HUERTA ALBA RESORT v G.R. No.
RESORT v G.R. No. 128567 pay the judgment obligation had not yet lapsed (in essence, the exercise of
CA/SYNDICATED MANAGEMENT
GROUP
September 1, 2000 PURISIMA, J.
TOPIC IN SYLLABUS: Judicial foreclosure Digest By:amb
SUMMARY: Syndicated won in a judicial foreclosure case. Huerta Alba, from
1994-1995, kept questioning and seeking clarification, as it wanted to know the
kind of redemptionary right applicable. The courts ruled that it was an equity of
redemption with a ~90-day period. However, much later on (after filing pleading
after pleading and motion after motion), Huerta invoked the provisions of the
General Banking Act, claiming that the original mortgagee was a bank, thus
allowing for a one-year period. The RTC allowed this in order to stay execution,
but the CA and SC set aside the RTC, noting that the invocation of the GBA should
have been during the answer, when invocation of the same as a counterclaim would
have defeated/qualified the relief prayed for. As such, it was estopped from
invoking the same.
DOCTRINE:In judicial foreclosure, what is granted under Rule 68 is an equity of
redemption, and not a right of redemption (the former has a much shorter period).
The exception to the rule is if the mortgagee is a bank, in which case a one-year
period from registration of the certificate of sale is allowed under the General
Banking Act (now GB Law). However, this period must be invoked at the first
instance during the Answer, as a Counterclaim.
FACTS:
October 19, 1989: Syndicated Management filed a complaint for judicial foreclosure
of mortgage before the RTC Makati, seeking to foreclose four parcels of land
mortgaged by Huerta Alba to Intercon Fund (where Syndicated was the assignee of
the loan). In its answer, Huerta Alba questioned the assignment as an ULTRA
VIRES act, and questioned the correctness of the charges and interest on the
mortgage debt.
April 30, 1992: RTC granted the foreclosure.
Sometime after: The case was appealed to the CA, which dismissed the appeal on
the ground of late payment of docket fees. The case was brought to the SC via rule
65 certiorari.
December 13, 1993: SC affirmed the CA decision. An MR was filed against this
decision.
February 16, 1994: MR denied with finality.
March 10, 1994: Huerta filed a motion for leave to present as second MR, but the
leave was denied.
March 14, 1994: Decision became final and executory.
July 4, 1994: Syndicated filed with the RTC a motion for execution, which was
granted. When the sheriff attempted to levy on the properties, Huerta would filed
an Urgent Motion to Quash and Set Aside the Writ on the ground that the records
of the case were still with the CA (therefore premature); thus, the 150-day period to
Page 1 of 9
EQUITY OF REDEMPTION).
September 2, 1994: The Motion to Quash was denied-- the subject judgment had
become final and executory, and execution was now a matter of right. This was
opposed by Huerta, which brought up the same to the CA via a petition for
certiorari averring the same arguments as the Motion to Quash.
September 6, 1994: An auction sale was conducted and Syndicated Management
was declared the highest bidder. The sale was registered in the ROD on October 21
of the same year.
September 7, 1994: In the RTC, Huerta filed an Ex-Parte Motion for Clarification
on the question on w/n the twelve month period of redemption for ordinary
execution applied in this case.
September 26, 1994: The RTC ruled that the applicable rule was equity of
redemption under Rule 68 (so the twelve month rule does not apply). Thereafter,
Huerta filed an Exception to this order, as well as Motion to Set Aside Order,
claiming that the order materially altered the April 30, 1992 decision, declaring
that the judgment shall be satisfied under the rules on sale of real estate under
execution.
September 30, 1994: The CA ruled that the period involved was a 150-day period
(equity of redemption), computed from notification of Entry of Judgment (around
March 14, 1994), such that the equity of redemption expired on September 11,
1994. An MR was filed as to this decision.
December 23, 1994: MR denied. Case(s) with the CA eventually became final and
executory on January 25, 1995.
February 10, 1995: Trial court confirmed the sale of properties, and declared that
all pending incidents relating to its September 26, 1994 order had become moot and
academic. TCTs were then issued in favor of Syndicated.
February 27, 1995: Huerta FILED YET ANOTHER MOTION FOR
CLARIFICATION, this time with the CA. It sought clarification of the date of
commencement of the one year period for redemption of the properties in question
(on the ground that the lending entity may have been a credit institution; under the
General Banking Act, there would be a one year redemption period, not merely the
shorter equity of redemption). This was merely NOTED by the CA, as all the
decisions so far are now final and executory. As to the argument on the one year
period, it should have ventilated this in the first instance, when it was seeking
clarification as to the 150-day period. Huerta took no further step from this ruling.
March 31, 1995: Syndicated filed a Motion for Issuance of Writ of Possession with
the RTC. When the hearing for the Motion for Issuance of Writ of Possession took
place weeks later, Huerta's counsel suddenly entered appearance and asked for time
to interpose their opposition. In its opposition, Huerta also filed a Motion to
Compel Private Respondent (Syndicated) to Accept Redemption. There, it asserted
its right to redemption under the General Banking Act on the ground that the
original mortgagee was a credit institution.
