FORECLOSURE V.

PACTUM COMMISSORIOUM
PEREZ V. CORTES 15 PHIL 211
Doctrine: When an obligation secured by the mortgage of real estate becomes due, the
creditor is entitled to apply to the courts for the foreclosure of the mortgage, but he is
not authorized to appropriate or dispose of the property in order to recover the amount
due.

SECOND DIVISION
[G.R. No. 3821. February 16, 1910. ]
LUCIA PEREZ ET AL., Plaintiffs-Appellees, v. DOMINGO CORTES ET
AL., Defendants-Appellants.
Levering & Wood, for Appellants.
Andres Borromeo, and Buenaventura Reyes, for Appellees.
SYLLABUS
1. REALTY; UNLAWFUL SEIZURE OR POSSESSION. One who usurps or takes
possession of realty on the ground that he has a right to do so, can not be protected by
the courts, whatever may be the right such person believes he has to the property
seized, inasmuch as said act is not permitted even to the lawful owner.
2. CONSTRUCTION OF CONTRACTS. In the event of a doubt as to the nature and
conditions of a contract that can not be decided by the language of the document
setting forth such agreement, it should be held that the debtor assumed the lesser
obligation and that the liability contracted is that which permits the greatest reciprocity of
interests and rights. (Art. 1289, Civil Code.)
3. MORTGAGE; RIGHT TO FORECLOSE. When an obligation secured by the
mortgage of real estate becomes due, the creditor is entitled to apply to the courts for
the foreclosure of the mortgage, but he is not authorized to appropriate or dispose of the
property in order to recover the amount due.

DECISION

TORRES, J. :

On the 21st of September, 1905, Lucia, Eduvigis, and Inocenta Perez presented an
amended written complaint in the Court of First Instance of Oriental Negros, alleging
that the two first named were the owners of a parcel of land situated in the sitio of Looc,
in the town of Guiljungan of the said province, about 30 hectares in area, and bounded
on the north by the small river Nagcalhin, on the south by lands now owned by Ciriaco
Jambalos, formerly belonging to Victor Jambalos and Pelagio Villegas, on the east by
the sea and by land belonging to Pedro Olang, and on the west by the land of Dorotea
Malahay; that their predecessor, Liberato Perez, had recorded the possessory
information of the above-described land in the registry of property of Oriental Negros on
the 16th of April, 1895; that the plaintiffs Lucia and Eduvigis transferred one-half of the
said land to Dominga Bolado, the mother of Inocenta Perez, on January 21, 1902,
which half has a capacity of 20 gantas of corn seed, and is bounded on the north by the
other half, on the south by lands of Juan Palermo and Andrea Carampatana, on the
east by the beach and the said other half, and on the west by lands of Tomasa Planas
and the small river; that Dominga in turn transferred to Inocenta Perez the said half of
the estate on May 25 following, and the land described is a part of the said half; that in
January, 1903, the defendants, Domingo Cortes and his wife Dominga Ubaldo, usurped
and unlawfully retained the land last described, and still retain it without possessing any
right thereto, and that in consequence of said usurpation and retention by the
defendants of the aforesaid land of Inocenta Perez, the plaintiffs suffered damages to
the extent of P250 by reason of benefits and products not received, for which reason
they prayed that judgment be entered in their favor, declaring the plaintiffs Lucia and
Eduvigis, as heirs of the late Liberato Perez, to be the lawful owners of the whole of the
land described in the complaint; that the transfer made by said heirs of one half of the
land to Dominga Bolado and that effected by the latter to Inocenta Perez be ratified and
confirmed; that the defendants be ordered to restore the parcel of land described in
paragraph one of the complaint, usurped and unlawfully retained by them, and to pay
P250 as damages for the benefits and products not received, and to pay the costs.
The defendants, after demurring to the complaint, filed an answer thereto on the 8th of
February, 1906, denying all the allegations contained in each and every one of the
paragraphs therein, and asked to be absolved therefrom with the costs against the
plaintiffs.
By another written answer to the amended complaint the said defendants denied
paragraphs 1, 2, 4, 5, and 6, and admitted paragraph 3 of the complaint, alleging that
they were and still are in possession as owners of part of the land mentioned in the said
paragraph 3; that said land is bounded on the north by lands of Inocenta Perez, on the
south by that of Juan Palermo, on the east by that of Pelagio Villegas, and on the west
by land belonging to a non-Christian; that said portion of land was included in a false
possessory information in the name of Liberato Perez in 1895, and was fraudulently
recorded in the registry of property; that in 1895 Liberato Perez was not, nor had ever
been in possession of said land, and that the person who was in possession in said

year was Vicente Perez, the real owner; that Perez transferred his rights to Pedro
Olang, and upon the death of the latter, his widow, Dominga Ubaldo, inherited the said
parcel; for these reasons they asked that the entry made in the registry of property be
canceled and that the possessory information be declared null and void in so far as the
land of the defendants is referred to, and that the latter be absolved of the complaint
with the costs against the plaintiffs.
The case came up for trial and evidence was adduced by the parties, their exhibits
being made of record. On the 6th of March, 1906, judgment was rendered by the lower
court ordering that Inocenta Perez be restored in the possession of the usurped land
which the defendants who retain it must vacate, the same being the property of Lucia
Perez and Eduvigis Perez, and that Inocenta be indemnified by the defendants in the
sum of P250 for losses and damages, with interest thereon at the rate of 6 per cent per
annum from the 21st of September, 1903, and that the said plaintiffs shall recover costs
from the defendants.
The latter excepted to the foregoing decision and moved for a new trial on the ground
that it was contrary to law, and that the findings were manifestly contrary to the weight
of the evidence; the motion was overruled, to which the petitioners excepted and
presented the corresponding bill of exceptions which was approved and submitted to
this court.
It has been fully proven in the case that Liberato Perez, the father of two of the plaintiffs,
by virtue of the possession he enjoyed as owner for more than sixty years, without
counting that of his ancestors, lawfully acquired by means of extraordinary prescription,
under the provisions of article 1959 of the Civil Code, the ownership of about 30
hectares of land described in the complaint. There can be no question therefore as to
the right of his two daughters, plaintiffs herein, to recover possession of the duly
identified portion of said land from the defendants who, forcibly and without any reason
whatever, took possession of said land; the said daughters succeeded their father in his
rights and obligations from the moment of his death (art. 661, Civil Code), and as actual
proprietors of a portion of the estate retained at the time the complaint was filed, they
were entitled to bring an action against the holders and possessors thereof to recover
possession (art. 348, Civil Code), it appearing in the case that said portion was forcibly
taken possession of, and retained up to the present day; by the express will of the
owners of the said portion, Inocenta Perez, another of the plaintiffs, enjoyed the
possession and usufruct of the same.
Impugning the right of the plaintiffs, the defendants alleged that they were and still are
the owners of the part or portion of land claimed, for the reason that Pedro Olang had
acquired it in 1895 from its lawful owner and possessor, Vicente Perez, and that
Dominga Ubaldo inherited it upon the death of her husband, the said Olang; for said
reason they asked that the possessory information filed by Liberato Perez while living
for the ownership of the whole parcel of land be declared null, as well as its registration
in the registry of property, because the portion of land in controversy was fraudulently
included in said information and recorded in the registry in the said year.

It is nowhere shown that Vicente Perez was either the owner or in possession as such,
in 1895, of the portion of land in controversy, nor that Pedro Olang had lawfully acquired
or had been in possession thereof; hence, the defendant Dominga Ubaldo could not
have succeeded to any right to that part of the land, notwithstanding the documentary
evidence and the testimony of the witnesses with which she attempted to show such
right.
It appears to be proven in the case that in January, 1903, Dominga Ubaldo and
Domingo Cortes, her second husband, took possession of the said portion of land and
ejected therefrom the laborers that Inocenta Perez employed to work thereon, and from
the day of the usurpation to the present day they have retained the estate, and in spite
of this act of spoliation, an actual transgression which is not permitted even to the lawful
owner, and without having presented any deed of transfer by which Olang might have
acquired the ownership of said portion of the land, his widow now claims to be the
owner of the same. Dominga Bolado, mother of the plaintiff Inocenta Perez and of
Vicente Perez, only received one-half of the 30 hectares of land to which the
possessory information refers, and took possession thereof in January, 1902; before the
expiration of said year, the actual date not appearing, the said Vicente Perez died; his
mother was still living, and the latter before her death transferred the possession of the
said moiety of the land to her only surviving daughter, Inocenta. From all of the
foregoing it is logically deduced that Vicente Perez was never in possession of the
estate in 1902 under title of ownership, from which date his mother took charge of the
same in usufruct, for the reason that he died a few months later, and much less in 1895,
because Liberato Perez, who possessed it in its entirety as the real owner, was still
living.
It may be true that Vicente Perez owed Pedro Olang 100 pesos in the year 1895, but it
can not be admitted that he gave the said land as security; it did not belong to him, nor
could he in any manner dispose of it without the knowledge or consent of its lawful
owner, and, seeing that he died before his mother, he could not have succeeded her in
the enjoyment of the said portion of land.
Apart from the foregoing, Pedro Olang and Doroteo Malahay, when they were informed
of the petition presented by Liberato Perez asking for the possessory information
already referred to, stated that they, as adjoining owners, agreed to the facts stated in
the said petition, and that they had no objection or claim to make in the matter. After the
above statement made by Olang in April, 1895, it is not likely that he acquired from
Vicente Perez the land covered by said information; this document was attested by
Malahay as municipal captain, they know that it did not belong to the latter but to
Liberato, and in consequence Pedro Olang could not have transmitted any right to his
widow since he had not received any from Vicente Perez, his supposed predecessor in
the possession of the estate.
The record does not show that Vicente Perez was ever in possession of any portion of
the land covered by the possessory information, and consequently he could not transmit

any right to Pedro Olang, nor the right of possession to said portion of the land.
The widow of the creditor Pedro Olang claims to rest the right of the latter, and therefore
her own right, on the document marked "Exhibit A," dated January 15, 1895, wherein it
appears that Vicente Perez declared to have mortgaged to Pedro Olang for the sum of
100 pesos a parcel of land owned by him situated in the barrio of Looc, with a
description of its boundaries, on the condition that he would continue to work it and
obtain the benefits therefrom, but if it were not redeemed within a period of three years,
that is to say on the 14th of January, 1898, the land would then become the property of
the creditor. The document is a private one, and could not therefore be entered in the
register, and although it has been attached to the record of the case it does not appear
that the signature of Vicente Perez at the foot of the same was offered in evidence or
was duly identified.
The contract entered into by means of the said document is one of loan with mortgage;
not one of sale under pacto de retro, because beyond the word rescate (redemption)
said document does not contain any word to show that the agreement was a sale a
retro.
However, even if there were a doubt as to whether the contract entered into by Vicente
Perez was one of mortgage or one of sale, on the hypothesis that he could dispose of
the property, while it is not possible to decide the question by the language of the
document, in justice it must be assumed that the debtor assumed a lesser obligation
and that in accord with the creditor he bound himself to execute a mortgage which
involves a greater reciprocity of interests than a contract of sale under pacto de retro, in
spite of the fact that both the latter and that of mortgage involve a valuable
consideration in accordance with the provisions of article 1289 of the Civil Code.
On this supposition, in the absence of payment, on the obligation becoming due the
creditor would be entitled to have the mortgaged property sold to satisfy the debt, but
not to appropriate or dispose of it. (Arts. 1857, 1858, and 1859, Civil Code.)
The land in question is comprised within a larger tract of 30 hectares, referred to in the
possessory information instituted at the request of Liberator Perez in the court of the
justice of the peace of Guiljugan and finally approved on the 7th of April, 1895, a date
posterior to that of the above-mentioned document of mortgage in favor of Pedro Olang;
this information was recorded in the registry of property on the 16th of the said month of
April; and if the contract of mortgage of the 13th of January were a true contract, it can
not be understood how Pedro Olang and Doroteo Malahay made statements in the
month of April following in conformity with the facts contained in said possessory
information, nor can the declaration given by Higino de la Serna in said information
agree with that made in this suit, as they are markedly opposed and contradictory. From
all of the foregoing it is deduced that the said document was prepared in order to
somehow legalize the right which the widow of Pedro Olang believes she has to the
land in question.

As was agreed to in the aforesaid document, although the same be contrary to law, in
the absence of payment of the 100 pesos the mortgaged land could not become the
property of the creditor until the 14th of January, 1898, that is, after the lapse of three
years, and in the meantime the debtor, Vicente Perez, was to continue in the
possession and enjoyment of the fruits of the land; yet the defendants sought to prove
that Pedro Olang or his widow had been in possession of the property, as owner of the
same, for the last nine or ten years, the result being that their witnesses testified to facts
which were not true, undoubtedly for the purpose of legalizing the forcible usurpation of
the land in 1903.
The certified copy of the said information duly recorded in the registry of property is a
public document, one which is protected by articles 390, 391, 393, and 394 of the
Mortgage Law, and by sections 299 and 331 of the Code of Civil Procedure, and unless
it be proved to be null or invalid, which has not been done by the defendants, it must be
sustained by the courts.
With respect to the legal capacity of the plaintiffs to bring this suit and appear therein,
their respective rights are based on the provisions of section 115 of the Code of Civil
Procedure, because it involves their own property, and their respective husbands have
no personal rights or interest therein.
For the reasons above set forth by which the errors assigned to the court below have
been refuted, it is our opinion that the judgment appealed from should be and is hereby
affirmed, and the defendants are ordered to vacate the land in question and deliver it to
the plaintiffs, and to pay to Inocenta Perez the sum of P250 for the reasons stated in
said judgment, with legal interest thereon, and to pay the costs of this instance. So
ordered.
Johnson, Carson and Moreland, JJ., concur.

Dalay v. Aquiatin & Maximo 47 Phil 951

G.R. No. 20132

September 22, 1923

JUAN DALAY, plaintiff-appellant,

vs.
BERNARDO AQUIATIN and PROCESO MAXIMO, defendants-appellees.

Tirona and Francisco for appellant.

Lucio Javillonar for the appellee Aquiatin.
No appearance for the other appellee.

ROMUALDEZ, J.:

Ciriaco Villarin, being the owner of six parcels of land described in the complaint,
executed on July 4, 1917, a document (Exhibit A) in favor of Eugenio Gomez,
acknowledging a debt, one of whose clauses is as follows:

. . . and if I cannot pay the aforesaid amount, when the date agreed upon comes, the
same shall be paid with the lands given as security, the lot and house and lands
described in the aforesaid seven documents.

As the period so stipulated elapsed without Ciriaco Villarin having paid the debt,
Eugenio Gomez believing himself entitled to do so, executed a document Exhibit C on
September 30, 1917, in favor of Juan Dalay, where the transfer is stated as follows:

I hereby state that I have received from Mr. Juan Dalay of the municipality of Paete, the
sum of P2,300; and for this reason I hereby transfer and sell to him the lands to me paid
by Ciriaco Villarin in accordance with the foregoing document and the title deeds of the
aforesaid lands hereto attached. Dated and signed at Pagsanjan, Laguna,

September 30, 1917, Eugenio Gomez. Acknowledged before a notary public on

January 1, 1919.

By virtue of this conveyance, Juan Dalay, on the same date it was executed, entered
upon the possession of these lands and is now still in possession thereof.

On October 10, 1917, Ciriaco Villarin, in an affidavit Exhibit B, acknowledged that the
title to, and possession of, and possession of, the aforesaid lands had been transferred
in a real and absolute sale to Eugenio Gomez.

Fifteen days later, that is, on October 25, 1917, Ciriaco Villarin contracted a debt in
favor of Bernardino Aquiatin for which he gave the note set forth in the latter's
complaint, filed November 7, 1917, in civil case No. 2536 of the Court of First Instance
of Laguna.

After the judgment rendered in that case in favor of Bernardino Aquiatin became final,
execution was issued and levied upon the six parcels aforementioned, among other
properties.

Juan Dalay brought this action against Bernardino Aquiatin and the deputy sheriff,
Proceso Maximo, to have himself declared owner of said lands, to forever prohibit the
defendants, their agents and other persons acting in the defendants, their agents and
other persons acting in their behalf, from performing any act tending to carry out the
attachment and execution sale of said realties, and to recover the costs.

The answer of the defendant Aquiatin is a general denial and a special defense wherein
he alleges that the sale upon which the plaintiff Dalay relies is simulated and fraudulent,
and that said plaintiff had not had exclusive possession of, nor title to, said lands.

After trial, the court found that the plaintiff had no cause of action for the reason that he
was not, nor could he have been, the owner of the properties given to him as security of
the debt, and dismissed the complaint, ordering the execution to be carried out upon the
lands in question, and sentencing the plaintiff to pay the costs.

From this judgment, Juan Dalay appeals, assigning as errors the failure of the court to
the hold the documents Exhibits A and B effective as a transfer and absolute waiver of
the title to the lands, and its failure to hold that the plaintiff is the absolute owner thereof
and of the improvements thereon.

This being the issue raised, the question to be decided is whether or not by virtue of the
transfer hereinabove mentioned, Juan Dalay became the owner of the parcels of land in
dispute.

There is no question that Ciriaco Villarin was the original owner of these realties. Let us
see whether the contract executed by the latter in favor of Eugenio Gomez (Exhibit A),
an the transfer made afterwards by the latter in favor of Juan Dalay (Exhibit C), and the
declaration made later on by Ciriaco Villarin (Exhibit B) had the legal effect of
transferring to Juan Dalay the full title to these lands.

The document Exhibit A contains, as above stated, the clause which we again quote as
follows:

. . . and if I cannot pay the aforesaid amount, when the date agreed upon comes, the
same shall be paid with the lands given as security, the lot and house and lands
described in the aforesaid seven documents.

Is this stipulation violative of the provisions of article 1859 of the Civil Code? Two things
are prohibited by this article, to wit, (a) the appropriation by the creditor of the properties
pledged or mortgaged; and (b) the disposition thereof by the same creditor.

The stipulation above set forth does not authorize either one or the other. Of course it is
clear that it does not authorize the creditor to dispose of the properties mortgaged.

Neither do we find that it authorizes him to appropriate the same. What it says is merely
a promise to pay the debt with such properties, if at its maturity it is not satisfied. It is
merely a promise made by the debtor to assign the property given as security in
payment of the debt, which promise is accepted by the creditor.

There is no doubt that a debtor may make an assignment of his properties in payment
of a debt. (Art. 1175, Civil Code.) And the assignment is not made unlawful by the fact
that said properties are mortgaged, because the title thereto remains in the debtor; nor
is a promise to make such an assignment in violation of the law.

We are, therefore, of the opinion that this case does not come under the provisions of
article 1859 of the Civil Code, and therefore said article is not applicable to the
stipulation in question.

Upon the expiration of the period for the payment of the debt without the same having
been paid, Eugenio Gomez did not wait nor require Ciriaco Villarin to make a formal
assignment of the mortgaged property in payment of the debt, and transferred the same
to Juan Dalay in the document Exhibit C. And in doing so, Eugenio Gomez did not
dispose of property merely mortgaged, but of property promised to be assigned in
payment of the debt which had not been paid at the expiration of the period fixed for its
payment.

Gomez had not, by virtue alone of the promise of assignment of said property, any real
right thereon, but he did have a personal action against Villarin to compel him to
execute the proper deed of assignment. For this reason the conveyance made by
Gomez in favor of Dalay was defective, it having been made in advance of the actual
assignment of said property in his favor.

This transfer, however, is not void per se inasmuch as Villarin consented to the said
property passing to Gomez in payment of the debt after the expiration of the period for
payment, if the debt was not paid. There is no question as to the occurrence of the other
elements of this contract made in favor of Dalay, the defect consisting in Villarin not
having previously executed the deed of assignment he had promised.

