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G.R. No.

115068 November 28, 1996


FORTUNE MOTORS (PHILS.) INC. petitioner,
vs.
METROPOLITAN BANK AND TRUST COMPANY, and THE COURT OF
APPEALS, respondents.

HERMOSISIMA, JR., J .:
Before us is a petition for review of the decision of the Court of Appeals in CA G.R CV
No. 38340 entitled "Fortune Motors (Phils.) Inc., v. Metropolitan Bank and Trust Company et
al.
1
The appellate court's decision reversed the decision in Civil Case No. 89-5637 of Branch
150 of the Regional Trial Court of Makati City.
It appears that Fortune Motors (Phils.) Inc. obtained the following loans from the Metropolitan
Bank and Trust Company: (1) P20 Million, on March 31, 1982; (2) P8 Million, on April 30,
1983; (3) P2,500,000.00, on June 8, 1983 and; (4) P3 Million, on August 16, 1983.
On January 6, 1984, respondent bank consolidated the loans of P8 Million and P3 Million into
one promissory note, which amounted to P12,650,000.00. This included the interest that had
accrued thereon in the amount of P1,650,000.00.
To secure the obligation in the total amount of P34,150,000.00, petitioner mortgaged certain
real estate in favor of respondent bank.
Due to financial constraints, petitioner failed to pay the loan upon maturity. Consequently on
May 25, 1984, respondent bank initiated extrajudicial foreclosure proceedings and in effect,
foreclosed the real estate mortgage.
The extrajudicial foreclosure was actually conducted by Senior Deputy Sheriff Pablo Y. Sy
who had sent copies of the Notice of Extrajudicial Sale to the opposing parties by registered
mail. In accordance with law, he posted copies of the Notice of Sheriff's Sale at three
conspicuous public places in Makati the office of the Sheriff, the Assessor's Office and the
Register of Deeds in Makati. He thereafter executed the Certificates of Posting on May 20,
1984. The said notice was in fact published on June 2, 9 and 16, 1984 in three issues of "The
New Record." An affidavit of publication, dated June 19, 1984,
2
was executed by Teddy F.
Borres, publisher of the said newspaper.
Subsequently, the mortgaged property was sold at public auction for P47,899,264.91 to the
mortgagee bank, the highest bidder.
Petitioner failed to redeem the mortgaged property within the one-year redemption period and
so, the titles thereto were consolidated in the name of respondent bank by which token the
latter was entitled to the possession of the property mortgaged and, in fact possessed the same.
Petitioner then filed a complaint for the annulment of the extrajudicial foreclosure, which
covered TCT Nos. 461087, 432685, 457590, 432684, S-54185, S-54186, S-54187, and S-
54188.
On December 27, 1991, the trial court rendered judgment annulling the extrajudicial
foreclosure of the mortgage.
On May 14, 1992, an appeal was interposed by the respondent to the Court of Appeals. Acting
thereon, the Court of Appeals reversed the decision rendered by the lower court.
Subsequently, the Motion for Reconsideration filed by petitioner was denied on April 26,
1994.
Aggrieved by the decision rendered by the Court of Appeals, petitioner appealed before this
Court. On May 30, 1994, however, we issued a Resolution denying said petition. Hence, this
motion for reconsideration.
Petitioner raises the following issues before us, to wit:
I
THAT THE COURT OF APPEALS ERRED IN DECLARING THAT THE
PUBLICATION OF THE NOTICE OF EXTRAJUDICIAL FORECLOSURE
WAS VALID.
3

II
THAT THE RESPONDENT COURT OF APPEALS ERRED IN DECLARING
THAT THE NOTICES OF EXTRAJUDICIAL FORECLOSURE, AND SALE
WERE DULY RECEIVED BY THE PETITIONER.
4

III
THAT THE COURT OF APPEALS ERRED IN FAILING TO ADJUDGE THE
IRREGULARITIES IN THE BIDDING, POSTING, PUBLICATION, AND THE
SALE OF FORTUNE BUILDING.
5

IV
THAT THE RESPONDENT COURT OF APPEALS ERRED IN RENDERING A
JUDGMENT BASED ON PRESUMPTION.
6

Petitioner contends that the newspaper "Daily Record"
7
where the notice of extrajudicial
foreclosure was published does not qualify as a newspaper of general circulation.
It further contends that the population that can be reached by the "Daily Record" is only
.004% as its circulation in Makati in 1984, was 1000 to 1500 per week. Hence, it concludes
that only 1648 out of a population of 412,069 were probable readers of the "Daily Record,"
and that this is not the standard contemplated by law when it refers to a newspaper of general
circulation.
In the case of Bonnevie v. Court of Appeals,
8
we had already made a ruling on this point:
The argument that the publication of the notice in the "Luzon Weekly Courier" was
not in accordance with law as said newspaper is not of general circulation must
likewise be disregarded. The affidavit of publication, executed by the publisher,
business/advertising manager of the Luzon Weekly Courier, states that it is "a
newspaper of general circulation in . . . Rizal; and that the Notice of Sheriffs sale
was published in said paper on June 30, July 7 and July 14, 1968." This
constitutes prima facieevidence of compliance with the requisite publication.
(Sadang v. GSIS, 18 SCRA 491).
To be a newspaper of general circulation, it is enough that "it is published for the
dissemination of local news and general information; that it has a bona fide
subscription list of paying subscribers; that it is published at regular intervals."
(Basa v. Mercado, 61 Phil. 632). The newspaper need not have the largest
circulation so long as it is of general circulation. (Banta v. Pacheco, 74 Phil. 67).
In the case at bench, there was sufficient compliance with the requirements of the law
regarding publication of the notice in a newspaper of general circulation. This is evidenced by
the affidavit of publication executed by the New Record's publisher, Teddy F. Borres, which
stated that it is a newspaper edited in Manila and Quezon City and of general circulation in the
cities of Manila, Quezon City et. al., and in the Provinces of Rizal . . . , published every
Saturday by the Daily Record, Inc. This was affirmed by Pedro Deyto, who was the executive
editor of the said newspaper and who was a witness for petitioner. Deyto testified: a) that the
New Record contains news; b) that it has subscribers from Metro Manila and from all over the
Philippines; c) that it is published once a week or four times a month; and d) that he had been
connected with the said paper since 1958, an indication that the said newspaper had been in
existence even before that year.
9

Another contention posited by petitioner is that the New Record is published and edited in
Quezon City and not in Makati where the foreclosed property is situated, and that, when New
Record's publisher enumerated the places where said newspaper is being circulated, Makati
was not mentioned.
This contention of petitioner is untenable. In 1984, when the publisher's affidavit relied upon
by petitioner was executed, Makati, Mandaluyong, San Juan, Paraaque et. al., were still part
of the province of Rizal. Apparently, this is the reason why in the New Record's affidavit of
publication executed by its publisher, the enumeration of the places where it was being
circulated, only the cities of Manila, Quezon, Caloocan, Pasay, Tagaytay et. al., were named.
Furthermore, as aptly ratiocinated by the Court of Appeals:
The application given by the trial court to the provisions of P.D. No. 1079 is, to our
mind, too narrow and restricted and could not have been the intention of the said
law. Were the interpretation of the trial court (sic) to be followed, even the leading
dailies in the country like the "Manila Bulletin," the "Philippine Daily Inquirer," or
"The Philippine Star" which all enjoy a wide circulation throughout the country,
cannot publish legal notices that would be honored outside the place of their
publication. But this is not the interpretation given by the courts. For what is
important is that a paper should be in general circulation in the place where the
properties to be foreclosed are located in order that publication may serve the
purpose for which it was intended.
10

Petitioner also claims that the New Record is not a daily newspaper because it is published
only once a week.
A perusal of Presidential Decree (P.D.) No. 1079 and Act 3135 shows that the said laws do
not require that the newspaper which publishes judicial notices should be a daily newspaper.
Under P.D. 1079, for a newspaper to qualify, it is enough that it be a "newspaper or periodical
which is authorized by law to publish and which is regularly published for at least one (1) year
before the date of publication" which requirement was satisfied by New Record. Nor is there a
requirement, as stated in the said law, that the newspaper should have the largest circulation in
the place of publication.
Petitioner claims that, when its representative went to a newspaper stand to look for a copy of
the new Record, he could not find any. This allegation can not be made a basis to conclude
that the newspaper "New Record" is not of general circulation. By its own admission,
petitioner's representative was looking for a newspaper named "Daily Record." Naturally, he
could not find a newspaper by that name as the newspaper's name is "New Record" and not
"Daily Record." Although it is the Daily Record Inc. which publishes the New Record, it does
not mean that the name of the newspaper is Daily Record.
Petitioner contends that, since it was the Executive Judge who caused the publication of the
notice of the sale and not the Sheriff, the extrajudicial foreclosure of the mortgage should be
deemed annulled.
Petitioner's contention in this regard is bereft of merit, because Sec. 2 of P.D. No. 1079 clearly
provides that:
The executive judge of the court of first instance shall designate a regular working
day and a definite time each week during which the said judicial notices or
advertisements shall be distributed personally by him
11
for publication to qualified
newspapers or periodicals . . . , which distribution shall be done by raffle.
The said provision of the law is clear as to who should personally distribute the judicial
notices or advertisements to qualified newspapers for publication. There was substantial
compliance with the requirements when it was the Executive Judge of the Regional Trial
Court of Makati who caused the publication of the said notice by the newspaper selected by
means of raffle.
With regard to the second assigned error wherein petitioner claims that it did not personally
receive the notices of extrajudicial foreclosure and sale supposedly sent to it by Metrobank,
we find the same unmeritorious.
Settled is the rule that personal notice to the mortgagor in extrajudicial foreclosure
proceedings is not necessary. Section 3 of Act No. 3135 governing extrajudicial foreclosure of
real estate mortgages, as amended by Act No. 4118, requires only the posting of the notice of
sale in three public places and the publication of that notice in a newspaper of general
circulation. It is pristine clear from the above provision that the lack of personal notice to the
mortgagor, herein petitioner, is not a ground to set aside the foreclosure sale.
12

