Philippine National Bank v. Reblando
REITERATIONFacts
The Antecedents: Spouses Alejandro and Myrna Reblando (Reblandos) obtained a loan from Philippine National Bank (PNB) secured by a real estate mortgage (REM) over two parcels of land. Initially, the loan was PhP 150,000, secured by a lot covered by Transfer Certificate of Title (TCT) No. T-40839 and another lot designated as Lot No. 10, covered by Tax Declaration (TD) No. 59006. The REM contract, executed on January 28, 1992, included a supplemental page describing Lot No. 10. Subsequently, the loan was increased twice, first to PhP 260,000 and then to PhP 312,000, with corresponding "Amendments to Real Estate Mortgage" executed on January 4, 1995, and January 26, 1995. On July 24, 1995, Alejandro Reblando entered into a Contract to Sell with Bliss Development Corporation (BDC) for a dwelling unit (Unit No. 10) in the Rural Bliss 1 Project. The Reblandos defaulted on their loan, leading PNB to extra-judicially foreclose the mortgaged properties. PNB was the lone bidder and was awarded the lots. After the redemption period lapsed, PNB consolidated its ownership and secured new titles and tax declarations. PNB then obtained a writ of possession from the RTC. Procedural History: On May 10, 2000, the Reblandos filed a complaint seeking the declaration of nullity of the mortgage over Lot No. 10, arguing they were not the absolute owners when the "Amendment to Real Estate Mortgage" was executed on January 13, 1995. They cited DBP v. Court of Appeals and claimed PNB required them to post Lot No. 10 as additional collateral. PNB countered that Lot No. 10 was already mortgaged on January 28, 1992, and the Reblandos deliberately omitted the supplemental page of the REM. PNB also raised estoppel. The RTC declared the mortgage over Lot No. 10 null and void, along with the subsequent foreclosure sale and writ of possession. PNB appealed to the Court of Appeals (CA), which affirmed the RTC's decision, holding that PNB, as a banking institution, should have exercised extraordinary diligence and that the Contract to Sell for Unit No. 10 indicated the Reblandos were not owners of Lot No. 10 at the time of the mortgage. The CA also rejected the estoppel defense. PNB filed a petition for review with the Supreme Court. The Petition: PNB seeks the reversal of the CA's decision, arguing that both lower courts erred in applying DBP v. Court of Appeals, in failing to recognize that the mortgagors also mortgaged all their real rights attached to the property, and in not applying the principle of estoppel by deed.
Issue(s)
Whether the Court of Appeals erred in holding the applicability of DBP v. Court of Appeals to the instant case, specifically regarding the factual findings and validity of the mortgage. Whether the Court of Appeals erred in failing to recognize that the mortgagors also mortgaged all other real rights belonging to them attached to property or may thereafter be vested in them, and whether the Court of Appeals erred in failing to apply the principle of estoppel by deed against the respondents.
Ruling
The Supreme Court granted the petition, reversed and set aside the decision of the Court of Appeals, declared the Real Estate Mortgage constituted over Lot No. 10 as valid, and ordered the respondents to vacate the property and surrender its possession to petitioner PNB.
Ratio Decidendi
On the applicability of DBP v. Court of Appeals and the validity of the mortgage: The Supreme Court found that both the RTC and CA erred in their factual findings. The Court clarified that the REM was executed on January 28, 1992, not February 28, 1992, and that the original REM contract, including its supplemental page, covered two parcels of land: the lot covered by TCT No. T-40839 and Lot No. 10 (TD No. 59006). The Court noted that the annotation on the "Declaration of Real Property" dated January 29, 1992, stamped by the City Assessor, explicitly stated that the property described under TD No. 59006 was mortgaged to PNB for PhP 150,000.00. This annotation, being part of a public document, enjoys the presumption of regularity and requires clear and convincing evidence to overcome, which the respondents failed to provide. Therefore, both parcels of land were simultaneously mortgaged on January 28, 1992. The Court further held that respondent Alejandro Reblando was the declared owner of Lot No. 10, as evidenced by TD No. 59006 issued in his name on September 12, 1990, which was prior to the mortgage. The Contract to Sell for Unit No. 10, a 36-square meter dwelling unit, executed three years after the mortgage, did not prove that respondents lacked ownership of Lot No. 10 at the time of the mortgage, as it covered a different subject matter. Tax declarations, coupled with proof of actual possession, serve as prima facie proof of ownership. Thus, the mortgage constituted over Lot No. 10 was valid because Alejandro Reblando had the power to subject it as collateral. On the mortgaging of real rights and estoppel by deed: The Supreme Court found merit in PNB's position that respondents are estopped from denying the validity of the REM. The Court cited Rule 131, Section 2(a) of the Rules of Court on estoppel, stating that a party cannot be permitted to falsify a declaration, act, or omission that intentionally led another to believe a particular thing to be true and act upon it. The respondents benefited from the loan, defaulted on payment, allowed the property to be foreclosed, failed to redeem it, and then contested the mortgage's validity. This inconsistent position, especially without proof of coercion or fraudulent inducement by PNB, cannot be countenanced. The Court emphasized that the practice of obtaining loans, defaulting, and then contesting the mortgage's validity after foreclosure without meritorious grounds should be deterred, as it goes against the principles of unjust enrichment and good faith. Furthermore, the Court noted that the respondents attempted to mislead the courts by omitting a part of the REM contract and submitting a Contract to Sell for a different property to support their false theory. Therefore, the respondents are estopped from contesting the validity of the mortgage.
Main Doctrine
A mortgagor is estopped from assailing the validity of a real estate mortgage after benefiting from the principal loan obligation and failing to redeem the foreclosed property, especially when the challenge is based on a contract to sell for a different property that does not negate ownership at the time of the mortgage.