This defect, which would have been a ground for annulling this transfer made by Gomez
in favor of Dalay, had Villarin brought the proper action, was cured by the act of said
Villarin in executing the document Exhibit B, wherein he acknowledged that the title to,
and possession of, said lands were transferred to Gomez as in a real and absolute sale.
This confirmation, valid and effective under the provisions of article 1311 of the Civil
Code, gave full effect to the transfer of these properties made by Gomez in favor of
Dalay.

The allegation of the defendant Aquiatin that this sale in favor of Dalay is simulated and
fraudulent cannot be held proven. It does not appear that when he executed the
document Exhibit A, Ciriaco Villarin was indebted to anybody with the exception of
Gomez, nor that he owed anything to anybody when he executed the document Exhibit
B, which cured the defect of the transfer in favor of Dalay.

As appears from the complaint of Bernardo Aquiatin himself, the debt of Ciriaco Villarin,
which is the subject-matter of the aforecited case No. 2536, was contracted by Villarin
on October 25, 1917, about fifteen days after the execution of said document Exhibit B.

We do not find, therefore, in the record sufficient ground for holding fraudulent the
transfer of the lands in question in favor of the herein plaintiff Juan Dalay, who by virtue
of said sale became the absolute owner of these lands before Villarin contracted his
debt in favor of Aquiatin and of course before the filing of the complaint for the recovery
of such debt and therefore before the rendition of the judgment in that case No. 2536;
so that when the execution involved in this action was levied, Ciriaco Villarin, the
judgment debtor, was no longer the owner of said parcels of land.

The judgment appealed from is reversed and the plaintiff Juan Dalay is adjudged the
sole and absolute owner of the lands described in his complaint, and it is ordered that
the defendants, their agents, and other persons acting in their behalf, abstain forever
from performing any act whatsoever tending to carry out the attachment an execution
sale complained of, or to enforce either one in any manner whatsoever.

No special finding as to costs is made. So ordered.

Araullo, C.J., Johnson, Malcolm, Avancea, and Villamor, JJ., concur.

Johns, J., concurs in the result.

Separate Opinions

STREET, J., dissenting:

I wish to record an earnest dissent from the doctrine stated in this case. In an
instrument intended to operate as mortgage of seven parcels of land executed by the
debtor, Ciriaco Villarin, in favor of his creditor, Eugenio Gomez, a stipulation was
inserted to the effect that in case the specified date should arrive and Villarin should be
unable to pay the amount due, it should be paid with the land given as a guaranty. By
virtue of this stipulation the debtor was bound, so the court in effect holds, to transfer
the property to the creditor in satisfaction of the mortgaged debt, the mortgagor being
unable at that time to pay the same. Said stipulation in the opinion of the undersigned
should be declared invalid, as being contrary to the spirit, if not the letter, of article 1859
of the Civil Code, as well as directly contrary to the general principles of jurisprudence
applicable to the relation of mortgagor and mortgagee. If a stipulation of this kind is
valid, every mortgage in which such stipulation is inserted will become self-executing,
and the debtor, upon making default in the payment of the debt, will be bound to
transfer the property in satisfaction of the mortgage, with the result that the right of
redemption is lost from the mere fact that the debtor is unable to pay at the date
stipulated.

There is a maxim long recognized by the equity courts of England an America to the
effect that "Once a mortgage, always a mortgage." This means that if an instrument is in
its origin a mortgage, it will be treated as such by the courts until it is satisfied or
foreclosed by some legal process; and the courts will not recognize a stipulation
inserted in the instrument creating the mortgage which is intended to vest the property
in the creditor upon failure of the debtor to pay the mortgage debt. Nor will they
recognize any waiver of the equity of redemption inserted in the contract. This doctrine
is based upon a recognition of the inequality of the position of the debtor and creditor
necessarily has a power over his debtor which may be exercise inequitably, and that the
debtor is liable to yield to the exertions of such power. The doctrine embodied in the
maxim referred to protects the debtor absolutely from the consequences of his inferiority
and of his own act done through infirmity of will.

In discussing this doctrine Mr. Pomeroy, author of the leading American treatise on the
subject of Equity Jurisprudence, says:

. . . The doctrine has been firmly established from an early day that when the character
of a mortgage has attached at the commencement of the transaction, so that the
instrument, whatever be its form, is regarded in equity as a mortgage, that character of
mortgage must and will always continue. If the instrument is in its essence a mortgage,
the parties cannot by any stipulations, however express and positive, render it anything
but a mortgage, or deprive it of the essential attributes belonging to a mortgage in
equity. The debtor or mortgagor cannot, in the inception of the instrument, as a part of

or collateral to its execution, in any manner deprive himself of his equitable right to
come in after a default in paying the money at the stipulated time, and to pay the debt
and interest, and thereby to redeem the land from the lien and encumbrance of the
mortgage; the equitable right of redemption, after a default is preserved, remains in full
force, and will be protected and enforced by a court of equity, no matter what
stipulations the parties may have made in the original transaction purporting to cut off
this right. (Pomeroy's Equity Jurisprudence, 4th ed., sec. 1193, vol. 3 p. 2825.)

Opposed as I am to the doctrine stated by the court with reference to the legality of the
stipulation above referred to, I also differ from the court with respect to the effect of
Exhibit B. In this connection it appears that about ten days after Gomez had transferred
the property to the plaintiff Dalay, Ciriaco Villarin, the debtor, made an affidavit in which
he recites the fact that he had failed to comply with his obligation to pay the debt which
he had been contracted by himself to Gomez and that he therefore recognized that the
ownership and possession of the property in question was to be considered as
transferred in absolute title to said Gomez, in accordance with the stipulation contained
in the original contract obligating him to transfer the property as already stated. This
admission on the part of Villarin was merely a recognition of the validity of the stipulation
in question and such an admission could not impress validity upon a stipulation of the
character referred to.

It is not to be denied that a mortgagor of property may transfer the mortgaged property
to the creditor in satisfaction of the mortgage debt after the mortgage has fallen due. But
such a transfer implies the independent exercise of the power vested in the mortgagor,
as owner, and the affidavit in question is nothing more than the recognition of a situation
which was supposed by the debtor to be an accomplished fact, namely, that the
property in question had passed to the creditor upon the debtor's failure to pay the debt
when due. No legal efficacy can be conceded to such an admission.

The judgment should in my opinion be affirmed.

Tambunting v. CA

Doctrine: The rule is that statutory provisions governing publication of notice of

mortgage foreclosure sales must be strictly complied with, and that even slight
deviations therefrom will invalidate the notice and render the sale at least voidable.

Interpreting Sec. 457 of the Code of Civil Procedure (reproduced in Sec. 18[c] of Rule
39, Rules of Court and in Sec. 3 of Act No. 3135) in Campomanes vs. Bartolome and
German & Co. (38 Phil. 8081), this Court held that if a sheriff sells without the notice
prescribed by the Code of Civil Procedure induced thereto by the judgment creditor, the
sale is absolutely void and no title passes.

PADILLA, J.:

On 16 December 1959, private respondents, spouses Damaso R. Cruz and Monica

Andres (hereafter, the Cruzes) obtained a loan from petitioners, spouses Antonio and
Aurora Tambunting (hereafter, the Tambuntings) in the amount of P3,600.00. The
Tambuntings are engaged in the lending-pawnshop business using the name and style
"Agencia de Tambunting", with co-petitioner Jose P. Tambunting as Manager. The loan
was evidenced by a promissory note executed by the Cruzes, payable within four (4)
months from 16 December 1959, with interest at 12% per annum. As security for
payment of the loan, a Deed of Real Estate Mortgage was executed by the Cruzes in
favor of the Tambuntings over a parcel of land belonging to the Cruzes, covered by
Transfer Certificate of Title No. 59433, Register of Deeds of Rizal.

Due to debtors' failure to pay the loan obligation at maturity, a petition for extrajudicial
foreclosure of mortgage was filed by the creditors on 17 March 1967. On 4 July 1967, a
notice of sheriff's sale was posted announcing an auction sale on 2 August 1967 at
10:00 o'clock in the morning. As shown by the affidavit of publication, the notice of sale
was published in the Rizal Chronicle, a newspaper of general circulation in Rizal
province, on 12, 19, and 26 July 1967.

On 2 August 1967, the Cruzes instituted an action against the Tambuntings for
annulment of mortgage and damages with prayer for a writ of preliminary injunction
before the Court of First Instance of Rizal, Branch 6-Pasig (docketed as Civil Case No.
10180). On the same day, a temporary restraining order was issued by the court
enjoining herein petitioners from proceeding with the scheduled sale and to suspend the
same until further orders from the court.

When the temporary restraining order was dissolved on 1 September 1967, the
proposed sale was moved to 20 October 1967. Postings of sheriff's notice of sale were
made on 15 September 1967 with a re-publication of said notice in the Rizal Chronicle
on 27 September, 4 & 11 October, 1967. However, on 19 October 1967, petitioners
were again directed by the court to hold the scheduled sale in abeyance due to a motion

for reconsideration filed by the Cruzes in regard to the lifting of the temporary restraining
order.

Upon denial of the Cruzes 1 motion for reconsideration, petitioners published in the
Rizal Chronicle on 20 December 1967, the sheriff's notice of scheduled sale on 26
January 1968.

On 26 January 1968, the Cruzes thru counsel wrote the Provincial Sheriff of Rizal
asking that the auction sale set for that day (26 January 1968) be postponed to some
other date considering that there was no compliance with the notices required by law.
On the same date, the Cruzes again thru counsel sent the sheriff a notice of lis pendens
informing the latter that Civil Case No. 10180 had been filed by them for the annulment
of the mortgage, upon the foreclosure of which the sale was to be conducted, and that
such action affects title to the property.

The mortgage property was nonetheless sold at public auction on 26 January 1968 to
Aurora Tambunting and Antonio Tambunting for P9,400.05. Thereafter, mortgageevendee Antonio Tambunting sold and transferred his share in the property to his wife
Aurora Tambunting.

On 31 January 1969, Aurora Tambunting executed an Affidavit of Consolidation of Title,

for the issuance of a new title in her name. On 31 January 1969, Transfer Certificate of
Title No. 239717-Rizal was issued in the name of Aurora Tambunting, married to
Antonio Tambunting. Aurora Tambunting then transferred the property to Tambunting
Realty Corporation which obtained Transfer Certificate of Title No. 270972-Rizal in its
name.

On or about 24 August 1970, the private respondents filed a supplemental complaint in

Civil Case No. 10180 impleading Tambunting Realty Corporation, the Provincial Sheriff
and the Register of Deeds of Rizal, the first, as the subsequent vendee of the property,
the second, as the officer responsible for holding the extrajudicial foreclosure sale of 26
January 1968, and the third, for the subsequent transfers of the mortgaged property
despite alleged non-compliance with the requirements of Act 3135, Sec. 3 (as amended
by Act 4118) on posting and publication of the notice of foreclosure sale.

On 2 September 1974, the Court of First Instance of Rizal rendered judgment, the
dispositive part of which reads:

IN VIEW OF ALL THE FOREGOING, judgment is hereby rendered::

(a)
Declaring the Real Estate Mortgage (Exhibit "A"and "3") as well as the
Promissory Note for P4,600.00 [sic] Exhibit "1") valid until fully paid as hereunder
provided;

(b)
Declaring without force and effect the Certificate dated April 25, 1963 (Exhibit
"B"), insofar as it states that the capital was increased from P3,000.00 [sic] to
P5,000.00;

(c)
Ordering the plaintiffs to pay the defendants Aurora Tambunting and Antonio
Tambunting the sum of P3,600.00 plus 12% per annum from April 25, 1963 until the
obligation shall have been duly paid; (as amended);

(d)
Ordering plaintiffs to pay defendants Aurora Tambunting and Antonio
Tambunting the sum equivalent to 10% (Exhibit "1" also Exhibit "3-A") of the amount of
P3,600.00 by way of mitigated liquidated damages, plus attorney's fees in the amount of
Pl,000.00; and finally,

(e)
Declaring as null and void the Deed of Sale (Exhibit "L-2"), Affidavit of
Consolidation (Exhibit "L-3"), Transfer Certificate of Title No. 239713 (Exhibit
"L-4"), Absolute Deed of Sale (Exhibit ("L-5"), Transfer Certificate of Title No. 270972
(Exhibit "L-6"), and ordering the Register of Deeds to reinstate the Transfer Certificate
Title No. 59433 in the name of the plaintiffs giving it therefore all force and effect as
though it had not been cancelled. ...

SO ORDERED. 1

The Tambuntings filed a motion for reconsideration, while the Cruzes filed an opposition
and moved for partial reconsideration, insisting on automatic nullity of the Real Estate
Mortgage due to alleged full payment of the obligation as of 25 April 1963 and claiming
reimbursement of all proceeds by way of rentals received by the Tambuntings during
the pendency of the case.

The trial court modified par. (c) of the dispositive part of its judgment and ordered the
Cruzes to pay the Tambuntings P3,600.00 plus 12% interest per annum from 25 April
1963 until the obligation is fully paid. The rest of the dispositive part of the judgment
remained.

Before the Court of Appeals in CA-G.R. No. 57714-R, the Tambuntings questioned the
trial court's ruling voiding the foreclosure sale. Affirming the judgment of the Court of
First Instance, the Court of Appeals in a decision * promulgated on 13 December 1977,
reasoned that the petitioners deviated from the posting and publication requirements of
law, which rendered the notice of sale ineffective and voided the auction sale of 26
January 1968.

On 23 January 1978, the Cruzes filed in the same CA-G.R. No. 57714-R a "petition for
accounting of fruits and application of the same against amount of judgment with
restraining order" to restrain the Tambuntings from continuing to collect rentals from
tenants of the property in question, to render an accounting of rentals received, and to
apply collected rentals to satisfy the judgment rendered against them, and to turn over
to them the excess rentals. They also sought to suspend the running of interest on the
P3,600.00 principal of the loan until the final accounting is submitted by the
Tambuntings and necessary application (offset of accounts) has been made. 2

Finding the Cruzes' petition meritorious, the same was granted by the Court of Appeals
in a resolution ** promulgated 2 May 1978, except for the suspension of interest on the
P3,600.00 loan, which was denied. The Tambuntings also filed a Motion for
Reconsideration of the 13 December 1977 decision but it was denied for lack of merit in
the same resolution of 2 May 1978. 3

Hence, this recourse by way of review on certiorari filed by the Tambuntings.

Petitioners assign two (2) errors allegedly committed by the Court of Appeals: First, the
Court of First Instance and the Court of Appeals erroneously nullified and set aside the
auction sale for lack of compliance with the formalities of law, when the sale on 26
January 1968 was purely a postponement of previously scheduled sales, notices of
which had been posted and published as required by law. Consequently, the
nullification of the various deeds of transfer and transfer certificates of title resulting from
said sale is unwarranted, contend the petitioners. Second, the Court of Appeals erred in

granting the Cruzes' petition for accounting of fruits, etc. after judgment had been
rendered, because this was tantamount to a modification of the trial court's judgment,
and an appellee, who is not an appellant, cannot seek affirmative relief from the
appellate court.

We uphold the questioned decision and resolution of the Court of Appeals.

Act. No. 3135 (governing extrajudicial foreclosure of real estate mortgage), as amended
by Act No. 4118, reads:

SEC. 3.
Notice shall be given by posting notices of the sale for not less than twenty
(20) days in at least three public places of the municipality or city where the property is
situated, and if such property is worth more than four hundred pesos, such notice shall
also be published once a week for at least three consecutive weeks in a newspaper of
general circulation in the municipality or city.

The rule is that statutory provisions governing publication of notice of mortgage

foreclosure sales must be strictly complied with, and that even slight deviations
therefrom will invalidate the notice and render the sale at least voidable. 4 Interpreting
Sec. 457 of the Code of Civil Procedure (reproduced in Sec. 18 (c) of Rule 39, Rules of
Court and in Sec. 3 of Act No. 3135) in Campomanes v. Bartolome and German & Co.,
5 this Court held that if a sheriff sells without the notice prescribed by the Code of Civil
Procedure induced thereto by the judgment creditor, and the purchaser at the sale is the
judgment creditor, the sale is absolutely void and no title passes. This is regarded as
the settled doctrine in this jurisdiction whatever the rule may be elsewhere. 6

Where required by the statute or by the terms of the foreclosure decree, public notice of
the place and time of the mortgage foreclosure sale must be given, a statute requiring it
being held applicable to subsequent sales as well as to the first advertised sale of the
property. It has been held that failure to advertise a mortgage foreclosure sale in
compliance with statutory requirements constitutes a jurisdictional defect invalidating the
sale and that a substantial error or omission in a notice of sale will render the notice
insufficient and vitiate the sale. 7

One issue of a newspaper of general circulation is not substantial compliance with the
required publication of once (1) a week for at least three (3) consecutive weeks. 8
Petitioners claim the publisher's affidavit of publication is merely a customary proof,

hence, it should not be considered as the sole evidence of publication. This may be so
in the presence of equally convincing evidence. In the case at bar, however, there is no
such other proof of publication. To show compliance, the published notices and
certificate of posting by the sheriff of the notice of sale of 26 January 1968 should have
been presented. They do not appear in the record. Neither can the sale be considered
as an adjournment of an earlier sale under Sec. 24 of Rule 39 of the Rules of Court. 9
As correctly posed by the Court of Appeals, why was there one (1) publication of the
notice of sale scheduled on 26 January 1968? 10 The presumption of compliance with
official duty 11 has been rebutted by the failure to present proof of posting and
publication of the notice of sale of 26 January 1968.

There being no reversible error in the Court of Appeals ruling on this issue, we have no
choice but to affirm the declared nullity of the mortgage foreclosure sale in question, for
lack of compliance with the mandatory requirements of law in the matter of posting and
publication of notice of sale.

At this juncture, it should be carefully stressed that, while the foreclosure or auction sale
of 26 January 1968 is null and void, the real estate mortgage as well as the Cruzes' loan
obligation to the Tambuntings remain valid and effective as ruled in the decisions of the
trial court and the Court of Appeals.

As to the second issue, the Court notes that private respondents, the Cruzes, have
repeatedly sought the refund and reimbursement of money collected and received as
rentals by the Tambuntings from the property in question from January return to them
(private respondents). 12 1969 until its actual Was the appellate court, however, the
proper forum for respondents' aforesaid petition for accounting of fruits, etc.?

We hold that it was and the Court of Appeals resolution of 2 May 1978 is in accordance
with law.

Private respondents' petition for accounting, etc. 13 did not really seek a modification of
the judgments of the trial court and the Court of Appeals. The remedy sought
(accounting and offsetting of accounts) was a direct clear-cut consequence of an
equally clear-cut decision which, in effect, held that the Cruzes were never divested of
their ownership over the property in question. In other words, the accounting sought and
granted is merely an incident of the declared respondents' right of ownership under the
Civil Code. 14

As to petitioners' claim that it was erroneous for the appellate court to grant said petition
for accounting, etc. because an appellee (like the private respondents) who is not at the
same time an appellant cannot seek a modification of the trial court's judgment, 15 the
rule indeed is found in Section 7, Rule 51 of the Rules of Court stating that

SEC. 7.
Questions that may be decided.No error which does not affect the
jurisdiction over the subject matter will be considered unless stated in the assignment of
errors and properly argued in the brief, save as the court, at its option, may notice plain
errors not specified, and also clerical errors. 16

But, as already stated, the private respondents' petition for accounting, etc. was merely
a direct consequence of the Court of Appeals decision which affirmed the trial court's
judgment declaring them as not having lost their ownership over the disputed property.
If the respondents had been precluded from filing said petition for accounting, etc. in the
Court of Appeals, they would have had to file a separate action which could only result
in a multiplicity of suits.

