THIRD DIVISION  

SPS. NESTOR AND MA. NONA BORROMEO,                              Petitioners,

-  versus  -

HONORABLE COURT OF APPEALS and EQUITABLE SAVINGS BANK ,                        Respondents.

G.R. No. 169846

Present:

AUSTRIA-MARTINEZ, J.,       Acting Chairperson,TINGA,*CHICO-NAZARIO,NACHURA, andREYES, JJ.

Promulgated:

March 28, 2008x - - - - - - - - - - - - - - - - - - - - - - - - - - - -  - - - - - - - - - - - - - - - - - - - - - x                                                  D E C I S I O N  CHICO-NAZARIO, J.:            This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, assailing the Decision,[1] dated 29 April 2005, thereafter, upheld in a Resolution[2] dated 16 September 2005, both rendered by the Court of Appeals in CA-G.R. SP No. 85114.  The Court of Appeals, in its assailed Decision, reversed the Order dated 3 March 2004 of Branch 215 of the Regional Trial Court (RTC) of Quezon City in Civil Case No. Q-03-51184, and denied the issuance of a Writ of Preliminary Injunction enjoining respondent Equitable Savings Bank (ESB) from executing the extra-judicial foreclosure of the mortgaged property owned by petitioners, Spouses Nestor and Nona Borromeo. 

Respondent is a domestic savings bank corporation with principal office and place of business at EPCIB Tower 2, Makati Avenue, Salcedo Village, Makati City.[3]  At the time the dispute began,

it was a subsidiary of Equitable PCI Bank (EPCIB), a domestic universal banking corporation with principal office at Makati Avenue, Salcedo Village,Makati City.  After the merger of EPCIB and Banco De Oro (BDO), they have adopted the corporate name “Banco De Oro.”[4]  

Petitioners were client-depositors of EPCIB for more than 12 years.  Petitioners alleged that sometime in mid-1999, the branch manager of EPCIB, J.P. Rizal Branch, offered a loan to the petitioners under its “Own-a-Home Loan Program.”  Petitioners applied for a loan of P4,000,000.00 and were informed of the approval of their loan application sometime in October 1999.  It was in the early part of 2000 that petitioners signed blank loan documents consisting of the Loan Agreement, Promissory Notes, a Real Estate Mortgage (REM) and Disclosure Statements.[5]

 To secure the payment of the loan, petitioners executed an REM over their

land, registered under Transfer Certificate of Title (TCT) No. N-203923, located at Loyola Grand Villas, Quezon City, consisting of 303 square meters; and the proposed house that was to be built thereon.[6]  Petitioners asserted that even if the loan documents were signed in blank, it was understood that they executed the REM in favor of EPCIB.[7]   

From April 2001 to September 2002, respondent released a total amount of P3,600,000.00 in four installments, while the balance of P400,000.00 was not drawn by petitioners.[8]  On the other hand, petitioners started to pay their monthly amortizations on 21 April 2001.[9]

 Petitioners made repeated verbal requests to EPCIB to furnish them their

copies of the loan documents.[10] On 6 August 2003, they sent the president of EPCIB a letter[11] which reiterated their request for copies of the loan documents.  In addition, petitioners stated that the interest rate of 14% to 17% that was charged against them was more than the interest rate of 11% or 11.5% that the parties agreed upon.  They further claimed that they purposely did not draw the remaining balance of the loan in the amount of P400,000.00 and stopped paying their loan amortizations to protest EPCIB’s continued failure to provide them copies of the loan documents and its imposition of an interest rate higher than that

agreed upon.  From the time petitioners began paying their monthly amortizations on 21 April 2001 until the time they stopped, petitioners made total payments of approximately P500,000.00.[12]  

In reply to the petitioners’ letter dated 6 August 2003, the Vice President of EPCIB, Gary Vargas, sent to the petitioners a letter[13] dated 27 August 2003 explaining that as a matter of practice, their clients were given original copies of the loan documents only upon full release of the amount loaned.  EPCIB clarified that since petitioners’ loan had not been fully released, the original documents were not yet sent to them.  Petitioners were also informed that the applicable interest rate was set at the time the loan was released, not at the time the loan was approved, and that the prevailing interest when the first four installments of the loan were released ranged from 9.5% to 16%.

 In the meantime, on 13 August 2003, respondent, through counsel, also sent

a letter[14] to the petitioners demanding payment for their obligation, which, as of 15 August 2003, amounted to P4,097,261.04, inclusive of interest and other charges.  Respondent informed petitioners that failure to pay their obligation would result in its pursuing legal action against petitioners, including foreclosure proceedings on their REM. 

In a letter dated 18 September 2003,[15] respondent, through counsel, reiterated to petitioners its demand for the full settlement of their obligation on or before 30 September 2003.  

Finally, on 3 October 2003, petitioners received copies of the loan documents which they had earlier signed in blank.[16]  According to petitioners, they were surprised to find out that the Loan Agreement and REM designated respondent ESB as lender and mortgagor, instead of EPCIB with whom they allegedly entered into the agreement. However, in contrast to the Loan Agreement and the REM, the four Promissory Notes designated EPCIB as the lender.  Petitioners also alleged that instead of the prevailing interest rates of 8% to 10% annually, which the parties agreed upon,[17] the four Promissory Notes were set at the following interest rates:[18]

 DATE AMOUNT INTEREST RATE

25 April 2001 P1,200,000.00 16%18 January 2002 P 800,000.00 14.0%29 June 2001 P 800,000.00 15%19 September 2002 P 800,000.00 9.0%

  

When the petitioners failed to pay for the loan in full by 30 September 2003, respondent sought to extra-judicially foreclose the REM.  Upon the respondent’s petition for foreclosure, the Office of the Ex-Officio Sheriff of Quezon City issued a Notice of Extrajudicial Sale dated 16 October 2003, wherein the mortgage debt was set at P5,114,601.00.[19]  The Extrajudicial Sale was set to take place on 26 November 2003.  On 14 November 2003, petitioners received Notice of Extrajudicial Sale of their property.[20]

 On 20 November 2003, petitioners filed with the RTC a Complaint for

Injunction, Annulment of Mortgage with Damages and with Prayer for Temporary Restraining Order and Preliminary and Mandatory Injunction against EPCIB and respondent, docketed as Civil Case No. Q-03-51184.  In their Complaint, petitioners alleged that the loan documents failed to reflect the true agreement between the parties.  Firstly, the agreement was between the petitioners and EPCIB and, consequently, respondent had no interest in the REM.  Secondly, the interest rates reflected in the Promissory Notes were not the interest rates on which the parties had settled.  They also averred in their Complaint that EPCIB committed a breach of contract when it failed to release the fifth and last installment of the loan to petitioners. [21]  

Petitioners sought to prevent the Extrajudicial Sale from taking place on 26 November 2003.   Petitioners maintained that EPCIB acted in bad faith when it foreclosed the subject property simply because petitioners complained that the interest rates unilaterally imposed by EPCIB were excessive.  It further averred that their deposit accounts with EPCIB were more than sufficient to pay for the amortizations due on the housing loan.[22]

 The scheduled date for the Extrajudicial Foreclosure, namely, 26 November

2003, fell on the holiday Eid-el-Fitr, and as a result, it did not push through.   In an Order dated5 December 2003, the RTC determined that there was no longer any need to issue a temporary restraining order (TRO) and/or preliminary injunction.[23]

 On 14 December 2003, respondent re-filed its petition for extrajudicial

foreclosure of the REM.  The Ex-Officio Sheriff of Quezon City set the auction sale on 14 January 2004. 

 Petitioners reacted by filing with the RTC a Motion for Reconsideration of

its Order dated 5 December 2003, again praying for the issuance of a TRO and/or preliminary injunction to forestall the extrajudicial sale of their property scheduled for 14 January 2004.[24]

  

          On 3 March 2004, the RTC granted petitioners’ motion for reconsideration and ordered the issuance of a preliminary injunction after declaring that the validity of the REM was yet to be determined. It found that petitioners were bound to suffer grave injustice if they were deprived of their property before the RTC could rule on the validity of the REM constituted on the same.  On the other hand, it held that respondent’s interest was amply protected, since petitioners’ mortgaged property was valued at P12,000,000.00, which was more than sufficient to answer for petitioner’s obligation pegged at P4,097,261.00, and respondent’s REM over said property remained in effect.  Moreover, petitioners posted a bond in the amount of P3,500,000.00 to cover their unpaid liabilities.[25] In its Order dated 3 March 2004, the RTC ordered that[26]:  

                       With all the foregoing disquisitions and finding merit in plaintiffs’ application, the same [is] hereby GRANTED.  Let a writ of preliminary injunction issue upon plaintiffs’ posting of a bond in the amount of three million five hundred thousand (P3,500,000.00) pesos. 

 Respondent filed a Motion for Reconsideration of the afore-quoted Order,

which was denied for lack of merit by the RTC in an Order dated 29 April 2004. Thereafter, respondent filed on 14 July 2004 a Special Civil Action

for Certiorari before the Court of Appeals, docketed as CA-G.R. SP No. 85114.  During the proceedings before the Court of Appeals, petitioner presented a

letter dated 19 December 2002, with supporting documents, written and compiled

by EPCIB for Home Guaranty Corporation, wherein EPCIB included petitioners’ loan among its housing loans for which it sought insurance coverage.[27]

 In reversing the RTC Order dated 3 March 2004, the Court of Appeals

decreed that pending the RTC’s determination of the validity of the REM, its validity should be presumed.  It further ruled that the intended foreclosure of the mortgage by respondent was a proper exercise of its right after petitioners admittedly stopped paying their loan amortizations.    Moreover, it held that the foreclosure of the REM would not result in any grave and irreparable damage to the petitioners since petitioners, as mortgagors, may redeem the subject property or avail themselves of the remedy of claiming damages or nullifying the sale.[28]  The dispositive portion of the Court of Appeals Decision, dated 29 April 2005, reads:[29]

             WHEREFORE, in view of the foregoing, the assailed Orders dated March 3, 2004 and April 29, 2004 issued by the Regional Trial Court of Quezon City, Branch 215 in Civil Case No. Q-03-51184 are hereby ANNULLED and SET ASIDE.            Petitioners filed a Motion for Reconsideration of the foregoing Decision,

which the Court of Appeals denied in a Resolution dated 16 September 2005.[30]

 Hence, the present Petition, in which the following issues are raised[31]:

 I 

WHETHER OR NOT THE PRIVATE RESPONDENT SAVINGS BANK IS THE REAL PARTY-IN-INTEREST. 

II WHETHER OR NOT PETITIONERS ARE ENTITLED TO THE RELIEF DEMANDED, THAT THE FORECLOSURE AND PUBLIC AUCTION OF THE PROPERTY BELONGING TO PETITIONERS DURING THE LITIGATION PROCEEDINGS IN THE LOWER COURT WOULD PROBABLY WORK INJUSTICE TO THEM SUCH THAT THE JUDGMENT WHICH MAY BE ISSUED BY THE SAID

COURT WILL BE RENDERED INEFFECTUAL BY SUCH FORECLOSURE AND PUBLIC AUCTION OF SAID PROPERTY. 

III WHETHER OR NOT THE LOWER COURT WAS CORRECT IN GRANTING THE WRIT OF PRELIMINARY INJUNCTION, ALL REQUISITES BEING PRESENT  The petition is meritorious. The only issue that needs to be determined in this case is whether or not a

writ of preliminary injunction should be issued to enjoin the foreclosure and public auction of petitioner’s property during the proceedings and pending determination of the main cause of action for annulment of the REM on said property.  By no means is this a final determination of the merits of the main case still before the RTC.[32]

 Section 3, Rule 58 of the Rules of Court provides that: SEC. 3. Grounds for issuance of preliminary injunctions.—A preliminary injunction may be granted when it is established: 

(a)    That the applicant is entitled to the relief demanded, and the whole or part of such relief consists in restraining the commission or continuance of the act or acts complained of, or in requiring the performance of an act or acts, either for a limited period or perpetually;

(b)   That the commission, continuance or non-performance of the act or acts complained of during the litigation would probably work injustice to the applicant; or

(c)    That a party, court, agency or a person is doing, threatening, or is attempting to do, or is procuring or suffering to be done, some act or acts probably in violation of the rights of the applicant respecting the subject of the action or proceeding, and tending to render the judgment ineffectual.

  

As such, a writ of preliminary injunction may be issued only upon clear showing of an actual existing right to be protected during the pendency of the principal action.  The twin requirements of a valid injunction are the existence of a right and its actual or threatened violations.  Thus, to be entitled to an injunctive writ, the right to be protected and the violation against that right must be shown.[33]

 In this case, petitioners’ rights to their property is restricted by the REM they

executed over it.  Upon their default on the mortgage debt, the right to foreclose the property would be vested upon the creditor-mortgagee.[34]  Nevertheless, the right of foreclosure cannot be exercised against the petitioners by any person other than the creditor-mortgagee or its assigns.  According to the pertinent provisions of the Civil Code:  

Art. 1311. Contracts take effect only between the parties, their assigns and heirs, except in case where the rights and obligations arising from the contract are not transmissible by their nature, or by stipulation or by provision of law.  The heir is not liable beyond the value of the property he received from the decedent. 

If a contract should contain some stipulation in favor of a third person, he may demand its fulfillment provided he communicated his acceptance to the obligor before its revocation.  A mere incidental benefit or interest of a person is not sufficient.  The contracting parties must have clearly and deliberately conferred a favor upon a third person. (Emphasis ours.)

 An extrajudicial foreclosure instituted by a third party to the Loan Agreement and the REM would, therefore, be a violation of petitioners’ rights over their property. 

