FLORANTE VITUG vs. EVANGELINE A. ABUDA G.R. No. 201264 January 11, 2016

 Abuda loaned P250,000.00 to Vitug and his wife. As security for the loan, Vitug mortgaged to Abuda his property in Tondo Foreshore. The property was then subject of a conditional Contract to Sell between the National Housing Authority and Vitug. Later, the parties executed a "restructured" mortgage contract on the property to secure the amount of P600,000.00 representing the original P250,000.00 loan, additional loans, and subsequent credit accommodations given by Abuda to Vitug with an interest of five (5) percent per month. By then, the property was covered by Transfer Certificate of Title No. 234246 under Vitug's name.

Spouses Vitug failed to pay their loans despite Abuda's demands. Abuda filed a Complaint for Foreclosure of Property before the RTC. RTC ruled in favor of Abuda. Vitug appealed before the Court of Appeals, contending that the real estate mortgage contract he and Abuda entered into was void on the grounds of fraud and lack of consent under Articles 1318, 1319, and 1332 of the Civil Code. He alleged that he was only tricked into signing the mortgage contract, whose terms he did not really understand. Hence, his consent to the mortgage contract was vitiated. He also contented that his transfer certificate of title had an annotation by the National Housing Authority, which restricted his right to dispose or encumber the property. 

Court of Appeals found that no evidence on record showed that Vitug was defrauded when he entered into the agreement with Abuda.

Q: Are Vitug’s contentions meritorious?

A: No, Vitug’s contentions are not meritorious. Under Article 2085 of the Civil Code, for a mortgage contract to be valid, the absolute owner of a property must have free disposal of the property and that property must be used to secure the fulfillment of an obligation.

Petitioner's claim that he lacks free disposal of the property stems from the existence of the restrictions imposed on his title by the National Housing Authority. Without any action from the National Housing Authority, rights and obligations, including the right to foreclose the property in case of non-payment of the secured loan, are still enforceable between the parties that executed the mortgage contract. There is no showing that the National Housing Authority assailed the validity of the mortgage contract on the ground of violation of restrictions on petitioner's title. Petitioner has no cause of action against respondent based on those restrictions. The mortgage contract remains binding upon petitioner and respondent.

Petitioner in this case was aware of the restrictions in his title when he executed the loan and mortgage contracts with respondent. He voluntarily executed the contracts with respondent despite this knowledge. He also availed himself of the benefits of the loan and mortgage contract. He cannot now assail the validity of the mortgage contract to escape the obligations incurred because of it.

SPOUSES DEO AGNER and MARICON AGNER vs. BPI FAMILY SAVINGS BANK, INC. G.R. No. 182963 June 3, 2013

 

Petitioners, Spouses Deo and Maricon Agner executed a Promissory Note with Chattel Mortgage in favor of Citimotors, Inc. The contract provides, among others, that: for receiving the amount of Php834,768.00, petitioners shall pay Php17,391.00 every 15th day of each succeeding month until fully paid; the loan is secured by a 2001 Mitsubishi Adventure Super Sport; and an interest of 6% per month shall be imposed for failure to pay each installment on or before the stated due date.

 

On the same day, Citimotors, Inc. assigned all its rights, title and interests in the Promissory Note with Chattel Mortgage to ABN AMRO Savings Bank, Inc. which likewise assigned the same to respondent BPI Family Savings Bank, Inc.

 

For failure to pay four successive installments, respondent sent to petitioners a demand letter, declaring the entire obligation as due and demandable and requiring to pay Php576,664.04, or surrender the mortgaged vehicle immediately upon receiving the letter. As the demand was left unheeded, respondent, BPI, filed an action for Replevin and Damages before the RTC. RTC ruled in favor of BPI. Petitioners appealed to Court of Appeals and argued that they cannot be considered to have defaulted in payment for lack of competent proof that they received the demand letter.

 

Q: Is the argument of petitioner tenable?

 

A: No, the argument of petitioner is untenable. The Civil Code in Article 1169 provides that one incurs in delay or is in default from the time the obligor demands the fulfillment of the obligation from the obligee. However, the law expressly provides that demand is not necessary under certain circumstances, and one of these circumstances is when the parties expressly waive demand. Hence, since the co-signors expressly waived demand in the promissory notes, demand was unnecessary for them to be in default. Further, the Court even ruled in Navarro v. Escobido that prior demand is not a condition precedent to an action for a writ of replevin, since there is nothing in Section 2, Rule 60 of the Rules of Court that requires the applicant to make a demand on the possessor of the property before an action for a writ of replevin could be filed.

 

In this case, records bear that both verbal and written demands were in fact made by respondent prior to the institution of the case against petitioners. Even assuming, for argument’s sake, that no demand letter was sent by respondent, there is really no need for it because petitioners legally waived the necessity of notice or demand in the Promissory Note with Chattel Mortgage, which they voluntarily and knowingly signed in favor of respondent’s predecessor-in-interest.