teoco vs. metro bank

7/17/2019 Teoco vs. Metro Bank

http://slidepdf.com/reader/full/teoco-vs-metro-bank 1/9

[G.R. NO. 162333 : December 23, 2008]

BIENVENIDO C. TEOCO and !"N C. TEOCO, R., Petitioners, v. #ETRO$O%IT"N B"N& "ND TR!'T

CO#$"N(, Respondent .

D E C I ' I O N

RE(E', R.T., J.:

REAL creditors are rarely unwilling to receive their debts from any hand which will pay them.1 "n) *+na na

ma -a+*an) a b/ran) *+man)) a abaaran m+a ann+man.

This is a Petition for Review on Certiorari seeing the reversal of the !ecision" of the #ourt of Appeals $#A%

in #A&'.R. #( )o. *++1 dated -ebruary ", "/ which annulled and set aside the decision of the Regional

Trial #ourt $RT#% of #atbalogan, 0amar on uly "", 12 in #adastral Record )o. 132+. The RT# originally

dismissed the petition for writ of possession filed by respondent 4etropolitan 5an and Trust #ompany

$4etroban% on the ground that intervenors and present petitioners, the brothers 5ienvenido Teoco and uan

Teoco, r. $the brothers Teoco%, have redeemed the sub6ect property. The #A reversed this dismissal and

ordered the issuance of a writ of possession in favor of respondent 4etroban.

#ulled from the records, the facts are as follows7

Lydia T. #o, married to Ramon #o, was the registered owner of two parcels of land situated in Poblacion,

4unicipality of #atbalogan, Province of 0amar under Transfer #ertificate of Title $T#T% )os. T&8"" and T&

81.3 Ramon #o mortgaged the said parcels of land to 4etroban for a sum ofP",..

9n -ebruary 1/, 11, the properties were sold to 4etroban in an e:tra6udicial foreclosure sale under Act

)o. 313*. 9ne year after the registration of the #ertificates of 0ale, the titles to the properties were

consolidated in the name of 4etroban for failure of Ramon #o to redeem the same within the one year

period provided for by law. T#T )os. T&8"" and T&81 were cancelled and T#T )os. T&+/+" and T&+/3

were issued in the name of 4etroban.

9n )ovember ", 13, 4etroban filed a petition for the issuance of a writ of possession against Ramon #oand Lydia #o $the spouses #o%. ;owever, since the spouses #o were no longer residing in the Philippines at

the time the petition was filed, the trial court ordered 4etroban, on anuary 1", 1/ and again on anuary

"8, 1/ to effect summons by publication against the spouses #o.

9n 4ay 12, 1/, the brothers Teoco filed an answer&in&intervention alleging that they are the successors&

in&interest of the spouses #o, and that they had duly and validly redeemed the sub6ect properties within the

reglementary period provided by law. The brothers Teoco thus prayed for the dismissal of 4etroban<s

petition for a writ of possession, and for the nullification of the T#Ts issued in the name of 4etroban. The

brothers Teoco further prayed for the issuance in their name of new certificates of title.

4etroban, in its reply, alleged that the amount deposited by the brothers Teoco as redemption price was

not sufficient, not being in accordance with 0ection 2+ of the 'eneral 5aning Act. 4etroban also said the

assignment of the right of redemption by the spouses #o in favor of the brothers Teoco was not properlye:ecuted, as it lacs the necessary authentication from the Philippine Embassy.

9n -ebruary "/, 1*, the trial court was informed that the brothers Teoco had deposited the amount

of P3*8,"2.*2 to the cler of court of the RT# in #atbalogan, 0amar. The trial court ordered 4etroban to

disclose whether it is allowing the brothers Teoco to redeem the sub6ect properties. 4etroban refused to

accept the amount deposited by the brothers Teoco, alleging that they are obligated to pay the spouses #o<s

subse=uent obligations to 4etroban as well. The brothers Teoco claimed that they are not bound to pay all

the obligations of the spouses #o, but only the value of the property sold during the public auction.

http://www.chanrobles.com/cralaw/2008decemberdecisions.php?id=1384#fnt1








9n -ebruary "8, 12, the trial court reiterated its earlier order directing 4etroban to effect summons by

publication to the spouses #o. 4etroban complied with said order by submitting documents showing that it

caused the publication of summons against the spouses #o. The brothers Teoco challenged this summons by

publication, arguing that the newspaper where the summons by publication was published, the Samar

Reporter , was not a newspaper of general circulation in the Philippines. The brothers Teoco furthermore

argued that 4etroban did not present witnesses to identify the documents to prove summons by

publication.

