Philippine Countryside Rural Bank v. Toring
REITERATIONFacts
The Antecedents: Jovenal B. Toring (Respondent) owned a 13,890 sq. m. land covered by TCT No. 26401. He obtained a ₱2,000,000 loan from Philippine Countryside Rural Bank (Petitioner), mortgaging 8,890 sq. m. of the land. Respondent also sold 5,000 sq. m. to Edwin Jumao-as, who then donated 2,000 sq. m. to Barangay Basak, Lapu-Lapu City. Petitioner allegedly approved a reduced loan of ₱1,000,000 upon learning of the sale. However, the Real Estate Mortgage contract covered the entire 13,890 sq. m. Respondent surrendered the owner's duplicate copy of TCT No. 26401 and physical possession of the land. Due to non-payment, Petitioner sent a demand letter to foreclose the mortgage. Procedural History: Respondent filed a Complaint for Mandamus with Damages, seeking to restrain the foreclosure of the entire property, arguing only 8,890 sq. m. was validly mortgaged. He also sought the return of the TCT to annotate the deed of sale and donation. The Register of Deeds initially refused registration due to lack of subdivision plans. The RTC of Lapu-Lapu City, Branch 53, in Cadastral Case No. 19, ordered the annotation of the Deed of Absolute Sale on TCT No. 26401 but deferred the donation's annotation. Respondent claimed Petitioner ignored his requests for the TCT. An RTC of Mandaue City, Branch 55, issued a TRO. Petitioner opposed the preliminary injunction, denying knowledge of the sale and claiming the RTC Order was cancelled. Respondent cited testimony from Petitioner's branch manager, Lanete, in another case, admitting knowledge of the sale and the loan reduction. Petitioner admitted the loan and mortgage of the entire land but denied knowledge of the sale and donation, alleging the deed of sale was simulated. Petitioner also denied knowledge of certifications issued by Lanete stating no objection to the donation and that the portion was free from liens. The RTC granted a preliminary injunction. Respondent amended his complaint, alleging full payment of the loan, evidenced by a Cancellation and Discharge of Mortgage on a condominium unit. Petitioner denied this, stating the condominium mortgage was a separate transaction. Respondent filed a Motion for Summary Judgment, which the RTC granted, ordering Petitioner to surrender the TCT for annotation and making the injunction permanent. The Court of Appeals reversed this, finding the summary judgment improper and recognizing Petitioner's authority to foreclose. Upon Respondent's Motion for Reconsideration, the Court of Appeals reinstated the RTC's summary judgment, citing the final judgment in Cadastral Case No. 19 and the full payment of the mortgage as evidenced by the cancellation of the condominium mortgage. Petitioner filed the instant petition for review on certiorari. The Petition: Petitioner assails the Court of Appeals' affirmation of the summary judgment, arguing genuine issues of fact exist that require a full trial.
Issue(s)
Whether the Court of Appeals erred in affirming the summary judgment rendered by the trial court; specifically, whether there are genuine issues of fact that necessitate a full-blown trial on the merits. Whether the testimony of the bank manager in a different case constitutes a judicial admission. Whether the loan obligation of the respondent to the petitioner has been fully paid. Whether the real estate mortgage contract covered the entire property or only a portion thereof. Whether the case should be dismissed or remanded for further proceedings.
Ruling
The Supreme Court partly granted the petition, set aside the Resolution of the Court of Appeals affirming the summary judgment, and remanded the case to the Regional Trial Court for further proceedings in accordance with a regular trial on the merits.
Ratio Decidendi
On the propriety of Summary Judgment and Genuine Issues of Fact: The Court held that the Court of Appeals committed reversible error in affirming the summary judgment. Summary judgment is proper only when there are no genuine issues as to any material fact and the moving party is entitled to a judgment as a matter of law. The Court found that the pleadings filed by both parties clearly demonstrated the existence of genuine issues of fact, including: (1) whether the Deed of Absolute Sale dated May 25, 1993, was real or simulated; (2) whether such sale preceded the loan obtained by respondent; (3) whether petitioner was aware of the sale and donation when approving the loan; (4) whether the mortgage contract covered the entire property or only a portion; (5) whether the loan amount was ₱2,000,000 or ₱1,000,000; (6) whether petitioner knew of the RTC of Lapu-Lapu City's Order and took steps to implement it; (7) whether the condominium mortgage secured the same obligation as the land mortgage; and (8) whether the loan obligation was fully paid. The existence of these disputed facts meant that summary judgment was premature and improper. The party moving for summary judgment bears the burden of clearly demonstrating the absence of any genuine issues of fact, and the respondent failed to overcome this burden. On Judicial Admission: Petitioner's vigorous opposition to the preliminary injunction, its answer with counterclaim denying knowledge of the sale and alleging simulation, its opposition to the amendment of the complaint denying full payment, and its specific denial that the branch manager's testimony constituted a judicial admission all indicated contested material facts. These issues require presentation of evidence in a formal trial. Therefore, summary judgment was not appropriate as it cannot substitute for a trial when facts are contested. On Payment of Loan Obligation: The allegations in the parties' respective pleadings showed that relevant genuine issues required resolution through a full trial, including whether the loan obligation was fully paid. Summary judgment cannot replace a trial when the facts pleaded are contested. Consequently, the respondent was not entitled to a judgment as a matter of law based solely on the presented affidavits and pleadings. On the Extent of the Mortgage: The Court found that the pleadings filed by both parties clearly demonstrated the existence of genuine issues of fact, including whether the mortgage contract covered the entire property or only a portion. These issues require presentation of evidence in a formal trial. Therefore, summary judgment was not appropriate as it cannot substitute for a trial when facts are contested. On the Disposition: While the summary judgment was deemed improper, the Court clarified that the case should not be dismissed. Instead, it should be remanded to the trial court for further proceedings and proper disposition through a regular trial on the merits. This ensures that all contested factual issues are thoroughly examined and decided based on presented evidence, upholding the parties' right to due process and a full adjudication of their claims.
Main Doctrine
A summary judgment is improper when there are genuine issues of fact that require a full-blown trial, as it is a procedural technique to promptly dispose of cases where facts are undisputed, not to resolve contested factual allegations.