Allied Banking Corp. vs.

Sio Wan AUTHOR: DAYOS

G.R. No. 133179 NOTES: Pinagmukha nila na yung Allied check na dineposit
TOPIC: The defendants (Persona who may be sued for tort) sa Metrobank account ni FCC ay proceeds ng money market
PONENTE: placement.
FACTS:
 Filipinas Cement Corp (FCC) deposited 2M a money market placement with Producers bank, Santos being the
assigned account holder.
 Lim Sio Wan deposited a money market placement to Allied Banking Corp valued at Php 1,152,597 for a term of
31 days.
 Few weeks later, a purported Lim Sio Wan called Cristina So (Allied Officer) to pre-terminate the MMP, instead
issue a manager’s check and hand it over to Deborah Santos – Lim Sio Wan described Santos’ appearance through
phone.
 Santos later on arrived at the branch and upon signing the application form, Allied issued a manager’s check.
 The check was deposited in the account of FCC with Metrobank – forged signature of Lim.
 When the FCC placement matured, they demanded the proceeds.
 On the same date So received the call, manager’s check was deposited in the account of FCC, purporting to be the
proceeds of FCC’s money market placement with Producers.
 Upon the maturity, Lim Sio Wan demanded the proceeds of his money market placement.
 Allied advised him that it was already pre-terminated.
 He filed a complaint with the RTC to recover the proceeds of the money.
 RTC: in favor of Lim - Allied must pay!
 CA: Modified. Absolved Producer’s bank from liability
 Allied argued that Producer’s bank must be liable for the negligence of its employee Santos for her negligence
under Art. 2180
ISSUE(S):
Whether the court erred in absolving the producers bank from liability
HELD: YES

RATIO:
Art. 2180 pertains to the vicarious liability of an employer for quasi-delicts that an employee has committed. Such
provision of law does not apply to civil liability arising from delict.

One also cannot apply the principle of subsidiary liability in Art. 103 of the Revised Penal Code in the instant case. Such
liability on the part of the employer for the civil aspect of the criminal act of the employee is based on the conviction of the
employee for a crime. Here, there has been no conviction for any crime.

However, unjust enrichment on the part of Producers Bank. Producers Bank was unjustly enriched at the expense of Lim
Sio Wan. Based on the facts and circumstances of the case, Producers Bank should reimburse Allied and Metrobank for
the amounts the two latter banks are ordered to pay Lim Sio Wan.

CASE LAW/ DOCTRINE:

DISSENTING/CONCURRING OPINION(S):
G .R . N o . 156940 D ecem ber 14, 2004

A S S O C I A T E D B A N K (N o w W E S T M O N T B A N K ) v s . T A N

FACTS:

R e s p o n d e n t T a n is a b u s in e s s m a n a n d a re g u la r d e p o s it o r -c re d it o r o f t h e p e t it io n e r, A s s o c ia t e d
B a n k . S o m e t im e in S e p t e m b e r 1 9 9 0 , h e d e p o s it e d a p o s t d a t e d c h e c k w it h t h e p e t it io n e r in t h e a m o u n t
o f P 1 0 1 , 0 0 0 is s u e d t o h im b y a c e rt a in W illy C h e n g f ro m T a rla c . T h e c h e c k w a s d u ly e n t e re d in h is b a n k
re c o rd . A lle g e d ly , u p o n a d v ic e a n d in s t ru c t io n o f p e t it io n e r t h a t t h e P 1 0 1 , 0 0 0 c h e c k w a s a lre a d y c le a re d
a n d b a c k e d u p b y s u f f ic ie n t f u n d s , re s p o n d e n t , o n t h e s a m e d a t e , w it h d re w t h e s u m o f P 2 4 0 , 0 0 0 f ro m h is
a c c o u n t le a v in g a b a la n c e o f P 5 7 , 7 9 3 . 4 5 . A d a y a f t e r, T A N d e p o s it e d t h e a m o u n t o f P 5 0 , 0 0 0 m a k in g h is
e x is t in g b a la n c e in t h e a m o u n t o f P 1 0 7 , 7 9 3 . 4 5 , b e c a u s e h e h a s is s u e d s e v e ra l c h e c k s t o h is b u s in e s s
p a rt n e rs . H o w e v e r, h is s u p p lie rs a n d b u s in e s s p a rt n e rs w e n t b a c k t o h im a lle g in g t h a t t h e c h e c k s h e
is s u e d b o u n c e d f o r in s u f f ic ie n c y o f f u n d s . T h e re a f t e r, re s p o n d e n t in f o rm e d p e t it io n e r t o t a k e p o s it iv e
s t e p s re g a rd i n g t h e m a t t e r f o r h e h a s a d e q u a t e a n d s u f f ic ie n t f u n d s t o p a y t h e a m o u n t o f t h e s u b je c t
c h e c k s . N o n e t h e le s s , p e t it io n e r d id n o t b o t h e r n o r o f f e r a n y a p o lo g y re g a rd in g t h e in c id e n t . R e s p o n d e n t
T a n f ile d a C o m p la in t f o r D a m a g e s o n D e c e m b e r 1 9 , 1 9 9 0 , w it h t h e R T C a g a in s t p e t it io n e r. T h e t ria l
c o u rt re n d e re d a d e c is io n in f a v o r o f re s p o n d e n t a n d o rd e re d p e t it io n e r t o p a y d a m a g e s a n d a t t o rn e y ’s
fees. A p p e lla t e c o u rt a f f irm e d t h e lo w e r c o u rt ’s d e c is io n . C A ru le d t h a t t h e b a n k s h o u ld n o t h a v e
a u t h o riz e d t h e w it h d ra w a l o f t h e v a lu e o f t h e d e p o s it e d c h e c k p rio r t o it s c le a rin g . P e t it io n e r f ile d a
P e t it io n f o r R e v ie w b e f o re t h e S u p re m e C o u rt .

IS S U E :

W / N p e t it io n e r h a s t h e rig h t t o d e b it t h e a m o u n t o f t h e d is h o n o re d c h e c k f ro m t h e a c c o u n t o f re s p o n d e n t
o n t h e g ro u n d t h a t t h e c h e c k w a s w it h d ra w n b y re s p o n d e n t p rio r t o it s c le a rin g

HELD:

T h e P e t it io n h a s n o m e rit .

T h e re a l is s u e h e re is n o t s o m u c h t h e rig h t o f p e t it io n e r t o d e b it re s p o n d e n t ’s a c c o u n t b u t , ra t h e r, t h e
m a n n e r in w h ic h it e x e rc is e d s u c h rig h t . B a n k s a re g ra n t e d b y la w t h e rig h t t o d e b it t h e v a lu e o f a
d is h o n o re d c h e c k f ro m a d e p o s it o r’s a c c o u n t b u t t h e y m u s t d o s o w it h t h e h ig h e s t d e g re e o f c a re , s o a s
n o t t o p re ju d ic e t h e d e p o s it o r u n d u ly . T h e d e g re e o f d ilig e n c e re q u ire d o f b a n k s is m o re t h a n t h a t o f a
g o o d f a t h e r o f a f a m ily w h e re t h e f id u c ia ry n a t u re o f t h e ir re la t io n s h ip w it h t h e ir d e p o s it o rs is c o n c e rn e d .
I n t h is c a s e , p e t it io n e r d id n o t t re a t re s p o n d e n t ’s a c c o u n t w it h t h e h ig h e s t d e g re e o f c a re . R e s p o n d e n t
w it h d re w h is m o n e y u p o n t h e a d v ic e o f p e t it io n e r t h a t h is m o n e y w a s a lre a d y c le a re d . I t is p e t it io n e r’s
p re m a t u re a u t h o riz a t io n o f t h e w it h d ra w a l t h a t c a u s e d t h e re s p o n d e n t ’s a c c o u n t b a la n c e t o f a ll t o
in s u f f ic ie n t le v e ls , a n d t h e s u b s e q u e n t d is h o n o r o f h is o w n c h e c k s f o r la c k o f f u n d s .

[G.R. No. 153571. September 18, 2003]

BENGUET MANAGEMENT CORPORATION, petitioner, vs. COURT OF

APPEALS, KEPPEL BANK PHILIPPINES, INC., as Trustee for
METROPOLITAN BANK AND TRUST COMPANY, UNITED COCONUT
PLANTERS BANK, RIZAL COMMERCIAL BANKING CORPORATION, FAR
EAST BANK AND TRUST COMPANY and BANK OF THE PHILIPPINE
 ISLANDS under the Mortgage Trust Indenture, and THE REGISTER OF
DEEDS OF CALAMBA, respondents.

DECISION
YNARES-SANTIAGO, J.:

Assailed in this petition for certiorari under Rule 65 of the Revised Rules of Court is the Resolution
of the Court of Appeals in CA-G.R. SP No. 69503 dated April 5, 2002,[1] which denied petitioners
application for the issuance of a temporary restraining order, as well as its May 28, 2002 [2] Resolution
denying the motion for reconsideration.
The antecedent facts reveal that on November 29, 1994, petitioner Benguet Management
Corporation (BMC) and Keppel Bank Philippines, Inc. (KBPI),[3] acting as trustee of the other respondent
banks, entered into a Loan Agreement and Mortgage Trust Indenture (MTI) whereby BMC, in
consideration of the syndicated loan of P190,000,000.00, constituted in favor of KBPI a mortgage on
several lots located in Alaminos, Laguna and Iba, Zambales.
On September 28, 2001, for failure of BMC to pay in full the installments due on the Loan
Agreement and Mortgage Trust Indenture, KBPI filed an application[4] for extra-judicial foreclosure of
mortgage before the Office of the Clerk of Court of the Regional Trial Court of Iba, Zambales. On
October 29, 2001, a similar application[5] for extra-judicial foreclosure of mortgage was filed by KBPI
with the Office of the Clerk of Court of the Regional Trial Court of San Pablo City, docketed as EJF No.
Sp-2546 (01). Accompanying the latter application was a certification [6] from the Clerk of Court of the
Regional Trial Court of Iba, Zambales, stating that KBPI had paid the corresponding foreclosure fees
covering BMCs properties situated in Zambales and Laguna.
On October 31, 2001, BMC filed with the Office of the Executive Judge of the Regional Trial Court
of San Pablo City a Request Not To Give Due Course To The Application for Extra-Judicial
Foreclosure[7] in EJF No. Sp-2546 (01). BMC claimed that the application should be denied because it
is insufficient in form and substance and there is no need to proceed with the foreclosure of its
properties situated in Laguna because it was willing to execute a dacion en pago in place of the
mortgaged properties. Subsequently, BMC filed a Compliance and Supplementary Grounds to
Disapprove Application for Extra-judicial Foreclosure of Real Estate Mortgage[8] and a
Memorandum.[9] BMC contended that the application for foreclosure should be denied because KBPI
included unauthorized penalties in the statement of accounts and it did not comply with its obligation to
give BMC a 60-day grace period. BMC further claimed that the MTI securing the principal loan of P190
Million cannot be foreclosed because it was not registered with the Register of Deeds.
KBPI opposed the letter-request of BMC on the ground, inter alia, of wrong remedy and forum
shopping.[10]
Meanwhile, on November 7, 2001, BMC filed with the Regional Trial Court of Iba, Zambales, Branch
70, a complaint for damages, accounting and nullification of foreclosure of its properties in Zambales,
with prayer for the issuance of a temporary restraining order, docketed as Civil Case No. RTC-1852-
I.[11] BMC averred that the foreclosure of its properties should be annulled because KBPI imposed
unauthorized penalties, interest and charges. Assuming that the amount claimed is due and
demandable, BMC maintained that the same cannot be enforced because KBPI did not comply with
the 60-day grace period. BMC added that dacion en pago should be preferred over the foreclosure of
the collaterals because the other respondent banks are agreeable to such proposal.
On the same date, the Regional Trial Court of Iba, Zambales issued a temporary restraining order
enjoining the sale at public auction of BMCs properties in Zambales. [12]
 On February 6, 2002, KBPIs application for extrajudicial foreclosure of mortgage was found to be
sufficient in form and substance, and was granted.[13] BMC filed a motion for reconsideration, which was
denied on March 4, 2002.[14]
Hence, BMC filed a petition for certiorari with the Court of Appeals,[15] reiterating its arguments in
EJF No. Sp-2546 (01) and assailing the validity of the foreclosure of its properties in Laguna. It prayed
for the issuance of a preliminary injunction and/or temporary restraining order to enjoin the scheduled
sale of its properties in Laguna on March 19, 2002 at 10:00 pm. Since no injunction or restraining order
was issued by the Court of Appeals, the auction sale proceeded as scheduled with KBPI as the highest
bidder.
To restrain the registration of the certificate of sale,[16] BMC filed a Supplemental Petition[17] which
was favorably acted upon by the Court of Appeals on March 22, 2002. [18] On the same day, a temporary
restraining order enjoining the registration of the certificate of sale was issued by the appellate court,
albeit, late as the certificate was already registered at 2:15 p.m. of March 22, 2002.
Subsequently, BMC filed with the appellate court an Amended Supplemental Petition, [19] followed
by an Urgent Manifestation[20] praying for the issuance of a writ of preliminary injunction and/or
temporary restraining order to enjoin the consolidation of titles over the foreclosed properties in the
name of respondent banks. BMC contended that the foreclosure sale should be annulled because (1)
the bid price was grossly inadequate; (2) the sale was conducted in violation of Sections 2 and 3 of Act
No. 3135 on the requirements of place of sale and posting of notice; and (3) the other creditor banks
are amenable to the proposed dacion en pago instead of the foreclosure.
In its Resolution dated April 5, 2002, the Court of Appeals denied BMCs prayer to restrain the
consolidation of title in the name of KBPI, thus:

The petitioners filing of an Amended Supplemental Petition dated March 25, 2002, and an Urgent
Manifestation dated March 27, 2002 is hereby noted.

However, we see no justifiable reason to grant an injunctive relief at this point in time, since the
acts sought to be restrained or enjoined are positive rights of a buyer in a foreclosure sale. Unless
the petitioner could prove the nullity of such sale, there is no reason to stop the Register of Deeds
concerned from performing its ministerial duty under the law.

WHEREFORE, the application for temporary restraining order in the Amended Supplemental
Petition is hereby DENIED.

The respondents are directed to also file their comment thereto within ten (10) days from notice
hereof. Should the parties prefer, the case shall be set for hearing to enable the parties to prove their
respective positions as to issues in the petition as well as subsequent Supplemental Petition and
Amended Supplemental Petition.

In the meantime, the Chief of the Mailing Section is directed to investigate and report to us within
fifteen (15) days from notice, how and who made the unauthorized insertion of the Register of
Deeds of Laguna to the Courts Notice of Resolution of March 22, 2002.

