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Litonjua Vs LR Corporation

Spouses Litonjua obtained a loan secured by their properties but defaulted, so the property was sold to the lender L&R Corporation. However, the spouses had previously sold the property to PWHAS without L&R's consent per their contract. PWHAS redeemed the property but L&R refused payment. The court ruled the contract provision prohibiting sale without consent was invalid and the redemption by PWHAS for the spouses was valid.

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622 views1 page

Litonjua Vs LR Corporation

Spouses Litonjua obtained a loan secured by their properties but defaulted, so the property was sold to the lender L&R Corporation. However, the spouses had previously sold the property to PWHAS without L&R's consent per their contract. PWHAS redeemed the property but L&R refused payment. The court ruled the contract provision prohibiting sale without consent was invalid and the redemption by PWHAS for the spouses was valid.

Uploaded by

Red Hale
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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LITONJUA VS L & R CORPORATION

G.R. No. 130722. December 9, 1999.

Facts

Spouses Litonjua obtained a loan from L&R Corporation in the aggregate amount of
P400,000, which was secured by a mortgage upon their two parcels of lands in Quezon City.
With Spouses Litonjua defaulted on their loans, L&R Corporation initiated extra-judicial
foreclosure proceedings, and the lands were sold to L&R Corporation as the sole bidder. L&R
Corporation learned for the first time, when it presented the Certificate of Sale to the Register of
Deeds, of the prior sale of the spouses to Philippine White House Auto Supply, Inc. (PWHAS)
L&R Corporation invoked the provision in the mortgage contract that a prior written consent in
case of subsequent encumbrance or alienation. PWHAS, for the account of the spouses, tendered
payment of the full redemption price, however, the L&R Corporation refused to accept the
payment. Hence, PWHAS was compelled to redeem the mortgaged properties through the
sheriff. The Register of Deeds issued a TCT in favor of L&R Corporation. The spouses filed an
adverse claim and Quieting of Title.

Issue

Whether the sale to PWHAS and the redemption effected by the spouses were valid.

Ruling

Yes. Stipulation prohibiting the mortgagor from selling his mortgaged property without
the consent of the mortgagee violates Article 2130 of the New Civil Code. The provision does
not absolutely prohibit the mortgagor from selling his mortgaged property; but what it does not
outrightly prohibit, it nevertheless achieves. Being contrary to law, paragraph 8 of the subject
Deed of Real Estate Mortgage is not binding upon the parties.

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