Moreover, said petition for accounting, etc. is based on the rationale underlying a
related rule in the Rules of Court. Sec. 34, Rule 39 of the Rules of Court provides:

SEC. 34.
Rents and profits pending redemption. Statement thereof and credit
thereof on redemption.The purchaser, from the time of the sale until a redemption,
and a redemptioner, from the time of his redemption until another redemption, is entitled
to receive the rents of the property sold or the value of the use and occupation thereof
when such property is in the possession of a tenant. But when any such rents and
profits have been received by the judgment creditor or purchaser, or by a redemptioner,
or by the assignee of either of them, from property thus sold preceding such
redemption, the amounts of such rents and profits shall be a credit upon the redemption
money to be paid; and, if a later redemptioner or the judgment debtor, before the
expiration of the time allowed for such redemption demands in writing of such creditor,
purchaser, or prior redemptioner, or his assigns, a written and verified statement of the
amounts of the rents and profits thus received, the period of redemption is extended five
(5) days after such demand is complied with and such sworn statement given to such
later redemptioner or debtor. If such statement is not so given within one (1) month from
and after such demand, such redemptioner or debtor may bring an action to compel an
accounting and disclosure of such rents and profits, and until fifteen (15) days from and

after the final determination of such action, the right of redemption is extended to such
redemptioner or debtor.

What clearly appears from this provision is the right of the debtor to demand for an
accounting of the rents and profits received by a creditor during the period of
redemption. Thus, while the Rules of Court allow the purchaser in an execution sale to
receive the rentals if the purchased property is occupied by tenants, he is, however,
accountable to the judgment debtor or mortgagor, as the case may be, for the amounts
so received and the same will be duly credited against the redemption price when said
debtor or mortgagor effects the redemption. 17

Consequently, the principle applies in the instant case that issues though not
specifically raised in the pleadings in the appellate court, may, in the interest of justice,
be properly considered by said court in deciding a case, if they are questions raised in
the trial court and are matters of record having some bearing on the issue submitted
which the parties failed to raise or the lower court ignored. 18

WHEREFORE, the petition is DENIED. The decision and resolution of the Court of
Appeals dated 13 December 1977 and 2 May 1978 in CA-G.R. No. 57714-R are hereby
AFFIRMED. With costs against petitioners.

SO ORDERED.

Melencio-Herrera (Chairperson), Paras, Sarmiento and Regalado, JJ., concur.

Doctrine: In the absence of qualifying or restrictive words, the stipulation should be

deemed as merely an agreement on an additional forum, not as limiting venue to the
specified place.

THIRD DIVISION
[G.R. No. 139437. December 8, 2000]

LANGKAAN REALTY DEVELOPMENT, INC., petitioner, vs. UNITED COCONUT

PLANTERS BANK, and HON. COURT OF APPEALS, respondents.
DECISION
GONZAGA-REYES, J.:

This is a Petition for Review on Certiorari under Rule 45 seeking to set aside the
decision of the Court of Appeals in CA-G.R. No. CV 53514 which affirmed the decision
of the Regional Trial Court of Imus, Cavite, Branch 20, in Civil Case No. 360-89, and the
Resolution of the Court of Appeals denying the petitioners Motion for Reconsideration.

The antecedent facts are as follows:

Petitioner Langkaan Realty Development Corporation (LANGKAAN, for brevity) was the
registered owner of a 631,693 square meter parcel of land covered by Transfer
Certificate of Title No. 111322, and located at Langkaan, Dasmarinas, Cavite.

On April 8, 1983, petitioner LANGKAAN executed a Real Estate Mortgage over the
above-mentioned property in favor of private respondent United Coconut Planters Bank
(UCPB) as a security for a loan obtained from the bank by Guimaras Agricultural
Development, Inc. (GUIMARAS) in the amount of P3,000,000.00.[1] LANGKAAN and
GUIMARAS agreed to share in the total loan proceeds that the latter may obtain from
UCPB.[2] Subsequently, another loan of P2,000,000.00 was obtained by GUIMARAS,
totaling its obligation to the bank to P5,000,000.00. The loan was fully secured by the
real estate mortgage which covered all obligations obtained from UCPB by either
GUIMARAS or LANGKAAN before, during or after the constitution of the mortgage.[3]
Also provided in the mortgage agreement is an acceleration clause stating that any
default in payment of the secured obligations will render all such obligations due and
payable, and that UCPB may immediately foreclose the mortgage.[4]

GUIMARAS defaulted in the payment of its loan obligation.[5] On July 28, 1986, private
respondent UCPB filed a Petition for Sale under Act No. 3135[6], as amended, with the
Office of the Clerk of Court and Ex-officio Sheriff of RTC of Imus, Cavite. The petition
was given due course, and a Notice of Extra-judicial Sale of LANGKAANs property was
issued by Acting Clerk of Court II and Ex-officio Sheriff Regalado Eusebio on August 4,
1986, setting the sale on August 29, 1986 at the main entrance of the Office of the Clerk
of Court of RTC of Imus.[7] The Notice of Extra-judicial Sale was published in the
Record Newsweekly,[8] and was certified by Court Deputy Sheriff Nonilon A. Caniya to
have been duly posted.[9]

On August 29, 1986, the mortgaged property was sold for P3,095,000.00 at public
auction to private respondent UCPB as the highest bidder, and a corresponding
Certificate of Sale was issued in favor of the bank.

As petitioner LANGKAAN failed to redeem the foreclosed property within the

redemption period, the title of the property was consolidated in the name of UCPB on
December 21, 1987, and a new Transfer Certificate of Title with no. T-232040 was
issued in the latters favor.

On March 31, 1989, LANGKAAN, through counsel, Atty. Franco L. Loyola wrote UCPB
a letter offering to buy back the foreclosed property for P4,000,000.00.[10] This offer
was rejected by the bank in a letter dated May 22, 1989, stating that the current selling
price for the property was already P6,500,000.00.[11]

On May 30, 1989, petitioner LANGKAAN filed a Complaint for Annulment of Extrajudicial Foreclosure and Sale, and of TCT No. 232040 with Damages, with the RTC of
Imus, Cavite, docketed as Civil Case No. 360-89.

After trial, the RTC of Imus ruled in favor of private respondent UCPB, and dismissed
the petition of LANGKAAN for lack of merit. On appeal, the Court of Appeals affirmed en
toto the decision of the RTC of Imus. The petitioner filed a Motion for Reconsideration
which was denied by the Court of Appeals in a Resolution dated July 28, 1999. Hence
this petition.

The sole issue in this case, as stated by the petitioner in its Memorandum, is whether or
not the extra-judicial foreclosure sale is valid and legal on account of the alleged noncompliance with the provisions of Act No. 3135 on venue, posting and publication of the
Notice of Sale, and of the alleged defects in such Notice.[12]

At the outset, it must be stated that only questions of law may be raised before this
Court in a Petition for Review under Rule 45 of the Revised Rules of Civil
Procedure.[13] This Court is not a trier of facts, and it is not the function of this Court to
re-examine the evidences submitted by the parties.[14]

After a careful analysis of the issue set forth by the petitioner, we find the same not to
involve a pure question of law[15] It has been our consistent ruling that the question of
compliance or non-compliance with notice and publication requirements of an extrajudicial foreclosure sale is a factual issue binding on this Court.[16] In the case of Reyes
vs. Court of Appeals, we declined to entertain the petitioners argument as to lack of
compliance with the requirements of notice and publication prescribed in Act No. 3135,
for being factual.[17] Hence, the matter of sufficiency of posting and publication of a
notice of foreclosure sale need not be resolved by this Court, especially since the
findings of the Regional Trial Court thereon were sustained by the Court of Appeals.
Well-established is the rule that factual findings of the Court of Appeals are conclusive
on the parties and carry even more weight when the said court affirms the factual
findings of the trial court.[18]

The RTC found the posting of the Notice of Sale to have been duly complied with, thus:

As regards the posting of the notices of sale, Deputy Sheriff Nonilon Caniya has
categorically declared that he posted the same in three conspicuous places, to wit: (1)
Municipal Hall of Dasmarinas, Cavite, (2) Barangay Hall of Langkaan, and (3) in the
place where the property is located (Exh. 6). He added gratuitously that he even posted
it at the Dasmarinas Public Market. Such being the case, the negative testimony of
Virgilio Mangubat, a retired sheriff of Trece Martires City, to the effect that he did not
see any notice posted in the Bulletin Board of Dasmarinas, Cavite cannot prevail over
the positive testimony of Deputy Sheriff Caniya. In like manner, the general denial
advanced by Barangay Captain Benjamin Sangco of Langkaan that no notice was
posted at the bulletin board of said barangay in August, 1986 cannot take precedence
over the positive declaration of Deputy Sheriff Caniya who is presumed to have
performed his duties as such. Credence is generally accorded the testimonies of (sic)
sheriff who is presumed to have performed their (sic) duties in regular manner. xxx

xxx xxx xxx

xxx In another case, Bonnevie vs. Court of Appeals, 125 SCRA 122, it was even ruled
that a single act of posting satisfies the requirement of law.[19]

Due publication was likewise found by the RTC to have been effected.

It is beyond dispute that notice of Sheriffs Sale was published in Record Newsweekly, a
newspaper of general circulation in the Province of Cavite after a raffle among the
accredited newspaper thereat. No evidence was adduced by plaintiff to disprove this
fact. Its claim that said newspaper has no subscribers in Cavite is without merit and
belied by the Affidavit of Publication executed by the Publisher of Records Newsweekly
(Exh. 5) and by the Clerk of Court and Ex-Oficio Sheriff of the Multiple Sala of Imus,
Cavite. As held in the case of Olizon vs. Court of Appeals, 236 SCRA 148, personal
notice to the mortgagor in extrajudicial foreclosure proceedings is not necessary. Sec. 3
of Act No. 3135 governing extra-judicial foreclosure of real estate mortgages, as
amended by Act No. 4118, requires only posting of the notice of sale in three public
places and the publication of that notice in a newspaper of general circulation. Hence,
the lack of personal notice to the mortgagors is not a ground to set aside the foreclosure
sale. It was further held thereat (ibid) that publication of the notice alone in the
newspaper of general circulation is more than sufficient compliance with the noticeposting requirement of the law.[20]

On appeal, the findings of the RTC were sustained by the Court of Appeals, to wit:

Next, appellant contends that the notice of sale was posted, at the very least, at only
one [1] public place the Municipal Building of Dasmarinas, Cavite contrary to and in
violation of the requirement in Act No. 3135, as amended, that said notice shall be
posted in at least three [3] public places. Deputy Sheriff Nonilon Caniya, however, has
categorically declared that he had posted Notices of Sale in four public places; namely:
(1) Municipal Hall of Dasmarinas, Cavite, (2) Barangay Hall of Langkaan, (3) in the
place where the property is located and (4) at the Dasmarinas Public Market (t.s.n.,
January 12, 1994, pp. 6-11). We give credence to said Sheriffs testimony and accord
his actions with the presumption of regularity of performance, having come from a public
officer to whom no improper motive to testify has been attributed.

At any rate, even if it were true that the Notice of Sale was not posted in three public
places as required, this would not invalidate the foreclosure conducted. As explained in
Olizon vs. Court of Appeals, 238 SCRA 148, 155-156

Furthermore, unlike the situation in previous cases where the foreclosure sales were
annulled by reason of failure to comply with the notice requirement under Section 3 of
Act 3135, as amended, what is allegedly lacking here is the posting of the notice in
three public places, and not the publication thereof in a newspaper of general
circulation.

We take judicial notice of the fact that newspaper publications have more far-reaching
effects than posting on bulletin boards in public places. There is a greater probability
that an announcement or notice published in a newspaper of general circulation which
is distributed nationwide, shall have a readership of more people than that posted in a
public bulletin board, no matter how strategic its location may be, which caters only to a
limited few. Hence the publication of the notice of sale in the newspaper of general
circulation alone is more than sufficient compliance with the notice-posting requirement
of the law. By such publication, a reasonably wide publicity had been effected such that
those interested might attend the public sale, and the purpose of the law had been
thereby subserved.

The object of a notice of sale is to inform the public of the nature and condition of the
property to be sold, and of the time, place and terms of the sale. Notices are given for
the purpose of securing bidders and to prevent a sacrifice of the property. If these
objects are attained, immaterial errors and mistakes will not affect the sufficiency of the
notice; but if mistakes or omissions occur in the notices of sale which are calculated to
deter or mislead bidders, to depreciate the value of the property, or to prevent it from
bringing a fair price, such mistakes or omissions will be fatal to the validity of the notice,
and also to the sale made pursuant thereto.

In the case at bench, this objective was attained considering that there was sufficient
publicity of the sale through the Record Newsweekly.

Appellant next charges that the certificate of posting executed by Deputy Sheriff Caniya
is a falsified document resulting from the unlawful intercalations made thereon,
calculated to change the import and meaning of said certificate; and contains untruthful
statements of facts. A certificate of posting is however not a statutory requirement and

as such, is not considered indispensable for the validity of a foreclosure sale under Act
3135 (see Bohanan vs. Court of Appeals, 256 SCRA 355)

Again, We accord a presumption of regularity in the conduct of the raffle whereby

publication of the Notice of Sale was awarded to the Record Newsweekly.

As to the erroneous designation of Guimaras Agricultural Development, Inc. as a

mortgagor as well as the mistakes in the technical description of the subject property,
both appearing in the Notice of Sale, We find these immaterial errors and mistakes
which do not affect the sufficiency of the Notice (Olizon vs. Court of Appeals, supra.)
xxx [21]

We refuse to disturb the factual findings of the lower courts. The notice of the extrajudicial foreclosure sale was duly published and posted, and clerical errors therein are
not sufficient to invalidate the notice and nullify the sale.

We are left with the issue on the legal propriety of the venue of the extra-judicial
foreclosure sale which we deem proper for determination.

In ascertaining whether or not the venue of the extra-judicial foreclosure sale was
improperly laid, it is imperative to consult Act No. 3135, as amended, the law applicable
to such a sale.[22] Act 3135 provides, insofar as pertinent, as follows:

SECTION 1. When a sale is made under a special power inserted in or attached to any
real estate mortgage hereafter made as security for the payment of money or the
fulfillment of any other obligation, the provisions of the following sections shall govern as
to the manner in which the sale and redemption shall be effected, whether or not
provision for the same is made in the power.

SEC. 2. Said sale cannot be made legally outside of the province which the property
sold is situated; and in case the place within said province in which the sale is to be
made is the subject of stipulation, such sale shall be made in said place or in the
municipal building of the municipality in which the property or part thereof is situated.

Thus, the extra-judicial foreclosure sale cannot be held outside the province where the
property is situated. Should a place within the province be a subject of stipulation, the
sale shall be held at the stipulated place or in the municipal building of the municipality
where the property or part thereof is situated.

In the case at bar, the Real Estate Mortgage contract contains the following stipulation
on the venue of the auction sale, viz:

ARTICLE XX

VENUE OF AUCTION SALE

It is hereby agreed that in case of foreclosure of this mortgage under Act 3135, as
amended, and Presidential Decree No. 385, the auction sale shall be held at the capital
of the province, if the property is within the territorial jurisdiction of the province
concerned, or shall be held in the city, if the property is within the territorial jurisdiction of
the city concerned.[23]

The foreclosed property is located in Dasmarinas, a municipality in Cavite. Dasmarinas

is within the territorial jurisdiction of the province of Cavite, but not within that of the
provincial capital, Trece Martires City, nor of any other city in Cavite. The territorial
jurisdiction of Dasmarinas is covered by the RTC of Imus,[24] another municipality in
Cavite.

The petitioner contends that the extra-judicial foreclosure sale should have been held in
Trece Martires City, the capital of Cavite, following the above-quoted stipulation in the
real estate mortgage contract; or, in the alternative, Section 2 of Act 3135 should have
been applied, and the sale conducted at the municipal building of Dasmarinas where
the property is situated.[25] On the other hand, the private respondent argues that the
extra-judicial foreclosure sale was properly held at the main entrance of the Office of the
Clerk of Court and Ex-officio Sheriff of the RTC of Imus which has territorial jurisdiction
over Dasmarinas, as provided in the Supreme Court Administrative Order No. 7 (1983)
issued pursuant to Section 18 of B.P. Blg. 129.[26] The private respondent further
contends that Section 18 of B.P. Blg. 129 repealed the provision on venue under
Section 2 of Act 3135.

We agree with the petitioner that under the terms of the contract, the extra-judicial
foreclosure sale could be held at Trece Martires, the capital of the province which has
territorial jurisdiction over the foreclosed property. The stipulation of the parties in the
real estate mortgage contract is clear, and therefore, should be respected absent any
showing that such stipulation is contrary to law, morals, good customs, public policy or
public order. A contract is the law between the parties.[27] However, since the
stipulation of the parties lack qualifying or restrictive words to indicate the exclusivity of
the agreed forum, the stipulated place is considered only as an additional, not a limiting
venue.[28] Therefore, the stipulated venue and that provided under Act 3135 can be
applied alternatively. Now, applying Act 3135, the venue of the sale should be at the
municipal building of Dasmarinas since the foreclosed property is located in the
municipality of Dasmarinas.

We cannot sustain the contention of the private respondent that the proper venue for
the sale of the Dasmarinas property is the RTC of Imus which has territorial jurisdiction
thereon as provided under SC Administrative Order No. 7 issued pursuant to Section 18
of B.P. Blg. 129, which allegedly repealed the venue provision under Section 2 of Act
3135.

Section 18 of B.P. Blg. 129[29] provides for the power of the Supreme Court to define
the territorial jurisdiction of the Regional Trial Courts. Pursuant thereto, the Supreme
Court issued Administrative Order No. 7[30], placing the municipalities of Imus,
Dasmarinas and Kawit within the territorial jurisdiction of the RTC of Imus.[31] On the
other hand, Section 2 of Act 3135 refers to the venue of an extra-judicial foreclosure
sale.[32]

It is difficult to fathom how a general law such as B.P. Blg. 129 can repeal a special law
like Act 3135. Aside from involving two entirely different legal concepts such as
jurisdiction (B.P. Blg. 129) and venue (Section 2 of Act 3135),[33] this proposition goes
against a basic rule in statutory construction that the enactment of a later legislation
which is a general law cannot be construed to have repealed a special law.[34] Much
less can the private respondent invoke Supreme Court administrative issuances[35] as
having amended or repealed Section 2 of Act 3135. A statute is superior to an
administrative issuance, and the former cannot be repealed or amended by the
latter.[36]

Notwithstanding the foregoing, however, this Court finds the extra-judicial foreclosure
sale held at the RTC of Imus to be valid and legal.

Well-known is the basic legal principle that venue is waivable. Failure of any party to
object to the impropriety of venue is deemed a waiver of his right to do so. In the case at
bar, we find that such waiver was exercised by the petitioner.

An extra-judicial foreclosure sale is an action in rem, and thus requires only notice by
publication and posting to bind the parties interested in the foreclosed property. No
personal notice is necessary. As such, the due publication and posting of the extrajudicial foreclosure sale of the Dasmarinas property binds the petitioner, and failure of
the latter to object to the venue of the sale constitutes waiver.

In the testimony of the President of LANGKAAN, Alfredo Concepcion, the latter

admitted that he was informed sometime in 1986 by GUIMARAS President Antonio
Barredo about the foreclosure sale of the Dasmarinas property held on August 6, 1986,
viz:

COURT:

Q: ATTORNEY CONCEPCION, YOU SAID THAT YOU CAME TO KNOW THAT THE
PROPERTY OF YOUR CORPORATION WAS SOLD BY COCONUT PLANTERS
BANK ONLY IN 1989?

A: At or about the date when Atty. Loyola made that written offer to the bank.

Q: IN THE YEAR 1989 OR PRIOR TO THAT DATE

ATTY. LOYOLA:

I think 1986, Your Honor.

COURT:

1986 WHEN HE LEARNED ABOUT THE SALE?

ATTY. LOYOLA:

Yes, Your Honor.

xxx xxx xxx

ATTY CATUBAY:

xxx xxx xxx

Q: So you talked to Ex-Justice Barredo?

A: I did.

Q: And of course he informed you about the proposal that took place on August 6,
1986?

A: He told me that he is aware.

Q: And you were also aware of the Certificate of Sale executed by the Sheriff, isnt it?
(sic)

A: At that point there was a foreclosure sale and that it was the mortgagee bank that
was the highest bidder.

