*

G.R.No.133883.December10,2003.

SPOUSES ARTURO AND NICETA SERRANO, petitioners, vs.

COURT OF APPEALS AND HEIRS OF EMILIO S. GELI,
respondents.

ActionsJudgmentsWritsofExecutionGenerally,theexecutionupon
a final judgment is a matter of right on the part of the prevailing party.
Generally,theexecutionuponafinaljudgmentisamatterofrightonthe
part of the prevailing party. It is the ministerial and mandatory duty of the
trialcourttoenforceitsownjudgmentonceitbecomesfinalandexecutory.
It may happen, however, that new facts and circumstances may develop or
occur after a judgment had been rendered and while an appeal therefrom is
pending or new matters had developed after the appeal has been dismissed
andtheappealedjudgmenthadbecomefinalandexecutory,whichtheparties
werenotawareofandcouldnothave

_______________

13Id.,atp.462.

*SECONDDIVISION.

416

416 SUPREMECOURTREPORTSANNOTATED

Serranovs.CourtofAppeals

beenawareofpriortoorduringthetrialorduringtheappeal,astheywere
notyetinexistenceatthattime.
Same Same Same Supervening Facts The execution of a judgment
maybestayed,nothwithstandingtheaffirmanceoftheappealedjudgmentby
the Supreme Court if there are supervening facts and circumstances which
either have a direct effect upon a matter already litigated and settled or
create a substantial change in the rights or relations of the parties therein
which would render execution of a final judgment unjust, impossible or
inequitableorwhenitbecomesimperativeintheinterestofjustice.Inthe
first situation, any attempt to frustrate or put off the enforcement of an
executory decision must fail. Once a judgment has become final and
executory,theonlyremedyleftformaterialattentionthereofisthatprovided
for in Rule 38 of the Rules of Court, as amended. There is no other
prerequisite mode of thwarting the execution of the judgment on equitable
groundspredicatedonfactsoccurringbeforethefinalityofjudgment.Inthe
second situation, the execution may be stayed, notwithstanding the
affirmance of the appealed judgment by this Court. It is required, however,
thatthesuperveningfactsandcircumstancesmusteitherhaveadirecteffect
uponthematteralreadylitigatedandsettledorcreateasubstantialchangein
therightsorrelationsofthepartiesthereinwhichwouldrenderexecutionof
a final judgment unjust, impossible or inequitable or when it becomes
imperativeintheinterestofjustice.Theinterestedpartymayfileamotionto
quashawritofexecutionissuedbythetrialcourt,oraskthecourttomodify
or alter the judgment to harmonize the same with justice and further
supervening facts. Evidence may be adduced by the parties on such
superveningfactsorcircumstances.
ContractsRescissionGenerally,theruleisthattorescindacontract
isnotmerelytoterminateit,buttoabrogateandundoitfromthebeginning,
i.e.,notmerelytoreleasethepartiesfromfurtherobligationstoeachother
inrespecttothesubjectofthecontract,buttoannulthecontractandrestore
the parties to the relative positions which they would have occupied if no
such contract had ever been made.Generally, the rule is that to rescind a
contract is not merely to terminate it, but to abrogate and undo it from the
beginningthatis,notmerelytoreleasethepartiesfromfurtherobligations
to each other in respect to the subject of the contract, but to annul the
contract and restore the parties to the relative positions which they would
have occupied if no such contract had ever been made. Rescission
necessarilyinvolvesarepudiationofthecontractandarefusalofthemoving
party to be further bound by it. With the rescission of the deed of sale, the
rights of Emilio Geli under the said deed to redeem the property had been
extinguished. The petitioners cannot even be compelled to subrogate the
respondents to their rights under the real estate mortgage over the property
whichthepetitionersexecutedinfavoroftheGSISsincethepaymentofthe
P67,701.84redemptionpricewasmadewithout