July 21, 1995: This motion was GRANTED on the basis of the General Banking
Act.
Syndicated challenged the order via petition for CPM with the SC, which was
referred to the CA. In a resolution dated November 14, 1996, the CA ruled in favor
of Syndicated, hence this present petition by Huerta with the Supreme Court.
PETITIONER’S ARGUMENT(S): There was a right of redemption given that
the mortgagee was a credit institution. Such right of redemption under the General
Banking Act has a one-year period from registration of certificate of sale.
ISSUE(S):What kind of right did Huerta have: a right to redemption, or an equity
of redemption? Was it seasonably invoked? (EQUITY OF REDEMPTION, not
seasonably invoked)
HELD: DENIED.
In Limpin v IAC, the Court held that in a judicial foreclosure, there is no right of
redemption under the law similar to extrajudicial foreclosure (where Act 3135
grants a one-year period). The law declares that a judicial foreclosure sale, when
confirmed by an order of the Court, operates to divest the rights of all the parties to
the action and to vest the same in favor of the purchaser, subject to such rights of
redemption as may be allowed by law. An example of such is if the mortgagee is a
bank (under PNB Charter and General Banking Act), where a one year period from
registration of the certificate of sale exists. Outside of such, what only exists is an
equity of redemption, which is the right of the defendant mortgagor to extinguish
the mortgage and retain ownership of the property by paying the secured debt
within the 90-day period after the judgment becomes final, in accordance with Rule
68, or even after the foreclosure sale but prior to its confirmation.
The right under RA 337 must be invoked seasonably.The facts show that it was
only on May 2, 1995, when Huerta filed the Motion to Compel Private Respondent
to Accept Redemption, when the right was first invoked. However, it should have
invoked the right as a counterclaim to its answer, because it could have affected
their rights entirely given thatthe General Banking Act had provisions that could
have favored Huerta other than the one-year redemption period. (The counterclaim
could have defeated/qualified the judgment/relief.) As such, it was now estopped
from invoking the same.
(Note that the TC invoked RA 337 later on, and the TC granted this invocation in
its July 1995 order. This should not have been granted, as it effectively modified the
law of the case, which was that the right afforded to Huerta was an unqualified
equity of redemption. Granting this motion contradicted the CA's earlier rulings.)
Page 2 of 9
Bacaling v. Muya G.R. Nos. 148404-05
April 11, 2002 De Leon, Jr., J.
TOPIC IN SYLLABUS: Judicial Foreclosure Digest By: Bries
SUMMARY: Nelita Bacaling and her spouse Ramon were owners of 3 parcels of
land. In 1955 the landholding was subdivided into 110 sub-lots. The landholding
was processed and approved as "residential" or "subdivision" by the NUPC. The
Bureau of Lands approved the corresponding subdivision plan for purposes of
developing the property into a low-cost residential community. In 1957, a real
estate loan was granted to the spouses Bacaling by GSIS for the development of the
subdivision. To secure repayment, the Bacalings executed in favor of the GSIS a
REM over the 110 sub-lots. The Bacalings failed to pay the amortizations on the
loan and consequently the mortgage constituted on the 110 sub-lots was foreclosed
by the GSIS. The respondents entered and occupied the sub-lots—they claimed in
1964 they were legally instituted by Bacaling’s administrator/overseer as tenant-
tillers, religiously paying rent and securing certificates of land transfer. In 1977 the
City Council of Iloilo enacted Zoning Ordinance No. 212 declaring the sub-lots as
"residential". Nelita, in 1989 was eventually able to restore to herself ownership of
the 110 sub-lots, and sell the land to Jose Juan Tong—she appointed him as her
attorney-in-fact, under an irrevocable SPA. 10 years after the perfection and
execution of the sale, Bacaling filed a complaint to nullify the contract of sale. DAR
Region VI and Central Office: dismissed. OP reversed and found that the land had
been converted from agricultural to residential. SC: OP affirmed.
DOCTRINE: Only foreclosures of mortgages in favor of banking institutions and
those made extrajudicially are subject to legal redemption
PROCEDURAL ANTECEDENTS: Petition for Review of a consolidated CA
Decision and its Resolution reversing the Decision and Resolution of the Office of
the President.
FACTS: Nelita Bacaling and her spouse Ramon were owners of 3 parcels of land in
Brgy. Cubay, Jaro, Iloilo City. These lots were duly covered by their respective
TCTS. In 1955 the landholding was subdivided into 110 sub-lots covered by their
respective TCTs, inclusive of the Registry of Deeds of the City of Iloilo. On May
16, 1955, the landholding was processed and approved as "residential" or
"subdivision" by the National Urban Planning Commission (NUPC). On May 24,
1955 the Bureau of Lands approved the corresponding subdivision plan for
purposes of developing the said property into a low-cost residential community
which the spouses referred to as the Bacaling-Moreno Subdivision.
