CASE NO. 8 MALAYAN BANK VS. LAGRAMA (G.R. No.
144884 Apr 27, 2001)
Facts:
Demetrio Llego, one of the defendants in the original complaint filed in the RTC of Lucena, inherited from his father a
portion of land in Silangang Mayao, Lucena City. This portion was part of a bigger parcel of land, which were
inherited by Llego’s mother and siblings. The heirs undertook the apportionment of the inherited parcel of land
informally, without executing a written extra-judicial partition thereof. As a result, title to the property remained in the
name of Llego's father.
Llego sold his portion to his uncle, respondent Lagrama and his aunt Abastillas. It was paid in installments, however,
Llego did not execute a deed of sale as the title was still in the name of his father. Llego promised that as soon as the
title was transferred in his name, he would immediately execute a deed of absolute sale in favor of the buyers, to
which they agreed. Private respondent Lagrama and Abastillas entered into and took possession of the portion of land
sold to them by Llego and paid the purchase price in full.
On March 6, 1979, Llego and his co-heirs extra-judicially partitioned the property and a new title was issued to Llego
for his share.
On November 12, 1982, Llego, through his attorney-in-fact, Ceferino Tan, mortgaged the land to the Republic
Planters Bank . As Llego failed to pay his indebtedness to petitioner bank, the mortgage was foreclosed and the
property was sold to the bank as the highest bidder. It appears that Llego likewise failed to redeem the property.
Private respondent now filed a complaint for specific performance to compel Llego to execute the necessary deed of
absolute sale in his favor. Impleaded as co-defendants were Ceferino Tan and petitioner bank. Llego did not answer
the complaint and was, for that reason, declared in default. Petitioner bank, in its answer, pleaded that it was a
mortgagee in good faith.
The court ruled ordering Llego to execute the necessary conveyance for him and defendant Ceferino Tan to redeem
the said property from the defendant bank. Consequently, the Register of Deeds of Quezon is directed to cancel the
transfer certificates and register the land in favor of the respondents.
Republic Planters Bank appealed but was dismissed making the court decision final. Thereafter, a writ of execution
was issued but it was returned unsatisfied because it turned out that petitioner bank had consolidated its title over the
land in dispute for failure of Demetrio Llego to redeem it. rivate respondents then filed a motion to require the
petitioner bank to execute the necessary deed of reconveyance, which was opposed by the latter. The trial court
granted the motion. Petitioner bank moved for reconsideration, but its motion was denied. CA affirmed the decision.
Issue: WoN the bank can be compelled to execute a deed of reconveyance transferring the land to the Lagrama family.
[Yes]
Ruling:
Petitioner bank was a transferee pendente lite whose title was subject to the incidents and results of the pending
litigation. Petitioner bank contends that it constituted the mortgage more than a year before the private respondents'
action for specific performance was filed and the fact that the foreclosure and public auction sale took place after the
institution of the case is immaterial since the foreclosure sale retroacts to the date of the constitution of the mortgage.
Petitioner bank argues that it was a purchaser for value long before the filing of the case and, therefore, it cannot be
considered a transferee pendente lite. This argument is specious. Petitioner acquired the property only after the filing
of private respondents' case for specific performance. When the mortgage was constituted, petitioner was not yet,
properly speaking, a transferee, being a mere mortgagee of the property. Only when petitioner acquired the property in
the foreclosure sale and subsequently consolidated its title did it become the transferee of the property. As such, it is
bound by the decision against Demetrio Llego.
Petitioner bank may thus be properly ordered to execute the necessary deed of reconveyance in favor of private
respondents. The remedy left to petitioner is to pursue its claim against Llego and his attorney-in-fact Ceferino Tan by
filing the appropriate action to recover the unpaid indebtedness.
