ASG Law

Tag: real estate

  • Oral Contracts and Land Sales: Enforceability Under the Statute of Frauds in the Philippines

    The Supreme Court held that an oral contract for the sale of land is enforceable if partially executed through partial payments and transfer of possession. This decision allows buyers who have made significant payments and taken possession to seek legal recourse for the sale of the property even without a written agreement, ensuring fairness and preventing sellers from unjustly denying the agreement.

    When a Handshake Seals a Deal: Can Oral Agreements Transfer Land Ownership?

    This case revolves around a dispute between the Pamplona and Cueto families concerning a property in Batangas City. The Cueto spouses claimed they had an oral agreement with the Pamplonas to purchase the property on installment. The Pamplonas, however, argued that the payments received were for an unrelated debt. The central legal question is whether an oral agreement for the sale of land can be enforced, especially when partial payments and possession have been transferred, despite the Statute of Frauds requiring such contracts to be in writing.

    The Regional Trial Court (RTC) initially sided with the Pamplonas, but the Court of Appeals (CA) reversed this decision, finding sufficient evidence of a partially executed oral contract to sell. The Supreme Court (SC) affirmed the CA’s ruling. The SC emphasized the principle that in civil cases, the burden of proof rests on the party making the assertion. In this case, the Cuetos had to prove the existence of the oral contract to sell by a preponderance of evidence. Preponderance of evidence means the greater weight of credible evidence, which the Cuetos successfully demonstrated.

    The Court scrutinized the evidence presented, noting that Lilia Cueto had indeed sent money to Bibiana Pamplona, and Bibiana did not deny receiving these payments. Moreover, the Cuetos were allowed to occupy the property during the period when Lilia was remitting payments. Upon facing denial of the agreement, Lilia immediately took steps to protect her interests by annotating an adverse claim on the title and initiating legal action. These factors collectively supported the existence of a partially executed contract to sell.

    The Pamplonas contended that the money received from Lilia was payment for past debts, not for the purchase of the property. However, they failed to provide any evidence to substantiate this claim. The Court reiterated that mere allegations without supporting evidence cannot stand. Bibiana’s failure to prove the alleged past debts weakened their case and strengthened the inference that the payments were indeed for the property.

    Furthermore, the Pamplonas highlighted statements made by Roilan Cueto and Vedasto Cueto, suggesting the Pamplonas remained the owners of the property. The Court clarified the distinction between a contract of sale and a contract to sell, referencing Serrano v. Caguiat, G.R. No. 139173, February 28, 2007, 517 SCRA 57, 64-65:

    A contract to sell is akin to a conditional sale where the efficacy or obligatory force of the vendor’s obligation to transfer title is subordinated to the happening of a future and uncertain event, so that if the suspensive condition does not take place, the parties would stand as if the conditional obligation had never existed. The suspensive condition is commonly full payment of the purchase price.

    The Court further quoted:

    x x x [a] distinction must be made between a contract of sale in which title passes to the buyer upon delivery of the thing sold and a contract to sell x x x where by agreement the ownership is reserved in the seller and is not to pass until the full payment, of the purchase price is made. In the first case, non-payment of the price is a negative resolutory condition; in the second case, full payment is a positive suspensive condition. Being contraries, their effect in law cannot be identical. In the first case, the vendor has lost and cannot recover the ownership of the land sold until and unless the contract of sale is itself resolved and set aside. In the second case, however, the title remains in the vendor if the vendee does not comply with the condition precedent of making payment at the time specified in the contract.

    In a contract to sell, ownership remains with the seller until full payment. Therefore, Roilan and Vedasto’s acknowledgments were consistent with the fact that ownership had not yet transferred to Lilia due to the ongoing installment payments. This recognition did not negate the existence of the oral contract to sell.

    The Court also addressed the Pamplonas’ argument regarding Roilan’s failure to raise the contract to sell as a defense in an earlier unlawful detainer suit. The Court invoked the principle that the rights of one party cannot be prejudiced by the actions or omissions of another, citing Section 28, Rule 130 of the Rules of Court which states: Res inter alios acta alteri nocere non debet. Further clarified by the SC in quoting Section 32, Rule 130 of the Rules of Court:

    Section 32. Admission by silence. — An act or declaration made in the presence and within the hearing or observation of a party who does or says nothing when the act or declaration is such as naturally to call for action or comment if not true, and when proper and possible for him to do so, may be given in evidence against him.

    The SC found that there were several requirements that must be met to be considered admission by silence. One such requirement would be the person must have heard or observed the act or declaration of the other person. Since Lilia was abroad and not present when Roilan failed to raise his defense, the argument was deemed invalid. Lilia’s subsequent actions, such as communicating with Bibiana and annotating the adverse claim, demonstrated her continued interest in the property.

    The Statute of Frauds, found in Article 1403 of the Civil Code, requires certain agreements, including sales of real property or an interest therein, to be in writing to be enforceable. However, the Court recognized an exception: partial execution. When a contract has been partially performed, such as through partial payments and transfer of possession, it is taken out of the scope of the Statute of Frauds. The purpose of the Statute is to prevent fraud, and allowing a party to renege on an oral agreement after accepting partial payments would itself constitute a form of fraud.

    The Court chose not to delve into the issue of the validity of the deed of transfer of interest between Redima and the Pamplonas. This decision stemmed from the recognition that Redima’s rights could be affected, and it was essential to ensure that Redima and Atty. Dimayacyac were afforded due process. Redima’s previous attempt to intervene in the case had been denied, further highlighting the need for a separate proceeding to address this matter.

    FAQs

    What was the key issue in this case? The central issue was whether an oral contract for the sale of land is enforceable, particularly when partial payments have been made and possession of the property has been transferred.
    What is the Statute of Frauds? The Statute of Frauds requires certain contracts, including sales of real property, to be in writing to be enforceable. This requirement aims to prevent fraudulent claims.
    What constitutes partial execution of a contract? Partial execution occurs when one party performs actions consistent with the contract, such as making partial payments or taking possession of the property, indicating an agreement exists.
    Why was the oral contract deemed enforceable in this case? The oral contract was deemed enforceable because the Cuetos made partial payments and took possession of the property, which constituted partial execution and removed the contract from the Statute of Frauds.
    What is the difference between a contract of sale and a contract to sell? In a contract of sale, ownership transfers upon delivery, while in a contract to sell, ownership remains with the seller until full payment of the purchase price.
    What is the significance of an admission by silence? Admission by silence occurs when a party fails to deny a statement or action that would naturally call for a response if untrue, but the Court found that the circumstances to make it admissible were not present.
    What did the Court say about Roilan’s failure to raise the contract as a defense in the unlawful detainer case? The Court stated that the rights of one party cannot be prejudiced by the actions or omissions of another, meaning Roilan’s failure did not affect Lilia’s rights.
    Why didn’t the Supreme Court resolve the issue regarding the transfer of interest to Redima? The Court chose not to resolve this issue to ensure that Redima and Atty. Dimayacyac were afforded due process, as their rights could be affected by the decision.

    This case underscores the importance of written contracts, especially in real estate transactions, to avoid disputes and ensure clarity. However, it also affirms that the absence of a written agreement does not automatically invalidate a sale if there is evidence of partial performance, safeguarding the rights of buyers who have acted in good faith.

    For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

    Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
    Source: Spouses Cipriano Pamplona and Bibiana Intac vs. Spouses Lilia I. Cueto and Vedasto Cueto, G.R. No. 204735, February 19, 2018

  • Disobeying Court Orders: Contempt and Property Rights in the Philippines

    The Supreme Court has affirmed the importance of respecting final and executory court decisions. This case clarifies that individuals who knowingly act in ways that undermine court orders, even if they are not direct parties to the original case, can be held in contempt. The ruling underscores the principle that obstructing justice, whether directly or indirectly, carries consequences and upholds the integrity of the judicial system. It serves as a crucial reminder that compliance with court orders is not merely a suggestion, but a legal obligation that binds all, regardless of their direct involvement in the original dispute.

    A Tangled Web: When a Loan Default Undermines a Supreme Court Mandate

    This case, Rizal Commercial Banking Corporation v. Federico A. Serra, revolves around a long-standing dispute over a property in Masbate. RCBC sought to enforce a decades-old order compelling Serra to sell the land, where RCBC’s business center was located, to the bank. During the legal battles, Serra mortgaged the property to Spouses Andueza. When Serra defaulted on his loan, Andueza initiated foreclosure proceedings, potentially undermining RCBC’s right to acquire the property as previously decreed by the Supreme Court. The core legal question is whether Serra and the Spouses Andueza’s actions constituted indirect contempt of court by disregarding the High Court’s earlier rulings.

    The Supreme Court’s analysis hinged on whether the respondents’ actions demonstrated a willful disregard for the authority and dignity of the court. Contempt of court is defined as a willful disregard or disobedience of a public authority. In its restricted sense, it involves despising the authority, justice, or dignity of a court. The Rules of Court outline two types of contempt: direct and indirect. Direct contempt occurs in the presence of the court, while indirect contempt, relevant here, is committed outside the court’s presence.

