39

ADORACION PAGUYO, complainant, vs. CHARLIE S. GATBUNTON, respondent.

A.M. No. P-06-2135 | May 25, 2007

Facts
Spouses Danilo Paguyo, Sr. and Adoracion Paguyo obtained a loan of ₱20,000.00 from
Jeanlyn’s Lending Investor (JLI), secured by a real estate mortgage executed over their residential
property. Upon default for payment, Spouses Garcia, as owner of JLI, filed an application for the
extrajudicial foreclosure with the RTC. Thereafter, a Notice of Sheriff’s Sale was issued by the
respondent, setting the public auction sale on April 11, 2003. However, the auction sale was actually
conducted by the respondent on December 1, 2003 with Jenelita Garcia emerging as the highest
bidder. As a result, Adoracion Paguyo filed with the Office of the Court Administrator a sworn letter-
complaint charging respondent with grave abuse of authority and/or gross ignorance of the law. The
OCA faults the respondent sheriff for conducting the auction sale of the mortgaged property on
December 1, 2003 without republishing the Notice of Sheriff’s Sale with the corresponding change in
the date of the auction.

Issue
Whether there is a need for a republication of the Notice of Sheriff’s Sale for a postponed
extrajudicial sale

Ruling
YES. In Development Bank of the Philippines v. Court of Appeals, the Court emphasized the
need for the republication of the Notice of Sheriff’s Sale of a postponed extrajudicial sale for the
latter’s validity. In that case, the Court held, citing Ouano v. CA:

x x x republication in the manner prescribed by Act No. 3135 is necessary for the validity
of a postponed extrajudicial foreclosure sale. Another publication is required in case the
auction sale is rescheduled, and the absence of such republication invalidates the
foreclosure sale.
40
PHILIPPINE VETERANS BANK, petitioner, vs. BENJAMIN MONILLAS, respondent.
G.R. No. 167098 | March 28, 2008

Facts
Benjamin Monillas executed a deed of sale of his share over the inherited property to Ireneo
under the latter’s representation that he would use the deed to facilitate the procurement of a loan.
However, Ireneo caused the transfer of the title in his name and mortgaged 22 lots to petitioner
Philippine Veterans Bank (PVB). Three years thereafter, respondent moved for the nullification of
the deed of sale and recovery of property with the RTC, which was granted. However, while the case
was pending, PVB foreclosed the mortgage, wherein PVB emerged as the highest bidder. Later,
respondent caused the annotation of notices of lis pendens on the titles of the subdivided lots. On
April 10, 2003, respondent sued petitioner and the Register of Deeds of Isabela which was decided
in favor of the respondent. Petitioner’s Motion for Reconsideration was later denied. Hence, this
instant petition for review on certiorari.

Issue
Whether the prior registered mortgage and the already concluded foreclosure proceedings
should prevail over the subsequent annotation of the notices of lis pendens on the lot titles.

Ruling
YES. The Court ruled that the prior registered mortgage of PVB and the foreclosure
proceedings already conducted prevail over respondents subsequent annotation of the notices of lis
pendens on the titles to the property. Settled in this jurisdiction is the doctrine that a prior
registration of a lien creates a preference; hence, the subsequent annotation of an adverse claim
cannot defeat the rights of the mortgagee, or the purchaser at the auction sale whose rights were
derived from a prior mortgage validly registered. A contrary rule will make a prior registration of a
mortgage or any lien nugatory or meaningless.
43
ROSALINA CARODAN, petitioner, vs. CHINA BANKING CORPORATION, respondent.
G.R. No. 210542 | February 24, 2016

Facts
Barbara Perez, Rebecca Perez-Viloria, Rosalina Carodan and Madeline Carodan obtained a
loan from China Banking Corporation for which Barbara and Rebecca executed a promissory note
under which they promised to jointly and severally pay the loan of P2.8 million and as a security,
Barbara, Rebecca and Rosalina executed a Real Estate Mortgage over a property of Rosalina. China
Bank also alleged that a Surety Agreement was also executed by Barbara and Rebecca as principals
and Rosalina and her niece Madeline as sureties. Barbara and Rebecca failed to pay their loan
obligation which prompted the bank to institute extrajudicial foreclosure proceedings on the
mortgaged property. The proceeds realized is Pl.5 million which would still leave a deficiency of
P365,345.77 when applied to the outstanding balance. For that reason, the bank prayed that the court
order the payment of the deficiency amount.