Petitioner's expostulation that it did not receive the mailed notice to it of the sale of the
mortgaged property should be brushed aside. The fact that respondent was able to receive the
registry return card from the mail in regular course shows that the postal item represented by
the return card had been received by the addressee. Otherwise, as correctly contended by
respondent, the mailed item should have been stamped "Returned to Sender," still sealed with
all the postal markings, and the return card still attached to it.
As to the contention that the signature appearing on the registry return card receipt appears to
be only a dot and that the photostat copy does not contain a signature at all we find, after a
close scrutiny of the registry return card, that there are strokes before and after the dot. These
strokes appear to be a signature which signifies: a) that the registry claim card was received at
the given address; b) that the addressee had authorized a person to present the claim card at
the post office and receive the registered mail matter; and c) that the authorized person signed
the return card to acknowledge his receipt of the mail matter. Even the trial court in its
decision ruled that:
. . . the Court finds no cogent reason to overcome the presumption that Sheriff
Pablo Sy performed his task regularly and in accordance with the rules. A closer
look at the assailed xerox copy of the registry receipt and the original form which
said xerox was admittedly copied would indeed show that the xerox is not a
faithful reproduction of the original since it does not bear the complete signature of
the addressee as appearing on the original. It does not, however, follow that the
xerox is a forgery. The same bears slight traces of the signature appearing on the
original but, there is no indication that the one was altered to conform to the other.
Rather, there must have been only a misprint of the xerox but not amounting to any
attempt to falsify the same.
13

Petitioner also claims that it had transferred to a different location but the notice was sent to its
old address. Petitioner failed to notify respondent of its supposed change of address. Needless
to say, it can be surmised that respondent had sent the notice to petitioner's official address.
Anent its third assigned error, petitioner assails the posting of the notices of sale by the Sheriff
in the Office of the Sheriff, Office of the Assessor and the Register of Deeds as these are not
the conspicuous public places required by law. Furthermore, it also questions the non-posting
of the notice of sale on the property itself which was to be sold.
Apparently, this assigned error of petitioner is tantamount to a last ditch effort to extricate
itself from the quagmire it is in. Act 3135 does not require posting of the notice of sale on the
mortgaged property. Section 3 of the said law merely requires that the notice of the sale be
posted for not less than twenty days in at least three public places of the municipality or city
where the property is situated. The aforementioned places, to wit: the Sheriff's Office, the
Assessor's Office and the Register of Deeds are certainly the public places contemplated by
law, as these are places where people interested in purchasing real estate congregate.
With regard to the fourth assigned error of petitioner, we do not subscribe to the latter's view
that the decision of the Court of Appeals was mainly based on the presumption of the
regularity of the performance of official function of the officers involved. A perusal of the
records indubitably shows that the requirement of Act No. 3135 on the extrajudicial
foreclosure of real estate mortgage had been duly complied with by Senior Deputy Sheriff Sy.
WHEREFORE, the petition is DENIED and the decision rendered in CA-G.R CV No. 38340
is hereby AFFIRMED.
SO ORDERED.


















FIRST DIVISION

GC DALTON INDUSTRIES, INC., G.R. No. 171169
Petitioner,
Present:

PUNO, C.J., Chairperson,
QUISUMBING,
*

- v e r s u s - CORONA,
LEONARDO-DE CASTRO and
BERSAMIN, JJ.

EQUITABLE PCI BANK,
Respondent. Promulgated:

August 24, 2009

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

D E C I S I O N
CORONA, J .:


In 1999, respondent Equitable PCI Bank extended a P30-million credit line to Camden Industries,
Inc. (CII) allowing the latter to avail of several loans (covered by promissory notes) and to purchase trust
receipts. To facilitate collection, CII executed a hold-out agreement in favor of respondent authorizing
it to deduct from its savings account any amounts due. To guarantee payment, petitioner GC Dalton
Industries, Inc. executed a third-party mortgage of its real properties in Quezon City
[1]
and Malolos,
Bulacan
[2]
as security for CIIs loans.
[3]


CII did not pay its obligations despite respondents demands. By 2003, its outstanding consolidated
promissory notes and unpaid trust receipts had reached a staggering P68,149,132.40.
[4]


Consequently, respondent filed a petition for extrajudicial foreclosure of petitioners Bulacan
properties in the Regional Trial Court (RTC) of Bulacan on May 7, 2004.
[5]
On August 3, 2004, the
mortgaged properties were sold at a public auction where respondent was declared the highest bidder.
Consequently, a certificate of sale
[6]
was issued in respondents favor on August 3, 2004.

On September 13, 2004, respondent filed the certificate of sale and an affidavit of
consolidation of ownership
[7]
in the Register of Deeds of Bulacan pursuant to Section 47 of the General
Banking Law.
[8]
Hence, petitioners TCTs covering the Bulacan properties were cancelled and new ones
were issued in the name of respondent.
[9]


In view of the foregoing, respondent filed an ex parte motion for the issuance of a writ of
possession
[10]
in the RTC Bulacan, Branch 10 on January 10, 2005.
[11]


Previously, however, on August 4, 2004, CII had filed an action for specific performance and
damages
[12]
in the RTC of Pasig, Branch 71 (Pasig RTC), asserting that it had allegedly paid its obligation
in full to respondent.
[13]
CII sought to compel respondent to render an accounting in order to prove that
the bank fraudulently foreclosed on petitioners mortgaged properties.

Because respondent allegedly failed to appear during the trial, the Pasig RTC rendered a
decision on March 30, 2005
[14]
based on the evidence presented by CII. It found that, while CIIs past due
obligation amounted only to P14,426,485.66 as of November 30, 2002, respondent had deducted a total
of P108,563,388.06 from CIIs savings account. Thus, the Pasig RTC ordered respondent: (1) to return to
CII the overpayment with legal interest of 12% per annum amounting toP94,136,902.40; (2) to
compensate it for lost profits amounting to P2,000,000 per month starting August 2004 with legal interest
of 12% per annum until full payment and (3) to return the TCTs covering the mortgaged properties to
petitioner. It likewise awarded CII P2,000,000 and P300,000, respectively, as moral and exemplary
damages and P500,000 as attorneys fees.

Respondent filed a notice of appeal. CII, on the other hand, moved for the immediate entry
and execution of the abovementioned decision.

In an order dated December 7, 2005,
[15]
the Pasig RTC dismissed respondents notice of
appeal due to its failure to pay the appellate docket fees. It likewise found respondent guilty of forum-
shopping for filing the petition for the issuance of a writ of possession in the Bulacan RTC. Thus, the
Pasig RTC ordered the immediate entry of its March 30, 2005 decision.
[16]


Meanwhile, in view of the pending case in the Pasig RTC, petitioner opposed respondents ex
parte motion for the issuance of a writ of possession in the Bulacan RTC. It claimed that respondent was
guilty of fraud and forum-shopping, and that it was not informed of the foreclosure. Furthermore,
respondent fraudulently foreclosed on the properties since the Pasig RTC had not yet determined whether
CII indeed failed to pay its obligations.

In an order dated December 10, 2005, the Bulacan RTC granted the motion and a writ of
possession was issued in respondents favor on December 19, 2005.

Petitioner immediately assailed the December 10, 2005 order of the Bulacan RTC via a
petition for certiorari in the Court of Appeals (CA). It claimed that the order violated Section 14, Article
VIII of the Constitution
[17]
which requires that every decision must clearly and distinctly state its factual
and legal bases. In a resolution dated January 13, 2006,
[18]
the CA dismissed the petition for lack of merit
on the ground that an order involving the issuance of a writ of possession is not a judgment on the merits,
hence, not covered by the requirement of Section 14, Article VIII of the Constitution.

Petitioner elevated the matter to this Court, assailing the January 13, 2006 resolution of the
CA. It insists that the December 10, 2005 order of the Bulacan RTC was void as it was bereft of factual
and legal bases.