RTC D-*n

9n uly "", 12, the RT# rendered its decision in favor of the brothers Teoco, to wit7

>;ERE-9RE, 6udgment is hereby rendered dismissing the petition for a writ of possession under 0ection 2

of Act 313* it appearing that intervenor Atty. uan #. Teoco, r. and his brother Atty. 5ienvenido #. Teoco

have legally and effectively redeemed Lot 81 and 82 of Psd&888*/, #atbalogan, #adastre, from the

petitioner 4etropolitan 5an and Trust #ompany.

Accordingly, 4etroban may now withdraw the aforesaid redemption money ofP3*8,"2.*2 deposited by

uan #. Teoco, r., on -ebruary 1, 1" with the cler of court and it is ordered that the Transfer #ertificate

of Title )os. T&+/" and T&+/3 of 4etropolitan 5an and Trust #ompany be and are cancelled and in their

place new transfer certificates of title be issued in favor of ?ntervenors Attys. 5ienvenido #. Teoco and uan

#. Teoco, r., of legal age, married, and residents of #albiga, 0amar, Philippines, upon payment of the

prescribed fees therefore. )o pronouncement as to costs./

According to the RT#, the case filed by 4etroban should be dismissed since intervenor uan #. Teoco, r., by

his tender of P3*8,"2.*2 to 4etroban on -ebruary 1, 1", within the reglementary period of

redemption of the foreclosed property, had legally and effectively redeemed the sub6ect properties from

4etroban. This redemption amount is a fair and reasonable price and is in eeping with the letter and spirit

of 0ection 2+ of the 'eneral 5aning Act because 4etroban purchased the mortgaged properties from the

sheriff of the same court for only P318,18.". ?n debuning the argument that the amount tendered was

insufficient, the RT# held7

?t is contended for 4etroban that the redemption money deposited by uan #. Teoco, r., is insufficient and

ineffective because the spouses Ramon #o and Lydia T. #o owe it the total amount of P8,+*8,1"* e:cludinginterest and other charges and the mortgage contract e:ecuted by them in favor of 4etroban in 1+* and

1+8 $E:h. A and 5% are not only security for payment of their obligation in the amount of P", but also

for those obligations that may have been previously and later e:tended to the #o couple including interest

and other charges as appears in the accounts, boos and records of the ban.

4etroban cites the case of Mojica v. Court of Appeals, "1 0#RA *12 $11% where the 0upreme #ourt held

that mortgages given to secure future advancements are valid and legal contracts@ that the amounts named

as consideration in said contract do not limit the amount for which the mortgage may stand as security@ that

a mortgage given to secure the advancements is a continuing security and is not discharged by repayment

of the amount named in the mortgage until the full amount of the advancements are paid. ?n the opinion of

this court, it is not fair and 6ust to apply this rule to the case at bar. There is no evidence offered by

4etroban that these other obligations of Ramon #o and his wife were not secured by real estate mortgages

of other lands. ?f the other indebtedness of the #o couple to 4etroban are secured by a mortgage on their

other lands or properties the obligation can be enforced by foreclosure which the court assumes 4etroban

has already done. There is no proof that 4etroban ased for a deficiency 6udgment for these unpaid loans.

The 0upreme #ourt in the Mojica case was dealing with the rights of the mortgagee under a mortgage from

an owner of the land. ?t determined the security covered by the mortgage the intention of the parties and

the e=uities of the case. >hat was held in that case was hedged about so as to limit the decision to the

particular facts. ?t must be apparent that the 4o6ica ruling cannot be construed to give countenance or

approval to the theory that in all cases without e:ception mortgages given to secure past and future

advancements are valid and legal contracts.





