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Timestamp: 2019-04-19 00:32:34+00:00

Document:
Sps. Yap vs. Sps. Dy, Et Al.
HON. COURT OF APPEALS and SPOUSES EDILBERTO and MARCIANA TADIAMAN, respondents.
This petition for review on certiorari seeks to set aside the decision of the Court of Appeals in CA-G.R. CV No.
truck was brought by such persons all the way back to Metro Manila.
aforesaid Court Order, was already delivered to their main garage at Bo.
transferred to any other place.
company lawyer would say so.
it on February 14, 1983.
compound owned by other person.
the discovery of the whereabouts of said cargo truck by the undersigned.
were completely changed with worn-out spare parts.
replaced parts were not mentioned in said receipt.
September 26, 1982, with interest thereon at 14% per annum from said date.
(c) The costs of suit.
which is the sway and dominance of justice.
(5) Proportionate part of the costs adjudged against plaintiff.
actually recover the vehicle, as reported by the deputy sheriff above.
1986. PAMPANGA. 15. . . ACTED WITH GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF JURISDICTION WHEN IT SUSTAINED THE ERRONEOUS DECISION OF THE HONORABLE REGIONAL TRIAL COURT BRANCH 46 OF SAN FERNANDO. .s. . & 3. if the truck was stripped of vital parts.. . ERRED GRIEVOUSLY WHEN IT EXONERATED PRIVATE RESPONDENTS FROM PAYING THE PETITIONER ON THE LATTER'S LEGITIMATE CLAIMS UNDER THE COMPLAINT PARTICULARLY ON THE UNPAID PROMISSORY NOTE MADE BY THE PRIVATE RESPONDENTS. 1981 AND THE SUBSEQUENT 9 INSTALLMENTS OR UP TO AUGUST 15. . (e) . Filinvest maintains that: (g) THERE IS NO PROOF TO SUSTAIN THE AWARD OF MORAL DAMAGES FOR P50. "10" and "11"). . PAGE 1) OF THE DEFENDANTS (PRIVATE RESPONDENTS) THAT THEY HAVE DULY EXECUTED A PROMISSORY NOTE SECURED BY A DEED OF CHATTEL MORTGAGE AND THAT THE PRIVATE RESPONDENTS VIOLATED THE TERMS OF THE PROMISSORY NOTE IN FAILING TO PAY THE INSTALLMENTS DUE THEREON FOR NOV. 7 Additionally. . ACTED CONTRARY TO LAW WHEN IT IGNORED THE PLAIN ADMISSIONS IN THE ANSWER (AT PARAGRAPH 2. . ACTED WITH GRAVE ABUSE OF DISCRETION AND CONTRARY TO EXISTING LAW AND JURISPRUDENCE WHEN [IT] SUSTAINED THE SPECULATIVE FINDING OF THE RTC THAT THE PETITIONER "CANNIBALIZED" THE MORTGAGED VEHICLE. Exhibits "'9".000. October 2. (f) . 40. . DECIDED A QUESTION OF SUBSTANCE IN A WAY NOT IN ACCORD WITH LAW AND THE APPLICABLE DECISIONS OF THIS HONORABLE COURT WHEN IT REVERSED THE DECISION OF THE REGIONAL TRIAL COURT OF MANILA. (c) . Tadiaman that they had to buy the missing parts in order to make the truck run (t.n. p. Plaintiff-appellant conveniently overlooks the testimony of defendant-appellee Mrs.00 ACCORDINGLY THERE IS NO BASIS FOR THE AWARD OF EXEMPLARY DAMAGES. (d) .because. . 1982. 8 We gave due course to the petition and required the parties to submit their respective memoranda after the filing of the comment to the petition by the private respondents and of the reply thereto by Filinvest. it could not have been driven by the defendants-appellees all the way back to Cabanatuan City. 6 Filinvest now comes to us alleging that the Court of Appeals: (a) . (b) . . . The parties subsequently filed their memoranda which merely reiterated the arguments in their respective initiatory pleadings. BRANCH 9. ERRED IN REFUSING TO APPLY THE TERMS AND CONDITIONS OF THE PROMISSORY NOTE AND THE DEED OF CHATTEL MORTGAGE SIGNED BY THE PONCES "AS THE LAW BETWEEN THE PARTIES" TO THE CONTRACT SUBJECT OF THE SUIT IN THE RTC.
the judge of such court shall issue an order describing the personal property alleged to be wrongfully detained. and retain it in his custody. . Filinvest justified its seizure by citing a statement in Bachrach Motor Co. it was not the sheriff or any other proper officer of the trial court who implemented the writ of replevin. Yet. and requiring the sheriff or other proper officer of the court forthwith to take such property into his custody. either to effect a judicial foreclosure directly. for. . The first ground raised herein by Filinvest is baseless since the discussions or arguments in Filinvest's petition and memorandum fail to disclose what the decision of Branch 9 of the RTC of Manila is all about.. So is the fourth ground. if it be in the possession of the defendant or his agent. — Upon receiving such order the officer must serve a copy thereof on the defendant together with a copy of the application. Filinvest's disquisitions on such irrelevant issues are confounded. affidavit and bond. to secure possession as a preliminary to the sale contemplated in the provision above quoted. Pertinent portions of Bachrach read as follows: Where. 2d ed. 9 to wit. In any event. 28 Am. Rule 60 of the Rules of Court are very clear and direct as to the procedure for the seizure of property under a writ of replevin. Order. "if possession cannot be peaceably obtained the mortgagee must bring an action. — Upon the filing of such affidavit and bond with the clerk or judge of the court in which the action is pending. Duty of the officer. the unappealed portion of the trial court's decision did in fact order the private respondents to pay Filinvest the unpaid balance of the promissory note.The only relevant issue in this petition is whether or not the Court of Appeals committed reversible error in dismissing Filinvest's appeal from the decision of the trial court on the private respondents' counterclaim and in affirming in toto the said decision. the creditor must institute an action." (Trust Deeds and Power of Sale Mortgages. 4. debtor refuses to yield up the property. Summers. & Eng. 3. vs. thus: Sec.) In the Article of Chattel Mortgages. Encyc. As was said may years ago by the writer of this opinion in a monographic article contributed to an encyclopedic legal treatise. in Corpus Juris. and must forthwith take the property. it used its own employees who misrepresented themselves as deputy sheriffs to seize the truck without having been authorized by the court to do so. but because of the manner it carried out the seizure of the vehicle. Upon this point the American authorities are even more harmonious that they are upon the point that the creditor is entitled to possession. Because it was aware that no other person can implement the writ. subjecting himself to an action for trespass. however. Sec. with interest and attorney's fees. it must bring a civil action either to recover such possession as a preliminary step to the sale or to obtain judicial foreclosure. the Court of Appeals correctly ruled that Filinvest is liable for damages not because it commenced an action for replevin to recover possession of the truck prior to its foreclosure." This justification is misplace and misleading for Bachrach itself had ruled that if a mortgagee cannot obtain possession of a mortgaged property for its sale on foreclosure. He cannot lawfully take the property by force against the will of the debtor. Filinvest asked the trial court to appoint a special sheriff. Sections 3 and 4. 783. As to the sole issue defined above. (emphasis supplied) In the instant case. "the only restriction on the mode by which the mortgagee shall secure possession of the mortgaged property after breach of condition is that he must act in an orderly manner and without creating a breach of the peace. . we find the following statement of the law on the same point: "The only restriction on the mode by which the mortgagee shall secure possession of the mortgaged property after breach of condition is that . All the other grounds are deemed waived for not having been raised in the appeal to the Court of Appeals. of Law.
His possession in this situation is as fully entitled to protection as that of any other person. may claim in good faith. or that for some other reason the alleged default is nonexistent. .L.) The reason why the law does not allow the creditor to possess himself of the mortgaged property with violence and against the will of the debtor is to be found in the fact that the creditor's right of possession is conditioned upon the fact of default. it should have left the enforcement of the writ in accordance with Rule 60 of the Rules of Court which it had voluntarily invoked. 560. can seize the property where the creditor could not.J. could safely proceed to take the property from the debtor. 2. Whether the sheriff. the result must in this case be the same.." and it might be supposed that an officer. becomes pro hac vice the mere agent of the creditor..C. and the existence of this fact may naturally be the subject of controversy. (11 C. 462. The conclusion is clear that for the recovery of possession. Neither can he do through the medium of a public officer that which he cannot directly do himself. where the right is disputed. so far as with the provisions of the Chattel to Mortgage Law. which reads: Sec. . (a) Rule 60). . . that the debt is paid. the creditor must proceed along the usual channels by action in court. The debtor. and no intention on the part of the law-making body to impose such a duty can be implied. see also 5 R. for whether the mortgagee becomes the real owner of the mortgaged property — as some suppose — or acquires only certain rights therein. To allow the creditor to seize the property against the will of the debtor would make the former to a certain extent both judge and executioner in his own cause — a thing which is inadmissible in the absence of unequivocal agreement in the contract itself or express provision to that effect in the statute. Affidavit and bond. by filing it. is a point upon which we express no opinion. as provided in the same paragraph cited by the trial court. though it cannot be admitted that he may take the law into his own hands and wrest the property violently from the possession of the mortgagor. for instance. without force. such as the sheriff. Filinvest did in fact institute such an action and obtained a writ of replevin. we think. The consequence is that in such case the creditor must either resort to a civil action to recover possession as a preliminary to a sale. 10 Replevin is. of course. subjecting himself to an action to trespass." 11 It is not only the owner who can institute a replevin suit. Accordingly. it must be observed that the trial court erred in holding that the action for replevin was "not in order as [Filinvest] is not the owner of the property (Sec. And. — Upon applying for such order the plaintiff must show . . and rightly or wrongly. Parenthetically. it is none the less clear that he has after default the right of possession. It will be observed that the law places the responsibility of conducting the sale upon "a public officer. But whatever conclusion may be drawn in the premises with respect to the true nature of a chattel mortgage.he must act in an orderly manner and without creating a breach of the peace. A person "entitled to the possession" of the property also can. 2 par. as it is manifest that the sheriff or other officer proceeding under the authority of the language already quoted from section 14 of the Chattel Mortgage Law. There is nothing in this provision which creates a specific duty on the part of the officer to seize the mortgaged property. This suggestion is. the appropriate action to recover possession preliminary to the extrajudicial foreclosure of a chattel mortgage. upon being indemnified by the creditor. or preferably he may bring an action to obtain a judicial foreclosure in conformity. and in the language of article 446 of the Civil Code he must be respected therein. Filinvest admitted that it cannot acquire possession of the mortgaged vehicle in an orderly or peaceful manner. .