SO ORDERED. [21]

BMC filed a motion for reconsideration claiming, among others, that Section 47 of the General
Banking Act (Republic Act No. 8791), which reduced the period of redemption for extra-judicially
foreclosed properties of juridical persons from one year to until, but not after, the registration of the
certificate of foreclosure salewhich in no case shall be more than three (3) months after foreclosure,
whichever is earlier, is unduly discriminatory and therefore unconstitutional.
On May 28, 2002, the Court of Appeals denied BMCs motion for reconsideration. [22] Hence, BMC
filed the instant petition, contending that
I

THE COURT OF APPEALS ACTED WITH GRAVE ABUSE OF DISCRETION IN DENYING

PETITIONERS APPLICATION FOR TRO TO RESTRAIN THE CONSOLIDATION OF
TITLES AFTER IT HAD EARLIER RESTRAINED, ALBEIT TOO LATE, THE
REGISTRATION OF THE SHERIFFS CERTIFICATE OF SALE, DEMONSTRATIVELY
HAVING BEEN CONVINCED OF THE MERIT OF THE LEGAL GROUNDS RAISED BY
THE PETITIONER IN SUPPORT OF THE APPLICATION FOR TEMPORARY RESTRAINING
ORDER.

II

THE NEW LAW (GENRAL BANKING LAW OF 2000) ABROGATING THE RIGHT TO ONE
YEAR REDEMPTION PERIOD OF CORPORATE MORTGAGORS IS
UNCONSTITUTIONAL.

III

ASSUMING THAT THE NEW LAW IS CONSTITUTIONAL, IT SHOULD BE GIVEN

PROSPECTIVE APPLICATION.

IV

THE BID PRICE OF ONLY P162,354,329.46 FOR THE FOUNDRY PROJECT WITH A FAIR
MARKET VALUE OF P444,184,000.00, SOUND VALUE OF P493,732,000.00 COST OF
REPRODUCTION OF P989,605,000.00 IS SO GROSSLY INADEQUATE AS TO RENDER
THE SALE NULL AND VOID IN LAW AND IN EQUITY.

THE AUCTION SALE CONDUCTED IN SAN PABLO CITY IS NULL AND VOID FOR
BEING IN VIOLATION OF SECTION 2 OF ACT 3135, AS AMENDED AND THE EXPRESS
PROVISION OF THE MORTGAGE TRUST INDENTURE THAT: IN ANY EXTRA-JUDICIAL
FORECLOSURE UNDER ACT 3135, AS AMENDEDTHE AUCTION SALE SHALL TAKE
PLACE IN THE CITY OR CAPITAL OF THE PROVINCE WHERE THE COLLATERAL IS
SITUATED.

VI

THE REQUIREMENTS OF SECTION 3 OF ACT 3135, AS AMENDED, FOR POSTING OF

NOTICES WERE NOT COMPLIED WITH IN THE FORECLOSURE PROCEEDINGS IN
QUESTION.

VII
THE INTEREST BASED ON THE FLOATING RATE STIPULATED IN THE PROMISSORY
NOTES IS NULL AND VOID FOR BEING POTESTATIVE IN CHARACTER AND FOR
BEING VIOLATIVE OF THE PRINCIPLE OF MUTUALITY OF CONTRACT, HENCE THE
FORECLOSURE MAY PROCEED ONLY ONCE THE CORRECT LEGAL AMOUNT OF THE
LOAN IS DETERMINED AND ONLY IF THE MORTGAGOR CANNOT PAY FOLLOWING
THAT DETERMINATION. [23]

On June 26, 2002, a status quo order was issued enjoining the cancellation of titles over the
mortgaged properties in the name of BMC as well as the issuance of new titles and the consolidation
thereof in the name of private respondent banks[24]
We deem it proper to resolve the issue of forum shopping raised by private respondents.
Under the Procedure on Extra-Judicial Foreclosure of Mortgage (A.M. No. 99-10-05-0),[25] the
applicant in an extra-judicial foreclosure covering properties located in different provinces is required
to pay only one filing fee regardless of the number of properties to be foreclosed so long as the
application covers only one transaction or indebtedness. The venue, however, of the extra-judicial
foreclosure proceedings is the place where each of the mortgaged property is located. Pertinent portion
thereof states

Where the application concerns the extrajudicial foreclosure of mortgages of real estates and/or
chattels in different locations covering one indebtedness, only one filing fee corresponding to such
indebtedness shall be collected. The collecting Clerk of Court shall, apart from the official receipt
of the fees, issue a certificate of payment indicating the amount of indebtedness, the filing fees
collected, the mortgages sought to be foreclosed, the real estates and/or chattels mortgaged and
their respective locations, which certificate shall serve the purpose of having the application
docketed with the Clerks of Court of the places where the other properties are located and of
allowing the extrajudicial foreclosures to proceed thereat.

In Spouses Caviles v. Court of Appeals,[26] we recognized the predicament that confronts a

mortgagor seeking to restrain the extra-judicial foreclosure of mortgages arising from a single
transaction but concerning properties found in different provinces. Thus

[W]e find it necessary to dwell on the issue of whether or not the act of petitioners in filing three
civil actions - one with the RTC of Makati, another with the RTC of Bian, Laguna (Branch 24) and
the third one, with the Bian Assisting Court, constitutes forum shopping.

The problem of petitioners is an off-shoot of the express provisions of B.P. Blg. 129, to wit:

Sec. 21. Original jurisdiction in other cases. - Regional Trial Courts shall exercise original
jurisdiction:

(1) In the issuance of writs of certiorari, prohibition, mandamus, quo warranto, habeas corpus
and injunction which may be enforced in any part of their respective regions; (Emphasis,
supplied)

and Section 3, Rule 2 of the Rules of Court which provides that a party may not institute more
than one suit for a single cause of action. (Emphasis supplied)
 In the said case, the mortgagors filed separate actions for breach of mortgage contract with
injunction to restrain the extra-judicial foreclosure proceedings commenced by the mortgagee in Makati
and Bian, Laguna where the properties were situated. The Court did not find the mortgagors guilty of
forum shopping insofar as the cases filed with the Makati and Bian, Laguna (Branch 24) courts were
concerned. The obvious reason is that since injunction is enforceable only within the territorial limits of
the trial court, the mortgagor is left without remedy as to the properties located outside the jurisdiction
of the issuing court, unless an application for injunction is made with another court which has jurisdiction
over the latter properties.
In the case at bar, BMC is not guilty of forum shopping precisely because the remedy available to
them under the law was the filing of separate injunction suits. It is mandated to file only one case for a
single cause of action, e.g., breach of mortgage contract, yet, it cannot enforce any injunctive writ
issued by the court to protect its properties situated outside the jurisdiction of said court. Besides, BMC
was honest enough to inform the Zambales court in the certification[27] of its complaint that it has a
pending request not to give due course to the foreclosure proceedings with the San Pablo court, in the
same manner that its petition for certiorari with the Court of Appeals notified the appellate court of the
pendency of its complaint with the Zambales court.[28] It would therefore be unfair to dismiss the cases
filed by BMC on the ground of forum shopping where under the circumstances the law gives it no other
remedy.
The issues involved in the instant petition for certiorari are not only limited to the propriety of the
Court of Appeals denial of BMCs prayer to enjoin the consolidation of title of the foreclosed properties
in the name of private respondents. There are likewise raised factual issues, i.e., the validity of the
foreclosure and the sale at public auction of its properties, which are yet to be resolved by the Court of
Appeals. Since this Court is not a trier of facts, the remand of this case to the appellate court is
necessary.
Anent the constitutional issue raised by BMC, we have repeatedly held that the constitutionality of
a law may be passed upon by the Court, where there is an actual case and that the resolution of the
constitutional question must be necessary in deciding the controversy. [29] In this case, the resolution of
the constitutionality of Section 47 of the General Banking Act (Republic Act No. 8791) which reduced
the period of redemption of extra-judicially foreclosed properties of juridical persons is not the very lis
mota of the controversy. BMC is not asserting a legal right for which it is entitled to a judicial
determination at this time inasmuch as it may not even be entitled to redeem the foreclosed
properties. Until an actual controversy is brought to test the constitutionality of Republic Act No. 8791,
the presumption of validity, which inheres in every statute, must be accorded to it.
WHEREFORE, in view of all the foregoing, the petition is PARTLY GRANTED. The Resolutions of
the Court of Appeals dated April 5, 2002 and May 28, 2002, in CA-G.R. SP No. 69503, insofar as they
denied BMCs application for temporary restraining order, are REVERSED and SET ASIDE. The status
quo order issued by the Court on June 26, 2002 shall stand until further order of the Court, and the
instant case is REMANDED to the Court of Appeals for determination of the case on its
merits. Petitioner BMC is ordered to inform the appellate court of the present status of Civil Case No.
RTC-1852-I, then pending with the Regional Trial Court of Iba, Zambales, Branch 70, and if it had been
decided and the decision is on appeal in the Court of Appeals, the latter may consider its consolidation
with CA-G.R. SP No. 69503 if warranted.
No pronouncement as to costs.
SO ORDERED.
Davide, Jr., C.J., (Chairman), Vitug, and Carpio, JJ., concur.
Azcuna, J., no part.
THIRD DIVISION

SAN FERNANDO RURAL G.R. No. 168088

BANK, INC.,
Petitioner, Present:
YNARES-SANTIAGO, J.,
Chairperson,
- versus - AUSTRIA-MARTINEZ,
CALLEJO, SR.,
CHICO-NAZARIO, and
PAMPANGA OMNIBUS NACHURA, JJ.
DEVELOPMENT
CORPORATION and Promulgated:
DOMINIC G. AQUINO,
Respondents. April 3, 2007

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

DECISION

CALLEJO, SR., J.:

Before the Court is a Petition for Review under Rule 45 of the Rules of Court, assailing the
Decision[1] of the Court of Appeals (CA) in CA-G.R. SP No. 75787 as well as the
Resolution[2] which denied the motion for reconsideration thereof. The appellate court set aside
the Order[3] of the Regional Trial Court (RTC), San Fernando, Pampanga, Branch 44, in LRC No.
890, which in turn had granted the petition of San Fernando Rural Bank, Inc. (petitioner) for the
issuance of a writ of possession.

The Antecedents

Pampanga Omnibus Development Corporation (respondent PODC) was the registered owner of
a parcel of land in San Fernando, Pampanga (now San Fernando City). The 61,579-square-meter
lot was covered by Transfer Certificate of Title (TCT) No. 275745-R.

Respondent PODC secured two loans from petitioner and Masantol Rural Bank, Inc.
(MRBI) at an annual interest of 24%: P750,000.00 on April 20, 1989, to mature on April 15,
1990;[4] and another P750,000.00 on May 3, 1989, payable on April 28, 1990.[5] The loans were
evidenced by separate promissory notes executed by Federico R. Mendoza and Anastacio E. de
Vera. To secure payment of the loans, respondent PODC executed a real estate mortgage over the
subject lot in favor of the creditor banks.[6] The contract provided that in case of failure or refusal
of the mortgagor to pay the obligation secured thereby, the real estate mortgage may be
extrajudicially foreclosed in accordance with Act No. 3135, as amended.[7]

Eliza M. Garbes (PODC President and daughter of Federico Mendoza), together with her husband
Aristedes Garbes, secured a P950,000.00 loan from petitioner on March 27, 1992. The loan was
to mature after 180 days or on September 23, 1992.[8] Mendoza signed as co-borrower in the
promissory note executed by the spouses. The spouses also executed a chattel mortgage over their
personal property as security for the payment of their loan account.[9]

Upon respondent PODCs failure to pay its loan to petitioner, the latter filed a petition for
extrajudicial foreclosure of real estate mortgage and
at the auction on April 23, 2001, petitioner emerged as the winning bidder
for P1,245,982.05. The Ex-Officio Sheriff executed a Certificate of Sale[10] on May 9,
2001 which stated that the period of redemption of the property shall expire one (1) year after
registration in the Register of Deeds. The certificate was annotated at the dorsal portion of TCT
No. 275745-R on June 7, 2001. Petitioner did not file a petition for a writ of possession during
the redemption period.

On May 11, 2002, petitioner, through Eliza Garbes (with the authority of petitioners board of
directors),[11] executed a notarized deed of assignment[12] in favor of respondent Dominic G.
Aquino over its right to redeem the property. On May 29, 2002, respondent Aquino offered to
redeem the property for P1,588,094.28, but petitioner rejected the offer and demanded the
payment of P16,805,414.71 (including the loan of the spouses Garbes)[13] as redemption
money. Respondent Aquino rejected the demand of petitioner.

On May 30, 2002, respondent Aquino remitted Cashiers Check No.

0000202756[14] for P1,588,094.28 to the Ex-Officio Sheriff as redemption money for the property
for which he was issued Receipt No. 15582906 dated May 31, 2002.[15]

In a letter[16] dated June 4, 2002, the Ex-Officio Sheriff informed petitioner that the
property had been redeemed by respondent Aquino for P1,588,094.28. She requested petitioner
for the computation of the correct redemption price before the lapse of the reglementary period
to redeem the property. Petitioner then submitted a statement of account indicating that the
redemption price was P9,052,309.23, and including the loan of the spouses Garbes
(P7,753,105.48), a total of P16,805,414.71.[17] Thereafter, the Ex-Officio Sheriff computed the
redemption price (based on the General Banking Act [R.A. No. 8791], and The Rural Bank Act
of 1992 R.A. No. 7353) to be P5,194,742.50.[18] When respondent Aquino was apprised of this,
he remitted on June 7, 2002 a cashiers check for P3,606,648.52, representing the difference
between the redemption price computed by the Ex-Officio Sheriff (P5,194,742.50) and the
amount he had earlier paid (P1,588,094.28). The Ex-Officio Sheriff issued Official Receipt No.
15582907 to respondent Aquino, and on June 7, 2002, a Certificate of Redemption.[19] The
certificate reads in part:

WHEREAS, before the expiration of the one (1) year period to redeem, by virtue of the
Deed of Assignment executed by the President of the Pampanga Omnibus Devt. Corp.,
Mr. DOMINIC G. AQUINO redeemed the said property in the total amount of FIVE
MILLION ONE HUNDRED NINETY-FOUR THOUSAND SEVEN HUNDRED
FORTY-TWO and 50/100 (P5,194,742.50) paid under Official Receipts Nos.
15582906 and 15582907 dated May 31, 2002 and June 7, 2002, respectively, and have
issued this CERTIFICATE OF REDEMPTION under the guarantees prescribed by law.

City of San Fernando (P), June 7, 2002.[20]

On the same day, petitioners representative Elvin Reyes went to the office of the Ex-
Officio Sheriff and inquired how the amount of P5,194,742.50 was arrived at. The Ex-
Officio Sheriff explained to him that she had accepted the redemption price in accordance with
the provisions of
R.A. Nos. 8791 and 7353. She further explained that she had furnished petitioner with a copy of
the Certificate of Redemption she had earlier executed; however, Reyes refused to receive a copy
of the Certificate of Redemption.[21]

On June 10, 2002, petitioner, through its president Rogelio D. Reyes, executed an Affidavit
of Consolidation[22] over the property. It was alleged therein that respondent PODC or any other
person/entity with the right of redemption did not exercise their right to repurchase within one
year from June 7, 2001. The affidavit was filed with the Office of the Register of Deeds on the
same day. The penultimate paragraph reads:

That the aforesaid Mortgagors nor any other persons or entity entitled with the right of
redemption did not exercise their right of repurchase and a period of more than one (1)
year from June 7, 2001 has already elapsed and by reason thereof, the San Fernando
Rural Bank, Inc. do hereby request the Registry of Deeds of the province of Pampanga,
after the payment of the lawful fees of this office to cancel Transfer Certificate of Title
No. 275745-R and to issue a new Certificate of Title in favor of the San Fernando Rural
Bank, Inc.[23]

The affidavit was entered in the Registry Book in the Office of the Register of Deeds as
Entry No. 784. However, no new title was issued in favor of petitioner.