It is clear that under Article 1311 of the Civil Code, contracts take effect only between the parties who execute them.[35]  Where there is no privity of contract, there is likewise no obligation or liability to speak about.[36]  The civil law principle of relativity of contracts provides that contracts can only bind the parties who entered into it, and it cannot favor or prejudice a third person, even if he is aware of such contract and has acted with knowledge thereof.[37]  Since a contract may be violated only by the parties thereto as against each other, a party who has

not taken part in it cannot sue for performance, unless he shows that he has a real interest affected thereby.[38]

           In the instant case, petitioners assert that their creditor-mortgagee is EPCIB and not respondent.  While ESB claims that petitioners have had transactions with it, particularly the five check payments made in the name of ESB, it fails to categorically state that ESB and not EPCIB is the real creditor-mortgagor in this loan and mortgage transaction.  This Court finds the position taken by the petitioners to be more credible.  The four Promissory Notes designate EPCIB as the “lender.”[39]  In a letter dated 19 December 2002, addressed to Home Guaranty Corporation, EPCIB Vice President Gary Vargas even specified petitioners’ loan as one of its housing loans for which it sought insurance coverage.[40]  Records also show that petitioners repeatedly dealt with EPCIB. When the petitioners complained of not receiving the loan documents and the allegedly excessive interest charges, they addressed their letter dated 3 August 2003 to the president of EPCIB.[41]  The response, which explained the loan transactions in detail in a letter dated 27 August 2003, was written by Gary Vargas, EPCIB Vice President.[42]  Of almost three years’ amortizations, the checks were issued by petitioners in the name of EPCIB, except only for five checks which were issued in respondent’s name.[43]

 Respondent, although a wholly-owned subsidiary of EPCIB, has an

independent and separate juridical personality from its parent company.  The fact that a corporation owns all of the stocks of another corporation, taken alone, is not sufficient to justify their being treated as one entity.  If used to perform legitimate functions, a subsidiary’s separate existence shall be respected, and the liability of the parent corporation, as well as the subsidiary, shall be confined to those arising from their respective businesses.  A corporation has a separate personality distinct from its stockholders and other corporations to which it may be conducted.[44]  Any claim or suit of the parent corporation cannot be pursued by the subsidiary based solely on the reason that the former owns the majority or even the entire stock of the latter. 

From a perusal of the records, petitioners did not enter into a Loan Agreement and REM with respondent.  Respondent, therefore, has no right to foreclose the subject property even after default, since this right can only be

claimed by the creditor-mortgagor, EPCIB; and, consequently, the extrajudicial foreclosure of the REM by respondent would be in violation of petitioners’ property rights. 

This Court takes note of the fact that in several cases[45] the Court denied the application for a Writ of Preliminary Injunction that would enjoin an extrajudicial foreclosure of a mortgage, and declared that foreclosure is proper when the debtors are in default of the payment of their obligation.  Where the parties stipulated in their credit agreements, mortgage contracts and promissory notes that the mortgagee is authorized to foreclose the mortgaged properties in case of default by the mortgagors, the mortgagee has a clear right to foreclosure in case of default, making the issuance of a Writ of Preliminary Injunction improper.  However, the doctrine in these cases is not applicable to the case at bar where the identity of the creditor-mortgagor is highly disputable. 

This Court emphasizes that the determination of who is the creditor-mortgagee is only for purposes of determining the propriety of issuing a writ of preliminary injunction, based on the evidence presented before the hearing for the issuance of a preliminary injunction.  It will not bar the RTC from making its own determination as to who is the true creditor-mortgagee after trial and presentation of evidence on the main case.  To establish the essential requisites for a preliminary injunction, the evidence submitted by the plaintiff need not be conclusive and complete.  The plaintiffs are only required to show that they have an ostensible right to the final relief prayed for in their complaint. [46]  InUrbanes, Jr. v. Court of Appeals, this Court expounded that: 

A writ of preliminary injunction is generally based solely on initial and incomplete evidence.  The evidence submitted during the hearing on an application for a writ of preliminary injunction is not conclusive or complete for only a sampling is needed to give the trial court an idea of the justification for the preliminary injunction pending the decision of the case on the merits.  As such, the findings of fact and opinion of a court when issuing the writ of preliminary injunction are interlocutory in nature and made even before the trial on the merits is commenced or terminated.  There are vital facts that have yet to be presented during the trial which may not be obtained or presented during the hearing on the application for the injunctive writ.  The trial court needs to conduct

substantial proceedings in order to put the main controversy to rest.   It does not necessarily proceed that when a writ of preliminary injunction is issued, a final injunction will follow.[47]  (Emphasis provided.)

  

The extrajudicial foreclosure of the petitioners’ property pending the final determination by the RTC of their complaint for annulment of the REM and claim for damages would result in an injustice to the petitioners.  If the RTC would subsequently declare that respondent was entitled to have petitioners’ property foreclosed, it may still foreclose the subject property which is valued at P12,000,000.00,[48] to answer for the debt which is estimated at P5,000,000.00, and further claim the P3,500,000.00 surety bond posted by petitioners with the RTC.  On the other hand, if the RTC later finds that respondent is not the creditor-mortgagee and, therefore, the foreclosure of the property is invalid, petitioners would be placed in an oppressively unjust situation where they will be tied up in litigation for the recovery of their property while their debt to the real creditor-mortgagee, EPCIB, would remain unpaid and continue to accrue interest and other charges.  

The sole object of a preliminary injunction is to maintain the status quo until the merits can be heard.  A preliminary injunction is an order granted at any stage of an action prior to judgment of final order, requiring a party, court, agency, or person to refrain from a particular act or acts.  It is a preservative remedy to ensure the protection of a party’s substantive rights or interests pending the final judgment on the principal action.  A plea for an injunctive writ lies upon the existence of a claimed emergency or extraordinary situation which should be avoided for, otherwise, the outcome of a litigation would be useless as far as the party applying for the writ is concerned.[49] 

 IN VIEW OF THE FOREGOING, the instant Petition

is GRANTED.  This Court REVERSES the assailed Decision dated 29 April 2005 of the Court of Appeals inCA-G.R. SP No. 85114, and REINSTATES the Order dated 3 March 2004 of Branch 215 of the Regional Trial Court of Quezon City in Civil Case No. Q-03-51184 ordering the issuance of a Writ of Preliminary Injunction. 

SO ORDERED.

THIRD DIVISION

[G.R. No. 133079.  August 9, 2005]

SPS. MAXIMO LANDRITO, JR. and PACITA EDGALANI, petitioners, vs. THE HONORABLE COURT OF APPEALS; SPS. BENJAMIN SAN DIEGO and CARMENCITA SAN DIEGO; The EX-OFFICIO SHERIFF and CLERK OF COURT of the Regional Trial Court, Makati City; and the REGISTER OF DEEDS, Makati City, respondents.

D E C I S I O NGARCIA, J.:

Herein petitioners, the spouses Maximo Landrito, Jr. and Pacita Landrito, have come to this Court via this petition for review on certiorari  under Rule 45 of the Rules of Court to seek the reversal and setting aside of the decision dated 12 December 1997[1] and resolution dated 10 March 1998[2] of the Court of Appeals in CA-G.R. CV No. 48896, affirming an earlier order of the Regional Trial Court at Makati City which granted the motion to dismiss filed by the herein private respondents, the spouses Benjamin San Diego and Carmencita San Diego, in its Civil Case No. 94-2950, a complaint for annulment of extrajudicial foreclosure and auction sale, thereat commenced by them against the San Diegos, the ex-officio sheriff and the Register of Deeds of Makati City.

The facts:

In July 1990, petitioners obtained a loan of P350,000.00 from respondent Carmencita San Diego. To secure payment thereof, petitioners executed on 02 August 1990 in favor of the same respondent a deed of real estate mortgage over their parcel of land located at Bayanan, Muntinlupa, Rizal and registered in their names under Transfer Certificate of Title No. (432281) S-21000.

After making substantial payments, petitioners again obtained and were granted by Carmencita San Diego an additional loan of One Million Pesos (P1,000,000.00).  To secure this additional loan, the parties executed on 13

September 1991 an “Amendment of Real Estate Mortgage”, whereunder they stipulated that the loan shall be paid within six (6) months from 16 September 1991, and if not paid within said period, the mortgagee shall have the right to declare the mortgage due and may immediately foreclose the same judicially or extrajudicially, in accordance with law.

It appears that petitioners defaulted in paying their loan and continuously refused to comply with their obligation despite repeated demands therefor, prompting respondent Carmencita San Diego to send them on 27 April 1993, a final notice of demand requiring them to settle their financial obligation which, by then, already amounted to P1,950,000.00.

On 30 June 1993, after her efforts to collect proved futile, respondent Carmencita San Diego filed with the Office of the Clerk of Court and Ex-Officio Sheriff of RTC-Makati, a petition for the extrajudicial foreclosure of the mortgage.

On 06 July 1993, said office sent to the parties a Notice of Sheriff’s Sale, therein announcing that petitioners’ mortgaged property will be sold in a public auction to be conducted on 11 August 1993 at 10:00 o’clock in the morning, copies of which notice were posted in several conspicuous places within the sheriff’s territorial jurisdiction.

As announced, on 11 August 1993, at 10:00 o’clock in the morning, the public auction sale was held and the mortgaged property sold to respondent Carmencita San Diego as the highest bidder for P2,000,000.00, as evidenced by the Sheriff’s Certificate of Sale issued in her favor on 07 October 1993.

On 29 October 1993, respondent San Diego caused the registration of the same sheriff’s certificate of sale with the Office of the Register of Deeds, Makati City, and duly inscribed on the same date at the dorsal side of the petitioners’ TCT No. (432281) S-21000.

With the petitioners having failed to redeem their property within the 1-year redemption period from the date of inscription of the sheriff’s certificate of sale, as provided for in Act No. 3135, as amended, the San Diegos caused the consolidation of title over the foreclosed property in their names.

Then, on 09 November 1994, before the Regional Trial Court at Makati City, petitioners filed their complaint for annulment of the extrajudicial foreclosure and auction sale, with damages.  In their complaint, thereat docketed as Civil Case No. 94-2950, petitioners alleged that (1) said foreclosure and auction sale were null and void for failure to comply with the requirements of notice and publication, as mandated by Act 3135, as amended; (2) the mortgaged property was illegally foreclosed in the light of

the settled rule that an action to foreclose a mortgage must be limited to the amount mentioned in the mortgage document, in this case, P1,000,000.00, which amount was allegedly bloated by respondent Carmencita San Diego toP1,950,000.00; and (3) the San Diegos’ application for consolidation of title was premature because the husband, Benjamin San Diego, allegedly granted them an extension of the period of redemption up to 11 November 1994.

To the complaint, respondents interposed a Motion to Dismiss, therein alleging that said complaint failed to state a cause of action as no primary right of the petitioners had been violated since they actually failed to exercise their right of redemption within the one-year redemption period, adding that petitioners never took any action which may stall the running of the same period, thereby leaving them no further right or interest in the property in question.

In an order dated 13 January 1995, the trial court granted respondents’ motion to dismiss and accordingly dismissed petitioners’ complaint, saying that the latter’s cause of action, if any, is already barred by laches on account of their failure or neglect for an unreasonable length of time to do that which, by exercising due diligence, could or should have been done earlier.  Further, the trial court ruled that petitioners’ inaction constituted a waiver on their part.

Therefrom, petitioners went on appeal to the Court of Appeals in CA-G.R. CV No. 48896.

As stated at the outset hereof, the appellate court, in its decision of 12 December 1997, dismissed petitioners’ appeal and affirmed in toto the trial court’s order of dismissal.  With their motion for reconsideration having been denied by the same court in its resolution of 10 March 1998,[3] petitioners are now with us via the present recourse, faulting the Court of Appeals, as follows:

1.        The Court of Appeals gravely erred in avoiding to resolve in the assailed Decision and in the questioned Resolution the basic issue as to whether or not the extra-judicial foreclosure and public auction sale of the subject parcel of land are valid and lawful when the amount stated in letter-request or the petition for extra-judicial foreclosure and in the notice of sheriff sale doubled the amount stipulated in the Amendment of Real Estate Mortgage;

2.        The Court of Appeals has similarly committed serious error in considering that the complaint of the petitioner is a complaint for redemption when in the caption; in the body; and in the prayer of the complaint, petitioner spouses have sought the nullity as void ab

initio the extra-judicial foreclosure and auction sale of the subject property;

3.        The respondent Appellate Court likewise incredulously erred to have resolved the admissibility and probative value of the statement of account attached as Annex “E” of the complaint when it was not yet presented in evidence; because the stage of the case at the time the assailed dismissal order was issued, was yet in the period of pleadings;

4.        The Court of Appeals has grievously erred in affirming the assailed dismissal order by declaring petitioner spouses to have been guilty of laches in failing to redeem during the legal period of redemption the foreclosed parcel of land; when the cause of the failure to redeem was the illegal increase by 100% of the original obligation, stated in the Amendment of Real Estate Mortgage and bloating of the redemption price from Two Million Pesos (P2,000,000.00) to Three Million Four Hundred Ninety One Thousand Two Hundred Twenty Five & 98/100 Pesos (P3,491,225.98).

We DENY.

The records indubitably show that at the time of the foreclosure sale on 11 August 1993, petitioners were already in default in their loan obligation to respondent Carmencita San Diego.

Much earlier, or on 27 April 1993, a final notice of demand for payment had been sent to them, despite which they still failed to pay.  Hence, respondent Carmencita San Diego’s resort to extrajudicial foreclosure, provided no less in the parties’ “Amendment of Real Estate Mortgage”.

The rule has been, and still is, that in real estate mortgage, when the principal obligation is not paid when due, the mortgagee has the right to foreclose on the mortgage and to have the mortgaged property seized and sold with the view of applying the proceeds thereof to the payment of the obligation.[4]

Here, the validity of the extrajudicial foreclosure on 11 August 1993 was virtually confirmed by the trial court when it dismissed petitioners’ complaint, and rightly so, what with the fact that petitioners failed to exercise their right of redemption within the 1-year period therefor counted from the registration of the sheriff’s certificate of sale.

It is petitioners’ main submission, however, that the very reason why they did not avail of their redemption right is because Mrs. San Diego bloated their original loan of P1,000,000.00 toP1,950,000.00, an issue supposedly not considered and/or addressed by the appellate court in the decision under review.  In this regard, petitioners argue that the Court of Appeals, in sustaining the extrajudicial foreclosure proceedings, thereby go against the established jurisprudence that an action for foreclosure must be limited to the amount mentioned in the mortgage document, P1,000,000.00 in this case.