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VOL.417,DECEMBER10,2003 417

Serranovs.CourtofAppeals

the knowledge of the petitioners. The respondents, however, are entitled to

bereimbursedbythepetitionerstotheextentthatthelatterwerebenefited.
MortgagesRedemptionsThe rule on redemption is actually liberally
construedinfavoroftheoriginalownerofthepropertyWhereredemption
isseasonablyexercisedbythemortgagordebtor,whatisactuallyeffectedis
not the recovery of ownership of his land, which ownership he never lost,
but the elimination from his title thereto of the lien created by the
registrationofamortgagethereon.Caselawhasitthattheoneyearperiod
within which the mortgagordebtor or his successorininterest may redeem
the property should be counted from the time the certificate of sale was
registeredwiththeRegisterofDeeds.Uponthelapseoftheoneyearperiod,
the right to redeem becomes functusofficio on the date of its expiry. The
rule on redemption is actually liberally construed in favor of the original
owneroftheproperty.Thepurposeofthelawistoaidratherthantodefeat
him in the exercise of his right of redemption. Before the lapse of the one
year period, the mortgagordebtor remains the owner of the property. The
rightacquiredbythepurchaseratpublicauctionismerelyinchoateuntilthe
period of redemption has expired without the right being exercised by the
redemptioner. Such right becomes absolute only after the expiration of the
redemption period without the right of redemption having been exercised.
Thepurchaserisentitledasamatterofrighttoconsolidationoftitleandto
thepossessionoftheproperty.Whereredemptionisseasonablyexercisedby
the mortgagordebtor, what is actually effected is not the recovery of
ownership of his land, which ownership he never lost, but the elimination
from his title thereto of the lien created by the registration of a mortgage
thereon.
CourtsEquityAs a rule, equity follows the lawCourts operate not
because one person has been defeated or overcome by another, but because
he has been defeated or overcome illegally.The petitioners were impelled
to spend money for their counsel and for sheriffs fees for the
implementationofthewritofexecutionandthealiaswritofexecutionissued
by the trial court. In the meantime, the respondents remained in possession
of the property from 1969, when the said deed of absolute sale with partial
assumption of mortgage was executed, up to the present, or for a period of
34 years without paying a single centavo. For the Court to allow the
respondents to benefit from their own wrong would run counter to the
maxim:ExDoloMaloNonOriturActio(Nomancanbeallowedtofounda
claim upon his own wrongdoing). Equity is applied only in the absence of
and never against statutory law or judicial rules of procedure. We reiterate
our ruling that: Justice is done according to law. As a rule, equity follows
the law. There may be a moral obligation, often regarded as an equitable
consideration (meaning compassion), but if there is no enforceable legal
duty,theactionmustfailalthoughthedisadvantagedparty

418

418 SUPREMECOURTREPORTSANNOTATED

Serranovs.CourtofAppeals

deserves commiseration or sympathy. The choice between what is legally

just and what is morally just, when these two options do not coincide, is
explainedbyJusticeMorelandinValesv.Villa,35Phil.769,788wherehe
said:Courtsoperatenotbecauseonepersonhasbeendefeatedorovercome
byanother,butbecausehehasbeendefeatedorovercomeillegally.Menmay
do foolish things, make ridiculous contracts, use miserable judgment, and
lose money by themindeed, all they have in the world but not for that
alone can the law intervene and restore. There must be in addition, a
violation of law, the commission of what the law knows as an actionable
wrong before the courts are authorized to lay hold of the situation and
remedyit.(RuralBankofParaaque,Inc.v.Remolado,62051,March18,
1985)(135SCRA409,412).

PETITIONforreviewoncertiorariofadecisionoftheCourtof
Appeals.

ThefactsarestatedintheopinionoftheCourt.
Kapunan,Imperial,Panaguiton&BongolanLawOfficesfor
petitioners.
Agabin, Verzola, Hermoso, Layaoen & De Castro for
respondents.

CALLEJO,SR.,J.:

BeforeusisapetitionforreviewoncertiorariunderRule45ofthe
1
RulesofCourtoftheDecision oftheCourtofAppeals(CA)inCA
G.R. SP No. 45573 setting aside the Order of the Regional Trial
Court of Quezon City in Civil Case No. Q24790 with motion of
herein petitioners, Spouses Arturo 2and Niceta Serrano, for the
issuanceofanaliaswritofexecution.

TheAntecedents

TheSpousesSerranoweretheownersofaparceloflandaswellas
thehouseconstructedthereonlocatedatRoad4,Project6,Diliman,
QuezonCity,coveredbyTransferCertificateofTitleNo.80384,and
aparceloflandlocatedinCaloocanCity,coveredby

_______________

1PennedbyAssociateJusticeRomeoA.BrawnerwithAssociateJusticesRicardo

P.GalvezandMartinS.Villarama,Jr.concurring.
2 Penned by Judge Jaime M. Lantin who was appointed Associate Justice of the

CourtofAppeals.

