Litonjua v. L&R Corporation

Topics: Mortgage, Foreclosure, Real estate Pages: 3 (778 words) Published: February 3, 2014
Litonjua v. L&R Corporation
December 9, 1999
Litonjua obtained loans from L&R Corporation secured by a mortgage. Without knowledge of L&R, Litonjua sold to PWHAS the parcels of land they had previously mortgaged to L & R Corporation. When Litonjua defaulted in the payment of their loans, L & R Corporation initiated extrajudicial foreclosure proceedings and L & R Corporation was the only bidder. When L & R Corporation presented its corresponding Certificate of Sale for registration, it learned of the prior sale of the properties made by the Litonjua to PWHAS upon seeing the inscription at the back of the certificates of title.  7 months after the foreclosure sale, PWHAS, for the account of Litonjua tendered payment of the full redemption price to L & R. The latter, however, refused to accept the payment, hence, PWHAS was compelled to redeem the mortgaged properties through the Sheriff. A Certificate of Redemption was issued in favor of Litonjua. L & R Corporation challenges the decision of the court. Issues:

1) W/N a stipulation prohibiting sale of mortgaged property without prior written consent of mortgagee is a valid and enforeceable 2) W/N the redemption of a vendee of the mortgaged property is valid 3) W/n stipulation granting the mortgagee the right of first refusal is valid and enforceable Held:

1)Stipulation Violating Article 2130 of the New Civil Code
Being contrary to law, paragraph 8 of the subject Deed of Real Estate Mortgage is not binding upon the parties.  Accordingly, the sale made by Litonjua to PWHAS, notwithstanding the lack of prior written consent of L & R Corporation, is valid. Such a stipulation violates Article 2130; it attempts to circumvates the said provision which states that “a stipulation forbidding the owner from alienating the immovable mortgaged shall be void.” 2) Redemption by Vendee is Valid (Act 3135)

The sale by Litonjua of the mortgaged properties to PWHAS is valid.  Therefore, PWHAS stepped into the...
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