Petitioner likewise cites the conflict between the December 10, 2005 order of the Bulacan
RTC and the December 7, 2005 order of the Pasig RTC. Petitioner claims that, since the Pasig RTC
already ordered the entry of its March 30, 2005 decision (in turn ordering respondent to return TCT No.
351231 and all such other owners documents of title as may have been placed in its possession by virtue
of the subject trust receipt and loan transactions), the same was already final and executory. Thus,
inasmuch as CII had supposedly paid respondent in full, it was erroneous for the Bulacan RTC to order
the issuance of a writ of possession to respondent.

Respondent, on the other hand, asserts that petitioner is raising a question of fact as it
essentially assails the propriety of the issuance of the writ of possession. It likewise points out that
petitioner did not truthfully disclose the status of the March 30, 2005 decision of the Pasig RTC because,
in an order dated April 4, 2006, the Pasig RTC partially reconsidered its December 7, 2005 order and
gave due course to respondents notice of appeal. (The propriety of the said April 4, 2006 order is still
pending review in the CA.)

We deny the petition.

The issuance of a writ of possession to a purchaser in an extrajudicial foreclosure is summary
and ministerial in nature as such proceeding is merely an incident in the transfer of title.
[19]
The trial court
does not exercise discretion in the issuance thereof.
[20]
For this reason, an order for the issuance of a writ
of possession is not the judgment on the merits contemplated by Section 14, Article VIII of the
Constitution. Hence, the CA correctly upheld the December 10, 2005 order of the Bulacan RTC.

Furthermore, the mortgagor loses all legal interest over the foreclosed property after the
expiration of the redemption period.
[21]
Under Section 47 of the General Banking Law,
[22]
if the
mortgagor is a juridical person, it can exercise the right to redeem the foreclosed property until, but not
after, the registration of the certificate of foreclosure sale within three months after foreclosure,
whichever is earlier. Thereafter, such mortgagor loses its right of redemption.

Respondent filed the certificate of sale and affidavit of consolidation with the Register of Deeds of
Bulacan on September 13, 2004. This terminated the redemption period granted by Section 47 of the
General Banking Law. Because consolidation of title becomes a right upon the expiration of the
redemption period,
[23]
respondent became the owner of the foreclosed properties.
[24]
Therefore, when
petitioner opposed the ex parte motion for the issuance of the writ of possession on January 10, 2005 in
the Bulacan RTC, it no longer had any legal interest in the Bulacan properties.

Nevertheless, even if the ownership of the Bulacan properties had already been consolidated in the
name of respondent, petitioner still had, and could have availed of, the remedy provided in Section 8 of
Act 3135.
[25]
It could have filed a petition to annul the August 3, 2004 auction sale and to cancel the
December 19, 2005 writ of possession,
[26]
within 30 days after respondent was given possession.
[27]
But it
did not. Thus, inasmuch as the 30-day period to avail of the said remedy had already lapsed, petitioner
could no longer assail the validity of the August 3, 2004 sale.

Any question regarding the validity of the mortgage or its foreclosure cannot be a
legal ground for the refusal to issue a writ of possession. Regardless of whether or
not there is a pending suit for the annulment of the mortgage or the foreclosure
itself, the purchaser is entitled to a writ of possession, without prejudice, of course,
to the eventual outcome of the pending annulment case.
[28]



Needless to say, petitioner committed a misstep by completely relying and pinning all its
hopes for relief on its complaint for specific performance and damages in the Pasig RTC,
[29]
instead of
resorting to the remedy of annulment (of the auction sale and writ of possession) under Section 8 of Act
3135 in the Bulacan RTC.

WHEREFORE, the petition is hereby DENIED.

Costs against petitioner.

SO ORDERED.











































DEVELOPMENT BANK OF G.R. No. 174329
THE PHILIPPINES,
Petitioner,
Present:

CARPIO, J., Chairperson,
NACHURA,
- versus - LEONARDO-DE CASTRO,
*

PERALTA, and
MENDOZA, JJ.


ENVIRONMENTAL AQUATICS,
INC., LAND SERVICES AND
MANAGEMENT ENTERPRISES, Promulgated:
INC. and MARIO MATUTE
Respondents. October 20, 2010
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x


D E C I S I O N

CARPIO, J .:

The Case

This is a petition
[1]
for review on certiorari under Rule 45 of the Rules of Court. The petition
challenges the 16 January 2006 Decision
[2]
and 16 August 2006 Resolution
[3]
of the Court of
Appeals in CA-G.R. CV No. 46207. The Court of Appeals affirmed with modification the 7 January
1994 Decision
[4]
of the Regional Trial Court (RTC), National Capital Judicial Region, Branch 84, Quezon
City, in Civil Case No. Q-91-10563.

The Facts

On 10 September 1976, respondents Environmental Aquatics, Inc. (EAI) and Land Services and
Management Enterprises, Inc. (LSMEI) loaned P1,792,600 from petitioner Development Bank of the
Philippines (DBP). As security for the loan, LSMEI mortgaged to DBP its 411-square meter parcel of
land situated in New Manila, Quezon City, and covered by Transfer Certificate of Title No.
209937.
[5]
The mortgage contract
[6]
stated that:

If at anytime the Mortgagor shall fail or refuse to pay any of the
amortization on the indebtedness, or the interest when due, or whatever other
obligation herein secured or to comply with any of the conditions and stipulations
herein agreed, or shall initiate insolvency proceedings or be declared involuntary
insolvent (sic), or uses the proceeds of the loan for purposes other than those
specified herein then all the amortizations and other obligations of the Mortgagor
of any nature, shall become due, payable and defaulted and the Mortgagee may
immediately foreclose this mortgage judicially or extrajudicially under Act No.
3135 as amended, or under Republic Act No. 85, as amended and or under Act No.
1508 as amended.
[7]



On 31 August 1981, DBP restructured the loan. In their promissory notes,
[8]
EAI and LSMEI stated
that:

On or before March 14, 1986, for value received, we jointly and severally,
promise to pay the DEVELOPMENT BANK OF THE PHILIPPINES, or at its
office at Makati, Metro Manila, Philippines, the sum of * * ONE MILLION NINE
HUNDRED SEVENTY THREE THOUSAND ONE HUNDRED PESOS
(P1,973,100.00), Philippine Currency, with interest at the rate of sixteen per
centum (16%) per annum.
[9]

On or before March 14, 1986, for value received, we jointly and severally,
promise to pay the DEVELOPMENT BANK OF THE PHILIPPINES, or at its
office at Makati, Metro Manila, Philippines, the sum of * * ONE HUNDRED
NINETY THOUSAND SEVEN HUNDRED PESOS * * (P190,700), Philippine
Currency, with interest at the rate of fourteen per centum (14%) per annum.
[10]


On or before March 14, 1982, for value received, I/We, jointly and severally,
promise to pay the DEVELOPMENT BANK OF THE PHILIPPINES, or order at
its office at Makati, Metro Manila, Philippines, the sum of * * SIX HUNDRED
EIGHTY FOUR THOUSAND SEVEN HUNDRED EIGHTY EIGHT PESOS * *
(P684,788.00), Philippine Currency, with interest at the rate of ________ per
centum (___%) per annum.
[11]



EAI and LSMEI failed to pay the loan. As of 11 September 1990, the loan had increased
to P16,384,419.90.
[12]
On 25 October 1990, DBP applied for extrajudicial foreclosure of the real estate
mortgage. In its application letter,
[13]
DBP stated that:

[W]e request [the ex-officio sheriff] to take possession of the properties described
in the above-mentioned mortgages as well as those embraced in the after acquired
properties clause thereof, and sell the same at public auction in accordance with the
provisions of Act 3135, as amended by Act 4118, with respect to the real estate and
Act 1508 with respect to the chattels, as amended by Presidential Decree No. 385
aforecited.
[14]


During the 19 December 1990 public auction, the ex-officio sheriff sold the property to DBP as the
highest bidder for P1,507,000.
[15]


On 15 May 1991, LSMEI transferred its right to redeem the property to respondent Mario Matute
(Matute). In his 27 July 1991 letter,
[16]
Atty. Julian R. Vitug, Jr. (Atty. Vitug, Jr.) informed DBP that his
client Matute was interested in redeeming the property by paying the P1,507,000 purchase price, plus
other costs. In its 29 August 1991 letter,
[17]
DBP informed Atty. Vitug, Jr. that Matute could redeem the
property by paying the remaining balance of EAI and LSMEI's loan. As of 31 August 1991, the loan
amounted to P19,279,106.22.
[18]


On 8 November 1991, EAI, LSMEI and Matute filed with the RTC a complaint
[19]
praying that DBP
be ordered to accept x x x Matute's bonafide offer to redeem the foreclosed property.
[20]


The RTC's Ruling

In its 7 January 1994 Decision, the RTC allowed Matute to redeem the property at its P1,507,000
purchase price. The RTC held that:

The question is whether, as the defendant DBP contends, the redemption should be
made by paying to the Bank the entire amount owed by plaintiffs-corporations in
the amount ofP18,301,653.11 as of the date of foreclosure on December 12, 1990,
invoking Sec. 16 of Executive Order No. 81 otherwise known as the 1986 Revised
Charter of DBP. On the other hand, the plaintiffs contend that this redemption
may be made only by reimbursing the defendant Bank what it has paid for at the
auction sale made to it (sic), in the amount of P1,507,000.00, pursuant to Section 5
of Act No. 3135 and Sections 26 to 30 of Rule 39 of the Revised Rules of Court.

