Credit Transactions
Credit Transactions
Credit Transactions
Facts:
The second loan was fully paid. The first loan, however, was not.
Hence, petitioner foreclosed the property mortgaged as a security for the first
loan. But since the proceeds of the sale were not sufficient to cover the
balance of the first loan, petitioner also foreclosed the property mortgaged to
secure the second loan.
Issues:
1) Whether the dragnet clause in the first mortgage contract for the
security of the first loan could authorize the foreclosure of the property
under the mortgage to secure a second loan despite the full payment
of the second loan.
2) Whether the award of damages and attorneys fees is proper.
Ruling:
In addition, Article 2212 of the Civil Code requires that interest due
shall earn legal interest from the time it is judicially demanded, although the
obligation may be silent upon this point. Accordingly, the interest due shall
itself earn legal interest of 6% per annum from the date of finality of the
judgment until its full satisfaction, the interim period being deemed to be an
equivalent to a forbearance of credit.
The doctrine of mortgagee in good faith assumes that the title to the
subject property had already been transferred or registered in the name of
the impostor who thereafter transacts with a mortgagee who acted in good
faith.
Facts:
The RTC dismissed the Complaint and held that Evelyn is a mortgagee
in good faith. The CA, however, reversed the ruling of the RTC.
Issue:
Ruling:
No valid mortgage will arise unless the mortgagor has a valid title or
ownership over the mortgaged property. By way of exception, a mortgagee
can invoke that he or she derived title even if the mortgagor's title on the
property is defective, if he or she acted in good faith. In such instance, the
mortgagee must prove that no circumstance that should have aroused her
suspicion on the veracity of the mortgagor's title on the property was
disregarded.
The doctrine of mortgagee in good faith assumes that the title to the
subject property had already been transferred or registered in the name of
the impostor who thereafter transacts with a mortgagee who acted in good
faith. In this case, the title remained to be registered in the name of
Bernardo, the rightful and real owner, and not in the name of the impostor.
The burden of proof that one is a mortgagee in good faith and for value
lies with the person who claims such status. Good faith entails an honest
intention to refrain from taking unconscientious advantage of another.
In this case, Evelyn insists that she is a mortgagee in good faith and for
value. Thus, she has the burden to prove such claim and must provide
necessary evidence to support the same. Unfortunately, Evelyn failed to
discharge her burden. First, the Deed of REM was established to be a forged
instrument. Second, the subject property remained registered in the name of
Bernardo. Third, even assuming that the impostor has caused the property to
be titled in his name, Evelyn would still not be deemed a mortgagee in good
faith because she did not take the necessary steps to determine any defect in
the title of the alleged owner of the mortgaged property.
Facts:
One Virtual failed to pay for One Virtuals orders prompting Gilat to
demand payment from UCPB GEN. Due to the failure of both One Virtual and
UCPB GEN to pay, Gilat filed a collection complaint against UCPB GEN.
A Decision was rendered by the trial court ordering UCPB GEN to pay
Gilat the the principal debt under the surety bond, with legal interest of 12%
per annum from the time the judgment becomes final and executory until the
obligation is fully settled. The trial courts ruling was reversed by the Court of
Appeals but was reinstated by the Supreme Court.
Respondent filed a Motion for Reconsideration, claiming that while the
liability of a surety is principal and direct, such liability presupposes the
existence of a valid principal obligation. Respondent claims that since the
obligations in the Purchase Agreement were not complied with, petitioner
cannot validly demand payment.
Petitioner likewise filed a Motion for Partial Reconsideration and/or for
Clarification with respect to the legal interest due. Petitioner points out that
whatever interest is due shall itself earn legal interest from the time it is
judicially demanded
Issues:
Ruling:
1) Respondent, as surety, may be held liable for the payment of One Virtuals
purchases from Gilat.
2) The trial court has jurisdiction over the subject matter. Respondent cannot
invoke the arbitration clause, because it is not a party to the principal
contract: the Purchase Agreement. An arbitration agreement, being
contractual in nature, is binding only on the parties thereto, as well as their
assigns and heirs.
The acceptance does not give the surety the right to intervene in the
principal contract. The surety's role arises only upon the debtor's default, at
which time, it can be directly held liable by the creditor for payment as a
solidary obligor.
Later, the Repuela brothers learned that the Spouses Larawan have
already caused the transfer of title over the property to their name by virtue
of the Extajudicial Declaration of Heirs and Sale. Hence, they filed a
complaint before the RTC for the annulment of the Extrajudicial Declaration of
Heirs and Sale and the cancellation of title under the name of the Spouses
Larawan.
The RTC decided in favor of the Repuela brothers, holding that the
transaction between the parties was not a sale but an equitable mortgage.
However, the CA reversed and set aside the Decision of the RTC.
Issues:
Ruling:
The burden to show that the other party fully understood the contents of
the document rests upon the party who seeks to enforce the contract. If he
fails to discharge this burden, the presumption of mistake, if not, fraud,
stands unrebutted and controlling. Respondent failed to overcome this
burden. Furthermore, the law accords the equitable mortgage presumption in
situations when doubt exists as to the true intent of the parties to the
contract, as in this case.
3) BSP Circular No. 799, series of 2013 provides that effective July 1,
2013, the rate of interest for the loan or forbearance of any money, goods or
credits and the rate allowed in judgments, in the absence of an express
contract as to such rate of interest, shall be 6% per annum. Applying the
foregoing, the rate of interest of 12% per annum on the obligation of the
Repuela brothers shall apply from the date of the filing of the complaint on
January 17, 2003 until June 30, 2013 only. From July 1, 2013 until fully paid,
the legal rate of 6% per annum shall be applied to their unpaid obligation.