We do not take issue with petitioners’ submission that a mortgage may be foreclosed only for the amount appearing in the mortgage document, more so where, as here, the mortgage contract entered into by the parties is evidently silent on the payment of interest.

However, contrary to petitioners’ claim, the appellate court did pass upon the legal issue raised by them, albeit ruling that petitioners had been barred by laches from raising the same.  We quote from the challenged decision:

[Petitioners] next argued that the mortgaged property was illegally foreclosed since it is a well settled rule that an action to foreclose a mortgage must be limited to the amount mentioned in the mortgage.

The argument is without merit.

It appears from the evidence on record that despite due notice and publication of the same in a newspaper of general circulation (Exhs. “5”, “5-A” and “5-B”, pp. 53-55, Record), [petitioners] did not bother to attend the foreclosure sale nor raise any question regarding the propriety of the sale.  It was only on November 9, 1994, or more than one year from the registration of the Sheriff’s Certificate of Sale, that [petitioners] filed the instant complaint.  Clearly, [petitioners] had slept on their rights and are therefore guilty of laches, which is defined as the failure or neglect for an unreasonable or explained length of time to do that which, by exercising due diligence, could or should have been done earlier, failure of which gives rise to the presumption that the person possessed of the right or privilege has abandoned or has declined to assert the same.  (Words in bracket added.)

For sure, in the very petition they filed in this case, petitioners have not offered any valid excuse why, despite notice to them of the petition for extrajudicial foreclosure filed by the respondents, they failed to attend the proceedings and there voiced out what they are now claiming.  Truly, laches has worked against them.

The law on redemption of mortgaged property is clear.  Republic Act No. 3135 (An Act to Regulate the Sale of Property Under Special Powers  Inserted In Or Annexed to Real Estate Mortgages), as amended by Republic Act No. 4118, provides in Section 6 thereof, thus:

“Sec. 6. In all cases in which an extrajudicial sale is made under the special power hereinbefore referred to, the debtor, his successors in interest or any judicial creditor or judgment creditor of said debtor, or any person having a lien on the property subsequent to the mortgage or deed of trust under which the property is sold, may redeem the same at any time within the term of one year from and after the date of the sale; xxx” (Emphasis supplied)

In a long line of cases[5], this Court has consistently ruled that the one-year redemption period should be counted not from the date of foreclosure sale, but from the time the certificate of sale is registered with the Register of Deeds.  Here, it is not disputed that the sheriff’s certificate of sale was registered on 29 October 1993.

And under Article 13 of the New Civil Code[6], a year is understood to have three hundred sixty-five (365) days each.  Thus, excluding the first day and counting from 30 October 1993 (under paragraph 3 of Article 13 of the New Civil Code), and bearing in mind that 1994 was a leap year, petitioners had only until 29 October 1994, the 365th day after registration of the sheriff’s certificate of sale on 29 October 1993, within which to redeem the foreclosed property in accordance with law.  And since 29 October 1994 fell on a Saturday, petitioners had until the following working day, 31 October 1994, within which to exercise their right of redemption.

From the foregoing, it is clear as day that even the complaint filed by the petitioners with the trial court on 09 November 1994 was instituted beyond the 1-year redemption period.  In fact, petitioners no less acknowledged that their complaint for annulment of extrajudicial foreclosure and auction sale was filed about eleven (11) days after the redemption period had already expired on 29 October 1994[7].  They merely harp on the alleged increase in the redemption price of the mortgaged property as the reason for their failure to redeem the same.  However, and as already pointed out herein, they chose not, despite notice, to appear during the foreclosure proceedings.

Of course, petitioners presently insist that they requested for and were granted an extension of time within which to redeem their property, relying on a handwritten note allegedly written by Mrs. San Diego’s husband on petitioners’ statement of account, indicating therein the date 11 November 1994 as the last day to pay their outstanding account in full.  Even assuming,

ingratia argumenti, that they were indeed granted such an extension, the hard reality, however, is that at no time at all did petitioners make a valid offer to redeem coupled with a tender of the redemption price.

Even on this score, petitioners’ case must fall.

For, in Lazo v. Republic Surety & Insurance Co., Inc.[8], this Court has made it clear that it is only where, by voluntary agreement of the parties, consisting of extensions of the redemption period, followed by commitment by the debtor to pay the redemption price at a fixed date, will the concept of legal redemption be converted into one of conventional redemption.

Here, there is no showing whatsoever that petitioners agreed to pay the redemption price on or before 11 November 1994, as allegedly set by Mrs. San Diego’s husband.  On the contrary, their act of filing their complaint on 09 November 1994 to declare the nullity of the foreclosure sale is indicative of their refusal to pay the redemption price on the alleged deadline set by the husband.  At the very least, if they so believed that their loan obligation was only for P1,000,000.00, petitioners should have made an offer to redeem within one (1) year from the registration of the sheriff’s certificate of sale, together with a tender of the same amount.  This, they never did.

It must be remembered that the period of redemption is not a prescriptive period but a condition precedent provided by law to restrict the right of the person exercising redemption.  Correspondingly, if a person exercising the right of redemption has offered to redeem the property within the period fixed, he is considered to have complied with the condition precedent prescribed by law and may thereafter bring an action to enforce redemption.  If, on the other hand, the period is allowed to lapse before the right of redemption is exercised, then the action to enforce redemption will not prosper, even if the action is brought within the ordinary prescriptive period.  Moreover, the period within which to redeem the property sold at a sheriff’s sale is not suspended by the institution of an action to annul the foreclosure sale. [9] It is clear, then, that petitioners have lost any right or interest over the subject property primarily because of their failure to redeem the same in the manner and within the period prescribed by law.  Their belated attempts to question the legality and validity of the foreclosure proceedings and public auction must accordingly fail.

WHEREFORE, the instant petition is DENIED and the challenged decision and resolution of the Court of Appeals AFFIRMED.

No pronouncement as to costs.

SO ORDERED.

SECOND DIVISION

[G.R. No. 141365.  November 27, 2002]

SPOUSES FELIPE YULIENCO and FLORA YULIENCO, petitioners, vs. HON. COURT OF APPEALS (4TH DIVISION); HON. LUCAS P. BERSAMIN in his official capacity as Presiding Judge of the Regional Trial Court, Branch 96, NCJR, Quezon City; DEPUTY SHERIFF JOSE G. MARTINEZ of Branch 96, RTC, Quezon City; and ADVANCE CAPITAL CORPORATION, respondents.

D E C I S I O NQUISUMBING, J.:

Petitioners seek to annul and set aside the decision[1] dated December 20, 1999 of the Court of Appeals, which (1) affirmed the order of the Regional Trial Court of Quezon City, Branch 96, in Land Registration Case No. Q-11564 (99) granting a writ of possession to private respondent Advance Capital Corporation; and (2) lifted the temporary restraining order issued by the CA on September 17, 1999.

The records show that petitioner spouses Felipe and Flora Yulienco were the owners of a residential house and lot located at Nos. 136-138 Biak-na-Bato Street, Sta. Mesa Heights, Quezon City, covered by Transfer Certificate of Title No. RT-2572 (57609). [2] On June 29, 1990, petitioners obtained a loan of P20,000,000 from private respondent Advance Capital Corporation (ACC) with interest at 24 percent per annum and evidenced by a promissory note.  To secure the loan, deeds of real estate mortgage were executed on their properties in Makati City, Benguet, and Quezon City.  When petitioners failed to pay the loan in full, ACC filed on July 2, 1993 a petition for extrajudicial foreclosures of the properties with the Ex-Officio Sheriff of Quezon City, pursuant to the authority provided in the deed of real estate mortgage.  Auction sale of the properties was scheduled on July 30, 1993 and notice of the sale was published in the Times Record on July 7, 14, and 21, 1993.[3]

To forestall the foreclosure of their properties, petitioners filed on July 26, 1993 a petition for injunction, reformation, and damages with prayer for temporary restraining order and/or preliminary injunction against ACC with the

Regional Trial Court of Makati City, Branch 61.  In their complaint, petitioners questioned the validity of the promissory notes and real estate mortgages.  They alleged that their true agreement with ACC was to pay the loan from the proceeds of the sale of their shares of stock in PHESCO which were then subject of a pending case in the Securities and Exchange Commission.  They also assailed the Notice of Sheriff’s Sale in Makati and Quezon City because it was not published in newspapers of general circulation in Metro Manila.

On July 28, 1993, or two days before the scheduled sale, the Makati RTC issued an order[4] enjoining private respondent and the sheriffs of Makati, Quezon City, and Benguet from proceeding with the foreclosure of petitioners’ properties.  The auction sale of petitioners’ Quezon City property scheduled on July 30, 1993 was likewise cancelled.

On August 30, 1993, ACC filed with the Office of the Clerk of Court and Ex-Officio Sheriff of Quezon City a letter-request to proceed with the auction sale of petitioners’ Quezon City property since, by that time, the 20-day effectivity period of the temporary restraining order issued by the Makati RTC had expired[5] and, therefore, there was no more legal impediment to the sale.  On the same day, the Sheriff of Quezon City prepared and issued a Second Notice of Sheriff’s Sale of the Quezon City property, scheduling the sale on September 27, 1993.  The notice was published in the Times Record on September 1, 8, and 15 1993.[6]

In the meantime, the RTC of Makati issued on September 20, 1993 an order granting petitioners’ prayer for preliminary injunction as to the foreclosure of their property in Makati City, but not as to the Quezon City and Benguet properties since under Section 21 of Batas Pambansa Bilang 129, the court does not have jurisdiction to enforce a writ of preliminary injunction outside its territorial jurisdiction.

The public auction was held on September 27, 1993 and petitioners’ Quezon City property was sold to ACC as the highest bidder. [7] On the same date, the Sheriff’s Certificate of Sale was annotated on the TCT. [8] A year later, petitioners filed a second amended and supplemental petition in the case pending before the RTC of Makati.  On September 26, 1994, the RTC issued a temporary restraining order enjoining ACC from exercising its right of consolidation of ownership of the foreclosed property in Quezon City. [9] Then on October 13, 1994, the RTC, again citing Section 21 of Batas Pambansa Bilang 129, finally denied petitioners’ prayer for preliminary injunction to enjoin ACC from consolidating title.[10]

Thereafter, when petitioners failed to redeem the foreclosed property, ACC caused the consolidation of its ownership and paid the necessary taxes with the Bureau of Internal Revenue to effect transfer of the title to its name.[11]  Accordingly, the Register of Deeds of Quezon City cancelled TCT No. RT-2572 (57609) and issued TCT No. 119740 in ACC’s name.[12] Tax declarations over the subject property were likewise transferred in the name of ACC after it paid real estate taxes.[13] From then on, private respondent ACC has been paying real taxes on the property.[14]

Petitioners continued to occupy the house and lot over the property so, in a letter dated May 3, 1999, ACC made a formal and final demand on petitioners to vacate the subject house and lot within five days from receipt of the letter.  ACC also demanded P1,080,000 corresponding to rental arrearages from October 1994 to the date of the letter, at P20,000 per month.[15] ACC likewise filed with the RTC of Quezon City, Branch 96, a petition for the issuance of a writ of possession over the subject property.  The case was docketed as Land Registration Case No. Q-11564 (99).[16]

At the hearing of June 25, 1999, public respondent Hon. Lucas Bersamin, the presiding judge of the RTC of Quezon City, Branch 96, allowed ACC to present its evidence ex partewithout prejudice to any comment that may be filed by petitioners.

In their comment below, petitioners alleged, among others, that it would be improper for the court to issue a writ of possession pending the outcome of Special Civil Case No. 93-2521 before Branch 61 of the Makati RTC for injunction, reformation, and damages assailing the validity of the loan and the mortgage.[17]

On September 3, 1999, the RTC of Quezon City granted the petition for writ of possession, disposing as follows:

ACCORDINGLY, premises considered, the instant petition is hereby GRANTED.  Let a writ of possession be issued over the property covered by Transfer Certificate of Title No. 119740 of the Registry of Deeds of Quezon City and located at 136-138 Biak-na-Bato, Sta. Mesa Heights, Quezon City.

SO ORDERED.[18]

Petitioners’ motion for reconsideration was denied.  To annul the trial court’s decision dated September 3, 1999, petitioners elevated the case to the Court of Appeals via certiorari and prohibition with a prayer for temporary restraining order and/or writ of preliminary injunction.[19] In a resolution dated September 17, 1999, the CA issued a temporary restraining order enjoining

the implementation of the writ of possession issued by the RTC of Quezon City.[20] Then on December 20, 1999, respondent Court of Appeals denied the petition for certiorari.[21]The appellate court confined its discussion to the validity of the trial court’s issuance of the writ of possession, finding the same neither a capricious nor a whimsical exercise of judgment that could amount to grave abuse of discretion.  In the same decision, the CA likewise lifted the temporary restraining order it issued on September 17, 1999.[22]

Hence, the instant petition under Rule 45 of the Rules of Court, anchored on the following averments:

A.

THE RESPONDENT COURT HAS RENDERED THE DECISION DATED DECEMBER 20, 1999 (ANNEX B) IN DISREGARD OF THE FRAUD COMMITTED BY RESPONDENT ACC PROVEN BY FACTS NOT DENIED BY RESPONDENT ACC WHICH CLEARLY VIOLATE THE CONSTITUTIONAL RIGHT TO DUE PROCESS OF PETITIONERS AND WILL FRAUDULENTLY ENRICH RESPONDENT ACC THRU ACTUAL AND ILLEGAL CONFISCATION OF THE PROPERTIES OF PETITIONERS IN AN ILLEGAL AND FRAUDULENT MANNER, THUS CONSTITUTING A DEPARTURE FROM THE ACCEPTED AND USUAL COURSE OF JUDICIAL PROCEEDINGS OR SO FAR SANCTIONED SUCH DEPARTURE BY A LOWER COURT, AS TO CALL FOR AN EXERCISE OF THE POWER OF SUPERVISION OF THIS HONORABLE COURT; and

B.