Q: After you were informed there was a foreclosure sale, you did not do anything about
it, isnt it? (sic)

A: Well, at that point when I was so informed, I did not take any step yet but on the first
opportunity, I consulted Atty. Loyola.

Q: And that was in 1986 also?

A: 1986, correct.[37]

From 1986 to April 1989, despite knowledge of the foreclosure sale of their property, the
President of petitioner LANGKAAN did not take any step to question the propriety of the
venue of the sale. It was only on May 30, 1989 that the petitioner filed a Complaint for
Annulment of the foreclosure sale, and only after its offer to repurchase the foreclosed
property, the title to which had been consolidated in the name of private respondent
UCPB, had been rejected by the bank.

In the letter denominated as Offer to Reacquire by Langkaan Realty Development, Inc.

Without Prejudice, petitioner LANGKAAN, through its counsel Atty. Franco L. Loyola,
who is likewise the petitioners counsel in this case, acknowledged that the title to the
property then registered under the name of LANGKAAN has been consolidated under
the name of UCPB, which was the highest bidder in the extra-judicial foreclosure sale
conducted by the sheriff.[38] Nowhere can it be found that the petitioner objected to or
opposed the holding of the sale at the RTC of Imus. By neglecting to do so, petitioner
LANGKAAN is deemed to have waived its right to object to the venue of the sale, and
cannot belatedly raise its objection in this petition filed before us.

WHEREFORE, premises considered, the petition is hereby DENIED.

SO ORDERED.

Melo, (Chairman), Vitug, and Panganiban, JJ., concur.

SECOND DIVISION
[G.R. No. 144029. September 19, 2002]

SPOUSES GUILLERMO AGBADA and MAXIMA AGBADA, petitioners, vs. INTERURBAN DEVELOPERS, INC., and REGIONAL TRIAL COURT-BR. 105, QUEZON
CITY, respondents.
DECISION
BELLOSILLO, J.:

This is a Petition for Review on Certiorari of the Decision of the Court of Appeals in CAG.R. SP No. 54273, "Spouses Guillermo and Maxima Agbada v. Regional Trial Court,
Quezon City, Branch 105, and Inter-Urban Developers, Inc.," which dismissed the
Petition for Annulment of Judgment with Preliminary Injunction filed by petitionerspouses, specifically to nullify and to set aside the Summary Judgment rendered by
respondent Regional Trial Court in its Civil Case No. Q-93-18592, "Inter-Urban
Developers, Inc. (represented by Philip Tiam Lee) v. Spouses Guillermo and Maxima
Agbada," for Foreclosure of Real Estate Mortgage, as well as the Resolution of the
appellate court denying reconsideration of the assailed CA Decision.

On 21 February 1991 petitioner-spouses Guillermo Agbada and Maxima Agbada

borrowed P1,500,000.00 from respondent Inter-Urban Developers, Inc. through its
president, Simeon L. Ong Tiam.[1] To secure the loan, the parties concurrently
executed a Deed of Real Estate Mortgage over a parcel of land and the improvements
thereon situated in Tandang Sora, Quezon City owned by the spouses.[2] The loan was
payable within six (6) months from 21 February 1991 at three percent (3%) interest per
month, otherwise, failure to discharge the loan within the stipulated period would entitle
Inter-Urban Developers, Inc. to foreclose the mortgage judicially or extra-judicially.[3]
The spouses failed to pay the loan within the six-month period despite several out-ofcourt demands made by respondent Inter-Urban Developers, Inc.[4]

On 10 December 1993 Inter-Urban Developers, Inc. filed with the Regional Trial Court
of Quezon City, Branch 105, a complaint for foreclosure of real estate mortgage.[5] On
2 March 1994, without assistance of counsel, the spouses filed their unverified answer
admitting that they had borrowed the amount of P1,500,000.00 from respondent and

had executed the real estate mortgage to secure the loan but denying that it was
payable within six (6) months and at three percent (3%) interest per month.[6] As
affirmative defense they alleged in their answer that -

[petitioner-spouses] and Simeon L. Ong Tiam, then acting for and in behalf of [InterUrban Developers], were compadre and comadre, for this reason, after the execution of
the Real Estate Mortgage Contract x x x [Spouses Guillermo and Maxima Agbada] were
only charged with interest at legal rate and the period for the said contract is five (5)
years from execution thereof x x x x That the said contract is merely simulated and for
formality sake only x x x x That the claim or demand set forth in the plaintiffs complaint
is not yet due and demandable, thus, the complaint states no cause of action against
the defendants x x x x[7]

The parties filed their respective pre-trial briefs with petitioner-spouses again filing their
own and without the assistance of counsel. When the pre-trial was set on 21 April 1994
it had to be postponed on account of petitioner-spouses' absence. It was reset to 13
May 1994 but it was again postponed upon request of petitioner Guillermo Agbada who
had no lawyer yet to assist him. But he submitted a one-page hand written letter
addressed to the trial judge asking for continuance of the pre-trial and further admitting
liability for the due and demandable loan: "hindi ko po nais makipaglaban dito sa
kasong ito dahilan po itong perang ito dapat ko pong bayaran."[8] On 8 June 1994, preempting the pre-trial conference, Inter-Urban Developers, Inc. moved for summary
judgment alleging that -

1. In [the spouses] answer which is dated 1 March 1994, they admit the amount of
indebtedness as alleged in the Complaint; 2. They likewise admit in their Special and
Affirmative Defenses that they have executed the Real Estate Mortgage Contract
subject of this Complaint; 3. What [the spouses] are questioning in this Complaint is
only the period and their compadre, Simeon Ong Tiam, then President of [Inter-Urban
Developers], to be payable after five years and at the legal rate of interest; 4. Their
Compadre, Simeon Ong Tiam, and the [Inter-Urban Developers] are not one and the
same entity so that their alleged arrangement with their compadre does not in anyway
bind [Inter-Urban Developers] who has relied on the subject Deed of Real Estate
Mortgage; the said mortgage contract which execution, [the spouses] admit, clearly
shows that they contracted with the [Inter-Urban Developers], the amount of
P1,500,000.00 payable within six months from execution at the interest rate of three
percent per month x x x x 5. The [petitioner] Mr. Guillermo Agbada, in one scheduled
setting, has written this Honorable Court, as borne by the records of this case, that he is
admitting the total amount of indebtedness and is only bidding for time because he has

already arranged with a bank to pay the total amount of indebtedness so as to terminate
the case once and for all x x x x [9]

The motion for summary judgment was supported by an affidavit of the treasurercashier of Inter-Urban Developers, Inc. to the effect that she witnessed the execution of
the mortgage contract and that she personally gave the check of P1,500,000.00 for the
loan.[10] The spouses opposed the motion although they failed to submit supporting
counter- affidavits.[11]

On 7 July 1994, this time with the assitance of counsel, petitioner-spouses Agbada
moved to amend their answer to allege that the mortgage contract was not reflective of
the true intention of the parties since in reality the loan was interest-free and would
mature only after five (5) years from execution thereof and that consequently they were
denying under oath the due execution and authenticity of the mortgage document,
although the proposed answer was still not verified by them.[12] Interestingly, the
amended answer departed from the allegation in the original answer that the loan would
earn interest at the legal rate. The trial court denied the amendment of the answer
holding that the change would substantially alter the gist of the defense.[13]

On 13 January 1995 the trial court promulgated its Summary Judgment in favor of
respondent Inter-Urban Developers, Inc. It held that Simeon Ong Tiam, compadre of
petitioner-spouses and then president of Inter-Urban Developers, Inc. could not have
obligated his principal by contemporaneous agreement amending the maturity of the
loan from six (6) months to five (5) years and the interest rate from three percent (3%)
per month to the default or statutory rate, much less interest-free, since the undertaking
was contrary to the express provisions of the duly executed loan and mortgage
contract.[14] The trial court awarded Inter-Urban Developers, Inc. the amounts of "P1.5
million with monthly interest of 3% from February 21, 1991 until fully paid plus attorneys
fees of P10,000.00 including the real estate taxes and registration expenses. In case of
failure of defendants to do so within ninety (90) days from finality, the decree of
foreclosure shall issue."[15]

Petitioner-spouses did not appeal the Summary Judgment nor did they pay the
judgment debt. On 31 May 1995 Inter-Urban Developers, Inc. moved for a decree of
foreclosure which the spouses did not oppose nor did they attend the hearing on the
motion.[16] On 14 July 1995 the trial court granted the motion and issued a decree of
foreclosure.[17] On 19 August 1996 respondent moved for an order authorizing the sale
of the mortgaged real estate for failure of the spouses to pay the judgment debt.[18]
Once again the petitioner-spouses did not oppose the motion nor did they attend the

hearing thereon.[19] On 26 August 1996 the trial court ordered the foreclosure sale of
the mortgaged property.[20] On 10 September 1996 Inter-Urban Developers, Inc.
moved ex parte for the appointment of a special sheriff to attend to the foreclosure sale
since no sheriff was assigned in RTC-Br. 105.[21] On 11 September 1996, acting on the
ex parte motion, the trial court ordered the Ex-Oficio Sheriff to designate a special
sheriff to carry out the foreclosure sale.[22] On 6 November 1996 the mortgaged real
estate was sold at public auction to respondent Inter-Urban Developers, Inc. as highest
bidder for P4,637,092.74 which was supposed to be in full satisfaction of the judgment
debt.[23]

On 3 April 1997, upon motion of Inter-Urban Developers, Inc. and despite petitionerspouses' opposition thereto on the ground that the purchase price of the mortgaged
property was below its appraised value according to an appraisal report, the trial court
confirmed the sale in favor of Inter-Urban Developers, Inc.[24] The trial court ruled that it
could not have given weight to the appraisal report since this report was not
authenticated nor was the appraiser presented as witness during the hearing of the
motion to allow Inter-Urban Developers, Inc. an opportunity to cross-examine on the
appraised value of the property.[25]

The spouses moved for reconsideration of the confirmation order insisting on the
inadequacy of the purchase price but on 25 September 1997 the trial court denied the
motion. On 27 October 1997, for the second time, the spouses moved for
reconsideration of the order denying their first motion for reconsideration, calling the
attention of the court to their affidavit to the effect that the appraiser deliberately
absented himself from the hearing of the motion.[26] On 6 March 1998 the trial court
denied the motion.[27] Petitioner-spouses did not appeal the order of confirmation of the
sale nor any of the subsequent orders.

On 13 April 1998 petitioner-spouses filed with the Court of Appeals a motion for
extension of time to file a petition for review of a subject matter they did not identify.[28]
In a Resolution of 16 April 1998 the appellate court granted the motion and docketed
the purported petition as CA-G.R. SP No. 47325 under Rule 43 of the 1997 Rules of
Civil Procedure as amended.[29] On 24 April 1998 the spouses moved for a second
extension of the period to file their petition for review[30] which on 22 May 1998 the
Court of Appeals denied with finality and recorded entry of judgment of the denial.[31]
On 29 January 1998 Inter-Urban Developers, Inc. moved for the issuance of a writ of
possesion over the foreclosed real estate.

On 26 February 1999 the petitioner-spouses filed a Motion to Tender the Full Obligation
of the Defendant Spouses alleging that they had paid their obligation worth
P6,307,532.66[32] in the form of cashier's check which they left with the maid of the
counsel of record for Inter-Urban Developers, Inc.[33] On 21 July 1999 the trial court
denied the motion.[34] On 23 March 1999 for the first time since Summary Judgment
had been rendered against them, petitioner-spouses filed with the trial court a Motion to
Cancel Certificate of Sale for being Signed by an Unauthorized Officer/Person and to
Recall Summary Judgment for Lack of Jurisdiction[35] which was denied on 20 July
1999.[36] On 21 July 1999 the trial court issued a writ of possesion in favor of
respondent Inter-Urban Developers, Inc. over the subject real property.[37]

On 10 August 1999 petitioner-spouses Guillermo Agbada and Maxima Agbada filed with
the Court of Appeals a petition for annulment of judgment with prayer for preliminary
injunction. The petition sought the annulment of the Summary Judgment for alleged
violation of their right to due process arising from the absence of a full-blown trial on a
genuine issue of fact that the loan and mortgage would mature only on the fifth year
following its execution on 21 February 1991.[38] The petition did not question
compliance with legal requirements of the foreclosure proceedings or any part thereof.

On 21 January 2000 the Court of Appeals dismissed the petition and held that the
subject matter thereof was barred by res judicata, referring to CA G.R. SP No. 47325
wherein the appellate court denied with finality petitioner-spouses' second motion for
extension of time to file Petition for Review.[39] The Court of Appeals also ruled that
petitioner-spouses were in no position to ask for annulment of the Summary Judgment
since their negligence denied them the right to avail of other remedies otherwise open
to them, such as appeal, and that the spouses were estopped from assailing the
jurisdiction of the trial court after filing several motions to re-evaluate the assessed
value of the mortgaged property.[40] On 11 July 2000 the appellate court denied
reconsideration of its Decision,[41] hence, the instant petition for review on certiorari.

Petitioner-spouses argue that they were deprived of due process when their defense,
i.e., that the real estate mortgage carries a default interest rate and matures only on the
fifth year following its execution on 21 February 1991, was considered sham and
refused full blown trial, contrary to our ruling in Paz v. Court of Appeals.[42] They further
allege in their statement of facts that

On February 2, 1991, plaintiff Guillermo Agbada, being then an official of a security

agency which is a sister company of respondent Inter-Urban Developer and because of
financial problem faced by the couple, arranged with Simeon Lee Ong Tiam (his close

compadre, being the sponsor and god father in the wedding of his daughter and said
Ong Tiam being the President of Inter-Urban Development) obtained a loan from
respondent corporation under the agreement, in view of their relationship, that the loan
would only carry legal interest, and would be payable within a period of 5 years. It is to
be noted at this point that Inter-Urban Developers is not a money lending or financial
institution but is engaged in real estate development and the granting of loans was not
part of its principal business. It was clearly understood by petitioners as well as by the
responsible officers of Inter-Urban, particularly, Simeon Lee Ong and the other officers,
who, in fact, have close family ties and relationship with petitioners, that the loan was
only an accommodation, hence, the charging only of nominal interest and its repayment
within a period of 4 (sic) years. Petitioners were convinced to sign what they were then
informed was only a formality, a sham deed of mortgage which on its face purported to
show that a rate of interest different from that initially agreed upon appeared and the
period of maturity of the loan was changed from 5 years to 6 months.[43]

On the other hand, respondent Inter-Urban Developers, Inc. claims that petitionerspouses did not deny under oath the authenticity and due execution of the real estate
mortgage document, hence, were barred from setting up the defense that the interest
rate and maturity provisions of the loan and mortgage contract were different from those
stipulated in the written agreement.[44] Respondent further argues that the alleged
promise made by Simeon Ong Tiam even if true cannot be enforced against Inter-Urban
Developers, Inc. since there is nothing to show that he was authorized to enter into the
alleged contemporaneous agreement. Finally, respondent asserts that there were other
remedies available to petitioners which they failed to exhaust by their own negligence,
thus rendering the petition for annulment of judgment clearly unavailing and that they
voluntarily submitted to the jurisdiction of the trial court by seeking affirmative relief from
the effects of the assailed Summary Judgment.[45]

The petition has no merit. As explained quite frequently, a party may be barred from
raising questions of jurisdiction where estoppel by laches has set in.[46] In a general
sense, estoppel by laches is failure or neglect for an unreasonable and unexplained
length of time to do what, by exercising due diligence, ought to have been done earlier,
warranting a presumption that the party entitled to assert it has either abandoned to
defend it or has acquiesced to the correctness and fairness of its resolution. The
doctrine is based on grounds of public policy which for peace of society requires the
discouragement of stale claims and, unlike the statute of limitations, is not a mere
question of time but is principally an issue of inequity or unfairness of permitting a right
or claim to be enforced or espoused. Verily, after voluntarily submitting a cause, it is too
late for the loser to question the jurisdiction or power of the court just so he could
escape an adverse decision on the merits.

In the instant case, the allegation of deprivation of due process took more than four (4)
years of hibernation, so to speak, from 13 January 1995 when the trial court
promulgated its Summary Judgment only to resurrect after failed attempts to thwart the
transfer of title over the foreclosed real estate in favor of respondent Inter-Urban
Developers, Inc. Evidently, petitioner-spouses are barred by laches from assailing the
regularity of the Summary Judgment as shown not only by their silence when they
should have defended their alleged right to establish their understanding of the interest
rate and maturity of the loan and mortgage contract, but also by their full and knowing
participation in the proceedings, with the assistance of counsel, leading to the
confirmation of the foreclosure sale in favor of respondent Inter-Urban Developers, Inc.

During the period of their obtrusive reticence, instead of pushing for a full-blown trial
where they could have ventilated their affirmative defense, petitioner-spouses merely
disagreed with the finding of the trial court regarding the appraised value of the
foreclosed property, thus strongly implying their acquiescence to the due and
demandable loan, and in fact attempted to write off the loan completely and recover the
foreclosed lot and improvements thereon by filing a Motion to Tender the Full Obligation
of the Defendant Spouses in the form of a cashiers check worth P6,307,532.66 which
the trial court denied in due time for obvious lack of merit.

The foregoing circumstances also show that the due process routine vigorously pursued
only now by petitioner-spouses is a clear-cut afterthought meant to delay the settlement
of an otherwise uncomplicated property dispute. Aside from clogging court dockets, the
strategy is deplorably a common curse resorted to by losing litigants in the hope of
evading manifest obligations

A natural question is why anyone should want to plead groundlessly when he should
know that he will not be able to make his pleading good when proof is called for.
Unfortunately, there are reasons. A defendant from whom payment is sought x x x often
wants delay. Indeed, that may well be the very reason why suit had to be brought. And
defendant can have delay by the simple device of denying the debt, and perhaps gilding
the lily by adding pleas of payment and breach of warranty a trilogy known in the trade
as the last refuge of the deadbeat.[47]

It bears stressing that the proper remedy to seek reversal of judgment in an action for
foreclosure of real estate mortgage is not a petition for annulment of judgment but an
appeal from the judgment itself or from the order confirming the sale of the foreclosed

real estate. Since petitioner-spouses failed to avail of appeal without sufficient

justification, they cannot conveniently resort to the action for annulment for otherwise
they would benefit from their own inaction and negligence.[48]

Granting arguendo that the assailed Summary Judgment is properly brought before this
Court, we nonetheless find nothing irregular in its promulgation to justify its nullification
or reversal. Summary judgment or accelerated judgment is a procedural technique to
promptly dispose of cases where the facts appear undisputed and certain from the
pleadings, depositions, admissions and affidavits on record, or for weeding out sham
claims or defenses at an early stage of the litigation to avoid the expense and loss of
time involved in a trial.[49] Its object is to separate what is formal or pretended in denial
or averment from what is genuine and substantial so that only the latter may subject a
party in interest to the burden of trial. In the instant case, it is our conclusion that there is
no basis for protesting the Summary Judgment since the trial court faithfully adhered to
the proper function of accelerated judgment by adjudicating only the character of the
issues raised in the pleadings as genuine, sham or fictitious, and only upon clear
determination thereof did the court a quo proceed to render verdict.

Since the civil action before the trial court was for foreclosure of real estate mortgage,
the material issues were the existence of the debt and its demandability. Petitionerspouses admitted the existence of the debt in favor of respondent Inter-Urban
Developers, Inc. as well as the authenticity and due execution of the deed of real estate
mortgage. The mortgage deed, which the spouses duly signed and acknowledged
before a notary public, pegged the loans maturity date at six (6) months from 21
February 1991 at three percent (3%) interest per month. In effect, by the admission of
the due execution of the loan and mortgage deed, petitioner-spouses confessed that
they voluntarily signed it, and by the admission of the genuineness of the document,
they also acknowledged that at the time it was signed it was in the words and figures
exactly as set out in the pleading of respondent Inter-Urban Developers, Inc.

