- Petitioner
- Mamerta Vda. de Jayme
- Respondent
- Hon. Court of Appeals
- Citation
- G.R. No. 128669
- Court
- Supreme Court
- Division
- Second Division
- Ponente
- Quisumbing, J.
- Decided
- October 4, 2002
Summary
The Jayme spouses owned property that was leased to Cebu Asiancars Inc. with a stipulation that any building constructed would transfer to them upon lease termination. When Asiancars needed a P6,000,000 loan from MBTC, the spouses mortgaged their entire property as security, assisted by counsel and after consulting their children. Asiancars defaulted, and MBTC foreclosed the mortgage, purchasing the property at public auction in 1981. Asiancars also transferred the building to MBTC via dacion en pago. The Jaymes sued claiming fraud and seeking annulment, but the Supreme Court upheld the mortgage's validity, finding no vitiated consent. The Court recognized third-party mortgages under the Civil Code and held that the spouses lost their redemption rights after failing to redeem within the prescribed period. While MBTC was declared the rightful owner, Asiancars and its officers remained liable under their undertaking to compensate the Jaymes, with damages totaling over P4 million. The decision demonstrates the binding nature of third-party mortgages and the importance of understanding contractual obligations in commercial transactions.