00 — and not P50.000. freedom from intention to defraud. thereby justifying the award of moral damages along with the exemplary and other damages in favor of the private respondents. social humiliation. means being faithful to one's duty or obligation. hiding it from the private respondents. particularly describing it." 15 As to actual damages. 19 The acts of fraudulently taking the truck.00 which they incurred "as a direct result of [petitioner's] illegal and unwarranted actuations and in connection with the defense of this action. The petitioner's acts clearly fall within the contemplation of Articles 19 and 21 of the Civil Code. and removing its spare parts show nothing but a willful intention to cause loss to the private respondents that is punctuated with bad faith and is obviously contrary to good customs. (c) nominal damages of P30. and 21 of the Civil Code. .000. wrongful and unlawful acts". In common usage. . the private respondents are entitled to the moral damages they prayed for. the private respondents asked for (a) actual damages of P50. sleepless nights and other similar injury" which they suffered as a "proximate result of the [petitioner's illegal. as a mortgagee." 16 The petitioner may thus be held liable only for such amount for actual or compensatory damages. 13 It consists of the honest intention to abstain from taking an unconscionable and unscrupulous advantage of another. 12 However. for under Article 2219 of the Civil Code. the petitioner admits that per Exhibits "1. Filinvest. .000.00.00 which the trial court did not award them. had the right to the possession of the property mortgaged preparatory to its sale in a public auction. Filinvest committed bad faith in violation of Article 19 of the Civil Code which provides: Every person must.000. give everyone his due. misleading them.00 — was "supposedly spent for the alleged lost spare parts.00 for the spare parts found missing after their recovery of the truck and another P50.000. moral shock. serious anxiety. we cannot make anymore such award at this point.(a) That the plaintiff is the owner of the property claimed. 14 This leaves us to the issue of damages and attorney's fees.222. Having failed to appeal this omission by the trial court. In their answer with counterclaim. and (e) attorney's fees of P20. and." and "10" of the private respondents.000. the trial court ruled that the acts of the petitioner were in total disregard of Articles 19. The private respondents prayed for nominal damages of P30. Thus.00. (d) exemplary damages of P20. .00 for unearned profits due to the failure to use the truck in their ricemill business. only the sum of P33. and making them work for the release of the truck for about two weeks.000.000. moral damages may be recovered in cases involving acts referred to in Article 21 of the same Code. (b) moral damages of P50. 18 We agree with this finding of the trial court. and observe honesty and good faith. act with justice. but had also caused the private respondents to suffer indignities at the hands of the petitioner's personnel in hiding the truck in question. in the exercise of his rights and in the performance of his duties." "9. or is entitled to the possession thereof. Anent the moral damages. 20. wounded feelings. generally speaking. physical suffering. (emphasis supplied) Upon the default by the mortgagor in his obligations. 17 It added that the petitioner had not only caused actual damages in lost earnings. good faith is ordinarily used to describe that state of mind denoting honesty of purpose. for employing subterfuge in seizing the truck by misrepresenting its employees as deputy sheriffs and then hiding and cannibalizing it.00 for "the mental anguish.
besmirched reputation.000.. for its determination is addressed to the sound discretion of the court upon proof of the plaintiff's entitlement to moral. JJ. the petitioner is hereby ordered to pay the private respondents only the following: (a) actual damages in the reduced amount of P33.. There would then be no basis for awarding attorney's fees in favor of the private respondents for whatever physical suffering. Article 2232 of the Civil Code provides: In contracts and quasi-contracts. . 6599 on the counterclaim is AFFIRMED.00. concur.222. Padilla. The private respondents did not appeal therefrom. and (c) exemplary damages in the amount of P20. . Hermosisima. and oppressive manner by which the petitioner sought to enforce its right to the possession of the mortgaged vehicle. J. for the law could not have meant to impose a penalty on the right to litigate. or actual or compensatory damages. serious anxiety.00. reckless. even if proven. or any other similar injury they had suffered.000.. fraudulent. subject to the modifications abovestated. CV No. Branch 46 in Civil Case No. Footnotes . the court may award exemplary damages if the defendant acted in a wanton. Bellosillo and Kapunan.00. (b) moral damages in the amount of P50.R. be set aside. As so modified. is on leave. temperate. social humiliation. The award for attorney's fees must. Of course. Article 2234 of the Civil Code thus provides in part as follows: While the amount of the exemplary damages need not be proved. mental anguish. temperate or compensatory damages before the court may consider the question of whether or not exemplary damages should be awarded. the assailed judgment of the Court of Appeals in CA-G. however. 20 WHEREFORE. fraudulent. were only such as are usually caused to parties haled into court as a defendant and which are not compensable. There is no question that the petitioner filed in good faith its complaint for replevin and damages to protect its rights under the promissory note and the chattel mortgage. . SO ORDERED. No pronouncement as to costs.The award of exemplary damages is in order in view of the wanton. wounded feelings. That the private respondents had defaulted in its obligation under the promissory note thereby authorizing the petitioner to seek enforcement of its claim thereunder and proceed against the mortgage of the vehicle was duly recognized by the trial court by its judgment against the private respondents incorporated in the first part of the dispositive portion. Jr. oppressive. moral shock. a plaintiff need not prove the actual extent of exemplary damages. Pampanga. or malevolent manner. 30231 as well as that of the Regional Trial Court of San Fernando. the plaintiff must show that he is entitled to moral.
248 SCRA 549).R. inherited from his father a portion of a parcel of land situated in Barangay Silangang Mayao. of the Regional Trial Court. the necessary deed of reconveyance called for in the order of the Court dated 17 May 1993 in favor of the plaintiffs. 2000. Lagrama 357 SCRA 429 (2001) THE MALAYAN BANK (Formerly Republic Planters Bank). J. and the COURT OF APPEALS. The background of the case is as follows: Demetrio Llego. or to obtain judicial foreclosure. (Filinvest Credit Corp. No. SP No. The Malayan Bank vs. defendant Republic Planters Bank is hereby ordered to execute within twenty (20) days from receipt hereof. 1995. one of the defendants in the original complaint filed in the Regional Trial Court of Lucena City. Lucena City. September 27. DANILO LAGRAMA. Branch 56. respondents.R. There is. G. AGUSTIN LAGRAMA. vs.: This is a petition for review of the decision. of the Court of Appeals in CA-G. EDGARDO LAGRAMA. a well-defined procedure for the recovery of possession of mortgaged property: if a mortgagee is unable to obtain possession of a mortgaged property for its sale on foreclosure. he must bring a civil action either to recover such possession as a preliminary step to the sale. CORAZON LAGRAMA. 115902. SO ORDERED. Lucena City. were inherited by Llegos . affirming an order. ARTEMIO LAGRAMA. petitioners. FROM THE FOREGOING. v. CA. dated September 29. the other portions of which. DECISION MENDOZA.a mortgagee may take steps to recover the mortgaged property to enable it to enforce or protect its foreclosure right thereon.  dated April 17. in turn. however. the dispositive portion of which reads: WHEREFORE. 1998. 53856. This portion was part of a bigger parcel of land.
mortgaged the land to the Republic Planters Bank for P45. Petitioner bank.  On March 6. On the other hand. declared in default. execute a deed of sale of the lot as title to the lot was still in his fathers name. 1977.mother and siblings. Impleaded as co-defendants were Ceferino Tan and petitioner bank.000. Llego did not. A new title was issued to Llego for his share. Ceferino Tan. on March 26.e. however.  On May 17. the Court finds the case of the plaintiffs and conformably declares that plaintiffs [herein private . Llego. On November 12. private respondent Lagrama and Abastillas entered into and took possession of the portion of land sold to them by Llego. Tan alleged that he acted as Llegos attorney-in-fact only as an accommodation. The heirs undertook the apportionment of the inherited parcel of land informally. The lot was to be paid in installments. 1976. and his aunt Paz Abastillas his share in the inherited parcel of land. private respondent Lagrama and Abastillas paid the balance of the purchase price of the lot sold to them. As Llego failed to pay his indebtedness to petitioner bank. in its answer. the portion of the land he had previously sold to private respondent Lagrama. 1979. through his attorney-in-fact. 1982. It appears that Llego likewise failed to redeem the property. the dispositive portion of which stated: WHEREFORE. private respondents filed with the trial court a complaint for specific performance to compel Llego to execute the necessary deed of absolute sale in their favor. In 1983.  Notwithstanding the absence of a deed of sale. Llego did not answer the complaint and was. pleaded that it was a mortgagee in good faith. As a result. to which they agreed.i. title to the property remained in the name of Llegos father.. the lower court rendered its decision. for that reason. On December 23. he would immediately execute a deed of absolute sale in favor of the buyers. On March 25. by reason of the overwhelming evidence presented.00.Llego promised that as soon as the title was transferred in his name. Llego sold to his uncle. Llego and his co-heirs extrajudicially partitioned the propertyleft by their father. 1993. without executing a written extrajudicial partition thereof. the mortgage was foreclosed and the property was sold to the bank as the highest bidder. 1976. herein private respondent Agustin Lagrama.
The Court of Appeals held: It is well to remember that Republic Planters Bank was impleaded in the action below precisely because plaintiffs therein. Llego engaged in a scheme designed to defraud plaintiffs. Thereafter. a writ of execution was issued. now private respondents Agustin Lagrama. On appeal.. which was opposed by the latter. Neither did Ceferino Tan offer any evidence . questioned the act of Demetrio Llego in mortgaging the property to the bank despite the fact that he had previously sold the same to Agustin Lagrama. by his acts. the decision of the lower court became final. 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. Plaintiffs not being able to prove damages. but the appeal was dismissed for its failure to file the brief on time. 1995 in favor of the plaintiffs.  Private respondents then filed a motion to require the petitioner bank to execute the necessary deed of reconveyance.  Petitioner bank moved for reconsideration. 1998.respondents] herein are the absolute owners of the land in question and defendant Demetrio Llego is heretofore directed to execute the necessary conveyance for him and defendant Ceferino Tan to redeem the said property from the defendant bank. Edgardo Lagrama. Republic Planters Bank appealed. the Register of Deeds of Quezon is directed to cancel Transfer Certificate of Title No. In its decision. T-31753 and upon the execution and registration of the corresponding deed of sale the title be registered in the names of plaintiffs Agustin Lagrama. The court noted that Llego did not even bother to answer the complaint and allowed himself to be declared in default. On September 29. the Court of Appeals rendered its questioned decision affirming the trial courts decision and dismissing the petition. the trial court granted private respondents motion and ordered Republic Planters Bank to execute the necessary deed of reconveyance called for in the order of the Court dated May 17. SO ORDERED. the Court denies the same. the court found that. Danilo Lagrama. Artemio Lagrama and Corazon Lagrama. As a consequence. but its motion was denied. et al. Consequently.
It was aware of the charge of fraud imputed to Demeterio Llego in mortgaging the property to the bank despite the previous sale thereof to Agustin Lagrama. Consequently. The court in fact ordered the Register of Deeds to cancel the title (TCT No. It was. Hence. in conspiracy with Llego. the court may by an order divest the title of any party and vest it in others. Now. The main question in this case is whether or not petitioner bank may be compelled to execute a deed of reconveyance transferring the parcel of land mortgaged to petitioner in favor of private respondents. when execution of the final judgment was made. 1998 on the allegation that it is a mortgagee in good faith. which shall have the same form of a conveyance executed in due form of law. invoked the remedy provided for in section 10(a) of the 1997 Revised Rules of Civil Procedure which provides that in lieu of directing a conveyance of the property. the bank consolidated its title over the property. The court indeed found the existence of fraud in the transaction. to effect the conveyance to the plaintiffs. title to the land was still in the name of Demetrio Llego. it could not be insisted that Llego should effect the . Hence this petition. the sheriff reported that defendant (Demeterio) Llego refused to sign the document of reconveyance while defendant Ceferino Tan cannot be located. It stressed that title to the property had been consolidated in the name of the bank by virtue of the failure of Llego to redeem the mortgage. T-31753) of Llego and issue a new title to the Lagramas upon the execution and registration of the corresponding deed of sale.This therefore explains why the court in its judgment ordered Llego himself. The bank appealed the decision of the court but its appeal was thrown out. and not the mortgagee bank. during the proceedings. private respondents. as prevailing parties. Meantime. How then can the bank insist on its protestation that it has a good title thereto?  Petitioner banks motion for reconsideration was likewise denied.to counteract the imputation of fraud against him. Republic Planters Bank cannot blunt the impact of the courts order of September 29. The Court of Appeals rejected the contention that petitioner cannot be compelled to execute the deed of reconveyance since it was Demetrio Llego himself who was ordered by the court to do so. Significantly. impleaded as a defendant in the action for specific performance. to repeat.