In a letter[24] dated June 10, 2002, the Ex-Officio Sheriff informed petitioner that respondent
Aquino had redeemed the property and requested petitioner, through its president, to turn over
the owners duplicate of TCT No. 275745-R before the redemption price of P5,194,742.50 would
be remitted. She appended to the letter a copy of the Certificate of Redemption she had executed
in favor of respondent Aquino.However, petitioner refused to do so.

Meanwhile, the Ex-Officio Sheriff fell ill and failed to report for work up to June 14,
2002. She then wrote petitioner, reiterating her request for the delivery of TCT No. 275745-
R. She, however, failed to file the Certificate of Redemption with the Register of Deeds.[25]

When respondent Aquino learned that petitioner had filed an Affidavit of Consolidation,
he sent a letter[26] dated June 14, 2002 to the Register of Deeds, informing the latter that he was
the assignee under the Deed of Assignment executed by respondent PODC, and that as shown by
the appended Certificate of Redemption he had redeemed the property on June 7, 2002. He also
insisted that he had redeemed the property within the period therefor, and requested the Register
of Deeds not to register the Affidavit of Consolidation and to cancel TCT No. 275745-R.[27]

On June 17, 2002, respondent Aquino filed the Certificate of Redemption executed by
the Ex-Officio Sheriff with the Office of the Register of Deeds. The Register of Deeds entered the
Certificate of Redemption in the Primary Entry Book of Entries under Entry No. 1205. [28] On
even date, the Register of Deeds entered the deed of assignment executed by respondent PODC
in favor of Aquino in the Primary Book of Entries as Entry No. 1208.

Meanwhile, the Registrar of Deeds was in a quandary; he was not certain whether it was
proper for him to issue a new title to petitioner. In a letter[29] dated June 18, 2002, he requested
the Administrator of the Land Registration Authority (LRA), by way of consulta, to issue an
opinion on whether a new title should be issued to petitioner, or the Certificate of Redemption in
favor of respondent Aquino should be annotated at the dorsal portion of TCT No. 275745-R.
On October 15, 2002, petitioner filed a Petition for a Writ of Possession in the RTC of
Pampanga. Petitioner alleged that it had purchased the property at public auction as evidenced by
the Certificate of Sale appended thereto; the Certificate of Sale was annotated at the dorsal portion
of TCT No. 275745-R on June 7, 2001; as far as he was concerned, the right of respondent PODC
to redeem the property had already expired; and under Act No. 3135, as amended, it is entitled to
the possession of the property during or even after the redemption period. It prayed that the
corresponding writ of possession over the property be issued in its favor upon the filing of the
requisite bond in an amount equivalent to the market value of the property or in an amount as the
court may direct.[30] Petitioner appended to its petition a certified true copy of the Certificate of
Sale executed by the Ex-Officio Sheriff in its favor over the property. The case was docketed as
LRC No. 890.

The court set the hearing of the petition at 8:30 a.m. on November 28, 2002 and sent the
corresponding notices to respondent PODC. [31]
 During the hearing, respondent PODC opposed the petition on the following grounds:
petitioner deliberately concealed the fact that the property had been redeemed on June 7, 2002;
respondent Aquino had paid P5,194,742.00 as redemption money based on the computation of
petitioner; the Ex-Officio Sheriff had executed a Certificate of Redemption in favor of respondent
Aquino on June 7, 2002, a copy of which petitioner refused to receive; respondent Aquino, as
assignee, had offered to redeem the property on May 29, 2002 and tendered the amount
of P1,588,094.28, but petitioner insisted that the redemption price was P16,805,414.71, including
the loan account of the spouses Garbes; that since respondent Aquino had redeemed the property
from the Ex-Officio Sheriff on June 7, 2002 within the one-year period after paying the total
amount of P5,194,742.50, it was respondent Aquino, and not petitioner, who is entitled to a writ
of possession;[32] and that besides, he was already in possession of the property.[33] It insisted that
petitioner filed its petition to preempt the resolution of the LRA on the consulta of the Register
of Deeds. The oppositor prayed that the petition be denied and that it be granted such other relief
and remedies just and equitable under the premises.

In its Reply, petitioner averred that since respondent Aquino had offered an amount short of the
redemption price of P16,805,414.71, under Section 47 of R.A. No. 8791 there was no valid
redemption of the property. The loan of the spouses Garbes was intended for respondent PODC
as borrower. Petitioner alleged that it would have been foolhardy for it to grant a P950,000.00
loan to the spouses without any security. Hence, unless the entire loan account of respondent
PODC and the spouses Garbes (P16,805,414.71) was paid, the mortgage persisted.[34] It further
posited that, since respondent PODC had already assigned its right to redeem the property, the
oppositor had no more right or interest over the property; it was thus not the proper party as
oppositor.

By way of rejoinder, respondent PODC averred that the Certificate of Redemption executed by
the Ex-Officio Sheriff is presumed valid and legal; the RTC, acting as a Land Registration Court,
had no jurisdiction to pass upon the validity of the Certificate of Redemption;[35] upon the
execution of the Deed of Assignment in favor of respondent Aquino and the payment of
redemption money, the latter had taken actual possession of the property; based on the Certificate
of Redemption, he had developed the property and introduced a lot of improvements; and since
a third party was in possession of the property, possession could no longer be given to petitioner
via a writ of possession. Respondent PODC maintained that petitioner was not entitled to a writ
of possession until the title was consolidated in its name.
On December 12, 2002, the LRA resolved the consulta of the Register of Deeds as follows:

While it is clear from the records that an agent of the assignee tried to redeem the
property within the one (1) year period of redemption and, in fact, the Certificate of
Redemption was executed by the Clerk of Court and Ex-OfficioSheriff of the Regional
 Trial Court of San Fernando City, Pampanga on the last day of the redemption period,
the same was not registered before the Registry of Deeds within the one (1) year period
of redemption. Borne by the records is the receipt before the registry of the Certificate
of Redemption and other related documents on June 17, 2002 for annotation. Hence,
the same was not registered within the aforesaid one (1) year redemption period.

Considering that the document first presented and entered in the Primary Entry Book
of the registry is the Affidavit of Consolidation in favor of the creditors, the mortgagee
bank and not the Certificate of Redemption in favor of the assignee of the debtor-
mortgagor, although admittedly, the latter instrument was executed on the last day of
the redemption period but not, in fact, registered within the same period, under the
premises, the consolidating mortgagee is possessed with a superior right than the
redemptioner. Under the law, the first in registration is the first in law.[36]

The dispositive portion of the Resolution of the LRA Administrator reads:

WHEREFORE, premises considered, this Authority is of the opinion and so holds that
the Affidavit of Consolidation is superior over the Certificate of Redemption, hence,
registrable on TCT No. 275745-R.

SO ORDERED.[37]

Respondents filed a motion for reconsideration of the Resolution of the LRA Administrator.

On December 20, 2002, the court in LRC No. 890 issued an Order granting the petition and
ordered the issuance of a writ of possession, on a bond equivalent to the market value of the
property. It ruled that petitioner, as purchaser at the foreclosure sale, was entitled to a writ of
possession. The question of the validity of the redemption made by respondent Aquino, to whom
respondent PODC had assigned its right to redeem the property, as well as the registrability of
the Affidavit of Consolidation executed by petitioner, through its president, and the validity of
the Certificate of Redemption executed by the clerk of court and Ex-Officio Sheriff of the RTC
cannot be raised as a justification for opposing the petition. It declared that the proceedings for
the issuance of a writ of possession were ex-parte and it was the courts ministerial duty to issue
the writ.

Furthermore, the court held that petitioners right to the possession of the foreclosed
property is bolstered by the fact that no third party was actually holding the property adverse to
respondent PODC.Respondent Aquino, as assignee of respondent PODCs right to redeem could
not be considered a party holding the property adversely to respondent PODC. Neither was there
any pending civil case involving the rights of third parties. Consequently, it was the ministerial
duty of the RTC to issue a writ of possession in favor of petitioner, as the winning bidder in the
public auction.
The court declared that the purpose of the law in requiring the filing of a bond is to answer for
the reasonable rental for a period of twelve months for the use of the property during the period
of redemption. Since the period of redemption had already expired, a bond was no longer
necessary. Nevertheless, the court granted petitioners prayer to put up a bond in the amount
equivalent to the market value of the property. The court ruled that petitioner was entitled to the
possession of the property, together with improvements existing thereon, as a mere incident of its
right of ownership.[38]

Respondents filed a motion for reconsideration of the order, contending that petitioner was
entitled to a writ of possession after the lapse of the period for redemption only if a Torrens title
had been issued in its favor. Since the one-year redemption period had lapsed without petitioner
having been issued any Torrens title, the court erred when it granted the petition for a writ of
possession. It also pointed out that petitioner had failed to present any title under its name.

For its part, petitioner stated in its Opposition to respondents motion for reconsideration,
that it was not necessary that a buyer in a public auction be issued a title in its name before it
could be entitled to a writ of possession upon the expiration of the redemption period. The title is
merely an evidence of ownership; it is the Certificate of Sale that vests ownership in the buyer
over the property sold. It insisted that the purchaser was entitled to the possession of the property
even after the lapse of the redemption period.[39]

On February 18, 2003, the court issued an Order denying the motion for reconsideration of
respondents. The court ruled that petitioner, as purchaser at public auction, acquired the right to
possess the property, and the right of the mortgagor from the time it purchased the property and
not from the issuance of the title over the property in its name.[40]

On March 6, 2003, respondents filed a Petition for Certiorari with the CA, assailing the
orders of the RTC as follows:

I. Public respondent committed grave abuse of discretion amounting to lack or excess

of jurisdiction when it granted private respondents prayer for an issuance of writ of
possession in its favor when serious issues affecting private respondents right to
possess the subject lot is still pending determination by the Land Registration
Authority.
II. Public respondent committed grave abuse of discretion amounting to lack or excess
of jurisdiction when it allowed private respondent to post a redemption bond
beyond the redemption period.[41]
They averred that the RTC should have denied the petition for a writ of possession pending the
resolution of the consulta by the LRA. They asserted that the issues before the RTC were
substantial, namely: (a) whether
respondent Aquino, as the assignee of the right of respondent PODC to redeem the property, had
the right to do so; (b) whether he had redeemed the property as evidenced by the Certificate of
Redemption executed by the Ex-Officio Sheriff; and (c) the redemption price. They insisted that
the obligation of the RTC to issue the writ of possession ceased to be ministerial.

Respondents maintained that they had the right to redeem the property. Since there were
grave doubts about the parties contentions as to who had the right to possess the property, the
RTC should have dismissed the petition for a writ of possession pending determination of the
substantial issues by the LRA. The trial court should have relied on the rulings of this Court
in Rivero de Ortega v. Natividad,[42]Barican v. Intermediate Appellate Court,[43] and Sulit v.
Court of Appeals.[44] Respondents asserted that petitioner was not entitled to a writ of possession
because contrary to Section 7 of Act No. 3135, it posted a bond beyond the period for
redemption. The case was docketed as CA-G.R. SP No. 75787.

In its Comment on the petition, petitioner insisted on its right to a writ of possession and that the
trial court acted in accordance with law and the facts of the case. Moreover, it averred that the
RTC, sitting as a land registration court, had jurisdiction over the petition for a writ of possession;
thus, the remedy of respondents was to appeal the assailed order and not to file a petition
for certiorari in the CA.

The CA failed to resolve the plea of respondents for a temporary restraining order. Petitioner filed
a motion for execution of the December 20, 2002 Order of the trial court in LRC No. 890. The
RTC granted the motion and issued a writ of possession on May 14, 2003.[45] The Sheriff
implemented the writ and placed petitioner in possession of the property.
On September 4, 2003, petitioner filed a Complaint[46] against respondents and the Ex-
Officio Sheriff in the RTC of Pampanga, for the nullification of the Deed of Assignment executed
by PODC in favor of Aquino and of the Certificate of Redemption executed by the Ex-
Officio Sheriff, and for damages with a plea for injunctive relief. Petitioner filed an
Amended/Supplemental Complaint and prayed that judgment be rendered in its favor, thus:

WHEREFORE, it is prayed that a judgment be rendered in favor of the plaintiff and

against the defendants:

a) Annulling the Deed of Assignment dated May 11, 2002 executed by and between
defendants PODC and AQUINO.

b) Declaring the Certificate of Redemption dated June 7, 2001 issued by the defendant
Clerk of Court and Ex-Officio Sheriff as null and void ab initio.
 c) Ordering the defendants, jointly and severally, to pay the plaintiff the amount of:

A. P100,000.00 as and for moral damages.

B. P100,000.00 as and for exemplary damages.
C. P50,000.00 as and for attorneys fees plus the costs of suit.

OTHER RELIEF and remedies just equitable are also prayed for.[47]
The case was docketed as Civil Case No. 12785.

Meanwhile, the LRA Administrator issued a Resolution recalling the Resolution dated December
12, 2002 and declared that the Certificate of Redemption executed by the Ex-Officio Sheriff was
superior to the Affidavit of Consolidation filed by petitioner. Based on the June 14, 2002 letter of
the Ex-Officio Sheriff and the Certificate of Redemption, respondent Aquino, who was the
assignee of respondent PODC, had redeemed the property on June 7, 2002. Petitioner was already
aware as early as June 7, 2002 of the redemption of the property by respondent Aquino; hence,
the date of registration of the Certificate of Redemption on June 17, 2002 was of no legal
consequence.
Accordingly, on September 10, 2003, respondents filed (in LRC No. 890) a Joint Motion to quash
the writ of possession issued by the trial court and for the issuance of a new TCT. They averred
that the LRA Administrator finally resolved that the Certificate of Redemption issued by the Ex-
Officio Sheriff was superior to the Affidavit of Consolidation of petitioner. On the basis of the
LRA Order, the Register of Deeds issued TCT No. 544978-A over the property in the name of
respondent Aquino as the registered owner.

The court denied the joint motion on November 10, 2003, holding that respondent Aquino,
as the registered owner of the subject property, should initiate the appropriate action in the proper
court in order to exclude petitioner or any other person from the physical possession of his
property.[48] The court ruled that after placing petitioner in possession of the property, the court
had lost jurisdiction over the case.

On November 27, 2003, respondents filed before the CA their Joint Notice of Appeal [49] from
the November 10, 2003 Order of the RTC in LRC No. 890. The appeal was docketed as CA-G.R.
CV No. 81607.

On November 28, 2003, petitioner filed a Manifestation,[50] stating that under Section 47 of R.A.
No. 8791, the period to exercise the right to redeem shall be until but not after the registration of
the Certificate of Foreclosure Sale with the Register of Deeds which is in no case shall be more
than three (3) months after the foreclosure, whichever is earlier.[51] The Certificate of Foreclosure
Sale was registered on June 7, 2001 and since respondent PODC had assigned/transferred the
right to redeem the property to respondent Aquino only on May 11, 2002, the redemption period
had already lapsed.

