GR 194014; (September, 2012) (Digest)
G.R. No. 194014; September 12, 2012
PHILIPPINE NATIONAL BANK, Petitioner, vs. SPOUSES ALEJANDRO and MYRNA REBLANDO, Respondents.
FACTS
On January 28, 1992, respondents Spouses Reblando obtained a loan from petitioner Philippine National Bank (PNB) secured by a real estate mortgage (REM). The mortgage contract, consisting of two pages and a supplemental page, covered two properties: a parcel of land covered by TCT No. T-40839 and another designated as Cadastral Lot No. 10, covered by Tax Declaration (TD) No. 59006. The loan was later increased via amendments executed in 1995. The Reblandos defaulted, prompting PNB to extrajudicially foreclose the mortgage on both properties. After the foreclosure sale and the lapse of the redemption period, PNB consolidated its ownership.
The Reblandos filed a complaint seeking the declaration of nullity of the mortgage over Lot No. 10. They argued that at the time of the 1995 amendments, they were not the owners of Lot No. 10, as they only had a Contract to Sell with the Bliss Development Corporation dated July 1995. They claimed PNB required them to post Lot No. 10 as additional collateral. PNB countered that Lot No. 10 was already validly mortgaged under the original 1992 REM, as evidenced by the supplemental page describing the lot, and that the Reblandos were estopped from denying its inclusion.
ISSUE
Whether the real estate mortgage constituted over Lot No. 10 is valid.
RULING
The Supreme Court ruled in favor of PNB and declared the mortgage over Lot No. 10 valid. The Court found that the Reblandos validly mortgaged Lot No. 10 in the original 1992 REM, not merely in the 1995 amendments. The supplemental page of the 1992 contract, which the Reblandos deliberately omitted from their complaint, contained a clear description of Lot No. 10. This description matched the details in TD No. 59006, which was already in Alejandro Reblando’s name since 1990. The Court applied the “best evidence rule,” giving primacy to the original written agreement which conclusively showed the lot’s inclusion from the outset.
The legal logic rests on the principle that a mortgage can be constituted on one’s possessory rights and interest in a property, not requiring full ownership at the time of constitution. The Reblandos, being in possession under a claim of ownership evidenced by the tax declaration in Alejandro’s name, had a mortgageable interest in 1992. Their subsequent execution of a Contract to Sell in 1995 did not retroactively invalidate the earlier, valid mortgage. The Court also noted the Reblandos’ estoppel, as they enjoyed the loan benefits and only questioned the collateral after default. The foreclosure was thus valid as it proceeded on a right duly constituted in 1992.