Several circumstances militate against petitioners argument that the mortgage in its favor and the subsequent foreclosure and consolidation of title of the property under its name must be protected and respected. more than one year after the mortgage was validly constituted on November 12. has already attained finality as petitioners appeal to the Court of Appeals was dismissed for being filed out of time. In the complaint for specific performance filed by private respondents. Petitioners contentions are without merit.reconveyance. petitioner contends that the foreclosure sale in the case at bar must be treated to have taken place not on the actual date of the sale or during the pendency of the case but on the date the mortgage was executed and registered. Petitioner likewise cites St. petitioner cannot be considered a transferee pendente lite and it could not be accused of being aware of the flaw on said title when it transferred the property. 1982 when the same was mortgaged to it by Demetrio Llego. The Court of Appeals agreed with the trial court that the bank took title to the property pendente lite and. 1993. As it was an innocent purchaser for value long before the case against it was filed. 1984. As correctly pointed out by private respondents in their comment. more than one year before the case in the lower court was filed. whatever . First. Consequently. in which it was held that the foreclosure sale retroacts to the date of the registration of the mortgage and that a person who takes a mortgage in good faith and for valuable consideration. This being the case. petitioner contends that it is a mortgagee in good faith and for value of the property as of March 12. the record showing clear title to the mortgagor. 1982. The trial courts decision. therefore. dated May 17. Prescinding from this. Intermediate Appellate Court.  On the other hand. It points out that the complaint for specific performance was filed by private respondents only on May 3. v. Dominic Corp. it could not be considered a transferee pendente lite. or on November 12. 1982. it was bound by the courts decision. the instant petition is improper considering that it attempts to reverse the trial courts decision which is already final and executory. petitioner bank was impleaded as co-defendant along with Demetrio Llego and Ceferino Tan. will be protected against equitable claims on the title in favor of third persons of which he had no actual or constructive notice.
but the banks appeal was dismissed for its failure to file its brief. Only when petitioner acquired the property in the foreclosure sale and subsequently consolidated its title did it become the transferee of the property. As the writ of execution directed at Llego could not be carried out. the trial court directed its order to petitioner bank.judgment was rendered by the court in that case is necessarily binding on all defendants therein. It is noteworthy that petitioner bank tried to appeal from the decision of the trial court which ordered the Register of Deeds of Quezon to cancel TCT No. the court modified its earlier judgment. it cannot be considered a transferee pendente lite. When the mortgage was constituted. the trial courts decision became final. Petitioner bank argues that it was a purchaser for value long before the filing of the case and. It cannot be argued that. i. properly speaking. being a mere mortgagee of the property. petitioner was not yet. in so doing. therefore. The trial court ordered Llego to execute the necessary deed of reconveyance and. . As to which defendant would actually execute the reconveyance is not important. As a result. Second.. because in the meantime petitioner bank had obtained title to the land. for this merely involves the implementation of the courts order. and petitioner bank cannot now claim that it is not bound by the trial courts order to reconvey the land to private respondents.e. together with Ceferino Tan. Petitioner acquired the property only after the filing of private respondents case for specific performance. T-31753 and issue a new title to private respondents. This argument is specious. Tan and petitioner bank. 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. to redeem the property from petitioner bank believing that title to the land was still in the name of Llego. a transferee. Llego. Both the trial court and the Court of Appeals correctly held that petitioner bank was a transferee pendente lite whose title was subject to the incidents and results of the pending litigation.
Intermediate Appellate Court is misplaced. A transferee pendente lite stands exactly in the shoes of the transferor and is bound by any judgment or decree which may be rendered for or against the transferor. Thereafter. and his transfer certificate of title will.  Petitioners reliance on the case of St. petitioner nevertheless cannot claim a right superior to that of private respondents because petitioner acted in bad faith when it foreclosed and acquired the property. The contention is without merit. As the Court of Appeals pointed out. the facts were as follows: In 1961. the Peoples Homesite and Housing Corporation (PHHC) awarded a parcel of land covered by TCT No. . and this fact was duly annotated on the back of TCT 84387. As this Court held in one case: . petitioner bank is a transferee pendente lite of the property in litigation within the contemplation of Rule 39. afford him no special protection. 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. . in that respect. v. In the meantime. therefore. Petitioner insists that it is not a transferee pendente lite because it was a purchaser for value long before the case for specific performance was filed. the bank consolidated its title over the property. it cannot claim to be a purchaser in good faith and. As such. The spouses Robes mortgaged the lot to Manufacturers Bank and Trust Company. Even if it is not a transferee pendente lite. 47(b). it is bound by the decision against Demetrio Llego.The trial court found the existence of fraud in the transaction and declared private respondents to be the absolute owners of the property. As already stated. . his title is subject to the incidents and results of the pending litigation. In the Dominic case. Dominic Corp.Thus. petitioner was aware of the charge of fraud against Demetrio Llego in mortgaging the property to it despite the previous sale thereof to private respondent Agustin Lagrama. who sold the same to the spouses Carlos Robes and Adelia Francisco. this decision of the trial court is now final and is binding on petitioner bank. 83783 to Cristobal Santiago. Petitioner bank may thus be properly ordered to execute the necessary deed of reconveyance in favor of private respondents. to have a better right than its predecessor-in-interest. Third.Since the bank acquired the land in question with knowledge of the fraud committed by Llego. The facts of that case are different from those of the case at bar.
entitled Ricardo Castulo and Juan V. A writ of execution was issued to the Bustamante spouses. The spouses then filed a petition for certiorari with the Supreme Court. the Bustamante spouses were allowed to intervene in the case. PHHC was ordered to process Bustamantes application to purchase the lot and execute documents awarding the lot to her. Ebreo v. Anent the effect of the trial courts judgment on Manufacturers Banks (mortgagee bank) rights and on the foreclosure of the property in question. which was issued TCT No. Aurora Francisco applied for. that the writ could not be enforced against St. 22337. For failure of the Robes spouses to pay the mortgage obligation. Dominic Corp. it was held that the invalidation of the title issued as a result of regular land registration proceedings in the name of the mortgagor when given as a security for a loan would not nullify the rights of a mortgagee who acted in good . Claiming legal interest in the property. The spouses questioned the order via certiorari with the Intermediate Appellate Court. A notice of lis pendens was annotated on the title at the instance of the Bustamante spouses. 83783. 217192. The Bustamante spouses filed a motion to quash the writ. 84387 issued in the name of the Robes spouses was cancelled and TCT No. which motion was denied by the lower court. this Court reversed the ruling of the Intermediate Appellate Court and held that St. The sale of the same lot to the spouses Robes was likewise declared void and TCT No. and Peoples Homesite and Housing Corporation. Meanwhile. Manufacturers Bank foreclosed the lot which was then bought at public auction by Aurora Francisco.As no redemption of the property was effected. Q-11895. Again. Dominic Corp. Q-11895. Carlos Robes. The trial court ruled that the sale by PHHC to Cristobal Santiago was void and cancelled TCT No. Dominic Corp. Q-11895 was decided. was not bound by the decision in that case because it was never impleaded in Civil Case No. On appeal. Civil Case No. Adelia Francisco. which granted the writ of certiorari and ordered the trial court to issue the writ of execution against St. no notice of any lien or encumbrance appeared on the title. who was subsequently issued a certificate of sale. Dominic Corp.Civil Case No. however. TCT No. The notice of lis pendens was not carried over to TCT No. and was issued. a writ of possession for the property. Thereafter. 84387 was cancelled. 83783. with the qualification. 217192 was issued to the buyer Aurora Francisco. was filed seeking the cancellation of TCT No. Aurora Francisco sold the property to petitioner St.
And. When it was later foreclosed and sold at public auction and a new transfer certificate of title was issued to the buyer. These factual circumstances led the Court to conclude that the mortgagee bank and its subsequent transferrees had acted in good faith. Dominic Corp. SO ORDERED. when the property was sold to petitioner St. CA 387 SCRA 415 (2002) Manila FIRST DIVISION G. as a purchaser at the public auction sale of the property in question. In the case of St. respondents. Dominic Corp. The mortgagee is under no obligation to look beyond the certificate of title and has the right to rely on what appears on its face. PHILIPPINE NATIONAL BANK and SPS. Intermediate Appellate Court cannot be invoked in this case where both the trial court  and the Court of Appeals found that petitioner bank did not act in good faith in acquiring title to the property. 2002 PEDRO ACLON. It is obvious that the case of St. x-----------------------x . the decision of the Court of Appeals appealed from is AFFIRMED. regular. 22337. petitioner.R. and free from any lien or encumbrance. This is even more true with petitioner St. could not be affected by any adverse claim as the plaintiffs in the civil case. and free from any lien or encumbrance.. the title showed that it was valid. COURT OF APPEALS. vs. no notice of any lien or encumbrance appeared on the title. v. when the property in question was mortgaged to Manufacturers Bank. 106880 August 20. Dominic Corp. regular. The title of Aurora Francisco. WHEREFORE. No. Dominic. ZOSIMO and NATALIA OPIMO. which had acquired title from Francisco without any notice or flaw. Acion vs. which was again issued TCT No. The title to the property given as security to Manufacturers Bank by the spouses was valid. the notice of lis pendens was not carried over to the new title.faith.
G. The first seeks to reverse and set aside the Decision of the Court of Appeals dated April 30. Consequently. 1973 at the municipal building of Oras. a 165.735 square-meter agricultural land with all the improvements existing thereon. 1973. situated at the poblacion of Sulat. a Sheriff’s Certificate of Sale8 was issued in PNB’s favor and the same was registered with the Register of Deeds of Samar on October 4. payable within one (1) year. COURT OF APPEALS. Subsequently. in the amount of Five Thousand Pesos (P5. When the Opimo spouses attempted to take possession of the subject lot. PNB sold to spouses Zosimo and Natalia Opimo the subject residential land located at Sulat. However. 1974 without Aclon redeeming the foreclosed properties. 860.3 As security for the loan. covered by Tax Declaration No. Eastern Samar. PHILIPPINE NATIONAL BANK and SPS. ZOSIMO and NATALIA OPIMO. The subject properties were awarded to PNB. 1973. petitioner. with all the improvements existing thereon. as amended.10 However. 5 After notice6 and publication7. Aclon failed to pay the loan in full at the time of its maturity. 1964. Eastern Samar. 1992 in C. the Deputy Provincial Sheriff of Oras. covered by Original Certificate of Title (OCT) No. PNB instituted extra-judicial foreclosure proceedings in accordance with the provisions of Act 3135. Barrio Can-ilay. Samar.R. on May 31.4 The loan became due and payable on December 15. Eastern Samar. 1974. G. Aclon refused to vacate the same and instead filed a complaint against PNB and the Opimo spouses for Annulment of Two Contracts of Sale with Damages and Consignation docketed as Civil Case No. The Opimo spouses. 1907 in the Regional Trial Court (Branch I) of Borongan. Eastern Samar conducted a sale at public auction of the mortgaged properties on July 17. 24321. 9 On June 25. 24133. 1994 in C.: Before us are two petitions for review on certiorari under Rule 45 of the Rules of Court.A. 1975.1 The second assails the Decision dated August 31.00). Aclon remained in possession of the property. 1859 in the same trial court. G. 1973. located at Sitio Balagon.R.A.000. Canavid. . Aclon mortgaged to PNB two parcels of land. being the sole and highest bidder. Eastern Samar. on the other hand. 120190 PEDRO ACLON. respondents. vs. 24106. The period of redemption lapsed on October 4. Aclon secured a loan from the Philippine National Bank (PNB for brevity)) at Catbalogan.R. Despite the extension and repeated demands from PNB. both filed by petitioner Pedro Aclon (Aclon for brevity). filed a complaint for Recovery of Real Property with Preliminary Mandatory Injunction and Damages docketed as Civil Case No. on August 28. and. J. CV No. the same was extended after Aclon made a partial payment. DECISION AUSTRIA-MARTINEZ. No. CV No. to wit: a 234 square-meter residential lot.2 The facts of the case are as follows: On December 15. 1965. PNB then consolidated its ownership over the said parcels of land on October 16.