In 1957, a real estate loan of P600,000 was granted to the spouses Bacaling by
GSIS for the development of the subdivision. To secure repayment, the Bacalings
executed in favor of the GSIS a REM over their parcels of land including the 110
sub-lots. Out of the approved loan only P240,000 was released to them. The
Bacalings failed to pay the amortizations on the loan and consequently the
mortgage constituted on the 110 sub-lots was foreclosed by the GSIS. Nelita
Bacaling (by then a widow) in 1989 was eventually able to restore to herself
ownership of the 110 sub-lots.
According to the findings of the Office of the President, in 1972 and thereafter,
respondents Muya, Crispin Amor, Jereza, Lazarte and Tonocante entered and
occupied the 110 sub-lots and grabbed exclusively for themselves the said 9.9631
hectare landholding. Apparently, respondents took advantage of the onset of
martial law and the foreclosure of the lots by GSIS. They sowed the lots as if they
were their own, and altered the roads, drainage, boundaries and monuments
established.
Respondents claim that in 1964 they were legally instituted by Bacalings
administrator/overseer as tenant-tillers of the land on sharing basis with two and a
half hectares each for Muya, Amor, Tonocante and Lazarte, and one and a half
hectares for Jereza. In 1974, their relationship with the landowner was changed to
one of leasehold. They religiously delivered their rental payments to Bacaling as
agricultural lessor. In 1980, they secured certificates of land transfer in their names
for the sub-lots. They have made various payments to the Land Bank of the
Philippines as amortizing owners-cultivators of their respective tillage.
In 1977, however, the City Council of Iloilo enacted Zoning Ordinance No. 212
declaring the sub-lots as "residential" and "non-agricultural," which was consistent
with the conversion effected in 1955 by the NUPC and the Bureau of Lands. In
1978, Nelita was able to register the subject property as the Bacaling-Moreno
Subdivision with the NHA and to obtain therefrom a license to sell the sub-lots to
consummate the original design to develop a low-cost residential community.
In Aug. 21, 1990, Jose Juan Tong, together with Vicente Juan and Victoria Siady,
bought from Nelita the sub-lots for P1,700,000. The sale was effected after Bacaling
has repurchased the subject property from the GSIS. To secure performance of the
contract of absolute sale and facilitate the transfer of title of the lots to Tong,
Bacaling appointed him in 1992 as her attorney-in-fact, under an irrevocable SPA
to file, defend and prosecute any case involving the lots; to assume full control,
prosecute, terminate and enter into an amicable settlement and compromise
agreement of all cases now pending before the DARAB, Region VI which involved
the lots; to hire a lawyer/counsel which he may deem fit and necessary to effect and
attain the foregoing acts and deeds; handle and prosecute the aforesaid cases; to
effect a settlement of occupation and tenants on the aforesaid lots; to cause and
effect the transfer of the aforesaid lots in the name of the vendees; and to execute
and deliver document/s or instrument of whatever nature necessary to accomplish
the foregoing acts and deeds.
10 years after the perfection and execution of the sale, Bacaling filed a complaint to
nullify the contract of sale. The suit was dismissed with prejudice and the dismissal
has long become final and executory. Following the sale of the sub-lots and using
Page 3 of 9
the irrevocable SPA, Tong (together with Bacaling) filed a petition for cancellation
of the certificates of land transfer against respondents and a certain Ruel with the
DAR Region VI Office. The DAR, however, dismissed the petition on the ground
that there had been no legitimate conversion of the classification of the sub-lots
from agricultural to residential prior to Oct. 21, 1972 when Operation Land
Transfer under P.D. No. 72 took effect. Bacaling and Tong appealed to the DAR
Central Office but their appeal was rejected. The MR failed to overturn the ruling
of the Central Office Order.
Bacaling and Tong appealed the adverse DAR Orders to the Office of the President,
which reversed them and found that the land had been completely converted from
agricultural to residential lots as a result of the declarations of the NUPC and the
Bureau of Lands and the factual circumstances, i.e., the GSIS loan with real estate
mortgage, the division of the original 3 parcels into 110 sub-lots under individual
certificates of title, and the establishment of residential communities adjacent to the
subject property, which proved the intention of spouses Bacaling to develop a
residential subdivision. The OP Decision also categorically acknowledged the
competence of the NUPC and the Bureau of Lands to classify the 110 sub-lots into
residential areas. Separate MRs were denied.
Respondents elevated the OP Decision to the CA on a petition for review under
Rule 43. Before the petition was resolved, Nelita manifested to the CA that she was
revoking the irrevocable power of attorney in favor of Tong and she was admitting
the status of respondents as her tenants of the sub-lots which allegedly were
agricultural. CA reversed the OP Decision and validated the certificates of land
transfers in favor of respondents without promulgating a ruling on Tong's
supposedly ensuing lack of material interest in the controversy as a result of the
manifestation. The CA refused to recognize the 1955 NUPC and Bureau of Lands
classification of the subject lots as residential subdivision. Tong moved for
reconsideration of the CA Decision which Bacaling did not oppose despite her
manifestation. CA denied MR. Hence, this petition for review on certiorari.