?n construing a contract between the ban and a borrower such a construction as would be more favorable

to the borrower should be adopted since the alleged past and future indebtedness of Ramon #o to the ban

was not described and specified therein and that the addendum was made because the mortgage given

therefore were not sufficient or that these past and future advancements were unsecured. That being the

case the mortgage contracts, E:h. A and 5 should be interpreted against 4etroban which drew said

contracts. A written contract should, in case of doubt, be interpreted against the party who has drawn the

contract $8 R.#.L. +*/; H.E. Heackock Co. v. Macondray & Co., /" Phil. "*%. ;ere, the mortgage contracts

are in printed form prepared by 4etroban and therefore ambiguities therein should be construed againstthe party causing it $atco v. El Ho!ar "ilipino# $% Pil. $'(; Hod!es v. )a*aro, #A, *2 9.'. 82%.*

The RT# added that there is another reason for dismissing 4etroban<s petition7 the RT# failed to ac=uire

6urisdiction over the spouses #o. The RT# noted that 4etroban published its petition for writ of possession,

but did not publish the writ of summons issued by said court on -ebruary 18, 1/. According to the RT#7

A petition for a writ of possession of foreclosed property is in reality a possession suit. That 4etroban

prayed for a writ of possession in an independent special proceeding does not alter the nature of the case as

a possessory suit $Ca+rera v. Sinoy , L.&1"8/+, "3 )ovember 1*%.

The defendant or owner of the property foreclosed by the petitioner should be summoned to answer the

petition. Accordingly, the publication made by the petitioner is fatally flawed and defective and on that basis

alone this court ac=uired no 6urisdiction over the person of respondents Ramon #o and his wife $Mapa v.Court of Appeals, '.R. )o. 23/, 9ctober ", 1"@ ,ope* v. Pilippine -ational ank , L&3/""3, !ecember

1, 1+"%.8

4etroban appealed to the #A. ?n its appeal, 4etroban claimed that the RT# erred in finding that the

publication made by it is fatally flawed, and that the brothers Teoco had effectively redeemed the properties

in =uestion.

C" D-*n

9n -ebruary ", "/, the #A decided the appeal in favor of 4etroban, with the following disposition7

>;ERE-9RE, the appeal is hereby 'RA)TE!. The assailed !ecision dated uly "", 12 rendered by the

Regional Trial #ourt of #atbalogan, 0amar 5ranch " in #adastral Record )o. 132+ is hereby A))LLE! and

0ET A0?!E. Accordingly, let a writ of possession in favor of petitioner&appellant 4ETR9P9L?TA) 5A)B A)!

TR0T #94PA)C be issued over the properties and improvements covered by Transfer #ertificates of Title

)os. T&+/" and T&+/3 of the Registry of !eeds of >estern 0amar.

09 9R!ERE!.2

As regards the =uestion of 6urisdiction, the #A ruled that since the parcels of land in =uestion were already

registered in the name of 4etroban at the time the petition was filed, and since the certificates of title of

the spouses #o were already cancelled, there is no more need to issue summons to the spouses #o. The #A

noted that the best proof of ownership of the parcel of land is a certificate of title.+

The #A also held that the issue of the validity of summons to the spouses #o is unimportant considering that

the properties in =uestion were mortgaged to 4etroban and were subse=uently sold to the same ban after

the spouses #o failed to satisfy the principal obligation. ;ence, the applicable law is Act )o. 313*, as

amended by Act )o. /11+. 0ection 2 of said Act )o. 313* states that a petition for the issuance of a writ of

possession filed by the purchaser of a property in an e:tra6udicial foreclosure sale may be done e: parte. ?t

is the ministerial duty of the trial court to grant such writ of possession. )o discretion is left to the trial

court. Any =uestion regarding the cancellation of the writ, or with respect to the validity and regularity of the

public sale should be determined in a subse=uent proceeding as outlined in 0ection of Act )o. 313*.1
















-urther, the #A held that the brothers Teoco were not able to effectively redeem the sub6ect properties,

because the amount tendered was insufficient, and the brothers Teoco have not sufficiently shown that the

spouses #o<s right of redemption was properly transferred to them.

I+e

?n this Rule /* petition, the brothers Teoco impute to the #A the following errors7

?

T;E ;9)9RA5LE #9RT 9- APPEAL0 #944?TTE! 0ER?90 ERR9R 9- !'4E)T ?) ;9L!?)' T;AT

PET?T?9)ER0 -A?LE! T9 RE!EE4 T;E 05E#T PR9PERT?E0 >?T;?) T;E RE'LE4E)TARC PER?9! 9- 9)E

CEAR A)! T;AT T;E RE!E4PT?9) PR?#E TE)!ERE! ?0 ?)0--?#?E)T.