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VOL.417,DECEMBER10,2003 419
Serranovs.CourtofAppeals
Transfer Certificate of Title No. 15191. The couple mortgaged the
said properties in favor of the Government Service Insurance
System(GSIS)assecurityforaloanofP50,000.ByJune1969,the
couplewasabletopayonlytheamountofP18,000.
OnJune23,1969,theSpousesSerrano,asvendors,andSpouses
Emilio and Evelyn Geli, as vendees, executed a deed of absolute
sale with partial assumption of mortgage over the parcel of land
covered by TCT No. 80384 and the house thereon for the price of
P70,000. The Spouses Geli paid the amount of P38,000 in partial
paymentoftheproperty,thebalanceofP32,000tobepaidbythem
to the GSIS for the account of the Spouses Serrano. The Spouses
Geli thereafter took possession of the property. In the meantime,
EvelynGelidiedintestateandwassurvivedbyherhusbandEmilio
Geliandtheirchildren.
However,EmilioGeliandhischildrenfailedtosettletheamount
of P32,000 to the GSIS. The latter forthwith filed a complaint
againstEmilioGeliandhischildrenwiththeRegionalTrialCourtof
Quezon City for the rescission of the deed of absolute sale with
partial assumption of mortgage. The defendants therein alleged, by
wayofspecialdefense,thattheplaintiffsSpousesSerranofailedto
furnishthemwithadetailedstatementoftheaccountduefromthe
GSIS, thus amounting for their failure to remit the balance of the
loan to the GSIS. On September 6, 1984, the trial court rendered
judgment ordering the rescission of the said deed, the decretal
portionofwhichreads:

WHEREFORE,judgmentisherebyrendered:a)orderingtherescissionof
the Deed of Absolute Sale with Assumption of Mortgage, dated June 23,
1969 b) ordering defendant Emilio S. Geli and all persons claiming under
him, including the other defendants Oswaldo, Eugenia, Marilyn, Cristopher
andRay,allsurnamedGeli,tovacatethehouseandlotlocatedatNo.110A
1,Road4,Project6,QuezonCity,andtoturnoverthepeacefulpossession
of the premises to plaintiffs Arturo Serrano and Niceta M. Serrano c)
orderingdefendantEmilioS.GelitopayplaintiffstheamountofP1,000.00
amonthrepresentingreasonablecompensationfortheuseandoccupancyof
thepremisesstartingJune23,1969uptothetimethedefendantGeliandall
otherpersonsclaimingunderthemincludingtheotherdefendants,shallhave
completelyvacatedtheproperty,deductingtherefromthesumofP38,000.00
paid by defendant Geli to plaintiffs as part of the aforesaid compensation
and,d)orderingdefen

420

420 SUPREMECOURTREPORTSANNOTATED
Serranovs.CourtofAppeals

dant Emilio S. Geli to pay plaintiffs the sum of P10,000.00

3
representing
exemplarydamages.CostsagainstdefendantEmilioS.Geli.
Emilio Geli and his children appealed the decision to the CA on
October 19, 1984. During the pendency of the appeal, the GSIS
foreclosed the real estate mortgage over the property for non
payment of the P50,000 loan secured by the said property. At the
saleonpublicauction,theGSISwasthehighestbidder.Acertificate
of sale over the property was thereby issued by the sheriff in its
favor on August 30, 1986. On October 30, 1987 and November 4
3,
1987, Emilio Geli paid the redemption price of P67,701.84 to the
GSIS. Official Receipts Nos. 905401 and 901685 for the said
amountwiththenotationfortheaccountofArturoSerranowere
issued. Accordingly, on5 February 22, 1988, the GSIS executed a
certificateofredemption andturnedovertoEmilioGelitheowners
copyofTCTNo.80384inthenamesoftheSpousesSerrano.Emilio
GelididnotinformtheSpousesSerranoandtheCAthathehadpaid
theredemptionpricetotheGSIS.
OnJanuary8,1991,theCAdismissedtheappealofEmilioGeli
andhischildrenonthegroundthattheappellantsfailedtopaythe
requisite docket fees despite notices from the appellate court. No
motionforthereconsiderationoftheresolutionwasfiled.Thus,the
saiddismissaloftheappealbecamefinalandexecutory.TheCourt
of Appealsforthwith issued an Entry of Judgment on February 27,
1991.
Aftertheremandof the records, the Spouses Serrano filed with
theRTConJanuary14,1994amotionfortheexecutionofthetrial
courtsSeptember6,1984Decision.OnFebruary15,1994,thetrial
courtissuedanordergrantingthemotionandforthwithissuedawrit
of execution. The writ, however, was not implemented as the
SpousesSerranowerethenintheUnitedStates.OnAugust1,1995,
the trial court issued an alias writ of execution on motion of the
plaintiffs. This, too, was not implemented, because of the
defendants change of address. On May 9, 1996, the trial court
issued an order granting the motion of the plaintiffs for a second
aliaswritofexecution.OnSeptember6,1996,thedefendantsfileda
motiontoquashthesameclaiming,forthefirsttime,thatdefen

_______________

3Rollo,p.43.

4Id.,atp.71.

5Id.,atpp.6970.