Plaintiffs are correct. It is to be noted that the mortgage at issue was
executed on September 10, 1976, Exhs. A and 2. Republic Act No. 2081
entitled An Act to Amend Republic Act Numbered Eighty-Five and Other
Pertinent Laws, to Provide Facilities for Intermediate and Long-Term Credit by
Converting the Rehabilitation Finance Corporation into the Development Bank of
the Philippines, Authorizing the said Bank to Aid in the Establishment of
Provincial and City Private Development Banks, and for Other Purposes was
approved and made effective on June 14, 1958. It was therefore the law the
Charter (sic) of DBP, when in 1976 the mortgage here in issue was executed. On
the other hand, Executive Order No. 81, with its Section 16 thereof (sic) reading as
follows:

Sec. 16. Right of Redemption. Any mortgagor
of the Bank whose real property has been extrajudicially
sold at public auction shall, within one (1) year counted from
the date of registration of the certificate of sale, have the
right to redeem the real property by paying to the Bank all of
the latter's claim against him, as determined by the Bank.

is of recent vintage. Executive Order No. 81, issued by then President Corazon C.
Aquino, was made effective on December 3, 1986. Clearly, the application of
Executive Order No. 81 to the mortgage herein involved would violate the
constitutional proscription against the impairment of contracts. Sec. 16 of
Executive Order No. 81, which governs the right of redemption in extrajudicial
foreclosures, is not found in Rep. Act No. 2081 or even in Rep. Act No. 85. And
so, to make the redemption subject to a subsequent law would be obviously
prejudicial to the party exercising the right to redeem. Any change in the law
governing redemption that would make it more difficult than under the law at the
time of the mortgage cannot be given retroactive effect.

Under the terms of the mortgage contract, Exh. 2, specifically paragraph
4 thereof:

x x x the Mortgagee may immediately foreclose this
mortgage judicially or extrajudicially under Act No. 3135 as
amended, or under Republic Act No. 85, as amended and or
under Act No. 1508 as amended. x x x x.

Going by the literal terms of this quoted provision of the mortgage contract,
defendant DBP stand bound by the same. When defendant DBP foreclosed the
mortgage at issue, it chose Act 3135. That was an option it freely exercised
without the least intervention of plaintiffs. We cannot, therefore, escape the
conclusion that what defendant DBP agreed to in respect to (sic) the possible
foreclosure of its mortgage was to subject the same to the provisions of Act No.
3135, as amended, should the DBP opt to utilize said law. Section 6 of Act No.
3135 very clearly governs the right of redemption in extrajudicial foreclosures
thus:

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

Sections four hundred sixty-four to four hundred sixty-five, inclusive, of the Code
of Civil Procedure, since the promulgation of the Rules of Court of 1940, became
sections 29, 30 and 32 of Rule 39. The same sections were reproduced in the
Revised Rules of Court.



Having thus come to the conclusion that Act 3135 and Sections 29 to 32 of
Rule 39 of the Rules of Court rather than Executive Order No. 81 are the laws
applicable to the right of redemption invoke (sic) by plaintiffs in this case, it would
appear that all that remains for this Court to do is to apply the said legal
precepts. Pursuant to Section 30 of Rule 39, the judgment debtor or his
successor-in-interest per Sec. 29, here plaintiff Mario Batute may redeem the
property from the purchaser, at any time within twelve months after the sale, on
paying the purchaser the amount of his purchase, with one per centum per month
interest thereon in addition, up to the time of redemption, together with the amount
of any assessments or taxes which the purchaser may have paid thereon after the
purchase, and interest on such last-named amount at the same rate; x x x.
[21]


DBP appealed to the Court of Appeals.

The Court of Appeals' Ruling

In its 16 January 2006 Decision, the Court of Appeals affirmed with modification the RTC's 7
January 1994 Decision. The Court of Appeals imposed a 16% annual interest on the remaining balance
of the loan. The Court of Appeals held that:

The dearth of merit in appellant bank's position is, however, evident from the
fact that, as hereinbefore quoted, paragraph 4 of the September 10, 1976 Deed of
Real EstateMortgageexecuted in its favor by appellees EAI and LSMEI provided
for three options by which the extrajudicial foreclosure thereof may be
effected. Thereunder given the choice of resorting to Act No. 3135 as amended,
or Republic Act No. 85 as amended, or Act No. 1508 as amended, appellant bank
undoubtedly opted for the first of the aforesaid laws as may be gleaned from the
following prayer it interposed in the application for foreclosure of mortgage it filed
with the Ex-Officio Sheriff of Quezon City on October 25, 1990, viz:

WHEREFORE, we request you to take possession
of the properties described in the above-mentioned
mortgages xxx xxx xxx and sell the same at public auction
in accordance with the provisions of Act 3135, as amended
by Act 4118, with respect to the real estate xxx xxx xxx

With appellant bank's categorical election of Act No. 3135 as the controlling law
for the extrajudicial foreclosure of the subject mortgage, it goes without saying
that, insofar as the redemption of the subject realty is concerned, the provisions of
said law are deemed written into the parties' agreement and, as such, should be
respected as the law between them.
Anent the redemption of mortgaged properties extrajudicially foreclosed in
accordance therewith, Section 6 of Act No. 3135 provides as follows:

Section 6. In all cases in which an extrajudicial sale
is made under the special power hereinbefore referred to, the
debtor, his successors in interests (sic) 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 sixty-six, inclusive, of the Code
of Civil Procedure, in so far as these are not inconsistent
with the provisions of this Act.

As appropriately noted by the trial court, Sections 464, 465 and 466 of the Codeof
Civil Procedureare now, respectively, Sections 27, 28 and 30 of the 1997 Rules of
Civil Procedurewhich, under said second provision, prescribes the following
guidelines for redemption, viz:

Section 28. Time and manner of, and amounts
payable on, successive redemptions; notice to be given and
filed. The judgment obligor, or redemptioner, may
redeem the property from the purchaser, at any time within
one (1) year from the date of the registration of the
certificate of sale, by paying the purchaser the amount of his
purchase, with one per centum per month interest thereon in
addition, up to the time of redemption, together with the
amount of any assessments or taxes which may have been
paid thereon after purchase, and interest on such last named
amount at the same rate; and if the purchaser be also a
creditor having a prior lien to that of the redemptioner, other
than the judgment under which such purchase (sic), the
amount of such other lien, with interest.

Written notice of any redemption must be given to
the officer who made the sale and a duplicate filed with the
registry of deeds of the place, and if any assessments or
taxes are paid by the redemptioner or if he has or acquires
any lien other than that upon which the redemption was
made, notice thereof must in like manner be given to the
officer and filed with the registry of deeds; if such notice be
not filed, the property may be redeemed without paying such
assessments, taxes or liens.

In order to effect the redemption of the foreclosed property, the foregoing
provision notably requires the payment to the purchaser of the following sums
only: (a) the bid price; (b) the interest on the bid price, computed at one per centum
(1%) per month; and (c) the assessments or taxes, if any, paid by the purchaser,
with the same rate of interest.

When the statute is clear and explicit, the basic principle in legal
hermeneutics is to the effect that there is no need for an extended court
ratiocination on the law there is no room for interpretation, vacillation or
equivocation, only application. Having been made in accordance with Act No.
3135, we find that appellee Matute's offer to redeem the subject property in the
amount of P1,672,770.00 was, therefore, unjustifiably refused by appellant
bank. Corollarily, the rule is settled that the person effecting redemption is not
mandated to pay the whole debt since, in redemption of properties, the amount
payable is no longer the judgment debt but, rather, the purchase price thereby
fetched at the auction sale.

As for the deficiency x x x, the consistent ruling in a cantena of Supreme
Court decisions is to the effect that the mortgagee has the right to recover the same
from the debtor where, in the extrajudicial foreclosure of mortgage, the proceeds of
the sale are insufficient to pay the debt. x x x

Considering, however, that the amount offered by appellee by way of
redemption consisted merely of the purchase price for the foreclosed property,
together with the interests thereon, we find that appellant bank correctly takes
exception to the trial court's imposition of legal interest on the balance of the
mortgage debt. If the obligation consists in the payment of a sum of money, and
the debtor incurs in delay, the indemnity for damages, there being no stipulation to
the contrary, shall be the payment of the interest agreed upon, and in the absence of
stipulation, the legal interest which is six per cent per annum. In the case at bench,
the interest imposable on the balance of the mortgage debt should, therefore, be the
sixteen per cent (16%) per annum provided under the August 31, 1981 Promissory
Note appellees EAI and LSMEI executed in favor of appellant.
[22]


DBP filed a motion for reconsideration. In its 16 August 2006 Resolution, the Court of Appeals
denied the motion. Hence, the present petition.