??

T;E ;9)9RA5LE #9RT 9- APPEAL0 #944?TTE! 0ER?90 ERR9R 9- !'4E)T ?) ;9L!?)'

PET?T?9)ER0 T9 PAC )9T 9)LC T;E P ", PR?)#?PAL 95L?'AT?9) 5T AL09 T;AT PRE(?90LC

EDTE)!E!, >;ET;ER !?RE#T 9R ?)!?RE#T, PR?)#?PAL 9R 0E#9)!ARC A0 APPEAR0 ?) T;E A##9)T0,

599B0 A)! RE#9R!0.

???

T;E ;9)9RA5LE #9RT 9- APPEAL0 ERRE! ?) ;9L!?)' T;AT T;E PET?T?9)ER0 ;A(E )9T

0--?#?E)TLC 0;9>$)% T;AT T;E R?';T 9- RE!E4PT?9) >A0 PR9PERLC TRA)0-ERRE! T9 T;E4.

?(

T;E ;9)9RA5LE #9RT 9- APPEAL0 ERRE! ?) RE(ER0?)' T;E !E#?0?9) 9- T;E RE'?9)AL TR?AL

#9RT, 5RA)#; ", A)! 'RA)T?)' T;E >R?T 9- P900E00?9) T9 T;E RE0P9)!E)T.11 $/nderscorin!

supplied %cralawlibrary

O+r R+n)

0ufficiency of Amount Tendered

>e find that neither petitioners, the brothers Teoco, nor respondent, 4etroban, were able to present

sufficient evidence to prove whether the additional loans granted to the spouses #o by 4etroban were

covered by the mortgage agreement between them. The brothers Teoco failed to present any evidence of

the supposed trust receipt agreement between 4etroban and the spouses #o, or an evidence of the

supposed payment by the spouses #o of the other loans e:tended by 4etroban. 4etroban, on the other

hand, merely relied on the stipulation on the mortgage deed that the mortgage was intended to secure the

payment of the same $P",. loan% and tose tat may ereafter +e o+tained .1" ;owever, there was

no mention whatsoever of the mortgage agreement in the succeeding loans entered into by the spouses #o.

>hile we agree with 4etroban that mortgages intended to secure future advancements are valid and legal

contracts,13 entering into such mortgage contracts does not necessarily put within its coverage all loan

agreements that may be subse=uently entered into by the parties. ?f 4etroban wishes to apply the

mortgage contract in order to satisfy loan obligations not stated on the face of such contract, 4etroban

should prove by a preponderance of evidence that such subse=uent obligations are secured by said

mortgage contract and not by any other form of security.

?n order to prevent any in6ustice to, or un6ust enrichment of, any of the parties, this #ourt holds that the

fairest resolution is to allow the brothers Teoco to redeem the foreclosed properties based on the amount for










which it was foreclosed $P"**,//1.1/ plus interest%. This is sub6ect, however, to the right of 4etroban to

foreclose the same property anew in order to satisfy the succeeding loans entered into by the spouses #o, if

they were, indeed, covered by the mortgage contract. The right of 4etroban to foreclose the mortgage

would not be hampered by the transfer of the properties to the brothers Teoco as a result of this decision,

since Article "1"2 of the #ivil #ode provides7

Art. "1"2. The mortgage e:tends to the natural accessions, to the improvements, growing fruits, and the

rents or income not yet received when the obligation becomes due, and to the amount of the indemnity

granted or owing to the proprietor from the insurers of the property mortgaged, or in virtue of e:propriation

for public use, with the declarations, amplifications and limitations established by law, whether the estate

remains in the possession of the mortgagor, or it passes into the hands of a third person. $Empasis


-urther, Article "1" of the #ivil #ode provides7

Art. "1". The creditor may claim from a third person in possession of the mortgaged property, the payment

of the part of the credit secured by the property which said third person possesses, in the terms and with

the formalities which the law establishes.