    RCBC accused the respondents of indirect contempt under Rule 71, specifically Section 3, paragraphs (b) and (d), which pertain to disobedience of a court order and conduct impeding the administration of justice, respectively. The Court highlighted its previous decisions in G.R. Nos. 103338, 182478, 182664, and most importantly, 203241, all affirming RCBC’s superior right to the property. Specifically, G.R. No. 203241 had a Temporary Restraining Order (TRO) preventing any actions to remove RCBC from the property.

    The TRO issued by the Court in G.R. No. 203241 explicitly restrained Serra, the RTC-Makati, and their agents from removing or threatening to remove RCBC from the subject property. The subsequent decision in the same case directed the RTC-Makati to issue a writ of execution in favor of RCBC. Central to the Court’s reasoning was Serra’s deliberate attempt to evade his obligation to RCBC. The Court noted that:

    In the present case, there is no dispute that RCBC seeks to enforce the decision which became final and executory 911 15 April 1994. This decision orders Serra to execute and deliver the proper deed of sale in favor of RCBC. However, to evade his obligation to RCBC, Serra transferred the property to his mother Ablao, who then transferred it to Liok. Serra’s action prompted RCBC to file the Annulment case. Clearly, the delay in the execution of the decision was caused by Serra for his own advantage.

    The Court found Serra guilty of indirect contempt due to his actions which, in effect, allowed RCBC’s removal from the property. Serra’s defense, arguing that the foreclosure sale was a supervening event precluding the execution of the Court’s decision, was rejected. The court referenced the Abrigo v. Flores case, where a supervening event consists of facts that transpire after the judgment became final and executory, or of new circumstances that develop after the judgment attained finality. The Court found that Serra was aware of the likelihood of foreclosure. Serra’s inaction was a clear attempt to circumvent the Court’s ruling, justifying the imposition of a fine.

    Even though they were not parties in G.R. No. 203241, the Spouses Andueza were found to have knowledge of the pending litigation and the TRO affecting the property. The annotation of the TRO on the property’s title served as constructive notice. Their decision to proceed with the foreclosure despite this knowledge demonstrated a disregard for the Court’s order and its intent to protect RCBC’s rights. Therefore, the Spouses Andueza’s actions constituted indirect contempt, warranting a similar fine of P30,000.

    The other respondents, including the counsels of the Spouses Andueza and the public officials involved in the foreclosure proceedings, were absolved of indirect contempt. The Court reasoned that these individuals were either acting in their professional capacity to protect their clients’ interests or performing their ministerial duties in accordance with established procedures. The Court emphasized that there was no clear and convincing evidence that they willfully disobeyed the Court’s orders or intended to impede the administration of justice.

    The Court noted the need to lift the TRO it had previously issued in this case. This decision was based on the fact that RCBC had already filed a separate petition for certiorari with the Court of Appeals (CA-G.R. SP No. 137314), challenging the foreclosure sale and seeking injunctive relief. The Supreme Court recognized that the Court of Appeals was better positioned to resolve the factual and legal issues surrounding the foreclosure proceedings and the validity of RCBC’s claims over the property. The contempt petition was not the proper venue to determine the validity of the mortgage between Serra and the Spouses Andueza.

    FAQs

    What was the key issue in this case? The key issue was whether the respondents’ actions, specifically the foreclosure of a mortgage on a property subject to a prior Supreme Court order, constituted indirect contempt of court.
    Who were found guilty of indirect contempt? Federico A. Serra, the original landowner, and Spouses Eduardo and Henedina Andueza, the mortgagees who foreclosed on the property, were found guilty of indirect contempt.
    Why were Serra and the Spouses Andueza found guilty? Serra was found guilty for defaulting on his loan obligation, leading to foreclosure, which undermined the Court’s order to sell the property to RCBC. The Spouses Andueza were found guilty for proceeding with the foreclosure despite knowing about the existing TRO protecting RCBC’s rights.
    What is indirect contempt of court? Indirect contempt involves actions committed outside the court’s presence that demonstrate disobedience or resistance to a lawful court order, or that tend to impede the administration of justice.
    What was the penalty for indirect contempt in this case? Both Federico A. Serra and Spouses Eduardo and Henedina Andueza were each fined P30,000.00.
    Were the other respondents found guilty? No, the other respondents, including the counsels of the Spouses Andueza and the public officials involved in the foreclosure, were not found guilty of indirect contempt.
    Why were the other respondents not found guilty? The Court found that they were acting in their professional capacity or performing their ministerial duties without any clear intent to disobey the Court’s orders or impede justice.
    What happened to the Temporary Restraining Order (TRO) in this case? The TRO that was previously issued by the Supreme Court in this case was lifted.
    Why was the TRO lifted? The TRO was lifted because RCBC had filed a separate petition for certiorari with the Court of Appeals, which was deemed the more appropriate venue to resolve the issues surrounding the foreclosure sale.

    This case serves as a clear warning against actions that undermine judicial orders, even indirectly. It reinforces the principle that respect for the courts and their decisions is essential for maintaining the rule of law. While the Court lifted the TRO in this specific case, it did so to allow a more appropriate forum to address the underlying property dispute, underscoring the importance of following proper legal channels.

    For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

    Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
    Source: Rizal Commercial Banking Corporation v. Federico A. Serra, G.R. No. 216124, July 19, 2017

  • Breach of Express Warranty: When Road Widening Impacts Property Sales in the Philippines

    In Pilipinas Makro, Inc. v. Coco Charcoal Philippines, Inc., the Supreme Court ruled that an express warranty in a deed of sale, assuring that a property is free from encumbrances, is enforceable even when a road widening project later affects the land. The Court emphasized that a buyer’s awareness of ongoing construction near the property does not automatically equate to knowledge of specific encroachments. This decision protects buyers by upholding the sellers’ explicit guarantees regarding the property’s condition, ensuring they receive what they bargained for.

    Land Deals and Roadblocks: Who Pays When Public Works Shrink Private Property?

    Pilipinas Makro, Inc. (Makro) sought to establish a store in Davao City and purchased two adjacent lots from Coco Charcoal Philippines, Inc. (Coco Charcoal) and Lim Kim San (Lim). Both deeds of sale contained similar provisions, including an express warranty that the properties were free from encumbrances. After the sale, a resurvey revealed that a Department of Public Works and Highways (DPWH) road widening project had encroached upon both properties. Makro sought a refund from Coco Charcoal and Lim for the diminished area, but they refused. This led to a legal battle that ultimately reached the Supreme Court.

    The central legal question was whether Makro was entitled to a refund given the express warranty in the deeds of sale and its apparent awareness of the ongoing DPWH project. The Regional Trial Court (RTC) initially ruled in favor of Makro, finding that the respondents had concealed the encroachment. However, the Court of Appeals (CA) reversed this decision, arguing that Makro’s knowledge of the road widening project meant it could not claim ignorance of the encumbrance. This ruling hinged on the CA’s interpretation of the warranty as akin to a warranty against eviction, which requires the buyer to be in good faith. The Supreme Court, however, disagreed with the CA’s assessment.

    The Supreme Court clarified the distinction between an express warranty and an implied warranty. An **express warranty** is explicitly stated in the contract, while an **implied warranty** arises by operation of law. In this case, Section 4(i) of the deeds of sale contained an express warranty that the properties were free from encumbrances. The Court emphasized that this warranty was a key part of the agreement and should be enforced as written.

    Section 4. Representations and Warranties

    The SELLER hereby represents and warrants to the BUYER that:

    i. The Property is and shall continue to be free and clear of all easements, liens and encumbrances of any nature whatsoever, and is, and shall continue to be, not subject to any claim set-off or defense which will prevent the BUYER from obtaining full and absolute ownership and possession over the Property or from developing or using it as a site for its store building.

    The Court also distinguished this situation from a warranty against eviction. For a **warranty against eviction** to apply, there must be a final judgment depriving the buyer of the property due to a prior right. Here, there was no such judgment. Furthermore, the Court rejected the CA’s argument that Makro’s knowledge of the DPWH project negated the warranty. While Makro may have been aware of construction in the area, this did not necessarily mean it knew the exact extent of the encroachment on the properties.

    The Supreme Court emphasized that a simple ocular inspection could not have accurately determined the dimensions of the encroachment. Only a professional resurvey revealed the true extent of the impact of the DPWH project on the purchased lands. Therefore, Makro’s general awareness of construction activity did not negate the express warranty provided by Coco Charcoal and Lim. They were bound by their promise that the properties were free from encumbrances.

    However, the Court also addressed the amount of the refund. Section 2 of the deeds of sale stipulated that the purchase price should be adjusted based on any discrepancies in the land area, priced at P8,500.00 per square meter. The RTC had ordered the respondents to pay P1,500,000.00 each to Makro, but the Supreme Court found this amount to be without sufficient factual basis. Instead, applying the formula in the deeds of sale, the Court determined that Makro was entitled to P1,113,500.00 from Coco Charcoal and P1,105,000.00 from Lim, which corresponded to the value of the encroached areas at the agreed-upon rate.

    Moreover, the Supreme Court addressed the RTC’s award of attorney’s fees and exemplary damages. The Court stated that attorney’s fees are not automatically awarded simply because a party is compelled to litigate. There must be a showing of bad faith on the part of the losing party. In this case, there was no clear evidence that Coco Charcoal and Lim acted in bad faith by refusing the refund. Similarly, exemplary damages require a showing of wanton, fraudulent, reckless, oppressive, or malevolent conduct. The Court found no such evidence to justify the award of exemplary damages.