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VOL.417,DECEMBER10,2003 421
Serranovs.CourtofAppeals

dantEmilioGelihadalreadyredeemedthesubjectpropertyin1988
from the GSIS. According to the defendants, this constituted a
superveningeventthatwouldmaketheexecutionofthetrialcourts
decisionunjustandinequitable.
On May 19, 1997, the trial court issued an order denying the
aforesaid motion of the defendants. It noted that the payment by
defendant Emilio Geli of the redemption price to the GSIS took
placebeforetheCAdismissedtheappealandbeforethedecisionof
the RTC became final and executory hence, it did not constitute a
superveningeventwarrantingaquashalofthewritofexecution.The
6
trialcourtcitedtherulingofthisCourtinLimv.Jabalde.
On September18,1997, the trial court issued an order granting
the motion for the issuance of another alias writ of execution filed
bytheSpousesSerrano,towit:

The Motion to Quash Writ of Execution, filed by defendants having been

earlierdeniedand,itbeingexplicitundertheNewRulesofCivilProcedure
(1997) that no appeals may be taken from orders of execution, instead of
givingduecoursetotheappealinterposedbydefendant,thecourtresolvesto
7
grantthemotionfortheissuanceofanAliasWritofExecution.

On September
8
26, 1997, the trial court issued an Alias Writ of
Execution. Conformablywithsaidwrit,thesheriffservedaSheriffs
9
Notice to Vacate on the defendants. In the meantime, Emilio Geli
diedintestateandwassurvivedbyhischildren.
On October 10, 1997, the heirs of Emilio Geli filed with the
CourtofAppealsapetitionforcertiorariand/orprohibitionpraying
for the nullification of the May 19, 1997 and September 18, 1997
Orders of the trial court. They alleged inter alia that when their
fatherEmilioGelipaidtheredemptionpricetotheGSISonOctober
30, 1987 and November 3, 1987, their appeal of the September 6,
1984DecisionoftheRTCinCivilCaseNo.Q24790beforetheCA
was still pending resolution. Consequently, under the terms of the
deed of absolute sale with assumption of mortgage which was still
subsistingatthattime,theywereipsofactosubrogatedtothe

_______________

6172SCRA211(1989).

7Rollo,p.54.

8AnnexD,Petition.

9AnnexF,Petition.

422

422 SUPREMECOURTREPORTSANNOTATED
Serranovs.CourtofAppeals

rightsoftheSpousesSerranoasmortgagorsofthepropertyhence,
they became the owners of the property and were entitled to the
possessionthereof.Thepetitionersthereinfurtherpositedthatsince
they acquired ownership of the property before the CA dismissed
theirappealandbeforetheSeptember6,1984DecisionoftheRTC
became final and executory, the execution of the decision against
them was unjust and unfair. They then prayed for the following
relief:

WHEREFORE,premisesconsidered,itisrespectfullyprayedthattheorder
of public respondent Judge, dated 18 September 1997 and the Notice to
VacateissuedbypublicrespondentSheriff,dated26September1997beset
aside.Likewise,todeclareexecutionofjudgmentinCivilCaseNo.Q24790
to have been rendered impossible, as execution hereof would result to
injustice. In the meantime to obviate irreversible damage on the part of
petitioners, a writ of PRELIMINARY INJUNCTION be granted after due
hearing,ORDERINGpublicrespondentJudgeandpublicrespondentSheriff
todesistorrefrainfromimplementingtheSeptember18,1997order. 10
Otherremediesavailableinlawandequityarelikewiseprayedfor.

On January 5, 1998, the appellate court issued an order restraining

the implementation of the alias
11
writ of execution and the notice to
vacateissuedbythetrialcourt. OnMay12,1998,theCArendered
theassaileddecisioninfavoroftheheirsofEmilioGeli,thedecretal
portionofwhichreads:

WHEREFORE, the foregoing considered, the petition is hereby

GRANTED,andthewritofcertiorariissued.Therespondentcourtishereby
PERPETUALLY ENJOINED from issuing any order or writ which would
disturb the petitioners in their lawful ownership
12
and possession of the
propertysubjectmatteroftheinstantcase.

TheappellatecourtruledthatsinceEmilioGelipaidtheredemption
price for the property to the GSIS in 1987 while his appeal was
pending in the CA, the said redemption was a supervening event
which rendered the enforcement of the writ of execution issued by
thetrialcourtagainstthemunjustandinequitable.

_______________

10Rollo,p.65.

11CARollo,p.41.

12Id.,atp.64.

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VOL.417,DECEMBER10,2003 423
Serranovs.CourtofAppeals

The Spouses Serrano filed the instant petition and assigned to the
CAthefollowingerrors:
 I

THECOURTAQUOCOMMITTEDGRAVEABUSEOFDISCRETION
AMOUNTING TO LACK OR EXCESS OF JURISDICTION WHEN IT
PERMANENTLY ENJOINED THE TRIAL COURT FROM
DISTURBING THE RESPONDENTS IN THEIR LAWFUL
OWNERSHIP AND POSSESSION OF THE SAID PROPERTY, IT
BEING CLEAR THAT THEIR REDEMPTION WAS EFFECTED FOR
ANDONBEHALFOFPETITIONERARTUROV.SERRANO.