The mortgage directly and immediately sub6ects the property upon which it is imposed, whoever the

possessor may be to the fulfillment of the obligation for whose security it was constituted. 9therwise stated,

a mortgage creates a real right which is enforceable against the whole world. ;ence, even if the mortgage

property is sold or its possession transferred to another, the property remains sub6ect to the fulfillment of

the obligation for whose security it was constituted.1/

Thus, the redemption by the brothers Teoco shall be without pre6udice to the subse=uent foreclosure of

same properties by 4etroban in order to satisfy other obligations covered by the Real Estate 4ortgage.

Tran4er 4 R)/* 4 Redem-*n

The #A held that the brothers Teoco have not sufficiently shown that the spouses #o<s right of redemption

was properly transferred to them. The assignment of the right of redemption only stated that the spouses

#o are transferring the right of redemption to their parents, brothers, and sisters, but did not specifically

include the brothers Teoco, who are 6ust brothers&in&law of Ramon #o. -urthermore, the spouses #o no

longer reside in the Philippines, and the assignment of the right of redemption was not properly e:ecuted

andFor authenticated.

The alleged transfer of the right of redemption is couched in the following language7

B)9> ALL 4E) 5C T;E0E PRE0E)T07

That we, RA49) #9 and LC!?A #9, of legal ages, for and in consideration of preserving the continuous

ownership and possession of family owned properties, by these presents, hereby cede, transfer and convey

in favor of my -aren*, br*/er and *er, the right to redeem the properties under T#T )os. T&81

and T&8"", located in Patag district, #atbalogan, 0amar, sold by public auction sale on -ebruary 1/, 11

to the 4etropolitan 5an and Trust #ompany.

-urthermore, we waived whatever rights we may have over the properties in favor of the successor&in&

interest including that of transferring the title to whoever may redeem the aforesaid properties.

?) >?T)E00 >;ERE9-, we have hereunto affi:ed our signatures this 1th day of anuary, 1" at

(ancouver, #anada.1*

The brothers Teoco may be brothers&in&law only of Ramon #o, but they are also the brothers of Lydia Teoco

#o, who is actually the registered owner of the properties covered by T#T )os. T&81 and T&8"". #learly,







the brothers Teoco are two of the persons referred to in the above transfer of the right of redemption

e:ecuted by the spouses #o.

Anent the #A observation that the assignment of the right of redemption was not properly e:ecuted andFor

authenticated, ,ope* v. Court of Appeals18 is instructive. ?n ,ope* , this #ourt ruled that a special power of

attorney e:ecuted in a foreign country is generally not admissible in evidence as a public document in our

courts. The #ourt there held7

?s the special power of attorney relied upon by 4rs. Ty a public documentG >e find that it is. ?t has been

notariHed by a notary public or by a competent public official with all the solemnities re=uired by law of a

public document. >hen e:ecuted and acnowledged in the Philippines, such a public document or a certified

true copy thereof is admissible in evidence. ?ts due e:ecution and authentication need not be proven unlie

a private writing.

0ection "*, Rule 13" of the Rules of #ourt provides <

0ec. "*. Proof of pu+lic or official record . & An official record or an entry therein, when admissible for any

purpose, may be evidenced by an official publication thereof or by a copy attested by the officer having the

legal custody of the record, or by his deputy, and accompanied, if the record is not ept in the Philippines,

with a certificate that such officer has the custody. ?f the office in which the record is ept is in a foreign

country, the certificate may be made by a secretary of embassy or legation consul general, consul, vice

consul, or consular agent or by any officer in the foreign service of the Philippines stationed in the foreign

country in which the record is ept, and authenticated by the seal of his office.

-rom the foregoing provision, when the special power of attorney is e:ecuted and acnowledged before a

notary public or other competent official in a foreign country, it cannot be admitted in evidence unless it is

certified as such in accordance with the foregoing provision of the rules by a secretary of embassy or

legation, consul general, consul, vice consul, or consular agent or by any officer in the foreign service of the

Philippines stationed in the foreign country in which the record is ept of said public document and

authenticated by the seal of his office. A city 6udge&notary who notariHed the document, as in this case,

cannot issue such certification.12

(erily, the assignment of right of redemption is not admissible in evidence as a public document in our

courts. ;owever, this does not necessarily mean that such document has no probative value.

