Republic of the Philippines

Supreme Court
Manila

THIRD DIVISION

BIENVENIDO C. TEOCO and G.R. No. 162333

JUAN C. TEOCO, JR.,
Petitioners, Present:
YNARES-SANTIAGO, J.,
Chairperson,
- versus - AUSTRIA-MARTINEZ,
CHICO-NAZARIO,
REYES, and
LEONARDO-DE CASTRO,* JJ.

METROPOLITAN BANK Promulgated:

AND TRUST COMPANY,
Respondent. December 23, 2008

x--------------------------------------------------x

DECISION

REYES, R.T., J.:

REAL creditors are rarely unwilling to receive their debts from any hand which will pay
them.[1] Ang tunay na may pautang ay bihirang tumanggi sa kabayaran mula
kaninuman.

This is a petition for review on certiorari seeking the reversal of the Decision[2] of the
Court of Appeals (CA) in CA-G.R. CV No. 58891 dated February 20, 2004 which annulled
and set aside the decision of the Regional Trial Court (RTC) of Catbalogan, Samar on July
22, 1997 in Cadastral
Record No. 1378. The RTC originally dismissed the petition for writ of possession filed by
respondent Metropolitan Bank and Trust Company (Metrobank) on the ground that
intervenors and present petitioners, the brothers Bienvenido Teoco and Juan Teoco, Jr.
(the brothers Teoco), have redeemed the subject property. The CA reversed this
dismissal and ordered the issuance of a writ of possession in favor of respondent
Metrobank.

Culled from the records, the facts are as follows:

Lydia T. Co, married to Ramon Co, was the registered owner of two parcels of land
situated in Poblacion, Municipality of Catbalogan, Province of Samar under Transfer
Certificate of Title (TCT) Nos. T-6220 and T-6910.[3] Ramon Co mortgaged the said
parcels of land to Metrobank for a sum of P200,000.00.
On February 14, 1991, the properties were sold to Metrobank in an extrajudicial
foreclosure sale under Act No. 3135. One year after the registration of the Certificates of
Sale, the titles to the properties were consolidated in the name of Metrobank for failure
of Ramon Co to redeem the same within the one year period provided for by law. TCT
Nos. T-6220 and T-6910 were cancelled and TCT Nos. T-8482 and T-8493 were issued in
the name of Metrobank.

On November 29, 1993, Metrobank filed a petition for the issuance of a writ of
possession against Ramon Co and Lydia Co (the spouses Co). However, since the spouses
Co were no longer residing in the Philippines at the time the petition was filed, the trial
court ordered Metrobank, on January 12, 1994 and again on January 26, 1994 to effect
summons by publication against the spouses Co.

On May 17, 1994, the brothers Teoco filed an answer-in-intervention alleging that they
are the successors-in-interest of the spouses Co, and that they had duly and validly
redeemed the subject properties within the reglementary period provided by law. The
brothers Teoco thus prayed for the dismissal of Metrobanks petition for a writ of
possession, and for the nullification of the TCTs issued in the name of Metrobank. The
brothers Teoco further prayed for the issuance in their name of new certificates of title.

Metrobank, in its reply, alleged that the amount deposited by the brothers Teoco as
redemption price was not sufficient, not being in accordance with Section 78 of the
General Banking Act. Metrobank also said the assignment of the right of redemption by
the spouses Co in favor of the brothers Teoco was not properly executed, as it lacks the
necessary authentication from the Philippine Embassy.

On February 24, 1995, the trial court was informed that the brothers Teoco had
deposited the amount of P356,297.57 to the clerk of court of the RTC in Catbalogan,
Samar. The trial court ordered Metrobank to disclose whether it is allowing the brothers
Teoco to redeem the subject properties. Metrobank refused to accept the amount
deposited by the brothers Teoco, alleging that they are obligated to pay the spouses Cos
subsequent obligations to Metrobank as well. The brothers Teoco claimed that they are
not bound to pay all the obligations of the spouses Co, but only the value of the
property sold during the public auction.