II

THE COURT A QUO COMMITTED GRAVE ABUSE OF

DISCRETION AMOUNTING TO LACK OR EXCESS OF
JURISDICTION WHEN IT HELD THAT THE REDEMPTION
CONSTITUTED A SUPERVENING EVENT WHICH CHANGE THE
RELATIONS OF THE PARTIES, THUS13 RENDERING EXECUTION
INEQUITABLEUNDERTHEPREMISES.

The petitioners contend that the payment of the redemption price

madebyEmilioGeliin1987duringthependencyoftheappealin
the CA was ineffective because, subsequently, when the
respondentsappealwasdismissedbytheCA,thesummarydecision
of the RTC declaring the deed of absolute sale with partial
assumptionofmortgagerescindedhadbecomefinalandexecutory.
The deed of absolute sale with partial assumption of mortgage
executedbythepetitionersandtheSpousesGelihadceasedtoexist
with its rescission as decreed by the RTC. According to the
petitioners, the payment of the redemption price was conditioned
upontheperfectionandoutcomeoftheappeal.Sincetheappealof
the respondents was dismissed by their failure to pay the requisite
docket fees, they must suffer the consequences thereof. The
petitioners assert that the redemption of a property is a right
belonging to the mortgagordebtor, and since the deed of absolute
salewithpartialassumptionofmortgagehadbeenrescindedbyfinal
judgmentoftheRTC,EmilioGeliwasnolongeramortgagororthe
successorininterestofthemortgagorshence,hecouldnotredeem
the property on behalf of the mortgagors without the latters
knowledgeandconsent.

_______________

13Rollo,p.23.

424

424 SUPREMECOURTREPORTSANNOTATED
Serranovs.CourtofAppeals
For their part, the respondents echo the ruling of the CA that
although the issuance by the trial court of a writ of execution is
ministerialuponthefinalityofitsdecision,thesameissubjecttothe
onsetofasuperveningeventwhichmay,asinthiscase,renderthe
sameunwarranted,unjustandinequitable.
Therespondentscontendthatthepetitionerslosttheirownership
over the property when they failed to redeem the property within
one year from the sale thereof at public auction to the GSIS.
AlthoughtheGSISexecutedaCertificateofRedemptioninfavorof
EmilioGelionFebruary22,1988,thedeedwas,infact,adeedof
conveyance because, by then, the oneyear period to redeem the
property had already lapsed and the GSIS in the meantime had
becometheowneroftheproperty.Thus,theSpousesGeliacquired
ownershipthereofwhentheypurchasedthesamefromtheGSISin
1988forP67,701.84.TheGSISineffectsoldthepropertytoEmilio
Gelianddidnotmerelyallowhimtoredeemit.Departingfromtheir
submission before the CA, the respondents now posit that their
claim of ownership over the subject property was after all not
anchoredonthedeedofsalewithassumptionofmortgage,asithad
beenadmittedlyrescindedbyvirtueofthefinalityofthetrialcourts
September6,1984Decision.Theirclaimofownershiprestsonthe
fact that they had acquired the property from the GSIS, the
purchaseratpublicauction.Asownersoftheproperty,theycannot
nowbeevictedtherefrom.
Wefindthepetitiontobemeritorious.
Generally, the execution upon a final judgment is a matter of
right on the part of the prevailing party. It is the ministerial and
mandatorydutyofthetrialcourttoenforceitsownjudgmentonceit
becomesfinalandexecutory.Itmayhappen,however,thatnewfacts
andcircumstancesmaydeveloporoccurafterajudgmenthadbeen
renderedandwhileanappealtherefromispendingornewmatters
haddevelopedaftertheappealhasbeendismissedandtheappealed
judgment had become final and executory, which the parties were
notawareofandcouldnothavebeenawareofpriortoorduringthe
trial or during the appeal, as they were not yet in existence at that
time. In the first situation, any attempt to frustrate or put off the
enforcement of an executory decision must fail. Once a judgment
has become final and executory, the only remedy left for material
attention thereof is that provided for in Rule 38 of the Rules of
Court,asamended.Thereisnootherprerequisite

