G.R. No. 195229. October 9, 2012

FACTS:

Antipolo (candidate for Mayorality) filed a petition under Section 78 of the Omnibus Election Code to disqualify Lonzanida and to deny due course or to cancel certificate of candidacy on the ground that Lonzanida was elected, and had served, as mayor of San Antonio, Zambales for four (3) consecutive terms.

COMELEC Second Division hold that Aratea, the duly elected Vice-Mayor of San Antonio, Zambales, should be declared Mayor pursuant to the Local Government Code’s rule on succession.

While Lonzanida’s motion for reconsideration is pending with COMELEC en banc, Lonzanida and Efren Aratea (Aratea) were respectively proclaimed Mayor and Vice-Mayor. Aratea wrote to the DILG to allow him to take the oath of office as Mayor of San Antonio, Zambales since Lonzanida was disqualified to hold office . Robredo allowed Aratea to take an oath of office as “the permanent Municipal Mayor of San Antonio, Zambales without prejudice however to the outcome of the cases pending before the [COMELEC].”

The COMELEC En Banc issued a Resolution disqualifying Lonzanida from running for Mayor in the May 2010 elections.

Antipolo filed a Motion for Leave to Intervene and claimed her right to be proclaimed as Mayor of San Antonio, Zambales because Lonzanida.

ISSUE/S:

1. Whether Aratea is the rightful occupant to the Office of the Mayor of San Antonio, Zambales.
2. Whether Lonzanida was disqualified under Section 68 of the Omnibus Election Code, or made a false material representation under Section 78 of the same Code that resulted in his certificate of candidacy being void ab initio

HELD:

1. NO. Antipolo, the alleged “second placer,” should be proclaimed Mayor because Lonzanida’s certificate of candidacy was void ab initio. In short, Lonzanida was never a candidate at all. All votes for Lonzanida were stray votes. Thus, Antipolo, the only qualified candidate, actually garnered the highest number of votes for the position of Mayor.

The nature of the eligibility requirements for a local elective office and the disqualifications that may apply to candidates necessarily create distinctions on the remedies available, on the effects of lack of eligibility and on the application of disqualification.

2. Section 78 of the Omnibus Election Code states that a certificate of candidacy may be denied or cancelled when there is false material representation of the contents of the certificate of candidacy. The Court has already likened a proceeding under Section 78 to a quo warranto proceeding under Section 253 of the OEC since they both deal with the eligibility or qualification of a candidate, with the distinction mainly in the fact that a “Section 78” petition is filed before proclamation, while a petition for quo warranto is filed after proclamation of the winning candidate. 

Clearly, the violation by Lonzanida of the three-term limit rule, or his conviction by final judgment of the crime of falsification under the Revised Penal Code, does not constitute a ground for a petition under Section 68. 

Lonzanida’s certificate of candidacy was cancelled because he was ineligible or not qualified to run for Mayor. Whether his certificate of candidacy is cancelled before or after the elections is immaterial because the cancellation on such ground means he was never a candidate from the very beginning, his certificate of candidacy being void ab initio. There was only one qualified candidate for Mayor in the May 2010 elections—Antipolo, who therefore received the highest number of votes.

G.R. No. 160656. June 15, 2007

DOCTRINE:

While the plaintiff in an action for expropriation may enforce against the owner’s property the legal easement of right-of-way in its favor without paying for it, it is liable to pay the owner consequential damages if in enforcing the legal easement on the owner’s property, the remaining area would be rendered unusable and uninhabitable.

FACTS:

Andaya is the registered owner of two parcels of land in Butuan.  These properties are subject to a 60-meter wide perpetual easement for public highways, irrigation ditches, aqueducts, and other similar works of the government or public enterprise, at no cost to the government, except only the value of the improvements existing thereon that may be affected.

The Republic instituted an action before the Regional Trial Court of Butuan City to enforce the easement of right-of-way or eminent domain.  The property will be subject to easement of 60-meter easement to 10 meters, or an equivalent of 701 square meters.