Issues

DBP raises as issues that the lower courts erred in finding that the bank chose Act No. 3135 as the
governing law for the extrajudicial foreclosure of the property, including the determination of the
redemption price, and in ruling that the redemption price is equivalent to the P1,507,000 purchase price.
The Court's Ruling

The petition is meritorious.

Section 16 of Executive Order (EO) No. 81 states that the redemption price for properties
mortgaged to and foreclosed by DBP is equivalent to the remaining balance of the loan. Section 16 states
that, Any mortgagor of the Bank whose property has been extrajudicially sold at public auction shall x x
x have the right to redeem the real property by paying to the Bank all of the latter's claims against
him, as determined by the Bank.

In Development Bank of the Philippines v. West Negros College, Inc.,
[23]
the Court held that the
redemption price for properties mortgaged to and foreclosed by DBP is equivalent to the remaining
balance of the loan, with interest at the agreed rate. The Court held that:

It has long been settled that where the real property is mortgaged to and
foreclosed judicially or extrajudicially by the Development Bank of the
Philippines, the right of redemption may be exercised only by paying to the
Bank all theamount heowed thelatter on thedateof thesale, with interest on
thetotal indebtedness at therateagreed upon in theobligation fromsaid date,
unless the bidder has taken material possession of the property or unless this had
been delivered to him, in which case the proceeds of the property shall compensate
the interest. x x x

The foregoing rule is embodied consistently in the charters of petitioner
DBP and its predecessor agencies. Section 31 of CA 459 creating the Agricultural
and Industrial Bank explicitly set the redemption price at the total indebtedness
plus contractual interest as of the date of the auction sale. Under RA 85 the powers
vested in and the duties conferred upon the Agricultural and Industrial Bank by CA
459 as well as its capital, assets, accounts, contracts, and choses in action were
transferred to the Rehabilitation Finance Corporation. It has been held that among
the salutary provisions of CA 459 ceded to the Rehabilitation Finance Corporation
by RA 85 was Sec. 31 defining the manner of redeeming properties mortgaged
with the corporation. Subsequently, by virtue of RA 2081 (1958), the powers,
assets, liabilities and personnel of the Rehabilitation Finance Corporation under
RA 85 and CA 459, particularly Sec. 31 thereof, were transferred to petitioner
DBP. Significantly, Sec. 31 of CA 459 has been reenacted substantially in Sec. 16
of the present charter of the DBP, i.e., EO 81 (1986) as amended by RA 8523
(1998).

x x x x

The unavoidable conclusion is that in redeeming the foreclosed property
respondent West Negros College as assignee of Bacolod Medical Center
should pay the balance of the amount owed by the latter to petitioner DBP
with interest thereon at the rate agreed upon as of the date of the public
auction on 24 August 1989.
[24]
(Emphasis supplied)

In Development Bank of the Philippines v. Mirang,
[25]
the Court held that the redemption price for
properties morgaged to and foreclosed by DBP is equivalent to the remaining balance of the loan, with
interest at the agreed rate. The Court held that, The unavoidable conclusion is that the appellant, in
redeeming the foreclosed property, should pay the entire amount he owed to the Bank on the date
of the sale, with interest thereon at the rate agreed upon.
[26]


As early as 1960, the Court has already settled the issue. In Nepomuceno, et al. v. Rehabilitation
Finance Corporation,
[27]
the Court held that the redemption price for properties morgaged to and
foreclosed by DBP is equivalent to the remaining balance of the loan, with interest at the agreed
rate. The Court held that:

The issue posed in this appeal is: considering that the loan of P300,000.00
was obtained from the Rehabilitation Finance Corporation [now DBP] by spouses
Jose Nepomuceno and Isabela Acua and Jesus Nepomuceno merely acted as
accomodation mortgagor, for what price may the mortgagor redeem his property
after the same has been sold at public auction? Would it be for the price at which
the property was sold, as contended by the mortgagor, or for the balance of the loan
obtained by the borrowers from the banking institution, as contended by appellant?

x x x x

[T]he inescapable conclusion is that the mortgagor herein or his assignees
cannot redeem the property in dispute without paying the balance of the total
indebtedness then outstanding on the date of the sale to the Rehabilitation
Finance Corporation.
[28]
(Emphasis supplied)

The lower courts ruled that the redemption price for the property is equivalent to the P1,507,000
purchase price because DBP chose Act No. 3135 as the governing law for the extrajudicial
foreclosure. The RTC and Court of Appeals, respectively, stated that:

When defendant DBP foreclosed the mortgage at issue, it chose Act 3135. That
was an option it freely exercised without the least intervention of plaintiffs. We
cannot, therefore, escape the conclusion that what defendant DBP agreed to in
respect to (sic) the possible foreclosure of its mortgage was to subject the same to
the provisions of Act No. 3135, as amended, should the DBP opt to utilize said
law.
[29]


Thereunder given the choice of resorting to Act No. 3135 as amended, or
Republic Act No. 85 as amended, or Act No. 1508 as amended, appellant bank
undoubtedly opted for the first of the aforesaid laws as may be gleaned from the
following prayer it interposed in the application for foreclosure of mortgage it filed
with the Ex-Officio Sheriff of Quezon City on October 25, 1990.
[30]


The Court disagrees. Republic Act (RA) No. 85 and Act No. 1508 do not provide a procedure for
extrajudicial foreclosure of real estate mortgage. When DBP stated in its letter to the ex-officio sheriff
that the property be sold at public auction in accordance with the provisions of Act 3135, it did so
merely to find a proceeding for the sale.

In Development Bank of the Philippines v. Zaragoza,
[31]
Development Bank of the Philippines v.
Mirang,
[32]
and Development Bank of the Philippines v. Jimenez, et al.,
[33]
the Court held that when the
bank resorted to Act No. 3135 in order to sell the mortgaged property extrajudicially, it did so merely to
find a proceeding for the sale.

In its 10 October 2006 petition, DBP claims that when it resorted to Act No. 3135 in order to sell
the mortgaged property extrajudicially, it did so merely to find a proceeding for the sale. DBP stated
that:

[W]hen herein petitioner resorted to Act 3135 in its application for extrajudicial
foreclosure of the subject mortgaged real estate, it did so only to find a
proceeding for the extrajudicial sale. The Court of Appeals should have noted
that neither Republic Act No. 85 (the Charter of the Rehabilitation Finance
Corporation) nor Act 1508 (Chattel Mortgage Law) prescribe a procedure for
extrajudicial foreclosure of real estate mortgage as provided under Act 3135. Such
action, therefore, cannot be construed to mean a waiver of petitioner's right to
demand the payment of respondents' entire obligation as the proper redemption
price. There is no such waiver on the part of the petitioner.

x x x x

[I]t is hereby stressed that DBP did not elect Act 3135 to the exclusion of other
laws in the extrajudicial foreclosure of the subject mortgaged real property. Such a
conclusion is definitely contrary to law and jurisprudence, which settled the rule
that Act 3135 is the general law that governs the procedure and requirements in
extra-judicial foreclosure of real estate mortgage, but in determining the
redemption price of the property mortgaged to the Development Bank of the
Philippines, the DBP Charter shall prevail.

It is of judicial notice that Act 3135 is the only law governing the
proceedings in extrajudicial foreclosure of real estate mortgage. Act No. 1508, on
the other hand, governs the extrajudicial foreclosure of chattel mortgage, and
should not be in issue in the instant case which involves a real estate mortgage.

It should likewise be of judicial notice that Republic Act No. 85 is the
charter of the Rehabilitation Finance Corporation, predecessor of appellant
DBP. RA 85 prescribes the redemption price, not the proceedings and
requirements in an extrajudicial foreclosure of real estate mortgage such as those
found in Act 3135.

x x x When appellant DBP cited Act 3135 in its Deed of Real Estate
Mortgage or even in the application for foreclosure of mortgage, it was not a
matter of making an exclusive option or choice because Act 3135 governs the
procedure and requirements for an extrajudicial foreclosure or real estate
mortgage. In citing said law, Appellant DBP was merely finding a proceeding for
extra-judicial foreclosure sale x x x. And while the said Act 3135 provides for
redemption, such provision will not apply in the determination of the redemption
price on [sic] mortgages to DBP. In the latter case, the DBP Charter will
prevail.
[34]


Even assuming that DBP chose Act No. 3135 as the governing law for the extrajudicial foreclosure,
the redemption price would still be equvalent to the remaining balance of the loan. EO No. 81, being a
special and subsequent law, amended Act No. 3135 insofar as the as redemption price is concerned.