" . 1859 is docketed as CA-G. CV No. as follows: The dispositive portion of the RTC decision in Civil Case No."11 The dispositive portion of the RTC decision in Civil Case No. 1907 reads "WHEREFORE. The Philippine National Bank is absolved from the complaint. judgment is hereby rendered dismissing this action for annulment of sale and it ordered(sic) that the plaintiff Pedro Aclon and all persons acting under his command vacate the house and lot in Sulat in question now covered by Tax Declaration No. 1859). However. 24133 (Civil Case No.00) representing the reasonable compensation for use of said house and lot form June 25. CV No. affirming with modification the trial court’s decision by deleting the award of attorney’s fees. 157 SCRA 57). "(3) defendant-appellant and all persons claiming rights under him are ordered to vacate the property in question and to surrender possession thereof to plaintiffs-appellees. Opimo and give possession to defendant Zosimo A. to wit: "No reason having been stated in the body of the decision for the award of attorney’s fees.R. as well as the sale at public auction to defendant PNB are declared null and void for not having complied with the mandatory provisions of Act 3135 as well as the stipulation between the parties. the trial court rendered separate decisions for each case. and to pay the costs of the suit."13 On August 31. The Philippine National Bank is absolved from the complaints. despite consolidation of the two cases. On April 30. "(2) the subsequent sale of the property by defendant PNB to appellees is however declared valid. CV No.500). judgment is hereby rendered declaring the foreclosure proceedings of defendants’ properties by the Philippine National Bank and the subsequent contracts of sale involving said mortgaged properties valid and declaring plaintiff Zosimo Opimo and his wife the lawful owners of the properties in question and entitled to the possession thereof with costs against the defendant Pedro Aclon. 1975 to December 21. the dispositive portion of which reads: "WHEREFORE. with the foregoing modification. 31144 of Zosimo A. "WHEREFORE. 24106 while the appeal in Civil Case No. 1907). Intermediate Appellate Court. such award is hereby disallowed in this appeal (Abrogar vs. 1994. 1907 is docketed as CA-G.R. The appeal in Civil Case No. "SO ORDERED. Opimo and his wife. 1859 reads "WHEREFORE. the Court of Appeals promulgated its Decision in CA-G.R. plus One Hundred Pesos (P100) a month thereafter until possession is completely delivered to the Opimos. to pay attorney’s fees in the amount of One Thousand Five Hundred Pesos (P1.R. the Decision appealed from is hereby AFFIRMED with costs against appellant. 1988. 24133. CV No. 24106 (Civil Case No. the decision appealed from is modified as follows: "(1) the extrajudicial foreclosure proceedings in question. the Court of Appeals promulgated its Decision in CA-G. 1992. to pay to the Opimos the amount of Thirteen Thousand Pesos (P13." 12 Aclon brought two separate appeals with the Court of Appeals.Both cases were heard jointly.
"2. THE RESPONDENT COURT OF APPEALS GRAVELY ERRED IN NOT HOLDING THE PRIVATE RESPONDENT OPIMO SPOUSES AS PURCHASERS IN BAD FAITH OF THE PROPERTY IN QUESTION.R. The respondent Court of Appeals gravely erred in ordering petitioner-appellant and all persons claiming rights under him to vacate the property in question and to surrender possession thereof to respondentappellees. we consolidated the two petitions."SO ORDERED. as well as the sale at public auction to defendant PNB are declared null and void for not having complied with the mandatory provisions of Act 3135 as well as the stipulation between the parties. 15 In G.00 REPRESENTING REASONABLE VALUE FOR THE USE AND OCCUPATION OF THE PROPERTY AS WELL AS THE AMOUNT OF P100. 106880 (CA-G. petitioner raises the following Assignment of Errors: "1. "5. No. Inasmuch as the factual antecedents. "3.00 A MONTH UNTIL POSSESSION IS DELIVERED TO THE OPIMO SPOUSES. ON POSTING. CV No.R. parties involved and issues raised in these cases are substantially the same. The respondent Court of Appeals gravely erred in not holding the subsequent sale of the property by defendant PNB to respondent-appellees as null and void despite the fact that the extra-judicial foreclosure proceedings in question. THE SALES BY THE RESPONDENT PNB OF THE PROPERTY IN QUESTION TO ITSELF AND TO THE RESPONDENT OPIMO SPOUSES ARE LIKEWISE A NULLITY AND OF NO FORCE AND EFFECT. 24133)."14 Petitioner Aclon seasonably appealed each case to this Court. "4. No. THE RESPONDENT COURT OF APPEALS GRAVELY ERRED IN NOT HOLDING THAT THE FORECLOSURE SALE BEING A NULLITY. petitioner raises the following: "ASSIGNMENT OF ERRORS "1. CV No. "2.R. THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN NOT HOLDING THAT THE EXTRAJUDICIAL FORECLOSURE OF THE MORTGAGE AS WELL AS THE FORECLOSURE SALE ARE NULL AND VOID AND OF NO FORCE AND EFFECT FOR LACK OF COMPLIANCE WITH THE MANDATORY REQUIREMENTS OF THE LAW. . THE RESPONDENT COURT OF APPEALS SERIOUSLY ERRED IN NOT HOLDING THAT THERE WAS NO FACTUAL OR LEGAL BASIS FOR THE RULING OF THE TRIAL COURT ORDERING PETITIONERS TO PAY RESPONDENTS THE AMOUNT OF P13."16 In G. THE RESPONDENT COURT OF APPEALS SERIOUSLY ERRED IN NOT HOLDING THAT THE ACCEPTANCE BY RESPONDENT PNB OF PAYMENTS WAS REALLY INTENDED FOR PETITIONERS’ OBLIGATIONS AND NOT TO OTHER EXPENSES INCURRED IN THE FORECLOSURE PROCEEDINGS BECAUSE OF THE NULLITY OF THE SAID FORECLOSURE."17 We find both appeals devoid of merit.R. ACT 3135. PUBLICATION OF THE NOTICE OF SALE AND THE PLACE OF AUCTION SALE. 120190 (CA-G.000. 24106).
an attempt to redeem from an execution sale has been construed as a waiver of defects or irregularities therein. 20 We find no compelling reason to depart from the factual findings of the Court of Appeals that there was compliance by PNB with the provisions of Act 3135 with respect to the posting and publication of the notice of sale at public auction. Nevertheless. (h) where the findings of fact of the Court of Appeals are contrary to those of the trial court. (c) when there is grave abuse of discretion. (d) when the judgment is based on a misapprehension of facts.300. there was no indication whatsoever that he does not recognize the validity of the sale. Aclon failed to comply with his undertaking and instead defaulted in his subsequent payments. We find no cogent reason to disturb the findings of the trial court in light of the settled rule that the evaluation of the testimonies of witnesses by the trial court is entitled to the highest respect because such court . surmises or conjectures. testified to the contrary. 1974. or are mere conclusions without citation of specific evidence. precluding him from relying upon them for the purpose of challenging its validity. In both appealed cases.Petitioner’s assigned errors essentially involve questions of fact. in making its findings. the clerk who was then in-charge of PNB’s records of loan accounts at the time Aclon secured his loan with PNB. absurd or impossible. the appellate court affirmed the finding of the trial court that the payment made by Aclon on January 21. However. Angel Carpeso. In other words.19 The exceptions to this rule are: (a) when the conclusion is a finding grounded entirely on speculations.00 he paid was a deposit for the repurchase of his foreclosed properties. went beyond the issues of the case and the same is contrary to the admissions of both appellant and appellee. (g) where the Court of Appeals manifestly overlooked certain relevant facts not disputed by the parties and which. that the Opimo spouses are buyers in good faith. he offered to repurchase the subject properties without any condition or reservation.22 When Aclon sought to redeem his property from PNB he never made any reservation with respect to his right to question the validity of the auction sale and to seek alternative relief before the courts.24 The trial court gave credence to Carpeso’s testimony. 1973 was intended for the expenses in the foreclosure of the subject properties. or where the findings of fact of the Court of Appeals are premised on absence of evidence but are contradicted by the evidence on record. His main contention is anchored on the premise that the sale at public auction of the subject properties to PNB is null and void because the extrajudicial foreclosure proceedings were conducted in violation of the provisions of Act 3135 and of the contractual agreement between the parties.18 It is settled that as a rule. would justify a different conclusion. A determination of the validity of petitioner’s claim and the issues arising therefrom necessitates a review of the factual findings of the trial court and the respondent appellate court. 23 1âwphi1 It is true that Aclon denies that the P1. if properly considered. PNB did not acquire ownership of the said properties and as a result. and that no reliance could or should have been placed upon his action in so doing. (e) when the findings of fact are conflicting (f) when the Court of Appeals. Petitioner concludes that since the auction sale is null and void. and. that the payment made by Aclon to PNB on September 28. the findings of fact of the Court of Appeals especially those affirming the trial court are final and conclusive and cannot be reviewed on appeal to the Supreme Court. 21 In the absence of evidence proving that a judgment debtor was merely trying to protect himself or save his property. 1975. Instead. or where the facts set forth by the petitioner are not disputed by the respondent. 1975 was given as a deposit for the purpose of enabling him to redeem his foreclosed properties despite the lapse of the redemption period on October 4. that the payment on January 21. (b) when the inference made is manifestly mistaken. its subsequent sale of the subject residential lot to the Opimo spouses is. was a deposit for the purpose of enabling Aclon to repurchase the foreclosed property. If petitioner indeed felt that the assailed foreclosure proceedings were attended with any irregularity he should have filed the appropriate action with the court. likewise. only questions of law may be raised as the Supreme Court is not a trier of facts. null and void. We have held in a long line of cases that in a petition for review on certiorari under Rule 45 of the Rules of Court.
The decision of the Court of Appeals in C. the petitions are DENIED.J. 24106 is AFFIRMED in toto. Vitug. G. is in a better position to assess their credibility.has the direct opportunity to observe the witnesses’ demeanor and manner of testifying and thus. 1907 when his efforts in redeeming the subject properties proved unavailing through his own fault and negligence. J. 1979. The material facts. respondents.. G. in this appeal by certiorari from a decision 1 of the Court of Appeals. CV No. petitioner. vs. he is likewise estopped from questioning the venue of the public auction. Indeed. Davide. Sulit vs. C.. we find no error in the appellate court’s ruling that redemption is an implied admission of the regularity of the sale and estops the petitioner from later impugning its validity on that ground.28 With petitioner’s implied admission of the validity of the extrajudicial foreclosure proceedings. (Chairman). The decision of the Court of Appeals in C. CA 268 SCRA 441 (1997) CESAR SULIT. JJ. SO ORDERED. or more than five (5) years after the said properties were foreclosed and almost four (4) years after the same were sold to the Opimo spouses that petitioner Aclon filed Civil Case No.R. the sale by PNB to Opimo spouses is valid. REGALADO.25 It was only on February 2. WHEREFORE. Secondarily. is whether or not the mortgagee or purchaser in an extrajudicial foreclosure sale is entitled to the issuance of a writ of possession over the mortgaged property despite his failure to pay the surplus proceeds of the sale to the mortgagor or the person entitled thereto. as found by respondent court.A.: The primary issue posed before the Court. Consequently. 27 Redemption is inconsistent with the claim of invalidity of the sale. are not disputed: . 26 Thus.. concur. COURT OF APPEALS and ILUMINADA CAYCO. 24133 is AFFIRMED with MODIFICATION to the effect that the extrajudicial foreclosure proceedings in question and the sale at public auction to PNB are declared valid.A. Jr.R. it calls for a resolution of the further consequences of such non-payment of the full amount for which the property was sold to him pursuant to his bid. any party otherwise in a position to object to a mortgage-foreclosure sale is precluded from doing so by conduct sufficient to bring into operation the doctrines of waiver and estoppel. CV No. and Ynares-Santiago. on official leave.