Long after issues were joined in the instant proceedings, or on October 8, 2001,
Nelita resurrected her manifestation with the CA and moved to withdraw/dismiss
the present petition on the ground that the irrevocable power of attorney in favor of
Tong had been nullified by her and that Tong consequently lacked the authority to
appear before the SC. She also manifested that respondents were bona fide tenants
of the sub-lots which were allegedly agricultural and not residential pieces of realty.
Accordingly, Tong was left all alone to pursue the instant case.
ISSUES: WON the sub-lots admittedly classified for residential use by the NUPC
and the Bureau of Lands prior to October 21, 1972 are covered by the Operation
Land Transfer under P.D. No. 72?
HELD: NO. Petition for Review is GRANTED. The certificates of land transfer
over the 110 sub-lots in the name of respondents and/or their successors in interest
are DECLARED VOID AB INITIO. Said sub-lots are declared outside the
coverage and operation of P.D. No. 27 and other land reform laws. The
consolidated Decision of the CA is REVERSED AND SET ASIDE. OP
REINSTATED with the modification in that the respondents are not entitled to
disturbance compensation.
IMPORTANT BIT BELOW:
The respondents argued that GSIS cannot be considered as the owner of the said
properties from 1961 up to 1989 as the foreclosure proceedings that started in 1957
only attained finality during its promulgation by the SC in 1989. Respondents
contend that GSIS was the owner of the said parcels of land only from 1989. The
SC disagreed. The pendency of the GSIS case cannot be construed as a maintenance
of status quo with Bacaling as the owner from 1957 up to 1989 for the reason that
what was appealed to this Court was only the issue of redemption, and not the
validity of the foreclosure proceedings including the public auction sale, the
confirmation of the public auction sale and the confirmation and transfer of
ownership of the foreclosed parcels of land to GSIS. The ownership of GSIS over
the subject parcels of land was not disputed. It was the existence of the right to
redeem in a judicial foreclosure that was the subject of the controversy. We ruled
that there was no longer any right of redemption in a judicial foreclosure
proceeding after the confirmation of the public auction. Only foreclosures of
mortgages in favor of banking institutions and those made extrajudicially are
subject to legal redemption. Since GSIS is not a banking institution and the
procedure of the foreclosure is not extrajudicial in nature, no right of redemption
exists after the judicial confirmation of the public auction sale of the said lots.
The sub-lots are residential. In Tiongson v. CA the SC held if the lot in question is
not an agricultural land then the rules on agrarian reform do not apply since the
key factor in ascertaining whether there is a landowner-tenant relationship is the
nature of the disputed property. This is buttressed by P.D. 27 which by its terms
applies only to tenant-farmers of private agricultural lands primarily devoted to
rice and corn under a system of shared-crop or lease tenancy, whether classified as
landed estate or not.
Here, the sub-lots have been officially classified as residential since 1955. The
classification began when the NUPC and the Bureau of Lands approved the
subdivision of the 3 parcels of land into 110 sub-lots each covered with TCTs. To
build the subdivision project, Nelita obtained a real estate mortgage loan from the
GSIS which she used to fund the project but he was unfortunately unable to
complete it due to the immensity of the cost. She undertook to complete the sale of
the subdivision when in 1978 she obtained the registration with the NHA as well as
a license to sell individually the sub-lots. Earlier, in 1977, the City Council of Iloilo
also recognized the residential classification of the same sub-lots when it passed the
Page 4 of 9
Land Use Plan and Zoning Ordinance. In 1990, Bacaling sold the same parcels to
Tong who wanted to pursue the development of the subdivision project. It is clear
that Tong bought the property for residential and not agricultural purposes upon
the strong assurance of Bacaling that the sub-lots were legally available for such
prospect. The subject lots were valuable in the buyers market only for residential
use as shown by the example of adjacent lots which had long been utilized for
building subdivisions and the implausibility of believing that Tong would buy the
lands only to lose them at a bargain to agrarian reform.
Both intention and overt actions show the classification of thesub-lots for
residential use. One cannot imagine Nelita borrowing the P600,000 from the GSIS
and spending P250,000 for the purpose of developing and subdividing the original 3
parcels of land into 110 homelots, with individual TCTs ready and available for
sale, if her purported desire were to keep the landholding for agricultural purposes.
It also makes no sense that Tong would invest so much money, time and effort in
these sub-lots for planting and cultivating agricultural crops when all the
mechanisms are already in place for building a residential community. One cannot
likewise deny the consistent official government action which decreed the sub-lots
as most appropriate for human settlements considering that for several times
beginning in 1955 and in accordance with relevant laws and regulations, the said
landholding was categorically reserved as a residential subdivision.
It is also grave error to gloss over the NUPC action since its declarations have long
been recognized in similar cases as the present one as clear and convincing evidence
of residential classification. In Magno-Adamos v. Bagasao the SC found the
endorsements of the NUPC approving albeit tentatively a subdivision plan to be a
very strong evidence of conversion of the disputed parcels of land into a residential
subdivision which would contradict the alleged tenancy relationship. We found
nothing objectionable in the trial court's ruling in Santos v. de Guzman[51]
ejecting an alleged tenant from the landholding "because the same was included in a
homesite subdivision duly approved by the National Planning Commission."[52]
In Republic v. Castellvi we gave great weight to the certification of the NUPC that
the subject parcels of land were classified as residential areas and ordered their
appraisal as residential and not agricultural lands.
