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    Spouses Bernardo VS Union Bank

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    Rizza Angela Mangalleno
    The spouses Bernardo obtained a loan from Union Bank secured by their family home. They defaulted and Union Bank foreclosed on the property. The spouses filed a case claiming improper foreclosure procedures but later entered a compromise agreement to buy back the property. They then defaulted on the compromise payments. Union Bank sought to consolidate its title through a writ of execution. The lower court initially granted relief to the spouses but the appellate court reversed, finding the compromise agreement did not extinguish the original loan obligation. The Supreme Court upheld this, finding no novation as the compromise simply provided a new payment scheme without changing the underlying loan or parties.

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    Spouses Bernardo VS Union Bank

    Uploaded by

    Rizza Angela Mangalleno
    214 views2 pages
    The spouses Bernardo obtained a loan from Union Bank secured by their family home. They defaulted and Union Bank foreclosed on the property. The spouses filed a case claiming improper foreclosure procedures but later entered a compromise agreement to buy back the property. They then defaulted on the compromise payments. Union Bank sought to consolidate its title through a writ of execution. The lower court initially granted relief to the spouses but the appellate court reversed, finding the compromise agreement did not extinguish the original loan obligation. The Supreme Court upheld this, finding no novation as the compromise simply provided a new payment scheme without changing the underlying loan or parties.

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    case digest

    Original Title

    SPOUSES BERNARDO VS UNION BANK

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    The spouses Bernardo obtained a loan from Union Bank secured by their family home. They defaulted and Union Bank foreclosed on the property. The spouses filed a case claiming improper foreclosure procedures but later entered a compromise agreement to buy back the property. They then defaulted on the compromise payments. Union Bank sought to consolidate its title through a writ of execution. The lower court initially granted relief to the spouses but the appellate court reversed, finding the compromise agreement did not extinguish the original loan obligation. The Supreme Court upheld this, finding no novation as the compromise simply provided a new payment scheme without changing the underlying loan or parties.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    214 views2 pages

    Spouses Bernardo VS Union Bank

    Uploaded by

    Rizza Angela Mangalleno
    The spouses Bernardo obtained a loan from Union Bank secured by their family home. They defaulted and Union Bank foreclosed on the property. The spouses filed a case claiming improper foreclosure procedures but later entered a compromise agreement to buy back the property. They then defaulted on the compromise payments. Union Bank sought to consolidate its title through a writ of execution. The lower court initially granted relief to the spouses but the appellate court reversed, finding the compromise agreement did not extinguish the original loan obligation. The Supreme Court upheld this, finding no novation as the compromise simply provided a new payment scheme without changing the underlying loan or parties.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 2

    THIRD DIVISION

    SPOUSES ANTHONY ROGELIO BERNARDO and MA. MARTHA BERNARDO, Petitioners,


    VS. UNION BANK OF THE HILIPPINES and the HON. COURT OR APPEALS, Respondents
    G.R. No. 208892 SEPTEMBER 18, 2019
    INTING, J.

    NATURE OF THE CASE:


    Petition for Certiorari under Rule 65 of the Rules of Court assailing the Decision and Resolution of the
    Court of Appeals (CA).

    FACTS:
    Spouses Bernardo (Petitioners) obtained a loan from Union Bank of the Philippines (Union Bank)
    amounting to P3, 032,635.57, secured by a real estate mortgage over a family home located in
    Muntinlupa. Petitioners defaulted in the payment of their loan obligation, as such; Union Bank
    commenced an extrajudicial proceeding over the foreclosed property. In the foreclosure sale, Union Bank
    was the highest bidder, and a Certificate of Sale registered with the Registry of Deeds of Muntinlupa was
    thereafter issued in its favor.

    The Petitioners filed a Complaint for Annulment of the foreclosure sale before the Regional Trial Court
    (RTC) against Union Bank, on the ground of non-compliance with the publication notice requirement
    prior to the foreclosure sale.

    During the pre-trial, the parties executed a Comprise Agreement approved by the RTC. In the Agreement,
    Petitioners agreed to buy back the property for P5, 459,871.19, with the condition that failure to comply
    with the terms shall entitle Union Bank, among others to enforce its rights and remedies under the real
    mortgage contract.

    Petitioners defaulted in their payments in accordance with the payment schedule of the Compromise
    Agreement. Union Bank filed a Motion for Issuance of Writ of Execution before the RTC in order to
    consolidate its title over the foreclosed property. The RTC granted the motion and consequently title to
    the foreclosed property was transferred in Union Bank’s name.

    Petitioners filed a Motion to Quash the Writ of Execution and Notice to Vacate before the RTC. RTC
    granted the motion but ordered only that the writ be stayed only for the purpose of collecting all amounts
    due and outstanding pursuant to the schedule of payments.

    Union Bank filed a Motion for Reconsideration, and while the same was pending, Petitioners filed a
    Motion for Judicial Consignation. Union Bank opposed the motion and countered that there is no need to
    resort to judicial consignation as the bank was already in the process of evaluating the proposal offered by
    petitioners.

    The RTC granted Union Bank’s Motion for Reconsideration and denied petitioner’s Motion for Judicial
    Consignation. The RTC however, ruled that, should petitioners failed to abide by the terms of payment
    under the Compromise Agreement, the remedy of Union Bank was to move for the execution of judgment
    with respect to the amounts due and outstanding and not to take actual control or possession of the subject
    property.

    Union Bank filed a Motion for Reconsideration but the RTC denied the same. Aggrieved, Union Bank
    filed a Petition for Certiorari before the CA.

    The CA granted the Petition and reversed and set aside the Order of the RTC. It upheld the validity of the
    Compromise Agreement; ruled that said agreement did not have the effect of extinguishing Petitioners’
    loan obligation to Union Bank; and pointed out that the agreement simply granted a new payment scheme
    and interest rate to petitioners without any alteration as regards the original loan obligation to the bank.

    Petitioners moved for Reconsideration but the CA denied the same. Hence this Petition.

    ISSUE:
    Whether or not the execution of the Compromise Agreement had the effect of Novating the original Loan
    Obligation. -- (NO)

    RULING:

    A careful perusal of the Compromise Agreement shows that it was executed by the parties for the
    settlement of petitioner’s outstanding loan obligation with Union Bank. They agreed that petitioners
    would buy back the foreclosed property from the bank for P5, 459,871.19, which amount they termed as
    the “purchase price” in the agreement. The purchase price was to be paid under an amortization schedule,
    made an integral part of the agreement that divided payment thereof in equal installments of P72, 170.25
    per month for a period of fifteen (15) years.

    Note in this regard, that the Compromise Agreement specifically referred to the payment of petitioners’
    original loan obligation as the very purpose for its execution. Since there was no real change in the
    original obligation, substitution of the person of the debtor, or subrogation of a third person to the
    rights of the creditor, petitioners’ loan obligation to Union Bank cannot be said to have been
    extinguished by Novation.

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