C-3462 and assigned to Branch 131. This Motion was opposed by private respondent who contended that the issuance of a writ of possession upon his filing of a bond was a ministerial duty on the part of respondent Judge (Annex E). plus interests.000. private respondent resorted to extrajudicial foreclosure of the mortgage as authorized in the contract. In the same Motion petitioner prayed as an alternative relief that private respondent be directed to pay the sum of P3 Million which represents the balance of his winning bid of P7 Million less the mortgage indebtedness of P4 Million (Annex D. presided over by public respondent. the mortgaged property was sold at public auction to satisfy the mortgage indebtedness of P4 Million. Cesar Sulit. Mercado on 28 September 1993 the lot was sold to the mortgagee. On 28 March 1994 petitioner filed a Motion to have the auction sale of the mortgaged property set aside and to defer the issuance of the writ of possession. Annex B. (23211) 11591 in favor of private respondent (herein petitioner) Cesar Sulit. petition). She invited the attention of the court a quoto some procedural infirmities in the said proceeding and further questioned the sufficiency of the amount of bond. the sale price of the above-described real estate property together with all improvements existing thereon. petition). Hence. being the petitioner/mortgagee thereupon did not pay to the undersigned Notary Public of Kalookan City the said sum of SEVEN MILLION PESOS (P7. The Certificate further states as follows: IT IS FURTHER CERTIFIED. Upon petitioner's failure to pay said loan within the stipulated period. On 11 May 1994 respondent Judge denied petitioner's Motion and directed the issuance of a writ of possession and its immediate enforcement by deputy sheriff Danilo Norberte (Annex G. petition).00) Pesos (Annex C. finding the subject petition to be meritorious. As stated in the Certificate of Sale executed by the notary public (Annex B. that the aforementioned highest bidder/buyer. On 17 January 1994 respondent Judge issued a decision (should have been denominated as order). The petition was docketed as LRC Case No.000. As prayed for. CESAR SULIT. 2. to secure a loan of P4 Million.00). who submitted a winning bid of P7 Million. petition). ." 2(Emphasis words supplied for clarity). On 13 December 1993 private respondent petitioned the Regional Trial Court of Kalookan City for the issuance of a writ of possession in his favor. petition). let a Writ of Possession be issued in favor of herein petitioner. petition). which amount was properly credited to the PARTIAL satisfaction of the mortgage debt mentioned in the said real estate mortgage.It appears from the record that on 9 June 1992 petitioner (herein private respondent) Iluminada Cayco executed a Real Estate Mortgage (REM) over Lot 2630 which is located in Caloocan City and covered by TCT No. the same is hereby GRANTED. to which Opposition petitioner submitted a Reply (Annex F. in a public auction conducted by Notary Public Felizardo M. Philippine Currency. the dispositive part of which reads: WHEREFORE. herein private respondent. upon his posting of an indemnity bond in the amount of One Hundred Twenty Thousand (P120. attorney's fees and all other incidental expenses of foreclosure and sale (par.000.
the dishonored checks claimed to have been issued by petitioner in payment of interest could not have been the written stipulation contemplated in Article 1956 of the Code. Instead. 4 It is elementary that in the absence of a stipulation as to interest. on the basis of Article 1956 of the Civil Code. then the auction sale of 28 September 1993 is deemed CANCELLED and private respondent may foreclose the mortgage anew either in a judicial or extrajudicial proceeding as stipulated in the mortgage contract.000. 1994 a petition for certiorari with preliminary injunction and/or temporary restraining order before respondent Court of Appeals. private respondent's assessment thereof has no legal basis. were correctly considered by the trial court as the written agreement between the parties. Consequently. petitioner asserts that respondent Court of Appeals gravely erred when it failed to appreciate and consider the supposed legal significance of the bouncing checks which private respondent issued and delivered to petitioner as payment for the agreed or stipulated interest on the mortgage obligation. after private respondent's obligation became due. the balance or excess of his bid of P7 Million after deducting therefrom the sum of P4. herein private respondent Iluminada Cayco filed on May 26. according to respondent court. 1993. In the event that private respondent fails or refuses to pay such excess or balance. Accordingly. it is claimed that any question regarding the propriety of the sale and the issuance of the writ of possession must be threshed out in a summary proceeding provided for in Section 8 of Act 3135. 3 to be more logical and plausible. private respondent is ordered to pay unto petitioner. 1994. Subsequently. and not certiorari. allegedly representing interest of 5% per month from June 9. respondent court rendered judgment on November 11.250. 1994 and the writ of possession issued pursuant thereto. . through the notary public. It appears then that if any such agreement was reached by the parties. to wit: It is noteworthy that the Deed of Real Estate Mortgage executed by the parties on 9 June 1992 (Annex A. the loan due will now earn interest at the legal rate of 12% per annum 5 which. 1992. Private respondent who maintains that he had an agreement with petitioner for the payment of 5% monthly interest did not produce any other writing or instrument embodying such a stipulation on interest. it was merely a verbal one which does not conform to the aforequoted statutory provision. Certainly. as follows: IN JUDGMENT. in the absence of a written stipulation for the imposition of interest on the loan obtained by petitioner.00 computed from December 10. He likewise avers that a motion for reconsideration or an appeal. We grant the writ of certiorari and the disputed order of 17 January 1994 which precipitately directed the issuance of a writ of possession in favor of private respondent and the subsequent order of 11 May 1994 which denied petitioner's Motion for Reconsideration are hereby SET ASIDE.000. 1993). which immediately issued a status quo order restraining the respondent judge therein from implementing his order of January 17. 1992.00. until September 23.365.280. Moreover. as well as expenses of foreclosure based on receipts which must be presented to the notary public. is the proper remedy available to herein private respondent from an order denying her motion to defer issuance of the writ of possession.From the aforesaid orders of the court a quo. There is no merit in petitioner's contention that the dishonored checks amounting to a total of P1. is equivalent to P365. 1992 to December 9. Corollary to the principal issue earlier stated. Petition) does not contain any stipulation for payment of interest.280 which represents the mortgage debt and interest up to the date of the auction sale (September 23. we find the explanation of respondent court in rejecting such postulate.
7 Coming now to the main issue in this case. specifying the damages suffered by him. together with any other expenses incurred in connection with the sale. 7.the date of the auction sale. it would be adverse if produced. The debtor may. and assessments or taxes due on the disputed property. It baffles this Court. It is this amount which should further be deducted from the purchase price of P7. because the mortgage was not violated or the sale was not made in accordance with the provisions hereof. or of any other real property encumbered with a mortgage duly registered in the office of any register of deeds in accordance with any existing law. and the Court shall take cognizance of this petition in accordance with the summary procedure provided for in section one hundred and twelve of Act Number Four hundred and ninety-six.000. upon approval of the bond. and the court shall. to indemnify the debtor in case it be shown that the sale was made without violating the mortgage or without complying with the requirements of this Act. and this in spite of the express requirement therefor in the certificate of sale 6 issued by the notary public for the purpose of computing the actual amount payable by the mortgagor or redemptioner in the event of redemption. to give him possession thereof during the redemption period. it shall dispose in his favor of all or part of the bond furnished by the person who obtained possession. Such petition shall be made under oath and filed in form of an ex parte motion in the registration or cadastral proceedings if the property is registered. why petitioner has continually failed up to the present to submit documentary evidence of the alleged expenses of the foreclosure sale. furnishing bond in an amount equivalent to the use of the property for a period of twelve months. . who shall execute said order immediately. Upon the filing of such motion and the approval of the corresponding bond. but the order of possession shall continue in effect during the pendency of the appeal. but not later than thirty days after the purchaser was given possession. notarial and documentary fees. the purchaser may petition the Court of First Instance of the province or place where the property or any part thereof is situated. in the proceedings in which possession was requested. petition that the sale be set aside and the writ of possession cancelled. petitioner argues that it is ministerial upon the court to issue a writ of possession after the foreclosure sale and during the period of redemption. order that a writ of possession issue. In any sale made under the provisions of this Act. such as the posting and publication of notices. Either of the parties may appeal from the order of the judge in accordance with section fourteen of Act Numbered Four hundred and ninety-six. The governing law thus explicitly authorizes the purchaser in a foreclosure sale to apply for a writ of possession during the redemption period by filing an ex parte motion under oath for that purpose in the corresponding registration or cadastral proceeding in the case of property with Torrens title.00. therefore. 8. or in special proceedings in the case of property registered under the Mortgage Law or under section one hundred and ninety-four of the Administrative Code. Sec. invoking in support thereof Sections 7 and 8 of Act 3135 which conjointly provide: Sec. upon the filing of such petition. and in each case the clerk of the court shall. and if it finds the complaint of the debtor justified. collect the fees specified in paragraph eleven of section one hundred and fourteen of Act Numbered Twenty-eight hundred and sixty-six. addressed to the sheriff of the province in which the property is situated. the law also in express terms directs the court to issue the order for a writ of possession.000. It may thus be safely presumed that such evidence having been willfully suppressed.
then to the mortgagor or his agent. et al. Disposition of proceeds of sale. 11 this Court took into account the circumstances that long before the mortgagee bank had sold the disputed property to the respondent therein. or to the person entitled to it. which is made applicable to the extrajudicial foreclosure of real estate mortgages by Section 6 of Act 3135. in the case of Barican. and that there was a pending civil case involving the rights of third parties.No discretion appears to be left to the court. decided to withhold the issuance of the writ of possession on the ground that it could work injustice because the petitioner might not be entitled to the same. inadequacy of price becomes immaterial since the judgment debtor may reacquire the property or sell his right to redeem. however. or if there be no such incumbrancers or there be a balance or residue after payment of such incumbrancers. and it cannot be raised as a justification for opposing the issuance of the writ of possession since. Nevertheless. who effects the extrajudicial foreclosure of the mortgage. vs. after paying off such mortgage or other incumbrances. there is due in favor of private respondent. taking into consideration the factual milieu obtaining therein as well as the peculiar circumstances attendant thereto. also by way of an exception. under the Act. et al. The case at bar is quite the reverse. it is our considered opinion. Rule 68 of the Rules of Court provides: Sec.00 were sold for only P57. as mortgagor. it was no longer the judgment debtor who was in possession but the petitioner spouses who had assumed the mortgage. a mortgagor stands to gain with a reduced price because he possesses the right of redemption. in forced sales low prices are generally offered and the mere inadequacy of the price obtained at the sheriff's sale. even before the expiration of the period of redemption provided by law and the Rules of Court. and thus recover the loss he claims to have suffered by reason of the price obtained at the auction sale. is to be determined in a subsequent proceeding as outlined in Section 8. 9 The rule is. Hence. as well as the consequent cancellation of the writ. the obligation of a court to issue a writ of possession in favor of the purchaser in a foreclosure of mortgage case ceases to be ministerial. it was ruled therein that under the circumstances.396.." 10 Thus. which excess is indisputably a substantial amount. vs. Intermediate Appellate Court. be paid to the person foreclosing the mortgage. unless shocking to the conscience. has been held insufficient to set aside a sale. 12 However. 13 where the properties in question were found to have been sold at an unusually lower price than their true value.85. 8 Such recourse is available to a mortgagee. Under Section 35. in the sense that instead of an inadequacy in price. — The money realized from the sale of mortgaged property under the regulations hereinbefore prescribed shall. Intermediate Appellate Court. Now. in Cometa. et al. not without exception. . et al. and when there shall be any balance or residue. that is. this Court. the possession of the mortgaged property may be awarded to a purchaser in the extrajudicial foreclosure "unless a third party is actually holding the property adversely to the judgment debtor. When there is the right to redeem.000. a surplus from the proceeds of the sale equivalent to approximately 40% of the total mortgage debt. Any question regarding the regularity and validity of the sale. after deducting the costs of the sale. the proceeding for this is ex parte. and we so hold. On the contrary. to be ascertained by the court. 4. the same shall be paid to the junior incumbrancers in the order of their priority. that equitable considerations demand that a writ of possession should also not issue in this case. properties worth at least P500. This is because no disadvantage is caused to the mortgagor. Rule 39 of the Rules of Court.