There are generally three reasons for the necessity of the presentation of public documents. -irst, public

documents are prima facie evidence of the facts stated in them, as provided for in 0ection "3, Rule 13" of

the Rules of #ourt7

0E#. "3. Pu+lic documents as evidence. & !ocuments consisting of entries in public records made in the

performance of a duty by a public officer are prima facie evidence of the facts therein stated. All other public

documents are evidence, even against a third person, of the fact which gave rise to their e:ecution and of

the date of the latter. $/nderscorin! supplied %cralawlibrary

0econd, the presentation of a public document dispenses with the need to prove a document<s due e:ecution

and authenticity, which is re=uired under 0ection ", Rule 13" of the Rules of #ourt for the admissibility of

private documents offered as authentic7

0E#. ". Proof of private document . & 5efore any private document offered as authentic is received in

evidence, its due e:ecution and authenticity must be proved either7

$a% 5y anyone who saw the document e:ecuted or written@ or

$b% 5y evidence of the genuineness of the signature or handwriting of the maer.







Any other private document need only be identified as that which it is claimed to be. $/nderscorin!


?n the presentation of public documents as evidence, on the other hand, due e:ecution and authenticity are

already presumed7

0E#. "3. Pu+lic documents are evidence. & !ocuments consisting of entries in public records made in theperformance of a duty by a public officer are prima facie evidence of the facts therein stated. All other public

documents are evidence, even against a third person, of the fact 0ic !ave rise to teir e1ecution and of

the date of the latter. $/nderscorin! supplied %cralawlibrary

0E#. 3. Proof of notarial documents. & Every instrument duly acnowledged or proved and certified as

provided by law, may be presented in evidence without further proof, the certificate of acnowledgment

being prima facie evidence of the e:ecution of the instrument or document involved. $/nderscorin!


Third, the law may re=uire that certain transactions appear in public instruments, such as Articles 13*+ and

18"* of the #ivil #ode, which respectively provide7

Art. 13*+. The following must appear in a public document7

$1% Acts and contracts which have for their ob6ect the creation, transmission, modification or e:tinguishment

of real rights over immovable property@ sales of real property or of an interest therein governed by Articles

1/3, )o. ", and 1/*@

$"% The cession, repudiation or renunciation of hereditary rights or of those of the con6ugal partnership of

gains@

$3% The power to administer property, or any other power which has for its ob6ect an act appearing or which

should appear in a public document, or should pre6udice a third person@

$/% The cession of actions or rights proceeding from an act appearing in a public document.

All other contracts where the amount involved e:ceeds five hundred pesos must appear in writing, even a

private one. 5ut sales of goods, chattels or things in action are governed by Articles 1/3, )o. ", and 1/*.

Art. 18"*. An assignment of a credit, right or action shall produce no effect as against third person, unless it

appears in a public instrument, or the instrument is recorded in the Registry of Property in case the

assignment involves real property. $/nderscorin! supplied %cralawlibrary

>ould the e:ercise by the brothers Teoco of the right to redeem the properties in =uestion be precluded by

the fact that the assignment of right of redemption was not contained in a public documentG >e rule in the

negative.

4etroban never challenged either the content, the due e:ecution, or the genuineness of the assignment of

the right of redemption. #onse=uently, 4etroban is deemed to have admitted the same. ;aving impliedlyadmitted the content of the assignment of the right of redemption, there is no necessity for a prima

facie evidence of the facts there stated. ?n the same manner, since 4etroban has impliedly admitted the

due e:ecution and genuineness of the assignment of the right of redemption, a private document evidencing

the same is admissible in evidence.1+

True it is that the #ivil #ode re=uires certain transactions to appear in public documents. ;owever, the

necessity of a public document for contracts which transmit or e:tinguish real rights over immovable

property, as mandated by Article 13*+ of the #ivil #ode, is only for cn5enence@ it is not essential for





validity or enforceability.1 Thus, in Cenido v. Apacionado," this #ourt ruled that the only effect of

noncompliance with the provisions of Article 13*+ of the #ivil #ode is that a party to such a contract

embodied in a private document may be compelled to e:ecute a public document7

Article 13*+ does not re=uire the accomplishment of the acts or contracts in a public instrument in order to

validate the act or contract but only to insure its efficacy, so that after the e:istence of said contract has

been admitted, the party bound may be compelled to e:ecute the proper document. This is clear from

Article 13*2, vi* .7

Art. 13*2. ?f the law re=uires a document or other special form, as in the acts and contracts enumerated in

the following article $Article 13*+%, the contracting parties may compel each other to observe that form,

once the contract has been perfected. This right may be e:ercised simultaneously with the action upon the

contract."1

9n the other hand, Article 18"* of the #ivil #ode provides that IaJn assignment of a credit, right or

action /a -rd+ce n e44ec* a a)an* */rd -ern, unless it appears in a public instrument, or the

instrument is recorded in the Registry of Property in case the assignment involves real property.