THE RESPONDENT JUDGE COURT HAS DECIDED IN ITS DECISION DATED DEC. 20, 1999 (ANNEX B) QUESTIONS OF SUBSTANCE NOT THERETOFORE DETERMINED BY THIS HONORABLE COURT, OR HAS DECIDED IT IN A WAY NOT IN ACCORD WITH LAW AND LOGIC AND/OR WITH THE APPLICABLE DECISIONS OF THIS HONORABLE COURT.[23]

At issue is whether the Court of Appeals committed reversible error in affirming the RTC decision granting the writ of possession to respondent corporation.  To resolve this issue, we must also inquire whether prohibition lies to enjoin the Regional Trial Court of Quezon City from issuing to ACC the writ of possession over the property covered by TCT No. 119740 of the Quezon City Register of Deeds.

Petitioners assail the jurisdiction of the Quezon City RTC in taking cognizance of the present case on the ground that there is a pending case in the Makati RTC for injunction, reformation, and damages impugning the

validity of the promissory notes and mortgage contracts used as basis for the foreclosure sale.  They likewise lament that the grant of the writ and the displacement of petitioners from their residence on the basis of fraud smacks of deprivation of property without due process of law.

Petitioners’ contention cannot stand judicial muster. Act 3135, otherwise known as “An Act to Regulate the Sale of Property under Special Powers Inserted in or Annexed to Real Estate Mortgages,” mandates that jurisdiction over a petition for a writ of possession lies in the court of the province, city, or municipality where the property subject thereof is situated.  Section 7 of the said Act is clear on this matter, thus:

SEC. 7.  In any sale made under the provisions of this Act, the purchaser may petition the Court of First Instance [now Regional Trial Court] of the province or place where the property or any part thereof is situated, to give him possession thereof during the redemption period, furnishing bond in an amount equivalent to the use of the property for a period of twelve months, 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….

Since the land subject of the controversy is located in Quezon City, the city’s RTC should rightly take cognizance of the case, to the exclusion of other courts.

Neither can this Court consider the pendency of Special Civil Case No. 93-2521 before Branch 61 of the Makati RTC a procedural obstacle.  Said action for injunction, reformation, and damages does not raise an issue that constitutes a prejudicial question in relation to the present case.

A prejudicial question is one that arises in a case the resolution of which is a logical antecedent of the issue involved therein, and the cognizance of which pertains to another tribunal.[24]It generally comes into play in a situation where a civil action and a criminal action are both pending and there exists in the former an issue that must be preemptively resolved before the criminal action may proceed, because howsoever the issue raised in the civil action is resolved would be determinative juris et de jure of the guilt or innocence of the accused in the criminal case.[25] The rationale behind the principle of prejudicial question is to avoid two conflicting decisions.[26]

Here, Special Civil Case No. 93-2521 and the present one are both civil in nature and, therefore, no prejudicial question can arise from the existence of the two actions.  It taxes our imagination how the questions raised in Special Civil Case No. 93-2521 would be determinative of Land Registration Case No. Q-11564 (99).  The basic issue in the former is whether the promissory note

and mortgage agreement executed between petitioners and private respondent ACC are valid.  In the latter case, the issue is whether respondent, armed with a TCT in its name, is entitled to a writ of possession.  Clearly, the two cases can proceed separately and take their own direction independently of each other.

In the present case, petitioners cannot anchor their case on the purported interest they have, as owners, over the land and the improvements thereon.  They have been stripped of their rights over the property when, as mortgagors, they failed to redeem it after foreclosure took place.  A mortgagor has only one year after registration of sale with the Register of Deeds within which to redeem the foreclosed real estate.[27]  After that one-year period, he loses all his interests over it.  This is in consonance with Section 78 of Republic Act 337, otherwise known as the “General Banking Act,” which provides:

SEC. 78. …In the event of foreclosure, whether judicially or extrajudicially, of any mortgage on real estate which is security for any loan granted before the passage of this Act or under the provisions of this Act, the mortgagor or debtor whose real property has been sold at public auction, judicially or extrajudicially, for the full or partial payment of an obligation to any bank, banking, or credit institution, within the purview of this Act, shall have the right, within one year after the sale of the real estate as a result of the foreclosure of the respective mortgage, to redeem the property by paying the amount fixed by the court in the order of execution… (Emphasis supplied.)

Likewise, Section 6 of Act 3135 states:

SEC. 6.  In all cases in which an extrajudicial sale is made under the special power hereinbefore referred to, the debtor, his successors in interest or any judicial creditor or judgment creditor of said debtor, or any person having a lien on the property subsequent to the mortgage or deed of trust under which the property is sold, may redeem the same at any time within the term of one year from and after the date of the sale;… (Emphasis supplied.)

Well established is the rule that after the consolidation of title in the buyer’s name, for failure of the mortgagor to redeem, the writ of possession becomes a matter of right.[28]Its issuance to a purchaser in an extrajudicial foreclosure is merely a ministerial function.[29] The writ of possession issues as a matter of course upon the filing of the proper motion and the approval of the corresponding bond.  The judge issuing the writ following these express provisions of law neither exercises his official

discretion nor judgment.[30] As such, the court granting the writ cannot be charged with having acted without jurisdiction or with grave abuse of discretion.

Petitioners cite the 1987 case of Cometa vs. IAC,[31] to bolster their argument that a writ of possession should not be granted in the light of a pending case for annulment of the foreclosure sale wherein the properties were sold at an unusually low price.  We note that petitioners’ reliance thereon is as flawed as their citation thereof. [32] In said case, there was a pending action where the validity of the levy and sale of the properties in question were directly put in issue, which is not the case here.  Special Civil Case No. 93-2521 pending before the Makati RTC for reformation of instrument is not the pending case as contemplated in Cometa because (1) the sale and levy of the property are not directly put in issue, and (2) the Makati RTC could not have taken cognizance of the foreclosure proceedings of the Quezon City property for lack of jurisdiction.  A direct action for annulment of the foreclosure sale of the subject property should have been filed in the RTC of Quezon City where the property is located.

More instructive is the 1997 case of Arcega vs. CA,[33] where we held that the purchaser in a foreclosure sale is entitled to possession of the property:

Respondent bank’s right to possess the property is clear and is based on its right of ownership as a purchaser of the properties in the foreclosure sale to whom title has been conveyed.  Under Section 7 of Act No. 3135 and Section 35 [now Section 33] of Rule 39, the purchaser in a foreclosure sale is entitled to possession of the property.  The bank in this case has a better right to possess the subject property because of its title over the same.  (Emphasis supplied.)

If only to stress the writ’s ministerial character, we have, in a case more recent than Cometa, disallowed injunction prohibiting its issuance,[34] just as we have held that its issuance may not be stayed by a pending action for annulment of mortgage or the foreclosure itself.[35]

Guided by the foregoing principles, until the foreclosure sale of the property in question is annulled by a court of competent jurisdiction, petitioners are bereft of valid title and right to prevent the issuance of a writ of possession to respondent corporation.  Until then, it is the trial court’s ministerial function to grant the possessory writ to said corporation.  No error could be attributed to the respondent appellate court for affirming the trial court’s order in favor of private respondent, Advance Capital Corporation.

WHEREFORE, the instant petition is DENIED for lack of merit.  The challenged decision of the Court of Appeals dated December 20, 1999 in CA-G.R. SP No. 54949 is AFFIRMED. Costs against petitioners.

SO ORDERED.

FIRST DIVISION

G.R. No. 154355             May 20, 2004

Spouses REMPSON SAMSON and MILAGROS SAMSON; and REMPSON REALTY & DEVELOPMENT CORPORATION petitioners, vs.Judge MAURICIO M. RIVERA, in His Capacity as Presiding Judge of the Regional Trial Court of Antipolo City, Branch 73; Atty. JOSELITA MALIBAGO-SANTOS, in Her Capacity as Ex Officio Sheriff, RTC of Antipolo City; and LENJUL REALTY CORPORATION, respondents.

D E C I S I O N

PANGANIBAN**, J.:

In denying the Petition, this Court applies the well-entrenched rule that the buyer in an extrajudicial foreclosure sale is entitled to possession of the purchased property. Any question regarding the regularity and validity of the mortgage and foreclosure sale may be determined only after the issuance of the writ of possession.

The Case

Before us is a Petition for Review1 under Rule 45 of the Rules of Court, seeking to set aside the March 7, 2002 Resolution2 and the July 18, 2002 Resolution3 of the Court of Appeals (CA) in CA-GR SP No. 69266. The March 7, 2002 Resolution disposed as follows:

"WHEREFORE, the instant petition is DISMISSED."4

The July 18, 2002 Resolution denied reconsideration.

The Facts

The pertinent facts are undisputed. Petitioner Spouses Rempson and Milagros Samson incurred from Far East Bank and Trust Company (FEBTC) loan obligations, the principal of which amounted to fifty-five million pesos (P55,000,000).5 On October 10, 1994 and February 22, 1996, in order to secure the payment of the loan obligations, Spouses Samson executed in favor of FEBTC two real estate mortgages covering five parcels of commercial property located at Antipolo City, Rizal.6

Petitioner spouses failed to settle their loan obligations. Thus, on May 16, 2000, FEBTC filed an Application for Extra-Judicial Foreclosure of Real Estate Mortgage7 before the Office of the Clerk of Court and Ex-Officio Sheriff of the Regional Trial Court (RTC) of Antipolo City.8 In their application, FEBTC requested the said office to foreclose the two mortgages extrajudicially, in the manner and form prescribed by Act 3135, as amended, to satisfy the debt of P72,219,158.45, inclusive of interest, penalties and other charges.9

Acting on the application, the Office of the Clerk of Court and Ex-Officio Sheriff issued a Notice of Sheriff Sale dated May 19, 2000,10 setting the foreclosure sale on June 22, 2000.11 There was only one bidder during the foreclosure sale, so in accordance with AM 99-10-05-0,12 the sheriff postponed the auction to July 5, 2000.13

On July 5, 2000, the auction sale proceeded with two bidders participating -- FEBTC and Lenjul Realty and Development Corporation, with the latter declared as the highest bidder in the amount of eighty million pesos (P80,000,000).14 On July 11, 2000, a Certificate of Sheriff’s Sale was issued confirming the sale of the foreclosed properties to the winning bidder.15 Shortly thereafter, the Certificate of Sale was registered with the Registry of Deeds of Antipolo City.16 On February 19, 2001, new Certificates of Title over the foreclosed properties were issued by the Register of Deeds of Antipolo City in favor of Lenjul Realty Corporation.17

On April 3, 2001, Private Respondent Lenjul Realty filed a Petition for the Issuance of a Writ of Possession, which sought an ex parte issuance of a writ of possession over the foreclosed properties.18 The Petition was docketed as Land Registration Case No. 01-2698 and raffled to Branch 73 presided by Judge Mauricio M. Rivera.19 On June 11, 2001 and June 15, 2001, Spouses Samson and Rempson Corporation filed their respective Answer/Opposition.20

While the Petition was pending, Spouses Samson and Rempson Corporation filed with the Antipolo City RTC, an action for Annulment of Extra-Judicial Foreclosure and/or Nullification of Sale and the Certificates of Title, plus Reconveyance and Damages with Prayer for a Temporary Restraining Order and/or Writ of Preliminary Injunction. Petitioners filed it against Lenjul Realty Corporation, FEBTC, Bank of the Philippine Islands, Joselita Malibao-Santos in her capacity as the clerk of court and ex officio sheriff of the Antipolo City RTC, and the Register of Deeds of Antipolo City. The case was docketed as Civil Case No. 01-6219 and raffled to Branch 71 presided by Judge Felix S. Caballes.21 On August 15, 2001, upon motion of Petitioner Rempson Realty and Development Corporation, Judge Caballes issued an Order directing the consolidation of the civil case with the land registration case.22

On September 18, 2001, Judge Rivera issued an order denying the consolidation of the Petition for Writ of Possession and the civil case for annulment of foreclosure.23 On October 22, 2001 and December 4, 2001, respectively, Rempson Corporation and Spouses Samson moved for a reconsideration of the September 18, 2001 Order denying consolidation.24

On November 5, 2001, Judge Rivera gave due course to the Petition for the Issuance of a Writ of Possession and denied the Opposition of Spouses Samson and Rempson Corporation.25 Thus, they filed their respective Motions for Reconsideration on December 4, 2001 and December 7, 2001.26

On February 11, 2002, Judge Rivera denied reconsideration of the Order giving due course to the Petition for the Issuance of the Writ of Possession and directed the issuance of such writ of possession.27

On February 20, 2002, Judge Rivera issued an Order granting petitioners’ Motion for Reconsideration with regard to the September 18, 2001 Order denying the consolidation of cases.28

On February 26, 2002, a Writ of Possession29 was issued directing the sheriff of the Antipolo City RTC to place Lenjul Realty Corporation in physical possession of the foreclosed properties. On the same date, the sheriff issued a Notice to Vacate30 addressed to Rempson Corporation, ordering it to leave the properties on or before March 2, 2002.

On February 22, 2002, petitioners filed with the Court of Appeals the aforesaid Special Civil Action for Certiorari with Prohibition/Mandamus under Rule 65 with an Application for Issuance of a Writ of Preliminary Injunction and/or Temporary Restraining Order to annul the November 5, 2001 and the February 11, 2002 Orders of Judge Rivera.31

Ruling of the Court of Appeals

The Court of Appeals ruled that certiorari was improper, because there was an adequate remedy in the ordinary course of law. Citing Section 8 of Act No. 3135, it opined that petitioners’ remedy was to file a petition to set aside the foreclosure sale and to cancel the writ of possession in LR Case No. 01-2698. The CA further noted that certiorari was premature inasmuch as petitioners had failed to file a motion for reconsideration of the Order directing the issuance of the writ of possession.32

In denying the Motion for Reconsideration, the Court of Appeals held that the issuance of a writ of possession was a ministerial function that was done upon the filing of the proper motion and the approval of the corresponding bond.33It further ruled that prohibition did not lie to enjoin the implementation of the writ.34

Hence this Petition.35

The Issues

In their Memorandum, petitioners assign the following issues for our consideration:

"1.) Whether or not the Court of Appeals had erroneously affirmed the ruling of x x x Judge Rivera ordering the immediate issuance of a writ of possession in favor of private respondent Lenjul Realty Corporation without first requiring presentation of evidence and formal offer thereof;

"2.) Whether or not the Court of Appeals had erroneously affirmed the ruling of x x x Judge Rivera upholding the validity of the issuance of new titles over the foreclosed properties in the name of Private Respondent Lenjul Realty Corporation despite the fact that the consolidation of ownership therein was done prior to the expiration of the 1-year period of redemption.

