G.R. No.
L-14303 March 24, 1960 April 9, 1952, RFC advised Alto that the auctioned property had already been sold to the
REHABILITATION FINANCE CORPORATION, plaintiff-appellant,
vs.
ALTO SURETY and INSURANCE COMPANY, INC., oppositor-appellee.
Jesus A. Avanceña and Federico G. Cabling for appellant.
Raul A. Aristorenas and Benjamin Relova for appellee.
BARRERA, J.:
This is an appeal from an order of the Court of First Instance of Camarines Sur, sitting as
a land registration court (in Special Proceeding No. 781—G.L.R.O. Rec. No. 14837) denying
appellant's petition under Section 112 of Act No. 496 for cancellation of the annotation
of appellee's second mortgage on appellant's transfer certificate of title No. 1155 of the
Register of Deeds of Camarines Sur.
Eustaquio Palma registered owner of a parcel of land with its improvements, located in
San Agustin, Iriga, Camarines Sur, covered by Transfer Certificate of Title No. 12—
Camarines Sur, executed a first mortgage to secure a loan of P20,000.00, in favor of the
Rehabilitation Finance Corporation (RFC), and subsequently, with the consent of the RFC,
a second mortgage over the same property, in favor of Alto Surety & Insurance Company,
Inc. (Alto). Both mortgages were duly registered in the Office of the Register of Deeds of
Camarines Sur and annotated on the corresponding certificate of title. Upon failure of the
mortgagor to settle the P20,000.00 loan on its maturity, RFC foreclosed the mortgage
extrajudicially under Act 3135 as authorized in the deed of mortgage and the property
was sold in public auction under the direction of the Provincial Sheriff of Camarines Sur
on April 17, 1951 in favor of mortgagee RFC as the highest bidder for the sum of
P11,211.68.
Six months later, mortgagor Palma, by a deed of assignment dated October 15, 1951,
transferred and conveyed all his rights, title and interest in and to the mortgaged property
to the spouses Anacleto Trinidad and Rosa S. de Trinidad, the assignees assuming the
obligation of paying the repurchase price of the auctioned property. Within the year of
redemption, that is, on December 29, 1951, the assignee-spouses and the RFC executed
a "Deed of Resale" whereby the mortgaged property was resold and reconveyed in favor
of the "redemptioners, their heirs, assignees and successors in interest". However,
instead of paying the whole redemption price, only P5,500 was paid on hand and the sum
of P21,505.11, balance of the total indebtedness including 6% interest was agreed to be
paid in ten annual amortizations.
On April 3, 1952, Alto, as junior encumbrancer, wrote the RFC inquiring as to the actual
status of the property subject to redemption expiring on April 17, 1952. In its reply dated
Trinidad spouses "under a deed of redemption on the installment plan".
This notwithstanding, the RFC, on October 2, 1952, executed an affidavit consolidating
ownership on the purchased property, stating therein that the period of redemption had
expired on April 18, 1952 without the debtor or any lien-holder thereon exercising said
right of redemption or repurchase. This affidavit, together with the deed of sale
evidencing its (RFC's) purchase of the property at public auction were registered on
December 16, 1953, by virtue of which, RFC was able to secure the cancellation of
Transfer Certificate of Title No. 12, in the name of the owner-mortgagor Eustaquio Palma,
and the issuance of a new title in its name (T.C.T. No. 1155). The second mortgage in favor
of Alto, however, was carried and annotated at the back of the new title.
It is this annotation on its certificate of title No. 1155 that the RFC sought to have
cancelled, alleging that with the consolidation and transfer to it as the first mortgagee of
the mortgagee's rights on the property, the junior encumbrancer's lien on the same
property had ceased. Alto, the second mortgagee, opposed the petition contending that
with the execution of the Deed of Resale between RFC and the spouses Anacleto Trinidad
and Rosa S. de Trinidad, assignees of the mortgagor, the mortgaged property had been
completely released from the first mortgage and the second mortgage had been
automatically transformed into a first lien on the property.
From the order denying the petition for cancellation, RFC appealed to the Court of
Appeals. The case, however, was certified to this Court, the questions raised therein being
purely of law.
As stated by the lower court: "The only question at issue is whether the annotation of the
second mortgage in favor of the oppositor on the back of Transfer Certificate of Title No.
1155 was made in accordance with law". The petition for cancellation was filed by the
RFC and the original registration case, under Section 112 of Act 496, on the alleged ground
that the lien in favor of Alto had already ceased. In opposing this petition, Alto claimed
that with the execution of the deed of resale between RFC and the Spouses Anacleto and
Rosa S. de Trinidad, (Exhibit J), there had been a valid exercise by the latter, as the
mortgagor's successors-in-interest, of the right of redemption, thus justifying the
retention of the encumbrance in favor of the junior mortgagee in the certificate of title
covering the property.
The court a quo acted correctly in denying, under the circumstances, the petition to
cancel the annotation of the second mortgage at the back of the title covering the
property originally owned by Eustaquio Palma. It has been consistently held by this Court,
that the relief afforded by Section 112 of the Land Registration Act may only be allowed
if "there is a unanimity among the parties, or there is no adverse claim or serious objection
1
on the part of any party in interest; otherwise, the case becomes controversial and should Paras, C. J., Bengzon, Montemayor, Bautista Angelo, Labrador, Concepcion, Reyes, J.B.L.,
be threshed out in an ordinary case.1 In another case, this Court2 has held that "Section Endencia, and Gutierrez David, JJ., concur.
112 authorizes, in our opinion, only alterations which do not impair rights recorded in the
decree, or alterations which, if they do prejudice such rights, are consented to by all
parties concerned or alterations to correct obvious mistakes". This doctrine is but sound
and proper. The proceedings provided in the Land Registration Act being summary in
nature, they are inadequate for the litigation of issues properly pertaining to ordinary civil
actions,3 thus, questions involving ownership of or title to a real property,4 or relating to
the validity or cancellation or discharge of a mortgage should properly be ventilated in an
ordinary proceeding."5