Petitioner-spouses would however claim that a contemporaneous agreement was

entered into between them and Simeon Ong Tiam who was then the president of InterUrban Developers, Inc. that the loan was in reality for a period of five (5) years from 21
February 1991 and, as alleged in their amended answer, interest-free or contrarily, as
stated in their other pleadings, at statutory rate of interest. The defense would thus not
only self-contradict but also appear to override and discard the simultaneous written
formal agreement between the parties.

In the instant case, while petitioner-spouses appear to tender a material issue of fact,
i.e., demandability and interest rate of the loan, summary judgment would nonetheless
be proper where it is shown that issues tendered are sham, fictitious, contrived, set up
in bad faith, or patently unsubstantial.[50] To forestall summary judgment, it is essential
for the non-moving party to confirm the existence of genuine issues where he has
substantial, plausible and fairly arguable defense, i.e., issues of fact calling for the
presentation of evidence upon which a reasonable findings of fact could return a verdict
for the non-moving party although mere scintilla of evidence in support of the party
opposing summary judgment will be insufficient to preclude entry thereof.[51] The
proper inquiry would therefore be whether the affirmative defense offered by petitionerspouses constitutes genuine issue of fact requiring a full-blown trial.

We rule that the affirmative defense sets up a sham issue which justifies summary
judgment. For one, petitioner-spouses have not explained how their affirmative defense,
since it attempts to vary a written agreement, could be proved by admissible evidence.
It would be useless to avail of a complete trial where the issue proposed by petitionerspouses could not be resolved in any manner other than by referring to the explicit
terms of the loan and mortgage agreement. To be sure, where the parties have reduced
their agreement in writing, it is presumed that they have made the writing the only
repository and memorial of the truth and whatever is not found in the writing must be
understood to have been waived and abandoned. Specifically, under Sec. 9, Rule 130,
Revised Rules of Evidence, the trial court is barred from admitting evidence which
proves or tends to prove the alleged concurrent agreement with Simeon Ong Tiam
which alters or varies the terms of the deed between the parties -

Sec. 9 Evidence of written agreements. - When the terms of an agreement have been
reduced to writing, it is considered as containing all the terms agreed upon and there
can be, between the parties and their successors in interest, no evidence of such terms
other than the contents of the written agreement. However, a party may present
evidence to modify, explain or add to the terms of the written agreement if he puts in
issue in his pleading: (a) An intrinsic ambiguity, mistake or imperfection in the written
agreement; (b) The failure of the written agreement to express the true intent and
agreement of the parties thereto; (c) The validity of the written agreement; or (d) The
existence of other terms agreed to by the parties or their successors in interest after the
execution of the written agreement x x x x

While it is true that contracting parties may establish stipulations, clauses, terms and
conditions as they may deem convenient provided they are not contrary to law, morals,
good customs, public order, or public policy, the parol evidence rule forbids any addition
to or contradiction of the terms of an agreement reduced into writing by testimony

purporting to show that, at or before the signing of the document, other or different
terms were orally agreed upon by the parties. As applied herein, the alleged terms of
the contemporaneous agreement between petitioner-spouses and Simeon Ong Tiam
cannot be proved for they are not embodied in the mortgage deed but exist only in their
faint recollection. Only the terms of the loan and mortgage agreement providing for six
(6) months maturity from date of execution thereof and the interest rate of three percent
(3%) per month are worth considering and implementing.

The instant case is not unprecedented. In Tarnate v. Court of Appeals[52] involving a

case of foreclosure of real estate mortgage that was resolved by means of summary
judgment where neither the existence of the loans and the mortgage deeds nor the fact
of default on the due repayments was disputed, we rejected as genuine issue the
contention of petitioners therein that they were misled by respondent bank to believe
that the loans were long-term accommodations since the loan documents admittedly
executed by the parties clearly contradicted petitioners asseverations and the parties
must have realized that when the terms of the agreement were unequivocally reduced
in writing, they could hardly be controverted by oral evidence to the contrary. Similarly,
in Heirs of Amparo del Rosario v. Santos,[53] where we rejected the alteration of the
conditions imposed in the deed of sale, this Court ruled that appellants therein could not
be allowed to introduce evidence of conditions allegedly agreed upon by them other
than those stipulated in the deed of sale because when they reduced their agreement in
writing, it is presumed that they have made the writing the only repository and memorial
of truth, and whatever is not found in the writing must be understood to have been
waived and abandoned.

Petitioner-spouses cannot invoke any of the exceptions to the parol evidence rule, more
particularly, the alleged failure of the writing to express the true intent and agreement of
the parties. The exception obtains only where the written contract is so ambiguous or
obscure in terms that the contractual intention of the parties cannot be understood from
a mere reading of the instrument, thus necessitating the reception of relevant extrinsic
evidence of the contractual provision in dispute to enable the court to make a proper
interpretation of the instrument.[54] However, in the case at bar, the loan and mortgage
deed is clear and without ambiguity, mistake or imperfection in specifying the maturity of
the loan exactly after six (6) months from date of execution thereof at interest rate of
three percent (3%) per month, and certainly these unmistakable terms forbid petitionerspouses from introducing evidence aliunde of the alleged contemporaneous agreement
in violation of the parol evidence rule.

Indeed the literal meaning of the stipulations is bolstered by the intention of the parties
as inferred from their contemporaneous and subsequent acts.[55] It is a matter of record

that, without hesitation, petitioner Guillermo Agbada asked for the postponement of the
pre-trial conference through a one-page handwritten letter addressed to the trial judge
admitting liability for the due and demandable loan: Hindi ko po nais makipaglaban dito
sa kasong ito dahilan po itong perang ito ay dapat ko pong bayaran[56] Furthermore,
when proceedings had been ongoing in the trial court for more than four (4) years,
petitioner-spouses plainly assailed the finding of the trial court vis--vis the appraised
value of the foreclosed property, without more, thus strongly implying their
acquiescence to the due and demandable loan, and in fact attempted to pay the loan
completely and recover the foreclosed lot and improvements thereon by tendering a
cashiers check worth P6,307,532.66 through a house help.

Furthermore, for purposes of defeating respondents motion for summary judgment,

petitioner-spouses did not avail of any means to prove prima facie that Simeon Ong
Tiam had authority to change the terms of the real estate mortgage by a
contemporaneous agreement or, at the very least, to corroborate their allegations by
means of the verified statements of Simeon Ong Tiam himself. Verily the spouses were
not able to adduce even a single explanation why respondent Inter-Urban Developers,
Inc. would suddenly and conveniently abandon the formalities which it had gone through
in drafting and executing the real estate mortgage in place of an alleged coincidental
and plain verbal novation of the original stipulations on interest rate and duration of the
loan. In the absence of even prima facie basis for inferring authority on the part of
Simeon Ong Tiam or inferring his corroboration of petitioner-spouses affirmative
defense, we cannot bind over Inter-Urban Developers, Inc. to the test of trial to meet the
affirmative defense. In Narra Integrated Corporation v. Court of Appeals[57] we rejected
as genuine issue for lengthy trial the claim that the contractual undertaking of one
person was also binding upon another without first showing a plausible and fairly
arguable and substantial circumstance indicating privity and consent to the contract by
the other person upon whom compliance was also sought.

Other circumstances confirm the sham character of petitioner-spouses defense. To be

sure, they failed to offer any counter-affidavit which would have debunked the
allegations in the motion for summary judgment as well as its supporting documents
and explained their failure to act swiftly and precisely on the issue. In Heirs of Amparo
Del Rosario v. Santos,[58] and Tiu v. Court of Appeals,[59] we noted that the failure to
adduce counter-evidence strongly indicated the absence of serious factual issue to
prevent summary judgment. It has also been said that while parties are not required to
offer affidavits in support of, or in opposition to, summary judgment motions, however,
once a properly supported motion for summary judgment has been filed, an adverse
party cannot rest upon the mere allegations or denials of his pleadings. As colorfully
stated in American jurisprudence, [the rule on summary judgment] x x x say[s] in effect
Meet these affidavit facts or judicially die. The party opposing summary judgment thus

must offer either discovery responses or affidavits that set forth specific facts showing
that there is a genuine issue for trial.[60]

The maneuvering of petitioner-spouses before the trial court reinforces our belief that
their claim is unfounded. They contradicted themselves when they claimed that the loan
was interest-free and then in another vein contended that it bore the statutory rate of
interest, only to change their recollection subsequently to a nominal rate of interest.
Petitioner-spouses would also vacillate with respect to the alleged reason for
respondent Inter-Urban Developers, Inc. to agree to different maturity and interest-rate
provisions since the answer filed before the trial court would assign as cause therefor
the personal relationship between them and Simeon Ong Tiam although their
memorandum before this Court would assert that the preferential treatment was due to
petitioner Guillermo Agbadas employment as consultant of a sister company of InterUrban Developers, Inc. It is fatal to petitioner-spouses case, not to mention a misuse of
precious court resources, for them not to recall and convey in precise manner the
stipulations of the purported concurrent agreement with Simeon Ong Tiam when the
alleged side contract is the very defense sought to be heard in a full-blown trial.

Moreover, instead of filing opposing affidavits to support their affirmative defenses,

petitioner-spouses absented themselves from the proceedings a quo eventually leading
to the foreclosure sale and its confirmation. They did not pay the debt when, according
to their own affirmative defense, it was already due and demandable on the fifth year
counted from 21 February 1991, that is, in any of the months in 1996. If they indeed
believed in the worthiness of their claim, they ought to have offered payment of the loan
as it was then already payable according to their own allegations and if refused by
respondent Inter-Urban Developers, Inc. consigned the money with the trial court. Quite
the reverse, petitioner-spouses resorted to irrelevant legal actions, i.e., a motion for
extension of time to file an unspecified petition for review with the Court of Appeals,
which they did not even pursue thus manifesting a regrettable intention to delay the
adverse effects of their prejudicial admissions and to obscure the fact of finality of the
Summary Judgment.[61]

The case of Paz v. Court of Appeals[62] cited by petitioner-spouses does not square
with the instant petition. The Paz case involved an action for quieting of title and
recovery of possession, accounting and damages with preliminary mandatory injunction
filed by the buyers of several parcels of land against the defendant who was a co-heir of
the vendors thereof. n the defendant's answer, he alleged that the sale was void since
he was not given the opportunity to exercise his right of pre-emption to buy the property
there being no notice of sale having been given to him and that he was ready and
willing to buy the property. Thereafter the defendant filed his own complaint seeking to

annul the sale of the lots in question again invoking his right of pre-emption which had
been denied him as a result of the seemingly deliberate omission of a notice of sale to
him. This Court ruled that summary judgment was improper given a plausible ground of
substantial defense which was fairly arguable -

In the case at bar, not only did petitioner herein and defendant in Civil Case No. 54158
assert genuine issues of fact and law which must be heard and tried, but he even filed
Civil Case No. 54408 for the annulment of sale of the controversial lots in favor of the
Nepomucenos and also opposed the survey of the controversial lots in LRC Case No.
R-3730. The court a quo failed to consider that the affidavits of the two vendors Ramon
and Luzonica Paz presented to the court by private respondent only stated that they
merely informed their brother Bienvenido of the sale by way of showing their deeds of
sale. The deeds of sale in favor of the Nepomucenos were already fait accompli when
they were shown to the petitioner, hence does not justify a summary judgment.
Petitioner asserts that he was unjustly denied as a co-heir of his right of legal preemption or redemption provided for under Art. 1623 of the Civil Code by the failure of
his co-heirs to give him notice in writing of their intended desire to sell their shares, as
well as the terms/consideration thereof, in order to enable him to match private
respondents - Nepomuceno's offer to buy or his co-heirs' selling price at P450.00 per
square meter. Petitioner's allegation of the lack of written notification to him by all his coheirs is a factual and legal issue which cannot justify dispensation of a trial on the
merits.[63]

Clearly, Paz differs from the case at bar. Herein petitioner-spouses were grossly
negligent in failing to pursue an affirmative defense which if true would have certainly
impelled them to raise hell the moment that the trial court refused evidence of such
allegation. Moreover, the spouses faced an impenetrable wall barring the alteration of
the specific and unambiguous terms of the real estate mortgage which was not the case
in Paz. Indeed, while the defendant in Paz could have proved the deprivation of his right
to legal pre-emption, the petitioners in the instant case could not do so upon veritable
rules of evidence. Lastly, the representations of the defendant in Paz were fairly
arguable since the very evidence offered by the movant for summary judgment showed
the absence of the relevant notice to him. In contrast, we cannot say that the petitionerspouses here have adequate basis for claiming an alleged contemporaneous
agreement affecting the contractual right of respondent Inter-Urban Developers, Inc.
absent any reasonable showing of the latter's consent to the alteration of the real estate
mortgage contract it had earlier executed. All in all, Paz presented genuine and material
issues of fact while the instant case proffered only one issue which could properly be
characterized as sham.

Finally, we find no merit in petitioner-spouses' claim that the purchase price of the
mortgaged real property was way below its appraised value. To begin with, they
deliberately withheld the presentation of their own evidence which might have proved
this matter and thus unfortunately deprived respondent Inter-Urban Developers, Inc. the
opportunity to cross-examine whatever such evidence would tend to establish. Equally
significant, the low purchase price could have worked in the petitioner-spouses' favor if
they promptly exercised their equity of redemption. As held in Tarnate v. Court of
Appeals,[64] "[a]nent the contention that the property has been sold at an extremely low
price, suffice it to say that, if correct, it would have, in fact, favored an easy redemption
of the property. That remedy could have well been availed of but petitioners did not."

With respect to the award of attorneys fees and the reimbursement of advances for real
estate taxes and registration expenses allegedly incurred by respondent Inter-Urban
Developers, Inc. we rule that the determination thereof was done arbitrarily since the
evidence on record, particularly the receipts proving payment of real estate taxes and
registration expenses in the names of petitioner-spouses as payor, does not support the
finding.[65] In Warner Barnes & Co. v. Luzon Surety[66] we held that the trial court
cannot impose attorney's fees as well as other charges through summary judgment
absent the standard proof of liability for specified amounts truly owing. Furthermore,
since the attorney's fees along with the purported costs for real estate taxes and
registration expenses were unjustifiably satisfied from proceeds of the sale of the
mortgaged property,[67] we must order restitution of the amounts paid in excess of the
duly established debt although the judgment may have become final and executory. In
Esler v. de la Cruz[68] we held -

The gist of the appeal is that since the order for the dismissal of the case was issued on
August 20, 1960, and said dismissal had become final, the court could no longer issue
its order of December 9, 1960 directing the return of the property. The argument while
apparently correct would be productive of clear injustice. As a matter of principle courts
should be authorized, as in this case, at any time to order the return of property
erroneously ordered to be delivered to one party, if the order was found to have been
issued without jurisdiction. Authority for the return of the property is expressed under the
provision of Section 5 of Rule 39, Rules of Court, which reads as follows:

Sec. 5. Effect of reversal of executed judgment. - Where the judgment executed is

reversed totally or partially on appeal, the trial court, on motion, after the case is
remanded to it, may issue such orders of restitution as equity and justice may warrant
under the circumstances.

Under the same principle now expressed in Sec. 5, Rule 39, of the 1997 Rules of Civil
Procedure[69] respondent Inter-Urban Developers, Inc. must return to petitionerspouses the amounts of P10,000.00 for attorney's fees, P1,691.15 for registration
expenses and P10,582.02 for real estate taxes, with interest thereon at twelve percent
(12%) per annum from promulgation of this Decision until fully satisfied.[70]

WHEREFORE, the instant Petition for Review on Certiorari is DENIED. The Decision of
the Court of Appeals in CA-G.R. SP No. 54273, "Spouses Guillermo and Maxima
Agbada v. Regional Trial Court, Quezon City, Branch 105, and Inter-Urban Developers,
Inc.," which dismissed the petition for annulment of judgment with preliminary injunction
filed by the Spouses Guillermo and Maxima Agbada to nullify and to set aside the
Summary Judgment rendered by the Regional Trial Court-Br. 105 of Quezon City in its
Civil Case No. Q-93-18592 for foreclosure of real estate mortgage, "Inter-Urban
Developers, Inc. (represented by Philip Tiam Lee) v. Spouses Guillermo and Maxima
Agbada," as well as the Resolution of the Court of Appeals denying reconsideration of
the assailed Decision is AFFIRMED, with the MODIFICATION that respondent InterUrban Developers is directed to return to petitioner-spouses Guillermo and Maxima
Agbada the amounts of P10,000.00 for attorney's fees, P1,691.15 for registration
expenses and P10,582.02 for real estate taxes, with interest thereon at twelve percent
(12%) per annum from promulgation of this Decision until satisfied.

Upon finality of this Decision, let this case be REMANDED to the Regional Trial Court Branch 105 of Quezon City for prompt completion of the execution proceedings. No
pronouncement as to costs.

SO ORDERED.

Mendoza, Quisumbing, Austria-Martinez, and Callejo, Sr., JJ., concur

DOCTRINE: in Philippine National Bank vs. Gonzales, 45 Phil. 693, wherein property
valued at P45,000.00 was sold for P15,000.00 and in Cu Unjieng & Sons v. Mabalacat
Sugar Co., 58 Phil. 439, property worth P300,000.00 to P400,000.00 was sold for
P177,000.00, the Court cannot consider the sale of the Bacolod properties, the Taft
Avenue house and lot and the Paraaque property of the Sorianos null and void for
having been sold at inadequate prices shocking to the conscience and there being no
showing that in the event of a resale, better prices can be obtained.
Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. L-21026

February 13, 1924

PHILIPPINE NATIONAL BANK, plaintiff-appellee,

vs.
MANUEL ERNESTO GONZALEZ, defendant-appellee.
SATURNINO LOPEZ, buyer and appellant.

Camus and Delgado, Turner and Rheberg, Serviliano de la Cruz for appellant.
Palma, Leuterio and Yamzon for defendant-appellee.
No appearance for the plaintiff-appellee.

STATEMENT

November 23, 1921, Philippine National Bank commenced a suit against Manuel
Ernesto Gonzales to foreclose a real mortgage made to secure a promissory note for
P15,000. March 17, 1922, the plaintiff bank filed an amended complaint against the
same defendant, in which the original was reproduced, to foreclose a second mortgage
for P15,000 upon the same land described in the original complaint. The defendant was
duly served in both proceedings with both the original and amended complaints, and

made defaults in both cases. On April 21, 1922, the bank filed a motion for default.
August 8, 1922, the court declared the defendant in default, and set the case for hearing
on August 23, 1922, at which time the bank appeared and presented proofs of all the
facts alleged in its original and amended complaints. August 28, 1922, the court
rendered judgment in favor of the bank and against the defendant, requiring him within
three months from the date to pay the plaintiff the amount of the two mortgages in
question, together with the interest and costs, and that in default thereof, execution
should be issued for the sale of the property to satisfy the judgment. December 7, 1922,
and for want of any payment, the plaintiff moved the court for an execution, and on
January 11, 1923, an execution was issued for the sale of the real property described in
the mortgages to satisfy the amount of the judgment. On August 28, 1922, the total of
the judgment in the first cause of action, including the interest, was P17,313.59, and in
the second mortgage, on the same date, it was P17,755.

The property advertised for sale was evidenced by Torrens Certificate of Title and
described in Exhibits A, B and C, of which Exhibit A contains 3,657,703 square meters,
Exhibit B 1,335,505, square meters and Exhibit C 263,765 square meters. Pursuant to
the execution the property was duly advertised for sale, and that described in Exhibits B
and C was sold to Saturnino Lopez, the appellant here, for P15,000, that being the
highest bid, and he being the highest bidder.

February 16, 1923, the sheriff filed a motion to confirm the sale to Lopez, which was set
down for hearing on March 9, 1923, and due notice was given to all the parties in
interest. At a hearing on that date, the court made an order duly conforming the sale.