    In the absence of bad faith or malicious intent, the Court held that neither attorney’s fees nor exemplary damages were warranted. The ruling underscores the principle that litigation should not be penalized unless there is clear evidence of wrongdoing beyond a mere erroneous conviction of one’s cause. This provides a balanced approach, ensuring that parties are not unduly punished for defending their positions in court.

    This case illustrates the importance of **express warranties** in property sales. Sellers must honor their explicit promises regarding the condition of the property, and buyers are entitled to rely on those promises. While due diligence is always advisable, buyers are not automatically assumed to have knowledge of hidden encumbrances simply because of visible construction activity in the vicinity.

    FAQs

    What was the key issue in this case? The key issue was whether Pilipinas Makro was entitled to a refund from Coco Charcoal and Lim Kim San for the portion of land encroached upon by a DPWH road widening project, given the express warranty in the deeds of sale.
    What is an express warranty? An express warranty is a specific promise or guarantee made by the seller regarding the condition or quality of the property being sold, as explicitly stated in the contract. It differs from an implied warranty, which arises by operation of law.
    How did the Court distinguish between express warranty and implied warranty against eviction? The Court clarified that the express warranty in the deeds of sale was a specific promise about the property’s condition, whereas the implied warranty against eviction requires a final judgment depriving the buyer of the property due to a prior right. In this case, there was no such judgment, so the implied warranty did not apply.
    Was Makro’s knowledge of the DPWH project relevant? The Court held that Makro’s general awareness of the ongoing DPWH project did not negate the express warranty. Actual knowledge of the specific encroachment, which could only be determined through a resurvey, was necessary to invalidate the warranty.
    How was the amount of the refund calculated? The amount of the refund was calculated based on the formula specified in Section 2 of the deeds of sale, which stipulated a price of P8,500.00 per square meter for any discrepancies in the land area.
    Why were attorney’s fees and exemplary damages not awarded? The Court found no evidence that Coco Charcoal and Lim acted in bad faith or with malicious intent, which is required for awarding attorney’s fees and exemplary damages. The Court underscored the principle that litigation should not be penalized in the absence of wrongdoing beyond a mere erroneous conviction of one’s cause.
    What is the practical implication of this ruling for property buyers? The ruling reinforces the importance of express warranties in property sales and ensures that sellers are held accountable for their explicit promises regarding the condition of the property, providing greater protection for buyers.
    What should property buyers do to protect their interests? Buyers should conduct thorough due diligence, including professional surveys, and ensure that all warranties are clearly stated in the contract. They should also seek legal advice to fully understand their rights and obligations.

    In conclusion, the Supreme Court’s decision in Pilipinas Makro, Inc. v. Coco Charcoal Philippines, Inc. underscores the importance of upholding express warranties in property sales and provides clarity on the distinction between express and implied warranties. This ruling offers valuable guidance for property buyers and sellers, promoting fairness and transparency in real estate transactions.

    For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

    Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
    Source: Pilipinas Makro, Inc. v. Coco Charcoal Philippines, Inc., G.R. No. 196419, October 04, 2017

  • Indispensable Parties in Ejectment Suits: Clarifying Property Rights and Legal Standing

    In Philippine Veterans Bank v. Spouses Sabado, the Supreme Court clarified the concept of indispensable parties in ejectment cases, particularly when rights to a property have been assigned. The Court ruled that while a party holding legal title to a property might have an interest, their presence is not indispensable in an ejectment suit if the core issue is who has the better right to possess the property. This decision underscores the importance of understanding the specific rights assigned and the nature of the relief sought in determining the necessary parties to a legal action, ensuring efficient and effective resolution of property disputes.

    Deed of Assignment Dilemma: Who Holds the Key to Ejectment?

    The case began with a Contract to Sell between Haus Talk Project Managers, Inc. (HTPMI) and Spouses Ramon and Annabelle Sabado for a property in Antipolo City. The spouses made a downpayment and agreed to pay the balance in monthly installments. Later, HTPMI executed a Deed of Assignment in favor of Philippine Veterans Bank (PVB), assigning its rights and interests in the Contract to Sell, including the right to collect payments. The Sabados failed to meet their payment obligations, leading PVB to cancel the contract and demand that they vacate the property. When the Sabados refused, PVB filed an ejectment suit.

    The central question before the Supreme Court was whether HTPMI, the original owner, was an indispensable party to the ejectment suit filed by PVB, the assignee of the Contract to Sell. The resolution of this issue hinged on the interpretation of the Deed of Assignment and the rights it conferred upon PVB. The Court had to determine if HTPMI’s remaining interest in the property, particularly its legal title, necessitated its inclusion in the case for a full and fair adjudication.

    To understand the Court’s reasoning, it is essential to define an **indispensable party**. According to Section 7, Rule 3 of the Rules of Court:

    SEC. 7. Compulsory joinder of indispensable parties. – Parties in interest without whom no final determination can be had of an action shall be joined either as plaintiffs or defendants.

    The Supreme Court has further elaborated on this, stating that an indispensable party is:

    one whose interest will be affected by the court’s action in the litigation, and without whom no final determination of the case can be had. The party’s interest in the subject matter of the suit and in the relief sought are so inextricably intertwined with the other parties’ that his legal presence as a party to the proceeding is an absolute necessity. In his absence, there cannot be a resolution of the dispute of the parties before the court which is effective, complete, or equitable.

    The Court also cited *Regner v. Logarta*, which provides parameters for determining indispensability:

    An indispensable party is a party who has x x x an interest in the controversy or subject matter that a final adjudication cannot be made, in his absence, without injuring or affecting that interest, a party who has not only an interest in the subject matter of the controversy, but also has an interest of such nature that a final decree cannot be made without affecting his interest or leaving the controversy in such a condition that its final determination may be wholly inconsistent with equity and good conscience.

    The Court emphasized that the interest must be inseparable from that of the other parties. However, a person is not an indispensable party if their interest is separable, such that a just decree can be made between the parties without affecting their interest.

    Applying these principles, the Supreme Court disagreed with the Court of Appeals, which had ruled that HTPMI was an indispensable party. The Court pointed to the specific terms of the Deed of Assignment, which stated:

    By this assignment, the ASSIGNEE hereby acquires all rights of the ASSIGNOR under the Contracts to Sell and under the law, including the right to endorse any and all terms and conditions of the Contracts to Sell and the right to collect the amounts due thereunder from the purchaser of the Property. The ASSIGNOR for this purpose hereby names, constitutes and appoints the ASSIGNEE [as its] attorney-in-fact to execute any act and deed necessary in the exercise of all these rights. Notwithstanding the assignment of the Contracts to Sell and the Receivables thereunder to the ASSIGNEE, the legal title to the Property and obligations of the ASSIGNOR under the Contracts to Sell, including the obligation to complete the development of the property and the warranties of a builder under the law, shall remain the ASSIGNOR’S.

    The Supreme Court interpreted this to mean that while HTPMI retained legal title, PVB was assigned the rights to collect payments, cancel the contract upon default, and recover possession of the property. The critical issue in an unlawful detainer case is **de facto possession**, independent of claims of ownership. The sole question is who has the better right to possess the property.

    Since HTPMI’s interest as the legal titleholder was separable from PVB’s right to recover possession under the assigned contract, the Court held that HTPMI was not an indispensable party. A complete resolution could be achieved by determining which party, PVB or the Sabados, had the superior right to possess the property, without needing HTPMI’s participation. The CA’s decision was reversed, and the rulings of the MTCC and RTC, which favored PVB, were reinstated.

    This ruling provides clarity on the rights of assignees in Contract to Sell agreements. Financial institutions and other assignees can confidently pursue ejectment suits without necessarily impleading the original property owner, as long as the assignment includes the right to recover possession. It streamlines the process of recovering properties subject to defaulted contracts, reducing potential delays and complications.

    However, it’s crucial to carefully draft Deeds of Assignment to clearly define the rights being transferred. If the intent is to grant the assignee the right to recover possession, this must be explicitly stated. The absence of such a clear assignment could lead to the assignee being unable to pursue an ejectment suit independently, potentially requiring the involvement of the original property owner.

    For property buyers, this case underscores the importance of fulfilling contractual obligations. Failure to pay installments can result in the cancellation of the Contract to Sell and subsequent eviction. It also highlights the need to understand the implications of a Deed of Assignment, as the rights under the contract may be transferred to a third party.