On December 18, 2003, the CA rendered judgment in CA-G.R. SP No. 75787 granting the
petition of respondents and setting aside the assailed orders of the trial court. The fallo of the
decision reads:

WHEREFORE, the petition is GRANTED and the orders dated December 20, 200[2]
and February 18, 2003 of respondent judge are VACATED and SET ASIDE.

SO ORDERED.[52]

The appellate court ruled that the December 20, 2002 Order of the RTC granting the petition for
a writ of possession was interlocutory and not final; hence, it may be questioned only via petition
for certiorariunder Rule 65 of the Rules of Court, not by appeal. The CA cited the ruling of this
Court in City of Manila v. Serrano.[53]

The CA further held that the RTC committed grave abuse of discretion amounting to excess or
lack of jurisdiction when it granted the application of petitioner for a writ of
possession. Respondent Aquino, as successor-in-interest of respondent PODC, had redeemed the
property on June 7, 2002 in accordance with Section 6 of Act No. 3135, as amended, and in
relation to Section 27(a), Rule 39 of the Rules of Court. Thus, although the Certificate of
Redemption was not registered before the Register of Deeds, he was entitled to the possession
thereof; the registration of the Certificate of Redemption in the Office of the Register of Deeds is
merely required to bind third persons. According to the CA, petitioner may not refuse the
redemption by respondent Aquino because the right of petitioner over the property was merely
inchoate until after the redemption period had lapsed without the right being exercised by those
allowed by law.

Petitioner moved for the reconsideration of its decision on the ground that, under Section
47 of R.A. No. 8791, respondent PODC had only up to the registration of the Certificate of
Foreclosure Sale (June 7, 2001) but not more than three (3) months from the public auction,
whichever is earlier, within which to redeem the property; respondent PODC, on the other hand,
assigned its right to redeem the property on May 11, 2002, long after the redemption period had
expired; hence, respondent PODC had no more right to assign it to respondent
Aquino. Consequently, the latter had no right to redeem the property, and the Certificate of
Redemption executed by the Ex-Officio Sheriff was null and void. Moreover, respondent Aquino
failed to pay the correct amount of the redemption price. Petitioner claimed that it acted in good
faith when it had its Affidavit of Consolidation registered in the Register of Deeds. In sum,
petitioner ascribes error on the part of the CA in nullifying the order of the RTC.
 However, the CA denied the motion of petitioner on the ground that by invoking Section
47 of R.A. No. 8791, it thereby changed its theory on appeal which, as held by this Court
in Dalumpines v. Court of Appeals,[54] is prohibited.[55]

Petitioner SFRBI then filed a petition for review on certiorari with this Court for the reversal of
the Decision and Resolution of the CA, and raised the following issues:

I
Whether or not the Court of Appeals seriously erred when it sanctioned the Respondents
resort to Certiorari under Rule 65 of the Revised Rules of Court, questioning a final
order and not an interlocutory order of the RTC.

II
Whether or not the respondents are guilty of forum shopping by taking both the remedy
of appeal and certiorari on the same issues and substantially the same set of facts.

III
Whether or not the Court of Appeals committed serious error when it ruled on a matter
that was not and could not have been submitted for its adjudication.

IV
Whether or not the Honorable Court is precluded from reviewing the factual findings
of the Court of Appeals.

V
Whether or not the petitioner SAFER Bank, as well as the Honorable Court, is
precluded from applying the governing law, under which the redemption period had
clearly expired.[56]

On the first issue, petitioner avers that the December 20, 2002 Order of the RTC granting
the writ of possession in its favor was final; hence, the remedy of respondents herein, as
oppositors below, was to appeal to the CA and not to file a special civil action for certiorari. In
fact, petitioner asserts, the writ of possession issued by the RTC had already been implemented
when respondents filed their petition in the CA on December 10, 2003.

Petitioner also claims that the assailed order of the RTC was in accordance with the law
and the Rules of Court; even if it is merely an error of judgment and not a jurisdictional error,
resort to a petition for certiorari was inappropriate. Respondents were, thus, proscribed from
filing a petition for certiorari in the CA since the appeal was an adequate and speedy remedy in
the ordinary course of law and, indeed, they appealed the November 10, 2003 Order of the RTC
in LRC No. 890 to the CA in CA-G.R. CV No. 81607. It had also posted a bond in the RTC to
answer for any damages. The ruling of this Court in City of Manila v. Serrano[57] is, therefore, not
applicable.
Petitioner further avers that the CA erred in applying Act No. 3135, as amended, instead of
Section 47 of R.A. No. 8791, the General Banking Act of 2000. Respondent PODC had the right
to redeem the property not later than June 7, 2001. Undisputably, respondent PODC failed to
redeem the property before the registration of the Certificate of Sale; hence, when respondent
PODC executed the deed of assignment on May 11, 2002 in favor of respondent Aquino, it had
no more right to redeem the property.
Thus, it could not have assigned the right to redeem the property to respondent Aquino. The latter
redeemed the property only on June 7, 2002, long after the Certificate of Sale was registered
on June 7, 2001.Since there was no valid redemption of the property by respondent Aquino,
petitioner claimed that it was entitled to the writ of possession of the property. It further insisted
that the RTC, acting as a Land Registration Court, had limited jurisdiction; it had no jurisdiction
to resolve the issues on the validity of the deed of assignment and the legality of respondent
Aquinos redemption of the property, as well as its ownership. Only the RTC in the exercise of its
general jurisdiction in Civil Case No. 12765 (where petitioner assailed the deed of assignment
and the Certificate of Redemption executed by the Ex-OfficioSheriff) was vested with jurisdiction
to resolve these issues. In resolving these issues, the CA thereby preempted the RTC in Civil Case
No. 12765 and deprived it of due process. In any event, according to petitioner, the
pronouncement of the CA on the validity of the Deed of Assignment and Certificate of
Redemption was merely an obiter dictum.

Petitioner posits that the CAs reliance on the rulings of this Court in Rivero and Barican was
erroneous because the right of third parties holding the property adverse to respondent PODC
was not involved.Neither was the pendency of the consulta of the Register of Deeds in the LRA
a bar to the issuance of a writ of possession in its favor by the RTC acting as a land registration
court. It was the ministerial duty of the RTC to issue a writ of possession over the property to
petitioner as purchaser at the foreclosure sale during and after the redemption period.

Petitioner further maintains that respondents filed their petition for certiorari in the CA and
delineated the issues to be resolved. It did not change its theory in the CA when it filed its motion
for reconsideration of the CA decision. Citing the ruling in Rivera v. Court of
Appeals,[58] petitioner
avers that a theory of the case is that which refers to the facts on which the cause of action is
based. The facts are those alleged in the complaint and satisfactorily proven at the trial. It insists
that it did not change the set of facts that it submitted and presented to the CA. It was not estopped
from citing Section 47 of R.A. No. 8791. It had posited in the RTC that respondents failed to
redeem the property before the expiration of the redemption period. Besides, as held by this Court
in Lianga Lumber Company v. Lianga Timber Co., Inc.,[59] a party may change his theory on
appeal when the factual basis thereof would not require presentation of any further evidence by
the adverse party to enable it to properly meet the issue raised in the new theory. The failure of a
party to invoke an applicable law in a given case does not create a vested right, and an erroneous
interpretation does not give rise to estoppel. Even if petitioner did not invoke R.A. No. 8791, it
behooved the CA to apply the law before it, prescinding from the theory advocated by the
parties. Neither may respondents invoke estoppel. They were aware of the provisions of the law
as well as the facts and circumstances warranting the application thereof.
Petitioner also imputes forum shopping to respondents because the latter raised the issue
of possession in both CA-G.R. SP No. 75787 and CA-G.R. CV No. 81607. Petitioner also accuses
respondents of using the decision in CA-G.R. SP No. 75787 to support their contention in CA-
G.R. CV No. 81607. It further contends that the writ of possession issued by the RTC was void.

For their part, respondents aver that the RTC committed grave abuse of its discretion in
issuing the December 20, 2002 and February 18, 2003 Orders. Hence, the decision of the CA was
in accord with the law and the Rules of Court. They assert that given the circumstances obtaining
in this case, their petition for certiorari was proper. Although they had the right to appeal the
orders of the RTC, the same was not a speedy and adequate
remedy. They insist that they were not guilty of forum shopping because the only issue in CA-
G.R. CV No. 81607 was the validity of the Order of the RTC dated November 10, 2003, which
denied their motion to quash the writ of possession. On the other hand, challenged in CA-G.R.
SP No. 75787 was the Order of the RTC granting the petition for a writ of possession. Since
the Ex-Officio Sheriff declared in the Certificate of Redemption that respondent Aquino
redeemed the property within the one-year period, petitioner was estopped from relying on
Section 47 of R.A. No. 8791. Respondents point out that in the RTC and the CA, petitioner had
insisted that respondent Aquino had one (1) year from June 7, 2001 within which to redeem the
property as provided in Act No. 3135, as amended; thus, petitioner was proscribed from changing
the theory it pursued in the RTC and the CA. Moreover, under Section 71 of R.A. No. 8791,
redemption by entities of property mortgaged is governed by R.A. No. 7353, under which the
period of redemption is one year from the registration of the Certificate of Sale.

The Ruling of the Court

The petition is meritorious.

The CA erred in holding that the Order of the RTC granting the petition for a writ of possession
was merely interlocutory. Interlocutory orders are those that determine incidental matters and
which do not touch on the merits of the case or put an end to the proceedings. A petition
for certiorari under Rule 65 of the Rules of Court is the proper remedy to question an improvident
interlocutory order.[60] On the other hand, a final order is one that disposes of the whole matter or
terminates the particular proceedings or action leaving nothing to be done but to enforce by
execution what has been determined. It is one that finally disposes of the pending action so that
nothing more can be done with it in the lower court.[61] The remedy to question a final order is
appeal under Rule 41 of the Rules of Court.

We agree with petitioners contention that the December 20, 2002 Order of the RTC
granting the petition for a writ of possession is final. The remedy of respondents was to appeal to
the CA by filing their notice of appeal within the period therefor.[62] Indeed, when the RTC denied
on November 10, 2003 the motion of respondents to quash the writ the court had earlier issued,
respondents appealed to the CA under Rule 41 of the Rules of Court. The appeal was docketed
as CA-G.R. CV No. 81607. Respondents did not file a supplemental petition in CA-G.R. SP No.
75787.

The reliance of the CA in City of Manila v. Serrano[63] is misplaced. In that case, the trial
court issued the writ of possession in connection with a complaint for expropriation under Rule
67 of the Rules of Court. Such a writ is interlocutory in nature.[64] On the other hand, an order
granting a writ of possession under Act No. 3135, as amended, is of a different species. The latter
order is final, hence, appealable.[65] Even if the trial court erred in granting a petition for a writ of
possession, such an error is merely an error of judgment correctible by ordinary appeal and not
by a petition for a writ of certiorari.[66] Such writ cannot be legally used for any other purpose.

Certiorari is a remedy narrow in its scope and inflexible in character. It is not a general utility
tool in the legal workshop.[67] Certiorari will issue only to correct errors of jurisdiction and not
to correct errors of judgment. An error of judgment is one which the court may commit in the
exercise of its jurisdiction, and which error is reviewable only by an appeal. Error of jurisdiction
is one where the act complained of was issued by the court
without or in excess of jurisdiction and which error is correctible only by the extraordinary writ
of certiorari. As long as the court acts within its jurisdiction, any alleged errors committed in the
exercise of its discretion will amount to nothing more than mere errors of judgment, correctible
by an appeal if the aggrieved party raised factual and legal issues; or a petition for review under
Rule 45 of the Rules of Court if only questions of law are involved.[68]

A cert writ may be issued if the court or quasi-judicial body issues an order with grave
abuse of discretion amounting to excess or lack of jurisdiction. Grave abuse of discretion implies
such capricious and whimsical exercise of judgment as is equivalent to lack of jurisdiction or, in
other words, where the power is exercised in an arbitrary manner by reason of passion, prejudice,
or personal hostility, and it must be so patent or gross as to amount to an evasion of a positive
duty or to a virtual refusal to perform the duty enjoined or to act at all in contemplation of
law.[69] Mere abuse of discretion is not enough.Moreover, a party is entitled to a writ
of certiorari only if there is no appeal nor any plain, speedy or adequate relief in the ordinary
course of law.
The raison detre for the rule is that when a court exercises its jurisdiction, an error committed
while so engaged does not deprive it of the jurisdiction being exercised when the error was
committed. If it did, every error committed by a court would deprive it of its jurisdiction and
every erroneous judgment would be a void judgment. In such a situation, the administration of
justice would not survive. Hence, where the issue or question involved affects the wisdom or
legal soundness of the decision not the jurisdiction of the court to render said decision the same
is beyond the province of a special civil action for certiorari.

Under Section 8, Act No. 3135, as amended, the debtor-mortgagor may file a motion to set aside
a writ of execution:

Section 8. Setting aside of sale and writ of possession. The debtor may, in the
proceedings in which possession was requested, but not later than thirty days after the
purchaser was given possession, petition that the sale be set aside and the writ of
possession cancelled, specifying the damages suffered by him, because the mortgage
was not violated or the sale was not made in accordance with the provisions hereof, and
the court shall take cognizance of this petition in accordance with the summary
procedure provided for in section one hundred and twelve of Act Numbered Four
hundred and ninety-six; and if it finds the complaint of the debtor justified, it shall
dispose in his favor of all or part of the bond furnished by the person who obtained
possession. Either of the parties may appeal from the order of the judge in accordance
with section fourteen of Act Numbered Four hundred and ninety-six; but the order of
possession shall continue in effect during the pendency of the appeal.

The purchaser may appeal the order to the CA if his petition is denied by the RTC. However,
during the pendency of the appeal, the purchaser must be placed in possession of the property,
such possession being predicated on the right of ownership.[70]

The threshold issue between petitioner and respondents in the RTC was the correct amount of
redemption money under Section 47 of R.A. No. 8791. Respondent Aquino had the right to file
an action against petitioner in the RTC in the exercise of its general jurisdiction to enforce
redemption within the redemption period to preserve its right to redeem the foreclosed
property.[71] It bears stressing that the controversy between the parties relates to the precise
amount of redemption: petitioner contended that, under the real estate mortgage executed by
respondent PODC in its favor, the loan account of the spouses Garbes was secured by the property
covered by said deed; on the other hand, respondents averred that only the loan account of
respondent PODC was secured by the mortgage of its property. Indeed, the parties could have
raised the issue of the redemption period under the second paragraph of Section 47 of R.A. No.
8791. The provision reads:
Notwithstanding Act 3135, juridical persons whose property is being sold pursuant to
an extrajudicial foreclosure, shall have the right to redeem the property in accordance
 with this provision until, but not after, the registration of the certificate of foreclosure
sale with the applicable Register of Deeds which in no case shall be more than three (3)
months after foreclosure, whichever is earlier. Owners of property that has been sold in
a foreclosure sale prior to the effectivity of this Act shall retain their redemption rights
until their expiration.