In 1998, the Board reported that the project would affect a total of 10,380 square meters of Andaya’s properties, 4,443 square meters of which will be for the 60-meter easement. The Board also reported that the easement would diminish the value of the remaining 5,937 square meters. As a result, it recommended the payment of consequential damages amounting to P2,820,430 for the remaining area.

Andaya contended that the consequential damages should be based on the remaining area of 9,679 square meters. Thus, the just compensation should be P11,373,405.

The trial court ruled that Republic must pay P 2,820,430.00 as fair and reasonable severance damages;

Both parties appealed to the Court of Appeals. Andaya demanded just compensation for his entire property minus the easement. Andaya alleged that the easement would prevent ingress and egress to his property and turn it into a catch basin for the floodwaters coming from the Agusan River. As a result, his entire property would be rendered unusable and uninhabitable.

The Court of Appeals modified the trial court’s decision by imposing a 6% interest on the consequential damages from the date of the writ of possession or the actual taking, and by deleting the attorney’s fees.

ISSUE/S:

Is the Republic liable for just compensation if in enforcing the legal easement of right-of-way on a property, the remaining area would be rendered unusable and uninhabitable?

HELD:

YES. The Republic is liable to pay consequential damages if in enforcing the legal easement on Andaya’s property, the remaining area would be rendered unusable and uninhabitable. Andaya is entitled to payment of just compensation, which must be neither more nor less than the monetary equivalent of the land.

Taking,” in the exercise of the power of eminent domain, occurs not only when the government actually deprives or dispossesses the owner of his property or of its ordinary use, but also when there is a practical destruction or material impairment of the value of his property. Using this standard, there was undoubtedly a taking of the remaining area of Andaya’s property. While it is true that the owner retained title and possession of the remaining property, he would be entitled to just compensation if the enforcement of the legal easement on a portion of his property would deprive him of the normal use of the remaining areas. In the instant case, the enforcement of the legal easement on a portion of the owner’s property prevented ingress and egress to his remaining property and turn it into a catch basin for the floodwaters coming from the Agusan River.

NO person shall be deprived of his private property without due process of law; and in expropriation cases, an essential element of due process is that there must be just compensation whenever private property is taken for public use. Noteworthy, Section 9, Article III of our Constitution mandates that private property shall not be taken for public use without just compensation.14

It is settled that Republic is legally entitled to a 60-meter wide easement or an equivalent of 4,443 square meters. Clearly, although the Republic will use only 701 square meters, it should not be liable for the 3,742 square meters, which constitute the difference between this area of 701 square meters and the 4,443 square meters to which it is fully entitled to use as easement, free of charge except for damages to affected existing improvements, if any, under Section 112 of the Public Land Act.

 In effect, without such damages alleged and proved, the Republic is liable for just compensation of only the remaining areas consisting of 5,937 square meters, with interest thereon at the legal rate of 6% per annum from the date of the writ of possession or the actual taking until full payment is made.

G.R. No. 195540. March 13, 2013

DOCTRINE:

The new redemption period commences from the date of foreclosure sale, and expires upon registration of the certificate of sale or three months after foreclosure, whichever is earlier. There is likewise no retroactive application of the new redemption period because Section 47 exempts from its operation those properties foreclosed prior to its effectivity and whose owners shall retain their redemption rights under Act No. 3135.

FACTS:

In 1985, Goldenway Merchandising executed a Real Estate Mortgage in favor of Equitable PCI Bank over 3 of its real properties. The mortgage secured the Two Million Pesos (P2,000,000.00) loan granted by respondent to petitioner and was duly registered.

As petitioner failed to settle its loan obligation –  

1. respondent extrajudicially foreclosed the mortgage on December 13, 2000. 
2. In a public auction, the mortgaged properties were sold for P3,500,000.00 to respondent. Accordingly, a Certificate of Sale was issued on January 26, 2001.
3. On February 16, 2001, the Certificate of Sale was registered and inscribed on TCT Nos. T-152630, T-151655 and T-214528.