425

VOL.417,DECEMBER10,2003 425
Serranovs.CourtofAppeals

mode of thwarting the execution of the judgment on equitable

grounds predicated on facts occurring before the finality of
14
judgment. In the second situation, the execution may be stayed,
 14
judgment. In the second situation, the execution may be stayed,
notwithstanding
15
the affirmance of the appealed judgment by this
Court. It is required, however, that the supervening facts and
circumstances must either have a direct effect upon the matter
already litigated and settled or create a substantial change in the
rights or relations of the parties therein which would render
execution of a final judgment unjust, impossible or 16
inequitable or
whenitbecomesimperativeintheinterestofjustice. Theinterested
party may file a motion to quash a writ of execution issued by the
trial court, or ask the court to modify or alter the judgment to 17
harmonize the same with justice and further supervening facts.
Evidencemaybeadducedbythepartiesonsuchsuperveningfacts
18
orcircumstances.
In this case, the payment by Emilio Geli of the amount of
P67,701.84 on October 30 and November 3, 1987 to the GSIS for
the account of the petitioners was made while the appeal of the
private respondents from the summary judgment of the RTC was
pending. The summary judgment of the RTC had not yet become
final and executory. It behooved the said respondents to prosecute
theirappealandfiletheirbrief,wheretheyshouldhaveinvokedthe
paymentoftheredemptionpriceasagroundforthereversalofthe
trialcourtssummaryjudgmentintheirfavor.Therespondentsfailed
todoso,andevenconcealedthepaymentoftheloanfortheaccount
of the petitioners. Worse, the respondents did not pay the requisite
docket fees for their appeal, which resulted in its dismissal. The
respondentsevenoptednottofileanymotionforthereconsideration
of the resolution of the CA dismissing their appeal. In sum, the
respondents allowed the decision of the trial court to become final
andexecutory.Consequently,theenforcementofthe

_______________

14ConcurringopinionofChiefJusticeAndresN.NarvasainBaclayonv.Courtof

Appeals,182 SCRA 761 (1990) Gabaya v. Mendoza, 113 SCRA 400 (1982) Ago v.
CourtofAppeals,16SCRA81(1966).
15Leev.Mapa,51Phil.624(1928).

16SeeSeavanCarrier,Inc.v.GTISportswearCorporation,137SCRA580(1985).

17SeeLimpin,Jr.v.IntermediateAppellateCourt,147SCRA516(1987).

18DelaCostav.Cleofas,67Phil.686(1939).

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426 SUPREMECOURTREPORTSANNOTATED
Serranovs.CourtofAppeals

summaryjudgmentofthetrialcourtcannolongerbefrustratedby
the respondents payment, through Emilio Geli, of the amount of
P67,701.84totheGSISin1987.
 Irrefragably,theSpousesGeli,asvendeesmortgagorsunderthe
deed of absolute sale with partial assumption of mortgage, would
havebeensubrogatedtotherightsandobligationsofthepetitioners
underthesaiddeed,includingtherighttoredeemthepropertyfrom
19
the GSIS. However, the CA dismissed their appeal for failure to
pay the requisite docket fees, and such dismissal became final and
executory.Hence,thesummaryjudgmentofthetrialcourtdeclaring
the deed of absolute sale with partial assumption of mortgage
rescindedhadalsobecomefinalandexecutory.
Generally, the rule is that to rescind a contract is not merely to
terminateit,buttoabrogateandundoitfromthebeginningthatis,
not merely to release the parties from further obligations to each
other in respect to the subject of the contract, but to annul the
contract and restore the parties to the relative positions which they
would have occupied if no such contract had ever been made.
Rescission necessarily involves a repudiation of the contract20
and a
refusal of the moving party to be further bound by it. With the
rescission of the deed of sale, the rights of Emilio Geli under the
said deed to redeem the property had been extinguished. The
petitionerscannotevenbecompelledtosubrogatetherespondentsto
their rights under the real estate mortgage over the property which
the petitioners executed in favor of the GSIS since the payment of
the P67,701.84 redemption
21
price was made without the knowledge
of the petitioners. The respondents, however, are entitled to be
reimbursed 22
by the petitioners to the extent that the latter were
benefited.

_______________

19Litonjuav.L&RCorporation,320SCRA405(1999).

20Waev.Zynda,278NorthwesternReports,66(1935),citing1BlackonRescission

andCancellation,81.
21Article1237,NewCivilCode.Whoeverpaysonbehalfofthedebtorwithout

theknowledgeoragainstthewillofthelatter,cannotcompelthecreditortosubrogate
himinhisrights,suchasthosearisingfromamortgage,guaranty,orpenalty.
22Article1236,NewCivilCode.Thecreditorisnotboundtoacceptpaymentor

performancebyathirdpersonwhohasnointerestinthefulfillmentoftheobligation,
unlessthereisastipulationtothecontrary.