because that would mean exacting payment at a price unjustifiably higher than the real amount of the mortgage obligation. it is the mortgagee's duty to return any surplus in the selling price to the mortgagor. We need not elucidate on the obvious. It would obviously serve no purpose for the sheriff or the notary public to go through the idle ceremony of receiving the money and paying it back to the creditor. the notary public who conducted the sale. We are not unmindful of the rule that it is not necessary for the mortgagee to pay cash to the sheriff or. 19 Applying this provision to the present case would be highly iniquitous if the amount required for redemption is based on P7. when he sells under a power. that redemption should be looked upon with favor and where no injury will follow." 16 The general rule that mere inadequacy of price is not sufficient to set aside a foreclosure sale is based on the theory that the lesser the price the easier it will be for the owner to effect the redemption. 18 together with the amount of any assessments or taxes which the purchaser may have paid thereon after purchase. Simply put. And even though the mortgagee is not strictly considered a trustee in a purely equitable sense. there is jurisprudence to the effect that while the mortgagee ordinarily is liable only for such surplus as actually comes into his hands. In case of a surplus in the purchase price. therefore. Section 30 of Rule 39 provides that the redemption price should be equivalent to the amount of the purchase price. a mortgagee who exercises the power of sale contained in a mortgage is considered a custodian of the fund. Admittedly. he must still account for the proceeds as if the price were paid in cash.The application of the proceeds from the sale of the mortgaged property to the mortgagor's obligation is an act of payment. a liberal construction will be given to our redemption laws. as the highest bidder. particularly Section 30 of Rule 39. that we adopt such interpretation as may be favorable to the private respondent. 20 It bears stressing that the rule holds true only where the amount of the bid represents the total amount of the mortgage debt. to the notary public who conducted the extrajudicial foreclosure sale. 14 Perforce. hence. it is the policy of the law to aid rather than to defeat his right. being bound to apply it properly. specifically on the exercise of the right to redeem. under the truism that the lawmaking body did not contemplate such a pointless application of the law in requiring that the creditor must bid under the same conditions as any other bidder. in this case. 421) observed: "That expression is to be understood in this sense: that with the power being given to enable him to recover the mortgage money. plus one per cent monthly interest up to the time of the redemption. but as far as concerns the unconsumed balance. cannot be considered otherwise than as a trustee. with a due regard to the rights and interests of the mortgagor in the surplus money to be produced by the sale. no payment was made by herein petitioner. such a construction will undeniably be prejudicial to the substantive rights of private respondent and it could even effectively prevent her from exercising the right of redemption. Where the redemptioner chooses to exercise his right of redemption. Conformably hereto. but he sells on credit instead of for cash. not payment by dation.00.000. the court requires that he shall exercise the power of sale in a provident way. The reason is that in case the mortgagor decides to exercise his right of redemption. and. is liable to the persons entitled thereto if he fails to do so. 15 Commenting on the theory that a mortgagee.000. it is more in keeping with the spirit of the rules. however. and interest on such last-named amount at the same rate. and in an action . and taking into consideration the facts obtaining in this case. It stands to reason. 17 The same thing cannot be said where the amount of the bid is in excess of the total mortgage debt. Norris (1 Giff . the mortgagee is deemed a trustee for the mortgagor or owner of the equity of redemption. the vice-chancellor in Robertson vs.
however. Surplus money. Even the trial court failed or refused to resolve this issue. 22 Inevitably. notwithstanding the fact that this was one of the grounds raised in the motion filed by private respondent before it to set aside the sale. No compelling reason exists in this case to justify a rejection of their findings or a reversal of their conclusions.against the mortgagee to recover the surplus. It must be emphasized that petitioner failed to present the receipts or any other proof of the alleged costs or expenses incurred by him in the foreclosure sale. As regards the issue concerning the alleged defect in the publication of the notice of the sale. she should have filed a petition to set the same aside and to cancel the writ of possession. There is likewise no merit in the argument that if private respondent had wanted to question the validity of the sale. it is argued. surplus money arising from a sale of land under a decree of foreclosure stands in the place of the land itself with respect to liens thereon or vested rights therein. the right of a mortgagor to the surplus proceeds is a substantial right which must prevail over rules of technicality. 21 We cannot simply ignore the importance of surplus proceeds because by their very nature. In the case at bar. They are constructively. Jurisprudence has it that when there are several liens upon the premises. 25 Upon the strength of the foregoing considerations. in case of a foreclosure sale. if there be any. we deem the same to be substantial compliance with the statutory prescription. petitioner cannot be allowed to unjustly enrich himself at the expense of private respondent. that private respondent has filed a motion to set aside the sale and to defer the issuance of a writ of possession before the court where the ex parte petition for issuance of such writ was then pending. . real property and belong to the mortgagor or his assigns. These. Since it has never been denied that the bid price greatly exceeded the mortgage debt. both the trial court and respondent Court of Appeals have found that the sale was conducted in accordance with law. 24 And a senior mortgagee. after satisfying the prior mortgage. provided the petition is filed not later than thirty days after the purchaser was given possession of the land. Considering. then the auction sale of 28 September 1993 is deemed CANCELLED and private respondent (petitioner herein) may foreclose the mortgage anew either in a judicial or extrajudicial proceeding as stipulated in the mortgage contract. We. 23 A junior mortgagee may have his rights protected by an appropriate decree as to the application of the surplus. which we repeat: In the event that private respondent fails or refuses to pay such excess or balance. is regarded as a trustee for the benefit of junior encumbrancers. the latter cannot raise the defense that no actual cash was received. however. take exception to and reject the last paragraph in the dispositive portion of the questioned decision of respondent court. 26 absent any showing of grave abuse of discretion. His lien on the land is transferred to the surplus fund. at least. we cannot countenance the apparent paltriness that petitioner persistently accords the right of private respondent over the surplus proceeds. the surplus money must be applied to their discharge in the order of their priority. should have been disposed of in accordance with the summary procedure laid down in Section 112 of the Land Registration Act. gains much significance where there are junior encumbrancers on the mortgaged property. suffice it to state for purposes of this discussion that a question of non-compliance with the notice and publication requirements of an extrajudicial foreclosure sale is a factual issue and the resolution thereof by the lower courts is binding and conclusive upon this Court. realizing more than the amount of his debt on a foreclosure sale.
Ley vs Union Bank This petition for review on certiorari assails the Decision1 of the Court of Appeals dated 18 January 2005. there is nothing in the cited provision from which it can be inferred that a violation thereof will have the effect of nullifying the sale. and the former fails to do so and flagrantly disobeys the order. despite demands. LCDC failed. The basis for the appellate court’s finding of appositeness of res judicata is a case that originated at the Regional Trial Court (RTC) in Makati City (Makati case). UBP filed against the spouses Ley and LCDC the collection suit docketed as Civil Case No. envision such contingency or warrant the suggested alternative procedure. this fact alone will not affect the validity of the sale but simply gives the mortgagor a cause of action to recover such surplus.9 . While the expedient course desired by respondent court is commendable. The Makati case A brief review of the antecedents of the Makati case will facilitate a better appreciation of the case at bar. 29 it was also held that where the mortgagee has been ordered by the court to return the surplus to the mortgagor or the person entitled thereto. to pay its loan obligation as of 31 May 1991. 92-2737 before the RTC. the court can cite the mortgagee for contempt and mete out the corresponding penalty under Section 3(b) of the former Rule 64 (now Rule 71) of the Rules of Court. a Credit Line Agreement2 was executed between Ley Construction and Development Corporation (LCDC) and private respondent Union Bank of the Philippines (UBP). merely provides that where there is a balance or residue after payment of the mortgage.4 Among the securities for the Credit Line Agreement is a Continuing Surety Agreement5 executed on 23 May 1990 by petitioners. On 28 May 1990. Branch 139. hereinbefore quoted. but its disposition of this case in all other respects is hereby AFFIRMED. Makati City. 28 In the early case of Caparas vs. in favor of UBP. Yatco. spouses Manuel and Janet Ley (spouses Ley). et al. the mortgagor is deemed to have affirmed the validity of the sale since nothing is due if no valid sale has been made. effective for a period of up to 31 May 1991..for lack of statutory and jurisprudential bases. finding petitioners’ complaint before the trial court for recovery of title barred by res judicata. etc. WHEREFORE. The better rule is that if the mortgagee is retaining more of the proceeds of the sale than he is entitled to. the same shall be paid to the mortgagor. Section 4 of Rule 64. the questioned decision of the Court of Appeals is MODIFIED by deleting the last paragraph of itsfallo.6 LCDC availed of the credit line granted to it and executed the promissory notes in favor of UBP in the total amount of P18.8 Consequently. SO ORDERED.152. The quoted phrase "as stipulated in the mortgage contract" does not.757. 3 The credit line given to LCDC was for P20 million.78. 27 This is likewise in harmony with the decisional rule that in suing for the return of the surplus proceeds. of course..7 However. on 7 October 1991.
23 which reads in part. however. The RTC of Tagaytay City denied UBP’s motion to dismiss in an Order dated 17 February 2004. SO ORDERED. that Azkon Refrigeration Industries.19 In said complaint. Inc. the spouses Ley filed against UBP a complaint18 for recovery of title before the RTC of Tagaytay City. and/or UBP. the RTC. Aggrieved.833.702. the two causes of action relied by both parties are based on different claims or cause [sic] of actions [sic] (Rizal Surety and Insurance Co. and.14 The money judgment in its favor having become final and executory. in view of UBP’s refusal. UBP filed a motion to dismiss the Tagaytay case on the grounds of bar by prior judgment. this Court likewise affirmed the invalidity of the order denying the motion for execution per its Decision dated 27 June 2000.86 plus the agreed interest and penalty charges. the new presiding judge denied the motion for execution. had already fully paid its obligation with International Corporate Bank. that. 22 The ground of bar by prior judgment is anchored on the finality of the judgment in the Makati case. the Tagaytay property was sold on execution with UBP as the highest bidder.11 When UBP moved for the execution of the Resolution. UBP filed before the Court of Appeals a special civil action for certiorari to annul and set aside the 17 February 2004 Order of the RTC. UBP imputed grave abuse of discretion to the trial court in .000. Inc. UBP levied on the spouses Ley’s property covered by Transfer Certificate of Title No. filed on 23 June 2003. Inc. failure of the complaint to state a cause of action. WHEREFORE. the motion to dismiss is hereby DENIED. the spouses Ley alleged that they are the registered owners of the Tagaytay property and that on 23 December 1993. premises considered. 21 On 8 August 2003. 19 September 2002. T-21273 of the Register of Deeds of Tagaytay City (Tagaytay property). A certificate of sale 16 was then issued in favor of UBP.On 14 March 1996. and failure of the Ley spouses as plaintiffs to attach a copy of the title as well as other pertinent documents to their complaint. that despite demands.12 the Court of Appeals set aside and annulled the trial court’s denial of the motion for execution. 336 SCRA 12) which are brought on different statutes and rules (Vda. On appeal. Inc. Inc. In its petition. to secure the loan/credit line accommodation in the amount of P9. had later on merged with UBP. the former’s assets and liabilities were absorbed by the latter as the surviving corporation. 335 SCRA 728). 20 It is further alleged in the complaint that the International Corporate Bank.00 granted to Azkon Refrigeration Industries. that as a consequence. CA. 17 The Tagaytay case Prior to the expiration of the redemption period for the Tagaytay property on 18 September 2003. Makati City issued a Resolution 10 granting UBP’s Motion for Summary Judgment and ordering LCDC and the spouses Ley to pay the amount of P18. vs. UBP refused to release the title to the Tagaytay property to the spouses Ley. De Salonga vs. the spouses Ley were unable to effect the sale of the Tagaytay property to a willing buyer for an acceptable price. that all the foregoing had prompted the spouses Ley to file the Tagaytay case for recovery of title as well as damages. they entered into a Third Party Real Estate Mortgage over the same property in favor of the International Corporate Bank. 15 On 18 September 2002. This certificate of sale was registered with the Registry of Deeds of Tagaytay City and annotated on the original of the title on file with the Register of Deeds on the following day.13 On petition for review.674. This levy was annotated on the certificate of title. Alagar. thus: As gleaned from the foregoing.