    FAQs

    What was the key issue in this case? The key issue was whether Haus Talk Project Managers, Inc. (HTPMI) was an indispensable party in an ejectment suit filed by Philippine Veterans Bank (PVB) against Spouses Sabado. PVB had acquired rights to the property through a Deed of Assignment.
    What is an indispensable party? An indispensable party is someone whose interest in a case is such that a final resolution cannot be made without affecting that interest. Their absence would prevent the court from making a complete and equitable decision.
    What did the Deed of Assignment stipulate in this case? The Deed of Assignment transferred HTPMI’s rights to collect payments, cancel the contract upon default, and recover possession of the property to PVB. However, HTPMI retained legal title to the property.
    Why did the Supreme Court rule that HTPMI was not an indispensable party? The Court reasoned that the main issue in an ejectment case is physical possession, and HTPMI’s ownership was separable from PVB’s right to recover possession under the assigned contract. A complete resolution could be achieved without HTPMI’s participation.
    What is the significance of this ruling for financial institutions? This ruling allows financial institutions that have been assigned rights to a property to pursue ejectment suits independently. This streamlines the process of recovering properties subject to defaulted contracts.
    What does this case imply for property buyers? This case underscores the importance of fulfilling contractual obligations. Failure to pay installments can lead to the cancellation of the Contract to Sell and eviction, even if the rights have been assigned to a third party.
    What is the main legal principle clarified in this case? The case clarifies the application of the concept of indispensable parties in ejectment suits, specifically in cases involving assignments of rights under Contracts to Sell. It emphasizes that retention of legal title alone does not make a party indispensable.
    How does this ruling affect the rights of assignees in property contracts? It strengthens the rights of assignees, allowing them to independently pursue legal action for recovery of possession without necessarily involving the original owner, provided the right to recover possession was explicitly assigned.

    In conclusion, Philippine Veterans Bank v. Spouses Sabado offers valuable guidance on determining indispensable parties in ejectment cases, particularly when dealing with assigned contracts. The ruling emphasizes the importance of clearly defining the rights assigned and the nature of the relief sought. By focusing on the core issue of physical possession, the Court provided a pragmatic approach that promotes efficiency in resolving property disputes.

    For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

    Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
    Source: PHILIPPINE VETERANS BANK VS. SPOUSES RAMON AND ANNABELLE SABADO, G.R. No. 224204, August 30, 2017

  • Due Diligence Defined: Banks’ Responsibility in Mortgage Transactions

    Banks acting as mortgagees must rigorously exercise due diligence; failing to do so negates any claim of good faith or innocent purchaser status. This ruling emphasizes that banks cannot solely rely on clean titles but must conduct thorough investigations to protect the true owners and prevent fraudulent transactions. This heightened responsibility ensures financial institutions are not complicit in unlawful property transfers, providing greater security for landowners.

    Mortgagee Beware: When Land Bank’s Due Diligence Falters

    This case, *Land Bank of the Philippines v. Lorenzo Musni, Eduardo Sonza and Spouses Ireneo and Nenita Santos*, G.R. No. 206343, decided February 22, 2017, revolves around a dispute over a parcel of land in Tarlac. Lorenzo Musni, heir to the property, alleged that Nenita Sonza Santos falsified a Deed of Sale, fraudulently transferring the land’s title to herself and her brother, Eduardo Sonza. Subsequently, the Spouses Santos and Eduardo mortgaged the land to Land Bank as security for a loan. When they defaulted, Land Bank foreclosed on the property. The core legal question is whether Land Bank, in foreclosing on the mortgaged property, could claim the status of a mortgagee in good faith and an innocent purchaser for value, despite the underlying fraudulent transfer of title.

    The Regional Trial Court (RTC) initially ruled in favor of Musni, finding that Land Bank was not an innocent purchaser for value due to the pending criminal case against Nenita for falsification, which should have alerted the bank to the questionable ownership. The Court of Appeals (CA) affirmed this decision, emphasizing the heightened due diligence required of banks in mortgage transactions. Land Bank appealed to the Supreme Court, arguing that it had acted in good faith by verifying the title with the Registry of Deeds and finding no adverse claims or notices of *lis pendens*.

    However, the Supreme Court sided with Musni, affirming the CA’s decision with modifications. The Court reiterated the principle that banks are held to a higher standard of care than ordinary individuals when dealing with land titles, even registered ones. Justice Leonen, writing for the Court, emphasized that reliance solely on the face of the title is insufficient. Banks must conduct a thorough investigation to ascertain the true ownership of the property. The court referenced precedents such as *Philippine Banking Corporation v. Dy, et al.*, 698 Phil. 750 (2012), and *Philippine National Bank v. Corpuz*, 626 Phil. 410 (2010), which underscore this duty.

    Specifically, the Supreme Court scrutinized Land Bank’s claim of due diligence, finding that it fell short of the required standard. The bank’s account officer testified to conducting a credit investigation and inspection, yet the report and testimony failed to adequately demonstrate adherence to the bank’s standard operating procedures. Critically, the Court noted that the title mortgaged to Land Bank was issued shortly after a Department of Agrarian Reform Adjudication Board (DARAB) decision, a circumstance that should have raised suspicion. This timeline discrepancy, coupled with the ongoing falsification case, indicated a failure on Land Bank’s part to conduct a sufficiently thorough investigation.

    The Supreme Court also rejected Land Bank’s argument that it could not have known about the criminal action since it was not a party to the case and no notice of *lis pendens* was filed. Citing *Heirs of Gregorio Lopez v. Development Bank of the Philippines*, G.R. No. 193551, November 19, 2014, the Court reiterated that banks cannot simply rely on the absence of such notices but must actively investigate the mortgagor’s title. Therefore, the Court upheld the nullification of the mortgage contract and the foreclosure sale, ordering Land Bank to reconvey the property to Musni.

    Regarding the award of damages to Land Bank, the trial court had initially ordered the Spouses Santos and Eduardo to pay Land Bank P448,000.00 for the losses it suffered due to the mortgage, foreclosure, and consolidation of the land. The Court of Appeals deleted this award, a decision affirmed by the Supreme Court, albeit on different grounds. The Supreme Court reasoned that Land Bank was not entitled to damages because it had failed to exercise the required due diligence. The Court emphasized that “petitioner did not seek relief from the Court with clean hands.” This denial underscores the principle that parties seeking equitable relief must demonstrate fairness and good faith in their own conduct.

    Finally, the Supreme Court modified the lower courts’ decisions by ordering the cancellation of TCT No. 333352, which covered multiple properties, before reconveying the subject property (covered by TCT No. 304649) to Musni. This modification ensures that only the fraudulently obtained property is returned, clarifying the scope of the reconveyance. Musni was also directed to reimburse the Spouses Santos for the amount of P286,640.82, with legal interest, representing the loan Musni had obtained from them, thereby restoring equity to the situation. The decision reinforces the duty of banks to exercise a higher degree of diligence in mortgage transactions, protecting landowners from fraudulent schemes and ensuring the integrity of the Torrens system.

    FAQs

    What was the key issue in this case? The central issue was whether Land Bank could claim the status of a mortgagee in good faith and an innocent purchaser for value, despite a fraudulent transfer of the land’s title to the mortgagors. This hinged on whether Land Bank exercised the required due diligence in the mortgage transaction.
    What does it mean to be a mortgagee in good faith? A mortgagee in good faith is someone who, without any knowledge of defects in the mortgagor’s title, accepts a mortgage on a property. However, banks have a higher duty to investigate beyond the title itself.
    What level of due diligence is expected of banks in mortgage transactions? Banks are expected to exercise a higher degree of diligence than ordinary individuals. This includes thoroughly investigating the mortgagor’s title and the circumstances surrounding its acquisition, not just relying on the face of the title.
    Why was Land Bank not considered a mortgagee in good faith in this case? Land Bank failed to adequately demonstrate that it followed its standard operating procedures in verifying the title. Critical red flags, such as the timing of the DARAB decision and the pending falsification case, were not properly investigated.
    What is the significance of a notice of *lis pendens*? A notice of *lis pendens* is a warning to the public that a property is involved in a pending court case. While its absence is a factor, banks still have a duty to conduct their own investigations.
    What was the Court’s ruling on the award of damages to Land Bank? The Supreme Court upheld the deletion of the award, reasoning that Land Bank’s losses were a result of its failure to exercise due diligence, thus they did not come to the court with clean hands.
    What was the effect of the falsified Deed of Sale on the mortgage? Because the Deed of Sale was falsified, the mortgagors never legally owned the property. This meant they had no right to mortgage it, rendering the mortgage contract void.
    What modification did the Supreme Court make to the Court of Appeals’ decision? The Supreme Court clarified that the consolidated title (TCT No. 333352) should be cancelled before reconveying the subject property to Lorenzo Musni. It also directed Musni to pay the Spouses Santos the amount of the loan they originally extended to him.

    This case serves as a critical reminder to financial institutions about the importance of thorough due diligence in mortgage transactions. It reinforces the principle that banks cannot simply rely on the face of a title but must actively investigate the circumstances surrounding its acquisition. This added layer of scrutiny protects landowners from fraudulent schemes and upholds the integrity of the Torrens system.

    For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

    Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
    Source: Land Bank of the Philippines, v. Lorenzo Musni, et al., G.R. No. 206343, February 22, 2017

  • Mortgage Agreements and Due Diligence: Protecting Buyers’ Rights in Condominium Developments

    This case clarifies the responsibilities of banks when providing loans to real estate developers, particularly concerning the rights of condominium unit buyers. The Supreme Court affirmed that banks must exercise a high degree of diligence before accepting properties as collateral, including verifying compliance with regulations like Presidential Decree No. 957, which requires prior approval for mortgages on condominium units. Failure to do so can render the mortgage null and void, especially concerning buyers who were not properly notified of the mortgage. This decision reinforces the protection of buyers’ rights and underscores the banking sector’s duty to conduct thorough due diligence in real estate transactions.