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VOL.417,DECEMBER10,2003 427
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Neither did the respondents acquire title to the property under the
certificate of redemption executed by the GSIS on February 10,
1998.
 First. In the certificate of redemption, the mortgagordebtor in
whose favor the certificate was executed was the petitioner Arturo
SerranoandnotEmilioGeliand/ortherespondents:

NOW, THEREFORE, for and in consideration of the foregoing premises

andthesumofSIXTYSEVENTHOUSANDSEVENHUNDREDONE&
84/100 (P67/701.84) PESOS, Philippine Currency, herein paid by EMILIO
S.GELI,oflegalage,married,Filipino,withresidenceandpostaladdressat
110 A1, Road 4, Project 6, Quezon City, do hereby resell, retransfer and
reconvey by way of Certificate of Redemption in favor of ARTURO V.
SERRANO, the abovedescribed parcel/s of land, together with the
building/sandimprovementsexistingthereon.
IN WITNESS WHEREOF, the GOVERNMENT SERVICE
INSURANCE SYSTEM has caused this instrument to be executed by its
Director, Atty. Roque M. Fernando, Jr., at the City of Manila, Philippines,
this____dayof__________,19__.
GOVERNMENTSERVICEINSURANCESYSTEM
MortgageePurchaser
By:Sgd.
ROQUEM.FERNANDO,JR. 23
inhiscapacityasDirector

Second. Case law has it that the oneyear period within which the
mortgagordebtor or his successorininterest may redeem the
propertyshouldbecountedfromthetimethecertificateofsalewas
24
registeredwiththeRegister of Deeds. Upon the lapse of the one
yearperiod,therighttoredeembecomesfunctusofficioonthedate
25
ofitsexpiry. Theruleonredemptionisactuallyliberallycon

_______________

Whoeverpaysforanothermaydemandfromthedebtorwhathehaspaid,except
thatifhepaidwithouttheknowledgeoragainstthewillofthedebtor,hecanrecover
onlyinsofarasthepaymenthasbeenbeneficialtothedebtor.
23Rollo,p.69.

24 Union Bank of the Philippines v. Court of Appeals, 359 SCRA 480 (2001)
Peoplev.Narido,316SCRA131(1991)Bernardezv.Reyes,201SCRA648(1991).
25Urbanov.GovernmentServiceInsuranceSystem,367SCRA672(2001).

428

SUPREMECOURTREPORTSANNOTATED 428
Serranovs.CourtofAppeals

struedinfavoroftheoriginalowneroftheproperty.Thepurposeof
thelawistoaidratherthantodefeathimintheexerciseofhisright
26
of redemption. Before the lapse of the oneyear period, the
mortgagordebtor remains the owner of the property. The right
acquiredbythepurchaseratpublicauctionismerelyinchoateuntil
the period of redemption has 27
expired without the right being
exercised by the redemptioner. Such right becomes absolute only
after the expiration of the redemption
28
period without the right of
redemption having been exercised. The purchaser is entitled as a
matterofrighttoconsolidationoftitleandtothepossessionofthe
29
property. Where redemption is seasonably exercised by the mort
gagordebtor, what is actually effected is not the recovery of
ownership of his land, which ownership he never lost, but the
elimination from his title thereto 30
of the lien created by the
registrationofamortgagethereon.
Upon the expiry of the redemption period without the mortga
gordebtorbeingable to redeem the property, the purchaser can no
longerbecompelledtoallowtheformertoredeemthepropertyorto
resellthepropertyandifheagreestoselltheproperty,itmaybefor
a price higher31 than that for which he purchased the property at
publicauction.
Inthiscase,thereisnoshowingintherecordsthatthesheriffs
certificate of sale in favor of the GSIS had been registered in the
Office of the Register of Deeds of Quezon City and if so, when it
wasinfactregisteredinthesaidoffice.Itcannotthusbearguedthat
whenEmilioGeliremittedtheamountofP67,701.84totheGSISin
fullpaymentoftheaccountofthepetitioners,theoneyearperiodto
redeem the property had by then lapsed. Hence, the petitioners
remainedtheownersoftheproperty.TheGSISneveracquiredtitle
over the property and could not have conveyed and transferred
ownership over the same when it executed the certificate of
redemptiontoandinthenameofthepetitionerArturoSerrano.As
theLatinmaximgoes:NEMODATQUODNONHABET.

_______________

26Ysmaelv.CourtofAppeals,318SCRA215(1999).

27Medidav.CourtofAppeals,208SCRA886(1992).

28HeirsofBlancaflorv.CourtofAppeals,304SCRA796(1999).

29Tarnatev.CourtofAppeals,241SCRA254(1995).

30Medidav.CourtofAppeals,supra.

31Urbanov.GovernmentServiceInsuranceSystem,supra.