In Sy v. Court of Appeals,
[35]
the Court held that RA No. 337 amended Act No. 3135 insofar as the
redemption price is concerned. The Court held that:

[T]he General Banking Act partakes of the nature of an amendment to Act
No. 3135 insofar as the redemption price is concerned, when the mortgagee is a
bank or banking or credit institution, Section 6 of Act No. 3135 being, in this
respect, inconsistent with Section 78 of the General Banking Act. Although
foreclosure and sale of the subject property was done by SIHI pursuant to
Act. No. 3135, x x x Section 78 of the General Banking Act, as amended
provides the amount at which the subject property is redeemable from SIHI,
which is, in this case, the amount due under the mortgage deed, or the
outstanding obligation of Carlos Coquinco, plus interest and
expenses.
[36]
(Emphasis supplied)

In Ponce de Leon v. Rehabilitation Finance Corporation,
[37]
the Court held that RA No. 337, being
a special and subsequent law, amended Act No. 3135 insofar as the redemption price is concerned. The
Court held that:

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
amending 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
or 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.
[38]
(Emphasis supplied)

WHEREFORE, the Court GRANTS the petition. The Court PARTIALLY SETS ASIDE the 16
January 2006 Decision and 16 August 2006 Resolution of the Court of Appeals in CA-G.R. CV No.
46207. The Court gives respondent Mario Matute a grace period of 60 calendar days from notice of
finality of this Decision to redeem the property, by paying petitioner Development Bank of the
Philippines the remaining balance of respondents Environmental Aquatics, Inc. and Land Services and
Management Enterprises, Inc.'s loan, plus expenses and interest at the agreed rate computed from the 19
December 1990 public auction. If the bank has taken material possession of the property, the possession
of the property shall compensate for the interest during the period of possession.

SO ORDERED.
G.R. No. 121494 June 8, 2000
SPOUSES VICTOR ONG and GRACE TIU ONG, petitioners,
vs.
COURT OF APPEALS, HON. RODOLFO R. BONIFACIO in his capacity as Presiding Judge,
RTC, Pasig City, Branch 159; PROVINCIAL SHERIFF OF RIZAL GRACE S. BELVIS;
DEPUTY SHERIFF VICTOR S. STA. ANA; and PREMIERE DEVELOPMENT
BANK, respondents.
R E S O L U T I O N


QUISUMBING, J .:
Subject of the present petition for review on certiorari is the decision of the Court of Appeals in CA-G.R.
SP. No. 34636 dismissing petitioner's special civil action for prohibition with preliminary injunction
which sought to enjoin public respondents from implementing a writ of possession issued in favor of
private respondent. The Court of Appeals likewise denied petitioners' Motion for Reconsideration.
Petitioners are the mortgagors of an 857 square meter lot and residential house in San Juan, Metro
Manila, evidenced by Transfer Certificate Title (TCT) No. (53788) 030-R. The real estate mortgage was
used to secure a promissory note (No. 275-2 and later 285-W) issued by Kenlene Laboratories, Inc.
(debtor company), a domestic corporation, in favor of private respondent Premiere Development Bank
(mortgagee-bank).
Upon failure of the debtor company to pay its amortizations, the mortgagee-bank extrajudicially
foreclosed the real estate mortgage under the provisions of Act 3135, as amended by Act 4118. The
mortgagee-bank was the highest bidder. During the one-year redemption period, the mortgagee filed a
petition with the Regional Trial Court of Pasig City, Branch 159 for the issuance of a writ of possession,
which was docketed as LRC Case No. R-4874.
Upon the filing of a bond, the trial court issued the writ of possession. Petitioners filed a Motion for
Reconsideration and to Recall Writ of Possession, which was denied by the trial court.
Petitioners-mortgagors filed with the Court of Appeals a petition for prohibition with an application for a
writ of preliminary mandatory injunction
1
to enjoin the implementation of the writ of possession.
Petitioners alleged that there is a pending case for annulment of extrajudicial foreclosure of real estate
mortgage with an application for preliminary injunction and temporary restraining order (TRO), docketed
as Civil Case No. 64604, with the Regional Trial Court of Pasig, Branch 157. Petitioners argued that the
implementation of the writ of possession would render nugatory the judgment of the trial court in Civil
Case No. 64604.
Initially, the Court of Appeals granted the TRO, but later dismissed the petition for prohibition for lack of
merit based on:
2
(1) failure to allege that there was no appeal or any plain, speedy and adequate remedy in
the ordinary course of law, (2) forum-shopping (though it did not explain why), and (3) Veloso v. IAC,
205 SCRA 22 (1992) which held that the pendency of a civil case for annulment of sale or reformation of
contract is not sufficient ground to deny the issuance of a writ of possession or for the suspension of the
resolution thereof. The Court of Appeals likewise denied petitioner's Motion for Reconsideration.
3

Hence, the present petition for review on certiorari.
4

In their Memorandum,
5
petitioners argue that the Court of Appeals should have enjoined the
implementation of the writ of possession (LRC Case No. R-4874) pending resolution of their separate
case for annulment of extrajudicial foreclosure of real estate mortgage (Civil Case No. 64604). Petitioners
contend that if Civil Case No. 64604 is resolved in their favor, the RTC-Pasig, Branch 157 cannot
enforce it as against a co-equal court which issued the writ of possession, hence the necessary recourse to
the Court of Appeals and this Court.
Petitioners further invoke the case of Allied Bank v. Court of Appeals, G.R. No. 109253, February 7,
1994,
6
wherein both the SC and CA upheld the trial court's orders setting aside the certificate of sale and
nullifying the extrajudicial foreclosure proceedings on the ground of prematurity. The mortgagee bank
therein foreclosed the real estate mortgage prior to the maturity of the restructured loan. Worse, there was
no publication of the foreclosure sale. No writ of possession was issued in that case. Hence, Allied is not
at fours with this case, and petitioners not similarly situated.
Petitioners insist that appeal under Act 496 is not an available remedy because it merely refers to orders
and decisions of the trial court in "registration proceedings." Further, appeal, even if available, would not
be adequate and speedy remedy because it would not stop the sheriff from implementing the writ of
possession.
Lastly, petitioners maintain that the order issuing the writ of possession has not yet attained finality
because of the present petition for prohibition. Inasmuch as the extrajudicial foreclosure proceedings are
a nullity, the issuance of the writ of possession was in excess of jurisdiction, hence correctible
by certiorari or prohibition.
On the other hand, in its Memorandum,
7
private respondent (mortgagee-bank) contends, in gist, that
prohibition does not lie since petitioners in fact has two remedies available (1) appeal of the order
issuing the writ of possession under Sec. 8 of Act 3135, as amended by Act 4118, and (2) their separate
action for annulment of foreclosure of mortgage. For failure to avail of the first remedy, the issue of
possession already attained finality. Private respondent concedes, nevertheless, that its possession of the
mortgaged property would still be subject to the outcome of Civil Case No. 64604. Further, private
respondent claims that the pendency of both the petition for prohibition and Civil Case No. 64604, both
aimed at preventing the implementation of the writ of possession, constitutes forum shopping.
Simply put, the issues are: (1) Whether or not prohibition lies to enjoin the issuance of a writ of
possession? (2) Whether or not petitioners are guilty of forum shopping?
A writ of possession is "a writ of execution employed to enforce a judgment to recover the possession of
land. It commands the sheriff to enter the land and give possession of it to the person entitled under the
judgment."
8

A writ of possession may be issued under the following instances:
9
(1) land registration proceedings
under Sec. 17 of Act 496;
10
(2) judicial foreclosure, provided the debtor is in possession of the
mortgaged realty and no third person, not a party to the foreclosure suit, had intervened;
11
and (3)
extrajudicial foreclosure of a real estate mortgage under Sec. 7 of Act 3135 as amended by Act 4118.
The present case falls under the third instance. Under Sec. 7 of Act 3135 as amended by Act 4118, 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.
12
Sec. 7 of Act 3135, as amended
by Act 4118, provides
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 in the registration or cadastral proceedings if the property is registered, or
in special proceedings in the case of property registered under the Mortgage Law or under sec.
194 of the Administrative Code, or of any other real property encumbered with a mortgage
duly registered in the office of any register of deeds in accordance with any existing law, and
in each case the clerk of court shall, upon the filing of such petition, collect the fees specified
in par. 11 of sec 114 of Act No. 496, 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.
In case it is disputed that there was violation of the mortgage or that the procedural requirements for the
foreclosure sale were not followed, Sec. 8 of Act 3135 as amended by Act 4118, provides that the
mortgagor may file a petition with the trial court which issued the writ to set aside the sale and for
cancellation of the writ of possession within 30 days after the purchaser-mortgagee was given possession.
Sec. 8 of Act 3135 as amended by Act 4118, provides
Sec. 8. The debtor may, in the proceedings in which possession was requested, but not later
than thirty days after the purchaser was given possession, petition that the sale be set aside and
the writ of possession cancelled, specifying the damages suffered by him, because the
mortgage was not violated or the sale was not made in accordance with the provisions hereof,
and the court shall take cognizance of this petition in accordance with the summary procedure
provided for in section one hundred and twelve of Act No. 496; and if it finds the complaint of
the debtor justified, it shall dispose in his favor of all or part of the bond furnished by the
person who obtained possession. Either of the parties may appeal from the order of the judge
in accordance with section 14 of Act No. 196; but the order of possession shall continue in
effect during the pendency of the appeal.
The law is clear that the purchaser must first be placed in possession of the mortgaged property pending
proceedings assailing the issuance of the writ of possession. If the trial court later finds merit in the
petition to set aside the writ of possession, it shall dispose in favor of the mortgagor the bond furnished
by the purchaser. Thereafter, either party may appeal from the order of the judge in accordance with
Section 14 of Act 496, which provides that "every order, decision, and decree of the Court of Land
Registration may be reviewed . . . in the same manner as an order, decision decree or judgment of a Court
of First Instance (RTC) might be reviewed." The rationale for the mandate is to allow the purchaser to
have possession of the foreclosed property without delay, such possession being founded on his right of
ownership.
13