The ministerial duty of the RTC to issue a writ of possession does not become discretionary
simply because the Register of Deeds had elevated in consulta to the LRA the question of whether
the Torrens title should be issued in favor of petitioner whose Affidavit of Consolidation was
registered in the Office of the Register of Deeds, or in favor of respondent Aquino who claimed
to have redeemed the property on June 7, 2002 as gleaned from the Certificate of Redemption of
the Ex-Officio Sheriff but registered only on June 17, 2002. Respondent Aquino claimed to have
redeemed the property with the correct redemption price and within the one year period of
redemption. The LRA himself admitted that the issue of whether respondent Aquino had remitted
the correct redemption price is a matter that should be resolved by the regular courts.[72] The LRA
was vested with jurisdiction to resolve only the registrability of the Affidavit of Consolidation
executed by petitioner and the Certificate of Redemption executed by the Ex-Officio Sheriff.

We need not rule on the issue of whether respondent Aquino had lawfully redeemed the property
as provided in Section 47 of R.A. No. 8791. This issue shall be passed upon by the RTC in Civil
Case No. 12785 after the parties present their testimonial and documentary evidence.

IN LIGHT OF ALL THE FOREGOING, the petition is GRANTED. The Decision of the
Court of Appeals is SET ASIDE AND REVERSED.

SO ORDERED.

G.R. No. L-21146 September 20, 1965

RURAL BANK OF LUCENA, INC., petitioner,

vs.
HON. FRANCISCO ARCA, as Judge of the Court of First Instance of Manila, Branch 1, and CENTRAL BANK
OF THE PHILIPPINES, respondents.

Norberto J. Quisumbing for petitioner.

Nat. M. Balboa, F. E. Evangelista and Solicitor General for respondents.

REYES, J.B.L., J.:

The Rural Bank of Lucena, Inc., a banking corporation organized under Republic Act No. 720, instituted, on June
22, 1961, in the Court of First Instance of Manila (Civil Case No. 47345) an action to collect damages and to enjoin
the Central Bank from enforcing Resolution No. 928 of its Monetary Board, finding that the Rural Bank of Lucena
(Lucena for short), through its officers, directors, and employees, had committed acts substantially prejudicial to the
Government, depositors, and creditors, and directing Lucena to reorganize its board of directors; to refrain from
granting or renewing loans, or accept new deposits, and not to issue drafts or make disbursements without the
approval of the supervising Central Bank examiners, and threatening Lucena that its management would be taken
over if the latter should fail to comply with the resolution. After issue joined and trial of the case, and while the
litigation was still undecided by the Court of First Instance, the Monetary Board, having been informed that the
Director of its Department of Rural Banks recommended the liquidation of the Rural Bank of Lucena, adopted on
February 2, 1962 its Resolution No. 122 (Petition, Annex "C") —

To request the Solicitor General, pursuant to Section 29 of Republic Act No. 265, to file a petition in the
proper courts for the liquidation of the affairs of the Rural Bank of Lucena, Inc.

Notice was given by Central Bank officials, on February 10, 1962 that the Lucena bank was temporarily closed
pending final decision of the Court, and that business be transacted with Central Bank representatives only.

Two days later (February 12, 1962), the Lucena bank filed suit in the Court of First Instance of Quezon (Tayabas)
annual Resolution 122 of the Monetary Board (Case No. 6471) and enjoin its enforcement; and on February 14 the
court issued ex parte a writ of preliminary injunction to such effect.

On the same day, the Court of First Instance of Manila, per Judge, now Court of Appeals Justice, Magno Gatmaitan
of Branch XIV, decided Case No. 47345, enjoining enforcement of Resolution No. 928 of the Monetary Board, for
having been issued without the prior hearing prescribed by section 10 of the Rural Bank Act, and ordering the
Central Bank to pay P5,000.00 damages and costs. The Central Bank appealed.

Upon the other hand, the Court of First Instance of Quezon Province, in its Case No. 6741, on February, 24, 1962,
dissolved its preliminary injunction against the enforcement of Resolution 122 of the Monetary Board. Other than
filing a motion for reconsideration (ultimately denied on January 9, 1963) the Lucena bank took no other steps to
prosecute the case it had filed.

On the 31st of March 1962, invoking section 29 of Republic Act 265, the Central Bank, as liquidator, petitioned the
Court of First Instance of Manila for assistance in the liquidation of the Lucena bank (Civil Case No. 50019). Upon
motion, and after hearing the parties, Judge Arca issued on interlocutory order on March 28, 1963, the dispositive
portion of which is to the following effect (Petition, Annex "D"):

The Rural Bank of Lucena thru its duly authorized officers or representatives, is hereby ordered to turn over
to the Central Bank, thru its duly authorized representative, within a period of five (5) days from receipt of
copy of this order, the physical possession of all of said Rural Bank of Lucena's assets, properties and
papers. Should the Rural Bank of Lucena or its officers fail to comply with the above order within the period
indicated herein, the Central Bank, thru its authorized representatives, is hereby authorized to take actual
and physical possession of all said assets, properties and papers of the Rural Bank of Lucena, duly
inventoried in the presence of the Provincial Fiscal, the Provincial Commander, the Provincial Treasurer,
and the Provincial Auditor of Quezon province, or their duly authorized representatives.

The Rural Bank of Lucena resorted to this Court on certiorari, claiming that Judge Arca gravely abused his
discretion in issuing the above order, in that —

(a) it interferes with the immediately executory judgment of Judge Gatmaitan in Case No. 47345 of the Court
of First Instance of Manila;

(b) Section 29 of the Central Bank Act (R.A. 265) does not apply;

(c) there was no prior valid take over of assets nor due hearing of the liquidated Bank;

(d) Judge Gatmaitan's decision constitutes a judicial review of the Monetary Board's action that cannot be
nullified by the challenged order of Judge Area; and
 (e) the turn over should not be ordered before trial on the merits.1awphîl.nèt

This Court issued a temporary restraining order until April 25, 1963, but the same was not renewed when it expired.

We see no irreconcilable conflict between section 10 (as amended) of Republic Act No. 720 (Rural Banks Act) and
section 29 of Republic Act No. 265 (Central Bank Act). The former provides in substance as follows:

The director of the Department of the Central Bank designated by the Monetary Board to supervise Rural
Banks ... upon proof that the Rural Bank or its board of directors or officers are conducting and managing
the affairs of the bank in a manner contrary to laws, orders, instructions, rules and regulations promulgated
by the Monetary Board or in any manner substantially prejudicial to the interests of the government,
depositors or creditors, to take over the management of such bank when specifically authorized to do so by
the Monetary Board after due hearing until a new board of directors and officers are elected and qualified. ...

It is easily seen that what this section authorized is the take over of the management by the Central Bank, until the
governing body of the offending Rural Bank is recognized with a view to assuring compliance by it with the laws and
regulations.

Upon the other hand, section 29 6f the Central Bank Act (R. A. 265) has in view a much more drastic step, the
liquidation of a rural bank by taking over its assets and converting them into money to pay off its creditors. Said
section prescribes:

SEC. 29. Proceedings upon insolvency. — Whenever, upon examination by the Superintendent or his
examiners or agents into the condition of any banking institution, it shall be disclosed that the condition of
the same is one of insolvency, or that its continuance in business would involve probable loss to its
depositors or creditors, it shall be the duty of the Superintendent forthwith, in writing, to inform the Monetary
Board of the facts, and the Board, upon finding the statement of the Superintendent to be true, shall
forthwith forbid the institution to do business in the Philippines and shall take charge of its assets and
proceeds according to law.

The Monetary Board shall thereupon determine within thirty days whether the institution may be reorganized
or otherwise placed in such a condition so that it may be permitted to resume business with safety to its
creditors and shall prescribe the conditions under which such resumption of business shall take place. In
such case the expenses and fee in the administration of the institution shall be determined by the Board and
shall be paid to the Central Bank out of the assets of such banking institution.

At any time within ten days after the Monetary Board has taken charge of the assets of any banking
institution, such institution may apply to the Court of First Instance for an order requiring the Monetary Board
to show cause why it should not be enjoined from continuing such charge of its assets, and the court may
direct the Board to refrain from further proceedings and to surrender charge of its assets.

If the Monetary Board shall determine that the banking institution cannot resume business with safety to its
creditors, it shall, by the Solicitor General, file a petition in the Court of First Instance reciting the
proceedings which have been taken and praying the assistance and supervision of the court in the
liquidation of the affairs of the same. The Superintendent shall thereafter, upon order of the Monetary Board
and under the supervision of the court and with all convenient speed, convert the assets of the banking
institution to money.

Considering that section 27 of the Rural Banks law (R.A. No. 720) expressly declares that —

The provisions of Republic Acts numbered 265 and 337, in so far as applicable and not in conflict with any
provision of this Act, are hereby made a part of this Act.

we find no room for questioning the applicability of section 29 of Republic Act No. 265 (Central Bank Act) to rural
banks organized under Republic Act 720, whenever the Monetary Board should find that the rural bank affected is
insolvent, or that its continuance in business would involve probable loss to its depositors or creditors, and that it
cannot resume business with safety.
It follows that on the assumption that under section 10 of the Rural Banks Act the Monetary Board may not take over
the management of a rural bank without giving the latter a hearing, i.e., an opportunity to rebut the charge that it has
contravened applicable laws, rules and regulations to the substantial prejudice of the government, its depositors and
creditors, such a previous hearing is nowhere required by section 29 of the Central Bank Law. Manifestly, whether a
rural bank's "continuance in business would involve probable loss" to its clients or creditors and that it "cannot
resume business with safety," is a matter of appreciation and judgment that the law entrusts primarily to the
Monetary Board. Equally apparent is that if the rural bank affected is in the condition previously adverted to, every
minute of delay in securing its assets from dissipation inevitably increases the danger to the creditors. For this
reason, the statute has provided for a subsequent judicial review of the Monetary Board, in lieu of a previous
hearing.

In point of fact, the petitioner Rural Bank of Lucena did file a petition (Annex "G") for judicial review in the Court of
First Instance of Quezon Province, dated February 12, 1962, and challenged the validity of Resolution No. 122 of
the Monetary Board (Case No. 6471) ; but the Court of First Instance of Quezon dissolved the preliminary injunction
issued in that case and allowed Resolution No. 122 to take effect, without any steps being taken for a review of such
action. This being the case, and in view of the manifest reluctance the Lucena bank's officials to comply with the
Monetary Board's resolution, the Central Bank had cause to seek judicial assistance for the discharge of its duties
as liquidator.

The petitioner rural bank seems to take the view that the proceedings had before Judge Gatmaitan in Case No.
47345, Branch XIV, of the Court of First Instance of Manila constituted the judicial review required by section 29 of
Republic Act No. 265, the Central Bank Act. Such a stand is untenable, for the case tried and decided by Judge
Gatmaitan concerned an attempt by the Central Bank to take over management under section 10 of the Rural Banks
law (R.A. No. 720) in connection with the Monetary Board's resolution No. 928 of June 16, 1961. Even more
conclusive is the consideration that said action (Case No. 47345) was filed on June 22, 1961, and could not possibly
be a judicial review of the Resolution No. 122 adopted eight months later, on February 2, 1962. A review cannot
precede the adoption of the resolution being reviewed. This proposition requires no demonstration.

The narrated events also rebut the contention that the order of Judge Area, issued on March 28, 1963, in Case No.
50019, constitutes unlawful interference with the enforcement of Judge Gatmaitan's decision of February 14, 1962,
the issues involved being different in each case. As heretofore pointed out one involved a take over of management
under section 10 of the Rural Banks Act, and the other a seizure of assets and liquidation under section 29 of the
Central Bank law (R.A. 265).

Nor can the proceedings before Judge Area be deemed judicial review of the 1962 resolution No. 122 of the
Monetary Board, if only because by law (section 29, R. A. 265) such review must be asked within 10 days from
notice of the resolution of the Board. Between the adoption of Resolution No. 122 and the challenged order of Judge
Arca, more than one year had elapsed. Hence, the validity of the Monetary Board's resolution can no longer be
litigated before Judge Arca, whose role under the fourth paragraph of section 29 is confined to assisting and
supervising the liquidation of the Lucena bank.

Whether or not the Central Bank acted with arbitrariness or bad faith in decreeing that circumstances called for the
liquidation of the Lucena Rural Bank, and should be answerable in damages, should be threshed out and
determined, not by Judge Arca but in Case No. 6471 of the Court of First Instance of Quezon Province, which was
filed within the 10-day period prescribed by the Central Bank law, and which appears to be still pending, unless the
Lucena bank had abandoned such litigation, a fact that we need not decide at present. Suffice it to say that Judge
Arca had no reason to inquire into the merits of the case before issuing the disputed order requiring the surrender of
the assets and papers of the Lucena bank, because: (1) neither the statute (sec. 29, R.A. 265) nor the constitutional
requirement of due process demand that the correctness of the Monetary Board's resolution to stop operation and
proceed to the liquidation of the Lucena Rural Bank should first be adjudged before making the resolution effective,
it being enough that a subsequent judicial review by provided (section 29, R.A. 265; 12 Am. Jur. 305, sec. 611;
Bourjois vs. Chapman, 301 U.S. 183, 81 Law Ed. 1027, 1032; American Surety Co. vs. Baldwin, 77 Law Ed. 231, 86
ALR 307; Wilson vs. Standefer, 46 Law Ed. 612); (2) the period for asking such judicial review had elapsed with
excess between the adoption of the Monetary Board Resolution No. 122 and the filing of the case by the Central
Bank in the Court of First Instance of Manila; (3) the correctness of said resolution had already been put in issue
before the Court of Quezon Province; (4) because the latter court had refused to stop implementation of the
Resolution of the Monetary Board when it dissolved its own preliminary injunction; and (5) because the Lucena Bank
had apparently acquiesced in the action taken by the Court of Quezon Province, since the rural bank had not sought
that the action of the Quezon court be set aside by a higher court.
IN VIEW OF THE FOREGOING, the writ applied for is denied with costs against the petitioner Lucena Rural Bank,
Inc.

Bengzon, C.J., Bautista Angelo, Concepcion, Dizon, Makalintal, Bengzon, J.P., and Zaldivar, JJ., concur.

SPS. LIPANA V. DEVELOPMENT BANK OF RIZAL

(G.R. NO. 73884)
Facts:
Petitioners opened and maintained both time and savings deposits with herein respondent
bank. Upon maturity of some of their time deposit certificates, petitioners were not able to
cash them but instead were issued a manager’s check which was dishonored upon
presentment. Demands for the payment of deposits having failed, petitioners moved for the
issuance of a writ of preliminary attachment for collection of a sum of money. Respondent
Judge ordered the issuance of a writ and later, rendered judgment in favor of petitioners.
Meanwhile, the Monetary Board finding that respondent bank was insolvent, decided to
place it under receivership. Petitioners then moved for the execution which was granted,
but was subsequently stayed upon reconsideration. Petitioners moved to lift the stay but
were denied. Hence, the instant petition.
Issue:
Whether or not the stay of execution of judgment against a bank placed under receivership
is valid.
Ruling: YES.
In the instant case, the stay of the execution of judgment is warranted by the fact that
respondent bank was placed under receivership. To execute the judgment would unduly
deplete the assets of respondent bank to the obvious prejudice of other depositors and
creditors, since, as aptly stated in Central Bank of the Philippines vs. Morfe, after the
Monetary Board has declared that a bank is insolvent and has ordered it to cease operations,
the Board becomes the trustee of its assets for the equal benefit of all the creditors,
including depositors. The assets of the insolvent banking institution are held in trust for the
equal benefit of all creditors, and after its insolvency, one cannot obtain an advantage or a
preference over another by an attachment, execution or otherwise.
The instant petition is hereby DISMISSED.