April 5, 1923, the defendant Gonzales, through his then attorney, filed the following
motion:

Comes now the defendant and to the Honorable Court respectfully shows that he
applies for a reconsideration of the order entered in this case under the date of March 9,
1923, confirming the sale at public auction made by the deputy provincial sheriff Mr.
Jose V. Lopez in favor of Mr. Saturnino Lopez of the two parcels of land included in
certificate of title No. 5136 of the property of the defendant and judgment debtor Mr.
Manuel Ernesto Gonzales. This motion is based on the following ground:

That said order is not in accordance with law.

It was set down for hearing on April 7, 1923, and notice was duly given. April 16, 1923,
the court rendered a decision in which he found as a fact that all of the necessary
requisites for the notice of sale had been duly complied with but that it appeared that the
value of the land, which was sold to the appellant, was P45,940, for which he did only
15,000, and on account of this difference in value for taxation purposes and the value
for which the land was sold, the court set aside the confirmation, and ordered a resale
"thereby giving the aforesaid defendant a greater opportunity in order that he may
obtain a better price, if possible, from the sale of the aforesaid lands." From that order,
Lopez appeals, assigning as error that "the trial court erred in setting aside, without
good cause having been shown, the prior order confirming the judicial sale, and
ordering the resale of the land in question.

JOHNS, J.:

That is the only question involved on this appeal. It will be noted that in the first
instance, the trial court confirmed the sale on the motion of the sheriff, and that in the
last order, he specifically found as a fact that there had been a compliance of all of the
essential requisites for a sale on execution, and that the order, confirming the sale, was
set aside upon the sole ground of inadequacy of consideration. It will also be noted that
in the motion to set aside the sale, the only ground specified is "that order is not in
accordance with law." In other words, in the motion itself no grounds are specifically set
forth or alleged as to why the sale should be set aside, and that in the body of the
motion, it is not claimed that the land was sold for an inadequate consideration.

Although the trial court set aside the sale "for the purpose of avoiding exorbitant
damages to said defendant," the only evidence presented at the hearing on the motion
as to the value of any land was the certificate of the municipal and deputy treasurer of
Santo Tomas, Pangasinan, of date March 26, 1923, to the effect that four pieces of land
of the defendant Gonzales contain 162 hectares, 4 ares, and 26 centares, and had a
combined assessed valuation of P45,940.

Not a witness was called to testify as to the value of the land. In other words, the only
evidence before the court as to value was the certificate of the deputy municipal
treasurer, and that was to the effect that the four pieces of land therein described had
an assessed valuation of P45,940. Neither was there any showing made nor any
evidence presented, that, in the event the property in question was resold, that it would
sell for more than P15,000. That as to the land in question, it appears of record that on

August 28, 1922, the amount of the bank's judgment was P17,313.59. It also appears
that the bank was personally represented at the sale, and that it refused to bid more
than P15,000. For such reason, the property was sold to Lopez, as the highest bidder.
In other words, it appears of record that the bank itself consented and agreed to the
sale of the property in question for more than P3,000 less than the amount of its claim.

The only ground specified in the motion of April 5, 1923, is "that said order is not in
accordance with law." No other grounds are pointed out or assigned, and the order of
the court setting aside the sale was based upon that motion.

The rule is fundamental that the confirmation of a sale, or the setting aside of the
confirmation, is largely a matter in the discretion of the trial court, and section 257 of the
Code of Civil Procedure povides:

* * * Should the court decline to confirm the sale, for good cause shown, and should set
it aside, it shall order a resale in accordance with law.

In the instant case, the court in its original order confirmed the sale and later set it aside
upon a motion, specifying "that said order is not in accordance with law." In setting the
sale aside, the court finds that "although the requisites prescribed for the sale at public
auction of the land were complied with," it set aside the sale for inadequacy of
consideration without any proof as to the value of the land, except the assessed
valuation, or without any showing whatever that, in the event of a resale, the property
would sell for more money. It also appears that the bank was represented at the sale,
and that it consented and agreed to the sale of the property in question to Lopez for
P3,000 less than the amount of its claim. It also appears that the suit to foreclose was
commenced on November 23, 1921; that the judgment was rendered by default August
28, 1922; and that the property was not sold until February 14, 1923. In other words,
Gonzales had sixteen months after the suit was commenced to find a purchaser that
would be ready, able, and willing to pay the amount of the mortgage, and to stop the
sale, and when the property in question was actually sold, it sold for P3,000 less than
the amount of the bank's claim.

We frankly concede that the trial court has a large discretion in setting aside and
confirming the sale of real property, and that, where a proper motion is filed, and the
evidence tends to support the motion, the decision of the trial court should be final. Be
that as it may, the motion to set aside the confirmation should point out and specify why
it should be set aside, and there should be reasonable evidence in the record tending to

support the motion. In the instant case, the motion upon which the court based it as
action does not specify or point out a single reason why the confirmation should be set
aside, Neither is there any evidence to sustain the motion.

The rule is well stated in Graffam and Doble vs. Burgess (117 U.S., 180), in which the
syllabus says:

A judicial sale of real estate will not be set aside for inadequacy of price, unless the
inadequacy be so great as to shock the conscience, or unless there be additional
circumstances against its fairness.

If the inadequacy of price paid for the purchase of real estate at a sale on an execution
be so gross as to shock the conscience, or if in addition to gross inadequacy the
purchaser has been guilty of unfairness or has taken any undue advantage, or if the
owner of the property or the party interested in it has been for any other reason misled
or surprised, then the sale will be regarded as fraudulent and void, and the party injured
will be permitted to redeem the property sold.

The same principle is laid down by this court in Warner, Barnes & Co. vs. Santos (14
Phil., 446), in which the syllabus says:

* * * That a judicial sale of real estate in an action to foreclose will not be set aside for
inadequacy of price, unless the inadequacy be so great as to shock the conscience or
unless there be additional circumstances against its fairness.

Ruling Case Law, vol. 16, page 100, says:

It is by no means a matter of discretion with the court to rescind a sale which it has once
confirmed, nor is the sale to be rescinded for mere inadequacy or price, or for an
increase of price alone, irregularity, and the like. Some special ground must be laid such
as fraud and collusion accident, mutual mistake, breach of trust, or misconduct upon the
part of the purchaser, or other party connected with the sale, which has worked injustice
to the party complaining and was unknown to him at the time the sale was confirmed.

In the instant case, there is no claim or pretense that there was any fraud or collusion,
or that in any way Gonzales was misled or deceived. The bank was personally
represented at the sale, and there is no showing whatever that, if the property was
resold, it would sell for a centavo more than the P15,000.

For such reasons, the judgment of the trial court, setting aside the confirmation of the
sale, is reversed, and the sale will stand affirmed as of the date of the original
confirmation by the trial court, with costs in favor of the appellant. Such judgment to be
without prejudice to the right of Gonzales, if any, to redeem. So ordered.

Araullo, C.J., Johnson, Malcolm, Avancea and Romualdez, JJ., concur.

Republic of the Philippines

SUPREME COURT
Manila

SECOND DIVISION

G.R. No. L-23493

August 23,1978

DEVELOPMENT BANK OF THE PHILIPPINES, plaintiff-appellee,

vs.
JOVENCIO A. ZARAGOZA and AVELINA E. ZARAGOZA, defendants-appellants.

Jose R. Espique for appellants.

Jesus A. Avencena for appellee.

DOCTRINE: In extrajudicial foreclosure of mortgage, where the proceeds of the sale

are insufficient to pay the debt, the mortgagee has the right to recover the deficiency
from the debtor

ANTONIO, J.:

This is an appeal from the judgment of the Court of First instance of Manila in Civil Case
No. 47325, sentencing defendants-appellants Jovencio A. Zaragoza and Avelina E.
Zaragoza to pay jointly and severally plaintiff-appellee Development Bank of the
Philippines the sum of P7,779.36, with interest thereon at a legal rate from July 10,
1957 until fully paid, plus the sum equivalent to 10% of the amount due as attorney's
fees and costs of the suit.

The issues raised in this appeal are: (a) whether or not the mortgagee is entitled to
claim the deficiency in extrajudicial foreclosure of mortgage; and (b) whether or not
additional interests are properly chargeable on the balance of the indebtedness during
the period from notice of sale to actual sale.

The following facts are not disputed: Appellants obtained, on July 19, 1949, a loan of
P30,000 from the appellee which was secured by a real estate mortgage. It was
stipulated that upon failure of appellants to pay the amortization due, according to the
terms and conditions thereof, appellee shall have the authority to foreclose
extrajudicially the mortgaged property, pursuant to Republic Act No. 3135, as amended.
Conformably to this stipulation, upon breach of the conditions of the mortgage, appellee
foreclosed extrajudicially the mortgage on December 10, 1952, and the Provincial
Sheriff of Pangasinan posted the requisite notice of the sale at public auction of the
mortgaged property.

On June 10, 1957, the property was sold at public auction to the appellee, being the
highest bidder therein, for the sum of P21,035.00. After applying the proceeds of the
sale to satisfy the outstanding balance of the indebtedness in the amount of
P28,914.36, it was found that appellants still owed the appellee in the amount of
P7,779.36. Suit for the deficiency with preliminary attachment was filed by appellee
against appellants on June 20, 1961. In their answer, appellants averred that after an
extrajudicial foreclosure of property, no deficiency judgment would lie and that from the
date of the foreclosure to the sale of said property, the mortgagor is no longer liable for
the interest on the loan. The aforesaid contentions of appellants were overruled by the
trial court, who thereupon rendered the aforesaid judgment in favor of the appellee.
Contending that the trial court erred in resolving those issues of law, appellants
appealed directly to this court.

We find the appeal without merit.

The first issue had already been resolved in an earlier case. Thus, in Philippine Bank of
Commerce v. Tomas de Vera 1 this Court ruled that in extrajudicial foreclosure of
mortgage, where the proceeds of the sale is insufficient to cover the debt, the
mortgagee is entitled to claim the deficiency from the debtor. Explaining the reasons for
this rule, the Court stated:

The sole issue to be resolved in this case is whether the trial court acted correctly in
holding appellee Bank entitled to recover from appellant the sum of P99,033.20 as

deficiency arising after the extrajudicial foreclosure, under Act No. 3135, as amended,
of the mortgaged properties in question. It is urged, on appellant's part, that since Act
No. 3135, as amended, is silent as to the mortgagee's right to recover deficiency arising
after an extrajudicial foreclosure sale of mortgage, he (mortgagee) may not recover the
same.

A reading of the provisions of Act No. 3135, as amended (re extrajudicial foreclosure)
discuss nothing, it is true, as to the mortgagee's right to recover such deficiency. But
neither do we find any provision thereunder which expressly or impliedly prohibits such
recovery.

Article 2131 of the new Civil Code, on the contrary, expressly provides that 'The form,
extent and consequences of a mortgage, both as to its constitution, modification and
extinguishment, and as to other matters not included in this Chapter, shall be governed
by the provisions of the Mortgage Law and of the Land Registration Law. Under the
Mortgage Law, which is still in force, the mortgagee has the right to claim for the
deficiency resulting from the price obtained in the sale of the real property at public
auction and the outstanding obligation at the time of the foreclosure proceedings. (See
Soriano v. Enriquez, 24 Phil. 584; Banco de Islas Filipinos V. Concepcion e Hijos, 53
Phil. 86; Banco Nacional v. Barreto, 53 Phil. 101). Under the Rules of Court (Sec. 6,
Rule 70), 'Upon the sale of any real property, under an order for a sale to satisfy a
mortgage or other incumbrance thereon, if there be a balance due to the plaintiff after
applying the Proceeds of the sale, the court, upon motion, should render a judgment
against the defendant for any such balance for which by the record of the case, he may
be Personally liable to the plaintiff, ...' It is true that this refers to a judicial foreclosure,
but the underlying principle is the same, that the mortgage is but a security and not a
satisfaction of indebtedness.

xxx

xxx

xxx

Let it be noted that when the legislature intends to foreclose the right of a creditor to sue
for any deficiency resulting from the foreclosure of the security given to guarantee the
obligation, it so expressly provides. Thus, in respect to pledges, Article 2115 of the new
Civil Code expressly states: ... If the Price of the sale is less (than the amount of the
principal obligation) neither shall the creditor be entitled to recover the deficiency,
notwithstanding any stipulation to the contrary.' Likewise, in the event of a foreclosure of
a chattel mortgage on the thing sold in installments he (the vendor) shall have no further
action against the purchaser to recover any unpaid balance Of the price. Any
agreement to the contrary shall be void.' (Article 1484, paragraph 3, Ibid.). It is then

clear that in the absence of a similar provision in Act No. 3135, as amended, it can not
be concluded that the creditor loses his right given him under the Mortgage Law and
recognized in the Rules Of Court, to take action for the recovery of any unpaid balance
on the Principal obligation, simply because he has chosen to foreclose his mortgage
extra-judically pursuant to a special Power of attorney given him by the mortgagor in the
mortgage contract. As stated by this Court in Medina v. Philippine National Bank (56
Phil. 651), a case analogous to the one at bar, the step taken by the mortgagee-bank in
resorting to extrajudicial foreclosure under Act 3135, was merely to find a proceeding for
the sale, and its action can not be taken to mean a waiver of its right to demand the
payment of the whole debt. (pp. 1028-1030).

This rule was reiterated in Development Bank of the Philippines v. Vda de Moll. 2

In connection with the second issue, appellants argue that since the appellee held in
abeyance the sale of the property for a period of four (4) years, they alone should suffer
the consequences of such delay. It was further contended that the debtor's liability in
judicial foreclosures is limited to the amount due at the time of the foreclosure and,
therefore, such should also apply to extrajudicial foreclosures. By way of refutation
appellee explained that the seemingly long interval between the date of issuance of the
Sheriff's Notice of Sale and the date of sale was due to the numerous transfers made of
the date of the sale upon requests of the appellants themselves. Each transfer is
covered by a corresponding agreement for postponement, executed jointly by
appellants and appellee. Certainly, under such circumstances, appellants cannot take
advantage of the delay which was their own making, to the prejudice of the other party.
Apart from this consideration, it must be noted that a foreclosure of mortgage means the
termination of all rights of the mortgagor in the property covered by the mortgage. It
denotes the procedure adopted by the mortgagee to terminate the rights of the
mortgagor on the property and includes the sale itself. In judicial foreclosures, the
"foreclosure" is not complete until the Sheriff's Certificate is executed, acknowledged
and recorded. In the absence of a Certificate of Sale, no title passes by the foreclosure
proceedings to the vendee. 3 It is only when the foreclosure proceedings are completed
and the mortgaged property sold to the purchaser that all interests of the mortgagor are
cut off from the property. This principle is applicable to extrajudicial foreclosures.
Consequently, in the case at bar, prior to the completion of the foreclosure, the
mortgagor is, therefore, liable for the interest on the mortgage. 4

ACCORDINGLY, the judgment appealed from is hereby AFFIRMED. Costs against

appellants.

Fernando (Chairman), Barredo, Aquino, Concepcion, Jr. and Santos, JJ., concur.

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. L-24571

December 18, 1970

JOSE L. PONCE DE LEON, plaintiff-appellant,

vs.
REHABILITATION FINANCE CORPORATION, defendant-appellant and third-party
defendant-appellant, ROSALINA SORIANO, TEOFILA SORIANO and REV. FR.
EUGENIO R. SORIANO, third-party plaintiffs-appellants.

DOCTRINE: With respect to the allegation that foreclosure was void due to the
inadequacy of the bid price, we agree with the CA that the "mere inadequacy of
the price obtained at the [s]heriffs sale, unless shocking to the conscience, (was)
not sufficient to set aside the sale if there (was) no showing that, in the event of a
regular sale, a better price (could) be obtained.

CONCEPCION, C.J.:

Appeal from a decision of the Court of First Instance of Rizal, the dispositive part of
which reads:

IN VIEW OF THE FOREGOING, the Court hereby renders judgment dismissing

plaintiff's complaint with costs against plaintiff; ordering plaintiff Jose Ponce de Leon to
pay the defendant RFC the amount of FIVE HUNDRED TWENTY-NINE THOUSAND
TWO HUNDRED SIXTY FIVE PESOS AND FIFTY FOUR (P529,265.54) CENTAVOS,
with interest at six percent per annum from November 24, 1954 until fully paid, the
further sum of ONE HUNDRED EIGHTY (P180.00) pesos per month from May 20, 1955
until plaintiff vacates the house and lot at Taft Avenue, Pasay City, and FIVE
THOUSAND (P5,000.00) PESOS as damages for the injunction and costs.

The Court declares the mortgage of one-half of the lot covered by Original transfer
certificate of title No. 8094 of the lands records of Rizal Province belonging to the thirdparty plaintiffs, namely Rosalina Soriano, Rev. Fr. Eugenio Soriano and Teofila Soriano
del Rosario null and void and the sheriff's sale in favor of the RFC of said one-half share
likewise null and void. 1

As correctly set forth in said decision, the main facts are:

On August 14, 1945, herein plaintiff Jose L. Ponce de Leon and Francisco Soriano,
father of third-party plaintiffs Teofila Soriano del Rosario, Rosalina Soriano and Rev. Fr.
Eugenio Soriano, obtained a loan for P10,000.00 from the Philippine National Bank
(PNB), Manila, mortgaging a parcel of land situated at Barrio Ibayo, Municipality of
Paraaque, Rizal, covered by original certificate of title No. 8094 of the land records of
Rizal Province in the name of Francisco Soriano, married to Tomasa Rodriguez, as
security for the loan (Exhibit 15-Soriano). On August 16, 1945, Ponce de Leon gave
P2,000.00 to Soriano from the proceeds of the loan (Exhibit "N"). The loan was
subsequently increased to P17,500.00 and an amendment to the real estate mortgage,
Exhibit "15-Soriano," was executed by Jose L. Ponce de Leon and Francisco Soriano
on March 13, 1946 (Exhibit "16-Soriano").

On May 4, 1951, Jose L. Ponce de Leon filed with the Rehabilitation Finance
Corporation (RFC for short) Manila, his loan application, Exhibit "1-RFC," for an
industrial loan, for putting up a sawmill, in the amount of P800,000.00 offering as
security certain parcels of land, among which, was the parcel which Ponce de Leon and
Soriano mortgaged to the PNB. The application stated that the properties offered for
security for the RFC loan are encumbered to the PNB, Bacolod, and to Cu Unjieng
Bros. The properties offered for security to the RFC were inspected by the appraisers of
the latter, who submitted the following appraisals:

1.

Land ............................................. P480,228.00

2.

Building ........................................ P 12,000.00

3.

Machinery & equiptment .......... P 67,101.00

4.

Transportation equipment ......... P 14,000.00

Total .............................................. P573,329.00

(Exh. "6-a RFC")

The application was approved for P495,000.00 and the mortgage contract (Exhibit "A,"
also "16-RFC & "33-Soriano") was executed on October 8, 1951 by Jose L. Ponce de
Leon, his wife Carmelina Russel, and Francisco Soriano. The same parties signed a
promissory note (Exhibit "A") for P495,000.00, with interest at 6% per annum, payable
on installments every month for P28,831.64 in connection with the mortgage deed.
Before the mortgage deed was signed, the Notary Public, Felipe Cuaderno, Jr. before
whom it was acknowledged, translated it in Tagalog to Francisco Soriano, who
thereafter affixed his signature to the document. At the time that Francisco Soriano
signed the mortgage deed, Exhibit "A," his spouse Tomasa Rodriguez was already
dead leaving as her heirs, her children namely, Rosalina, Teofila and Rev. Fr. Eugenio
Soriano, none of whom signed the said mortgage deed or the promissory note.