On February 26, 1997, the trial court reiterated its earlier order directing Metrobank to
effect summons by publication to the spouses Co. Metrobank complied with said order
by submitting documents showing that it caused the publication of summons against
the spouses Co. The brothers Teoco challenged this summons by publication, arguing
that the newspaper where the summons by publication was published, the Samar
Reporter, was not a newspaper of general circulation in the Philippines. The brothers
Teoco furthermore argued that Metrobank did not present witnesses to identify the
documents to prove summons by publication.

RTC Disposition

On July 22, 1997, the RTC rendered its decision in favor of the brothers Teoco, to wit:

WHEREFORE, judgment is hereby rendered dismissing the petition for a writ of

possession under Section 7 of Act 3135 it appearing that intervenor Atty. Juan C. Teoco,
Jr. and his brother Atty. Bienvenido C. Teoco have legally and effectively redeemed Lot
61 and 67 of Psd-66654, Catbalogan, Cadastre, from the petitioner Metropolitan Bank
and Trust Company.
Accordingly, Metrobank may now withdraw the aforesaid redemption money of
P356,297.57 deposited by Juan C. Teoco, Jr., on February 10, 1992 with the clerk of
court and it is ordered that the Transfer Certificate of Title Nos. T-8492 and T-8493 of
Metropolitan Bank and Trust Company be and are cancelled and in their place new
transfer certificates of title be issued in favor of Intervenors Attys. Bienvenido C. Teoco
and Juan C. Teoco, Jr., of legal age, married, and residents of Calbiga, Samar, Philippines,
upon payment of the prescribed fees therefore. No pronouncement as to costs.[4]

According to the RTC, the case filed by Metrobank should be dismissed since intervenor
Juan C. Teoco, Jr., by his tender of P356,297.57 to Metrobank on February 10, 1992,
within the reglementary period of redemption of the foreclosed property, had legally
and effectively redeemed the subject properties from Metrobank. This redemption
amount is a fair and reasonable price and is in keeping with the letter and spirit of
Section 78 of the General Banking Act because Metrobank purchased the mortgaged
properties from the sheriff of the same court for only P316,916.29. In debunking the
argument that the amount tendered was insufficient, the RTC held:

It is contended for Metrobank that the redemption money deposited by Juan C. Teoco,
Jr., is insufficient and ineffective because the spouses Ramon Co and Lydia T. Co owe it
the total amount of P6,856,125 excluding interest and other charges and the mortgage
contract executed by them in favor of Metrobank in 1985 and 1986 (Exh. A and B) are
not only security for payment of their obligation in the amount of P200,000 but also for
those obligations that may have been previously and later extended to the Co couple
including interest and other charges as appears in the accounts, books and records of
the bank.

Metrobank cites the case of Mojica v. Court of Appeals, 201 SCRA 517 (1991) where the
Supreme Court held that mortgages given to secure future advancements are valid and
legal contracts; that the amounts named as consideration in said contract do not limit
the amount for which the mortgage may stand as security; that a mortgage given to
secure the advancements is a continuing security and is not discharged by repayment of
the amount named in the mortgage until the full amount of the advancements are paid.
In the opinion of this court, it is not fair and just to apply this rule to the case at bar.
There is no evidence offered by Metrobank that these other obligations of Ramon Co
and his wife were not secured by real estate mortgages of other lands. If the other
indebtedness of the Co couple to Metrobank are secured by a mortgage on their other
lands or properties the obligation can be enforced by foreclosure which the court
assumes Metrobank has already done. There is no proof that Metrobank asked for a
deficiency judgment for these unpaid loans.

The Supreme Court in the Mojica case was dealing with the rights of the mortgagee
under a mortgage from an owner of the land. It determined the security covered by the
mortgage the intention of the parties and the equities of the case. What was held in
that case was hedged about so as to limit the decision to the particular facts. It must be
apparent that the Mojica ruling cannot be construed to give countenance or approval to
the theory that in all cases without exception mortgages given to secure past and future
advancements are valid and legal contracts.