"3.) Whether or not the Court of Appeals had erroneously affirmed the ruling of x x x Judge Rivera upholding the now 3-month period of redemption for juridical mortgagors under the General Banking Act of Year 2000 and the application of said law retroactively as to violate the equal protection clause of the [n]ew Constitution and the prohibition therein on non-impairment of contracts.

"4.) Whether or not the Court of Appeals had erroneously affirmed the ruling of x x x Judge Rivera refusing consolidation of the annulment case pending in the sala of Judge Caballes with the case below despite the fact that petitioners had already contested Private Respondent Lenjul Realty Corporation’s presumed ownership over the foreclosed properties so that the issue of such presumed ownership should first be resolved before the petition for writ of possession is heard.

"5.) Whether or not the Court of Appeals had erroneously affirmed the ruling of x x x Judge Rivera giving due course to the petition for writ of possession despite the fact that Private Respondent Lenjul Realty Corporation was not the winning bidder at the foreclosure sale,

nor a transferee and/or successor-in-interest of the rightful winning bidder Lenjul Realty and Development Corporation.

"6.) Whether or not the Court of Appeals had erroneously affirmed the ruling of x x x Judge Rivera ignoring and disregarding existing rules of procedure and jurisprudence that foreclosed properties, consisting of separate lots covered by individual transfer certificates of title, should be sold separately and not en masse.

"7.) Whether or not the Court of Appeals had erred in dismissing the special civil action for certiorari on grounds of perceived technicalities and/or alleged procedural imperfections rather than on its merits."36

The issues to be addressed in this case are as follows: (1) whether the trial court committed grave abuse of discretion in granting the Petition for the Issuance of a Writ of Possession; and (2) whether the filing of a Petition for Certiorari with the Court of Appeals was the proper remedy.

The Court’s Ruling

The Petition has no merit.

First Issue:Writ of Possession

The Court of Appeals correctly sustained the issuance of the Writ of Possession. The issuance of the Writ is explicitly authorized by Act 313537 (as amended by Act 4118), which regulates the methods of effecting an extrajudicial foreclosure of mortgage.38 Section 7 thereof provides:

"Section 7. Possession during redemption period. – In any sale made under the provisions of this Act, the purchaser may petition the [Regional Trial Court] where the property or any part thereof is situated, to give him possession thereof during the redemption period, furnishing bond in an amount equivalent to the use of the property for a period of twelve months, 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. 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, 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, 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 in each case the clerk of the court shall, upon the filing of such petition, collect the fees specified in paragraph eleven of section one hundred and fourteen of Act Numbered Four hundred and ninety-six, as amended by Act Numbered Twenty-eight hundred and sixty-six, and the court shall, upon approval of the bond, order that a writ of possession issue, addressed to the sheriff of the province in which the property is situated, who shall execute said order immediately."

Entitlement to Writ of Possession

Under the provision cited above, the purchaser in a foreclosure sale may apply for a writ of possession during the redemption period by filing for that purpose an ex parte motion under oath, in the corresponding registration or cadastral proceeding in the case of a property with torrens title. Upon the filing of such motion and the approval of the corresponding bond, the court is expressly directed to issue the writ.39

This Court has consistently held that the duty of the trial court to grant a writ of possession is ministerial.40 Such writ issues as a matter of course upon the filing of the proper motion and the approval of the corresponding bond. No discretion is left to the trial court.41 Any question regarding the regularity and validity of the sale, as well as the consequent cancellation of the writ, is to be determined in a subsequent proceeding as outlined in Section 8 of Act 3135.42 Such question cannot be raised to oppose the issuance of the writ, since the proceeding is ex parte.43 The recourse is available even before the expiration of the redemption period provided by law and the Rules of Court.44

The purchaser, who has a right to possession that extends after the expiration of the redemption period,45 becomes the absolute owner of the property when no redemption is made. Hence, at any time following the consolidation of ownership and the issuance of a new transfer certificate of title in the name of the purchaser, he or she is even more entitled to possession of the property.46 In such a case, the bond required under Section 7 of Act 3135 is no longer necessary, since possession becomes an absolute right of the purchaser as the confirmed owner.47

The Petition for Writ of Possession Not Stayed by the Annulment Case

This Court has long settled that a pending action for annulment of mortgage or foreclosure does not stay the issuance of a writ of possession.48 Therefore, the contention of petitioners that the RTC should have consolidated Civil Case No. 01-6219 with LR Case No. 01-2698 and resolved the annulment case prior to the issuance of the Writ of Possession is unavailing.

Their reliance on Active Wood Products Co., Inc. v. Court of Appeals49 is misplaced. In that case, the sole issue was the consolidation of a civil case regarding the validity of the mortgage and a land registration case for the issuance of a writ of possession. It did not declare that the writ of possession must be stayed until the questions on the mortgage or the foreclosure sale were resolved. Moreover, the issue of consolidation in the present case has become moot, considering that the trial court has already granted it.

Second Issue:Proper Remedy

The Court of Appeals correctly declared that petitioners pursued the wrong remedy. A special civil action for certiorari could be availed of only if the lower tribunal has acted without or in excess of jurisdiction, or with grave abuse of discretion amounting to lack or excess of jurisdiction; and if there is no appeal or any other plain, speedy, and adequate remedy in the ordinary course of law.50

No Grave Abuse of Discretion

There is grave abuse when the court -- in the exercise of its judgment -- acts in a capricious, whimsical, arbitrary or despotic manner equivalent to acting with lack of jurisdiction.51 Considering that the trial court issued the Writ of Possession in compliance with the express provisions of Act 3135, it cannot be charged with having acted in excess of its jurisdiction or with grave abuse of discretion.52

Since there was no grave abuse of discretion, petitioner should have filed an ordinary appeal instead of a petition for certiorari. In GSIS v. CA,53 this Court held that "the wisdom or soundness of the x x x order granting [the] writ of possession x x x is a matter of judgment [in] which the remedy is ordinary appeal."54 An error of judgment committed by a court in the exercise of its legitimate jurisdiction is not the same as "grave abuse of discretion."55Errors of judgment are correctible by appeal, while those of jurisdiction are reviewable by certiorari.56

Available Remedy

Section 8 of Act 3135 provides the plain, speedy, and adequate remedy in opposing the issuance of a writ of possession.57 The provision reads:

"Section 8. Setting aside of sale and writ of possession. – The debtor may, in the proceedings in which possession was requested, but not later than thirty days after the purchaser was given possession, petition that the sale be set aside and the writ of possession cancelled, specifying the damages suffered by him, because the mortgage was not violated or the sale was not made in accordance with the provisions hereof, 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 Numbered Four hundred and ninety-six; and if it finds the complaint of the debtor justified, it shall dispose in his favor of all or part of the bond furnished by the person who obtained possession. 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; but the order of possession shall continue in effect during the pendency of the appeal." (Emphasis supplied)

A party may petition for the setting aside of a foreclosure sale and for the cancellation of a writ of possession in the same proceedings where the writ of possession was requested. In petitioners’ case, the filing of the Petition is no longer necessary because the pendency of Civil Case No. 01-6219 (which was consolidated with the present case) already challenged the foreclosure sale.

Pending proceedings assailing the issuance of the writ, the purchaser in a foreclosure sale is entitled to possession of property. If the trial court later finds merit in a petition to set the writ aside, it shall dispose in favor of the mortgagor the bond furnished by the purchaser.58

It should also be noted that prior to the filing of a petition for certiorari, a motion for reconsideration is generally required.59 Petitioner may have filed a Motion for Reconsideration with regard to the trial court’s Order giving due course to the Petition, but not with regard to the Order directing the issuance of a writ of possession.

Finally, petitioners’ allegation that the RTC issued the Writ of Possession despite failing to receive evidence is unsupported by the record. The documents submitted to this Court show sufficient basis for the trial court to rule accordingly. Despite the ex parte nature of the proceedings, and aside from the oral arguments, the RTC allowed petitioners to file pleadings to oppose the Petition for the issuance of the Writ of Possession.

Other Issues

The other issues raised by petitioners are factual matters which, subject to certain exceptions not applicable here,60this Court does not review. Moreover, petitioners rely on factual matters on which the trial court has yet to make any finding. The tenability of their arguments should be ventilated in Civil Case No. 01-6219, an "Annulment of Extra-Judicial Foreclosure and/or Nullification of Sale and the Certificates of Title, plus Reconveyance and Damages." Those factual issues cannot be ruled upon in these proceedings.

WHEREFORE, the Petition is DENIED, and the assailed Resolutions of the Court of Appeals AFFIRMED. Costs against petitioners.

SO ORDERED.

SECOND DIVISION

G.R. No. 155673             January 14, 2005

SPOUSES SALVADOR F. DE VERA and FELIZA V. DE VERA, petitioners, vs.HON. GUILLERMO P. AGLORO, Presiding Judge, RTC – Branch 83 Malolos, Bulacan and BPI FAMILY SAVINGS BANK, INC., respondents.

D E C I S I O N

CALLEJO, SR., J.:

This is a petition for review on certiorari with urgent application for temporary restraining order/preliminary injunction of the March 22, 2002 Decision1 of the Court of Appeals (CA) in CA-G.R. SP No. 67164.

On March 25, 1996, the Spouses Salvador F. De Vera and Feliza V. De Vera secured a loan in the amount ofP1,200,000.00 from the BPI Family Savings Bank, Inc. (the Bank, for brevity).2 To secure the payment thereof, the Spouses executed a Real Estate Mortgage over their property located in Guiguinto, Bulacan, with an area of 232 square meters covered by Transfer Certificate of Title (TCT) No. T-85716.3 When the Spouses De Vera defaulted in the payment of the balance of their loan amounting to P1,091,484.01 and failed to pay despite demands of the Bank, the latter filed a petition4 with the ex-officio sheriff of the Regional Trial Court (RTC) of Malolos, Bulacan, for the extrajudicial foreclosure of the real estate mortgage. At the public auction scheduled on October 9, 1998, the Bank was declared the highest bidder for the property. On October 18, 1998, the Sheriff executed a certificate of sale5 in favor of the Bank. On November 18, 1999, the Bank filed in the Office of the Register of Deeds an affidavit for the consolidation of its ownership over the property.6 Thus, on December 1, 1999, TCT No. T-133862 was issued in the name of the Bank.7

On February 11, 2000, the Spouses De Vera filed a Complaint8 for the nullification of the real estate mortgage against the Bank and the Sheriff with the RTC of Malolos, Bulacan, as well as the extrajudicial sale of the property at public auction. The Spouses prayed that, after due proceedings, judgment be rendered in their favor as follows:

WHEREFORE, it is most respectfully prayed that, after hearing, judgment be rendered:

1. Setting aside the Mortgage Loan Agreement and any/all contracts, accessory or subsidiary thereto;

2. Setting aside the foreclosure proceedings and the issuance of new title to the defendant Bank;

3. Allowing the plaintiffs to pay to the defendant Bank what is legal, just and equitable under the premises;

4. Sentencing defendant Bank to pay plaintiffs the following items of damages:

a. At least P500,000.00 as actual or compensatory damages;

b. At least P100,000.00 as moral damages;

c. At least P100,000.00 as exemplary damages;

d. 25% of total recovery as attorney’s fees;

e. Cost of suit.9

The case was docketed as Civil Case No. 109-M-2000 and was raffled to Branch 83 of the court. On February 23, 2000, the Bank filed an Ex Parte Petition for Writ of Possession with the RTC of Malolos, Bulacan, docketed as LRC Case No. P-97-2000. The case was raffled to Branch 83 of the court. The Bank impleaded the Spouses as respondents and prayed that after an ex parte hearing, an order be issued as follows:

1. Granting petitioner a writ of possession over the properties covered by TCT No. T-133862 of the Registry of Deeds of Bulacan, together with all the improvements thereon; and

2. Ordering the Sheriff or any of his duly authorized deputies to immediately place petitioner in possession thereof.

3. Petitioner further prays for such other reliefs as may be deemed just and equitable under the premises.10

The trial court set the petition for hearing at 8:30 a.m. of August 16, 2000 at the Building of the Bulwagan ng Katarungan, Provincial Capitol Compound in Malolos, Bulacan.11

When the petition was called for hearing on August 16, 2000, no oppositor appeared. Forthwith, the trial court authorized its Branch Clerk of Court to receive the evidence of the Bank ex parte,12 and the Bank adduced its testimonial and documentary evidence ex parte on August 28, 2000.

On September 8, 2000, the Spouses De Vera filed in LRC Case No. P-97-2000 an Urgent Motion to Suspend Proceedings to await the resolution of Civil Case No. 109-M-2000 or for the consolidation of the two cases. The Spouses cited the rulings of this Court in Barican v. IAC13 and Sulit v. Court of Appeals .14 Opposing the motion, the Bank alleged that the pendency of Civil Case No. 109-M-2000 was not a bar to the petition for a writ of possession because the issuance of the said writ was ministerial on the part of the trial court. The petitioner cited the rulings of this Court in Ong v. Court of Appeals15 and Vaca v. Court of Appeals.16

In an Order17 dated February 13, 2001, the trial court denied the motion of the Spouses. Citing the case of Vda. de Zaballero v. CA,18 the trial court ruled that the purchaser of the foreclosed property, upon ex parte application and the posting of the required bond, has the right to acquire possession of the foreclosed property during the 12-month redemption period. According to the trial court, this is sanctioned under Section 7 of Act No. 3135, as amended by Act No. 4118. The trial court also declared that considering that the redemption period had already expired, the Bank as purchaser, can, and with more reason, demand for a writ of possession.