The mortgage deed specifically stipulated that the proceeds thereof shall be used
exclusively for the purchase of machinery and equipment, construction of buildings and
the payment of obligations and that the release of the amounts loaned shall be at the
discretion of the RFC. In view of these conditions, the RFC paid Ponce de Leon's
obligations of P100,000.00 to the PNB; P30,000.00 to Cu Unjieng Bros; and P5,000.00
to Arturo Colmenares. From the balance of P360,000.00, the sum of P352,000.00 was
released to Jose L. Ponce de Leon at various amounts during the period from
December, 1951 to July 1952. The checks covering these releases were issued to Jose
L. Ponce de Leon in view of the authority given to him in writing by Francisco Soriano
and Carmelina Russel (Exhibit "33-A-Soriano," Exhibit "A" and Exhibit "16-RFC").

On March 12, 1952, Jose L. Ponce de Leon and his wife Carmelina Russel executed an
addendum to the chattel mortgage for machineries and equipments (Exhibit "F").

None of the amortization and interests which had become due was paid and, for this
reason, the RFC took steps for the extra-judicial foreclosure of the mortgaged properties
consisting of real estates and the sawmill and its equipments of Ponce de Leon situated
in two places in Samar. The RFC was the purchaser of all the mortgaged properties in
the ensuing sheriff's sales, with the exception of two parcels of land situated in Bacolod
City which were purchased by private individuals. Many items of the mortgaged
machineries and equipments could not be found. The parcels of land mortgaged were
sold as follows:

1)

Nine parcels at Bacolod City ................................................P78,800.00

2)

Two parcels acquired by private individuals .................... P5,790.00

3)

Two parcels at Pasay City with improvements ................. P15,000.00

4)

The land of Soriano at Paraaque, Rizal ............................ P10,000.00

5) The Machineries & equipments that were left ............................. P6,000.00

The Sheriff sold the land covered by original certificate of Title No. 8094 in the name of
Francisco Soriano, married to Tomasa Rodriguez, on June 15, 1954 and the deed of
sale, dated April 19, 1955 was executed by the sheriff in favor of the purchaser thereof,
the RFC, including all the other properties sold (Exhibit "15-RFC," also "54-Soriano").

Previous to the expiration of the one-year period of redemption, Francisco Soriano,

through Teofila Soriano del Rosario offered to repurchase the Soriano lot for
P14,000.00 and on June 14, 1955, the last day for the redemption of the lot, Francisco
Soriano, in company with his daughter, Rosalina and Teofila, went to see Mr. Bernardo,
Chief of the assets department of the RFC, and offered to redeem said lot for
P14,000.00 but the offer was rejected and they were told to participate in the public sale
of the land to be conducted by the RFC. Jose L. Ponce de Leon did not offer to redeem

the mortgaged properties sold at anytime before the expiration of the period of
redemption.

The RFC scheduled a public sale of the lot registered in the name of Francisco Soriano
and of the other lots which the RFC acquired in the Sheriff's sale for February 20, 1956
in view of the inability of Ponce de Leon or Soriano to legally redeem the properties sold
by the Sheriff within the one year period after the sale.

On February 18, 1956, Jose L. Ponce de Leon instituted the present action alleging that
there was delay in the releases of the amount of the loan; that the RFC withheld the
amount of P19,000.00 from the loan until it had verified whether Ponce de Leon had still
an unpaid indebtedness to the defunct Agricultural and Industrial Bank, the RFC's
predecessor, and this was paid only after one year had passed; that the typhoon in
October and November, 1952 had caused destructions to his sawmills and hampered
his operations for which reason, he asks, in his complaint, that the amortizations on his
obligations which became due since October, 1952 be declared extinguished; that the
sheriff's sales be declared null and void because the properties were sold at
grossly inadequate prices and that said sales were not conducted in accordance
with law; that the RFC be compelled to account for his machineries and
equipments at his lumber mill in Calbayog and to reimburse him for the value of
the unaccounted machineries and equipments; that the RFC be ordered to pay
him actual and moral damages for P105,000.00 and costs. De Leon asked for the
issuance of a writ of preliminary injunction to restrain the RFC from carrying out its
contemplated public sale. The Court set the petition for injunction for hearing but no one
appeared for the RFC at the hearing thereof so that the Court had to issue the
preliminary injunction prayed for. De Leon caused notice of lis pendens to be recorded
in relation with this case.

The RFC filed its answer sustaining the legality of the mortgage and Sheriff's sales and
counter-claimed that Ponce de Leon be ordered to pay the deficiency claim
representing the balance of the latter's indebtedness, rental of the lot and house at Taft
Avenue, Pasay City occupied by Ponce de Leon and damages.

Subsequent to the filing of Ponce de Leon's complaint against the RFC, Francisco
Soriano wrote a letter, dated February 20, 1956, to the President asking the latter's
intervention so that the projected sale on the same date to be conducted by the RFC
may be suspended insofar as the lot in his name is concerned and that he be allowed to
redeem it (Exhibit "27-Soriano"). This letter was referred by the Executive Office to the
RFC, which sent a letter, Exhibit "29-Soriano," to Francisco Soriano informing the latter

that he could redeem his former property for not less than its appraised value of
P59,647.05, payable 20% down and the balance in ten years, with 6% interest. Soriano
did not redeem the lot under the conditions of the RFC. He then filed a third-party
complaint in this case with the RFC and Jose L. Ponce de Leon as the third-party
defendants. Due to the death of Francisco Soriano, he was substituted as third-party
plaintiff by his children, namely, Teofila Soriano del Rosario, Rosalina Soriano and Rev.
Fr. Eugenio Soriano.

The Sorianos contend that the mortgage in favor of the RFC and promissory note
signed by Francisco Soriano lacked the latter's consent and was without consideration
insofar as Francisco Soriano is concerned and hence null and void as to him and his
children; that the lot covered by original certificate of title No. 8094 in the name of
Francisco Soriano belonged to the conjugal partnership of the latter and his wife,
Tomasa Rodriguez, now deceased, and since the latter was already dead when the
mortgage was executed and her children who have thus inherited her share have not
signed the mortgage contract and promissory note, at least, the one-half share of the lot
belonging now to the Soriano sisters and brothers, the third-party plaintiffs, have not
been legally included in the mortgage to the RFC so that the latter had not acquired said
one-half share in the sheriff's sale. The Sorianos further ask that they be allowed to
redeem the remaining one-half share, that which belonged to their father, for one-half of
P10,000.00 which was the amount for which the RFC acquired the whole lot in the
sheriff's sale. The third party-plaintiffs also ask that Ponce de Leon be ordered to
reimburse them for whatever amount they may use in redeeming the lot and expenses
incident thereto and that Ponce de Leon and the RFC be made to pay them moral
damages which their father suffered and attorney's fees.

Answering the third-party complaint, the RFC and Ponce de Leon affirm the legality of
the mortgage deed insofar as Soriano is concerned. The RFC further contends that the
mortgage was binding on the whole Soriano lot and that there was no valid redemption
of this lot.

Ponce de Leon interposed a counterclaim for various sums of money allegedly received
from him by Francisco Soriano and the present third-party plaintiffs. 2

In due course, the lower court rendered judgment the dispositive part of which is quoted
at the beginning of this decision. Said court held that the typhoons in October and
November 1952 did not relieve the plaintiff from his obligations under the promissory
note and the deed of mortgage in favor of the RFC; that the sheriff's sale of the
mortgaged properties is valid; that the RFC need not account for the machineries and

equipment of the sawmill in Samar or reimburse the value of such machinery and
equipment as may be unaccounted for, they having become property of the RFC, owing
to plaintiff's failure to exercise the right of redemption in accordance with law;
that neither may he recover damages from the RFC for the alleged delay in the releases
made by the same, since their contract stipulates that the proceeds of the loan shall be
released at the discretion of the Mortgagee and plaintiff's offer of redemption came long
after the expiration of the period therefor, and was not for the full amount of plaintiff's
liability, which he, moreover, asked to be reduced and wanted to pay in installments;
and that, accordingly, plaintiff has no right to recover any damages.

Upon the other hand, the court found that plaintiff should pay: (1) rentals for the use of
the mortgaged property (house and lot) at Pasay City, after the title thereto had passed
to the RFC, and (2) the sum of P529,265.54, representing the balance of plaintiff's
obligation in favor of the RFC which, as of November 24, 1954, amounted to
P583,270.49, plus 10% thereof, as stipulated penalty, or the aggregate sum of
P641,597.54 -after deducting therefrom the sum of P112,332.00 for which the
mortgaged properties had been sold, (3) apart from the sum of P5,000.00, as damages
for the injunction issued, at his behest, and the costs.

As regards the third party complaint of the Sorianos, the lower court: (1) overruled their
claim to the effect that Francisco Soriano had signed the promissory note and the deed
of mortgage in favor of the RFC without knowledge of the contents thereof and without
any consideration therefor; but (b) held that, being registered in the name of "Francisco
Soriano, married to Tomasa Rodriguez," the property covered by original certificate of
title No. 8094 hereinafter referred to as the Paraaque property is presumed to
belong to the conjugal partnership of said spouses, and that, the RFC having failed to
offset this presumption, the mortgage on and the sale of the property by the sheriff are
null and void as to one-half () thereof.

Moreover, the court declared: (a) that the RFC was justified in rejecting the offer, made
by the Sorianos, to redeem said property for, pursuant to section 78 of Republic Act No.
337, redemption could be effected "only by paying the amount fixed in the order of
execution;" (b) that plaintiff's counterclaim against the Sorianos is barred by the statute
of limitations; (c) that neither may he recover damages from the Sorianos, their alleged
bad faith not bound to pay damages to the RFC, the action of the former against the
latter not being altogether unjustified.

All of the parties namely, plaintiff, Jose Ponce de Leon, defendant, Rehabilitation
Finance Corporation, hereinafter referred to as RFC (now Development Bank of the

Philippines), and Rosalina Soriano, Fr. Eugenio Soriano and Teofila Soriano del
Rosario, hereinafter referred to as the Sorianos have appealed from said decision.

Appeal of the Sorianos

The Sorianos maintain that the lower court erred: (1) in holding that the promissory note
and the deed of mortgage executed by Francisco Soriano in favor of the RFC are valid
as regards one-half of the Paraaque property; (2) in ruling that the extrajudicial sale
thereof to the RFC is valid as to the aforementioned one-half of said property; (3) in not
sentencing the RFC to allow the redemption of such half of said property by the
Sorianos, as heirs of the deceased Francisco Soriano, for one-half of the sum of
P10,000 for which the whole lot was sold to the RFC, or, at least, for the whole sum of
P10,000; (4) in not declaring that section 78 of Rep. Act No. 337 is unconstitutional and
in holding that the same, instead of Act No. 3135, as amended by Act No. 4118, is the
law applicable to the case; (5) in considering that the case of Villar v. de Paderanga 3 is
authoritative or controlling in the case at bar; (6) in not sentencing the plaintiff and the
RFC to pay damages to the Sorianos; (7) in not ordering the RFC to return OCT No.
8094, covering the Paraaque property, to the Sorianos, free from any lien or
encumbrance; and (8) in denying the motion for reconsideration of the Sorianos.

The latter's first assignment of error is predicated upon theory that, when the promissory
note and the deed of mortgage in question were executed by Francisco Soriano, he was
somewhat absent-minded, owing to senility, he being then a septuagenarian, apart from
illiterate, for he could write only his name; that he was persuaded to sign said
promissory note and deed of mortrage thru fraud, deceit and undue influence, and did
not know the true nature of these instruments when he affixed his signatures thereon;
and that said instruments are also null and void for lack of cause and consideration. In
this connection, the appealed decision has the following to say:

The third-party plaintiffs ask that the mortgage deed and promissory note be declared
null and void with respect to Francisco Soriano for lack of consent and consideration. It
is claimed that Francisco Soriano was made to believe by Ponce de Leon when he
signed the mortgage deed and the promissory note that these were documents
releasing his land from the previous mortgage in favor of the PNB and that Francisco
Soriano did not receive a single centavo out of the RFC loan.

The principal witness on the above allegation of the third-party plaintiffs is Rosalina
Soriano, who testified that her father, Francisco was an old man who was absent-

minded; that in 1945, Ponce de Leon merely borrowed her father's certificate of title on
the pretext that he would see if it were valid; that she gave it to Ponce de Leon who
never returned the certificate and it turned out that the latter mortgaged it to the PNB by
deceiving her father in signing the mortgage contract; that in 1951, her father received a
sheriff's notice that the land would be foreclosed; that her father went to see Ponce de
Leon in Negros but the latter assured him that nothing would happen to his land; that in
October, 1951, she and her father went to see Ponce de Leon; that when the latter told
her father that the property was mortgaged to the RFC, her father got angry at Ponce de
Leon saying that the latter fooled him but Ponce de Leon assured him that he would
redeem the land but he failed to do so.

Ponce de Leon denied having deceived Francisco Soriano into signing the mortgage
deed covering his land, saying that the transaction was with the full and complete
knowledge and understanding of Francisco Soriano. He was supported by Felipe
Cuaderno, Jr., the Notary Public, who notarized the mortgage deed, who said that he
explained and translated into Tagalog, a language known and spoken by Francisco
Soriano, the mortgage deed.

The fact that Francisco Soriano may have been absent-minded could not be said to
have the effect of vitiating his consent to the mortgage deed because the execution and
signing of a contract is not a matter that concerns past events in which absentmindedness may be taken into account. Besides, the testimony of Rosalina Soriano to
the effect that her father told Ponce de Leon that the latter fooled him shows that the old
man Soriano could remember past events, for if truly absent-minded, Francisco would
not recollect what he claims to be what really took place at the RFC office as testified to
by Rosalina.

Neither could Francisco Soriano be considered feeble-minded if we believe the

testimony of Rosalina which shows Soriano's determination to see to it that the wrong
done him was righted and that his property may not be taken away from him, for
according to Rosalina, he even went to Negros alone to see Ponce de Leon he received
the Sheriff's notice of foreclosure and as shown by his alleged going to see Ponce de
Leon a number of times about his land and of his enlisting the aid of Ramon Lacson.

The Sorianos stress that, according to Felipe Cuaderno, Jr., the Notary Public, when the
latter asked Francisco Soriano, after he had translated the mortgage deed into Tagalog
if he (Francisco) understood it, it was Ponce de Leon who said that the old man already
(k)new it. But, granting that this was what happened, yet, Francisco Soriano would
certainly have protested against the statement of Ponce de Leon if Francisco did not

really know what the transaction was about or he would have told Cuaderno that the
document was not in accordance with the agreement between him and Ponce de Leon
considering that the document was already translated to the old man by Cuaderno in
the Tagalog language which Soriano understood.

Besides, if Ponce de Leon really deceived Francisco Soriano into signing the mortgage
deed and promissory note so much so that in October, 1951, the old man Soriano was
so angry at Ponce de Leon that he told the latter that he fooled him as testified to by
Rosalina Soriano, then why was it that Ponce de Leon was made one of the sponsors of
the thanksgiving mass of the Neo-Prysbeter Rev. Fr. Eugenio Soriano, the old man's
son and one of the present third-party plaintiffs? The conduct of the Sorianos in making
Ponce de Leon one of the sponsors in the thanksgiving mass of Rev. Fr. Eugenio
Soriano in which Ponce de Leon spent a considerable amount for the big feast that
followed the mass is inconsistent with the Sorianos' claim that Ponce de Leon had
hoodwinked Francisco Soriano into signing the mortgage instrument and the promissory
note.

Moreover, the mere oral unsupported testimony of Rosalina Soriano, an interested party
and one of the plaintiffs herein, is not sufficient to overcome the legal presumption of the
regularity of the mortgage deed, a contract celebrated with all the legal requisites under
the safeguard of a notarial certificate (Naval, et al. v. Enriquez, 3 Phil. 670-72). Such
unsupported testimony of the interested party Rosalina Soriano is not that clear, strong
and convincing evidence beyond mere preponderance of evidence, required to show
the falsity or nullity of a notarial document (Sigue, et al. v. Escaro CA, 53 Q.C. 1161;
Jocson v. Ratacion, G.R. No. 41687; Palanca v. Chillanchin v. Coquinco, G.R. No. L1355; Robinson v. Villafuerte, 18 Phil. 171).

With reference to the contention that there was no consideration received by Francisco
Soriano out of the mortgage contract and the promissory note executed in connection
therewith, this is a matter which concerned merely Francisco Soriano and Jose L.
Ponce de Leon for Francisco Soriano had expressly in writing (Exhibit '33-a-Soriano')
authorized Jose L. Ponce de Leon to have the check or checks covering the amount of
the mortgage issued in the name of said Jose L. Ponce de Leon. Whatever
arrangements the latter and Francisco Soriano may have had with respect to the
amounts thus given by the RFC on account of the mortgage is not the concern of the
RFC if Ponce de Leon did not in fact give any portion of the amount to Francisco
Soriano. At any rate, there is ample evidence to show that Francisco Soriano received
part of the consideration of the loan from the RFC. It will be recalled that part of this loan
was paid for the obligation of Francisco Soriano and Ponce de Leon to the Philippine
National Bank secured by a mortgage of the lot in the name of Francisco Soriano. That

Francisco Soriano received portions of this PNB loan from Ponce de Leon is shown by
the fact that on August 16, 1945, Francisco Soriano received the amount of P2,000.00
from Ponce de Leon, evidenced by the receipt exhibit "N", and this amount must have
been part of the P10,000.00 consideration of the PNB mortgage because this mortgage
was executed on August 11, 1945 or two days before Soriano received from Ponce de
Leon the amount of P2,000.00 on August 16, 1945. And two days thereafter, on August
18, 1945, Francisco Soriano again received from Ponce de Leon the amount of P350.00
as shown by the receipt exhibit '0-3' and, on April 27, 1945, the amount of P1,000.00
was received by Francisco Soriano from Ponce de Leon as shown by his receipt exhibit
"0-1" to pay the mortgage on his lot to Apolonio Pascual. On March 12, 1952, Francisco
Soriano received the amount of P3,000.00 from de Leon as shown by the check exhibit
'X-2" and on June 3, 1952, the amount of P50.00 as shown by the check exhibit "X-6"
and P200.00 on October 22, 1952 as shown by the check exhibit "X-7". Rosalina
Soriano herself received P50.00 on March 30, 1952 from Ponce de Leon as shown by
the check marked Exhibit "X-3" and third-party plaintiff Rev. Eugenio Soriano received
P100.00 on March 3, 1952 as shown by the check exhibit "X-1" and P50.00 on March
13, 1952 as shown by exhibit "X-4." There is therefore no ground for declaring the
mortgage contract and promissory note invalid for lack of consideration insofar as
Francisco Soriano and his children are concerned. 4

The facts thus relied upon by His Honor, the Trial Judge, are borne out by the record,
and We are fully in accord with the conclusions drawn therefrom.

In support of their second assignment of error, the Sorianos maintain that the sum of
P10,000, for which the Paraaque property was sold to the RFC, is ridiculously
inadequate, considering that said property had been assessed at P59,647.05. This
pretense is devoid of merit, for said property was subject to redemption and:

... where there is the right to redeem ... inadequacy of price should not be material,
because the judgment debtor may re-acquire the property or else sell his right to
redeem and thus recover any loss he claims to have suffered by reason of the price
obtained at the execution sale. 5

Then, again, as the trial court had correctly of served:

But, mere inadequacy of the price obtained at the sheriff's sale unless shocking to the
conscience will not be sufficient to set aside the sale if there is no showing that, in the
event of a regular sale, a better price can be obtained. The reason is that, generally,

and, in forced sales, low prices are usually offered (1 Moran's Rules of Court, pp. 834835). Considering that in Gov't of P.I. v. Sorna, G.R. No. 32196, wherein property worth
P120,000.00 was sold for only P15,000.00, in Philippine National Bank v. Gonzales, 45
Phil. 693, wherein property valued at P45,000.00 was sold for P15,000.00 and in Cu
Unjieng & Sons v. Mabalacat Sugar Co., 58 Phil. 439, property worth P300,000.00 to
P400,000.00 was sold for P177,000.00, the Court cannot consider the sale of the
Bacolod properties, the Taft Avenue house and lot and the Paraaque property of the
Sorianos null and void for having been sold at inadequate prices shocking to the
conscience and there being no showing that in the event of a resale, better prices can
be obtained. 6

The third, fourth and fifth assignments of error of the Sorianos refer to the amount for
which they feel entitled to redeem the aforementioned property.