    When Banking Collides with Condominium Rights: Who Bears the Burden of Due Diligence?

    The case of Prudential Bank vs. Ronald Rapanot revolves around a condominium unit buyer’s right to their property versus a bank’s claim as a mortgagee. Ronald Rapanot purchased a unit in the Wack-Wack Twin Towers Condominium from Golden Dragon Real Estate Corporation. Unbeknownst to Rapanot, Golden Dragon had mortgaged the same unit to Prudential Bank (now Bank of the Philippine Islands) as collateral for a loan. When Golden Dragon failed to deliver the unit despite full payment, Rapanot filed a complaint, leading to a legal battle that reached the Supreme Court. The core legal question is whether the bank, as a mortgagee, acted with due diligence and can thus enforce its mortgage against Rapanot, the buyer.

    The facts reveal that Rapanot made a reservation payment for Unit 2308-B2 on May 9, 1995. Subsequently, on September 13, 1995, Golden Dragon secured a loan from Prudential Bank and executed a Mortgage Agreement, which included Unit 2308-B2 as collateral. Rapanot later entered into a Contract to Sell on May 21, 1996, and completed his payments by April 23, 1997, receiving a Deed of Absolute Sale. Despite this, Golden Dragon failed to deliver the unit. The bank denied Golden Dragon’s request to substitute the collateral due to unpaid accounts. Rapanot, finding himself without his purchased unit, initiated legal action.

    The Housing and Land Use Regulatory Board (HLURB) initially ruled in favor of Rapanot, declaring the mortgage null and void due to violations of Presidential Decree No. 957 (PD 957). This decree is crucial because it mandates that developers obtain prior written approval from the HLURB before mortgaging any condominium unit. It also requires developers to notify buyers of the mortgage. The HLURB found that Golden Dragon failed to comply with these requirements. The HLURB Board modified the Arbiter’s Decision, reducing some damages but affirming the core ruling. The Office of the President (OP) and later the Court of Appeals (CA) upheld the HLURB’s decision, leading Prudential Bank to seek recourse with the Supreme Court.

    The Supreme Court emphasized the limited scope of review under Rule 45 of the Rules of Court, which generally confines appeals to questions of law. While exceptions exist, the Court found that none applied in this case. The Bank argued that it was denied due process before the HLURB and that it should be considered a mortgagee in good faith. However, the Court rejected these arguments, highlighting that the essence of due process is the opportunity to be heard, which the Bank had through its participation in preliminary hearings and submission of its Answer.

    Regarding the due diligence, the Supreme Court stated that the Mortgage Agreement was null and void as against Rapanot. The Court cited Section 18 of PD 957, which explicitly requires prior written approval from the HLURB for any mortgage on a condominium unit. Further, the buyer must be notified before the release of the loan. According to the Supreme Court, acts executed against the provisions of mandatory or prohibitory laws are void, referencing Far East Bank & Trust Co. v. Marquez, where it was stated that,

    “the mortgage over the lot is null and void insofar as private respondent is concerned.”

    The Court elaborated on the bank’s duty to exercise a higher degree of diligence than private individuals, especially when dealing with real estate developers. This is because the banking business is impressed with public interest, according to Philippine National Bank v. Vila,

    “the highest degree of diligence is expected, and high standards of integrity and performance are even required, of it.”

    The Court found that the Bank failed to ascertain whether Golden Dragon had obtained the required HLURB approval and whether the units offered as collateral already had buyers.

    Moreover, the Court noted that Rapanot had made his initial payment four months before the Mortgage Agreement, a fact the Bank could have easily verified. Thus, the Supreme Court concluded that the Bank’s failure to exercise the required diligence constituted negligence, negating its claim as a mortgagee in good faith. The Court affirmed the lower courts’ decisions, emphasizing the protection of buyers’ rights in real estate transactions and the banking sector’s responsibility to conduct thorough due diligence. This underscores the principle that banks cannot simply rely on clean titles but must actively investigate potential encumbrances and compliance with relevant laws.

    FAQs

    What was the key issue in this case? The key issue was whether Prudential Bank (now BPI) could be considered a mortgagee in good faith and thus enforce its mortgage on a condominium unit against the buyer, Ronald Rapanot, who had fully paid for the unit.
    What is Presidential Decree No. 957 (PD 957)? PD 957, also known as the Subdivision and Condominium Buyers’ Protective Decree, aims to protect real estate buyers from fraudulent practices. It requires developers to secure HLURB approval before mortgaging properties and to notify buyers of the mortgage.
    What does it mean to be a mortgagee in good faith? A mortgagee in good faith is someone who, without knowledge of any defect in the title, accepts a mortgage on a property. However, banks are held to a higher standard and must exercise due diligence in verifying the property’s status.
    Why was Prudential Bank not considered a mortgagee in good faith? Prudential Bank failed to verify whether Golden Dragon had secured HLURB approval for the mortgage, as required by PD 957, and whether the property already had a buyer. This lack of diligence disqualified them from being considered a mortgagee in good faith.
    What is the significance of HLURB approval in mortgaging condominium units? HLURB approval ensures that the proceeds of the mortgage loan are used for the development of the condominium project and protects the interests of the buyers. Mortgaging without approval violates PD 957 and can render the mortgage void.
    What is the bank’s responsibility when dealing with real estate developers? Banks must exercise a higher degree of diligence than private individuals. They must verify the developer’s compliance with relevant laws, such as PD 957, and investigate the property’s status to protect the interests of potential buyers.
    What was the outcome of the case? The Supreme Court affirmed the lower courts’ decisions, ruling that the mortgage was null and void concerning Ronald Rapanot. Prudential Bank was ordered to cancel the mortgage and release the title to Rapanot.
    What does this case mean for condominium buyers? This case reinforces the protection of condominium buyers’ rights, ensuring that banks cannot simply rely on clean titles but must actively investigate potential encumbrances and compliance with relevant laws before granting loans to developers.

    This case serves as a crucial reminder of the importance of due diligence in real estate transactions, particularly for banks and financial institutions. It highlights the need to go beyond surface-level checks and actively investigate compliance with regulations like PD 957 to protect the rights of property buyers. The ruling reinforces the principle that banks must exercise a higher standard of care, ensuring transparency and fairness in real estate dealings.

    For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

    Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
    Source: Prudential Bank vs. Rapanot, G.R. No. 191636, January 16, 2017

  • Foreclosure Redemption Rights: Assignee’s Entitlement to Shorter Redemption Period under the General Banking Law

    In White Marketing Development Corporation v. Grandwood Furniture & Woodwork, Inc., the Supreme Court addressed whether a non-bank assignee of a mortgage contract is entitled to the shorter redemption period provided to banks under the General Banking Law of 2000 (R.A. No. 8791). The Court ruled that the assignee steps into the shoes of the mortgagee bank and acquires all its rights, including the shorter redemption period. This means that even if the entity that forecloses on the property is not a bank, the shorter redemption period still applies if the mortgage originated from a bank and was subsequently assigned. This decision clarifies the scope and applicability of the shorter redemption period, emphasizing the importance of maintaining the financial stability of banks and their assignees.

    From Banker to Bidder: Who Gets the Redemption Rights?

    This case revolves around a loan obtained by Grandwood Furniture & Woodwork, Inc. (Grandwood) from Metropolitan Bank and Trust Company (Metrobank), secured by a real estate mortgage. Metrobank later assigned its rights to Asia Recovery Corporation (ARC), which then assigned them to Cameron Granville 3 Asset Management, Inc. (CGAM3). After Grandwood defaulted on the loan, CGAM3 initiated foreclosure proceedings. White Marketing Development Corporation (White Marketing) emerged as the highest bidder at the auction sale.

    The core legal question was whether Grandwood, the original mortgagor, could redeem the foreclosed property under the longer redemption period provided in Act No. 3135 (the general law on extrajudicial foreclosure) or whether the shorter period under Section 47 of R.A. No. 8791 (the General Banking Law of 2000) applied. The resolution of this issue hinged on whether White Marketing, as the assignee of the mortgage, could avail itself of the shorter redemption period granted to banks.

    The Regional Trial Court (RTC) initially ruled in favor of White Marketing, stating that the shorter redemption period under R.A. No. 8791 applied because the mortgage contract was initially between Grandwood and Metrobank, a banking institution. The Court of Appeals (CA) reversed this decision, arguing that the shorter redemption period only applied to banks and not to White Marketing, which was not a banking institution.

    The Supreme Court, however, reversed the CA’s decision, emphasizing the principle of **assignment of credit**. The Court cited the case of Fort Bonifacio v. Fong, explaining:

    The reason that a contracting party’s assignees, although seemingly a third party to the transaction, remain bound by the original party’s transaction under the relativity principle further lies in the concept of subrogation, which inheres in assignment.

    Case law states that when a person assigns his credit to another person, the latter is deemed subrogated to the rights as well as to the obligations of the former. By virtue of the Deed of Assignment, the assignee is deemed subrogated to the rights and obligations of the assignor and is bound by exactly the same conditions as those which bound the assignor. Accordingly, an assignee cannot acquire greater rights than those pertaining to the assignor. The general rule is that an assignee of a non-negotiable chose in action acquires no greater right than what was possessed by his assignor and simply stands into the shoes of the latter.

