Case

digests for midterms

Special Commercial Law


1. Cadiz v CA
GR No. 153784
October 25, 2005

FACTS:
Cadiz and Gloria were employees of Philippine Commercial International Bank. They
verbally adxmitted their participation in a scheme to divert funds intended for other
accounts. After investigation, a show-cause memoranda were served on them
requiring them to explain why no disciplinary action should be taken against them.
Not satisfied with their explanation, the bank dismissed the petitioners.

Petitioners then lodged a complaint for illegal dismissal before the Labor Arbiter.

DECISION OF LOWER COURTS:
(1) Labor Arbiter: ordered reinstatement and payment of backwages since the
petitioners were adjudged to be illegally dismissed
Also held that the petitioners acts in frequently coding several deposit slips as
1511 (immediately withdrawable) are mere procedural inadequacies, with the
fault attributable to respondent bank for its laxity
(2) NLRC: departed from LA and concluded that petitioners were dismissed for just
cause
(3) CA: affirmed NLRC.

Hence, the current petition for review on certiorari.

ISSUE: Whether petitioners were validly dismissed

RULING:
YES, they were validly dismissed.
Miscoding of deposit slips cannot be downplayed as mere procedural
inadequacies.
Whatever liability or responsibility was expected of the bank stands as an issue
separate from the liability of the recreant bank employees. Even assuming that the
bank observed less than ideal controls over the security of its operations, such laxity
does not serve as carte blanche signal for the bank employees to take advantage of
safeguard control lapses and perpetrate chicanery on their employer
Also, respondent bank complied with the two-notice rule prescribed by the Labor
Code.
Even if respondent bank did not suffer a pecuniary loss, petitioners are not relieved
from liability. Lack of material or pecuniary damages would not in any way mitigate
a persons liability nor obliterate the loss of trust and confidence.

Banks must not only exercise high standards of integrity and performance, it
must also ensure that its employees do likewise because this is the only way to
ensure that a bank will comply with its fiduciary duty.

2. Ramirez v CA
GR No. 98147, March 5, 1993

FACTS:

On February 16, 1976, PNB granted a loan/credit accommodation in favor of Ronnie
Garcia amounting to 30,000. This is secured by a first mortgage over a parcel of
land. The deed of real estate mortgage was registered on the same year.

On August 18, 1977, Garcia executed a deed of second mortgage over the same
property in favor of Teodoro Marmeto for an in consideration of 100,000. The
encumbrance was likewise recorded in the title on 1978.

PNB extrajudicially foreclosed the mortgage upon failure of Garcia to comply with
his obligation. A certificate of sale was issued on November 8, 1977.

The second mortgage was also extrajudicially foreclosed and Marmeto was likewise
issued a certificate of sale on June 28, 1978.

Garcia executed a Waiver and Renunciation of Rights, with respect to the first
mortgage, particularly his right of redemption of the property in favor of his father
Jesus Garcia who assigned his right to Nimfa Ramirez, herein petitioner. None of the
assignments was registered with the Register of Deeds.

Nimfa Ramirez paid the total redemption price to PNB which accepted it.

Since no redemption had been made as to the second mortgage, Marmeto filed with
the RTC a petition for consolidation of ownership. Ramirez filed a third-
party/adverse claim over the property.

DECISION OF LOWER COURTS:
(1) RTC: directed consolidation of ownership.
(2) CA: dismissed Ramirezs petition, alleging that petitioner failed to exercise her
right to redeem within the period granted by law

Hence, the current petition.

ISSUES:
(1) Whether Ramirez had acquired any right by virtue of her having redeemed the
property in question
(2) What will be the effect of the redemption by Ramirez on Marmeto?

RULING:
(1) YES, Ramirez validly acquired title to the subject property by virtue of the
redemption from PNB.

Contrary to CAs ruling, her redemption is validly exercised. PNB accepted the
redemption price from petitioner after 1 year period had expired. By accepting the
redemption price after the statutory period for redemption had expired, PNB is
considered to have waived the 1 year period within which Ramirez could redeem
the property. There is nothing in the law which prevents such waiver

(2) Second mortgagee merely takes what is called an equity of redemption and
thus a second mortgagee has to wait until after the debtors obligation to the first
mortgagee has been fully settler. The rights of a second mortgagee are strictly
subordinate to the superior lien of the first mortgagee.

The recording of the deeds of assignment of the right to redeem in the first
mortgage would be immaterial since it cannot be denied that the foreclosure was
recorded and Marmeto is charged with knowledge of his right to redeem. Having
failed to redeem the property, he cannot now allege the property would be

consolidated in his name.

This however is without prejudice to his right to payment from his debtor-obligor
(Ronnie Garcia) of the debt secured by the second mortgage.


3. Huerta Alba Resort Inc. v CA
GR No. 128567, September 1, 2000

FACTS:
Syndicated Management Group, Inc. (SMGI), as mortgagee-assignee, filed a
complaint before the RTC for foreclosure of 4 parcels of land mortgaged by Huerta
Alba Resort to Intercon Fund Resource (Intercon).

DECISION OF LOWER COURTS:
(a) RTC granted the complaint
(b) CA dismissed appeal due to late payment of docket fees
(c) Supreme Court dismissed petition for certiorari.

SMGI then filed with the trial court of origin a motion for execution of decision.
Thus, a writ of execution was issued. Petitioner filed an urgent motion to quash and
set aside the writ of execution. The dispute is principally is as to when the 150
period within which Huerta Alba may exercise its equity of redemption be counted.

