Co v. Philippine National Bank

BARREDO, J.:

Direct appeal to this Supreme Court pursuant to Republic Act 5440 from the decision of the Court of First Instance of Rizal, Branch XXI in its Civil Case No. 23101 entitled "Citadel Insurance & Surety Co., Inc. vs. Philippine National Bank", the dispositive portion of which reads: "WHEREFORE, this Court finds that plaintiff has validly exercised the right of redemption herein-before discussed and orders the defendant to: "(a) Accept the amount consigned and deposited pursuant to the Order of this Court on March 11, 1976; "(b) Execute and specifically comply to the effects of the exercise of the right of redemption so that whatever title is due to the plaintiff after redemption may properly accrue to plaintiff; "(c) Deliver and surrender to plaintiff possession over the property in question. "Considering that this case has been submitted for decision based upon four (4) limited questions of law and there being no evidence presented and submitted to support any claim for damages, there is no pronouncement and award of damages as well as costs.

"SO ORDERED. (Pp. 180-181, Record on Appeal.) It goes without saying that under the Act aforementioned by virtue of which this appeal is before Us, the issues We are called upon to resolve are only questions of law.

Briefly stated, the undisputed material facts of this case, as may be culled from the decision of the trial court and elsewhere in the record, are as follows: On November 10, 1961, the Standard Parts Manufacturing Corporation, hereinafter to be referred to simply as STANDARD, executed a real estate mortgage in favor of herein defendant-appellant Philippine National Bank, hereinafter to be referred to simply as PNB, over properties covered by Transfer Certificates of Title Nos. T-5108 and T-5320, both situated in Baguio City, as collateral for a loan consideration of P500,000.00. On February 20, 1963, the same debtor corporation executed an amended real estate mortgage to include as collateral for the increase of the above loan to P1,000,000.00 a property located at Pasong Tamo Extension within the Municipality of Makati (then part of Rizal Province and now of Metro Manila) covered by Transfer Certificate of Title No. 54474.

Additionally, on February 20, 1963, the same corporation executed in favor of PNB a chattel mortgage of its personal properties listed on pages 96 to 108 of the Record on Appeal. On pages 6-7 of appellant's brief it is stated that as of July 19, 1974, the "borrowed loan" of STANDARD totalled P4,296,803.56, and that the said obligation was secured, as aforementioned, by the mortgages on the Baguio and Makati real estates of STANDARD and the chattel mortgage on its personal properties above referred to.

When STANDARD failed to pay its obligation, PNB extrajudicially foreclosed the mortgage on the Baguio properties as well as the chattel mortgage on July 19, 1974, with PNB as the highest bidder for P1,514,305.00. Subsequently, on August 8, 1974, PNB also foreclosed the mortgage on the Makati property and purchased the same, as highest bidder, for P1,363,000.00. We quote further from appellant's brief: When Standard Parts failed to pay its obligation, PNB foreclosed the Baguio properties and chattels on July 19, 1974 with it as the highest bidder for P1,514,305.00 and the Pasong Tamo property on August 8, 1974 also with it as the highest bidder for P1,363,000.00.

Hence, after foreclosure of the above-mentioned mortgage, the deficiency claim of the Bank against Standard Parts as of August 8, 1974 amounted to P1,434,521.07. Subsequently, a Certificate of Sale dated July 19, 1974 was issued by the Sheriff of Baguio City covering TCT Nos. T-5708 and T-5320 (Annex "C", P.S.F.).

A Certificate of Sale dated August 8, 1974 covering TCT No. 54474 was also issued by the Sheriff of Rizal (Annex "D", P.S.F.) and registered on March 14, 1976 in the Registry of Deeds. Upon failure of Standard Parts to redeem the foreclosed properties within the reglementary period, the PNB consolidated titles to the Baguio properties and TCT Nos. 26080 and 26081 (Annexes "E" and "E-1", respectively, P.S.F.) were issued by the Register of Deeds of Baguio City on May 5, 1976 in the name of the Bank.

On May 14, 1976, TCT No. 54474 was cancelled and TCT No. S-28133 issued in the name of the PNB. Meantime, on March 5, 1976, Citadel wrote PNB a letter (Annex "H", P.S.F.) stating therein its desire to redeem the property covered by TCT No. 54474, it being the alleged assignee of the right of redemption of Standard Parts with respect only to said property. Citadel, however, offered to redeem the property for only P1,621,970.00.

In its reply to said letter, PNB, in a letter dated March 5, 1976 (Annex "I", P.S.F.), justifiably refused to accept the tender of payment of Citadel considering that the amount of P1,621,970.00 was very much lower than the Bank's total amount of P3,366,546.42 as of March 5, 1976 per the Statement of Account of Standard Parts (Annex "G", P.S.F.). (Pp. 7-9, Brief of PNB) To Our mind then, the facts that are decisive herein are the following: 1.

The mortgages here in question were constituted way back in 1961 to 1963. 2. The foreclosure sale of the Baguio properties and the chattels took place on July 19, 1974 and that of the Makati estate on August 8, 1974.

3. Citadel Insurance & Surety Co., Inc. (CITADEL, for short) to whom STANDARD had in the meanwhile (or on February 20, 1976) transferred its rights in the mortgages here in issue, wrote PNB on March 5, 1976 stating that it was redeeming the Makati property, offering to pay therefor as redemption price P1,621,970.00. The letter of CITADEL in this regard reads thus: "CITADEL INSURANCE & SURETY CO., INC.

Suite 202 Sikatuna Bldg., Ayala Ave. Makati, Rizal Tel. No. 87-33-07 & 87-34-44 March 5, 1976 PHILIPPINE NATIONAL BANK Escolta, Manila Re: Legal Redemption of Extra-Judicial Foreclosed Property of Standard Parts Manufacturing Corporation Under Act No. 3135, As amended Gentlemen: In connection with the above-mentioned property which is covered by TCT No. 54474 of the Register of Deeds For the Province of Rizal we wish to inform you that the CITADEL INSURANCE & SURETY CO., INC., is the Assignee of the right of redemption, which will expire on March 11, 1976, by virtue of a "Deed of Assignment and Waiver of Redemption Rights"

dated February 29, 1976, photostat copy of which is attached to this letter as Annex "A". As assignee of the aforementioned Right of Redemption, our Company is now exercising the same by tendering to you the redemption price computed as follows: P1,363,000.00 - total bid of the PNB per its letter to the Sheriff dated August 8, 1974; P 258,970.00 - interest at the rate of 1% a month from the date of auction, August 8, 1974, up to the time of redemption;