In construing a contract between the bank and a borrower such a construction as would
be more favorable to the borrower should be adopted since the alleged past and future
indebtedness of Ramon Co to the bank was not described and specified therein and that
the addendum was made because the mortgage given therefore were not sufficient or
that these past and future advancements were unsecured. That being the case the
mortgage contracts, Exh. A and B should be interpreted against Metrobank which drew
said contracts. A written contract should, in case of doubt, be interpreted against the
party who has drawn the contract (6 R.C.L. 854; H.E. Heackock Co. vs. Macondray & Co.,
42 Phil. 205). Here, the mortgage contracts are in printed form prepared by Metrobank
and therefore ambiguities therein should be construed against the party causing it
(Yatco vs. El Hogar Filipino, 67 Phil. 610; Hodges vs. Tazaro, CA, 57 O.G. 6970).[5]

The RTC added that there is another reason for dismissing Metrobanks petition: the RTC
failed to acquire jurisdiction over the spouses Co. The RTC noted that Metrobank
published its petition for writ of possession, but did not publish the writ of summons
issued by said court on February 16, 1994. According to the RTC:

A petition for a writ of possession of foreclosed property is in reality a possession suit.

That Metrobank prayed for a writ of possession in an independent special proceeding
does not alter the nature of the case as a possessory suit (Cabrera v. Sinoy, L.-12648, 23
November 1959).

The defendant or owner of the property foreclosed by the petitioner should be

summoned to answer the petition. Accordingly, the publication made by the petitioner
is fatally flawed and defective and on that basis alone this court acquired no jurisdiction
over the person of respondents Ramon Co and his wife (Mapa vs. Court of Appeals, G.R.
No. 79394, October 2, 1992; Lopez vs. Philippine National Bank, L-34223, December 10,
1982).[6]

Metrobank appealed to the CA. In its appeal, Metrobank claimed that the RTC erred in
finding that the publication made by it is fatally flawed, and that the brothers Teoco had
effectively redeemed the properties in question.

CA Disposition

On February 20, 2004, the CA decided the appeal in favor of Metrobank, with the
following disposition:

WHEREFORE, the appeal is hereby GRANTED. The assailed Decision dated July 22, 1997
rendered by the Regional Trial Court of Catbalogan, Samar Branch 29 in Cadastral
Record No. 1378 is hereby ANNULLED and SET ASIDE. Accordingly, let a writ of
possession in favor of petitioner-appellant METROPOLITAN BANK AND TRUST COMPANY
be issued over the properties and improvements covered by Transfer Certificates of
Title Nos. T-8492 and T-8493 of the Registry of Deeds of Western Samar.

SO ORDERED.[7]

As regards the question of jurisdiction, the CA ruled that since the parcels of land in
question were already registered in the name of Metrobank at the time the petition was
filed, and since the certificates of title of the spouses Co were already cancelled, there is
no more need to issue summons to the spouses Co. The CA noted that the best proof of
ownership of the parcel of land is a certificate of title.[8]

The CA also held that the issue of the validity of summons to the spouses Co is
unimportant considering that the properties in question were mortgaged to Metrobank
and were subsequently sold to the same bank after the spouses Co failed to satisfy the
principal obligation. Hence, the applicable law is Act No. 3135,[9] as amended by Act No.
4118. Section 7 of said Act No. 3135 states that a petition for the issuance of a writ of
possession filed by the purchaser of a property in an extrajudicial foreclosure sale may
be done ex parte. It is the ministerial duty of the trial court to grant such writ of
possession. No discretion is left to the trial court. Any question regarding the
cancellation of the writ, or with respect to the validity and regularity of the public sale
should be determined in a subsequent proceeding as outlined in Section 9 of Act No.
3135.[10]

Further, the CA held that the brothers Teoco were not able to effectively redeem the
subject properties, because the amount tendered was insufficient, and the brothers
Teoco have not sufficiently shown that the spouses Cos right of redemption was
properly transferred to them.

Issues

In this Rule 45 petition, the brothers Teoco impute to the CA the following errors:

I
THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS ERROR OF JUDGMENT IN
HOLDING THAT PETITIONERS FAILED TO REDEEM THE SUBJECT PROPERTIES WITHIN THE
REGLEMENTARY PERIOD OF ONE YEAR AND THAT THE REDEMPTION PRICE TENDERED IS
INSUFFICIENT.