30 claiming that the appellate court erred (i) in finding that the trial court did declare that res judicatahad already set in to bar the action for recovery of or release of title.27 Accordingly. (iii) in disregarding the principle that a denial of a motion to dismiss is not appealable. the appellate court ruled that the allegations in the complaint concerning UBP’s refusal to release the title over the Tagaytay property to the spouses Ley despite full payment of the loan suffice to state a cause of action for recovery of damages. thus: WHEREFORE. and (iv) in denying the motion for reconsideration of the Ley spouses on the ground that the motion was filed one day late. This inattention could have caused some confusion had the appellate court’s order become final and executory. 1awphi1. Accordingly. in truth. the appellate court evidently misread the true import of the trial court’s adjudication which actually was a rejection of the bid to dismiss the complaint on the ground of res judicata. res judicata does not apply in private respondents Spouses Ley’s prayer for recovery of damages. 24 On the premise that the property sought to be recovered had already been levied upon on execution and a certificate of sale covering it issued in the name of UBP. Rule 8 of the Rules of Court. the dispositive portion of its Decision decreeing.denying the motion to dismiss on the following grounds: that the Tagaytay property sought to be recovered had already been levied and sold on execution to satisfy the final and executory judgment in the Makati case. The spouses Ley filed a motion for reconsideration28 on 9 February 2005 but this was denied by the appellate court in a Resolution29 dated 26 April 2005 on the ground that the motion was filed out of time. . the Court of Appeals held in its Decision that res judicatahad already set in to bar the cause of action for recovery or release of title. the assailed Order dated February 17. its declaration that res judicata had already set in the case for recovery or release of title. the instant PETITION FOR CERTIORARI is PARTLY GRANTED. 26 Nevertheless. The Court of Appeals also found the failure of the spouses Ley to attach a copy of the title over the Tagaytay property excusable since the owner’s copy of the title had been with UBP all along." Yet. . Branch 18 is hereby AFFIRMED in so far as in [sic] its declaration that res judicata had already set in the case for recovery or release of title. 25 The appellate court also considered the doctrine of judicial stability or non-interference in the regular orders or judgments of a co-equal court as a barrier to the competence of the trial court to sustain the spouses Ley’s action for recovery of title. premises considered.nét First. however. The spouses Ley then elevated the appellate court’s Decision to this Court through a Petition for Review on Certiorari. 2004 issued by the Regional Trial Court of Tagaytay City. (ii) in entertaining the petition for certiorari despite the absence of a motion for reconsideration from UBP that would have given the trial court the opportunity to correct itself. that UBP was justified in refusing to release the title over the Tagaytay property to the spouses Ley because it had already become the owner of the property. the Court of Appeals partly granted the petition for certiorari. . as the erroneous premise set forth in the dispositive portion could have led to a variety of interpretations tending to frustrate a hassle-free execution of the decision. The dispositive portion decreed that the decision of the RTC of Tagaytay was thereby "affirmed in so far as . there is a glaring inconsistency in the dispositive portion of the Court of Appeals’ Decision. and that the failure to attach a copy of the title to the Tagaytay property as well as other pertinent documents alleged in the complaint violated the rule on actionable documents as provided in Sec. 7. We dispose of a few peripheral issues before proceeding to the heart of this case.
Even so. A cause of action is the act or omission by which a party violates a right of another. is the item with respect to which the . UBP raised before the trial court several grounds to secure the dismissal of the complaint. To recall. or cause of action. the rigid observance of the rules would mean that the legal mess spawned by the imprecise fallo of the appellate court’s decision would not be untangled and miscarriage of justice would ensue. the spouses Ley are correct in their position that a motion for reconsideration should have first been filed by UBP before filing the petition for certiorari. to wit: that the action is barred by prior judgment. What is of primary importance is that technical procedures are used to aid the courts in achieving their mandate to resolve cases in a manner that best serves the interest of substantial justice. filed out of time. this Court will not hesitate to relax the same in the interest of substantial justice. We now tackle the merits of the petition. identity of parties. the contention of the spouses Ley that a denial of a motion to dismiss is not appealable is offtangent. We disagree and hold that res judicata does not bar any of the causes of action in the complaint. 35 Yet it appears that the trial court considered only the ground of res judicata despite the interposition of other grounds by UBP. the other causes of action are not so barred. The doctrine of res judicata provides that a final judgment on the merits rendered by a court of competent jurisdiction is conclusive as to the rights of the parties and their privies and constitutes an absolute bar to subsequent actions involving the same claim. While it is true that the belated filing of a motion for reconsideration necessarily suggests that the decision sought to be reconsidered has become final and executory. Finally.33 the spouses Ley should have been accorded the same spirit of liberality which the appellate court extended to UBP by giving due course to UBP’s petition for certiorari despite its failure to file the requisite motion for reconsideration with the lower court. and that the spouses Ley failed to attach a copy of the title as well as other documents in their complaint. When there is a strong showing that grave miscarriage of justice would result from the strict application of the Rules. UBC properly elevated the case to the Court of Appeals through a petition for certiorari under Rule 65 on the ground that the trial court had acted without or in excess of its jurisdiction. Rules are designed to aid the courts in the dispensation of justice. (2) the judgment or order must be on the merits. therefore. and of causes of action. It did not resort to ordinary appeal in assailing the denial of the motion to dismiss. In its Decision. the courts are given leeway in deciding whether to strictly follow this rule or to tolerate any deficiency. of subject matter. Third. demand.Second. 32 Their motion for reconsideration submitted on 9 February 2005 was. 31 However. and (4) there must be between the first and second actions. the records show that the counsel for the spouses Ley received the 18 January 2005 Decision of the Court of Appeals on 24 January 2005. on the other hand.38 The subject matter. (3) it must have been rendered by a court having jurisdiction over the subject matter and parties. or with grave abuse of discretion amounting to lack or excess of jurisdiction.34 In this case. the following requisites must concur: (1) the former judgment or order must be final. that the complaint states no cause of action. the Court of Appeals categorized the causes of action in the complaint and ruled that while the action for recovery of title is barred by res judicata. we agree that it is res judicata that is determinative of question whether the petition should be dismissed or not. 36 For res judicata to serve as an absolute bar to a subsequent action. 37 The present action of the spouses Ley is not barred by res judicata since the previous and the present cases involve different subject matters and causes of action.
controversy has arisen. the cause of action lies in the failure of the borrower to pay the loan on due date. the title to which was sought to be recovered by the spouses Ley in the Tagaytay case. Inc. While in the Makati case. the Owner’s Copy of the TCT covering the Tagaytay property. which originated from the Tagaytay case. The property was the subject of the proceedings on execution to satisfy the judgment in the Makati case. from International Corporate Bank. and it is ordinarily the right. the Decision of the Court of Appeals dated 18 January 2005 is REVERSED insofar as it held that the action of petitioner spouses Manuel Ley and Janet Ley to recover the Owner’s Copy of Transfer Certificate of Title No. . it is the loan transaction between the spouses Ley and LCDC.. and that the pendency of the Tagaytay case does not affect the running of the redemption period for the Tagaytay property. True. T-21273 covering their property in Tagaytay City is barred by res judicata. on the other. SO ORDERED. to which the spouses Ley were sureties. that the central issue in the Tagaytay case is whether the spouses Ley are entitled to the physical title. on one hand. Said court is ordered to conduct the appropriate proceedings and decide the case with deliberate dispatch in accordance with this Decision. It should be made clear. the cause of action in the Tagaytay case stemmed from the alleged refusal of UBP as the surviving corporation in a merger with the original mortgagee bank to release the title to the mortgaged property to the spouses Ley despite payment of the mortgage debt.39 The subject matter in the Makati case is the collection of a sum of money which had already become due and demandable under the loan transaction between UBP and LCDC whereas the subject matter of the present case. or the contract under dispute. the one year period of redemption had not yet expired when the complaint for recovery of title was filed by the spouses Ley.e. does ownership of the land sold become consolidated in the purchaser. the Court cannot support the appellate court’s contention that the action for recovery of title is barred by the doctrine of judicial stability or non-interference in the regular orders of judgments of a co-equal court on the premise that the levy on the Tagaytay property in the Makati case was a mere consequence of the judgment for recovery for a sum of money. the thing. however. The other pronouncements in said Decision are AFFIRMED. What might have spawned the confusion is the fact that the Tagaytay property. or concerning which the wrong has been done. WHEREFORE. while the Tagaytay case had its roots in the real estate mortgage constituted by the spouses Ley on their Tagaytay property as security for a loan secured by Azkon Refrigeration Industries. The case is remanded to the Regional Trial Court of Tagaytay City for further proceedings. without the judgment debtor having made use of his right of redemption. is the recovery of title to the Tagaytay property owned by the spouses Ley which had been allegedly withheld without justification by UBP. and UBP. but the property is not the subject of the Makati case. i. Being the subject of execution is not the same as being the subject of the main case itself. There is no similarity of causes of action between the two cases either. The Makati case arose from a credit line agreement between LCDC and UBP’s predecessor-in-interest. The judgment did not order the sale of the Tagaytay property in particular as it was not the subject of the litigation therein. No pronouncement as to costs. While it is true that a certificate of sale on the Tagaytay property was already issued in favor of UBP.40 Finally. is the same Tagaytay property which was levied and sold on execution in the Makati case. It is only upon the expiration of the redemption period.
vs. Fortunato Jose for appellants. J. the contract is a sale with the right to repurchase and not an antichresis. ET AL. Issue: WON the agreement had been converted into an antichresis.Adrid vs Morga Adrid vs Morga Facts: Sps Adrid executed a sale with a right to repurchase in favor of Morga over their lot. 339 this Court said: What characterizes a contract of antichresis is that the creditor acquires the right to receive the fruits of the property of his debtor with the obligation to apply them to the payment of interest. 550 of the San Francisco Malabon Estate . 51 Phil. Sps Adrid never repurchased the same. Plaintiff-Appellant. Adrid’s loan. ET AL. Apolinar S.. ******************* The agreement was in fact an equitable mortgage. ROSARIO MORGA. and MAMERTO MORGA. In the case of Alojado vs. and then to the principal of his credit.. Held: No. defendant-appellee. and when such a covenant is not made in the contract which speaks unequivocally of a sale with right of repurchase. Lim Siongco. Perfecto Adrid and his wife Carmen Silangcruz. MONTEMAYOR. Fojas for appellee. intervenors-appellees.. There is nothing in the document nor in the acts of the parties subsequent to its execution to show that the parties had entered into a contract of antichresis. Later on they brought an action to recover the lot contending that such agreement had been converted into one of antichresis considering that Morga took possession of the same and benefited himself of the yearly harvest of palay. Adrid also paid for the real estate tax PERFECTO ADRID. ETC. if any is due. then owners of No. The lot was given as security for Sps. 1938..: chanrobles virtual law library On August 8.
