Pastora Valmonte, and Joaquin Valmonte v CA, Philippine National
Bank, Artemio Valenton [ Purisima, 1999]
FACTS
Joaquin Valmonte sold to his daughter Pastora 3 parcels of land in the
Municipality of Jaen, Province of Nueva Ecija. A few days later, Pastora
obtained a crop load of P 16k from Philippine National Bank (PNB) and as a
security, she executed a Real Estate Mortgage in favor of the bank involving
the same parcels of land.
Pastora then executed a Special Power of Attorney in favor of Virginia del
Castelo to borrow P 5k from PNB with authority to mortgage the same
parcels of land. As a result, a loan of P 5k payable on demand was granted
by PNB. Castelo then executed a Real Estate Mortgage in its favor.
PNB sent a Notice of Extra Judicial Sale of Mortgaged Properties to the
Provincial Sheriff.
Pastora executed a Deed of Sale in favor of her father. The Notice of Extra
Judicial Sale was published in a newspaper called Nueva Era. There was
then an auction sale and PNB was the sole and only bidder of P 5,
5245.40. Provincial Sheriff issued the Minutes of Auction Sale and Certificate
of Sale.
Period of redemption expired. Artemio Valention offered to purchase the
properties for P 35k payable upon execution of the contract in his favor.
Joaquin Valmonte sent a letter-request to appelle bank for additional time so
he may repurchase the properties for P 35k. Appellants were given up to Dec
31, 1955 to purchase in cash but by Dec 7, they were only able to give P 26,
926.36 including the P 16k loand obtained by PAstora in 1951.
Appellants failed to purchase the properties so Valenton deposited P 34k
which the bank accepted. The Deed of Absolute Sale was then executed as
well as Affidavit of Consolidation of Ownership.
Valmonted filed a case to RTC. CA affirmed RTC.
ISSUE
WON the CA erred in applying the principle of merger – NO – Obligations are
extinguished by the merger of the rights of the creditor and debtor. The
mortgage for the P 16k loan was deemed extinguished.
The merger took place in the person of PNB, the principal creditor. The
merger was brought about when during the auction sale, PNB purchased the
properties on which it had another subsisting mortgage credit. The mortgage
for the 16k was deemed extinguished.
The two loans should be considered as one mortgage credit since they were
constituted between the same parties on the same properties. Being a single
and indivisible obligation, the foreclosure sale in connection with the P 5k
loan necessarily included the other loan of P 16k. There was no outstanding
mortgage credit for the P 16k loan and PNB being the purchaser at the
auction was not subrogated to answer for any encumbrance on subject
properties.
Merger as one of the means of extinguishing an obligation has the following
elements:
1. The merger of the characters of the creditor and debtor must be in
the same person
2. It must take place in the person of either the principal creditor or the
principal debtor
3. It must be complete and definite
>The Valmontes may have redeemed their property but they failed to do so.
PNB acquired the mortgaged properties because of the failure of the
petitions to redeem.