by Go Tong.
Upon default, DBS and later, its successor-in-interest, herein respondent
demanded payment from petitioners to no avail, hence, this complaint.
In their answer, petitioners raised among others that Go cannot be held liable
under the CSA, since supposedly there was no solidary debtors.

Issue:
obligation

Whether or not Go is a surety and hence liable to the principal

Held: Yes. Under Article 2047 of the Civil Code, the surety undertakes to be bound
solidary with the principal debtor. Such undertaking makes a surety agreement an
ancilliary contract as it presupposes the existence of the principal contract.
Although a surety contract is in essence secondary only to a valid principal
obligation, the surety becomes liable for the debt or duty of another although it
possesses no direct or personal interest over the obligation nor does it receive any
benefit therefrom. Let it be stressed that notwithstanding the fact that the surety
contract is secondary to the principal obligation, the surety assumes liability as a
regular party to the undertaking.
In the instant case as established through the CSA, Go had clearly bound
himself as a surety of Go Tongs obligation. There is no question that Gos liability
thereto is solidary, hence petitioner can proceed against him upon Go Tongs failure
to satisfy the obligation contracted.

G.R. No. 182133, June 23, 2015

United Overseas Bank of the Philippines, petitioner vs HLURB, J.O.S.
Managing Builders Inc., et. al.
Facts:
Private respondent JOS Managing Builders (JOS) is the registered
owner of a condominium project. JOS and co-respondent Eduplan Phils. (Eduplan)
entered into a contract to sell covering a unit of the condominium, where full
payment was effected by Eduplan
Notwithstanding the execution of the deed of sale, JOS failed to cause the
issuance of a Condominium Certificate of Title. Eduplan discovered that the lots on
which the condominium was erected had been mortgaged to petitioner United
Overseas Bank (UOS). Eduplan accordingly filed a complaint for specific
performance and damages against JOS and UOS before the HLURB.
JOS alleged that it could not issue the certificate of title because the bank has
the custody of the Transfer Certificate of Title. UOS, on the other hand, claimed that
JOS executed a mortgage upon the subject property in their favor, and that upon
default of payment they foreclosed the same and afterwards obtained the property
through sale at a public auction.
HLURB arbiter ruled in favor of Eduplan, declaring the mortgage executed by
respondent JOS in favor of UOS as null and void, including the foreclosure of the
mortgage for being in violation of Section 18 of P.D. 957.
Issue:

Whether or not the executed mortgage binds Eduplan

Held: No. The Court rules in accord with law and equity. Although the Civil Code in
Article 2089 provides for the indivisibility of the contract of mortgage, jurisprudence
dictates that the same may be nullified with respect to the interest of the
complaining buyer.
In the case at bench, Eduplan has an actionable interest over the unit it
purchased. Notwithstanding the validity of the mortgage constituted by JOS and
UOS, the same cannot bind Eduplan because of the violation of the provision of P.D.

957, requiring clearance from HLURB prior to an execution of a mortgage. Hence,

the mortgage is invalid with respect to the unit purchased by Eduplan.

G.R. No. 195272, January 14, 2015

BPI vs Spouses David M. Castro
Facts:
The complaint originated from the two loans contracted by respondent
spouses David M. Castro (David) from Prudential Bank. Both loans were individually
secured by a Real Estate Mortgage (REM) over two parcels of land located in Quezon
City registered in the name of respondents and in the Province of Laguna registered
in the name of Davids mother, Guellerma Malabanan. As the loans remained
unpaid, Prudential filed two separate petitions for foreclosure of mortgage. As
regards the first petition, Prudential admitted that through inadvertence, the
photocopies of the first two pages of the REM covering the properties in Laguna
were mixed and attached to the photocopies of the last two pages of the REM
covering the Q.C. property. Thus, in the notice of the sheriffs sale, the name
Gullerma Malabanan appeared as mortgagor . the real property described therein
however is the Q.C. property. The Q.C. property was sold at a public auction in favor
of Prudential.
In their complaint, Spouses Castro alleged that the extrajudicial foreclosure
and sale was null and void for lack of notice and publication. They prayed for the
declaration of the Sheriffs Certificate of Sale as null and void and for award of
damages. In their answer, Prudential cited clerical and harmless inadvertence but
nonetheless claimed that the spouses were properly notified and that they should
have noticed the same and alerted the Sheriff, this failure, the bank claims
amounted to laches.
The trial court ruled in favor of Prudential, citing substantial compliance with
the requirement. The CA reversed the ruling, prompting BPI as successor-in-interest
to file the present petition.
Issue:
Whether the errors in the Notice of the Sheriffs Sale invalidates the
notice and render the sale and the certificate of such sale void.
Held: No. In Century Savings Bank vs Samonte the Court reiterated the purpose of
the rule on notice: is to inform the public of the nature and condition of the property
to be sold, and of the time, place and terms of the sale. Notices are given for the
purpose of securing bidders and prevent the sacrifice of the property. If these
objects are attained, immaterial errors and mistakes will not affect the sufficiency of
the notice, so long as the mistakes or omissions are not calculated to deter or
mislead bidders, to depreciate the value of the property, or to prevent it from
bringing a fair price.
With jurisprudence as the measure, the errors pointed out by respondents
appear to be harmless. The evils that can result from an erroneous notice of sale did
not arise. There was no intention to mislead, as the errors in fact did not mislead the
bidders as shown by the fact that the winning bid is over and above the real amount
of the indebtedness.
The notice rule was also complied with when the Notice of Sheriffs Sale was
published in a national newspaper of general circulation. David in fact admitted that

he knew there was an application for foreclosure of the subject property, which
should have alerted him in finding irregularity in the notice and there should have
registered his objection. Instead he let the public auction run its course. For failure
to overcome the burden of proving that the foreclosure proceedings is tainted with
irregularity, the certificate of sale should be upheld.