Cases for Pledge (CredTrans)

7/26/2019 Cases for Pledge (CredTrans)

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G.R. No. L-51997 September 10, 1981

SPOUSES INOCENCIO H. GONZALES !" ROSARIO ES #UI$EL GONZALES, petitioners,

vs.

%HE GO$ERN&EN% SER$ICE INSURANCE S'S%E& t(r) GENERAL &ANAGER RO&AN A. CRUZ, *R. !" %HE

&ANAGER, RESI+EN%IAL LOANS +EPAR%&EN%, respondents.

&ELENCIO-HERRERA, J.:

We view this Petition as substantially one for mandamus to compel the respondent Government Service Insurance System

(GSIS) to accept 6 interest!bearin" bonds issued by the #and $an% of the Philippines at their par or face value as payment

for petitioners& outstandin" housin" loan.

'n pril , *+6, u"ust *-, *+6 and ovember /, *+6, petitioner!spouses Inocencio 0. Gon1ales and 2osario 3s4uivel

Gon1ales obtained a housin" loan of P5,555.55 from the respondent GSIS. his was to be repayable within fifteen years at

6 interest per annum for the first P75,555.55 and pay for the balance. GSIS accepted as collaterals two () residential lots

located in 8ue1on 9ity, and two () a"ricultural lands located in :aen, ueva 3ci;a. 'f the latter two, one is *ecree o. /, otherwise %nown as the enants& 3mancipation ct, effective 'ctober *, *+/,

the agriculturallands of petitioners were subdivided and awarded by the then >epartment of "rarian 2eform to the tenant!

farmers therein. It was only in =ay of *+/+, however, that payment by the #and $an% became remittable coverin" in

particular, the *

he land, havin" been appraised at P**/,55


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collaterals could be released. hey also as% for actual, moral and eAemplary dama"es, aside from attorney&s fees and costs

of suit.

he issue is whether or not under the provisions of section 5, 2epublic ct o. 7--, as amended, the GSIS may be

compelled to accept #and $an% bonds at face value in payment of outstandin" loans secured partially by lands ta%en by the

#and $an% under 'peration #and ransfer.

Section 5 of 2epublic ct o. 7--, otherwise %nown as Bhe 9ode of "rarian 2eforms of the Philippines,B as amended

by Presidential >ecree o.

the #and $an% in the case of obli"ations secured by liens or encumbrances in favor of private parties or

institutions. (3mphasis supplied)

9learly, when lands with eAistin" encumbrances are ac4uired under the land reform pro"ram, the land owner is paid the net

value of the land as determined under Presidential >ecree o. /, minus the outstandin" balance of his obli"ation to a

"overnment lendin" institution, which is to be paid directly to the latter by the #and $an% in #and $an% bonds, eAistin"

charters of those "overnment lendin" institutions to the contrary notwithstandin". he insistence of the GSIS to discount

those bonds (notwithstandin" the alle"ed BreasonablenessB of the * discount rate) is to defeat that very provision aimed

not only to cushion the impact of dispossession on the land owner but also to benefit the tenant so that the latter may obtain

title to the land free from any hen or encumbrance.

rue, the statute does not eAplicitly provide that #and $an% bonds shall be accepted at their face value. here can be no

4uestion, however, that such is the intendment of the law particularly in the absence of any provision eApressly permittin"

discountin", as differentiated from 2epublic ct o. 75-, or the $ac%pay #aw, as amended by 2epublic cts os. 55 and

+/, which eApressly allows it.