?n Co v. Pilippine -ational ank ,"" the #ourt interpreted the phrase effect as against a third person to

be dama!e or prejudice to suc tird person, thus7

: : : ?n ,icauco v. 2le!ario# et al., /3 Phil. */, this #ourt held that whether or not : : : an e:ecution

debtor was legally authoriHed to sell his right of redemption, is a =uestion already decided by this #ourt in

the affirmative in numerous decisions on the precepts of 0ections /83 and /8/ and other sections related

thereto, of the #ode of #ivil Procedure. $The mentioned provisions are carried over in Rule 3 of the

Revised Rules of #ourt.% That the transfers or conveyances in =uestion were not registered is of miniscule

significance, there being no showing that P)5 was damaged or could be damaged by such omission. >hen

#?TA!EL made its tender on 4ay *, 128, P)5 did not =uestion the personality of #?TA!EL at all. ?t is now

too late and purely technical to raise such innocuous failure to comply with Article 18"* of the #ivil #ode. "3

?n Ansaldo v. Court of Appeals,"/ the #ourt held7

?n its !ecision, the -irst !ivision of the Appellate Tribunal, speaing through the Presiding ustice at the

time, ;on. 4agno 0. 'atmaitan, held as regards Arnaldo<s contentions, that <

: : :

"% there was no need that the assignment be in a public document this being re=uired only to produce : : :

effect as against third persons $Article 18"*, #ivil #ode%, i.e., to adversely affect 3rd persons, i.e., a 3rd

person with a right against original creditor, for e:ample, an original creditor of creditor, & against whom

surely such an assignment by his debtor $creditor in the credit assigned% would be pre6udicial, because he,

creditor of assigning creditor, would thus be deprived of an attachable asset of his debtor : : :@

: : :

E:cept for the =uestion of the claimed lac of authority on the part of T-#<s president to e:ecute theassignment of credit in favor of P#?5 improperly raised for the first time on appeal, as observed by the #ourt

of Appeals & the issues raised by Ansaldo were set up by him in, and after analysis and assessment re6ected

by, both the Trial #ourt and the Appellate Tribunal. This court sees no error whatever in the appreciation of

the facts by either #ourt or their application of the relevant law and 6urisprudence to those facts, inclusive of

the =uestion posed anew by Ansaldo relative to the alleged absence of authority on the part of T-#<s

president to assign the corporation<s credit to P#?5."*

?n the case at bar, 4etroban would not be pre6udiced by the assignment by the spouses #o of their right of

redemption in favor of the brothers Teoco. As conceded by 4etroban, the assignees, the brothers Teoco,





















would merely step into the shoes of the assignors, the spouses #o. The brothers Teoco would have to

comply with all the re=uirements imposed by law on the spouses #o. 4etroban would not lose any security

for the satisfaction of any loan obtained from it by the spouses #o. ?n fact, the assignment would even prove

to be beneficial to 4etroban, as it can foreclose on the sub6ect properties anew, provided it proves that the

subse=uent loans entered into by the spouses #o are covered by the mortgage contract.

7EREORE, the decision of the #ourt of Appeals is 'ET "'IDE. The decision of the Regional Trial #ourt in

#atbalogan, 0amar is REIN'T"TED with the following #ODIIC"TION7 the redemption by 5ienvenido #.

Teoco and uan #. Teoco, r. of the properties covered by T#T )os. T&81 and T&8"" shall be without

pre6udice to the subse=uent foreclosure of same properties by 4etropolitan 5an and Trust #ompany to

satisfy other loans covered by the Real Estate 4ortgage.

'O ORDERED.

teoco vs. metro bank

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