    Building on this principle, the Supreme Court stated that when Metrobank assigned its rights to ARC, and subsequently to CGAM3 and finally to White Marketing, each assignee stepped into the shoes of Metrobank. Therefore, White Marketing was entitled to the same rights and benefits that Metrobank had under the mortgage contract, including the shorter redemption period.

    The Court then delved into the applicability of Section 47 of R.A. No. 8791, which states:

    Notwithstanding Act 3135, juridical persons whose property is being sold pursuant to an extrajudicial foreclosure, shall have the right to redeem the property in accordance with this provision until, but not after, the registration of the certificate of foreclosure sale with the applicable Register of Deeds which in no case shall be more than three (3) months after foreclosure, whichever is earlier.

    According to the Court, this provision clearly provides a shorter redemption period for juridical persons (like Grandwood) when their property is foreclosed extrajudicially. This period is either three months after the foreclosure or until the registration of the certificate of foreclosure sale, whichever comes first.

    The Supreme Court also addressed the underlying rationale for the shorter redemption period, citing Goldenway Merchandising Corporation v. Equitable PCI Bank:

    The difference in the treatment of juridical persons and natural persons was based on the nature of the properties foreclosed – whether these are used as residence, for which the more liberal one-year redemption period is retained, or used for industrial or commercial purposes, in which case a shorter term is deemed necessary to reduce the period of uncertainty in the ownership of property and enable mortgagee-banks to dispose sooner of these acquired assets. It must be underscored that the General Banking Law of 2000, crafted in the aftermath of the 1997 Southeast Asian financial crisis, sought to reform the General Banking Act of 1949 by fashioning a legal framework for maintaining a safe and sound banking system. In this context, the amendment introduced by Section 47 embodied one of such safe and sound practices aimed at ensuring the solvency and liquidity of our banks. It cannot therefore be disputed that the said provision amending the redemption period in Act 3135 was based on a reasonable classification and germane to the purpose of the law.

    The Court emphasized that the shorter redemption period serves as an additional security measure for banks, helping them maintain solvency and liquidity. Allowing assignees to benefit from this shorter period incentivizes them to accept assignments of credit from banks, facilitating the banks’ ability to manage their assets effectively. To deny this benefit to assignees would undermine the purpose of R.A. No. 8791 and potentially harm the banking system.

    Grandwood argued that the liberal construction of redemption laws should favor the mortgagor. The Supreme Court, however, rejected this argument, citing City of Davao v. The Intestate Estate of Amado S. Dalisay:

    While it is a given that redemption by property owners is looked upon with favor, it is equally true that the right to redeem properties remains to be a statutory privilege. Redemption is by force of law, and the purchaser at public auction is bound to accept it. Further, the right to redeem property sold as security for the satisfaction of an unpaid obligation does not exist preternaturally. Neither is it predicated on proprietary right, which, after the sale of the property on execution, leaves the judgment debtor and vests in the purchaser. Instead, it is a bare statutory privilege to be exercised only by the persons named in the statute.

    In other words, a valid redemption of property must appropriately be based on the law which is the very source of this substantive right. It is, therefore, necessary that compliance with the rules set forth by Jaw and jurisprudence should be shown in order to render validity to the exercise of this right. Hence, when the Court is beckoned to rule on this validity, a hasty resort to elementary rules on construction proves inadequate. Especially so, when there are deeper underpinnings involved, not only as to the right of the owner to take back his property, but equally important, as to the right of the purchaser to acquire the property after deficient compliance with statutory requirements, including the exercise of the right within the period prescribed by law.

    The Court cannot close its eyes and automatically rule in favor of the redemptioner at all times. The right acquired by the purchaser at an execution sale is inchoate and does not become absolute until after the expiration of the redemption period without the right of redemption having been exercised. “But inchoate though it be, it is, like any other right, entitled to protection and must be respected until extinguished by redemption.” Suffice it to say, the liberal application of redemption laws in favor of the property owner is not an austere solution to a controversy, where there are remarkable factors that lead to a more sound and reasonable interpretation of the law. Here, the proper focus of the CA should have been the just and fair interpretation of the law, instead of an automatic and constricted view on its liberal application.

    The Court concluded that the liberal construction of redemption laws cannot be applied blindly, especially when it undermines the purpose of the law and the rights of the parties involved. In this case, the shorter redemption period under R.A. No. 8791 was intended to provide additional security to banks, and this purpose should not be defeated by extending the redemption period simply because the mortgagee’s rights were assigned to a non-bank entity.

    Therefore, Grandwood’s redemption, which occurred after the registration of the certificate of sale, was deemed out of time. White Marketing, as the assignee of the mortgagee’s rights, was entitled to the benefit of the shorter redemption period under R.A. No. 8791.

    FAQs

    What was the key issue in this case? The central issue was whether a non-bank assignee of a mortgage contract originating from a bank is entitled to the shorter redemption period provided to banks under the General Banking Law of 2000 (R.A. No. 8791).
    What is the significance of Section 47 of R.A. No. 8791? Section 47 of R.A. No. 8791 provides a shorter redemption period for juridical persons whose properties are sold in extrajudicial foreclosures, aiming to provide additional security and liquidity for banks. The period is either three months from foreclosure or until registration of the certificate of sale, whichever is earlier.
    What is the principle of assignment of credit? Assignment of credit means that when a creditor assigns their rights to another person, the assignee steps into the shoes of the assignor, acquiring all the rights, benefits, and obligations of the original creditor. The assignee cannot acquire greater rights than the assignor possessed.
    Why is there a shorter redemption period for juridical persons under the General Banking Law? The shorter redemption period aims to reduce uncertainty in property ownership and enable mortgagee-banks to dispose of acquired assets sooner, ensuring their solvency and liquidity. This was crafted in response to the 1997 Southeast Asian financial crisis.
    Did the Supreme Court favor a liberal interpretation of redemption laws in this case? No, the Supreme Court did not apply a liberal interpretation of redemption laws because the automatic application would undermine the law’s purpose and the rights of the parties involved. A strict interpretation was used because it involved banks and finance liquidity.
    What was the effect of Metrobank assigning its rights to White Marketing? When Metrobank assigned its rights, White Marketing, as the assignee, stepped into Metrobank’s shoes and acquired all its rights and benefits under the mortgage contract, including the shorter redemption period provided under R.A. No. 8791.
    What was the main argument of Grandwood Furniture & Woodwork, Inc.? Grandwood argued that the shorter redemption period should not apply to White Marketing because it was not a bank and that the general principle of liberal construction of redemption laws should favor the mortgagor.
    What was the Supreme Court’s ruling in this case? The Supreme Court ruled that the shorter redemption period under R.A. No. 8791 applied to White Marketing as the assignee of Metrobank’s rights. Grandwood’s redemption was out of time since it occurred after the registration of the certificate of sale.

    This case serves as a clear reminder that when a mortgage originates from a bank, the shorter redemption period under the General Banking Law remains applicable even if the mortgage is subsequently assigned to a non-bank entity. This ruling reinforces the importance of upholding the intent of the law to protect the financial stability of banks and to encourage the efficient management of their assets. It also highlights that while redemption laws are generally construed liberally, this principle is not absolute and must be balanced against the rights of all parties involved and the specific context of the case.

    For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

    Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
    Source: WHITE MARKETING DEVELOPMENT CORPORATION vs. GRANDWOOD FURNITURE & WOODWORK, INC., G.R. No. 222407, November 23, 2016

  • Ensuring Access: The Indispensable Right to a Legal Easement of Right of Way

    The Supreme Court has affirmed that a property owner cannot obstruct a neighbor’s access to a public highway, especially when the obstruction is a deliberate act during ongoing litigation. This ruling reinforces the principle that an easement of right of way can be legally enforced to ensure that landlocked properties have access to public roads. The decision underscores the importance of good faith in property disputes and prevents landowners from manipulating court decisions by altering the physical conditions of the land in question. This benefits property owners who find themselves without access due to the actions of their neighbors, ensuring they have a legal avenue to secure their right of way.

    When a Street Disappears: Can a Landowner Block Access and Force a Neighbor to Seek a Right of Way?

    Naga Centrum, Inc. found itself in a legal battle after closing a road that had long provided access for spouses Ramon and Nenita Orzales to the public highway. The Orzaleses, whose property was surrounded by other immovables, sought a legal easement of right of way through Naga Centrum’s land, arguing that their access to the public road had been unjustly cut off. Naga Centrum countered that the Orzaleses should have secured a right of way from their property seller initially, and that the easement should instead be established on adjacent properties owned by other individuals. This case hinged on whether the Orzaleses were entitled to demand a right of way and, if so, whether the chosen route was the least prejudicial to Naga Centrum.

    The factual backdrop reveals that the Orzaleses acquired their property in 1965, utilizing Rizal Street to access Valentin Street, a public highway. This changed when Naga Centrum, the subsequent owner of the adjacent property encompassing Rizal Street, evicted informal settlers and closed the road. While initially allowing the Orzaleses limited access, the situation escalated when Naga Centrum constructed a concrete fence, restricting access and prompting the Orzaleses to seek legal recourse. The trial court sided with the Orzaleses, granting them a legal easement of right of way, a decision that was later affirmed by the Court of Appeals (CA).