It will be recalled that, before the expiration of the redemption period, Teofila Soriano
del Rosario offered to repurchase said property for P14,000; that she and her sister
Rosalina reiterated the offer on the last day of said period; and that the offer was
rejected by the RFC, whose action was upheld by the lower court, inasmuch as sec. 78
of Rep. Act 337 provides that, "(i)n the event of foreclosure ... the mortgagor or debtor
whose real property has been sold at public auction ... for the ... payment of an
obligation to any bank, banking, or credit institution, ... shall have the right ... to redeem
the property by paying the amount fixed by the court in the order of execution, ...," not
the amount for which it had been purchased by the buyer at public auction. We have
already declared that" ... (o)nly foreclosure of mortgages to banking institutions
(including the Rehabilitation Finance Corporation) and those made extrajudicially are
subject to legal redemption, by express provision of statute, ..." 7 and, although neither
an ordinary bank nor the RFC was involved in the case in which this pronouncement
had been made, the same was relevant to the subject-matter of said case and to the
issue raised therein. At any rate, We reiterate the aforementioned pronouncement, it
being in accordance with law, for, pursuant to Rep. Act No. 337:

... The terms "banking institution" and "bank," as used in this Act, are synonymous and
interchangeable and specifically include banks, banking institutions, commercial banks,
savings banks, mortgage banks, trust companies, building and loan associations,
branches and agencies in the Philippines of foreign banks, hereinafter called Philippine
branches, and all other corporations, companies, partnerships, and associations
performing banking functions in the Philippines. 8

The Sorianos insist that the present case is governed, not by Rep. Act No. 337, but by
Act No. 3135, as amended by Act No. 4118 pursuant to which, in relation to section
465 of Act No. 190, the redemption may be made by "paying the purchaser the
amount of his purchase," with interest and taxes the deed of real estate mortgage
in favor of the RFC having allegedly been executed and the aforementioned property
having been sold pursuant to said Acts Nos. 3135 and 4118.

The conclusion drawn by the Sorianos from these facts is untenable. As set forth in its
title, Act No. 3135 was promulgated "to regulate the sale of property under special
powers inserted in or annexed to real estate mortgages," Section 6 thereof provides that
in all cases of "extrajudicial sale ... made under the special power hereinbefore referred
to," the property sold may be redeemed within "one year from and after the date of the
sale ...." Act No. 4118 amended Act No. 3135 by merely adding thereto three (3) new
sections. Upon the other hand, Rep. Act No. 337, otherwise known as "The General
Banking Act," is entitled "An Act Regulating Banks and Banking Institutions and for
other purposes." Section 78 thereof limits the amount of the loans that may be given by
banks and banking or credit institutions on the basis of the appraised value of the
property given as security, as well as provides that, in the event of foreclosure of a real
estate mortgage to said banks or institutions, the property sold may be redeemed "by
paying the amount fixed by the court in the order of execution," or the amount judicially
adjudicated to the creditor bank. This provision had the effect of ammending section 6
of Act No. 3135, insofar as the redemption price is concerned, when the mortgagee is a
bank or a banking or credit institution, said section 6 of Act No. 3135 being, in this
respect, inconsistent with the above-quoted portion of section 78 of Rep. Act No. 337. In
short, the Paraaque property was sold pursuant to said Act No. 3135, but the sum for
which it is redeemable shall be governed by Rep. Act No. 337, which partakes of the
nature of an amendment to Act No. 3135, insofar as mortgages to banks are banking or
credit institutions are concerned, to which class the RFC belongs. At any rate, the
conflict between the two (2) laws must be resolved in favor of Rep. Act No. 337, both as
a special and as the subsequent legislation. 9

The sixth, seventh and eighth assignments of error made by the Sorianos are mere
consequences of those already disposed of. Hence, no further discussion thereof is
necessary.

Plaintiff's Appeal

Plaintiff Ponce de Leon alleges that the lower court has erred: (1) "in not setting aside
the foreclosure sales on the mortgage contract dated October 8, 1951"; (2) "in stating

that the proceeds of the foreclosure sales were conscionable"; (3) in not granting Ponce
de Leon's claim for adjustment and not "giving him a reasonable time to pay whatever
obligations he may have"; (4) in not granting him damages nor directing the return of his
properties; (5) "in not ordering a new trial for the purpose of adjusting" his "obligations
and determining the terms and conditions of his obligation"; and (6) in not granting his
claim against the Sorianos.

With respect to his first assignment of error, plaintiff maintains that his promissory note
Exhibit A was not yet overdue when the mortgage was foreclosed, because the
installments stipulated in said promissory note have "no fixed or determined dates of
payment," so that the note is unenforceable and "the RFC should have first asked the
court to determine the terms, conditions and period of maturity thereof."

In this connection, it should be noted that, pursuant to Exhibit A, the total sum of
P495,000 involved therein shall be satisfied in quarterly installments of P28,831.64 each
representing interest and amortization and that, although the date of maturity of
the first installment was left blank, the promissory note states that the "date of maturity
(was) to be fixed as of the date of the last release," completing the delivery to the
plaintiff of the sum of P495,000 lent to him by the RFC. He now says that this sum of
P495,000 has not, as yet, been fully released by the RFC. But this is contrary to the
facts of record, for, during the trial, his counsel, Atty. Jose Orozco, made the following
admission:

Out of the loan of P495,000.00, the following were paid to the creditors of Jose Ponce
de Leon: P100,000.00 to the PNB, P30,000.00 to Cu Unijeng Bros. P5,000.00 to Arturo
Colmenares, P1,000.00 to Lorenzo Balagtas. The total amount paid to the creditors is
P136,000.00 which were taken out of the proceeds of P495,000.00. The rest were all
paid in the name of Jose Ponce de Leon. 10

In short, part of the sum of P495,000 had been delivered by the RFC to the creditors of
the plaintiff and Francisco Soriano, as agreed upon by them, in payment of their
outstanding obligations, and the balance of said sum of P495,000 was turned over to
the plaintiff, with the written authorization and conformity of Francisco Soriano. This is
borne out by the fact that, prior to the institution of this case, plaintiff had not complained
of failure of the RFC to fully release the aforementioned sum of P495,000. Indeed, in his
own complaint herein, he merely alleged a "delay in the release." Even so, he impliedly
admitted that the first installment was due in October 1952 or, more specifically, on
October 24, 1952, this being the date given therefor in the letter-demands of the RFC,
the accuracy of which were not questioned by the plaintiff so that the last release

made by the RFC to complete the sum of P495,000 must have taken place on July 24,
1952, although, in answer to a question propounded to him, by his own counsel, as
regards the date he "received the total amount granted by the RFC," plaintiff said on
the witness stand he "believed that it was in the last part or quarter of 1953." At this
juncture, it is noteworthy that plaintiff claims the right to a suspension of payment or an
extension of the period to pay the RFC owing to the typhoons that had lashed his
sawmill in October and November 1952, thus indicating clearly that the amount of the
loan extended to him and Francisco Soriano had then been fully released by the RFC
three (3) months before October 1952 and that the first installment under the promissory
note Exhibit A was due that month, as claimed by the RFC.

At any rate, Annex A, in effect, authorized the RFC to fix the date of maturity of the
installments therein stipulated, which is allowed by the Negotiable Instruments Law 11
and when a promissory note expresses "no time for payment," it is deemed "payable on
demand." 12

Under his second assignment of error, plaintiff maintains that the aggregate price
of P112,332.00, for which the mortgaged properties had been sold at public
auction, is unconscionable, said properties being allegedly worth P1,202,976.
This premise is inaccurate.

It should be noted that plaintiff and Francisco Soriano were granted a P495,000
loan on the security, not only, of the existing properties offered as guarantee, but,
also, on that of assets appraised at P570,000 yet to be acquired only
plaintiff, partly with money thus received from the RFC and partly with his own
funds. After obtaining said loan and receiving the amount thereof, less the sum of
P136,000 applied to the payment of outstanding obligations, plaintiff failed to
purchase the machinery and equiptment he had promised to get, or to set up the
constructions he had undertaken to make. Moreover, the RFC found that the
mortgaged lots in the cities of Pasay and Bacolod, which were originally
appraised at P492,288.00, were actually worth P172,530,00 only. Again, a good
part of the machinery and equipment existing in one of the mortgaged lands,
when it was inspected before the granting of the loan, were subsequently lost or
missing, and those that remained were, at the time of the sale to the RFC, in bad
shape, so that the appraised value thereof was then estimated at P10,000 only.
Under these circumstances, it is clear that the lower court did not err in
approving the sale of the mortgaged properties for the aggregate sum of
P112,332.

As regards his third assignment of error, it is urged by the plaintiff that he is entitled to a
"suspension of payment," or a postponement of the date of maturity of obligation to pay,
in view of the typhoons that had "practically wiped out" his sawmill in Samar during the
months of October and November 1952. This claim is predicated upon Article 1174 of
our Civil Code, reading:

... Except in cases expressly specified by the law, or when it is otherwise declared by
stipulation, or when the nature of the obligation requires the assumption of risk, no
person shall be responsible for those events which could not be foreseen, or which,
though foreseen, were inevitable.

Plaintiff cannot avail of the benefits of this provision since he was not bound to deliver
the aforementioned sawmill, or any other specific thing damaged or destroyed by
typhoons, to the RFC. His obligation was merely generic, namely, to pay certain sums
of money to the RFC, at stated intervals. As His Honor, the Trial Judge had aptly put it:

... in the instant case, there was an obligation on the part of the debtor to pay his loan,
independently of the purpose for which the money loaned was intended to be used and
this obligation to pay continues to subsist notwithstanding the fact that it may have
become impossible for the debtor to use the money loaned for the particular purpose
that was intended (Milan v. Rio y Glabarrieta, 45 Phil. 718). There is hence no ground
for declaring the amortizations due on the principal loan since October, 1952 as
extinguished due to fortuitous event or to grant plaintiff a reasonable time to pay the due
amortizations as asked for by Ponce de Leon in his complaint. 13

Being mere corollaries to his first three assignments of error, which cannot be
sustained, plaintiff's fourth, fifth and sixth assignments of error must have the same fate.

Defendant's Appeals

The RFC contends that the lower court erred: (1) in holding that the Paraaque property
is presumed to belong to the conjugal partnership of Mr. and Mrs. Francisco Soriano;
(2) in failing to give due weight to the testimony of Gregorio Soriano, and in holding that
the same is insufficient to overcome the presumption in favor of the conjugal nature of
said property; (3) in failing to consider that the Sorianos are now estopped from
questioning the validity of the mortgage on and the foreclosure sale of said property; (4)
in annulling the mortgage insofar as one-half of said property is concerned, despite the

finding that part of the proceeds of the RFC loan was paid to settle the PNB loan
secured by the same property; and (5) in holding that the mortgage thereon and the
sheriff's sale thereof to the RFC are null and void as regards, one-half of said property.
These assignments of error may be reduced to one, namely that the lower court erred in
avoiding the sale to the RFC of the Paraaque property, upon the ground that the same
formed part of the conjugal partnership of Mr. and Mrs. Francisco Soriano.

In this connection, it appears that the property was registered in the name of "Francisco
Soriano, married to Tomasa Rodriguez," and that based upon this fact alone without
any proof establishing satisfactorily that the property had been acquired during
coverture the lower court presumed that it belongs to the conjugal partnership of said
spouses. We agree with the RFC that the lower court has erred in applying said
presumption.

We should not overlook the fact that the title to said property was not a transfer
certificate of title, but an original one, issued in accordance with a decree which,
pursuant to law, merely confirms a pre-existing title. 14 Said original certificate of title
does not establish, therefore, the time of acquisition of the Paraaque property by the
registered owner thereof.

Then, again, the lower court applied said presumption, having in mind, presumably,
Article 160 of our Civil Code, which reads:

... All property of the marriage is presumed to belong to the conjugal partnership, unless
it be proved that it pertains exclusively to the husband or to the wife.

This provision must be construed in relation to Articles 153 to 159 of the same Code,
enumerating the properties "acquired ... during the marriage" that constitute the
conjugal partnership. Consistently therewith, We have held that "the party who invokes
this presumption must first prove that the property in controversy was acquired during
the marriage. In other words, proof of acquisition during coverture is a condition sine
qua non for the operation of the presumption in favor of conjugal partnership." 15 It had,
earlier, been declared, 16 that "(t)he presumption under Article 160 of the Civil Code
refers to property acquired during the marriage ...." We even added that, there being "no
showing as to when the property in question was acquired ... the fact that the title is in
the wife's name alone is determinative." This is borne out by the fact that, in the
previous cases applying said presumption, 17 it was duly established that the property

in question therein had been acquired during coverture. Such was, also, the situation
obtaining in Servidad v. Alejandrino 18 cited in the decision appealed from.

The case at bar is differently situated. The Sorianos have not succeeded in proving that
the Paraaque property was acquired "during the marriage" of their parents. What is
more, there is substantial evidence to the contrary.

Gregorio Soriano testified that his first cousin, Francisco Soriano, had acquired said
property from his parents, long before he got married. In this connection, the lower
court, however, said that:

... the credibility of this witness is subject to doubt for it was shown that he had an
improper motive in testifying against the third-party plaintiffs because he had a niece
who was prosecuted by the third-party plaintiffs for estafa, .... 19

This observation is, to our mind, hardly justifiable. To begin with, when counsel for the
Sorianos asked the witness whether or not his grandchild or grandniece Flordeliza
Clemente had been accused of "estafa" by the Sorianos, counsel for the RFC objected
thereto, and the court sustained the objection, upon the ground that the question was
"irrelevant." As a consequence, there is no evidence of the prosecution of Flordeliza
Clemente by the Sorianos. What is more, the ruling of the court declaring the matter
"irrelevant" to the present case rendered it unnecessary for the RFC to prove that said
prosecution if it were a fact had nothing to do with the testimony of Gregorio
Soriano. It would, therefore, be less than fair to the RFC to draw an inference adverse
thereto resulting from the absence of evidence to this effect. At any rate, said
prosecution does not necessarily warrant the conclusion that Gregorio Soriano was
impelled by an "improper motive" in testifying as he did. After all, the Sorianos are,
likewise, nieces of Gregorio Soriano and he was not the party allegedly accused by
them.

Again, this witness testified in a straightforward manner, and disclosed a good number
of details bearing the ear-marks of veracity. What is more, his testimony was
corroborated, not only by Felipe Cuaderno, Jr. and OCT No. 8094, but, also, by the
testimony of third-party plaintiff Rosalina Soriano. Indeed, Felipe Cuaderno, Jr. an
assistant attorney and notary public of the RFC, before whom the deed of mortgage
was acknowledged testified that, in a conference he had before the execution of the
promissory note and the deed of mortgage in favor of said institution, Francisco Soriano
assured him that the Paraaque property was "his own separate property, having

acquired it from his deceased father by inheritance and that his children have nothing to
do with the property." This was, in effect, confirmed by no less than Rosalina Soriano,
for she stated, on cross-examination, that her father, Francisco Soriano, "was born and
... raised" in said property, so that contrary to her testimony in chief he could not
have told her that he and his wife had bought it, as the Sorianos would have Us believe.

Needless to say, had the property been acquired by them during coverture, it would
have been registered, in the name not of "Francisco Soriano, married to Tomasa
Rodriguez," but of the spouses "Francisco Soriano and Tomasa Rodriguez." In Litam v.
Espiritu, 20 We quoted with approval the following observation made in the decision
under review therein:

Further strong proofs that the properties in question are the paraphernal properties of
Marcosa Rivera, are the very Torrens Titles covering said properties. All the said
properties are registered in the name of "Marcosa Rivera, married to Rafael Litam." This
circumstance indicates that the properties in question belong to the registered owner,
Marcosa Rivera, as her paraphernal properties, for if they were conjugal, the titles
coveting the same should have been issued in the names of Rafael Litam and Marcosa
Rivera. The words 'married to Rafael Litam'written after the name of Marcosa Rivera, in
each of the above mentioned titles are merely descriptive of the civil status of Marcosa
Rivera, the registered owner of the properties covered by said titles.

The records further show that on August 16, 1945 or two (2) days after the execution
of the deed of mortgage for P10,000 in favor of the PNB Francisco Soriano received
P2,000 from plaintiff herein; that, early in 1951, Francisco Soriano received a letter
informing him that the PNB mortgage on the Paraaque property would be foreclosed,
unless the debt guaranteed therewith were settled; that, accordingly, his children came
to know of the mortgage in favor of the PNB; that on October 8, 1951, said mortgage
was transferred to the RFC; that, thereafter, or from March to October 1952, Francisco
Soriano and his children, Rosalina Soriano and Eugenio Soriano, received several
sums of money, aggregating P3,450, from plaintiff herein; that the latter, moreover,
spent over P6,000 on the occasion of the ordination of third-party plaintiff, Eugenio
Soriano, as a priest, on April 20, 1952; that plaintiff, also, paid the bills of Francisco
Soriano in the Singian Clinic when he fell sick in 1953; and that the former had, likewise,
paid the real estate tax on the Paraaque property from 1947 to 1952.

Under these circumstances, it is difficult to believe that Sorianos did not know then of
the mortgage constituted by Francisco Soriano, on October 8, 1951, in favor of the
RFC. In fact, Rosalina Soriano testified that when, that month, Francisco Soriano and

she conferred with the plaintiff, he stated that the Paraaque property was mortgaged to
the RFC, whereupon her father got angry at the plaintiff and said that he had fooled him
(Francisco Soriano). Being thus aware of said mortgage since October 1951, the
Sorianos did not question its validity until January 12, 1957, when they filed in this
cage their third-party complaint in intervention as regards, at least, one-half of the
Paraaque property, which they now claim to be their mother's share in the conjugal
partnership. Worse still, after the foreclosure sale in favor of the RFC, they tried to
redeem the property for P14,000, and, when the RFC did not agree thereto, they even
sought the help of the Office of the President to effect said redemption.

Their aforementioned failure to contest the legality of the mortgage for over five (5)
years and these attempts to redeem the property constitute further indicia that the same
belonged exclusively to Francisco Soriano, not to the conjugal partnership with his
deceased wife, Tomasa Rodriguez. Apart from the fact that said attempts to redeem the
property constitute an implied admission of the validity of its sale and, hence, of its
mortgage to the RFC there are authorities to the effect that they bar the Sorianos
from assailing the same.

... defendants, by their repeated requests for time to redeem had impliedly admitted
and were estopped to question the validity and regularity of the Sheriff's sale. 21

The petitioner himself believed that the company had a right to cancel, because in
March, 1932, i.e., after the cancellation, he proposed the repurchase of the property,
and the company agreed to resell it to him .... Unluckily he could make no down
payment and the repurchase fell through. Wherefore, it is now too late for him to
question the cancellation, inasmuch as he practically ratified it, .... 22

The fact that Mallorca failed to exercise her right of redemption, which she sought to
enforce in a judicial court, ends her interest to the land she claims, and, doubtless,
estops her from denying PNB's mortgage lien thereon. 23

It is thus clear that the lower court erred in annulling the RFC mortgage on the
Paraaque property and its sale to the RFC as regards one-half of said property, and
that the decision appealed from should, accordingly, be modified, by eliminating
therefrom the second paragraph of its dispositive part, quoted earlier in this decision.

With this modification and that of other pertinent parts of the decision appealed from,
the same is hereby affirmed in all other respects, with the costs of this instance against
plaintiff, Jose L. Ponce de Leon and third-party plaintiffs, Rosalina Soriano, Teofila
Soriano del Rosario and Father Eugenio Soriano. It is so ordered.

Reyes, J.B.L., Makalintal, Zaldivar, Castro, Fernando, Teehankee, Barredo and

Villamor, JJ., concur.

Dizon and Makasiar, JJ., are on leave.