The trial court emphasized that it is its ministerial duty to issue the writ of possession in favor of a purchaser at public auction, and that such duty could not be defeated by the pendency of a civil case, in this instance Civil Case No. 109-M-2000.19

A motion for reconsideration was filed by the Spouses De Vera which was denied in an Order20 dated September 7, 2001. The trial court cited the case of Banco Filipino Savings and Mortgage Bank v. IAC,21 which reiterated the rule that a purchaser in a foreclosed sale of mortgaged property is entitled to a writ of possession and that upon an ex parte petition of the purchaser, it is ministerial upon the trial court to issue such writ in the latter’s favor. It added that the pendency of a separate civil action questioning the validity of the mortgage or its foreclosure cannot be a legal ground for refusing the issuance of the writ of possession.

Aggrieved, the Spouses De Vera filed a petition for certiorari and mandamus with temporary restraining order and writ of preliminary injunction before the CA docketed as CA-G.R. SP No. 67164. Therein, they alleged that:

A.

PUBLIC RESPONDENT GRAVELY ABUSED HIS DISCRETION IN NOT SUSPENDING THE PETITION FOR WRIT OF POSSESSION DESPITE THE PENDENCY OF CIVIL CASE NO. 109-M-2000, WHICH IS A VIRTUAL REFUSAL TO PERFORM A BOUNDEN DUTY ENJOINED BY LAW AND JURISPRUDENCE, TENDING TO RENDER SAID CASE MOOT AND ACADEMIC, AND EXPOSING THE PETITIONERS TO GREAT AND IRREPARABLE INJURIES AS THEY STAND TO BE OUSTED FROM THEIR HOUSE AND LOT.

B.

PUBLIC RESPONDENT GRAVELY ABUSED HIS DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION IN DENYING PETITIONERS’ MOTION FOR RECONSIDERATION DESPITE CLEAR GROUND TO RECONSIDER THE ORDER DATED FEBRUARY 11, 2001.

The Bank posited that Section 7 of Act No. 3135, as amended by Act No. 4118, authorizes it to obtain a writ of possession by filing a petition under oath in the registration or cadastral proceedings in the form of an ex parte motion. It further emphasized that the issuance of a writ of possession is a ministerial duty of the trial court, as held in Spouses Ong v. Court of Appeals .22

On March 22, 2002, the CA rendered a decision denying due course to and dismissing the petition. The dispositive portion reads:

WHEREFORE, premises considered, the present petition is hereby DENIED DUE COURSE and accordingly DISMISSED, for lack of merit.23

The CA ruled that the respondent judge did not act with grave abuse of discretion when he denied the petitioners’ motion to suspend proceedings. It reasoned that since the subject parcel of land (with all its improvements) was not redeemed within one (1) year from the registration of the extrajudicial foreclosure sale, it follows that the bank, as purchaser thereof, acquired an absolute right to the writ of possession. It emphasized that the land registration court has the ministerial duty to issue the writ of possession upon mere motion, conformably to Section 7, Act No. 3135, as amended. Thus, the CA found that the Spouses De Vera failed to show that the injunctive relief prayed for was warranted.

The Spouses filed a motion for reconsideration which the appellate court denied in a Resolution24 dated October 15, 2002.

The Spouses forthwith filed their petition for review on certiorari under Rule 45 of the Rules of Court assailing the decision and the October 15, 2002 Resolution of the CA, asserting that:

A. THE COURT OF APPEALS ERRED IN NOT SUSPENDING THE PROCEEDINGS IN LRC CASE NO. N-3507 BECAUSE OF THE PENDENCY OF CIVIL CASE NO. 109-M-2000 FILED BY PETITIONERS SEEKING THE NULLITY, NOT ONLY OF THE FORECLOSURE AND AUCTION SALE, BUT ALSO OF THE MORTGAGE ITSELF.25

B. THE RESPONDENT JUDGE SHOULD [HAVE] CONSOLIDATED THE P-97-2000 LRC CASE NO. 3507 WITH CIVIL CASE NO. 109-M-2000 (BRANCH 83, RTC, BULACAN).26

The petition has no merit.

Section 6 of Act No. 313527 provides that the mortgagor or his successor-in-interest may redeem the foreclosed property within one (1) year from the registration of the sale with the Register of Deeds. Under Section 728 of the law, if the mortgagor fails to redeem the property, the buyer at public auction may file, with the RTC in the province or place where the property or portion thereof is located, an ex parte motion for the issuance of a writ of possession within one (1) year from the registration of the Sheriff’s Certificate of Sale, and the court shall grant the said motion upon the petitioner’s posting a bond in an amount equivalent to the use of the property for a period of twelve (12) months. On the strength of the writ of possession, the Sheriff is duty-bound to place the buyer at public auction in actual possession of the foreclosed property.29 After the one-year period, the mortgagor loses all interest over it.30The purchaser, who has a right to possession that extends after the expiration of the redemption period, becomes the absolute owner of the property when no redemption is made.31 Thus, the bond required under Section 7 of Act No. 3135 is no longer needed. The possession of land becomes an absolute right of the purchaser as confirmed owner.32 The purchaser can demand possession at any time following the consolidation of ownership in his name and the issuance to him of a new transfer certificate of title. After the consolidation of title in the buyer’s name for failure of the mortgagor to redeem the property, the writ of possession becomes a matter of right. Its issuance to a purchaser in an extrajudicial foreclosure sale is merely a ministerial function.33

In the present case, the petitioners-mortgagors failed to redeem the property within one (1) year from the registration of the Sheriff’s Certificate of Sale with the Register of Deeds. The respondent, being the purchaser of the property at public auction, thus, had the right to file an ex parte motion for the issuance of a writ of possession; and considering that it was its ministerial duty to do so, the trial court had to grant the motion and to thereafter issue the writ of possession.

The bare fact that the petitioners were impleaded in the ex parte petition for a writ of possession filed by the respondent did not alter the summary nature of the proceedings in Act No. 3135. Indeed, there was no need for the respondent to implead the petitioners as parties-respondents in its petition with the RTC. Hence, the petitioners cannot claim that they were denied due process when the RTC took cognizance of the respondent’s petition without prior service of copies of the petition and of the notice of hearing thereof on them.

Neither was there a need for the court to suspend the proceedings merely and solely because the petitioners filed a complaint in the RTC for the nullification of the real estate mortgage, the sale at public auction and the Sheriff’s Certificate of Sale issued in favor of the respondent.

First. An ex parte petition for the issuance of a possessory writ under Section 7 of Act No. 3135 is not, strictly speaking, a "judicial process" as contemplated in Article 433 of the Civil Code.34 It is a judicial proceeding for the enforcement of one’s right of possession as purchaser in a foreclosure sale. It is not an ordinary suit filed in court, by which one party "sues another for the enforcement of

a wrong or protection of a right, or the prevention or redress of a wrong." It is a non-litigious proceeding authorized in an extrajudicial foreclosure of mortgage pursuant to Act No. 3135, as amended.35 It is brought for the benefit of one party only, and without notice to, or consent by any person adversely interested.36 It is a proceeding where the relief is granted without an opportunity for the person against whom the relief is sought to be heard.37 No notice is needed to be served upon persons interested in the subject property. Hence, there is no necessity of giving notice to the petitioners since they had already lost all their interests in the property when they failed to redeem the same.38

Second. As a rule, any question regarding the validity of the mortgage or its foreclosure cannot be a legal ground for refusing the issuance of a writ of execution.39 The right of the purchaser to have possession of the subject property would not be defeated notwithstanding the pendency of a civil case seeking the annulment of the mortgage or of the extrajudicial foreclosure.40 Indeed, under Section 8 of Act No. 3135,41 even if the mortgagor files a petition assailing the writ of possession granted to the buyer and the sale at public auction within thirty (30) days from the issuance of a writ of possession in favor of the buyer at public auction of the property, and the court denies the same, the buyer may appeal the order of denial. However, the buyer at public auction remains in possession of the property pending resolution of the appeal. We have consistently ruled that it is the ministerial duty of the court to issue writ of possession in favor of the purchaser in a foreclosure sale. The trial court has no discretion on this matter.42

On the issue of whether the RTC was mandated to consolidate LRC Case No. P-97-2000 and Civil Case No. 109-M-2000, we agree with the following ruling of the CA:

… Neither can the prayer for mandamus be granted under the present circumstances. The reason is simple: Mandamus as a remedy applies only where petitioner’s right is founded clearly in law and not when it is doubtful. It will not issue to give to him something to which he is not clearly and conclusively entitled.

Here, respondent JUDGE’s ministerial duty in issuing the questioned issuance of the writ of possession finds ample support not only in the jurisprudence laid down by the Supreme Court in Navarra, but also in the case of Philippine National Bank v. Adil:

"The rule, therefore, is that after the redemption period has expired, the purchaser of the property has the right to be placed in possession thereof. Accordingly, it is the inescapable duty of the Sheriff to enforce the writ of possession especially as in this case, a new title has already been issued in the name of the purchaser." (Emphasis supplied)

Therefore, petitioners, who failed to establish a clear right, cannot compel respondent JUDGE to deviate from his duty to issue the writ of possession which is ministerial in nature, not requiring the exercise of sound discretion, especially since, as we have said, the redemption period has expired and a new title has already been issued in the name of BPI. As correctly pointed out in the assailed Order dated February 13, 2001:

"x x x it is its ministerial duty to issue the writ of possession in favor of a purchaser in a foreclosure sale and the right of the petitioner cannot be defeated notwithstanding the pendency of Civil Case No. 109-M-2000 being invoked by herein oppositor."43

Section 1, Rule 31 of the Rules of Court, as amended, reads:

Section 1. Consolidation. – When actions involving a common question of law or fact are pending before the court, it may order a joint hearing or trial of any or all the matters in issue in the actions; it

may order all the actions consolidated; and it may make such orders concerning proceedings therein as may tend to avoid unnecessary costs or delay.

It is plain as day that the trial court is not mandated to consolidate two or more related cases. The trial court is vested with discretion whether or not to consolidate two or more cases.44 The grant of discretion to the trial court is incompatible with the clear legal duty, the existence of which is essential to warrant the issuance of a writ of mandamus.

It bears stressing that consolidation is aimed to obtain justice with the least expense and vexation to the litigants. The object of consolidation is to avoid multiplicity of suits, guard against oppression or abuse, prevent delays and save the litigants unnecessary acts and expense.45 Consolidation should be denied when prejudice would result to any of the parties or would cause complications, delay, prejudice, cut off, or restrict the rights of a party.46

In the present case, the trial court acted in the exercise of its sound judicial discretion in denying the motion of the petitioners for the consolidation of LRC Case No. P-97-2000 with Civil Case No. 109-M-2000.

First. The proceedings in LRC Case No. P-97-2000 is not, strictly speaking, a judicial process and is a non-litigious proceeding; it is summary in nature. In contrast, the action in Civil Case No. 109-M-2000 is an ordinary civil action and adversarial in character. The rights of the respondent in LRC Case No. P-97-2000 would be prejudiced if the said case were to be consolidated with Civil Case No. 109-M-2000, especially since it had already adduced its evidence.

Second. The matter of whether or not consolidation is proper has certainly become moot and academic. The RTC had already issued an order granting the writ of possession in favor of the respondent herein, and declared that the latter had already been placed in actual possession of the property per its Order of November 8, 2002. The petitioners herein had already appealed the said order of the RTC granting the writ of possession to the CA on December 2, 2002. In the meantime, Civil Case No. 109-M-2000 is still pending trial in Branch 83 of the RTC of Malolos, Bulacan.

IN LIGHT OF ALL THE FOREGOING, the petition is DENIED for lack of merit. The decision of the Court of Appeals in CA-G.R. SP No. 67164 is AFFIRMED. Costs against the petitioners.

SO ORDERED.

SECOND DIVISION

 

G.R. No. 86679 July 23, 1991

PHILIPPINE NATIONAL BANK, petitioner, vs.INTERNATIONAL CORPORATE BANK and COURT OF APPEALS, * respondents.

Domingo A. Santiago, Jr., Nicolas C. Alino, Cesar T. Basa and Evelyn A. Alvarez for petitioner.

A.M. Perez & Associates for private respondent.

 

REGALADO, J.:p

Challenged in this petition for review on certiorari is the decision of the Court of Appeals, dated January 31, 1989, in C.A.-G.R. CV No. 12342 affirming the decision of the Regional Trial Court of Alaminos, Pangasinan, acting as a land registration court, which dismissed petitioner's application for the cancellation of annotations of an encumbrance on its transfer certificates of title. 1

As found by respondent court and sustained by the record, on May 7, 1985, petitioner filed with the Regional Trial Court of Alaminos, Pangasinan and docketed therein as LRC No. A-229, Record No. N-33399, a petition for the cancellation of a memorandum of encumbrance annotated upon its sixteen (16) transfer certificates of title. As a backdrop, petitioner alleged that spouses Archimedes J. Balingit and Ely Suntay executed in its favor the following real estate mortgages, to wit:

2. On December 16, 1966, a real estate mortgage was executed and registered on December 19, 1966 with the Register of Deeds of Alaminos, Pangasinan. The corresponding annotations were made on Transfer Certificates of Title Nos. 49020 and 49021 covering the mortgaged parcels of land as entry No. 264514 therein.

3. On September 14, 1967, an amendment of mortgage was executed in favor of the petitioner and registered on September 15, 1967 with the Register of Deeds of Alaminos, Pangasinan. The corresponding annotations were made on the aforesaid Transfer Certificates of Title Nos. 49020 and 49021 as entry No. 282423 therein.

4. On August 1, 1968, another real estate mortgage was executed and registered on August 2, 1968 with the Register of Deeds of Alaminos, Pangasinan. The corresponding annotations were made on Original Certificates of Title Nos. 18988, 18987, 19020, 19021, 19017, 19015, 18989, 19018, 19019, 19016, 18983, 18984, 18985 and 18986 covering the mortgaged parcels of land as entry No. 302341 therein.