429

VOL.417,DECEMBER10,2003 429
Serranovs.CourtofAppeals

Wearenotconvincedbytheratiocinationoftherespondentsthatthe
enforcementofthesummarydecisionofthetrialcourtandthealias
writofexecutionagainstthemisunjustandunreasonable.
 The Spouses Geli and the respondents, as heirs and successors
ininterest of the said spouses, were obliged under the deed of
absolutesalewithpartialassumptionofmortgagetopaytotheGSIS
thebalanceofthepetitionersaccount.TheSpousesGelirenegedon
their undertaking. The petitioners were impelled to secure the
servicesofcounselandsuetheSpousesGeliwiththeRTCforthe
rescission of the said deed with damages. The respondent spouses
nevertheless remained adamant and refused to pay the petitioners
accountwiththeGSISwhichimpelledthelattertoforeclosethereal
estatemortgageandsellthepropertyatpublicauction.EmilioGeli
and the respondents did not inform the CA and the petitioners that
Emilio Geli had paid the amount of P67,701.84 for the account of
the petitioners. The respondents even allowed their appeal to be
dismissedbytheCA,andthedismissaltobecomefinalandexecu
tory.Thepetitionerswereimpelledtospendmoneyfortheircounsel
andforsheriffsfeesfortheimplementationofthewritofexecution
and the alias writ of execution issued by the trial court. In the
meantime, the respondents remained in possession of the property
from 1969, when the said deed of absolute sale with partial
assumption of mortgage was executed, up to the present, or for a
periodof34yearswithoutpayingasinglecentavo.FortheCourtto
allow the respondents to benefit from their own wrong would run
countertothemaxim:ExDoloMaloNonOriturActio(Nomancan 32
beallowedtofoundaclaimuponhisownwrongdoing). Equityis
applied only in the absence
33
of and never against statutory law or
judicialrulesofprocedure. Wereiterateourrulingthat:

Justice is done according to law. As a rule, equity follows the law. There
may be a moral obligation, often regarded as an equitable consideration
(meaning compassion), but if there is no enforceable legal duty, the action
must fail although the disadvantaged party deserves commiseration or
sympathy.

_______________

32AlbaVda.deRazv.CourtofAppeals,314SCRA36(1999).

33PilipinasHino,Inc.v.CourtofAppeals,338SCRA355(2000).

430

430 SUPREMECOURTREPORTSANNOTATED
Serranovs.CourtofAppeals

Thechoicebetweenwhatislegallyjustandwhatismorallyjust,whenthese
two options do not coincide, is explained by Justice Moreland in Vales v.
Villa,35Phil.769,788wherehesaid:
Courtsoperatenotbecauseonepersonhasbeendefeatedorovercomebyanother,but
becausehehasbeendefeatedorovercomeillegally.Menmaydofoolishthings,make
ridiculous contracts, use miserable judgment, and lose money by themindeed, all
theyhaveintheworldbutnotforthatalonecanthelawinterveneandrestore.There
mustbeinaddition,aviolationoflaw,thecommissionofwhatthelawknowsasan
actionable wrong before the courts are authorized to lay hold of the situation and
remedyit.(RuralBankofParaaque,Inc.v.Remolado,62051,March18,1985)(135
34
SCRA409,412).

Insumthen,therespondents,asheirsofEmilioGeli,areobligedto
vacate the subject property. However, since the petitioners were
benefited to the extent of P67,701.84 which was the total amount
paid by Emilio Geli to the GSIS as redemption price for the
foreclosed property, the petitioners are obliged to refund the said
amounttotherespondents.
IN LIGHT OF ALL THE FOREGOING, the petition is
GRANTED. The assailed decision of the Court of Appeals dated
May 12, 1998 in CAG.R. SP No. 45573 is SET ASIDE AND
REVERSED.ThepetitionersSpousesSerranoareobligedtorefund
to the respondents, as heirs of Emilio S. Geli, the amount of
P67,701.84 to be deducted from the amount due to the petitioners
undertheSeptember6,1984DecisionoftheRegionalTrialCourt,
QuezonCity,inCivilCaseNo.Q24790.
SOORDERED.

Puno(Chairman),Quisumbing,AustriaMartinezandTinga,
JJ.,concur.

Petitiongranted,assaileddecisionsetasideandreversed.

Notes.Anemployeesconvictionfortheftwhichwasaffirmed
by the Regional Trial Court and the Court of Appeals is a
supervening cause that rendered unjust and inequitable the NLRC
decisionmandatingtheemployeesreinstatementwithbackwages.

_______________

34Manzanillav.CourtofAppeals,183SCRA207(1990).

431

VOL.417,DECEMBER10,2003 431
Peoplevs.Sara

(Sampaguita Garments Corporation vs. National Labor Relations

Commission,233SCRA260[1994])
The Supreme Court retains control over a case until the full
satisfactionofthefinaljudgmentconformablywithestablishedlegal
processesit has authority to suspend the execution of a final
 judgmentortocauseamodificationthereofasandwhenitbecomes
imperative in the higher interest of justice or when supervening
eventswarrantit.(Peoplevs.DelosSantos,329SCRA678[2000])

o0o

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