II
THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS ERROR OF JUDGMENT IN
HOLDING PETITIONERS TO PAY NOT ONLY THE P200,000 PRINCIPAL OBLIGATION BUT
ALSO THAT PREVIOUSLY EXTENDED, WHETHER DIRECT OR INDIRECT, PRINCIPAL OR
SECONDARY AS APPEARS IN THE ACCOUNTS, BOOKS AND RECORDS.

III
THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT THE PETITIONERS HAVE
NOT SUFFICIENTLY SHOW(N) THAT THE RIGHT OF REDEMPTION WAS PROPERLY
TRANSFERRED TO THEM.

IV
THE HONORABLE COURT OF APPEALS ERRED IN REVERSING THE DECISION OF THE
REGIONAL TRIAL COURT, BRANCH 29, AND GRANTING THE WRIT OF POSSESSION TO
THE RESPONDENT.[11] (Underscoring supplied)

Our Ruling

Sufficiency of Amount Tendered

We find that neither petitioners, the brothers Teoco, nor respondent, Metrobank, were
able to present sufficient evidence to prove whether the additional loans granted to the
spouses Co by Metrobank were covered by the mortgage agreement between them.
The brothers Teoco failed to present any evidence of the supposed trust receipt
agreement between Metrobank and the spouses Co, or an evidence of the supposed
payment by the spouses Co of the other loans extended by Metrobank. Metrobank, on
the other hand, merely relied on the stipulation on the mortgage deed that the
mortgage was intended to secure the payment of the same (P200,000.00 loan) and
those that may hereafter be obtained.[12] However, there was no mention whatsoever
of the mortgage agreement in the succeeding loans entered into by the spouses Co.

While we agree with Metrobank that mortgages intended to secure future

advancements are valid and legal contracts,[13] entering into such mortgage contracts
does not necessarily put within its coverage all loan agreements that may be
subsequently entered into by the parties. If Metrobank wishes to apply the mortgage
contract in order to satisfy loan obligations not stated on the face of such contract,
Metrobank should prove by a preponderance of evidence that such subsequent
obligations are secured by said mortgage contract and not by any other form of security.

In order to prevent any injustice to, or unjust enrichment of, any of the parties, this
Court holds that the fairest resolution is to allow the brothers Teoco to redeem the
foreclosed properties based on the amount for which it was foreclosed (P255,441.14
plus interest). This is subject, however, to the right of Metrobank to foreclose the same
property anew in order to satisfy the succeeding loans entered into by the spouses Co, if
they were, indeed, covered by the mortgage contract. The right of Metrobank to
foreclose the mortgage would not be hampered by the transfer of the properties to the
brothers Teoco as a result of this decision, since Article 2127 of the Civil Code provides:

Art. 2127. The mortgage extends to the natural accessions, to the improvements,
growing fruits, and the rents or income not yet received when the obligation becomes
due, and to the amount of the indemnity granted or owing to the proprietor from the
insurers of the property mortgaged, or in virtue of expropriation for public use, with the
declarations, amplifications and limitations established by law, whether the estate
remains in the possession of the mortgagor, or it passes into the hands of a third
person. (Emphasis supplied)

Further, Article 2129 of the Civil Code provides:

Art. 2129. The creditor may claim from a third person in possession of the mortgaged
property, the payment of the part of the credit secured by the property which said third
person possesses, in the terms and with the formalities which the law establishes.

The mortgage directly and immediately subjects the property upon which it is imposed,
whoever the possessor may be to the fulfillment of the obligation for whose security it
was constituted. Otherwise stated, a mortgage creates a real right which is enforceable
against the whole world. Hence, even if the mortgage property is sold or its possession
transferred to another, the property remains subject to the fulfillment of the obligation
for whose security it was constituted.[14]

Thus, the redemption by the brothers Teoco shall be without prejudice to the
subsequent foreclosure of same properties by Metrobank in order to satisfy other
obligations covered by the Real Estate Mortgage.