In several cases,
14
the Court has ruled that the issuance of a writ of possession is a ministerial function.
"The order for a writ of possession issues as a matter of course upon the filing of the proper motion and
the approval of the corresponding bond. The judge issuing the order following these express provisions of
law cannot be charged with having acted without jurisdiction or with grave abuse of
discretion."
15
Therefore, the issuance of the writ of possession being ministerial in character, the
implementation of such writ by the sheriff is likewise ministerial.
Contrary to petitioners' protestations that Veloso v. Intermediate Appellate Court, 205 SCRA 227 (1992)
should only apply to cases wherein the one-year period for redemption has already lapsed, Veloso makes
no such distinction. In said case, the Court merely observed that
Worthy of note is that petitioners do not impugn the validity of the mortgage at its inception.
Their assault is on it is founded on events allegedly transpiring after its execution. The
tenability of their challenge to the mortgage may well be determined in the civil action (No.
136559) instituted by them in the Manila Regional Trial Court. But clearly, the pendency of
that action does not and cannot bar the issuance of a writ of possession to the mortgagee who
has, in the meantime, extrajudicially foreclosed the mortgaged property and acquired it as
highest bidder in the subsequent public auction sale. The law is quite explicit on this point,
and the right of the mortgagee thereunder unquestionable. And decisions abound applying the
law and declaring it to be the court's ministerial duty to uphold the mortgagee's right to
possession even during the redemption period.
16

As a rule, any question regarding the validity of the mortgage or its foreclosure cannot be a legal ground
for refusing the issuance of a writ of possession.
17
Regardless of whether or not there is a pending suit for
annulment of the mortgage or the foreclosure itself, the purchaser is entitled to a writ of possession,
without prejudice of course to the eventual outcome of said case. Hence, an injunction to prohibit the
issuance of writ of possession is entirely out of place.
18

The foregoing considered, the petition for review on certiorari assailing the dismissal of the petition for
prohibition must fail.
First. Under Section 2 of Rule 65 of the Rules of Court, prohibition can only be availed of if there is no
appeal, or any other plain, speedy, adequate remedy in the ordinary course of law. In this case, appeal
under Sec. 8 of Act 3135, as amended by Act 4118, is still available. Further, petitioners have a plain,
speedy and adequate remedy in the ordinary course of law, which is their separate case for annulment of
the foreclosure of mortgage.
Second. Prohibition does not lie to enjoin the implementation of a writ of possession.
In PNB v. Adil, 118 SCRA 116 (1982), the Court held that "once the writ of possession has been issued,
the trial court has no alternative but to enforce the writ without delay." The Court found it gross error for
the judge to have suspended the implementation of the writ of possession on a very dubious ground as
"humanitarian reason."
With regard to the second issue, it will be recalled that the essence of forum-shopping is the filing of
multiple suits involving the same parties for the same cause of action, either simultaneously or
successively, for the purpose of obtaining favorable judgment.
19
It exists where the elements of litis
pendentia are present or where a final judgment in one case will amount to res judicata in another.
20
The
issuance of the writ of possession being a ministerial function, and summary in nature, it cannot be said
to be a judgment on the merits, but simply an incident in the transfer of title. Hence, a separate case for
annulment of mortgage and foreclosure sale cannot be barred by litis pendentia or res judicata.
21
Clearly,
insofar as LRC Case No. R-4874 and Civil Case No. 64604 pending before different RTCs are
concerned, there is no forum shopping.
In fact, in Nartates v. GSIS, 156 SCRA 205 (1987), two cases, one for annulment of foreclosure
proceedings (G.R. No. L-47669) and another for annulment of the writ of possession (G.R. No. L-47744),
both reached this Court at the same time. The Court consolidated the cases since they both stemmed from
the foreclosure of the GSIS of the property mortgaged to it by petitioner. As to the issuance of the writ of
possession, the Court upheld the issuance of the writ. As to the foreclosure proceedings, the records being
complete, the Court found the foreclosure in order.
In this case, however, only the issue of the implementation of the writ of possession is before
us.1awphil Civil Case No. 64604 is still pending with the trial court. Hence, the allegations as to the
failure to comply with procedural requirements of the extrajudicial foreclosure sale, being factual, is for
the trial court to determine.
22

As of the time of filing the petition, private respondent bank has not yet been placed in possession of the
property. Section 8 of Act 3135 as amended by Act 4118 provides that petitioners-mortgagors have "30
days after the purchaser was given possession" to file a petition that the sale be set aside and the writ of
possession cancelled. Hence, the filing of the petition for prohibition with the CA to enjoin the
implementation of the writ of possession is ill-advised and premature.
WHEREFORE, the instant petition for review on certiorari is DENIED for lack of merit. Costs against
petitioners.
SO ORDERED.





























FIRST DIVISION

SPOUSES BASILIO and NORMA HILAGA,
Petitioners,



- versus -



RURAL BANK OF ISULAN (Cotabato, Inc.,
as represented by its Manager),
Respondent.
G.R. No. 179781

Present:

PUNO, C.J., Chairperson,
CARPIO MORALES,
LEONARDO-DE CASTRO,
BERSAMIN, and
VILLARAMA, JR., JJ.

Promulgated:

April 7, 2010
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

DECISION

VILLARAMA, JR., J .:
Petitioners appeal from the Decision
[1]
dated May 25, 2007 and Resolution
[2]
dated August 6,
2007 of the Court of Appeals (CA) in C.A.-G.R. CV No. 81979 which had reversed the August 8, 2003
Judgment
[3]
of the Regional Trial Court of Surallah, South Cotabato, Branch 26 in Civil Case No. 666-N
for Redemption of Foreclosed Mortgaged Property Under [Act No.] 3135. The appellate court held
that petitioners right to redeem the foreclosed property from the respondent bank had expired.
The following facts are established:
Petitioners Basilio and Norma B. Hilaga were the owners of a parcel of land, identified as Lot
No. 172-A, Pls-212-D-7, located at Barrio Lopez Jaena, Municipality of Norala, Province of South
Cotabato and containing an area of 46,868 square meters, more or less.
On March 16, 1970, petitioners obtained a loan from respondent Rural Bank of Isulan
(Cotabato) Inc., in the amount of P2,500.00. To secure the loan, they executed a Real Estate
Mortgage
[4]
over the above-mentioned property which was then covered only by Tax Declaration No.
5537.
[5]
When petitioners failed to pay their obligation when it became due on March 19, 1971, the
respondent bank initiated foreclosure proceedings. The subject property was sold at a public auction by
the Provincial Sheriff on April 20, 1977 and a Certificate of Extrajudicial Sale
[6]
was issued in favor of
the Rural Bank of Isulan (Cotabato) Inc. as the highest bidder. The respondent bank then took possession
of the foreclosed property. Meanwhile, unknown to respondent bank, a Free Patent title
[7]
(Original
Certificate of Title No. P-19766) had been issued in favor of petitioners on August 4, 1976 or before the
foreclosure sale.
On September 21, 1994, or more than seventeen (17) years after the foreclosure sale,
petitioner Basilio Hilaga sent a letter
[8]
to the respondent banks lawyer, the late Atty. Ismail Arceno,
conveying his desire to redeem the subject property. When the letter remained unanswered, petitioners,
through their counsel, again sent a letter
[9]
dated May 4, 1999, seeking to redeem the foreclosed property.
The second letter, however, also remained unheeded.
Thus, on June 3, 1999, petitioners filed a complaint
[10]
for Redemption of Foreclosed
Mortgaged Property Under [Act No. 3135] before the Regional Trial Court of Surallah, South Cotabato,
Branch 26, seeking to redeem the subject property from the respondent bank under the provisions of Act
No. 3135. In their complaint, petitioners alleged that the mortgage and subsequent foreclosure of the
subject property had not been annotated on the title nor registered with the Register of Deeds. Also, no
annotation and consolidation of ownership was made in favor of the respondent bank. Thus, the one (1)-
year redemption period under Act No. 3135, which commences from the date of registration of the sale,
has not yet started. They insisted that, indeed, their right of redemption has not yet expired because under
Section 119 of Commonwealth Act No. 141 or the Public Land Act, a homesteader whose homestead has
been sold at a public auction by virtue of an extrajudicial foreclosure, may repurchase said land within
five (5) years from the date of registration of the sale. Thus, they can still exercise their right of
redemption. They signified their willingness to redeem or repurchase the foreclosed property by
depositing the amount of P10,000.00 with the court.
In its Answer with Counterclaim,
[11]
the respondent bank averred that when the real estate
mortgage in its favor was executed, the parcel of land was merely covered by a tax declaration. That
unknown to the respondent bank, petitioners proceeded to apply for and cause the issuance in 1976 of a
free patent and torrens title to the land; hence, they are estopped to claim that the parcel of land
mortgaged is covered by a free patent and torrens title. They likewise cannot avail of the benefits afforded
to a grantee of a public land under the Homestead and Free Patent Laws because they violated the terms
and conditions of their application to avail of a grant by homestead or free patent when they mortgaged
the land.
As aforesaid, the trial court rendered judgment in favor of petitioners. The trial court ruled
that because the certificate of sale was not registered, petitioners can still redeem the subject property.
The dispositive portion of the trial courts decision reads--
IN VIEW OF THE FOREGOING PREMISES, judgment is hereby
rendered in favor of the Plaintiffs, thereby ordering the defendant Bank:
1) to allow the plaintiffs to exercise their right of redemption under Act
3135 over the foreclosed property described above in the amount
corresponding to the principal obligation, plus the corresponding interest accruing
from the date of the filing of this case[; and]
2) to pay attorneys fees in the amount of FIVE THOUSAND PESOS
(PH 5,000.00).
SO ORDERED.
[12]