There is another reason why the petition must be denied. Granting arguendo that the
extrajudicial foreclosure proceeding instituted by the RFC is proper and justified, since the
junior encumbrancer was admittedly not notified thereof, the foreclosure of the first
mortgage cannot be considered to have terminated or extinguished the rights of said
junior encumbrancer over the property.

An interest in the mortgaged property acquired subsequent to the (first) mortgage may
be divested or barred only by making the holder thereof a party to the proceedings to
foreclose (Kurz vs. Pappas, 146 So. 100, 107 Fla. 861; Mediterranean Corp. vs. Pappas,
146 So. 106, 107 Fla. 876). (Emphasis supplied.)

While as a general rule, the junior encumbrancer is not a necessary party to a suit to
foreclose by a senior mortgagee, it is always proper and prudent to join him as a
defendant, both to give an opportunity to defend and to extinguish his right of
redemption (Lee vs. Slemons, 150 So. 792, 112 Fla. 675; Woodward vs. Householder, 289
S.W. 571, 315 Mo. 1155).

When a senior mortgagee forecloses and becomes the purchaser at his own foreclosure
sale, but the holder of a subsequent mortgage or other subordinate interest has not been
joined or has been eliminated from the proceeding, equity will keep the senior mortgage
alive against the subsequent encumbrance and the senior mortgagee will be entitled to
an action de novo to reforeclose the mortgage as to the omitted persons (Van Meter vs.
Field, 159 P. 2d 546, 195 Okl. 55; Rives vs. Stanford, 106 P. 2d 1101).

In view of the foregoing, the decision appealed from denying the first mortgagee's
petition to cancel the annotation of the second mortgage at the back of Transfer
Certificate of Title No. 1155, is hereby affirmed, without prejudice to the proper
adjudication, in an appropriate ordinary action, of the respective rights of the parties
herein as a result of the execution of the Deed of Resale, Exhibit J. The petitioner-
appellant shall pay the costs. It is so ordered.