Transfer of Right of Redemption

The CA held that the brothers Teoco have not sufficiently shown that the spouses Cos
right of redemption was properly transferred to them. The assignment of the right of
redemption only stated that the spouses Co are transferring the right of redemption to
their parents, brothers, and sisters, but did not specifically include the brothers Teoco,
who are just brothers-in-law of Ramon Co. Furthermore, the spouses Co no longer
reside in the Philippines, and the assignment of the right of redemption was not
properly executed and/or authenticated.

The alleged transfer of the right of redemption is couched in the following language:

KNOW ALL MEN BY THESE PRESENTS:

That we, RAMON CO and LYDIA CO, of legal ages, for and in consideration of preserving
the continuous ownership and possession of family owned properties, by these
presents, hereby cede, transfer and convey in favor of my parents, brothers and sisters,
the right to redeem the properties under TCT Nos. T-6910 and T-6220, located in Patag
district, Catbalogan, Samar, sold by public auction sale on February 14, 1991 to the
Metropolitan Bank and Trust Company.

Furthermore, we waived whatever rights we may have over the properties in favor of
the successor-in-interest including that of transferring the title to whoever may redeem
the aforesaid properties.

IN WITNESS WHEREOF, we have hereunto affixed our signatures this 10th day of
January, 1992 at Vancouver, Canada.[15]

The brothers Teoco may be brothers-in-law only of Ramon Co, but they are also the
brothers of Lydia Teoco Co, who is actually the registered owner of the properties
covered by TCT Nos. T-6910 and T-6220. Clearly, the brothers Teoco are two of the
persons referred to in the above transfer of the right of redemption executed by the
spouses Co.

Anent the CA observation that the assignment of the right of redemption was not
properly executed and/or authenticated, Lopez v. Court of Appeals[16] is instructive. In
Lopez, this Court ruled that a special power of attorney executed in a foreign country is
generally not admissible in evidence as a public document in our courts. The Court there
held:

Is the special power of attorney relied upon by Mrs. Ty a public document? We find that
it is. It has been notarized by a notary public or by a competent public official with all
the solemnities required by law of a public document. When executed and
acknowledged in the Philippines, such a public document or a certified true copy thereof
is admissible in evidence. Its due execution and authentication need not be proven
unlike a private writing.

Section 25, Rule 132 of the Rules of Court provides

Sec. 25. Proof of public or official record. An official record or an entry therein, when
admissible for any purpose, may be evidenced by an official publication thereof or by a
copy attested by the officer having the legal custody of the record, or by his deputy, and
accompanied, if the record is not kept in the Philippines, with a certificate that such
officer has the custody. If the office in which the record is kept is in a foreign country,
the certificate may be made by a secretary of embassy or legation consul general,
consul, vice consul, or consular agent or by any officer in the foreign service of the
Philippines stationed in the foreign country in which the record is kept, and
authenticated by the seal of his office.

From the foregoing provision, when the special power of attorney is executed and
acknowledged before a notary public or other competent official in a foreign country, it
cannot be admitted in evidence unless it is certified as such in accordance with the
foregoing provision of the rules by a secretary of embassy or legation, consul general,
consul, vice consul, or consular agent or by any officer in the foreign service of the
Philippines stationed in the foreign country in which the record is kept of said public
document and authenticated by the seal of his office. A city judge-notary who notarized
the document, as in this case, cannot issue such certification.[17]

Verily, the assignment of right of redemption is not admissible in evidence as a public

document in our courts. However, this does not necessarily mean that such document
has no probative value.

There are generally three reasons for the necessity of the presentation of public
documents. First, public documents are prima facie evidence of the facts stated in them,
as provided for in Section 23, Rule 132 of the Rules of Court:

SEC. 23. Public documents as evidence. Documents consisting of entries in public

records made in the performance of a duty by a public officer are prima facie evidence
of the facts therein stated. All other public documents are evidence, even against a third
person, of the fact which gave rise to their execution and of the date of the latter.
(Underscoring supplied)

Second, the presentation of a public document dispenses with the need to prove a
documents due execution and authenticity, which is required under Section 20, Rule
132 of the Rules of Court for the admissibility of private documents offered as
authentic:

SEC. 20. Proof of private document. Before any private document offered as authentic is
received in evidence, its due execution and authenticity must be proved either:

(a) By anyone who saw the document executed or written; or

(b) By evidence of the genuineness of the signature or handwriting of the maker.

