Mortgage Group

Members:
Bation, Jessa Gwen
Blanco, Neapolle Fleur
Bouffard, Marites B.
Bugarin, Chesza Marie
Butalid, Fatima Jinna
Dizon, Clarence Louis
Sibala, Jocelyn
Suan, Jennifer Y.
Tejam, Naddie May O.
Tubog, Charisse T.

SPOUSES NILO RAMOS and ELIADORA RAMOS, Petitioners,

vs.
RAUL OBISPO and FAR EAST BANK AND TRUST COMPANY, Respondents

G.R. No. 193804 February 27, 2013

PROCEDURAL HISTORY

Petition for review on certiorari under Rule 45 for the Decision dated January 27, 2010
of the Court of Appeals (CA) in CA-G.R. CV No. 82378 which reversed and set aside
the Decision dated January 29, 2004 of the Regional Trial Court (RTC) of Quezon City,
Branch 82 in Civil Case No. Q-99-38988.

STATEMENT OF FACTS

Nilo Ramos and Raul Obispo were contract workers from Saudi Arabia. When both
returned to the Philippines, Ramos remained friends with Obispo.
Sometime in August 1996, spouses Ramos executed a Real Estate Mortgage (REM) in
favor of Far East Bank and Trust Company (FEBTC). The notarized REM secured
credit accommodations extended to Obispo in the amount of P1,159,096.00. The REM
was registered and annotated on the spouses' property.
On 17 September 1999, FEBTC received a letter from spouses informing them that
Obispo had secured a loan of P 1,159,096.00. Obispo was only entrusted of the
spouses' property that will be used a collateral for a P 250,000.00 loan, on their behalf.
FEBTC did not respond, prompting the spouses to file a complaint for annulment of
REM with damages against respondents.
Petitioners claim that their consent was vitiated since Obispo, who facilitated the loan,
allegedly, made them sign a blank REM. They subsequently received the P 250,000.00
and settled their loan afterwards. The spouses were surprised that the property was in
fact mortgaged for P 1,159,096.00.
RTC ruled in favor of the spouses, declared the REM null and void and ordered
 FEBTC to cancel the encumberance on the property.
However, the decision was reversed by the CA, holding that the spouses were 3 rd party
mortgagors under Art. 2085 of the New Civil Code. Hence, this petition.

ISSUES

Whether or not there was a valid accommodation mortgage under Art. 2085 of the New
Civil Code.

ANSWERS

Yes

REASONING

The Supremece Court upheld the CA's decision that the REM was valid due to
petitioners inability to prove the alleged fraud.
The The validity of an accommodation mortgage is allowed under Article 2085 of the
New Civil Code which provides that "[t]hird persons who are not parties to the principal
obligation may secure the latter by pledging or mortgaging their own property." An
accommodation mortgagor, ordinarily, is not himself a recipient of the loan, otherwise
that would be contrary to his designation as such.
It was held by the SC that the accommodation mortgagor may not be necessarily
apprised beforehand of the entire amount of the loan or should it first be determined
before the execution of the SPA in favor of the debtor. This is especially true when the
words used by the parties indicate that the mortgage serves as a continuing security
for credit obtained as well as future loan availments.

HOLDING

WHEREFORE, the petition for review on certiorari is DENIED for lack of merit.1wphi1 The
Decision dated January 27, 2010 of the Court of Appeals in CA-G.R. CV No. 82378 is hereby
AFFIRMED and UPHELD. With costs against the petitioners. SO ORDERED.