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450 SUPREME COURT REPORTS ANNOTATED

Hechanova vs. Adil

*
No. L-49940. September 25, 1986.

GEMMA R. HECHANOVA, accompanied by her husband,

NICANOR HECHANOVA, JR., and PRESCILLA R. MASA,
accompanied by her husband, FRANCISCO MASA,
petitioners, vs. HON. MIDPANTAO L. ADIL, Presiding
Judge, Branch II, Court of First Instance of Iloilo, THE
PROVINCIAL SHERIFF OF ILOILO, and PIO
SERVANDO, respondents.

Civil Law; Sales, Mortgage; No valid mortgage was

constituted where the alleged deed of mortgage was a mere private
document and not registered; Stipulation vesting sole ownership
on mortgagee in case of failure to redeem the property is pactum
commissorium which is null and void; Foreclosure of mortgage,
not annulment of sale.—It is clear from the records of this case
that the plaintiff has no cause of action. Plaintiff has no standing
to question the validity of the deed of sale executed by the
deceased defendant Jose Servando in favor of his co-defendants
Hechanova and Masa. No valid mortgage has been constituted in-
plaintiff’s favor, the alleged deed of mortgage being a mere private
document and not registered, moreover, it contains a stipulation
(pacto comisorio) which is null and void under Article

_______________

* FIRST DIVISION.

451

VOL. 144, SEPTEMBER 25, 1986 451

Hechanova vs. Adil

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2088 of the Civil Code. Even assuming that the property was
validly mortgaged to the plaintiff, his recourse was to foreclose
the mortgage, not to seek annulment of the sale.

PETITION to review the decision and order of the Court of

First Instance of Iloilo.

The facts are stated in the opinion of the Court.

YAP, J.:

Petitioners seek the annulment of various orders issued by

the respondent Presiding Judge of Branch II, Court of First
Instance of Iloilo, in Civil Case No. 12312 entitled “Pio
Servando versus Jose Y. Servando et al.”. A temporary
restraining order was issued by this Court on May 9, 1979,
staying until further orders the execution of the decision
rendered by the respondent Judge in said case.
The case under review is for the annulment of a deed of
sale dated March 11, 1978, executed by defendant Jose Y.
Servan-do in favor of his co-defendants, the petitioners
herein, covering three parcels of land situated in Iloilo City.
Claiming that the said parcels of land were mortgaged to
him in 1970 by the vendor, who is his cousin, to secure a
loan of P20,000.00, the plaintiff Pio Servando impugned the
validity of the sale as being fraudulent, and prayed that it
be declared null and void and the transfer certificates of
title issued to the vendees be cancelled, or alternatively, if
the sale is not annulled, to order the defendant Jose
Servando to pay the amount of P20,000.00, plus interests,
and to order defendants to pay damages. Attached to the
complaint was a copy of the private document evidencing
the alleged mortgage (Annex A), which is quoted
hereunder:

“August 20, 1970

“This is to certify that I, Jose Yusay Servando, the sole
owner of three parcel of land under Tax Declaration
No. 28905, 44123 and 31591 at Lot No. 1, 1863-Portion
of 1863 & 1860 situated at Sto. Nino St., Arevalo,
Compania St. & Compania St., Interior Molo,
respectively, have this date mortgaged the said
property to my

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Hechanova vs. Adil

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cousin Pio Servando, in the amount of TWENTY

THOUSAND PESOS (P20,000.00), redeemable for a
period not exceeding ten (10) years, the mortgage
amount bearing an interest of 10% per annum.
I further certify that in case I fail to redeem the said
properties within the period stated above, my cousin
Pio Servando, shall become the sole owner thereof.
(SGD.) JOSE YUSAY SERVANDO

WITNESSES:

(Sgd) Ernesto G. Jeruta

(Sgd) Francisco B. Villanueva”

The defendants moved to dismiss the complaint on the

grounds that it did not state a cause of action, the alleged
mortgage being invalid and unenforceable since it was a
mere private document and was not recorded in the
Registry of Deeds; and that the plaintiff was not the real
party in interest and, as a mere mortgagee, had no
standing to question the validity of the sale. The motion
was denied by the respondent Judge, in its order dated
June 20, 1978, “on the ground that this action is actually
one for collection.”
On June 23, 1978, defendant Jose Y. Servando died. The
defendants filed a Manifestation and Motion, informing the
trial court accordingly, and moving for the dismissal of the
complaint pursuant to Section 21 of Rule 3 of the Rules of
Court, pointing out that the action was for recovery of
money based on an actionable document to which only the
deceased defendant was a party. The motion to dismiss was
denied on July 25, 1978, “it appearing from the face of the
complaint that the instant action is not purely a money
claim, it being only incidental, the main action being one
for annulment and damages.”
On August 1, 1978, plaintiff filed a motion to declare
defendants in default, and on the very next day, August 2,
the respondent Judge granted the motion and set the
hearing for presentation of plaintiff’s evidence ex-parte on
August 24, 1978.

453

VOL. 144, SEPTEMBER 25, 1986 453

Hechanova vs. Adil

On August 2, 1978, or the same day that the default order

was issued, defendants Hechanova and Masa filed their

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Answers, denying the allegations of the complaint and

repeating, by way of special and affirmative defenses, the
grounds stated in their motions to dismiss.
On August 25, 1978, a judgment by default was
rendered against the defendants, annulling the deed of sale
in question and ordering the Register of Deeds of Iloilo to
cancel the titles issued to Priscilla Masa and Gemma
Hechanova, and to revive the title issued in the name of
Jose Y. Servando and to deliver the same to the plaintiff.
The defendants took timely steps to appeal the decision
to the Court of Appeals by filing a notice of appeal, an
appeal bond, and a record on appeal. However, the trial
court disapproved the record on appeal due to the failure of
defendants to comply with its order to eliminate therefrom
the answer filed on August 2, 1978 and accordingly,
dismissed the appeal, and on February 2, 1978, issued an
order granting the writ of execution prayed for by plaintiff.
We find the petition meritorious, and the same is hereby
given due course.
It is clear from the records of this case that the plaintiff
has no cause of action. Plaintiff has no standing to question
the validity of the deed of sale executed by the deceased
defendant Jose Servando in favor of his co-defendants
Hechanova and Masa. No valid mortgage has been
constituted in plaintiff’s favor, the alleged deed of mortgage
being a mere private document and not registered;
moreover, it contains a stipulation (pacto comisorio) which
is null and void under Article 2088 of the Civil Code. Even
assuming that the property was validly mortgaged to the
plaintiff, his recourse was to foreclose the mortgage, not to
seek annulment of the sale.
WHEREFORE, the decision of the respondent court
dated August 25, 1973 and its Order of February 2, 1979
are set aside, and the complaint filed by plaintiff dated
February 4, 1978 is hereby dismissed.
SO ORDERED.
454

          Narvasa, Melencio-Herrera, Paras** and Feliciano,

JJ., concur.

     Cruz, J., on leave.

Decision and order set aside. Complaint dismissed.

——o0o——

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