DECISIONS:
(a) RTC denied to urgent motion to quash.
Meanwhile, the auction sale proceeded with SMGI as the sole bidder.
(b) CA held that the 150 periods should be computed from the date petitioner was
notified of the Entry of Judgment but the same period has expired already.

Huerta Alba filed with the RTC a motion for clarification seeking clarification
whether or not the 12 month period of redemption for ordinary execution should
apply.

DECISIONS:
(1) RTC: redemption should be governed by the rule on the sale of judicially
foreclosed property under Rule 68 of the Rules of Court

Huerta Alba again sought clarification with CA of the date of the commencement of
the 1 year period for the redemption of the properties

(2) CA: Foreclosure in this case is judicial and as such mortgagor has only the equity
and not the right or redemption. Even if under section 78 of RA 337 (General
Banking Act), a mortgagor of a bank, banking or credit institution, whether the
foreclosure was done judicially or extrajudicially, has a period of 1 year from the
auction sale within which to redeem the foreclosed property, it was never raised
whether SMGI is a bank or credit institution.

Upon motion for a writ of possession by SMGI, Huerta Alba then filed in opposition a
motion to compel respondent to accept redemption, alleging for the first time his
right under RA 337, theorizing that the original mortgagee being a credit institution,
its assignment of mortgage credit did not remove the coverage of RA 337

DECISIONS:
(1) RTC: denied SMGIs writ of possession.
(2) CA: set aside the RTCs decision.

Hence, the present petition.

ISSUE:
Whether or not Huerta Alba has the one year right of redemption of subject
properties under Section 78 of RA 337

RULING:
YES, however, this was not seasonably filed.

The claim that it is entitled to the beneficial provisions of RA 337 since SMGIs
predecessor-in-interest is a credit institution is in a nature of a compulsory
counterclaim which should have been averred in its answer to the complaint for
judicial foreclosure.

The failure of petitioner to seasonably assert its right under RA 337 precludes it
from so doing at this late stage case. Estoppel may be successfully invoked if the
party fails to raise the question in the early stages in proceeding.

The sale of the properties, as confirmed by the court, operated to divest Huerta Alba
of its right of redemption. There then existed only what is known as equity of
redemption, which is simply the right of the petitioner to extinguish the mortgage
and retain ownership of the property by paying the secured debt within the 90 day
period after the judgment became final. However, redemption can no longer be
effected since petitioner failed to exercise its equity of redemption within the
prescribed period.

The equity of redemption is, to be sure, different from and should not be confused
with the right of redemption.

RIGHT OF REDEMPTION
General Rule:
The right of redemption in relation to a mortgage understood in the sense of a
prerogative to re-acquire mortgaged property after registration of the foreclosure
sale exists only in the case of the extrajudicial foreclosure of the mortgage.

Exception:
No such right is recognized in a judicial foreclosure except only where the
mortgagee is the Philippine National Bank or a bank or banking institution.

I. Extrajudicial foreclosure right of redemption
Where a mortgage is foreclosed extrajudicially, Act 3135 grants to the mortgagor
the right of redemption within one (1) year from the registration of the sheriffs
certificate of foreclosure sale.

II. Judicial foreclosure
Where the foreclosure is judicially effected, however, no equivalent right of
redemption exists. The law declares that a judicial foreclosure sale, when
confirmed by an order of the court, x x shall operate to divest the rights of all the
parties to the action and to vest their rights in the purchaser, subject to such rights
of redemption a may be allowed by law.

Such rights exceptionally allowed by law (i.e. even after confirmation by an order
of the court) are those granted by the charter of the Philippine National Bank (Acts
No. 2747 and 2938), and the General Banking Act (R.A. 337). These laws confer on
the mortgagor, his successors in interest or any judgment creditor of the
mortgagor, the right to redeem the property sold on foreclosure after
confirmation by the court of the foreclosure sale which may be exercised
within a period of one (1) year, counted from the date of registration of the
certificate of sale in the Registry Property.

But, to repeat, no such right of redemption exists in case of judicial foreclosure of a
mortgage if the mortgagee is not the PNB or a bank or banking institution. In such a
case, the foreclosure sale, when confirmed by an order of the court. x x shall operate
to divest the rights of all the parties to the action and to vest their rights in the
purchaser.

EQUITY OF REDEMPTION
There then exists only what is known as the equity of redemption. This is simply the
right of the defendant mortgagor to extinguish the mortgage and retain ownership
of the property by paying the secured debt:

1. within the 90-day period after the judgment becomes final, in accordance
with Rule 68, or
2. even after judgment becomes final, in accordance with Rule 68, or
3. even after the foreclosure sale but prior to its confirmation.

Section 2, Rule 68 provides that xx If upon the trial xx the court shall find the facts
set forth in the complaint to be true, it shall ascertain the amount due to the plaintiff
upon the mortgage debt or obligation, including interest and costs, and shall render
judgment for the sum so found due and order the same to be paid into court within a
period of not less than ninety (90) days from the date of the service of such order, and
that in default of such payment the property be sold to realize the mortgage debt and
costs. This is the mortgagors equity (not right) of redemption which, as above
stated, may be exercised by him even beyond the 90-day period from the date of
service of the order, and even after the foreclosure sale itself, provided it be
before the order of confirmation of the sale. After such order of confirmation, no
redemption can be effected any longer.