The NUPC was created under EO 98. Under the express terms of its mandate, the
NUPC was therefore duty-bound to act only upon realty projects which would be
used for human settlements and not for agricultural purposes. It is in this light that
we must take stock of the 1955 NUPC conversion of the 110 sub-lots from
agricultural to residential classification.
To bolster the exclusive role of the NUPC over developmental projects for
residential and industrial purposes, the term subdivision (which NUPC was
mandated to review and if properly executed to approve) was defined in EO 98 as
the division of a tract or parcel of land into 2 or more lots, sites or other divisions
for the purpose, whether immediate or future, of sale or building development, and
includes resubdivision, and when appropriate to the context, relates to the process
of subdividing or to the land or area subdivided. The Subdivision Regulations
(which the NUPC adopted pursuant to EO 98) decreed as mandatory the NUPC
approval of all subdivisions of land in the Philippines intended for residential,
commercial and industrial purposes, before lots comprising the subdivision could be
legally sold or building development therein could validly commence.
The 1955 approval by the NUPC of the subdivision of the 3 parcels of land owned
by Nelita Bacaling and her spouse into 110 sub-lots caused the conversion, if not
outright classification, of the entire landholding into a residential community for
sale to interested buyers. This is an official classification of the sub-lots as
residential units and constitutes the only objective and effectual means of obtaining
in 1955 the classification and reservation of private land for non-agricultural use,
i.e. residential, industrial or commercial, since neither P.D. No. 27 nor R.A. No.
6657 (together with the specified formal mechanisms stipulated therein for
converting a piece of agricultural land into a residential lot) were then binding and
effective. The assignment or conversion of the one hundred ten (110) sub-lots for
residential purposes was not abrogated by P.D. No. 27 under which respondents
invalidly secured their certificates of land transfer since the decree was only
prospectively effective[59] and its coverage was limited only to agricultural lands
which clearly do not include the residential sub-lots in question.
By virtue of the official classification made by NUPC and the other circumstances
convincingly proved herein, the only fair and legally acceptable decision in the
instant case would be to declare that the sub-lots are residential in character as well
as in purpose and are excluded from the coverage of P.D. No. 27.
The Certificates of Land Transfer issued in respondents' names are not valid and do
not change the SC’s ruling. The respondents cannot rely on said CLTS as proof of
security of tenure. The certificates of land transfer are not absolute evidence of
ownership of the subject lots and consequently do not bar the finding that their
issuance is void from inception since they cover residential lands contrary to the
mandate of P.D. No. 27. It follows from the fact of nullity of the certificates of land
transfer in respondents' names that the respondents are not entitled to occupy and
possess the sub-lots or portions thereof without the consent of the owner, Tong.
Page 5 of 9
MONZON v. RELOVA GR No. 171827
September 17, 2008 Chico-Nazario, J.
TOPIC IN SYLLABUS: Judicial Foreclosure Digest By: Abu
SUMMARY Respondents, claiming to be the rightful mortgagees of certain
properties that were encumbered by the same mortgagor and auctioned off to a 3 rd
party, filed a Petition for Injunction to claim the excess of the proceeds which were
deposited in court. RTC granted. SC said they were wrong.
DOCTRINE: Spouses Relova and Perez rely on Section4, Rule68 of the Rules of
Court. , Rule68 governs the judicial foreclosure of mortgages. Extrajudicial
foreclosures, as what happened in this case, is governed by a different set of laws
(Act3135 as amended by Act4118). Unlike Rule68 which governs judicial
foreclosure sales, there is no rule covering extrajudicial foreclosure sales that
grants to junior encumbrancers the right to receive the balance of the purchase
price. The only right given to them is the right to redeem the foreclosed properties.
Even if R68 applied, this right can only be given to 2 nd mortgagees made party to
the proceeding. But the effect of the failure to make the 2ndmortgagee a party to
the proceeding is that his lien on the equity of redemption is not affected by the
decree of foreclosure.
FACTS:
Spouses Relova and Perez (Respondents) filed a Petition for Injunction with the
RTC of Tagaytay. They allege that Monzon issued a PN in favor of Sps. Perez. The
amount was P600K and secured by Lot2A. A Deed of Absolute Sale over the parcel
of land was later executed in favor of the Perez spouses. Same thing happened with
Sps. Relova. A PN in the amount of P200k was issued secured by Lot2B. A Deed of
Conditional Sale over the parcel of land was later issued in favor of Sps. Relova.
It appears that Monzon was indebted to the Coastal Lending Corporation. Coastal
Lending then extrajudicially foreclosed the property of Monzon which
included Lots2A and 2B. The winning bidder in this extrajudicial foreclosure was
Addio properties. Of the amount paid by Addio, there was a residue of roughly
P1.6M (indebtedness of Monzon was only P3.4M+ while Addio paid P5M+ for the
property). This residue is in the custody of Atty. Luna as Branch Clerk of Court.
