Source: http://lawlibrary.chanrobles.com/index.php?option=com_content&view=article&id=83401:57573&catid=1587&Itemid=566
Timestamp: 2019-04-19 11:03:28+00:00

Document:
G.R. No. 197857, September 10, 2014 - SPOUSES FRANCISCO SIERRA (SUBSTITUTED BY DONATO, TERESITA, TEODORA, LORENZA, LUCINA, IMELDA, VILMA, AND MILAGROS SIERRA) AND ANTONINA SANTOS, SPOUSES ROSARIO SIERRA AND EUSEBIO CALUMA LEYVA, AND SPOUSES SALOME SIERRA AND FELIX GATLABAYAN (SUBSTITUTED BY BUENAVENTURA, ELPIDIO, PAULINO, CATALINA, GREGORIO, AND EDGARDO GATLABAYAN, LORETO REILLO, FERMINA PEREGRINA, AND NIDA HASHIMOTO), Petitioners, v. PAIC SAVINGS AND MORTGAGE BANK, INC., Respondent.
SPOUSES FRANCISCO SIERRA (SUBSTITUTED BY DONATO, TERESITA, TEODORA, LORENZA, LUCINA, IMELDA, VILMA, AND MILAGROS SIERRA) AND ANTONINA SANTOS, SPOUSES ROSARIO SIERRA AND EUSEBIO CALUMA LEYVA, AND SPOUSES SALOME SIERRA AND FELIX GATLABAYAN (SUBSTITUTED BY BUENAVENTURA, ELPIDIO, PAULINO, CATALINA, GREGORIO, AND EDGARDO GATLABAYAN, LORETO REILLO, FERMINA PEREGRINA, AND NIDA HASHIMOTO), Petitioners, v. PAIC SAVINGS AND MORTGAGE BANK, INC., Respondent.
Assailed in this petition for review on certiorari1 is the Decision2 dated June 27, 2011 of the Court of Appeals (CA) in CA-G.R. CV No. 91999 which reversed and set aside the Decision3 dated April 24, 2006 of the Regional Trial Court of Antipolo City, Branch 74 (RTC) in Civil Case No. 91-2153, dismissing petitioners’ complaint for declaration of nullity of real estate mortgage and extrajudicial foreclosure proceedings.
On September 16, 1991, petitioners filed a complaint16 for the declaration of nullity of the real estate mortgage and its extrajudicial foreclosure, and damages against PSMB and Summa Bank before the RTC, docketed as Civil Case No. 91-2153.
Aggrieved, PSMB filed a motion for reconsideration,38 while petitioners filed a motion for discretionary execution39 which were, however, denied in an Order40 dated February 11, 2008. Dissatisfied, PSMB interposed an appeal to the CA.
Unperturbed, petitioners filed the instant petition.
The essential issues in this case are whether or not the CA erred in: (a) ruling that petitioners were aware that they were mere accommodation mortgagors, and (b) dismissing the complaint on the grounds of prescription and laches.
After a judicious perusal of the records, the Court finds petitioners’ claim of mistake or error (that they acted merely as accommodation mortgagors) grounded on their “very limited education” and “lack of proper instruction” not to be firmly supported by the evidence on record.
As correctly observed by the CA, the testimony of petitioner Francisco Sierra as to petitioners’ respective educational backgrounds51 remained uncorroborated. The other petitioners-signatories to the deed never testified that their educational background prevented them from knowingly executing the subject deed as mere accommodation mortgagors. Petitioners’ claim of lack of “proper instruction on the intricacies in securing [the] loan from the bank” is further belied by the fact that petitioners Francisco and Rosario Sierra had previously mortgaged two (2) of the subject properties twice to the Rural Bank of Antipolo. Moreover, petitioners did not: (a) demand for any loan document containing the details of the transaction, i.e., monthly amortization, interest rate, added charges, etc., and the release of the remaining amount of their alleged loan; and (b) offer to pay the purported partial loan proceeds they received at any time,52 complaining thereof only in 1991 when they filed their complaint. Indeed, the foregoing circumstances clearly show that petitioners are aware that they were mere accommodation mortgagors, debunking their claim that mistake vitiated their consent to the mortgage.
Thus, there being valid consent on the part of petitioners to act as accommodation mortgagors, no reversible error was committed by the CA in setting aside the RTC’s Decision declaring the real estate mortgage as void for vices of consent and awarding damages to petitioners. As mere accommodation mortgagors, petitioners are not entitled to the proceeds of the loan, nor were required to be furnished with the loan documents53 or notice of the borrower’s default in paying the principal, interests, penalties, and other charges on due date,54 or of the extrajudicial foreclosure proceedings, unless stipulated in the subject deed.55 As jurisprudence states, an accommodation mortgagor is a third person who is not a debtor to a principal obligation but merely secures it by mortgaging his or her own property.56 Like an accommodation party to a negotiable instrument, the accommodation mortgagor in effect becomes a surety to enable the accommodated debtor to obtain credit,57 as petitioners in this case.
On a second matter, petitioners insist that the CA erred in ruling that their action for nullification of the subject deed had already prescribed, contending that the applicable provision is the ten-year prescriptive period of mortgage actions under Article 114258 of the Civil Code.
The contention is bereft of merit.
Based on case law, a “mortgage action” refers to an action to enforce a right necessarily arising from a mortgage.59 In the present case, petitioners are not “enforcing” their rights under the mortgage but are, in fact, seeking to be relieved therefrom. The complaint filed by petitioners is, therefore, not a mortgage action as contemplated under Article 1142.