"B". Cavite. submitted a stipulation of facts with the prayer that decision be rendered on the basis of such facts. and upon his death on August 25. on August 11. chanrobles virtual law library 3. 550. said possession and yearly harvest of palay were transferred to his heirs. The parties plaintiff and defendant instead of presenting evidence. Exhibit A. the herein defendant and intervenors. of Title No. we reproduce the pertinent portions of said stipulation of facts: 1. 10028. The vendors never repurchased said Lot No. 10028. the date of the execution of said deed of sale with the right to repurchase. plus 12% interest per annum. 550 of the Malabon Estate within the period of two (2) years from date and covered by Trans. of Title No. For purposes of reference. converted into one of antichresis. the spouses Perfecto Adrid and Carmen Silangcruz executed a deed of sale for P2. covering lot 550. That on August 8.000 with the right to repurchase the same within two yeas for the same sum of P2. situated in General Trias. "A". But in 1956. 1938.000. purporting to sell the lot to Eugenio Morga for the sum of P2. That said deed of sale was registered in the office of the Register of Deed of Cavite and inscribed at the back of Trans. (Carmen Silangcruz then being already dead) brought the present action against the administratrix of the deceased Eugenio Morga to recover the same Lot No. offering to pay the sum of P2. Perfecto Adrid and his son. chanrobles virtual law library 4. Cert. 1938. execution a document entitled "Sale with Right to Repurchase". a copy of which is hereto attached as Exh.Subdivision. That on August 8.00 with 12% interest per annum with right to repurchase Lot No. 1939. and asking for accounting of all the produce of the lot since 1938. Cert. the vendee Eugenio Morga took possession of the land and benefited himself of the yearly produce of palay.000. 550. 1952. this on the theory that the original contract of sale with pacto de retro (Exhibit A) was by acts of the parties to the said contract. chanroble s virtual law library . Exh.000.
chanroble s virtual law library 6.844 square meter.00 were being paid by Eugenio Morga. and its yearly taxes amounting to P17. of Title No. became consolidated by operation of law.5. . 5 of the national document Exh. chanrobles virtual law library 11. "C'. The Court of First Instance of Cavite on July 15. and that the price cavan is P10. The plaintiffs having failed to repurchase the land within the stipulated period of two years from the date of the execution of the contract. They are likewise ordered to pay the amount of P1. the disposition part of which reads as follows: In view of the foregoing considerations. Exh. That in par. Cert. . this Court is of the opinion and so holds that the contract entered into between the spouses Perfecto Adrid and Carmen Silangcruz on one hand. That this lot 550 appears assessed in the names of the spouses Perfecto Adrid and Carmen Silangcruz under Tax Declaration No. and the spouses Eugenio Morga and Genoveva Vasquez on the other. rendered a decision. 1957. is a contract of sale with the right to repurchase. That the yearly harvest of palay of this lot No.350. 550 (is) 30 cavanes net since its area is 35.00. . the title of the deceased vendee a retro. "A" there is stipulation which reads: "Should we Perfecto Adrid and Carmen Silangcruz.00 as attorney's fees. with costs. then Eugenio Morga shall be the complete and absolute owner of the same without the necessity of further executing a deed of conveyance or any other document". 47. 10028. examined the document entitled "Sale with Right to Repurchase" (Exhibit A) and the acts of . We have carefully studied this case. chanroble svirtualawlibrary chanroble s virtual law library Wherefore judgment is hereby rendered against the plaintiffs. as stated in Trans. Eugenio Morga and Genoveva Vasquez. fail to repurchase the abovementioned parcel of land under the stipulations above mentioned.
Morga according to the contention of the plaintiff.000 would be rather inadequate for the supposed sale of Lot No. decision to take possession of the land. P300.00 a year. The parties to the contract must have contemplated the lot remaining in the possession of the vendors inasmuch as it was considered a mere security. the creditor.00 a year. there would be no reason for the agreement made for the payment of 12% interest per annum.00 would or should command more than P2.000 from Eugenio Morga. the contract from a sale with pacto de retro to that of antichresis. the contract .00 for its sale. but the tax declaration for the lot also remained in the name of said vendors. In other words. Despite the expiration of the two year period for the alleged repurchase. continued to pay the real estate tax in the name of the vendors. finding it financially advantageous to receive the products thereof. Not only this.the parties thereto subsequent to its execution and we have come to the conclusion that the intention of the parties was merely for Perfecto and his wife Carmen to borrow the sum of P2.000. But this did not convert. Otherwise. are the following. 1 It is also a fact that the price of P2. 550 being given as security. Eugenio during his lifetime. which should have been done in 1940. Lot No. as contended by plaintiffs. and his heirs after his death. and all these years. which would only be P240. neither Morga nor his heir have consolidated their title to the land. However. after the execution of the contract.000 by the alleged vendors until the same shall have been paid to Eugenio. 550 which has an area of about 3 1\2 hectares and has a yearly production of thirty cavans of palay valued P10. in lieu of the payment of interest at 12% a year. The certificate of title remained in the name of the alleged vendors.00. chanroblesvirtualawlibrary chanrobles virtual law library Some of the the reasons behind our conclusion that the present case is one of equitable mortgage. that is top say.00 a cavan. This interest must refer to the use of P2. we have here a clear case of equitable mortgage. Besides. pending payment of the loan . valued at P300. A parcel of land with an annual production of P300.
. Lim Siongco. the appealed decision is hereby reversed. Exhibit A. if any is due. FAUSTINO MANANSALA. No costs. MAXIMA MANANSALA and THE COURT OF APPEALS. In the case of Alojado vs. The defendants are hereby ordered to give up the possession of the lot in question to the appellants upon the payment of P2. MARIA LOPEZ. 339 this Court said: What characterizes a contract of antichresis is that the creditor acquires the right to receive the fruits of the property of his debtor with the obligation to apply them to the payment of interest. nor in the acts of the parties subsequent to its execution to show that the parties had entered into a contract of antichresis.respondents. the contract is a sale with the right to repurchase and not an antichresis. concur. C. is clearly untenable. JJ. There is nothing in the document. Labrador. chanroblesvirtualawlibrary chanrobles virtual law library Paras. .. Padilla. Endencia. TRILLANA VS.provided for the payment of interest which is characteristic of a loan or equitable mortgage.. 2 chanroble s virtual law library The contention of plaintiffs that although the original contract was one of sale with right to repurchase.J. No interest will be paid inasmuch as Eugenio and his heir have received the products of the land in lieu of the payment of interest. Bautista Angelo. 51 Phil. it was converted into one of antichresis just because the vendee took possession of the land. In view of the foregoing. and then to the principal of his credit.000. Barrera and Gutierrez David. vs. Concepcion. MANANSALA NAZARIO TRILLANA. and when such a covenant is not made in the contract which speaks unequivocally of a sale with right of repurchase. petitioner.
Bulacan. . In this connection we notice the Court of Appeals did not regard the contract as a pacto de retro sale. Upon a fuller examination of the matter. The judge found Exhibit 1 to be a forgery. The document Exhibit 1. if any. Hagonoy. Doubting the legal feasibility of acquiring. 1934-1944 I Marcos Bernardo married of legal age and residing at barrio S. we are now persuaded that our preliminary impression were justified. and held that since defendants admittedly took possession of the realty in July 1934 pursuant to such document and retained it thereafter. in tagalog.Delgado Flores and Macapagal for petitioner. we gave due course to the petition review on certiorari. prescription does not run during the period of redemption (1934-1944). now I own a land (latian) . the defendants Faustino Manansala et al. 1934 until April 1944 and if I cannot pay said amount come April 1944 the property I mortgaged is hereby paid to Mr. BENGZON. set up title through sale and prescription. On appeal.070 beginning today July 20. amounted to antichresis. which according to defendants meant. Faustino Manansala and Maria Lopez husband and wife in the amount of P1. inasmuch as they knew Exhibit 1 was false.G.: To a revindicatory complaint filed in 1950 in the Court of First Instance by Nazario Trillana over a parcel of land in Hagonoy. the action filed in 1950 was late. being impressed with counsel's contention that said written document represented a contract of antichresis. Faustino Manansala and Maria Lopez husband and wife . Bustos and Remedios D. they could not acquire by prescription because they had no just title. saying as to prescription. Yet no argument is needed to show that. The . and rendered judgment for plaintiff. . inasmuch as more than 15 years of adverse possession forfeited the plaintiff's right to recover. The Court of Appeals declared the agreement was a "kaliwaan" or exchange. the Court of Appeals saw differently.. even under such contract. that even if defendants had possessed the land since 1934. (b) Defendants — the document Exhibit 1. It was not convinced of the document's (Exhibit 1) falsity.1 The most that defendants could contend under Exhibit 1 is that it was a sale with pacto de retro. which. . the thru prescription. which is translated as follows: Julio 20. presented at the hearing: (a) Plaintiff — the contract of absolute sale (exhibit A) executed in his favor in June 1948 by Vicenta Bernardo. Garcia for respondents. And several decisions of this court consistently hold that the antichretic creditor cannot ordinarily acquire by prescription the land surrendered to him by the debtor. J. having used the words "Isinangla". "after the execution of the document we delivered the money.. land obtained under Exhibit 1. which may not give rise to acquisitive prescription. now my above mentioned property I mortgage to Mr.. Both parties allegedly deriving ownership from the registered owner Marcos Bernardo. "sinangla" and "matubos" obviously indicated a mortgage. Bulacan. I. daughter and the only surviving heirs of Marcos Bernardo. and plaintiff delivers possession of the land". coupled with delivery of possession of the land to the creditor. Sebastian. M. P.
which we think was the true agreement of the parties. by Exhibit A. 2 No interest is to be satisfied. either as pactum commissorium or as against the law. concur. So ordered.arrangement however contemplated a subsequent "re-exchange" when the owner redeems (matubos) on or before April 1944. Montemayor.. thru the proceedings prescribed for mortgages. no especial damages too.) Now as the contract Exhibit 1 did not divest Marcos Bernardo of ownership of the property. Faustino Manansala". A. But that in our opinion merely authorized Manansala to get the property for payment. Reyes.J. the property I mortgage is hereby paid to Mr. his heir Vicenta Bernardo could. Pablo..L. (Arts. J. JJ. Bautista Angelo. and one will be promulgated requiring defendants to deliver the lot to the plaintiff (substituted by Candida Cruz. the judgment of the Court of Appeals is reversed. Acting C. Costs against defendants. 1859 and 1884 Civil Code. Juana Trillana and Francisco Trillana) upon payment by the latter of the amount of P1..B. Padilla. Otherwise the stipulation would be open to attack. dovetail with an antichretic relationship. Such exchange and re-exchange agreed in exhibit 1. Labrador. Wherefore. the defendants Manansala et al.. It has not escaped our notice that the document says "if I cannot redeem come April 1944.070. Concepcion. and Reyes. Subject of course to the rights of the antichretic creditors. because the fruits gathered by the Manansalas are considered as interest. Footnotes . and she did. validly convey such ownership to Nazario Trillana in 1948.

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