G.R. No. 73884 September 24, 1987

SPOUSES ROMEO LIPANA and MILAGROS LIPANA, petitioners,

vs.
DEVELOPMENT BANK OF RIZAL, respondent.

PARAS, J.:
This is a petition for review on certiorari of the August 30, 1985 Order of the Regional Trial Court of Pasig denying
petitioners' Motion to Lift Stay of Execution in Civil Case No. 50802.

During the period from 1982 to January, 1984, herein petitioners opened and maintained both time and savings
deposits with the herein respondent Development Bank of Rizal all in the aggregate amount of P939,737.32. When
some of the Time Deposit Certificates matured, petitioners were not able to cash them but instead were issued a
manager's check which was dishonored upon presentment. Demands for the payment of both time and savings
deposits having failed, on March 14, 1984, petitioners filed with the Regional Trial Court of Pasig a Complaint With
Prayer For Issuance of a Writ of Preliminary Attachment for collection of a sum of money with damages, docketed
therein as Civil Case No. 50802 (Record, pp. 3-11).

Respondent Judge, in an Order dated March 19, 1984 (Ibid., p. 19-21), ordered the issuance of a writ of attachment,
and pursuant thereto, a writ of attachment dated March 20, 1984 was issued in favor of the petitioners (Ibid., p. 33).

On June 27, 1984, respondent bank filed its Answer (Ibid., p. 58-61).

On July 23, 1984, petitioners filed a Motion For Judgment on the Pleadings (Ibid., pp. 68-73), opposed by
respondent bank (Ibid., pp. 74-76), but respondent judge, in a Decision dated November 13, 1984, rendered
judgment in favor of petitioners. The dispositive portion of the said Decision, reads:

IN VIEW OF ALL THE FOREGOING, the Court renders judgment in favor of the plaintiffs, ordering
the defendant to pay the total sum of P939,737.32 plus stipulated interest; the sum equivalent to
15% of the amount due as attorney's fees; and costs of suit.

The counterclaim is dismissed, for lack of merit.

Meanwhile, on August 10, 1984, the Monetary Board, in its Resolution No. 1009, finding that the condition of
respondent bank was one of insolvency and that its continuance in business would result in probable loss to its
depositors and creditors, decided to place it under receivership (Rollo, p. 84).

On December 7, 1984, petitioners filed a Motion for Execution Pending Appeal (Rcd., pp. 91-93), which was
opposed by respondent bank (Ibid., p. 94-96). On December 27, 1984, petitioners filed their Reply to the opposition
(Ibid., pp. 98-101), to which respondent bank filed its Rejoinder on January 1, 1985 (Ibid., pp. 102-105).

In an order dated January 29, 1985, respondent judge ordered the issuance of a writ of execution (Ibid., p. 106).

On February 11, 1985, respondent bank filed a Motion for Reconsideration of order dated January 29, 1985 and to
Stay Writ of Execution (Ibid., pp. 109-110), opposed by petitioners (Ibid., p. 111) but in an Order dated March 6,
1985, respondent judge stayed the execution (Ibid., p. 113).

On August 7, 1985, petitioners filed a Motion to Lift Stay of Execution (Ibid., pp. 119-122), opposed by respondent
bank (Ibid., pp. 123-127), and in an Order dated August 30, 1985, respondent judge denied the said motion (Ibid., p.
130). Hence, the instant petition (Rollo, pp. 8-17).

The Second Division of the Court, in a resolution dated May 5, 1986, resolved to require the respondent to comment
(Ibid., p. 52). In compliance therewith, respondent bank filed its Comment on June 9, 1986 (Ibid., pp. 53-58).

The petition was given due course in a resolution dated August 11, 1986, and the parties were required to file their
respective memoranda (Ibid., p. 61). In compliance therewith, petitioners filed their Memorandum on September 19,
1986 (Ibid., p. 63-75), while respondent bank filed its Memorandum on September 25, 1986 (Ibid., pp. 76-83), and
the case was considered submitted for deliberation in the Resolution dated October 8, 1986 (Ibid., p. 88)

Petitioners raised the following issues:

1. Respondent judge cannot legally stay execution of judgement that has already become final and
executory;
 2. The placing under receivership by the Central Bank of the respondent bank, long after the
complaint was filed removed it from the application of the doctrine in Re: Central Bank vs. Morfe (63
SCRA 113);

3. The filing of the complaint for a sum of money With damages against respondent bank and the
subsequent attachment of its property in Pasig, Metro Manila long before the receivership took place
render inapplicable the doctrine laid down by this Honorable Supreme Court in the said Morfe case;

4. The indefinite stay of execution without a ruling as to how long it will last, amounts to deprivation
of petitioners of their property without due process of law.

The instant petition is without merit.

I.

The main issue in this case is whether or not respondent judge could legally stay execution of judgment that has
already become final and executory.

The answer is in the affirmative.

The rule that once a decision becomes final and executory, it is the ministerial duty of the court to order its
execution, admits of certain exceptions as in cases of special and exceptional nature where it becomes imperative
in the higher interest of justice to direct the suspension of its execution (Vecine vs. Geronimo, 59 O.G. 579);
whenever it is necessary to accomplish the aims of justice (Pascual vs. Tan, 85 Phil. 164); or when certain facts and
circumstances transpired after the judgment became final which could render the execution of the judgment unjust
(Cabrias vs. Adil, 135 SCRA 354).

In the instant case, the stay of the execution of judgment is warranted by the fact that respondent bank was placed
under receivership. To execute the judgment would unduly deplete the assets of respondent bank to the obvious
prejudice of other depositors and creditors, since, as aptly stated in Central Bank of the Philippines vs. Morfe (63
SCRA 114), after the Monetary Board has declared that a bank is insolvent and has ordered it to cease operations,
the Board becomes the trustee of its assets for the equal benefit of all the creditors, including depositors. The assets
of the insolvent banking institution are held in trust for the equal benefit of all creditors, and after its insolvency, one
cannot obtain an advantage or a preference over another by an attachment, execution or otherwise.

Moreover, it will be noted that respondent bank was placed under receivership on August 10, 1984, and the
Decision of respondent judge is dated November 13, 1984. Accordingly, in line with the ruling in the aforesaid Morfe
case, which reads:

The circumstance that the Fidelity Savings Bank, having stopped operations since February 19,
1969, was forbidden to do business (and that ban would include the payment of time deposits)
implies that suits for the payment of such deposits were prohibited. What was directly prohibited
should not be encompassed indirectly. ...

petitioners 'complaint should have been dismissed.

II.

It is the contention of petitioners, however, that the placing under receivership of respondent bank long after the
filing of the complaint removed it from the doctrine in the said Morfe case.

This contention is untenable. The time of the filing of the complaint is immaterial. It is the execution that win
obviously prejudice the other depositors and creditors. Moreover, as stated in the said Morfe case, the effect of the
judgment is only to fix the amount of the debt, and not give priority over other depositors and creditors.

III.
Anent the contention of petitioners that the attachment of one of the properties of respondent bank was erased by
virtue of the delayed receivership is to expand the power of the Central Bank, Suffice it to say that in the case
of Central Bank of the Philippines, et al. vs. Court of Appeals, et al. (Resolution of this Court dated September 17,
1984 in G.R. No. 33302), wherein the original plaintiff Algue Inc. was able to obtain a writ of preliminary attachment
against the original defendant Island Savings Bank, this Court refused to recognize any preference resulting from
such attachment and ruled that after a declaration of insolvency, the remedy of the depositors is to intervene in the
liquidation proceedings.

IV.

It is also contended by the petitioners that the indefinite stay of execution without ruling as to how long it will last,
amounts to a deprivation of their property without due process of law.

Said contention, likewise, is devoid of merit. Apart from the fact that the stay of execution is not only in accordance
with law but is also supported by jurisprudence, such staying of execution is not without a time limit. In fact, the
Monetary Board, in its resolution No. 4-33 approved the liquidation of respondent bank on April 26, 1985 and
ordered, among others, the filing of a petition in the Regional Trial Court praying for assistance of said court in the
liquidation of the bank. (Rollo, p. 81). The staying of the writ of execution will be lifted after approval by the
liquidation court of the project of distribution, and the liquidator or his deputy will authorize payments to all claimants
concerned in accordance with the approved project of distribution.

PREMISES CONSIDERED, the instant petition is hereby DISMISSED.

SO ORDERED.

Yap (Chairman), Melencio-Herrera, Padilla and Sarmiento, JJ., concur.

PROVIDENT SAVINGS BANK V. CA (G.R.

NO. 97218)
Facts:
Spouses Guarin obtained a loan from petitioner bank and as a security, executed a REM in
its favor over a parcel of land. Then petitioner bank was placed under receivership until it
was set aside. Guarin signified its willingness to pay its obligation in exchange for the
mortgaged title. Petitioner bank could not release said title as it also served as security for
another loan obtained by Guarin for his corporation. Private respondent Chua wrote
petitioner bank saying that the mortgaged property was offered to him as payment of
judgment he obtained against the Guarins. The Guarins sold the property to Chua with the
latter assuming the obligations. Chua tried to pay the loan but petitioner would not release
the title unless the second loan of Guarin was also settled.
Issue:
Whether or not a bank being placed under receivership interrupts the prescription of actions
it may institute.
Ruling: YES.
When a bank is prohibited to do business by the Central Bank and a receiver is appointed
for such bank, that bank would not be able to do new business, i.e., to grant new loans or
to accept new deposits.
Having arrived at the conclusion that the foreclosure is part of bank’s business activity
which could not have been pursued by the receiver then because of the circumstances
discussed in the Central Bank case, we are thus convinced that the prescriptive period was
legally interrupted by fuerza mayor in 1972 on account on the prohibition imposed by the
Monetary Board against petitioner from transacting business, until the directive of the
board was nullified in 1981. Indeed, the period during which the obligee was prevented by
a caso fortuito from enforcing his right is not reckoned against him (Article 1154, New
Civil Code). When prescription is interrupted, all the benefits acquired so far from the
possession cease and when prescription starts anew, it will be entirely a new one. This
concept should not be equated with suspension where the past period is included in the
computation being added to the period after prescription is resumed. Consequently, when
the closure of was set aside in 1981, the period of ten years within which to foreclose under
Article 1142 of the New Civil Code began to run again and, therefore, the action filed on
August 21, 1986 to compel petitioner to release the mortgage carried with it the mistaken
notion that petitioner’s own suit foreclosure had prescribed.
(In contrast to Larrobis v. Phil Veterans Bank, this is an exception to the general rule
because of peculiar circumstances)

SPS. LARROBIS V. PHILIPPINE VETERANS BANK

(G.R. NO. 135706 )
Facts:
Petitioner spouses contracted a monetary loan with herein respondent bank secured by a
REM executed on their lot. Respondent bank then went bankrupt and was placed under
receivership/liquidation by the Central Bank. Sometime after, respondent bank sent a
demand letter for the amount of the insurance premiums advanced by it over the mortgaged
property of petitioners. More than 14 years from the time the loan became due and
demandable, respondent bank moved for the extrajudicial foreclosure of the mortgaged
property and was sold to it as being the lone bidder. Petitioners moved to declare the
foreclosure null and void contending that the respondent bank being placed under
receivership did not interrupt the running of the prescriptive period. RTC ruled in favor of
respondents.
Issues:
(1) Whether or not foreclosure of mortgage is included in the acts prohibited during
receivership/liquidation proceedings.
(2) Whether or not the period within which the respondent bank was placed under
receivership and liquidation proceedings interrupted the running of the prescriptive period
in bringing actions.
Ruling: NO.
(1) While it is true that foreclosure falls within the broad definition of “doing business,” it
should not be considered included, however, in the acts prohibited whenever banks are
“prohibited from doing business” during receivership and liquidation proceedings. This is
consistent with the purpose of receivership proceedings, i.e., to receive collectibles and
preserve the assets of the bank in substitution of its former management, and prevent the
dissipation of its assets to the detriment of the creditors of the bank.
There is also no truth to respondent’s claim that it could not continue doing business from
the time it was under receivership. As correctly pointed out by petitioner, respondent was
even able to send petitioners a demand letter, through Francisco Go, for the insurance
premiums advanced by respondent bank over the mortgaged property of petitioners. How
it could send a demand letter on unpaid insurance premiums and not foreclose the mortgage
during the time it was “prohibited from doing business” was not adequately explained by
respondent.
(2) A close scrutiny of the Provident case shows that the Court arrived at said conclusion,
which is an exception to the general rule, due to the peculiar circumstances of Provident
Savings Bank at the time. The Superintendent of Banks, which was instructed to take
charge of the assets of the bank in the name of the Monetary Board, had no power to act as
a receiver of the bank and carry out the obligations specified in Sec. 29 of the Central Bank
Act.
In this case, it is not disputed that Philippine Veterans Bank was placed under receivership
by the Monetary Board of the Central Bank pursuant to Section 29 of the Central Bank Act
on insolvency of banks. Unlike Provident Savings Bank, there was no legal prohibition
imposed upon herein respondent to deter its receiver and liquidator from performing their
obligations under the law. Thus, the ruling laid down in the Provident case cannot apply in
the case at bar.

Manalo vs. Court of Appeals G.R. No. 141297,

October 8, 2001
Facts: Villanueva Enterprises, represented by its president, Therese Villanueva Vargas, obtained a loan
of three million pesos and one million pesos from the respondent PAIC Savings and Mortgage Bank and
the Philippine American Investments Corporation (PAIC), respectively. To secure payment of both debts,
Vargas executed in favor of the respondent and PAIC a joint first mortgageover two parcels of land
registered under her name. One of the lots is the subject of the present case. S. Villanueva Enterprises
failed to settle its loan obligation.

Accordingly, respondent instituted extrajudicial foreclosure proceedings over the mortgaged lots and
acquired the same as the highest bidder. After the lapse of one year, title was consolidated in respondent’s
name for failure of Vargas to redeem. The Central Bank of the Philippines filed a petition for assistance in
the liquidation of the respondent PAIC with the Regional Trial Court. After a few years, respondent petitioned
the RegionalTrialCourtofPasayCity for the issuance of a writ of possession for the subject property.
However, during the pendency of civil case for the issuance of a writ of possession, Vargas executed a
deed of absolute sale selling, transferring, and conveying ownership of the disputed lot in favor of a certain
Armando Angsico. Notwithstanding this sale, Vargas, still representing herself to be the lawful owner of the
property, leased the same to petitioner Domingo R. Manalo. Later, Armando Angsico, as buyer of the
property, assigned his rights therein to petitioner. The court subsequently issued the writ of possession but
Villanueva Enterprises and Vargas moved for its quashal. Petitioner, on the strength of the lease contract
and deed of assignment made in his favor, submitted a permission to file an ex-parte motion to intervene.
Both motions were denied by the court. Court of Appeals upheld the order of the lower court. Hence this
petition.