On March 8, 2001, petitioner offered to redeem the foreclosed properties by tendering a check in the amount of P3,500,000.00. However, petitioner was told that such redemption is no longer possible because the certificate of sale had already been registered. The foreclosed properties had already been consolidated in favor of respondent and that new certificates of title were issued in the name of respondent on March 9, 2001.

On December 7, 2001, petitioner filed a complaint for specific performance and damages against the respondent, asserting that it is the one-year period of redemption under Act No. 3135 which should apply and not the shorter redemption period provided in Republic Act (R.A.) No. 8791. That applying Section 47 of R.A. 8791 to the real estate mortgage executed in 1985 would result in the impairment of obligation of contracts and violation of the equal protection clause under the Constitution.

The RTC rendered its decision dismissing the complaint as well as the counterclaim. It noted that the issue of the constitutionality of Sec. 47 of R.A. No. 8791 was never raised by the petitioner during the pre-trial and the trial.

The CA affirmed the trial court’s decision. According to the CA, petitioner failed to justify why Section 47 of R.A. No. 8791 should be declared unconstitutional.

ISSUE/S: 

Whether applying Section 47 of R.A. No. 8791 to the present case would be a substantial impairment of its vested right of redemption under the real estate mortgage contract.

HELD:

NO. Section 47 did not divest juridical persons of the right to redeem their foreclosed properties but only modified the time for the exercise of such right by reducing the one-year period originally provided in Act No. 3135. The new redemption period commences from the date of foreclosure sale, and expires upon registration of the certificate of sale or three months after foreclosure, whichever is earlier. There is likewise no retroactive application of the new redemption period because Section 47 exempts from its operation those properties foreclosed prior to its effectivity and whose owners shall retain their redemption rights under Act No. 3135.

Petitioner’s claim that Section 47 infringes the equal protection clause as it discriminates mortgagors/property owners who are juridical persons is equally bereft of merit. The equal protection clause is directed principally against undue favor and individual or class privilege. It is not intended to prohibit legislation which is limited to the object to which it is directed or by the territory in which it is to operate.

The legislature clearly intended to shorten the period of redemption for juridical persons whose properties were foreclosed and sold in accordance with the provisions of Act No. 3135. The difference in the treatment of juridical persons and natural persons was based on the nature of the properties foreclosed―whether these are used as residence, for which the more liberal one-year redemption period is retained, or used for industrial or commercial purposes, in which case a shorter term is deemed necessary to reduce the period of uncertainty in the ownership of property and enable mortgagee-banks to dispose sooner of these acquired assets. It must be underscored that the General Banking Law of 2000, crafted in the aftermath of the 1997 Southeast Asian financial crisis, sought to reform the General Banking Act of 1949 by fashioning a legal framework for maintaining a safe and sound banking system.

The freedom to contract is not absolute; all contracts and all rights are subject to the police power of the State and not only may regulations which affect them be established by the State, but all such regulations must be subject to change from time to time, as the general well-being of the community may require, or as the circumstances may change, or as experience may demonstrate the necessity.32 Settled is the rule that the non-impairment clause of the Constitution must yield to the loftier purposes targeted by the Government.

Notes:

The law governing cases of extrajudicial foreclosure of mortgage is Act No. 3135, as amended by Act No. 4118. Section 6 thereof provides:

SEC. 6. In all cases in which an extrajudicial sale is made under the special power hereinbefore referred to, the debtor, his successors-in-interest or any judicial creditor or judgment creditor of said debtor, or any person having a lien on the property subsequent to the mortgage or deed of trust under which the property is sold, may redeem the same at any time within the term of one year from and after the date of the sale; xxx 

However, Section 47 of R.A. No. 8791 otherwise known as “The General Banking Law of 2000” which took effect on June 13, 2000, amended Act No. 3135.