5. On October 31, 1968, a real estate mortgage was executed in favor of the petitioner and registered on November 4, 1968 with the Register of Deeds of Alaminos, Pangasinan. The corresponding annotations were made on the Original Certificates of Title with numbers as enumerated in the immediately preceding paragraph as entry No. 306445 therein. 2

Annotated subsequent to the foregoing memoranda of the mortgage lien of petitioner on the above-mentioned properties is a "Notice of Levy re Civil Case No. 69035, CFI-Manila, Continental Bank vs. Archimedes J. Balingit and Ely Suntay Balingit" for a total sum of P96,636.10, as entry No. 285511 at the back of the titles enumerated in paragraph 2 and as entry No. 308262 in the titles enumerated in paragraph 4 of said petition. 3

For failure of the Balingit spouses to settle their loan obligation with petitioner, the latter extrajudicially foreclosed under Act 3135, as amended, the sixteen (16) parcels of land covered by the real estate mortgages executed by the said spouses in favor of petitioner. The sheriff s certificate of sale was registered on April 3, 1972 with the Register of Deeds, with a memorandum thereof duly annotated at the back of the aforesaid certificates of title of the foreclosed properties.

Upon the expiration of the one-year legal redemption period, petitioner consolidated in its name the ownership of all the foregoing mortgaged properties for which new transfer certificates of title were issued in its name. However, the annotation of the notice of levy in favor of private respondent was carried over to and now appears as the sole annotated encumbrance in the new titles of petitioner,

that is, Transfer Certificates of Title Nos. 1228, 1229, 1230, 1231, 1232, 1236, 1237, 1238, 1239, 1240, 1242, 1243, 1244, 1216, 1217 and 1218. 4

On May 28, 1986, private respondent International Corporate Bank, as successor in interest of the defunct Continental Bank, filed an opposition to the petition contending that, since it was not informed of the extrajudicial foreclosure proceedings, the new and consolidated titles over the foreclosed properties issued in favor of herein petitioner are null and void. 5

On August 28, 1986, the lower court rendered a decision, denying the petition for lack of jurisdiction, the pertinent part whereof reads:

Section 108 of Presidential Decree No. 1529 (Section 112 of Act 496) under which the petitioner seeks remedy has been interpreted by the Supreme Court that the relief therein can only be granted if there is no adverse claim or serious objection on the part of any party in interest otherwise the case becomes controversial and should be threshed out in an ordinary case or in the case where the incident properly belongs. Accordingly, an annotation of an adverse claim may be ordered cancelled only where the issue involved is not controversial or so disputed as to warrant that it be litigated in an ordinary action. (Tangunan and Tangunan vs. Republic of the Philippines, 94 Phil. 171; Asturias Sugar Central vs. Segovia, 190 Phil. 383; RP vs. Laperal, 108 Phil. 860; Abustan vs. Ferrer and Golez, 63 O.G. 34, August 21, 1967 and Cheng vs. Lim (Second Division), L-27614 jointly decided with L-27148, June 29, 1977).

Considering that the issue of whether the notice of levy should be cancelled as sought by the petitioner becomes controversial in view of the opposition and adverse claim of the oppositor Interbank, this Court, as land registration court and in accordance with the jurisprudence above cited, has no jurisdiction to entertain and act on the contested petition. The cancellation prayed for should be threshed out in an ordinary case.

WHEREFORE, the petition is hereby DENIED, without prejudice to the filing of an ordinary case by the petitioner.

SO ORDERED. 6

Not satisfied therewith, petitioner appealed to respondent Court of Appeals, asserting that the lower court erred in ruling that (1) there is an adverse claim or serious objection on the part of oppositor rendering the case controversial and therefore should be threshed out in an ordinary case; and (2) it has no jurisdiction to entertain and act on the contested petition. 7

On January 13, 1989, respondent court rendered judgment affirming the appealed decision, 8 as a consequence of which petitioner is now before us contending that:

I

REGIONAL TRIAL COURTS (RTC's) HAVE JURISDICTION TO ACT UPON PETITIONS FILED UNDER SEC. 108 OF "THE PROPERTY REGISTRATION DECREE" (P.D. 1529), WHETHER THEY ARE ACTING AS A LAND REGISTRATION COURT OR A COURT OF GENERAL JURISDICTION.

II

PURCHASER OF REAL PROPERTY AT AN EXTRAJUDICIAL FORECLOSURE SALE ACQUIRES SUCH PROPERTY FREE FROM ALL LIENS AND ENCUMBRANCES. THE ACTION OF REGISTER OF DEEDS IN CARRYING THE ANNOTATION OF THE NOTICES OF LEVY OVER TO THE NEW TITLE CERTIFICATES ISSUED IN PURCHASER'S FAVOR IS VOID AND ILLEGAL.

III

SECTION 108 OF "PROPERTY REGISTRATION DECREE" EXPRESSLY ALLOWS THE SUMMARY AMENDMENT OF CERTIFICATES OF TITLE WHENEVER INTEREST ANNOTATED HAS "TERMINATED AND CEASED."

IV

REMAND OF PROCEEDINGS TO TRIAL COURT TO DETERMINE PRIORITY OF LIENS BETWEEN PETITIONER AND RESPONDENT MAY BE UNNECESSARY AS FACTUAL BASIS OF PNB'S SUPERIOR LIEN IS BORNE OUT AND DISCLOSED BY THE RECORDS OF CASE BEFORE THIS TRIBUNAL. 9

We find the foregoing contentions meritorious.

The rule that was adopted by respondent Court of Appeals in its decision to the effect that a regional trial court sitting as a land registration court has limited jurisdiction and has no authority to resolve controversial issues, which should accordingly be litigated in a court of general jurisdiction, no longer holds.

We have held that under Section 2 of Presidential Decree No. 1529 (The Property Registration Decree) which took effect on June 11, 1979, regional trial courts acting as land registration courts now have exclusive jurisdiction not only over applications for original registration of title to lands, including improvements and interests therein, but also over petitions filed after original registration of title, with power to hear and determine all questions arising upon such applications or petitions. 10 That definitive ruling was precisely to correct the position taken therein by the Court of Appeals that the court a quo has limited jurisdiction and has no authority to resolve controversial issues which should be litigated before a court of general jurisdiction.

In the same case, the Court further noted that even under Act 496 (Land Registration Act), specifically Section 110 thereof, the court of first instance, sitting as a land registration court, has the authority to conduct a hearing, receive evidence, and decide controversial matters with a view to determining whether or not the filed notice of adverse claim is valid.

The said doctrine was a reiteration of our earlier ruling in Averia, Jr. vs. Caguioa, etc., et al., 11 as follows:

In Section 2 of the Id P.D. No. 1529, it is clearly provided that:

Sec. 2. Nature of registration proceedings; jurisdiction of courts. — Judicial proceedings for the registration of lands throughout the Philippines shall be in rem and shall be based on the generally accepted principles underlying the Torrens system.

Courts of First Instance shall have exclusive jurisdiction over all applications for original registration of titles to lands, including improvements and interest therein, and over an petitions filed after original registration of title, with power to hear and determine all questions arising upon such applications or petitions . . .

The above provision has eliminated the distinction between the general jurisdiction vested in the regional trial court and the limited jurisdiction conferred upon it by the former law when acting merely as a cadastral court. Aimed at avoiding multiplicity of suits, the change has simplified registration proceedings by conferring upon the regional trial courts the authority to act not only on applications for "original registration" but also "over all petitions filed after original registration of title, with power to hear and determine all questions arising upon such applications or petitions."

Consequently, and specifically with reference to Section 112 of the Land Registration Act (now Section 108 of P.D. No. 1529), the court is no longer fettered by its former limited jurisdiction which enabled it to grant relief only in cases where there was "unanimity among the parties" or none of them raised any "adverse claim or serious objection." Under the amended law, the court is now authorized to hear and decide not only such non-controversial case but even the contentious and substantial issues, such as the question at bar, which were beyond its competence before.

It is now beyond cavil, therefore, that the court below has ample jurisdiction to decide the controversy raised by the petition in LRC No. A-229, Record No. N-33399 initiated therein by petitioner.

However, considering that the issue of whether the adverse claim of private respondent should be cancelled or allowed to remain as annotations on the certificates of title involved can be resolved by us in the present recourse, we agree that the remand of the case to the court of origin is no longer necessary.

We have time and again laid down the rule that the remand of the case to the lower court for further reception of evidence is no longer necessary where this Court is in a position to resolve the dispute based on the records before it. In a number of cases, the Court, in the public interest and for the expeditious administration of justice, has resolved actions on the merits instead of remanding them to the trial court for further proceedings, such as where the ends of justice would not be subserved by the remand of the case. 12

In the case at bar, the right of petitioner to the relief prayed for is clear. The facto before us sufficiently show that the cancellation of the disputed annotation from the certificates of title of petitioner is justified in law.

It is undisputed that private respondent is a subsequent lien holder whose rights over the mortgaged property are inferior to that of petitioner as a mortgagee. Being a subsequent lien holder, private respondent acquires only the right of redemption vested in the mortgagor, and his rights are strictly subordinate to the superior lien of the anterior mortgagee. 13 After the foreclosure sale, the remedy of the second mortgagee is limited to the right to redeem by paying off the debt secured by the first mortgage. 14

The rule is that upon a proper foreclosure of a prior mortgage, all liens subordinate to the mortgage are likewise foreclosed, and the purchaser at public auction held pursuant thereto acquires title free

from the subordinate liens. Ordinarily, thereafter the Register of Deeds is authorized to issue the new titles without carrying over the annotation of subordinate liens. 15 In a case with similar features, we had earlier held that the failure of the subsequent attaching creditor to redeem, within the time allowed by Section 6 of Act 3136, the land which was sold extrajudicially to satisfy the first mortgage, gives the purchaser a perfect right to secure the cancellation of the annotation of said creditor's attachment lien on the certificates of title of said land. 16

It has likewise been declared in Bank of the Philippine Islands, etc., et al. vs. Noblejas, etc., et al., 17 that "(a)ny subsequent lien or encumbrance annotated at the back of the certificates of title cannot in any way prejudice the mortgage previously registered, and the lots subject thereto pass to the purchaser at the public auction sale free from any lien or encumbrance. Otherwise, the value of the mortgage could be easily destroyed by a subsequent record of an adverse claim, for no one would purchase at a foreclosure sale if bound by the posterior claim. . . . This alone is sufficient justification for the dropping of the adverse claim from the new certificates of title to be issued to her, as directed by respondent Commissioner in his opinion subject of this appeal."

The contention of private respondent in its opposition that the extrajudicial foreclosure is null and void for failure of petitioner to inform them of the said foreclosure and the pertinent dates of redemption so that it can exercise its prerogatives under the law 18 is untenable. There being obviously no contractual stipulation therefor, personal notice is not necessary and what governs is the general rule in Section 3 of Act 3135, as amended, which directs the posting of notices of the sale in at least three (3) public places of the municipality where the property is situated, and the publication thereof in a newspaper of general circulation in said municipality.

Finally, the levy in favor of private respondent's predecessor in interest arising from the judgment in Civil Case No. 69035 of the Court of First Instance of Manila, appearing at the back of petitioner's certificates of titles, is already without force and effect consider that the same has been annotated in the certificates of title for more than ten (10) years without being duly implemented. Properties levied upon by execution must be sold at public auction within the period of ten (10) years during which the judgment can be enforced by action. 19

WHEREFORE, the judgment of respondent Court of Appeals is hereby SET ASIDE. Instead, another judgment is hereby rendered ordering that the annotations of the notice of levy in favor of Continental Bank, now substituted by private respondent, on petitioner's Transfer Certificates of Title Nos. 1216, 1217, 1218, 1228, 1229, 1230, 1231, 1232, 1236, 1237, 1238, 1239, 1240, 1242, 1243 and 1244 should be, as they are hereby, CANCELLED.

SO ORDERED.

THIRD DIVISION 

JOSEPH L. SY, NELSON GOLPEO and JOHN TAN,

Petitioners,

          - versus -

NICOLAS CAPISTRANO, JR., substituted by JOSEFA B.

G.R. No. 154450

Present:

YNARES-SANTIAGO, J.,   Chairperson,AUSTRIA-MARTINEZ,

CAPISTRANO, REMEDIOS TERESITA B. CAPISTRANO and MARIO GREGORIO B. CAPISTRANO; NENITA F. SCOTT; SPS. JUANITO JAMILAR and JOSEFINA JAMILAR; SPS. MARIANO GILTURA and ADELA GILTURA,

Respondents.

CHICO-NAZARIO,NACHURA, andREYES, JJ.

Promulgated:

   July 28, 2008

 x------------------------------------------------------------------------------------x  

RESOLUTION 

NACHURA, J.:                            

 

 

 

           This is a petition for review on certiorari under Rule 45 of the Rules of Court of the Decision of the Court of Appeals (CA) dated July 23, 2002 in CA-G.R. CV No. 53314.           The case originated from an action for reconveyance of a large tract of land in Caloocan City before the Regional Trial Court (RTC), Branch 129, Caloocan City, entitledNicolas Capistrano, Jr. v. Nenita F. Scott, Spouses Juanito and Josefina Jamilar, Joseph L. Sy, Nelson Golpeo and John Tan, and the Register of Deeds, Caloocan City.  Said case was docketed as Civil Case No. C-15791.           The antecedents are as follows:           Sometime in 1980, Nenita Scott (Scott) approached respondent Nicolas Capistrano, Jr. (Capistrano) and offered her services to help him sell his 13,785 square meters of land covered by Transfer Certificate of Title (TCT) No. 76496 of the Register of Deeds of Caloocan City.  Capistrano gave her a temporary authority to sell which expired without any sale transaction being made.  To his shock, he

discovered later that TCT No. 76496, which was in his name, had already been cancelled on June 24, 1992 and a new one, TCT No. 249959, issued over the same property on the same date to Josefina A. Jamilar.  TCT No. 249959 likewise had already been cancelled and replaced by three (3) TCTs (Nos. 251524, 251525, and 251526), all in the names of the Jamilar spouses.  TCT Nos. 251524 and 251526 had also been cancelled and replaced by TCT Nos. 262286 and 262287 issued to Nelson Golpeo and John B. Tan, respectively.           Upon further inquiries, Capistrano also discovered the following: 

1.                  The cancellation of his TCT No. 76496 and the issuance of TCT No. 249959 to Jamilar were based upon two (2) deeds of sale, i.e., a “Deed of Absolute Sale” purportedly executed by him in favor of Scott on March 9, 1980 and a “Deed of Absolute Sale” allegedly executed by Scott in favor of Jamilar on May 17, 1990.