    At the heart of the legal debate was the applicability of Articles 649 and 650 of the Civil Code, which govern the establishment of easements of right of way. Article 649 states:

    “The owner, or any person who by virtue of a legal right may cultivate or use any immovable, which is surrounded by other immovables pertaining to other persons and without adequate outlet to a public highway, is entitled to demand a right of way through the neighboring estates, after payment of the proper indemnity.”

    And Article 650 further specifies:

    “The easement of right of way shall be established at the point least prejudicial to the servient estate, and, insofar as consistent with this rule, where the distance from the dominant estate to a public highway may be the shortest.”

    These provisions outline four critical requisites for claiming a legal or compulsory right of way: (a) the estate is surrounded by other immovables and lacks adequate access to a public highway; (b) proper indemnity is paid; (c) the isolation is not due to the proprietor’s own acts; and (d) the right of way claimed is the least prejudicial to the servient estate. The Supreme Court rigorously examined whether these requisites were met in the Orzaleses’ case.

    The Supreme Court affirmed the lower courts’ findings that all four requisites were indeed satisfied. The closure of Rizal Street by Naga Centrum effectively isolated the Orzaleses’ property, depriving them of access to the public road. The Orzaleses expressed their willingness to pay the proper indemnity for the easement. The isolation of the property was directly attributable to Naga Centrum’s actions, not the Orzaleses’ own doing. The easement, as established, proved to be the least prejudicial option, especially considering the smaller sizes of the adjacent properties owned by other parties.

    The Court emphasized that the condition of “least damage” and “shortest distance” were both met by establishing the easement on Naga Centrum’s property. It was also highlighted that the Orzaleses had been using Rizal Street for an extended period, a fact acknowledged by Naga Centrum itself. The Court pointed out Naga Centrum’s bad faith in deliberately blocking the Orzaleses’ access to Rizal Street during the pendency of the case. This was seen as an attempt to manipulate the court’s decision by altering the physical conditions of the property.

    The Supreme Court firmly rejected Naga Centrum’s argument that the existence of permanent structures on the designated right of way should warrant a renegotiation of the location. Allowing such a move would reward malice and bad faith, undermining the principles of justice and fair dealing. Instead, the Court underscored that a party cannot be allowed to influence court decisions by performing acts upon the disputed property during the pendency of the case. The case serves as a stark reminder of the importance of acting in good faith and respecting the rights of others.

    FAQs

    What is a legal easement of right of way? It is a legal right granted to a property owner who has no access to a public road, allowing them to pass through a neighboring property. This ensures that all properties have a means of access to public roads.
    What are the requirements to claim a legal easement of right of way? The requirements include: the property must be surrounded by other immovables without adequate access to a public highway; the claimant must pay proper indemnity; the isolation must not be due to the claimant’s own acts; and the right of way must be the least prejudicial to the other property.
    Can a property owner block an existing right of way? No, a property owner cannot block an existing right of way, especially if it results in isolating a neighboring property. Doing so can lead to legal action and the establishment of a legal easement of right of way.
    What does “least prejudicial to the servient estate” mean? It means that the easement should be located in a way that causes the least amount of damage or inconvenience to the property through which it passes. This often involves considering the size and use of the properties involved.
    What happens if there are structures on the proposed right of way? If structures are deliberately built on the proposed right of way during the pendency of a case, the court may order their removal. The court aims to prevent parties from manipulating the situation to their advantage.
    Who decides where the easement of right of way will be located? The court decides the location of the easement of right of way, taking into consideration the factors of least prejudice and shortest distance to the public highway. The court may also conduct ocular inspections to assess the properties involved.
    Is it necessary to include all neighboring property owners in a right of way case? Not necessarily. Only those property owners whose properties are directly involved in the proposed right of way need to be included. The court determines this based on the specific circumstances of the case.
    What is the significance of acting in good faith in property disputes? Acting in good faith means being honest and fair in dealing with others. Courts look unfavorably on parties who act maliciously or attempt to manipulate the legal process to achieve their desired outcome.

    In conclusion, this case reinforces the importance of respecting established access rights and acting in good faith during property disputes. The Supreme Court’s decision serves as a warning against those who seek to manipulate the legal process by altering the physical conditions of their property to gain an unfair advantage. The ruling underscores the judiciary’s commitment to upholding the principles of justice and ensuring that all property owners have reasonable access to public roads.

    For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

    Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
    Source: NAGA CENTRUM, INC. VS. SPOUSES RAMON J. ORZALES AND NENITA F. ORZALES, G.R. No. 203576, September 14, 2016

  • Contractual Obligations: Enforcing Clean Title Delivery Despite Third-Party Claims

    The Supreme Court has affirmed that a seller is bound by their contractual obligation to deliver a property title free from liens and encumbrances, regardless of potential claims against third parties. This ruling emphasizes the principle of relativity of contracts, ensuring that parties fulfill their agreed-upon duties without depending on external entities. The decision reinforces the importance of clear contractual terms and the responsibility of parties to honor their commitments, providing security for buyers in real estate transactions by ensuring sellers cannot evade their obligations by pointing to third-party liabilities.

    The Tangled Title: Can DBP Pass the Buck on a Promise of Clean Ownership?

    Development Bank of the Philippines (DBP) sold a property to Clarges Realty Corporation, promising a title free of liens by December 15, 1987. However, the title DBP delivered still carried annotations of a mortgage lien and a tax lien from the previous owner, Marinduque Mining. Clarges sued DBP for specific performance, seeking a clean title as agreed. DBP argued that the Asset Privatization Trust (APT) had assumed responsibility for the tax liability under Proclamation No. 50, making it impossible for DBP to deliver a clean title. The trial court sided with Clarges, and the Court of Appeals affirmed, leading DBP to appeal to the Supreme Court. The central question before the Supreme Court was whether DBP could avoid its contractual obligation by claiming a third party was responsible for the outstanding liens.

    The Supreme Court held firm on the principle that DBP was bound by its promise in the Deed of Absolute Sale. The Court emphasized that contracts create obligations solely between the parties involved. DBP could not evade its responsibility by pointing to the APT, a non-party to the agreement with Clarges. The Court stated that Clause 6 of the Deed of Absolute Sale clearly obligated DBP to deliver a clean title, and this obligation could not be transferred or made contingent on the actions of a third party. This ruling underscores the importance of upholding contractual agreements and ensuring that parties are held accountable for their promises.

    Building on this principle, the Court addressed DBP’s attempt to file a third-party complaint against the APT. Rule 6, Section 11 of the Rules of Court allows a defending party to bring in a third party for contribution, indemnity, or subrogation. While the APT could have been a valid third-party defendant, the decision to allow such a complaint rests with the trial court’s discretion. The Court highlighted that the trial court did not abuse its discretion in denying DBP’s motion, especially since Clarges had already presented its case. Allowing the third-party complaint at that stage would have unduly delayed the proceedings and prejudiced Clarges. This reinforces the idea that procedural rules are designed to ensure fairness and efficiency in litigation.

    Furthermore, the Supreme Court rejected DBP’s argument of legal impossibility. DBP claimed that Proclamation No. 50 made it legally impossible for them to clear the tax lien. However, the Court clarified that Articles 1266 and 1267 of the Civil Code, which excuse debtors from obligations due to impossibility, apply only to obligations to do, not obligations to give. DBP’s obligation was to deliver a clean title, an obligation to give, which was not legally impossible. DBP, as the mortgagee of the property, had the means to pay the tax liability and clear the lien. This distinction between obligations to do and obligations to give is a crucial aspect of contract law, shaping the responsibilities of contracting parties.

    Moreover, DBP’s claim that paying the tax liability would violate the Anti-Graft and Corrupt Practices Act was dismissed by the Court. The Court explained that a lien is a legal claim attached to the property. By acquiring the property, DBP also assumed the liabilities attached to it, including the tax liability. Paying the outstanding taxes would not be paying the taxes of a private corporation but rather fulfilling a liability associated with DBP’s own property. This clarification dispels any notion that fulfilling a contractual obligation could be considered a corrupt act. This point underscores the importance of due diligence in property transactions, as buyers inherit the liabilities associated with the property.

    The Court emphasized that the admission of a third-party complaint is discretionary. Citing Firestone Tire and Rubber Company of the Philippines v. Tempongko, the Court reiterated that a third-party complaint is a procedural tool to avoid multiple lawsuits and expedite the resolution of related claims. However, if allowing the third-party complaint would delay the original case or introduce new controversies, the court should require the defendant to file a separate action. This discretion ensures that the primary case is not unduly complicated or delayed by tangential issues. The denial of DBP’s motion was therefore justified, as it would have prolonged the proceedings and potentially prejudiced Clarges.

    Regarding the actual damages awarded to Clarges, the Supreme Court upheld the reimbursement of P163,929.00 for the cancellation of the mortgage lien. This expense was directly caused by DBP’s failure to deliver a clean title as promised. However, the Court upheld the Court of Appeals’ decision to disallow the reimbursement of P632.90 for miscellaneous and transportation expenses due to the lack of proper documentation. This highlights the importance of providing sufficient evidence to support claims for damages. The ruling reinforces the principle that damages must be duly proven to be recoverable.