Any other private document need only be identified as that which it is claimed to be.
(Underscoring supplied)

In the presentation of public documents as evidence, on the other hand, due execution
and authenticity are already presumed:

SEC. 23. Public documents are evidence. Documents consisting of entries in public
records made in the performance of a duty by a public officer are prima facie evidence
of the facts therein stated. All other public documents are evidence, even against a third
person, of the fact which gave rise to their execution and of the date of the latter.
(Underscoring supplied)

SEC. 30. Proof of notarial documents. Every instrument duly acknowledged or proved
and certified as provided by law, may be presented in evidence without further proof,
the certificate of acknowledgment being prima facie evidence of the execution of the
instrument or document involved. (Underscoring supplied)

Third, the law may require that certain transactions appear in public instruments, such
as Articles 1358 and 1625 of the Civil Code, which respectively provide:

Art. 1358. The following must appear in a public document:

(1) Acts and contracts which have for their object the creation, transmission,
modification or extinguishment of real rights over immovable property; sales of real
property or of an interest therein governed by Articles 1403, No. 2, and 1405;

(2) The cession, repudiation or renunciation of hereditary rights or of those of the

conjugal partnership of gains;

(3) The power to administer property, or any other power which has for its object an act
appearing or which should appear in a public document, or should prejudice a third
person;

(4) The cession of actions or rights proceeding from an act appearing in a public
document.

All other contracts where the amount involved exceeds five hundred pesos must appear
in writing, even a private one. But sales of goods, chattels or things in action are
governed by Articles 1403, No. 2, and 1405.

Art. 1625. An assignment of a credit, right or action shall produce no effect as against
third person, unless it appears in a public instrument, or the instrument is recorded in
the Registry of Property in case the assignment involves real property. (Underscoring
supplied)

Would the exercise by the brothers Teoco of the right to redeem the properties in
question be precluded by the fact that the assignment of right of redemption was not
contained in a public document? We rule in the negative.

Metrobank never challenged either the content, the due execution, or the genuineness
of the assignment of the right of redemption. Consequently, Metrobank is deemed to
have admitted the same. Having impliedly admitted the content of the assignment of
the right of redemption, there is no necessity for a prima facie evidence of the facts
there stated. In the same manner, since Metrobank has impliedly admitted the due
execution and genuineness of the assignment of the right of redemption, a private
document evidencing the same is admissible in evidence.[18]

True it is that the Civil Code requires certain transactions to appear in public documents.
However, the necessity of a public document for contracts which transmit or extinguish
real rights over immovable property, as mandated by Article 1358 of the Civil Code, is
only for convenience; it is not essential for validity or enforceability.[19] Thus, in Cenido
v. Apacionado,[20] this Court ruled that the only effect of noncompliance with the
provisions of Article 1358 of the Civil Code is that a party to such a contract embodied in
a private document may be compelled to execute a public document:

Article 1358 does not require the accomplishment of the acts or contracts in a public
instrument in order to validate the act or contract but only to insure its efficacy, so that
after the existence of said contract has been admitted, the party bound may be
compelled to execute the proper document. This is clear from Article 1357, viz.:

Art. 1357. If the law requires a document or other special form, as in the acts and
contracts enumerated in the following article (Article 1358), the contracting parties may
compel each other to observe that form, once the contract has been perfected. This
right may be exercised simultaneously with the action upon the contract.[21]

On the other hand, Article 1625 of the Civil Code provides that [a]n assignment of a
credit, right or action shall produce no effect as against third person, unless it appears in
a public instrument, or the instrument is recorded in the Registry of Property in case the
assignment involves real property.