 2.                  The supposed 1980 sale from him to Scott was for P150,000.00;

but despite the lapse of more than 10 years thereafter, the alleged 1990 sale from Scott to Jamilar was also forP150,000.00.

 3.                  Both deeds were presented for registration simultaneously

on June 24, 1992. 4.                  Although the deed in favor of Scott states that it was executed

on March 9, 1980, the annotation thereof at the back of TCT No. 76496 states that the date of the instrument is March 9, 1990.

 5.                  Even if there was no direct sale from Capistrano to Jamilar, the

transfer of title was made directly to the latter.  No TCT was issued in favor of Scott.

 6.                  The issuance of TCT No. 249959 in favor of Jamilar was with

the help of Joseph Sy, who provided for (sic) money for the payment of the capital gains tax, documentary stamps, transfer fees and other expenses of registration of the deeds of sale.

 7.                  On July 8, 1992, an Affidavit of Adverse Claim was annotated at

the back of Jamilar’s TCT No. 249959 at the instance of Sy, Golpeo, and Tan under a Contract to Sell in their favor by the Jamilar spouses.  Said contract was executed sometime in May,

1992 when the title to the property was still in the name of Capistrano.

 8.                  Around July 28, 1992, upon request of the Jamilar spouses, TCT

No. 249959 was cancelled and three (3) new certificates of title (TCT Nos. 251524, 251525, and 251526) all in the name of Jamilar on the basis of an alleged subdivision plan (No. Psd-13-011917) without Capistrano’s knowledge and consent as registered owner.  The notice of adverse claim of Sy, Golpeo, and Tan was carried over to the three new titles.

 9.                   Around August 18, 1992, Sy, Golpeo, and Tan filed Civil Case

No. C-15551 against the Jamilars and another couple, the Giltura spouses, for alleged violations of the Contract to Sell. They caused a notice of lis pendens to be annotated on the three (3) TCTs in Jamilar’s name.  Said civil case, however, was not prosecuted.

 10.              On January 26, 1993, a Deed of Absolute Sale was executed by

the Jamilars and the Gilturas, in favor of Golpeo and Tan.  Thus, TCT Nos. 251524 and 251526 were cancelled and TCT Nos. 262286 and 262287 were issued to Golpeo and Tan, respectively.  TCT No. 251525 remained in the name of Jamilar.[1]

  

Thus, the action for reconveyance filed by Capistrano, alleging that his and his wife’s signatures on the purported deed of absolute sale in favor of Scott were forgeries; that the owner’s duplicate copy of TCT No. 76496 in his name had always been in his possession; and that Scott, the Jamilar spouses, Golpeo, and Tan were not innocent purchasers for value because they all participated in defrauding him of his property.  Capistrano claimed P1,000,000.00 from all defendants as moral damages, P100,000.00 as exemplary damages; and P100,000.00 as attorney’s fees.

 In their Answer with Counterclaim, the Jamilar spouses denied the

allegations in the complaint and claimed that Capistrano had no cause of action against them, as there was no privity of transaction between them; the issuance of TCT No. 249959 in their names was proper, valid, and legal; and that Capistrano was in estoppel.  By way of counterclaim, they sought P50,000.00 as actual

damages, P50,000.00 as moral damages, P50,000.00 as exemplary damages, and P50,000.00 as attorney’s fees.

 In their Answer, Sy, Golpeo, and Tan denied the allegations in the complaint

and alleged that Capistrano had no cause of action against them; that at the time they bought the property from the Jamilars and the Gilturas as unregistered owners, there was nothing in the certificates of title that would indicate any vice in its ownership; that a buyer in good faith of a registered realty need not look beyond the Torrens title to search for any defect; and that they were innocent purchasers of the land for value.  As counterclaim, they sought P500,000.00 as moral damages and P50,000.00 as attorney’s fees.

 In her Answer with Cross-claim, Scott denied the allegations in the

complaint and alleged that she had no knowledge or any actual participation in the execution of the deeds of sale in her favor and the Jamilars’; that she only knew of the purported conveyances when she received a copy of the complaint; that her signatures appearing in both deeds of sale were forgeries; that when her authority to sell the land expired, she had no other dealings with it; that she never received any amount of money as alleged consideration for the property; and that, even if she were the owner, she would never have sold it at so low a price.

 By way of Cross-claim against Sy, Golpeo, Tan, and the Jamilars, Scott

alleged that when she was looking for a buyer of the property, the Jamilars helped her locate the property, and they became conversant with the details of the ownership and other particulars thereof; that only the other defendants were responsible for the seeming criminal conspiracy in defrauding Capistrano; that in the event she would be held liable to him, her other co-defendants should be ordered to reimburse her of whatever amount she may be made to pay Capistrano; that she was entitled to P50,000.00 as moral damages and P50,000.00 as attorney’s fees from her co-defendants due to their fraudulent conduct.

 Later, Sy, Golpeo, and Tan filed a third-party complaint against the Giltura

spouses who were the Jamilars’ alleged co-vendors of the subject property. Thereafter, trial on the merits ensued. 

Subsequently, the trial court decided in favor of Capistrano.  In its Decision dated May 7, 1996, adopting the theory of Capistrano as presented in his memorandum, the trial court rendered judgment as follows:

 1.                  Declaring plaintiff herein as the absolute owner of the parcel of

land located at the Tala Estate, Bagumbong, Caloocan City and covered by TCT No. 76496; 

2.                  Ordering defendant Register of Deeds to cause the cancellation of TCT No. 251525 registered in the name of defendant Josefina Jamilar; 

3.                  Ordering defendant Register of Deeds to cause the cancellation of TCT Nos. 262286 and 262287 registered in the names of defendants Nelson Golpeo and John B. Tan; 

4.                  Ordering defendant Register of Deeds to cause the issuance to plaintiff of three (3) new TCTs, in replacement of the aforesaid TCTs Nos. 251525, 262286 and 262287; 

5.                  Ordering all the private defendants in the above-captioned case to pay plaintiff, jointly and severally, the reduced amount of P400,000.00 as moral damages; 

6.                  Ordering all the private defendants in the above-captioned case to pay to plaintiff, jointly and severally, the reduced sum of P50,000.00 as exemplary damages; 

7.                  Ordering all the private defendants in the above-captioned case to pay plaintiff’s counsel, jointly and severally, the reduced amount of P70,000.00 as attorney’s fees, plus costs of suit; 

8.                  Ordering the dismissal of defendants Sy, Golpeo and Tan’s Cross-Claim against defendant spouses Jamilar; 

9.                  Ordering the dismissal of defendants Sy, Golpeo and Tan’s Third-Party Complaint against defendant spouses Giltura; and 

10.              Ordering the dismissal of the Counterclaims against plaintiff. SO ORDERED.[2]

  

          On appeal, the CA, in its Decision dated July 23, 2002, affirmed the Decision of the trial court with the modification that the Jamilar spouses were ordered to return to Sy, Golpeo, and Tan the amount of P1,679,260.00 representing their full payment for the property, with legal interest thereon from the date of the filing of the complaint until full payment.           Hence, this petition, with petitioners insisting that they were innocent purchasers for value of the parcels of land covered by TCT Nos. 262286 and 262287.  They claim that when they negotiated with the Jamilars for the purchase of the property, although the title thereto was still in the name of Capistrano, the documents shown to them – the court order directing the issuance of a new owner’s duplicate copy of TCT No. 76496, the new owner’s duplicate copy thereof, the tax declaration, the deed of absolute sale between Capistrano and Scott, the deed of absolute sale between Scott and Jamilar, and the real estate tax receipts – there was nothing that aroused their suspicion so as to compel them to look beyond the Torrens title.  They asseverated that there was nothing wrong in financing the cancellation of Capistrano’s title and the issuance of titles to the Jamilars because the money they spent therefor was considered part of the purchase price they paid for their property. 

In their Comment, the heirs of Capistrano, who were substituted after the latter’s death, reiterated the factual circumstances which should have alerted the petitioners to conduct further investigation, thus – 

(a)                Why the “Deed of Absolute Sale” supposedly executed by Capistrano had remained unregistered for so long, i.e., from March 9, 1980 up to June 1992, when they were negotiating with the Jamilars and the Gilturas for their purchase of the subject property;

 (b)               Whether or not the owner’s copy of Capistrano’s certificate of

title had really been lost; (c)                Whether Capistrano really sold his property to Scott and whether

Scott actually sold it to the Jamilars, which matters were easily

ascertainable as both Capistrano and Scott were still alive and their names appear on so many documents;

 (d)               Why the consideration for both the March 9, 1980 sale and

the May 17, 1990 sale was the same (P150,000.00), despite the lapse of more than 10 years;

 (e)                Why the price was so low (P10.88 per square meter, both in

1980 and in 1990) when the petitioners were willing to pay and actually paid P150.00 per square meter in May 1992; and

 (f)                 Whether or not both deeds of sale were authentic.[3]

  

In addition, the heirs of Capistrano pointed out that petitioners entered into negotiations over the property, not with the registered owner thereof, but only with those claiming ownership thereof based on questionable deeds of sale. 

The petition should be denied.  The arguments proffered by petitioners all pertain to factual issues which have already been passed upon by both the trial court and the CA.           Findings of facts of the CA are final and conclusive and cannot be reviewed on appeal, as long as they are based on substantial evidence.  While, admittedly, there are exceptions to this rule such as: (a) when the conclusion is a finding grounded entirely on speculations, surmises or conjectures; (b) when the inference made is manifestly mistaken, absurd or impossible; (c) when there is grave abuse of discretion; (d) when the judgment is based on a misapprehension of facts; (e) when the findings of facts are conflicting; (f) when the CA, in making its findings, went beyond the issues of the case and the same were contrary to the admissions of both the appellant and appellee.[4] Not one of these exceptional circumstances is present in this case.            First.  The CA was correct in upholding the finding of the trial court that the purported sale of the property from Capistrano to Scott was a forgery, and resort to a handwriting expert was not even necessary as the specimen signature submitted by Capistrano during trial showed marked variance from that found in the deed of

absolute sale. The technical procedure utilized by handwriting experts, while usually helpful in the examination of forged documents, is not mandatory or indispensable to the examination or comparison of handwritings.[5]

           By the same token, we agree with the CA when it held that the deed of sale between Scott and the Jamilars was also forged, as it noted the stark differences between the signatures of Scott in the deed of sale and those in her handwritten letters to Capistrano.           Second.  In finding that the Jamilar spouses were not innocent purchasers for value of the subject property, the CA properly held that they should have known that the signatures of Scott and Capistrano were forgeries due to the patent variance of the signatures in the two deeds of sale shown to them by Scott, when Scott presented to them the deeds of sale, one allegedly executed by Capistrano in her favor covering his property; and the other allegedly executed by Scott in favor of Capistrano over her property, theP40,000.00 consideration for which ostensibly constituted her initial and partial payment for the sale of Capistrano’s property to her.           The CA also correctly found the Gilturas not innocent purchasers for value, because they failed to check the veracity of the allegation of Jamilar that he acquired the property from Capistrano.           In ruling that Sy was not an innocent purchaser for value, we share the observation of the appellate court that Sy knew that the title to the property was still in the name of Capistrano, but failed to verify the claim of the Jamilar spouses regarding the transfer of ownership of the property by asking for the copies of the deeds of absolute sale between Capistrano and Scott, and between Scott and Jamilar.  Sy should have likewise inquired why the Gilturas had to affix their conformity to the contract to sell by asking for a copy of the deed of sale between the Jamilars and the Gilturas.  Had Sy done so, he would have learned that the Jamilars claimed that they purchased the property from Capistrano and not from Scott.           We also note, as found by both the trial court and the CA, Tan’s testimony that he, Golpeo and Sy are brothers, he and Golpeo having been adopted by Sy’s

father.  Tan also testified that he and Golpeo were privy to the transaction between Sy and the Jamilars and the Gilturas, as shown by their collective act of filing a complaint for specific performance to enforce the contract to sell.           Also noteworthy – and something that would have ordinarily aroused suspicion – is the fact that even before the supposed execution of the deed of sale by Scott in favor of the Jamilars, the latter had already caused the subdivision of the property into nine (9) lots, with the title to the property still in the name of Capistrano.           Notable likewise is that the owner’s duplicate copy of TCT No. 76496 in the name of Capistrano had always been in his possession since he gave Scott only a photocopy thereof pursuant to the latter’s authority to look for a buyer of the property.  On the other hand, the Jamilars were able to acquire a new owner’s duplicate copy thereof by filing an affidavit of loss and a petition for the issuance of another owner’s duplicate copy of TCT No. 76496.  The minimum requirement of a good faith buyer is that the vendee of the real property should at least see the owner’s duplicate copy of the title.[6]   A person who deals with registered land through someone who is not the registered owner is expected to look beyond the certificate of title and examine all the factual circumstances thereof in order to determine if the vendor has the capacity to transfer any interest in the land.  He has the duty to ascertain the identity of the person with whom he is dealing and the latter’s legal authority to convey.[7]

           Finally, there is the questionable cancellation of the certificate of title of Capistrano which resulted in the immediate issuance of a certificate of title in favor of the Jamilar spouses despite the claim that Capistrano sold his property to Scott and it was Scott who sold the same to the Jamilars. 

In light of the foregoing disquisitions, based on the evidence on record, we find no error in the findings of the CA as to warrant a discretionary judicial review by this Court.

           WHEREFORE, the petition is DENIED DUE COURSE for failure to establish reversible error on the part of the Court of Appeals.  Costs against petitioners.

 SO ORDERED.