G.R. NO. 145441 - PHILIPPINE SAVINGS BANK, VS. SPS. RODOLFO C. MAÑALAC, JR. AND ROSITA P. MAÑALAC.

Ruling

Accordingly, Mañalac signed another promissory note denominated as LC No. 77-232 for P1,550,000.00 payable to the order of PSBank with interest rate of 19% annum. [4] To secure the payment of the restructured loan, Mañalac executed a Real Estate Mortgage dated October 13, 1977 in favor of PSBank over the same aforementioned 8 real properties. On March 5, 1979, Mañalac and spouses Igmidio and Dolores Galicia, with the prior consent of PSBank, [5] entered into a Deed of Sale with Assumption of Mortgage involving 3 of the mortgaged properties covered by TCT Nos. N-6162 (now N-36192), N-8552 (now TCT No. N-36193), and 469843 (now TCT No. N-36194). The Deed of Sale with Assumption of Mortgage contained the following stipulations: The VENDEES shall assume as they hereby assume as part of the purchase price, the amount of P550,000.00, representing the portion of the mortgaged obligation of the VENDORS in favor of the Philippine Savings Bank, which is secured by that Real Estate Mortgage contract mentioned in the Second Whereas Clause hereof covering among others the above-described parcels of land under the same terms and conditions as originally constituted. The VENDORS hereby warrant valid title to, and peaceful possession of the property herein sold subject to the encumbrance hereinbefore mentioned. This instrument shall be subject to the Consent of the Philippine Savings Bank. All expenses relative to this instrument including documentary stamps, registration fees, transfer taxes and other charges shall be for the account of the VENDEES. [6] Thereafter, the 3 parcels of land purchased by the Galicias, together with another property, were in turn mortgaged by them to secure a P2,600,000.00 loan which they obtained from PSBank. Specifically, the mortgaged properties include TCT Nos. N-36192, N-36193, N-36194, (formerly TCT Nos. N-6162, N-8552 and 469843, respectively) and 75584. [7] This loan is evidenced by Promissory Note LC-79-36. [8] On March 12, 1979, Mañalac paid PSBank P919,698.11 which corresponds to the value of the parcels of land covered by TCT Nos. N-36192, N-36193, and N-36194, now registered in the name of the spouses Galicia. Accordingly, PSBank executed a partial release of the real estate mortgage covered by the aforesaid properties. [9] On August 25, 1981, the spouses Galicia obtained a second loan from PSBank in the amount of P3,250,000.00 for which they executed Promissory Note LC No. 81-108. They also executed a Real Estate Mortgage in favor of the bank covering TCT Nos. N-36192, N-36193, N-36194, 75584 and 87690. [10] Since Mañalac defaulted again in the payment of their loan installments and despite repeated demands still failed to pay their past due obligation which now amounted to P1,804,241.76, PSBank filed with the Office of the Provincial Sheriff of Rizal a petition for extrajudicial foreclosure of their 5 remaining mortgaged properties, specifically those covered by TCT Nos. 417012, N-1347, N-1348, N-3267, and 343593. Desp