On appeal, the CA reversed the trial court. According to the CA, the right of petitioners to
redeem their foreclosed property can only be exercised within two (2) years from the date of foreclosure,
as provided under Republic Act No. 720
[13]
or the Rural Banks Act, as amended by Republic Act No.
2670. The CA also ruled that petitioners are guilty of laches.
On August 6, 2007, the CA denied petitioners motion for reconsideration.
Hence, this appeal.
Petitioners alleged that--
I
THE COURT OF APPEALS COMMITTED A REVERSIBLE ERROR OF LAW
IN HOLDING THAT THE APPLICABLE LAW IS ACT NO. 3135, AS
AMENDED BY ACT NO. 4118 IN CONJUNCTION WITH REPUBLIC ACT
NO. 720 AS AMENDED BY REPUBLIC ACT NO. 2670 (RURAL BANK
ACT).

II
THE COURT OF APPEALS COMMITTED A REVERSIBLE ERROR OF LAW
AND GRAVE ABUSE OF DISCRETION IN HOLDING THAT PETITIONERS
HAS ONLY TWO YEARS TO REDEEM THEIR PROPERTY FROM THE
ISSUANCE OF CERTIFICATE OF SALE AFTER THE SAME WAS
FORECLOSED.
III
THE COURT OF APPEALS COMMITTED A REVERSIBLE ERROR OF LAW
AND GRAVE ABUSE OF DISCRETION IN DECLARING THAT
PETITIONERS ARE GUILTY OF LACHES.
[14]

Essentially, the issue is whether petitioners can still redeem their foreclosed property.
Petitioners assail the CAs ruling that they only have two (2) years from the time the certificate of sale
was issued to the respondent bank to redeem the property. Petitioners submit that they can still redeem their
foreclosed property from respondent bank since under the provisions of Act No. 3135, as amended, the one
(1)-year redemption period should start from the date of registration of the certificate of sale with the
Register of Deeds.
They admit that when the property was mortgaged, the property was covered by a mere tax
declaration. However, they point out that even though a free patent title was later issued to them,
respondent bank still opted to foreclose the property under Act No. 3135, as amended, and not under
Republic Act No. 720 or the Rural Banks Act, nor under Act No. 3344 or the Spanish Mortgage
Law. Thus, under the provisions of Act No. 3135, they have one (1) year from the date of the registration
of the sale to redeem the mortgaged property. Because no registration of the sale was effected, they can
still redeem the property from the respondent bank.
The petition has no merit.
Section 5 of Republic Act No. 720, as amended by Republic Act Nos. 2670 and 5939, specifically
provides for the redemption period for lands foreclosed by rural banks. It provides in part as follows:
SEC. 5. x x x
Loans may be granted by rural banks on the security of lands without
Torrens titles where the owner of private property can show five years or more of
peaceful, continuous and uninterrupted possession in the concept of an owner; x x
x or of homesteads or free patent lands pending the issuance of titles but already
approved, the provisions of any law or regulations to the contrary
notwithstanding: Provided, That when the corresponding titles are issued the
same shall be delivered to the register of deeds of the province where such
lands are situated for the annotation of the encumbrance: x x x
x x x Provided, That when a homestead or free patent land is
foreclosed, the homesteader or free patent holder, as well as their heirs shall have
the right to redeem the same within two years from the date of foreclosure in case
of a land not covered by a Torrens title or two years from the date of the
registration of the foreclosure in case of a land covered by a Torrens title x x x.
In Sta. Ignacia Rural Bank, Inc. v. Court of Appeals,
[15]
we summarized the rules on redemption in
the case of an extrajudicial foreclosure of land acquired under our free patent or homestead statutes as
follows. If the land is mortgaged to a rural bank under Republic Act No. 720, as amended, the
mortgagor may redeem the property within two (2) years from the date of foreclosure or from the
registration of the sheriffs certificate of sale at such foreclosure if the property is not covered or is
covered, respectively, by a Torrens title. If the mortgagor fails to exercise such right, he or his heirs
may still repurchase the property within five (5) years from the expiration of the two (2)-year redemption
period pursuant to Section 119 of the Public Land Act (C.A. No. 141). If the land is mortgaged to parties
other than rural banks, the mortgagor may redeem the property within one (1) year from the registration
of the certificate of sale pursuant to Act No. 3135. If he fails to do so, he or his heirs may repurchase the
property within five (5) years from the expiration of the redemption period also pursuant to Section 119
of the Public Land Act.
In the present case, petitioners admit that when the property was mortgaged, only the tax
declaration was presented. Although a free patent title was subsequently issued in their favor on August
4, 1976, petitioners failed to inform the creditor rural bank of such issuance. As a result, the certificate of
sale was not registered or annotated on the free patent title. Petitioners are estopped from redeeming the
property based on the free patent title which was not presented during the foreclosure sale nor delivered
to the Register of Deeds for annotation of the certificate of sale as required under Section 5 of Republic
Act No. 720, as amended. Estoppel in paisarises when one, by his acts, representations or admissions, or
by his own silence when he ought to speak out, intentionally or through culpable negligence, induces
another to believe certain facts to exist and such other rightfully relies and acts on such belief, so that he
will be prejudiced if the former is permitted to deny the existence of such facts.
[16]

Petitioners cannot fault respondent for the non-registration of the certificate of sale because
petitioners did not inform the respondent bank that a Torrens title had already been acquired by them on
August 4, 1976. By their silence and inaction, petitioners misled the respondent bank to believe that their
only proof of ownership was the tax declaration. Thus, the two (2)-year redemption period shall be
reckoned from the date of the foreclosure. Apropos is the CAs ruling on this matter:
It is undisputed that the foreclosed property was not yet covered by a
Torrens title, being merely covered by a Tax Declaration, when appellees
mortgaged their property. Clearly, the right of appellees to redeem their foreclosed
property can only be exercised within two (2) years from the date of foreclosure, as
provided for under R.A. No. 720, as amended by R.A. No. 2670. When the instant
suit commenced on 31 May 1999, appellees right to redeem had already lapsed
since they had only until 1979 to exercise their right of redemption or within two
(2) years from the foreclosure proceedings in 1977.
[17]

For the same reason, petitioners assertion that they will have five (5) years from the date of
registration of the sale to redeem the foreclosed property under Section 119 of the Public Land Act has no merit,
the reckoning period for the redemption period being properly from the date of sale.
But even assuming arguendo that petitioners can avail of the five (5)-year redemption period
provided under Section 119 of the Public Land Act, they still failed to exercise their right of redemption
within the reglementary period provided by law. As mentioned earlier, Section 119 of said Act expressly
provides that where the land involved is acquired as a homestead or under a free patent, if the mortgagor
fails to exercise the right of redemption, he or his heirs may still repurchase the property within five (5)
years from the expiration of the two (2)-year redemption period. The auction sale having been conducted
on April 20, 1977, petitioners had until April 20, 1984 within which to redeem the mortgaged
property. Since petitioner only filed the instant suit in 1999, their right to redeem had already lapsed. It
took petitioners twenty-two (22) years before instituting an action for redemption. The considerable
delay in asserting ones right before a court of justice is strongly persuasive of the lack of merit in
petitioners claim, since it is human nature for a person to enforce his right when the same is threatened
or invaded.
[18]

WHEREFORE, the petition for review on certiorari is hereby DENIED, for lack of merit. The
Decision and Resolution of the Court of Appeals dated May 25, 2007 and August 6, 2007, respectively,
in C.A.-G.R. CV No. 81979 are AFFIRMED.
With cost against the petitioners.
SO ORDERED.