#and $an% bonds are certificates of indebtedness, approved by the =onetary $oard of the 9entral $an%, fully taA!eAempt

both as to principal and income, and bear interest at the rate of 6 per annum redeemable at the option of the #and $an% at

or before maturity, which in no case shall eAceed < years. hey are fully ne"otiable and unconditionally "uaranteed by the

Government of the 2epublic of the Philippines.

hese bonds are deemed contracts and the obli"ations resultin" therefrom fall within the purview of the non!impairment

clause of the 9onstitution, and any impairment thereof may ta%e any encroachment in any respect upon the obli"ation andcannot be permitted. hus, the value of these bonds cannot be diminished by any direct or indirect act,

particularly, since said bonds are fully "uaranteed by the Govemment of the 2epublic of the Philippines.

hey are issued not in the open mar%et nor for the primary purpose of raisin" funds or poolin" financial

resources but in the captive mar%et of landowners and to facilitate the speedy transfer of lands to the

tenant!farmers in support of the land reform pro"ram of the Government. hey are not ordinary

commercial paper in that sense sub;ect to discountin".


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he GSIS fears disastrous conse4uences on its actuarial solvency and capacity to pay retirement, insurance and other

claims of its members if it were to accept the bonds at par or face value. Whatever unfavorable results the acceptance may

have on its finances, the effects must be deemed to have been intended 5by Presidential >ecree o. < *,

particularly, when it provided for the payment in bonds to "overnment lendin" institutions their BeAistin"

charters to the contrary notwithstandin".B If ini4uitous to said institutions, it remains now with the

le"islative branch to ma%e the necessary revisions if desired. he traditional role assi"ned to the :udiciary

is to implement and not to thwart fundamental policy "oals. /

lthou"h eAecutive construction is not necessarily bindin" upon the 9ourts, 7apropos to mention here is 'pinion o.

*-*, series of *+/6, of then Secretary of :ustice Dicente bad Santos on substantially the same facts as

those in the case at bar, wherein he opined that there is le"al ;ustification for re4uirin" the acceptance by

the Government lendin" institutions of #and $an% bonds under the circumstances. 8

It should also be borne in mind that 2epublic ct o. 7--, then %nown as the "ricultural #and 2eform 9ode, is a social

le"islation whose implementation has been made more imperative by Section 6, rticle II of the *+/7 9onstitution. 9It is

desi"ned to promote economic and social stability. It must be interpreted liberally to "ive full force and

effect to its clear intent. 10his liberality in interpretation, however, should not accrue solely in favor of

actual timers of the land, the tenant!farmers, but should eAtend to landowners as well, especially those

ownin" Bsmall landholdin"sB, by which is meant landholdin"s of - hectares and less than -

hectares. 11hese landowners constitute part of the economic middle class which the Government is

tryin" to build. hey deserve as much consideration as the tenants themselves in order not to create an

economic dislocation, were tenants solely favored but this particular "roup of landowners impoverished. 1

In support of its stand, the GSIS further advances the ratiocination that since the a"ricultural land of *< hectares sub;ected

to land reform is only one of the securities for petitioners& outstandin" obli"ation with the GSIS, the #and $an% bond

payments should be applied at par value only to that portion of the loan secured by the land covered by 'peration #and

ransfer. Stated otherwise, the GSIS is not compelled to accept #and $an% bonds for the dischar"e of eAistin" liens or

encumbrances on lands "iven as security to the GSIS but not ac4uired by the #and $an% under 'peration #and ransfer.

he obli"ation of the GSIS, it is claimed, is Blimited to acceptance of #and $an% bonds to pay the loan correspondin" to

the loan valueof the ac4uired land, and nothin" more.B

We find the fore"oin" asseverations self!servin" and in contravention of Presidential >ecree o.


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other lands not so ac4uired, would not only run counter to the principle of indivisibility of a mort"a"e and contravene the

clear mandate of P> o. ecision*dated ovember *-, 555 of the 9ourt of ppeals

(9) in 9!G.2. SP o. a"upan 9ity properties.6'n u"ust 7, *++, the 9ity Sheriff issued a otice of

3Atra!:udicial Sale schedulin" the auction sale on September *5, *++ at *5?55 oFcloc% in the mornin" or soon thereafter in

front of the :ustice 0all, $onuan, ondali"an, >a"upan 9ity./

t the auction sale on September *5, *++, respondent emer"ed as the hi"hest bidder.'n September *-, *++, a

9ertificate of Sale was issued in favor of respondent.+'n 'ctober *, *++, the sale was re"istered with the 2e"istry of

>eeds of >a"upan 9ity.

bout two months before the eApiration of the redemption period, or on u"ust 5, *+++, respondent filed an 3A!Parte

Petition for Writ of Possession before the 2e"ional rial 9ourt of >a"upan 9ity, doc%eted as Special Proceedin" o. ++!