The RTC ordered Rebecca, Barbara and Rosalina to be jointly and severally liable to China
Bank for the deficiency with interest. Rosalina appealed to the CA which found it bereft of merit.
Hence, this petition.

Issue
1. Whether China Bank can still collect the deficiency amount.
2. Rosalina is liable jointly and severally with Barbara and Rebecca for the payment of China
Bank's claims.

Ruling
1. YES. A mortgage is simply a security for, and not a satisfaction of indebtedness. If the
proceeds of the sale are insufficient to cover the debt in an extrajudicial foreclosure of mortgage, the
mortgagee is entitled to claim the deficiency from the debtor. The creditor, respondent China Bank
in this Petition, is therefore not precluded, from recovering any unpaid balance on the principal
obligation if the extrajudicial foreclosure sale of the property, subject of the Real Estate Mortgage,
would result in a deficiency.

2. YES. The Court finds that Rosalina is liable as an accommodation mortgagor and as a surety.

When Rosalina affixed her signature to the Real Estate Mortgage as mortgagor and to the
Surety Agreement as surety which covered the loan transaction represented by the Promissory Note,
she thereby bound herself to be liable to China Bank in case the principal debtors, Barbara and
Rebecca, failed to pay.
44

MAE FLOR GALIDO, petitioner, vs. NELSON P. MAGRARE, EVANGELINE M. PALCAT, RODOLFO
BAYOMBONG, and REGISTER OF DEEDS OF ANTIQUE, San Jose, Antique, respondents.
G.R. No. 206584 | January 11, 2016

Facts
Andigan sold undivided portions of Lot 1052-A to Nelson P. Magrare , Evangeline M. Palcat
and Rodolfo Bayombong. Andigan subdivided the property into five lots and new certificates were
issued in the name of Andigan, but he did not turn over the new TCTs to the three buyers. Andigan
mortgaged the same three lots to petitioner. On 6 February 2001, at 11:00 a.m., Magrare, Palcat and
Bayombong registered their respective adverse claims on said titles. On the same day, at 3:00 p.m.,
petitioner also registered her mortgage on the same TCTs. Subsequently, Magrare, Palcat and
Bayombong filed before the RTC a Petition to Compel the Surrender to the Register of Deeds the
Owner’s Duplicate Copies of the three TCTs against the Spouses Andigan which was granted,
prompting the RD to annul the duplicate copies of the three titles and new ones were issued in
lieu thereof.

Meanwhile, petitioner also filed with the RTC a case for foreclosure of mortgage which was
granted, she was issued a Certificate of Sale for the three disputed lots. Hence, petitioner filed a
petition seeking to cancel all entries appearing on said three titles. RTC dismissed the case as it was
moot and academic because the same titles already cancelled. Petitioner appealed to the CA but
the same was denied. Hence, this petition.

Issue
Who has a better right to the properties concerned: petitioner on one hand, and Magrare,
Palcat and Bayombong on the other.

Ruling
Magrare, Palcat and Bayombong have a better right to the properties. Petitioner derives
her title from Andigan, as mortgagor. However, at the time Andigan mortgaged the lots to petitioner
he had already sold the same to Magrare, Palcat and Bayombong. Hence, when Andigan mortgaged
the lots to petitioner on 8 May 2000, he no longer had any right to do so. Since Andigan no longer had
any interest in the subject properties at the time he mortgaged them to her, petitioner had nothing
to foreclose. Further, the adverse claims were registered on the respective titles on 6 February 2001,
at 11:00 in the morning. They were already in existence when petitioner filed her case for foreclosure
of mortgage.