The Petition for Injunction was filed to order Atty. Luna to deliver the residue to
spouses Relova and Perez instead of delivering them to Monzon.
Monzon, in her Answer, argues that she had already performed her obligation to
the spouses Relova and Perez via the dacion en pago as evidenced by the Deed of
Conditional Sale and Deed of Absolute Sale. Also, it is argued that the funds in the
custody of Atty. Luna cannot be acquired by them without a writ of preliminary
attachment or a writ of garnishment.
RTC – citing the absence of petitioner Monzon, issued an Order allowing the ex
parte presentation of evidence of respondents.
RTC ordered the Clerk of Court to deliver the amount to respondents. RTC also
stated that the Injunction failed to state a cause of action.
CA – dismissed the appeal.
Thus, this Petition for Review on Certiorari with the SC. execute a judgment thereon on all the properties of the debtor including the subject
matter of the mortgage, subject to the qualification that if he fails in the remedy
PETITIONER’S ARGUMENT(S): Had she been given the opportunity to elected by him, he cannot pursue further the remedy he has waived.
present her evidence, she would have proven that (1) respondents Exhibit A CASE IS REMANDED to the RTC and Spouses Relova and Perez are to
(mortgage of land to the spouses Relova) had been novated by respondents Exhibit manifest whether they want their Petition for Injunction to be construed as a
B (sale of the mortgage land to the spouses Relova). (2) respondents Exhibit C collection of sum of money.
(mortgage of land to the spouses Perez) had been novated by respondents Exhibit B (If respondents answer in the negative, the case shall be dismissed, without
(sale of the mortgage land to the spouses Perez); and (3) having executed Exhibits prejudice to the exercise of respondents rights as mortgage creditors. If
B and D, Monzon no longer had any obligation towards respondents. respondents mortgage contract was executed before the execution of the mortgage
contract with Addio Properties, Inc., respondents would be the first mortgagors.
ISSUE(S): WON Sps. Relova and Perez have a right to the proceeds of the Pursuant to Article 2126of the Civil Code, they would be entitled to foreclose the
foreclosure sale  NO. property as against any subsequent possessor thereof. If respondents mortgage
contract was executed after the execution of the mortgage contract with Addio
HELD: Properties, Inc., respondents would be the second mortgagors. As such, they are
Spouses Relova and Perez rely on Section4, Rule68 of the Rules of Court: “SEC. 4. entitled to a right of redemption pursuant to Section 6 of Act No. 3135, as amended
Disposition of proceeds of sale.--The amount realized from the foreclosure sale of by Act No. 4118. )
the mortgaged property shall, after deducting the costs of the sale, be paid to the
person foreclosing the mortgage, andwhen there shall be any balance or residue,
after paying off the mortgage debt due, the same shall be paid to junior
encumbrancers in the order of their priority, to be ascertained by the court, or if
there be no such encumbrancers or there be a balance or residue after payment to
them, then to the mortgagor or his duly authorized agent, or to the person entitled
to it.”
However, Rule68 governs the judicial foreclosure of mortgages. Extrajudicial
foreclosures, as what happened in this case, is governed by a different set of laws
(Act3135 as amended by Act4118).
“Any judge, worthy of the robe he dons, or any lawyer, for that matter, worth his
salt, ought to know that different laws apply to different kinds of sales under our
jurisdiction. We have three different types of sales, namely: an ordinary execution
sale, a judicial foreclosure sale, and an extrajudicial foreclosure sale.”
Unlike Rule68 which governs judicial foreclosure sales, there is no rule covering
extrajudicial foreclosure sales that grants to junior encumbrancers the right to
receive the balance of the purchase price. The only right given to them is the right
to redeem the foreclosed properties.
But even if Rule68 is to be applied to extrajudicial foreclosure of mortgages, the
right can only be given to 2ndmortgagees who are made parties to the judicial
foreclosure. A 2ndmortgagee is not an indispensable party in a proceeding to
foreclose a 1st mortgage on real property because a valid decree may be made as
st
between the mortgagor and the 1 mortgagee without regard to the 2ndmortgagee.
nd
But the effect of the failure to make the 2 mortgagee a party to the proceeding is
that his lien on the equity of redemption is not affected by the decree of
foreclosure
The rule is now settled that a mortgage creditor may elect to waive his security and
bring, instead, an ordinary action to recover the indebtedness with the right to
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NAGTALON v. UCPB GR No. 172504
31 July 2013 Brion, J.
TOPIC: Rule 68 Athena De Mesa
SUMMARY: Sps. Nagtalon entered into a credit agreement with UCPB secured by
a real estate mortgage over properties in Kalibo. Sps. Nagtalon failed to comply
with the terms. UCPB extra-judicially foreclosed the properties. After the lapse of
the 1-yr period for redemption, UCPB applied for a writ of possession. This was
denied by the RTC because there is a pending civil case for the nullity of the said
foreclosure. CA reversed RTC. SC upheld CA. Issuance of a writ of possession is a
ministerial function.