55+!> and raffled to $ranch -7 (29 $ranch -7).*50earin" was conducted on September *-, *+++ and respondent

presented its evidence eA!parte.**he testimony of 2odante =anuel was admitted eA!parte and thereafter the petition was

deemed submitted for resolution.

'n September 75, *+++, petitioners filed a =otion to >ismiss and to Stri%e 'ut estimony of 2odante =anuel statin" that the

9ertificate of Sale dated September *-, *++ is void because respondent violated rticle 5+ of the 9ivil 9ode on the

indivisibility of the mort"a"ed by conductin" two separate foreclosure proceedin"s on the mort"a"e properties in >a"upan

9ity and 8ue1on 9ity and indicatin" in the two notices of eAtra!;udicial sale that petitionersF obli"ation is P*5,-7/,5* and raffled to $ranch -- (29 $ranch --).
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'n Eebruary *-, 555, 29 $ranch -7 denied petitionersF =otion to >ismiss and to Stri%e 'ut estimony of 2odante

=anuel, rulin" that the filin" of a motion to dismiss is not allowed in petitions for issuance of writ of possession under Section

/ of ct o. 7*7 in 29 $ranch -- despite full %nowled"e of the pendency of

Spec. Proc. o. ++!55+!> in 29 $ranch -7@ that since the one!year period of redemption has already lapsed, the

issuance of a writ of possession in favor of respondent becomes a ministerial duty of the trial court@ that the issues in 9ivil

9ase o. ++!57*6+!> are not pre;udicial 4uestions to Spec. Proc. o. ++!55+!> because? (a) the special proceedin" is

already fait accompli, (b) 9ivil 9ase o. ++!57*6+!> is deemed not filed for bein" contrary to Section of ct o. 7*7as further amended on u"ust /, 55*.

s to the second issue, respondent maintains that there is no pre;udicial 4uestion between 9ivil 9ase o. ++!57*6+!> and

Spec. Proc. o. ++!55+!> since the pendency of a civil action 4uestionin" the validity of the mort"a"e and the eAtra!

;udicial foreclosure thereof does not bar the issuance of a writ of possession. 2espondent also insists that petitioners should
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have filed their Petition to nnul the 9ertificate of Sale in the same case where possession is bein" sou"ht, that is, in Spec.

Proc. o. ++!55+!>, and not in a separate proceedin" (9ivil 9ase o. ++!5*76+!>) because the venue of the action to

4uestion the validity of the foreclosure is not discretionary since the use of the word BmayB in Section of ct o. 7*7, the writ of possession must still be issued

because issuance of the writ in favor of the purchaser is a ministerial act of the trial court and the one!year period of

redemption has already lapsed.

nent the first issue, the 9ourt finds that petitioners have a mista%en notion that the indivisibility of a real estate mort"a"e

relates to the venue of eAtra!;udicial foreclosure proceedin"s. he rule on indivisibility of a real estate mort"a"e is provided

for in rticle 5+ of the 9ivil 9ode, which provides?

rt. 5+. pled"e or mort"a"e is indivisible, even thou"h the debt may be divided amon" the successors in interest of the

debtor or of the creditor.

herefore, the debtorFs heir who has paid a part of the debt cannot as% for the proportionate eAtin"uishment of the pled"e or

mort"a"e as the debt is not completely satisfied.

either can the creditorFs heir who received his share of the debt return the pled"e or cancel the mort"a"e, to the pre;udice

of the other heirs who have not been paid.

