Dimas-San Juan v. Belo

 

Dimas-San Juan v. Belo

G.R. No. 243165

January 25, 2023

 

FACTS:

                Petitioners Anita Dimas-San Juan, Reynan San Juan, Ryan San Juan, and Annalyn San Juan obtained a loan from respondent Adoracion Z. Belo (Belo) in the amount of P1,600,000.00. The Promissory Note stated that the sum of P1,600,000.00 is payable within six months from 13 July 2010, without need of notice or demand, and with an interest rate of 4.75% per month until full payment of the amount. To secure the loan, petitioners executed in favor of Belo a Deed of Real Estate Mortgage 5 dated 13 July 2010 on their property covered by Transfer Certificate of Title. As payment for the loan, petitioner Anita Dimas-San Juan issued in favor of Belo a postdated check dated 6 March 2011 7 in the amount of P1,600,000.00 and two additional postdated checks dated 12 December 2010 8 and 12 January 2011 9 for P76,000.00 each for the monthly interest. However, when the postdated checks were presented for payment in March 2011, all the checks were dishonored for the reason "ACCOUNT CLOSED." Despite the non-payment of the loan, Belo never initiated foreclosure proceedings over the mortgaged property. Subsequently, Belo sent petitioners a notice to vacate the property and to surrender possession thereof.

When petitioners refused to vacate the property, Belo filed on 06 February 2012 a Complaint for Ejectment with Damages against petitioners. The complaint was filed before the Municipal Trial Court (MTC) of Marilao, Bulacan and was docketed as Civil Case No.771. Petitioners filed before the RTC of Malolos City a Complaint for "Annulment of Deed of Dacion En Pago Sale against respondents Belo and the Register of Deeds. Petitioners alleged that Belo used the dacion en pago sale, dated 11 October 2011, in the ejectment suit she filed against petitioners. However, petitioners insisted that the dacion en pago sale is void since they already issued a postdated check in the amount of P1,600,000.00 as full payment of the loan in accordance with the Real Estate Mortgage Agreement dated 13 July 2010. Petitioners argued that under the mortgage agreement, in case of default, mortgagee Belo may foreclose the property but that the dacion en pago sale was never intended in the mortgage agreement. In the caes before the Supreme Court, petitioners argue that they are entitled to the civil fruits of the property since Belo is a possessor in bad faith because she was aware of the flaw in her title over the property which was acquired through a dacion en pago sale.

 

ISSUE:

                Whether or not the petitioners are entitled to the civil fruits of the subject property.

 

HELD:
                No. Even if the Court considers the issue belatedly raised by petitioners, there is still no merit in their claim that they are entitled to the civil fruits of the property since Belo cannot be considered a possessor in bad faith. As argued by Belo, she obtained a title over the property by virtue of the dacion en pago sale, which was declared valid by the RTC in its Decision dated 12 May 2017, albeit subsequently reversed by the CA. The Court also notes that in the ejectment case filed by Belo against petitioners, the MTC's ruling in favor Belo was affirmed by Branch 81, RTC of Malolos City. Moreover, in an Order 24 dated 27 June 2017, the RTC (Branch 81) granted Belo's Motion for Execution of Judgment Pending Appeal, and ordered the issuance of a writ of execution to implement the MTC Decision dated 26 October 2016 in the ejectment case. Clearly, Belo's possession of the property was by virtue of the MTC and RTC Decisions and Order, which negates petitioners' claim of possession in bad faith.