DOCTRINE:The law directs in express terms that the court issue a writ of
possession without delay to the purchaser after the latter has consolidated
ownership and has been issued a new TCT over the property. The law then does
not provide any room for discretion as the issuance has become a mere ministerial
function of the court.
PROCEDURAL ANTECEDENTS:
RTC ruled in favor of Sps. Nagtalon. MR denied. Rule 65 to the CA. CA reversed
RTC ruling. Nagtalon filed a Rule 45 to the SC
FACTS:
Roman Nagtalon and Donna Nagtalon (“petitioner”) entered into a credit
agreement with UCPB secured by real estate mortgage over land in Kalibo, Aklan.
Sps. Nagtalon failed to comply with the agreement. Through a petition for
extrajudicial foreclosure of mortgage, the mortgaged properties were foreclosed
and sold at public auction for P3,215,880.30 to UCPB as highest bidder.
Certificate of sale was entered in the ROD of Kalibo, Aklan and TCTs were
annotated.
1 year redemption period lapsed. Ownership was transferred to UCPB.
UCPB filed an ex parte petition for the issuance of writ of possession with the RTC.
Nagtalon opposed this, citing pending Civil Case No. 6602 (nullity of foreclosure,
fixing of true indebtedness, redemption, damages and injunction with temporary
restraining order) still pending with the RTC.
RTC held in abeyance the writ of possession for being premature due to the
pending RTC case. MR of UCPB denied.
CA reversed and set aside the RTC orders, noting that while it is the ministerial
duty of the court to issue a writ of possession after the lapse of the one-year period
of redemption, the rule admits of exceptions and the present case at bar was not one
of them (Vaca v. CA).
PETITIONER’S ARGUMENT(S):
The equitable circumstances present in the case fully justified the RTC’s order to
hold in abeyance the issuance of the writ of possession.
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RTC found prima facie merit in the allegations in Civil Case No. 6602 that the
foreclosure and the mortgage were void.
CA’s reliance on the Vaca case, in support of its decision, is misplaced because no
peculiar circumstances were present in this cited case which are applicable to the
present case.
CA decision violated her constitutional right to due process of law, as it deprived
her of the possession of her properties without the opportunity of hearing.
The nullity of the loan documents due to the unilateral fixing of the interest and
her failure to receive the proceeds of the loan, among others, are peculiar
circumstances that would necessitate the deferment of the issuance of the writ of
possession
RESPONDENT’S ARGUMENT(S):
Cited the Vaca case:
(1) the pendency of a civil case challenging the validity of the mortgage cannot bar
the issuance of the writ of possession because such issuance is a ministerial act;
(2) the peculiar and equitable circumstances, which would justify an exception to
the rule, are not present in the present case; and
(3) contrary to the allegation of the petitioner, it is the respondent who was
deprived of possession of the properties due to the petitioner’s persistent efforts
to frustrate the respondent’s claim.
ISSUE(S):
WON the pendency of a civil case challenging the validity of the credit agreement,
the promissory notes and the mortgage can bar the issuance of a writ of possession
after the foreclosure and sale of the mortgaged properties and the lapse of the one-
year redemption period—NO.
HELD: DENIED.
THE ISSUANCE OF A WRIT OF POSSESSION IS A MINISTERIAL
FUNCTION OF THE COURT
The issuance of a writ of possession to a purchaser in a public auction is a
ministerial function of the court, which cannot be enjoined or restrained, even by
the filing of a civil case for the declaration of nullity of the foreclosure and
consequent auction sale.
Once title to the property has been consolidated in the buyer’s name upon failure of
the mortgagor to redeem the property within the one-year redemption period, the
writ of possession becomes a matter of right belonging to the buyer. Consequently,
the buyer can demand possession of the property at anytime. Its right to possession
has then ripened into the right of a confirmed absolute owner and the issuance of
the writ becomes a ministerial function that does not admit of the exercise of the
court’s discretion.
ACT 3135, Sec. 6. In all cases in which an extrajudicial sale is made x xx, the
debtor, his successors in interest or any judicial creditor or judgment creditor of
said debtor, or any person having a lien on the property subsequent to the
mortgage or deed of trust under which the property is sold, may redeem the same
at any time within the term of one year from and after the date of the sale; and such
redemption shall be governed by the provisions of sections four hundred and sixty-
four to four hundred and sixty-six, inclusive, of the Code of Civil Procedure, in so
far as these are not inconsistent with the provisions of this Act.
ACT 3135, Sec 7. In any sale made under the provisions of this Act, the purchaser
may petition the Court of First Instance of the province or place where the property
or any part thereof is situated, to give him possession thereof during the
redemption period, furnishing bond in an amount equivalent to the use of the
property for a period of twelve months, to indemnify the debtor in case it be shown
that the sale was made without violating the mortgage or without complying with
the requirements of this Act. Such petition shall be made under oath and filed in
form of an ex parte motion x xx and the court shall, upon approval of the bond,
order that a writ of possession issue, addressed to the sheriff of the province in
which the property is situated, who shall execute said order immediately.