Erom these provisions is eAcepted the case in which, there bein" several thin"s "iven in mort"a"e or pled"e, each one of

them "uarantees only a determinate portion of the credit.

he debtor, in this case, shall have a ri"ht to the eAtin"uishment of the pled"e or mort"a"e as the portion of the debt for

which each thin" is specially answerable is satisfied.

his rule presupposes several heirs of the debtor or creditor

collectin" 9ler% of 9ourt shall, apart from the official receipt of the fees, issue a certificate of payment indicatin" the amount

of indebtedness, the filin" fees collected, the mort"a"es sou"ht to be foreclosed, the real estates andCor chattels mort"a"ed

and their respective locations, 3(4( ert44te 6( 6ere t(e p)rpo6e o (4! t(e pp4t4o! "o:ete" 34t( t(e
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Cer:6 o Co)rt o t(e pe6 3(ere t(e ot(er propert4e6 re ote" !" o o34! t(e e;tra"upan 9ity and 8ue1on 9ity are made to answer for the entire debt

of P*5,-7/,5*


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nder the provision above cited, the mort"a"or may file a petition to set aside the sale and for the cancellation of a writ of

possession with the trial court which issued the writ of possession within 75 days after the purchaser mort"a"ee was "iven

possession. It provides the plain, speedy, and ade4uate remedy in opposin" the issuance of a writ of possession. 7


9/12

GANCA'CO, J.:

his petition for review presents two () main issues, to wit? (*) 9an a plaintiff in a case, who had previously assi"ned in

favor of his creditor his liti"ated credit in said case, by a deed of assi"nment which was duly submitted to the court, validly

enter into a compromise a"reement thereafter releasin" the defendant therein from his claim without notice to his assi"neeMand () Will such previous %nowled"e on the part of the defendant of the assi"nment made by the plaintiff estop said

defendant from invo%in" said compromise as a "round for dismissal of the action a"ainst himM

he present case stemmed from 9ivil 9ase o. 8!757 1entitled Blfonso an vs. 9iriaco $. =endo1a,B an action

for the collection of a sum of money representin" the value of two () chec%s which plaintiff an claims to

have been delivered to him by defendant =endo1a, private respondent herein, by way of "uaranty with a

commission.

he record discloses that the $ernal spousesare en"a"ed in the manufacture of embroidery, "arments and

cotton materials. Sometime in September *+67, 9.$.=. Products, with =endo1a as president, offered to

sell to the $ernals teAtile cotton materials and, for this purpose, =endo1a introduced the $ernals to

lfonso an. hus, the $ernals purchased on credit from an some cotton materials worth P 5,/+6.6,payment of which was "uaranteed by =endo1a. hereupon, an delivered the said cotton materials to the

$ernals. In view of the said arran"ement, on ovember *+67, 9.$.=. Products, throu"h =endo1a, as%ed

and received from the $ernals P$9 9hec% o. 66-5< for P 5,/+6.6 dated Eebruary 5, *+6- with

the understandin" that the said chec% will remain in the possession of =endo1a until the cotton materials

are finally manufactured into "arments after which time =endo1a will sell the finished products for the

$ernals. =eanwhile, the said chec% matured without havin" been cashed and =endo1a demanded the

issuance of another chec% in the same amount without a date.

'n the other hand, on Eebruary , *+6-, defendant =endo1a issued two () P$ chec%s 5in favor of an in the total

amount of P 5,/+6.6. 0e informed the $ernals of the same and told them that they are indebted to him

and as%ed the latter to si"n an instrument whereby =endo1a assi"ned the said amount to Insular

Products Inc. an had the two chec%s issued by =endo1a discounted in a ban%. 0owever, the said chec%s

were later returned to an with the words stamped Bstop paymentB which appears to have been ordered

by =endo1a for failure of the $ernals to deposit sufficient funds for the chec% that the $ernals issued in

favor of =endo1a.