In Co v. Philippine National Bank,[22] the Court interpreted the phrase effect as against
a third person to be damage or prejudice to such third person, thus:

x x x In Lichauco vs. Olegario, et al., 43 Phil. 540, this Court held that whether or not x x x
an execution debtor was legally authorized to sell his right of redemption, is a question
already decided by this Court in the affirmative in numerous decisions on the precepts
of Sections 463 and 464 and other sections related thereto, of the Code of Civil
Procedure. (The mentioned provisions are carried over in Rule 39 of the Revised Rules of
Court.) That the transfers or conveyances in question were not registered is of miniscule
significance, there being no showing that PNB was damaged or could be damaged by
such omission. When CITADEL made its tender on May 5, 1976, PNB did not question
the personality of CITADEL at all. It is now too late and purely technical to raise such
innocuous failure to comply with Article 1625 of the Civil Code.[23]

In Ansaldo v. Court of Appeals,[24] the Court held:

In its Decision, the First Division of the Appellate Tribunal, speaking through the
Presiding Justice at the time, Hon. Magno S. Gatmaitan, held as regards Arnaldos
contentions, that

xxxx

2) there was no need that the assignment be in a public document this being required
only to produce x x x effect as against third persons (Article 1625, Civil Code), i.e., to
adversely affect 3rd persons, i.e., a 3rd person with a right against original creditor, for
example, an original creditor of creditor, against whom surely such an assignment by his
debtor (creditor in the credit assigned) would be prejudicial, because he, creditor of
assigning creditor, would thus be deprived of an attachable asset of his debtor x x x;

xxxx

Except for the question of the claimed lack of authority on the part of TFCs president to
execute the assignment of credit in favor of PCIB improperly raised for the first time on
appeal, as observed by the Court of Appeals the issues raised by Ansaldo were set up by
him in, and after analysis and assessment rejected by, both the Trial Court and the
Appellate Tribunal. This court sees no error whatever in the appreciation of the facts by
either Court or their application of the relevant law and jurisprudence to those facts,
inclusive of the question posed anew by Ansaldo relative to the alleged absence of
authority on the part of TFCs president to assign the corporations credit to PCIB.[25]
In the case at bar, Metrobank would not be prejudiced by the assignment by the
spouses Co of their right of redemption in favor of the brothers Teoco. As conceded by
Metrobank, the assignees, the brothers Teoco, would merely step into the shoes of the
assignors, the spouses Co. The brothers Teoco would have to comply with all the
requirements imposed by law on the spouses Co. Metrobank would not lose any
security for the satisfaction of any loan obtained from it by the spouses Co. In fact, the
assignment would even prove to be beneficial to Metrobank, as it can foreclose on the
subject properties anew, provided it proves that the subsequent loans entered into by
the spouses Co are covered by the mortgage contract.

WHEREFORE, the decision of the Court of Appeals is SET ASIDE. The decision of the
Regional Trial Court in Catbalogan, Samar is REINSTATED with the following
MODIFICATION: the redemption by Bienvenido C. Teoco and Juan C. Teoco, Jr. of the
properties covered by TCT Nos. T-6910 and T-6220 shall be without prejudice to the
subsequent foreclosure of same properties by Metropolitan Bank and Trust Company to
satisfy other loans covered by the Real Estate Mortgage.

SO ORDERED.

RUBEN T. REYES
Associate Justice

WE CONCUR:

CONSUELO YNARES-SANTIAGO
Associate Justice
Chairperson

MA. ALICIA AUSTRIA-MARTINEZ MINITA V. CHICO-NAZARIO

Associate Justice Associate Justice

TERESITA J. LEONARDO-DE CASTRO

Associate Justice
ATTESTATION

I attest that the conclusions in the above Decision had been reached in consultation
before the case was assigned to the writer of the opinion of the Courts Division.

CONSUELO YNARES-SANTIAGO
Associate Justice
Chairperson

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution and the Division Chairpersons
Attestation, I certify that the conclusions in the above Decision had been reached in
consultation before the case was assigned to the writer of the opinion of the Courts
Division.

REYNATO S. PUNO
Chief Justice