XXXX

Notwithstanding Act 3135, juridical persons whose property is being sold pursuant to an extrajudicial foreclosure, shall have the right to redeem the property in accordance with this provision until, but not after, the registration of the certificate of foreclosure sale with the applicable Register of Deeds which in no case shall be more than three (3) months after foreclosure, whichever is earlier. Owners of property that has been sold in a foreclosure sale prior to the effectivity of this Act shall retain their redemption rights until their expiration. 

G.R. No. 207976. November 14, 2018

FACTS:

Planters Development Bank (Planters Bank) granted two (2) loans to respondent Lubiya Agro Industrial Corporation (Lubiya) in the amounts of P6,500,000.00 and P5,000,000.00, respectively. The said loans were secured by real estate mortgages over two (2) parcels of land with improvements thereon located in General Santos City.

When Lubiya defaulted, Planters Bank sent a letter dated June 8, 1998 to it demanding payment and informing the latter that failure to heed such demand shall prompt Planters Bank to institute a legal action against it. Due to Libuya’s failure to settle its obligation, Planters Bank extrajudicially foreclosed the properties offered as security by Lubiya. In the public auction, Planters Bank emerged as the sole and highest bidder. A Certificate of Sale was thereafter issued in its favor and recorded with the Registry of Deeds on November 11, 1998.

On January 23, 2001, Lubiya filed a complaint for nullification of the loan agreement, foreclosure proceedings, and damages xx on Planters Bank’s alleged failure to furnish Lubiya with notices regarding the foreclosure and sale of the mortgaged properties despite being obligated in their mortgage contract to do so.

Lubiya moved for a summary judgment alleging that no genuine issues exist as to the material facts of the case. The RTC granted the motion however, the summary judgment was adversed to Lubiya as the RTC dismissed its complaint against Planters Bank.

The CA reversed the decision of the RTC and nullified the foreclosure sale.

Lubiya insists that the demand letter dated June 8, 1998, which Lubiya received on June 24, 1998 prior to the auction sale on October 6, 1998, duly satisfied the notice requirement agreed upon by the parties.

ISSUE:

whether or not the lack of personal notice of the extrajudicial foreclosure proceedings upon the mortgagor renders foreclosure null and void.

HELD:

As a general rule, personal notice to the mortgagor in extrajudicial foreclosure proceedings is not necessary. Section 3 of Act No. 313514 governing extrajudicial foreclosure of real estate mortgages only requires the 1) posting of the notice of extrajudicial foreclosure sale in three public places; and 2) publication of the said notice in a newspaper of general circulation. 

Sec. 3. Notice shall be given by posting notices of the sale for not less than twenty days in at least three public places of the municipality or city where the property is situated, and if such property is worth more than four hundred pesos, such notice shall also be published once a week for at least three consecutive weeks in a newspaper of general circulation in the municipality and city.

However, despite the above provisions of the law, the parties to a mortgage contract are not precluded from imposing additional stipulations. This includes the requirement of personal notification to the mortgagor of any action relative to the mortgage contract, such as the institution of an extrajudicial foreclosure proceeding. Thus, the exception to the rule is when the parties stipulate that personal notice is additionally required to be given the mortgagor. Failure to abide by the general rule, or its exception, renders the foreclosure proceedings null and void. 

The June 8, 1998 demand letter that Planters Bank sent to Lubiya satisfies the bank’s additional obligation to provide personal notice of the extrajudicial foreclosure sale to the mortgagor. The purpose of stipulations of such nature is to precisely apprise the mortgagors of any action which the mortgagees might take on the mortgaged properties in order to accord the former of an opportunity to safeguard their rights. Thus, when Planters Bank failed to send the notice of foreclosure sale to Lubiya, it committed a contractual breach sufficient to render the foreclosure sale on October 6, 1998 null and void. Besides, the loan agreements and mortgage contracts are standard contracts of adhesion prepared by petitioner itself. If the parties did not intend to require personal notice in addition to the statutory requirements of posting and publication, the said provision should not have been included in the mortgage contracts.