0ence, as adverted to above, an brou"ht an action a"ainst =endo1a doc%eted as 9ivil 9ase o. 8!757 /while the

$ernals brou"ht an action for interpleader doc%eted as 9ivil 9ase o. 33> 'E SSIG=3

I, #E'S' , of a"e, 9hinese, married to H 90H , residin" at o. 6 Nanlaon, 8ue1on 9ity,

doin" business under the name and style # 9'==329I# by way of securin" or "uaranteein" my

obli"ation to =r. G3'2G3 #I', S2., do by these presents 93>3, SSIG, 2SE32 >

9'D3H unto the said =r. G3'2G3 #I', S2., my claim a"ainst 9.$.=. Products, Inc., personally

"uaranteed by =r. 9iriaco $. =endo1a, in the amount of 3i"hty!housand Seven 0undred inety SiA

Pesos and SiAty!two centavos (P 5,/+6.6) the balance of which, in principal, and eAcludin", interests,

costs, dama"es and attorney&s fees now stands at P /6,555.55, P -,/+6.6, havin" already been

received by the assi"nor on >ecember 7, *+6


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()*(+,9.E.I., =anila, authori1in" lfonso an to withdraw the amount of P -,/+6.6 then on deposit with

the court. ll ri"hts, and interests in said net amount, plus interests and costs, and less attorney&s fees, in

case the amount allowed therefor be less than the amounts claimed in the relief in 9ivil

9ase ()*(+(9.E.I., =anila) and 8!


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Such alienation is sub;ect to the remedies of #itton under rticle 6 of the 9ivil 9ode, whereby the waiver,

release, or 4uit!claim made by plaintiff!appellee lfonso an in favor of defendant!appellant 9iriaco $.

=endo1a, if proven pre;udicial to Geor"e #it ton, Sr. as assi"nee under the deed of assi"nment, may

entitle #itton to pursue his remedies a"ainst an.

he alienation of a liti"atious credit is further sub;ect to the debtor&s ri"ht of redemption under rticle *67-

of the 9ivil 9ode.

s mentioned earlier, the assi"nor an died pendin" resolution of the motion for reconsideration. he estate of Geor"e

#itton, Sr., petitioner herein, as represented by :ames #itton, son of Geor"e #itton, Sr. and administrator15of the former&s

estate, is now appealin" the said resolution to this 9ourt as assi"nee of the amount sued in 9ivil 9ase

o. 8!757, in relation to 9ivil 9ase o.


12/12

indiscriminately dispose of the thin" or the ri"ht "iven as security. he 9ourt rules that the said provision

should be read in consonance with rticle 5+/ of the same code. lthou"h the pled"ee or the

assi"nee, #itton, Sr. did not ipso factobecome the creditor of private respondent =endo1a, the pled"e

bein" valid, the incorporeal ri"ht assi"ned by an in favor of the former can only be alienated by the latter

with due notice to and consent of #itton, Sr. or his duly authori1ed representative. o allow the assi"nor to

dispose of or alienate the security without notice and consent of the assi"nee will render nu"atory the

very purpose of a pled"e or an assi"nment of credit.

=oreover, under rticle *67-, the debtor has a correspondin" obli"ation to reimburse the assi"nee, #itton,

Sr. for the price he paid or for the value "iven as consideration for the deed of assi"nment. Eailin" in this,

the alienation of the liti"ated credit made by an in favor of private respondent by way of a compromise

a"reement does not bind the assi"nee, petitioner herein.

Indeed, a painsta%in" review of the record of the case reveals that private respondent has, from the very be"innin", been

fully aware of the deed of assi"nment eAecuted by an in favor of #itton, Sr. as said deed was duly submitted to $ranch OI of

the then 9ourt of Eirst Instance of =anila in 9ivil 9ase o. 3, the said compromise a"reement bein" null and void, and a new one is hereby rendered reinstatin" its decision

dated :anuary /, *+//, affirmin" in toto the decision of the lower court. his decision is immediately eAecutory. o motion

for eAtension of time to file a motion for reconsideration will be "ranted.

S' '2>323>.

Cases for Pledge (CredTrans)

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