Luzon Development Bank v. Angeles
REITERATIONFacts
The Antecedents: In June 1983, respondents Spouses Bartolome and Zenaida Angeles obtained a P500,000 loan from petitioner Luzon Development Bank, secured by a real estate mortgage on their property. Due to financial difficulties, respondents defaulted on the loan. Petitioner then extrajudicially foreclosed the mortgage, emerging as the highest bidder at a public auction in August 1984. A certificate of sale was issued and registered, and petitioner claimed title consolidated in its name after the respondents failed to redeem the property within the statutory period. Procedural History: Respondents contended that they negotiated with petitioner for repurchase and an extension of the redemption period, forging an agreement for a redemption price of P871,182.78, with specific payment terms. Petitioner accepted advance payments but later refused a subsequent payment and sought to increase the redemption price. In 1988, petitioner filed a petition for a writ of possession with the Regional Trial Court (RTC), asserting ownership after the alleged failure to redeem. The RTC denied the petition, finding a valid new contract extending the redemption period and directing respondents to pay the balance. Petitioner appealed to the Court of Appeals (CA), arguing the contract was never signed. The CA affirmed the RTC's decision, holding that petitioner's acceptance of payments estopped it from denying the contract's validity. Petitioner's motion for reconsideration was denied, leading to the present petition. The Petition: Petitioner Luzon Development Bank filed this petition for certiorari under Rule 45 of the Rules of Court, challenging the Court of Appeals' decision and resolution. Petitioner argued that the CA erred in affirming the RTC's finding of a valid and binding contract that extended the redemption period, asserting that the contract never took effect as it was not signed by both parties. Petitioner also contested the denial of its petition for a writ of possession, maintaining its right to the property as the highest bidder at the foreclosure sale. The core issues presented to the Supreme Court were whether a valid contract existed and whether petitioner was entitled to the writ of possession.
Issue(s)
Whether the parties validly entered into a new contract extending the redemption period and fixing the redemption price. Whether petitioner is entitled to a writ of possession of the subject property.
Ruling
The petition is DENIED. The Court affirmed the decision of the Court of Appeals, holding that a valid and binding agreement existed between Luzon Development Bank and the Spouses Angeles, which extended the redemption period and fixed the redemption price. Consequently, Luzon Development Bank is not entitled to a writ of possession unless the Spouses Angeles fail to comply with the terms of their new contract.
Ratio Decidendi
On the issue of whether the parties validly entered into a new contract: The Court held that a contract arises upon the meeting of the minds of two parties regarding the subject matter and cause. Consent may be express or implied, and the mere fact that a contract is unsigned does not prevent its legal existence. In this case, both parties admitted a written contract existed, though petitioner disputed its effectivity due to lack of signatures. However, petitioner's contention failed because its subsequent conduct, specifically its unqualified acceptance of respondents' payments even after the alleged lapse of the redemption period, constituted a tacit or constructive acceptance of the offer. This conduct affirmed that the contract was binding and subsisting, estopping petitioner from denying its validity. The Court applied the doctrine of estoppel, stating that a party who performs affirmative acts upon which another relies cannot later refute those acts or renege on their effects to the prejudice of the other. Petitioner's acceptance of payments led respondents to believe the redemption period was extended and the price fixed, and it could not renege on its obligations. On the issue of whether petitioner is entitled to a writ of possession: The Court agreed with the RTC that the parties were bound by their new contract, and unless they fulfilled their obligations, a writ of possession could not be issued. Under Republic Act No. 3135, a purchaser may petition for a writ of possession, and it is generally ministerial for the court to issue it. However, this rule is not absolute. The Court cited precedents where the issuance of a writ of possession was withheld when the mortgagee-bank received payments or when properties were sold at a price significantly lower than their fair market value. In this case, by entering into a new contract and accepting payments, petitioner voluntarily withheld its right of possession to give respondents a chance to redeem. Petitioner's conduct, including its delay in seeking the writ for four years, indicated no intention to possess the property and divest respondents of it. Therefore, the Court directed both parties to comply with their contract, with respondents to pay the balance and petitioner to accept payment and convey title upon full payment.
Main Doctrine
A bank is estopped from denying the validity of a contract extending the redemption period after it has unconditionally accepted payments from the mortgagor, and consequently, it is not entitled to a writ of possession unless the mortgagor fails to comply with the terms of the new agreement.