    Finally, the Court affirmed the award of attorney’s fees and costs of the suit to Clarges. Under Article 2208(2) of the Civil Code, attorney’s fees can be recovered when the defendant’s act or omission compels the plaintiff to litigate. DBP’s failure to deliver a clean title forced Clarges to file a lawsuit to protect its interests, justifying the award of attorney’s fees and costs. This provision serves as a deterrent against breaching contractual obligations and compels parties to fulfill their commitments to avoid unnecessary litigation. This underscores the principle that parties who breach their contracts may be liable for the other party’s legal expenses.

    FAQs

    What was the key issue in this case? The key issue was whether the Development Bank of the Philippines (DBP) could avoid its contractual obligation to deliver a clean title to Clarges Realty Corporation by claiming that the Asset Privatization Trust (APT) was responsible for the tax lien.
    What did the Deed of Absolute Sale stipulate? Clause 6 of the Deed of Absolute Sale required DBP to deliver a title to the property free from any and all liens and encumbrances on or before December 15, 1987.
    Why did DBP want to file a third-party complaint? DBP wanted to implead the APT, arguing that the APT had assumed the obligation to pay for Marinduque Mining and Industrial Corporation’s tax liability, which was the basis for the tax lien on the property.
    Why did the trial court deny DBP’s motion for leave to file a third-party complaint? The trial court denied the motion because it believed that DBP should have impleaded the APT earlier in the proceedings and that allowing the third-party complaint at that stage would unduly delay the case.
    What is the principle of relativity of contracts? The principle of relativity of contracts means that contracts bind only the parties to the agreement and cannot prejudice third persons. In this case, DBP’s contract with Clarges could not be altered or affected by the obligations of the APT.
    What kind of obligation was DBP’s obligation to deliver a clean title? DBP’s obligation to deliver a clean title was an obligation to give, which is distinct from an obligation to do. The court clarified that the impossibility provisions under the Civil Code apply only to obligations to do.
    Was DBP required to pay the tax liability of Marinduque Mining and Industrial Corporation? Yes, the Court explained that by acquiring the property, DBP also acquired the liabilities attached to it, including the tax liability. Paying the tax liability was necessary to clear the lien on the property.
    What damages were awarded to Clarges Realty Corporation? Clarges was awarded P163,929.00 for the expenses incurred in having the mortgage lien cancelled, as well as attorney’s fees and costs of the suit. However, the reimbursement for miscellaneous and transportation expenses was disallowed.

    This case serves as a potent reminder of the binding nature of contractual obligations and the importance of fulfilling one’s commitments. Parties entering into contracts must ensure they can deliver on their promises, regardless of external factors or potential third-party liabilities. By upholding the principle of relativity of contracts, the Supreme Court has provided clarity and security in property transactions, reinforcing the sanctity of contractual agreements.

    For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

    Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
    Source: DEVELOPMENT BANK OF THE PHILIPPINES VS. CLARGES CORPORATION, G.R. No. 170060, August 17, 2016

  • Caveat Emptor: The Risk Borne by a Buyer in Bad Faith in Property Transactions

    The Supreme Court held that a buyer who purchases property with knowledge of defects in the seller’s title cannot claim reimbursement for improvements or the purchase price if the sale is later invalidated. This decision underscores the importance of due diligence in real estate transactions, requiring buyers to thoroughly investigate the seller’s title and rights to avoid bearing the risk of loss.

    Navigating Murky Waters: When a Buyer’s “Good Faith” Sinks

    This case revolves around a property dispute that began with a loan and a subsequent sale with the right to repurchase, eventually leading to a sale to a third party. The central legal question is whether the third-party buyer, Desiderio Ranara, Jr., is entitled to reimbursement for the purchase price and improvements made on the land, despite being found to be a buyer in bad faith. The courts grappled with the application of the principle of caveat emptor (buyer beware) and the doctrine of in pari delicto (in equal fault) in determining the rights and obligations of the parties involved.

    The narrative begins when Leonor Parada secured a loan from Zacarias de los Angeles, Sr., using her agricultural land as collateral. A Deed of Sale with Right to Repurchase was executed, granting Zacarias, Sr.’s son, Zacarias Jr. (the respondent), possession of the land. Years later, Zacarias Jr. sold the land to Desiderio Ranara, Jr. (the petitioner). Parada contested the sale, claiming that the original agreement was an equitable mortgage, not a sale. The Regional Trial Court (RTC) and the Court of Appeals (CA) sided with Parada, declaring the sale to Ranara invalid and denying his claim for reimbursement. Ranara then elevated the case to the Supreme Court, arguing that he was an innocent purchaser for value and, at the very least, should be reimbursed for his expenses.

    The Supreme Court affirmed the lower courts’ decisions, emphasizing that the determination of whether a person is a purchaser in good faith is a factual matter, and the findings of the trial court, especially when affirmed by the appellate court, are generally binding. The Court found that Ranara was not a purchaser in good faith, as he had a duty to investigate the title of the property, which was still registered in Parada’s name. The principle of caveat emptor dictates that a buyer must be aware of the vendor’s title, and failure to investigate results in the buyer assuming all risks and losses.

    The Court cited Dacasin v. CA, which underscores the importance of due diligence in property transactions:

    The rule of caveat emptor requires the purchaser to be Ware of the supposed title of the vendor and one who buys without checking the vendor’s title takes all the risks and losses consequent to such failure.

    Ranara also argued that even if he was in bad faith, the respondent was equally at fault for selling the property, invoking the doctrine of in pari delicto. However, the Supreme Court dismissed this argument, stating that the doctrine applies when there is an illegal cause or object of the contract, which was not the case here. The Court clarified that the doctrine of in pari delicto, as governed by Articles 1411 and 1412 of the Civil Code, concerns contracts with illegal causes or objects, not contracts that are merely simulated or where the parties did not intend to be bound.

    The Court referenced Constantino, et al. v. Heirs of Pedro Constantino, Jr. to explain the doctrine of in pari delicto:

    Latin for “in equal fault,” in pari delicto connotes that two or more people are at fault or are guilty of a crime. Neither courts of law nor equity will interpose to grant relief to the parties, when an illegal agreement has been made, and both parties stand in pari delicto. Under the pari delicto doctrine, the parties to a controversy are equally culpable or guilty, they shall have no action against each other, and it shall leave the parties where it finds them.

    Since Ranara was deemed a buyer in bad faith, he was not entitled to reimbursement for the improvements he made on the property. The Court emphasized that only possessors in good faith are entitled to reimbursement for useful expenses, as provided under Article 546 of the Civil Code. The decision serves as a reminder of the importance of conducting thorough due diligence before engaging in property transactions.

    This case highlights the importance of understanding the risks involved in property transactions and the necessity of conducting thorough due diligence. Potential buyers must verify the seller’s title and rights to the property, as the principle of caveat emptor places the burden on the buyer to be aware of potential defects in the title. Failure to do so can result in the loss of both the purchase price and the value of any improvements made on the property. The ruling reinforces the need for caution and prudence in real estate dealings, ensuring that buyers are fully informed before committing to a purchase.

    FAQs

    What was the key issue in this case? The key issue was whether a buyer in bad faith is entitled to reimbursement for the purchase price and improvements made on a property when the sale is later invalidated.
    What is the principle of caveat emptor? Caveat emptor means “buyer beware.” It requires purchasers to be aware of the vendor’s title and assumes the risk of any defects if they fail to investigate.
    What is the doctrine of in pari delicto? In pari delicto means “in equal fault.” It applies when both parties to a contract are equally at fault, and neither can seek relief from the courts.
    When does the doctrine of in pari delicto apply? The doctrine applies when the nullity of a contract arises from an illegal cause or object, and both parties are equally at fault in the illegal agreement.
    What is the significance of good faith in property transactions? Good faith is crucial because only possessors in good faith are entitled to reimbursement for useful expenses incurred in improving the property.
    What due diligence should a buyer perform before purchasing property? A buyer should thoroughly investigate the seller’s title, verify ownership with the Register of Deeds, and inquire into the rights of any possessors of the land.
    What are the consequences of being a buyer in bad faith? A buyer in bad faith is not entitled to reimbursement for the purchase price or improvements made on the property, bearing the full risk of loss.
    How does Article 546 of the Civil Code apply in this case? Article 546 states that only possessors in good faith are entitled to reimbursement for useful expenses, which excludes buyers in bad faith like Ranara.
    What was the Court’s ruling on Ranara’s claim for reimbursement? The Court denied Ranara’s claim for reimbursement, affirming the lower courts’ decisions that he was a buyer in bad faith and not entitled to any compensation.

    This case serves as a cautionary tale for prospective property buyers, emphasizing the importance of conducting thorough due diligence and understanding the risks involved in real estate transactions. The Supreme Court’s decision reinforces the principle of caveat emptor, reminding buyers to be vigilant and informed before making a purchase.

    For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

    Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
    Source: Desiderio Ranara, Jr. vs. Zacarias De Los Angeles, Jr., G.R. No. 200765, August 08, 2016