In any event, even assuming that petitioners have a valid cause of action, the four-year prescriptive period on voidable contracts61 shall apply. Since the complaint for annulment was anchored on a claim of mistake, i.e., that petitioners are the borrowers under the loan secured by the mortgage, the action should have been brought within four (4) years from its discovery.
A perusal of the complaint, however, failed to disclose when petitioners learned that they were not the borrowers under the loan secured by the subject mortgage. Nonetheless, considering that petitioners admitted receipt on June 19, 198462 of PSMB’s letter dated June 11, 1984 informing them of the scheduled foreclosure sale on June 27, 1984 due to GCI’s breach of its loan obligation secured by the subject properties, the discovery of the averred mistake should appear to be reckoned from June 19, 1984, and not from the dishonor of the checks on January 9, 1984 as ruled by the CA.
As to this final issue, the Court holds that laches applies.
As the records disclose, despite notice on June 19, 1984 of the scheduled foreclosure sale, petitioners, for unexplained reasons, failed to impugn the real estate mortgage and oppose the public auction sale for a period of more than seven (7) years from said notice.63 As such, petitioners’ action is already barred by laches, which, as case law holds, operates not really to penalize neglect or sleeping on one’s rights, but rather to avoid recognizing a right when to do so would result in a clearly inequitable situation.64 As mortgagors desiring to attack a mortgage as invalid, petitioners should act with reasonable promptness, else its unreasonable delay may amount to ratification.65 Verily, to allow petitioners to assert their right to the subject properties now after their unjustified failure to act within a reasonable time would be grossly unfair to PSMB, and perforce should not be sanctioned.
WHEREFORE, the petition is DENIED. The Decision dated June 27, 2011 of the Court of Appeals (CA) in CA-G.R. CV No. 91999 is hereby AFFIRMED.
Velasco, Jr.,* Leonardo-De Castro, (Acting Chairperson),** Bersamin, and Perez, JJ., concur.
* Designated Acting Member per Special Order No. 1772 dated August 28, 2014.
** Per Special Order No. 1771 dated August 28, 2014.
2 Id. at 21-36. Penned by Associate Justice Ramon M. Bato, Jr. with Associate Justices Juan Q. Enriquez, Jr. and Florito S. Macalino, concurring.
3 Records, folder 2, pp. 716-723. Penned by Presiding Judge Francisco A. Querubin.
4 Summa Bank changed its name to PSMB effective June 10, 1983; records, folder 1, p. 268.
7Rollo, p. 23. Zaldaga likewise executed a deed of real estate mortgage (not attached to the records) in favor of Summa Bank on July 8, 1983 over a parcel of land covered by TCT No. N-76395 located in Antipolo City; records, folder 2, p. 685.
8 Records, folder 1, pp. 9-16.
9 See rollo, p. 23. See also Transcript of Stenographic Notes (TSN), April 30, 1993, p. 6; and records, folder 1, p. 456.
10 Records, folder 2, p. 719.
13Rollo, pp. 23-24. See also the letter dated June 11, 1984 which was duly received on June 19, 1984; records, folder 1, pp. 348-349.
14 See Certificate of Sale dated June 27, 1984; records, folder 1, pp. 350-352.
16 Records, folder 1, pp. 1-8.
20 Records, folder 1, p. 4.
26 Id. at 51 and 54.
33 Records, folder 2, pp. 716-723.
35 See id. at 721-722.
38 Id. at 724-748. Dated May 23, 2006.
40 Id. at 898-905. Penned by Judge Mary Josephine P. Lazaro.
43 See id. at 28-30.
44 See id. at 30-31.
45 See id. at 32-33.
46 See id. at 34-35.
47 Ramos v. Obispo, G.R. No. 193804, February 27, 2013, 692 SCRA 240, 249.
48Leonardo v. CA, 481 Phil. 520, 532 (2004).
49Ramos v. Obispo, supra note 47.
50 See Leonardo v. CA, supra note 48.
51 See rollo, p. 29.
52 See id. at 30-31.
54 Records, folder 1, p. 288.
55 See Union Bank of the Philippines v. CA, G.R. No. 164910, September 30, 2005, 471 SCRA 751, 761-762.
56 See Spouses Belo v. Philippine National Bank, 405 Phil. 851, 870 (2001). See also Article 2085 of the Civil Code.
57 See footnote 174 in New Sampaguita Builders Construction, Inc. (NSBCI) v. PNB, 479 Phil. 483, 529 (2004), citing Sps. Gardose v. Tarroza, 352 Phil. 797, 807 (1998).
58 Art. 1142. A mortgage action prescribes after ten years.
59 See Dizon v. Philippine Veterans Bank, G.R. No. 165938, November 25, 2009, 605 SCRA 441, 446-447.
60 See Cabcaban v. NLRC, 343 Phil. 467, 477 (1997).
61 Under Article 1390, in relation to Article 1391 of the Civil Code, where the consent of one of the contracting parties was vitiated by mistake, the contract is considered voidable and may be annulled within four (4) years from the time of the discovery of the mistake.
62 Records, folder 1, p. 348.
63 The complaint was filed on September 16, 1991; id. at 1.
64Far East Bank and Trust Company (now Bank of the Philippine Islands) v. Cayetano, G.R. No. 179909, January 25, 2010, 611 SCRA 96, 104.
65Ramos v. Obispo, supra note 47.

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