Issue: Whether or not the jurisdiction for the issuance of the writ of possession filed by the respondent
bank is vested solely on the liquidation court.

Held: No. The exclusive jurisdiction of the liquidation court pertains only to the adjudication of claims
against the bank. It does not cover the reverse situation where it is the bank which files a claim against
another person or legal entity.

Although the law provides that all claims against the insolvent bank should be filed in the liquidation
proceeding, such legal provision only finds operation in cases where there are claims against an insolvent
bank. In fine, the exclusive jurisdiction of the liquidation court pertains only to the adjudication of claims
against the bank. It does not cover the reverse situation where it is the bank which files a claim against
another person or legal entity. Moreover, a bank which had been ordered closed by the monetary board
retains its juridical personality which can sue and be sued through its liquidator. The only limitation being
that the prosecution or defense of the action must be done through the liquidator. Otherwise, no suit for or
against an insolvent entity would prosper. In such situation, banks in liquidation would lose what justly
belongs to them through a mere technicality.

[G.R. No. 141297. October 8, 2001]

DOMINGO R. MANALO, petitioner, vs. COURT OF APPEALS (Special Twelfth Division)

and PAIC SAVINGS AND MORTGAGE BANK, respondents.

DECISION
PUNO, J.:

This petition for certiorari seeks the review of the Decision of the Court of Appeals in C.A.-G.R. SP. No.
50341 promulgated December 23, 1999, which affirmed an Order issued by the Regional Trial Court, Branch
112, Pasay City, in Civil Case No. 9011 dated December 9, 1998.
On July 19, 1983, S. Villanueva Enterprises, represented by its president, Therese Villanueva Vargas,
obtained a loan of three million pesos (P3,000,000.00) and one million pesos (P1,000,000.00) from the respondent
PAIC Savings and Mortgage Bank and the Philippine American Investments Corporation (PAIC),
respectively. To secure payment of both debts, Vargas executed in favor of the respondent and PAIC a Joint First
Mortgage[1] over two parcels of land registered under her name. One of the lots, located in Pasay City with an area
of nine hundred nineteen square meters (919 sq.m.) and covered by TCT No. 6076, is the subject of the present
case. Section 2 of the mortgage contract states that the properties mortgaged therein shall include all buildings
and improvements existing on the mortgaged property at the time of the execution of the mortgage contract and
thereafter.[2]
S. Villanueva Enterprises defaulted in paying the amortizations due. Despite repeated demands from the
respondent, it failed to settle its loan obligation. Accordingly, respondent instituted extrajudicial foreclosure
proceedings over the mortgaged lots. On August 22, 1984, the Pasay City property was sold at a public auction
to the respondent itself, after tendering the highest bid. The respondent then caused the annotation of the
corresponding Sheriffs Certificate of Sale[3] on the title of the land on December 4, 1984. After the lapse of one
year, or the statutory period extended by law to a mortgagor to exercise his/her right of redemption, title was
consolidated in respondents name for failure of Vargas to redeem.
On October 29, 1986, the Central Bank of the Philippines filed a Petition[4] for assistance in the liquidation
of the respondent with the Regional Trial Court. The petition was given due course in an Order[5] dated May 19,
1987.
It appears that from the years 1986 to 1991, Vargas negotiated with the respondent (through its then
liquidator, the Central Bank) for the repurchase of the foreclosed property. The negotiations, however, fizzled out
as Vargas cannot afford the repurchase price fixed by the respondent based on the appraised value of the land at
that time. On October 4, 1991, Vargas filed a case for annulment of mortgage and extra-judicial foreclosure sale
before Branch 116 of the Pasay City Regional Trial Court. On July 22, 1993, the court rendered a
decision[6] dismissing the complaint and upholding the validity of the mortgage and foreclosure sale. On appeal,
the appellate court upheld the assailed judgment and declared the said mortgage and foreclosure proceedings to
be in accord with law.[7] This decision of the Court of Appeals subsequently became final and executory when we
summarily dismissed Vargass Petition for Review on Certiorari for having been filed beyond the reglementary
period.[8]
In the meantime, on June 22, 1992, respondent petitioned the Regional Trial Court, Branch 112, of Pasay
City, herein court a quo, for the issuance of a writ of possession for the subject property in Civil Case No.
9011. This is in view of the consolidation of its ownership over the same as mentioned earlier. Vargas and S.
Villanueva Enterprises, Inc. filed their opposition thereto. After which, trial ensued.
During the pendency of Civil Case No. 9011 (for the issuance of a writ of possession), Vargas, on December
23, 1992, executed a Deed of Absolute Sale[9] selling, transferring, and conveying ownership of the disputed lot
in favor of a certain Armando Angsico. Notwithstanding this sale, Vargas, still representing herself to be the
lawful owner of the property, leased the same to petitioner Domingo R. Manalo on August 25, 1994. Pertinent
provisions of the lease agreement[10]state:

3. (a) The lease is for a period of ten year lease (sic), involving 450 square meters, a portion of the
above 919 square meter property.

x x x (d) The LESSEE has to introduce into the said 450 square meter premises improvements
thereon (sic) consisting of one story building to house a Karaoke Music Restaurant Business, which
improvements constructed therof (sic), upon the termination of the lease contract, by said LESSEE
be surrendered in favor of the LESSOR (sic).[11]

Later, on June 29, 1997, Armando Angsico, as buyer of the property, assigned his rights therein to petitioner.[12]
On April 21, 1998, the court a quo granted the petition for the issuance of the Writ of Possession.[13] The writ
was subsequently issued on April 24, 1998, the pertinent portion of which reads:[14]

NOW THEREFORE you are hereby commanded that you cause oppositors THERESE
VILLANUEVA VARGAS and S. VILLANUEVA ENTERPRISES, INC. and any and all persons
claiming rights or title under them, to forthwith vacate and surrender the possession of subject
premises in question known as that parcel of land and improvements covered by TCT No. 6076 of
the Registry of Deeds of Pasay City; you are hereby further ordered to take possession and deliver
to the petitioner PAIC SAVINGS AND MORTGAGE BANK the subject parcel of land and
improvements.

Shortly, on May 8, 1998, S. Villanueva Enterprises and Vargas moved for its quashal. [15] Thereafter on June 25,
1998, petitioner, on the strength of the lease contract and Deed of Assignment made in his favor, submitted a
Permission to File an Ex-parte Motion to Intervene.[16] It bears mentioning, however, that before petitioner sought
intervention in the present case, he had separately instituted a Complaint for Mandamus, docketed as Civil Case
No. 98-0868 before another branch[17]of the Pasay City RTC to compel PAIC Bank to allow him to repurchase
the subject property.
On October 7, 1998, the court a quo denied the Motion to Quash and Motion to Intervene filed respectively
by Vargas and petitioner.[18] A Motion for Reconsideration and a Supplemental Motion for Reconsideration were
filed by the petitioner which, however, were similarly denied on December 9, 1998.
Petitioner then sought relief with the Court of Appeals, filing therein a Petition for Certiorari. While this was
awaiting resolution, he entered into another lease agreement,[19] this time with the respondent, represented by its
liquidator, over the same 450 sq.m. portion of the lot. The contract fixed a period of one month beginning January
28, 1999, renewable for another month at the exclusive option of the lessor, respondent PAIC Bank.
On December 23, 1999, the appellate court rendered the impugned Decision, dismissing the petition, thus:

All told, WE find the Order, subject of the instant Petition for Certiorari and Prohibition, to be not
without rational bases and we observe that the court a quo, in issuing its questioned Order,
committed no grave abuse of discretion amounting to lack of jurisdiction.

WHEREFORE, the Petition for Certiorari and Prohibition is hereby DISMISSED and the assailed
December 9, 1998 Order is AFFIRMED in all respects.

SO ORDERED.[20]

Hence, this appeal, where petitioner raises and argues the following legal issues:

I. Whether or not public respondent acted without or in excess of its jurisdiction and/or was
patently in error when it affirmed the denial of petitioners motion for intervention, despite the
fact that he has a legal interest, being a lessee and an assignee of the property subject matter of
this case.

II. Whether or not the public respondent committed grave abuse of discretion when it held that
what are required to be instituted before the liquidation court are those claims against the
insolvent banks only considering that the private respondent bank is legally dead due to
insolvency and considering further that there is already a liquidation court (Regional Trial
Court of Makati, Branch 57, docketed as Spec. Pro. No. M-1280) which is exclusively vested
with jurisdiction to hear all matters and incidents on liquidation pursuant to Section 29,
Republic Act No. 265, otherwise known as The Central Bank Act, as amended.

III. Whether or not the public respondent committed grave abuse of discretion and/or was
patently in error in affirming the ruling of the trial court, totally disregarding the arguments
raised in petitioners supplemental motion for reconsideration only through a minute order and
 without taking into consideration the fact that there is a pending action in another court (RTC,
Pasay City, Branch 231) which presents a prejudicial question to the case at bar.

IV. Whether or not the petitioner is estopped from questioning private respondents ownership
when it entered into a contract of lease involving the property in question.[21]

We will first resolve the jurisdictional and procedural questions raised by the petitioner.

I.

Petitioner postulates that the lower court should have dismissed respondents Ex-Parte Petition for Issuance
of Writ of Possession in Civil Case No. P-9011 for want of jurisdiction over the subject matter of the claim. The
power to hear the same, he insists, exclusively vests with the Liquidation Court pursuant to Section 29 of Republic
Act No. 265, otherwise known as The Central Bank Act.[22] He then cites our decision in Valenzuela v. Court of
Appeals,[23] where we held that if there is a judicial liquidation of an insolvent bank, all claims against the bank
should be filed in the liquidation proceeding. For going to another court, the respondent, he accuses, is guilty of
forum shopping.
These contentions can not pass judicial muster. The pertinent portion of Section 29 states:

x x x The liquidator designated as hereunder provided shall, by the Solicitor General, file a petition
in the Regional Trial Court reciting the proceedings which have been taken and praying the
assistance of the court in the liquidation of such institution. The court shall have jurisdiction in
the same proceedings to assist in the adjudication of disputed claims against the bank or non-
bank financial intermediary performing quasi-banking functions and the enforcement of individual
liabilites of the stockholders and do all that is necessary to preserve the assets of such institution
and to implement the liquidation plan approved by the Monetary Board. x x x [24] (emphasis
supplied.)

Petitioner apparently failed to appreciate the correct meaning and import of the above-quoted law. The legal
provision only finds operation in cases where there are claims against an insolvent bank. In fine, the exclusive
jurisdiction of the liquidation court pertains only to the adjudication of claims against the bank. It does not
cover the reverse situation where it is the bank which files a claim against another person or legal entity.
This interpretation of Section 29 becomes more obvious in the light of its intent. The requirement that all
claims against the bank be pursued in the liquidation proceedings filed by the Central Bank is intended to prevent
multiplicity of actions against the insolvent bank and designed to establish due process and orderliness in the
liquidation of the bank, to obviate the proliferation of litigations and to avoid injustice and arbitrariness.[25] The
lawmaking body contemplated that for convenience, only one court, if possible, should pass upon the claims
against the insolvent bank and that the liquidation court should assist the Superintendents of Banks and regulate
his operations.[26]
It then ought to follow that petitioners reliance on Section 29 and the Valenzuela case is misplaced. The
Petition for the Issuance of a Writ of Possession in Civil Case No. 9011 is not in the nature of a disputed claim
against the bank. On the contrary, it is an action instituted by the respondent bank itself for the preservation
of its asset and protection of its property. It was filed upon the instance of the respondents liquidator in order to
take possession of a tract of land over which it has ownership claims.
To be sure, the liquidator took the proper course of action when it applied for a writ in the Pasay City RTC.
Act 3135,[27] entitled An Act to Regulate the Sale of Property Under Special Powers Inserted In or Annexed To
Real Estate Mortgages, mandates that jurisdiction over a Petition for Writ of Possession lies with the court of the
province, city, or municipality where the property subject thereof is situated. This is sanctioned by Section 7 of
the said Act, thus:

Section 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. x x x[28] (emphasis supplied)

Since the land subject of this controversy is located in Pasay City, then the citys RTC should rightly take
cognizance of the case, to the exclusion of other courts.
Anent petitioners auxiliary contention that respondent should be held guilty of forum shopping for not filing
the case in the liquidation court, suffice it to state here that the doctrine only ponders situations where two (or
more) cases are pending before different tribunals.[29] Well to point, we have laid down the yardstick to determine
whether a party violated the rule against forum shopping as where the elements of litis pendentia are present or
where a final judgment in one case will amount to res judicata in the other.[30] Inasmuch as the case at bar is the
only one filed by the respondent for the issuance of a writ of possession over the subject property, there is no
occasion for the doctrine to apply.
Petitioner next casts doubt on the capacity of the respondent to continue litigating the petition for the issuance
of the writ. He asserts that, being under liquidation, respondent bank is already a dead corporation that cannot
maintain the suit in the RTC. Hence, no writ may be issued in its favor.
The argument is devoid of merit. A bank which had been ordered closed by the monetary board retains its
juridical personality which can sue and be sued through its liquidator. The only limitation being that the
prosecution or defense of the action must be done through the liquidator.[31] Otherwise, no suit for or against an
insolvent entity would prosper. In such situation, banks in liquidation would lose what justly belongs to them
through a mere technicality.[32]
That the law allows a bank under liquidation to participate in an action can be clearly inferred from the third
paragraph of the same Section 29 of The Central Bank Act earlier quoted, which authorizes or empowers a
liquidator to institute actions, thus:

x x x and he (liquidator) may in the name of the bank or non-bank financial intermediary
performing quasi-banking functions and with the assistance of counsel as he may retain, institute
such actions as may be necessary in the appropriate court to collect and recover accounts and
assests of such institution or defend any action filed against the institution. [33] (emphasis supplied.)

It is therefore beyond dispute that respondent was legally capacitated to petition the court a quo for the issuance
of the writ.

II.

Petitioner likewise proffers one other procedural obstacle, which is the pendency of Civil Case No. 98-0868
in Branch 231 of Pasay City RTC. The said action is the complaint he filed against the respondent for the latter
to receive and accept the redemption price of eighteen million pesos for the subject property. He argues that the
primary issue therein constitutes a prejudicial question in relation to the present case in that if the Court therein
will grant petitioners prayer, then this will necessarily negate the possessory writ issued by the court a quo.
 Again, we are not persuaded. A prejudicial question is one which arises in a case the resolution of which is a
logical antecedent of the issue involved therein, and the cognizance of which pertains to another tribunal. [34] It
generally comes into play in a situation where a civil action and a criminal action are both pending and there
exists in the former an issue which must be preemptively resolved before the criminal action may proceed, because
howsoever the issue raised in the civil action is resolved would be determinative juris et de jure of the guilt or
innocence of the accused in the criminal case. The rationale behind the principle of prejudicial question is to avoid
two conflicting decisions.[35]
Here, aside from the fact that Civil Case No. 98-0868 and the present one are both civil in nature and therefore
no prejudicial question can arise from the existence of the two actions,[36] it is apparent that the former action was
instituted merely to frustrate the Courts ruling in the case at bar granting the respondent the right to possess the
subject property. It is but a canny and preemptive maneuver on the part of the petitioner to delay, if not prevent,
the execution of a judgment adverse to his interests. It bears stressing that the complaint for mandamus was filed
only on May 7, 1998, sixteen days after the lower court granted respondents petition and thirteen days after it
issued the writ. It cannot then possibly prejudice a decided case.
At any rate, it taxes our imagination why the questions raised in Case No. 98-0868 must be considered
determinative of Case No. 9011. The basic issue in the former is whether the respondent, as the purchaser in the
extra-judicial foreclosure proceedings, may be compelled to have the property repurchased or resold to a
mortgagors successor-in-interest (petitioner); while that in the latter is merely whether the respondent, as the
purchaser in the extra-judicial foreclosure proceedings, is entitled to a writ of possession after the statutory period
for redemption has expired. The two cases, assuming both are pending, can proceed separately and take their own
direction independent of each other.