A writ of possession may be issued either (1) within the one-year redemption
period, upon the filing of a bond, or (2) after the lapse of the redemption period,
without need of a bond. (Sagun v. PBC & CA)
During the one-year redemption period, as contemplated by Section 7 of the above-
mentioned law, a purchaser may apply for a writ of possession by filing an ex parte
motion under oath in the registration or cadastral proceedings if the property is
registered, or in special proceedings in case the property is registered under the
Mortgage Law. In this case, a bond is required before the court may issue a writ of
possession.
On the other hand, upon the lapse of the redemption period, a writ of possession
may be issued in favor of the purchaser in a foreclosure sale, also upon a proper ex
parte motion. This time, no bond is necessary for its issuance; the mortgagor is now
considered to have lost any interest over the foreclosed property.
The purchaser then becomes the owner of the foreclosed property, and he can
demand possession at any time following the consolidation of ownership of the
property and the issuance of the corresponding TCT in his/her name. It is at this
point that the right of possession of the purchaser can be considered to have ripened
into the absolute right of a confirmed owner.
The correctness of the issuance of the writ in the second scenario is strengthened
by the fact that after the consolidation of ownership and issuance of titles to the
purchaser, the latter’s right to possession not only finds support in Section 7 of Act
3135, but also on its right to possession as an incident of ownership.22 The Court,
in Espinoza v. United Overseas Bank Philippines, noted that the basis of the right
to possession is the purchaser’s ownership of the property.
Moreover, if the court has the ministerial power to issue a writ of possession even
during the redemption period, upon proper motion and posting of the required
bond, as clearly provided by Section 7 of Act 3135, then with more reason should
the court issue the writ of possession after the expiration of the redemption period,
as the purchaser has already acquired an absolute right to possession on the basis of
his ownership of the property.24 The right to possess a property follows
ownership.
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EXCEPTIONS TO THE RULE THAT ISSUANCE OF A WRIT OF
POSSESSION IS A MINISTERIAL FUNCTION
The Tolosa case would reveal a discussion of the few jurisprudential exceptions:
(1) Gross inadequacy of purchase price
In Cometa v. Intermediate Appellate Court30 which involved an execution sale, the
court took exception to the general rule in view of the unusually lower price
(P57,396.85 in contrast to its true value of P500,000.00) for which the subject
property was sold at public auction. The Court perceived that injustice could result
in issuing a writ of possession under the given factual scenario and upheld the
deferment of the issuance of the writ.
(2) Third party claiming right adverse to debtor/mortgagor
In Barican v. Intermediate Appellate Court, consistent with Section 35, Rule 39 of
the Rules of Court, the Court held that the obligation of a court to issue a writ of
possession in favor of the purchaser in a foreclosure of mortgage case ceases to be
ministerial when a third-party in possession of the property claims a right adverse
to that of the debtor-mortgagor. In this case, there was a pending civil suit
involving the rights of third parties who claimed ownership over the disputed
property. The Court found the circumstances to be peculiar, necessitating an
exception to the general rule. It thus ruled that where such third party claim and
possession exist, the trial court should conduct a hearing to determine the nature of
the adverse possession.
(3) Failure to ay the surplus proceeds of the sale to mortgagor
In Sulit v. Court of Appeals in light of the given facts, particularly the mortgagee’s
failure to return to the mortgagor the surplus from the proceeds of the sale
(equivalent to an excess of approximately 40% of the total mortgage debt). We
ruled that equitable considerations demanded the deferment of the issuance of the
writ as it would be highly unfair and iniquitous for the mortgagor, who as a
redemptioner might choose to redeem the foreclosed property, to pay the
equivalent amount of the bid clearly in excess of the total mortgage debt.
PETITIONER WAS ACCORDED DUE PROCESS
The ex parte petition for the issuance of a writ of possession under Sections 6 and 7
of Act 3135 is not, strictly speaking, a “judicial process.” In Idolor v. Court of
appeals, it is not an ordinary suit by which one party “sues another for the
enforcement of a wrong or protection of a right, or the prevention or redress of a
wrong.” Being ex parte, it is a non-litigious proceeding where the relief is granted
without requiring an opportunity for the person against whom the relief is sought
to be heard.
The law does not require that the writ of possession be granted only after the issues
raised in a civil case on nullity of the loan and mortgage are resolved and decided
with finality. To do so would completely defeat the purpose of an ex parte petition
under Sections 6 and 7 of Act 3135 that, by its nature, should be summary; we
stress that it would render nugatory the right given to a purchaser to acquire
possession of the property after the expiration of the redemption period.
Petitioner is not left without a remedy as the same law provides the mortgagor the
right to petition for the nullification of the sale and the cancellation of the writ of
possession under Section 8 of Act. No. 3135, which remedy the petitioner was
aware of. In her petition for review, she averred that “[t]he said Act 3135 x xx does
not however prohibit or negate the filing of a separate civil case for the nullification
of loan indebtedness x xx or x xx mortgage contract[.]" Thus, she cannot claim
that she has been denied of due process merely on the basis oftheexparte nature
ofthe respondent's petition.

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