Case Digest: BERGADO v. THE COURT OF APPEALS, HON. CARLOTA P. VALENZUELA

SPOUSES ISABELO BERGADO and JUANA HERMINIA BERGARDO v. THE COURT OF APPEALS, HON. CARLOTA P. VALENZUELA, in her capacity as the Liquidator of Banco Filipino Savings and Mortgage Bank

463 SCRA 504 (2005)

A purchaser is necessarily bound to acknowledge and respect the encumbrance constituted on the purchased thing.

Manila International Construction Corporation (MICC) secured a loan of 1,885,000.00 to Banco Filipino Savings and Mortgage Bank (Banco Filipino), by mortgaging its 21 properties including its improvements. The same was registered in the Registry of Deeds.

Subsequently, MICC sold part of the mortgage land to Spouses Rodrigo and Sonia Paderes, then another part to Spouses Isabelo and Juana Bergado. For failure of MICC to settle its obligation, Banco Filipino filed a petition for extra-judicial foreclosure of MICC‘s mortgage. Banco Filipino won the bidding. Consequently, a certificate of sale was issued and the same was registered with the Registry of Deeds.

Banco Filipino thereafter filed before the Regional Trial Court Makati a petition for issuance of writ of possession. The RTC granted the petition. Pursuant to the Writ of Possession, Spouses Bergado et al. were ordered to vacate the premises. However, they filed an action to Court of Appeals (CA) questioning the validity of writ of possession. CA rendered decision against the Bergado et al. and upheld the writ of possession. Hence, this petition.

ISSUE:

Whether or not the Bergado et al. have superior rights over Banco Filipino

HELD:

That Bergado et al.’s purchased their properties from MICC in good faith is of no moment. The purchases took place after MICC‘s mortgage to Banco Filipino had been registered in accordance with Article 2125 of the Civil Code and the provisions of P.D. 1529 (PROPERTY REGISTRY DECREE). As such, under Articles 1312 and 2126 of the Civil Code, a real right or lien in favor of Banco Filipino had already been established, subsisting over the properties until the discharge of the principal obligation, whoever the possessor(s) of the land might be.

Respecting Bergado et al.‘s claim that their houses should have been excluded from the auction sale of the mortgaged properties, it does not lie. The provision of Article 448 of the Civil Code, cited by Bergado et al, which pertain to those who, in good faith, mistakenly build, plant or sow on the land of another, has no application to the case at bar.

Here, the record clearly shows that Bergado et al purchased their respective houses from MICC, as evidenced by the Addendum to Deed of Sale dated October 1, 1983 and the Deed of Absolute Sale dated January 9, 1984.

Being improvements on the subject properties constructed by mortgagor MICC, there is no question that they were also covered by MICC‘s real estate mortgage following the terms of its contract with Banco Filipino and Article 2127 of the Civil Code the mortgage extends 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 expropriation 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.

Being improvements on the subject properties constructed by mortgagor MICC, there is no question that they were also covered by MICC‘s real estate mortgage following the terms of its contract with Banco Filipino and Article 2127 of the Civil Code the mortgage extends 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 expropriation 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.

The established doctrine that the issuance of a writ of possession is a ministerial function whereby the issuing court exercises neither discretion nor judgment bears reiterating. The writ issues as a matter of course upon the filing of the proper motion and, if filed before the lapse of the redemption period, the approval of the corresponding bond.