III.

Having disposed of the jurisdictional and procedural issues, we now come to the merits of the case. Petitioner
seeks intervention in this case by virtue of the lease agreement and the deed of assignment executed in his favor
by the mortgagor (Vargas) and an alleged buyer (Angsico) of the land, respectively. He posits that as a lessee and
assignee in possession of the foreclosed real estate, he automatically acquires interest over the subject matter of
the litigation. This interest is coupled with the fact that he introduced improvements thereon, consisting of a one-
storey building which houses a karaoke-music restaurant, allegedly to the tune of fifteen million pesos
(P15,000,000.00). Enforcing the writ, he adds, without hearing his side would be an injustice to him.
Intervention is a remedy by which a third party, not originally impleaded in the proceeding, becomes a litigant
therein to enable him to protect or preserve a right or interest which may be affected by such proceeding.[37] The
pertinent provision is stated in Section 1, Rule 19 of the 1997 Rules of Civil Procedure, thus:

Section 1. Who may intervene. - A person who has a legal interest in the matter in litigation, or
in the success of either of the parties, or an interest against both, or is so situated as to be
adversely affected by a distribution or other disposition of property in the custody of the court
or of an officer thereof may, with leave of court, be allowed to intervene in the action. The
court shall consider whether or not the intervention will unduly delay or prejudice the
adjudication of the rights of the original parties, and whether or not the intervenors rights may
be fully protected in a separate proceeding.[38]

Intervention is not a matter of right but may be permitted by the courts only when the statutory conditions
for the right to intervene is shown.[39] Thus, the allowance or disallowance of a motion to intervene is addressed
to the sound discretion of the court.[40] In determining the propriety of letting a party intervene in a case, the
tribunal should not limit itself to inquiring whether a person (1) has a legal interest in the matter in litigation; (2)
or in the success of either of the parties; (3) or an interest against both; (4) or when is so situated as to be adversely
affected by a distribution or other disposition of property in the custody of the court or of an officer thereof.[41] Just
as important, as we have stated in Big Country Ranch Corporation v. Court of Appeals,[42] is the function to
consider whether or not the intervention will unduly delay or prejudice the adjudication of the rights of the original
parties, and whether or not the intervenors rights may be fully protected in a separate proceeding.
The period within which a person may intervene is also restricted. Section 2, Rule 19 of the 1997 Rules of
Civil Procedure requires:

Section 2. Time to intervene. - The motion to intervene may be filed at any time before the
rendition of judgment by the trial court. x x x

After the lapse of this period, it will not be warranted anymore. This is because, basically, intervention is not an
independent action but is ancillary and supplemental to an existing litigation.[43]
Taking into account these fundamental precepts, we rule that the petitioner may not properly intervene in the
case at bar. His insistence to participate in the proceeding is an unfortunate case of too little, too late.
In the first place, petitioners Ex-parte Permission to File a Motion to Intervene was submitted to the RTC
only on June 25, 1998. At that stage, the lower court had already granted respondents petition for the writ in an
Order dated April 21, 1998. It had issued the Writ of Possession on April 24, 1998. Petitioners motion then was
clearly out of time, having been filed only at the execution stage. For that reason alone, it must meet the
consequence of denial. While it is true that on May 8, 1998, Vargas and S. Villanueva Enterprises moved to quash
the writ, that did not in any way affect the nature of the RTCs Order as an adjudication on the merits. The issuance
of the Order is in essence a rendition of judgment within the purview of Section 2, Rule 19.
Allowing petitioner to intervene, furthermore, will serve no other purpose but to unduly delay the execution
of the writ, to the prejudice of the respondent. This cannot be countenanced considering that after the
consolidation of title in the buyers name, for failure of the mortgagor to redeem, the writ of possession becomes
a matter of right.[44] Its issuance to a purchaser in an extra-judicial foreclosure is merely a ministerial
function.[45] As such, the court neither exercises its official discretion nor judgment.[46] If only to stress the writs
ministerial character, we have, in previous cases, disallowed injunction to prohibit its issuance,[47] just as we have
held that issuance of the same may not be stayed by a pending action for annulment of mortgage or the foreclosure
itself.[48]
Even if he anchors his intervention on the purported interest he has over the land and the improvements
thereon, petitioner, still, should not be allowed to do so. He admits that he is a mere lessee and assignee. Whatever
possessory rights he holds only emanate from that of Vargas, from whom he leased the lot, and from whom his
assignor/predecessor-in-interest bought it. Therein lies the precariousness of his title. Petitioner cannot validly
predicate his supposed interest over the property in litigation on that of Vargas, for the simple reason that as early
as December 4, 1985, the latter has already been stripped of all her rights over the land when she, as mortgagor,
failed to redeem it. A mortgagor has only one year within which to redeem her foreclosed real estate.[49] After that
period, she loses all her interests over it. This is in consonance with Section 78 of the General Banking Act,[50] viz.:

x x x In the event of foreclosure, whether judicially or extrajudicially, of any mortgage on real

estate which is security for any loan granted before the passage of this Act or the provisions of
this Act, the mortgagor or debtor whose real property has been sold at public auction, judicially
or extrajudicially, for the full or partial payment of an obligation to any bank, banking or credit
institution, within the purview of this Act shall have the right, within one year after the sale
of the real estate mortgage as a result of the foreclosure of the respective mortgage, to
redeem the property by paying the amount fixed by the court in the order or execution x x
x.[51] (emphasis supplied.)
 Being herself bereft of valid title and rights, Vargas can not legitimately convey any to some other
person. She could not have lawfully sold the land to Angsico nor leased it to petitioner for her own account. It is
axiomatic that one can not transmit what one does not have.[52] It ought to follow that petitioner could not have
acquired any right or interest from Vargas.
Withal, all is not lost for the petitioner. He can still fully protect his rights in Civil Case No. 98-0868 or the
complaint for mandamus he filed before Branch 231 of the Pasay City RTC. There, he can ventilate his side to a
fuller extent as that would be the more appropriate venue for elucidating whatever legal basis he alleges in
compelling the respondent to sell to him the currently disputed land.

IV.

This brings us to petitioners final point. He briefly asserts that his act of entering into a lease contract with
the respondent should not affect his right to redeem the subject property.
The possible legal implication of the lease on the petitioners act of trying to redeem the disputed lot is a
question which, in our opinion, can best be resolved in the mandamus complaint. Whether the agreement must be
construed as a waiver on his part of exercising his purported right of redemption is an issue best left for the court
therein to decide. Whether by acknowledging the legality of the respondents claim and title over the land at the
time of the execution of the contract, he likewise perpetually barred himself from redeeming the same is a matter
which can be addressed most aptly in that pending action. Hence, there is presently no need for us to squarely
rule on this ultimate point.
IN VIEW WHEREOF, finding no cogent reason to disturb the assailed Decision, the instant petition is
hereby DENIED.
SO ORDERED.

FIDELITY SAVINGS AND MORTGAGE BANK V.

CENZON (G.R. NO. L-46208)
Facts:
Respondent spouses Santiago maintained a savings and time deposit with petitioner bank.
The Monetary Board found petitioner bank to be insolvent and ordered for its assets to be
taken charged of by the Acting Superintendent. The PDIC paid spouses for their deposits
with petitioner bank but there was still a remaining balance. The Monetary Board then
directed the liquidation of the affairs of petitioner bank and a subsequent petition for
assistance and supervision in liquidation was filed in the court. The liquidation proceedings
still pending, respondent spouses sent demand letters to petitioner bank for the payment of
their deposits. The court found in favor of respondent spouses.
Issue:
Whether or not petitioner bank may be adjudged to pay interest on unpaid deposits even
after its closure by the Central Bank by reason of insolvency.
Ruling: NO.
It is settled jurisprudence that a banking institution which has been declared insolvent and
subsequently ordered closed by the Central Bank of the Philippines cannot be held liable
to pay interest on bank deposits which accrued during the period when the bank is actually
closed and non-operational. In The Overseas Bank of Manila vs. Court of Appeals and
Tony D. Tapia, we held that:
It is a matter of common knowledge, which We take judicial notice of, that what enables a
bank to pay stipulated interest on money deposited with it is that thru the other aspects of
its operation it is able to generate funds to cover the payment of such interest. Unless a
bank can lend money, engage in international transactions, acquire foreclosed mortgaged
properties or their proceeds and generally engage in other banking and financing activities
from which it can derive income, it is inconceivable how it can carry on as a depository
obligated to pay stipulated interest. Conventional wisdom dictates this inexorable fair and
just conclusion. And it can be said that all who deposit money in banks are aware of such
a simple economic proposition. Consequently, it should be deemed read into every contract
of deposit with a bank that the obligation to pay interest on the deposit ceases the moment
the operation of the bank is completely suspended by the duly constituted authority, the
Central Bank.
From the aforecited authorities, it is manifest that petitioner cannot be held liable for
interest on bank deposits which accrued from the time it was prohibited by the Central
Bank to continue with its banking operations. The order, therefore, of the Central Bank as
receiver/liquidator of petitioner bank allowing the claims of depositors and creditors to
earn interest up to the date of its closure is in line with the doctrine laid down in the
jurisprudence above cited.

Fidelity Savings and Mortgage Bank vs Cenzon

Date: April 5, 1990
Petitioner: Fidelity Savings and Mortgage Bank
Respondents: Hon Pedro Cenzon and Spouses Timoteo and Olimpia Santiago
Ponente: Regalado

Facts: Private respondents instituted this present action for a sum of money with damages against Fidelity Savings
and Mortgage Bank, Central Bank of the Philippines, Eusebio Lopez, Jr., Arsenio M. Lopez, Sr., Arsenio S. Lopez, Jr.,
Bibiana E. Lacuna, Jose C. Morales, Leon P. Cusi, Pilar Y. Pobre-Cusi and Ernani A. Pacana. The court dismissed the
complaint as against Central Bank of the Philippines, Eusebio Lopez, Jr., Arsenio S. Lopez, Jr., Arsenio M. Lopez, Sr.
and Bibiana S. Lacuna.
The private respondents deposited with the Fidelity Savings Bank the amount of P50,000 (savings
account). Also, private respondents deposited another P50,000 under Certificate of Time Deposit No. 0210. The
Monetary Board found the bank insolvent and issued Resolution No. 350, (a) forbidding to do business in the
Philippines and (b) instructing the Acting Superintendent of Banks to take charge of the assets.
The PDIC paid the private respondents P10,000 on the aggregate deposits of P100,000. The MB later issued
its Resolution No. 2124 directing the liquidation of the affairs of the bank. The liquidation proceeding is presently
pending in the CFI of Manila.

Issue: WON an insolvent bank may be adjudged to pay interest on unpaid deposits even after its closure by the
Central Bank by reason of insolvency without violating the provisions of the Civil Code on preference of credits
Held: No
Ratio: It is settled jurisprudence that a banking institution which has been declared insolvent and subsequently
ordered closed by the Central Bank of the Philippines cannot be held liable to pay interest on bank deposits which
accrued during the period when the bank is actually closed and non-operational.
The Overseas Bank of Manila vs. CA: "It is a matter of common knowledge, which We take Judicial notice of, that what
enables a bank to pay stipulated interest on money deposited with it is that thru the other aspects of its operation it is able to generate funds
to cover the payment of such interest. Unless a bank can lend money, engage in international transactions, acquire foreclosed mortgaged
properties or their proceeds and generally engage in other banking and financing activities from which it can derive income, it is
inconceivable how it can carry on as a depository obligated to pay stipulated interest. Conventional wisdom dictates this inexorable fair and
just conclusion. And it can be said that all who deposit money in banks are aware of such a simple economic proposition. Consequently, it
should be deemed read into every contract of deposit with a bank that the obligation to pay interest on the deposit ceases the moment the
operation of the bank is completely suspended by the duly constituted authority, the Central Bank."
Petitioner cannot be held liable for interest on bank deposits which accrued from the time it was prohibited
by the Central Bank to continue with its banking operations, that is, when Resolution No. 350 to that effect was
issued on February 18, 1969. The order, therefore, of the Central Bank as receiver/liquidator of petitioner bank
allowing the claims of depositors and creditors to earn interest up to the date of its closure on February 18, 1969,
is in line with the doctrine laid down in the jurisprudence above cited.

Issue: WON an insolvent bank may be adjudged to pay moral and exemplary damages, attorney's fees and costs
when the insolvency is caused by the anomalous real estate transactions without violating the provisions on
preference of credits.
Held: No
Ratio: The trial court found, and it is not disputed, that there was no fraud or bad faith on the part of petitioner
bank and the other defendants in accepting the deposits of private respondents. The bank could not even be faulted
in not immediately returning the amount claimed by private respondents considering that the demand to pay was
made and Civil Case No. 84800 was filed in the trial court several months after the Central Bank had ordered
petitioner's closure. By that time, the bank was no longer in a position to comply with its obligations to its
creditors, including herein private respondents. Even the trial court had to admit that the bank failed to pay private
respondents because it was already insolvent. Further, this case is not one of the specified or analogous cases
wherein moral damages may be recovered.
There is no valid basis for the award of exemplary damages which is supposed to serve as a warning to
other banks from dissipating their assets in anomalous transactions. It was not proven by private respondents, and
neither was there a categorical finding made by the trial court, that the bank actually engaged in anomalous real
estate transactions. The same were raised only during the testimony of the bank examiner of the Central Bank, but
no documentary evidence was ever presented.
Hence, it was error for the lower court to impose exemplary damages upon the bank since, in contracts,
such sanction requires that the offending party acted in a wanton, fraudulent, reckless, oppressive or malevolent
manner. Neither does this case present the situation where attorney's fees may be awarded. In the absence of
fraud, bad faith, malice or wanton attitude, petitioner bank may, therefore, not be held responsible for damages
which may be reasonably attributed to the non-performance of the obligation. Consequently, we reiterate that
under the premises and pursuant to the provisions of law, it is apparent that private respondents are not justifiably
entitled to the payment of moral and exemplary damages and attorney's fees.
While we tend to agree with petitioner bank that private respondents' claims should have been filed in the
liquidation proceedings in Civil Case No. 86005, entitled "In Re: Liquidation of the Fidelity Savings and Mortgage
Bank," pending before Branch XIII of the then Court of First Instance of Manila, we do not believe that the decision
rendered in the instant case would be violative of the legal provisions on preference and concurrence of credits.