2
G.R. No. L-29027 October 25, 1928
SUN LIFE ASSURANCE COMPANY OF CANADA, plaintiff-appellee,
vs.
FLORENCIO GONZALEZ DIEZ, defendant-appellant.
Jose Ma. Cavanna for appellant.
Ross, Lawrence and Selph and Antonio T. Carrascoso, Jr., for appellee.
STREET, J.:
This case is supplemental to a mortgage foreclosure proceeding conducted by the same
plaintiff, the Sun Life Assurance Company of Canada, as assignee of the original
mortgagee under a first mortgage, against Joaquin Serna et al. (civil case No. 28009, of
the Court of First Instance of Manila), a proceeding which has already been concluded by
the sale of the mortgaged property and the purchase of the same by the plaintiff as
mortgage creditor. The defendant in the present proceeding is Florencio Gonzalez Diez,
holder of a second mortgage on the same property which was the subject of foreclosure
in that case, but who was not there named as a defendant; and the purpose of the present
proceeding is to foreclose the equity of redemption vested in Gonzalez Diez by the second
mortgage.
Upon hearing the cause the trial gave judgment in favor of the plaintiff, requiring second
mortgage to pay the entire mortgage debt, with costs, otherwise to be debarred from any
right as second mortgagee, with appropriate provision for the cancellation of the second
mortgage. From this judgment the defendant appealed.
It appears that on May 17, 1920, one Joaquin Serna mortgaged the property which is the
subject of this action to the Shanghai Life Insurance Company, Ltd., to secure a promissory
note payable to said corporation in the amount of P20,000, subject to certain stipulations
not necessary to be here specified. On the same day Serna executed a second mortgage
on the same property in favor of the herein defendant, Florencio Gonzalez Diez, to secure
a debt in the amount of P6,000. The promissory note secured by the first mortgage,
together with the rights of the original first mortgagee, was afterwards transferred to the
Sun Life Assurance Company of Canada, the plaintiff in this case. Also, after mortgaging
the property, as above stated, Serna transferred the mortgaged property for a valuable
consideration to Paulino Francisco. The note secured by the first mortgage was not paid
at maturity; and the holder, the Sun Life Assurance Company of Canada, therefore
instituted a proceeding (No. 28009 in the Court of First Instance of Manila) to foreclose
said first mortgage. In this proceeding only Joaquin Serna and Paulino Francisco were
named as defendants, no account being taken of Gonzalez Diez, the holder of the second
mortgage. The action proceeded, however, to finality, and the property was ultimately
sold in regular course and bought in by the plaintiff, the mortgage creditor.
After foreclosure had been effected, as above stated, the present proceeding was
instituted by the plaintiff against Gonzalez Diez for the purpose of foreclosing the
mortgage as against him in his character as second mortgagee. This proceeding appears
to have been started by a supplemental motion in the original foreclosure case, but upon
objection by the adversary part, the court required the plaintiff to pay the filing fee, and
the proceeding was thus given the status of an independent proceeding. Upon hearing
the cause the trial court declared the indebtedness under the first mortgage to be in the
total amount stated in its original decree of foreclosure, with interest and costs added,
and entered an order to the effect that in case the defendant should not redeem from
the first mortgage by paying the amount stated, within three months from the date of the
decision, he would be debarred of all right as second mortgagee.
In the present appeal question is made as to the right of the first mortgage creditor to
maintain this action. We are of the opinion, however, that the criticism directed against
the appealed decision on this point is not well founded. A second mortgage acquires only
a mortgag e lien upon what is called the equity of redemption vested in the mortgagor,
and his rights are strictly subordinate to the superior lien on the first mortgagee. Having
acquired this right the second mortgagee is a proper and in a sense even a necessary party
to a foreclosure proceeding brought by the first mortgagee; for, in the closing words of
section 225 of our Code of Civil Procedure, it is expressly provided that all persons having
or claiming an interest in the mortgaged premises subordinate in right to that of the
holder of the foreclosing mortgage creditor shall be made defendants in the foreclosure
proceeding. Accordingly, if in the original foreclosure proceeding the attention of the
court had been directed to the fact that a second mortgage had been executed in favor
of Gonzalez Diez, it would have been peremptorily required that the second mortgagee
should be made a party. 1awph!l.net
But the second mortgagee was not an indespensable party to the proceeding to
foreclosure the first mortgage, because appropriate relief could be granted by the court
to the first mortgagee, in the original foreclosure proceeding, without affecting the rights
of the second mortgagee. But the failure on the part of the first mortgagee to make the
second mortgagee a defendant was that the decree entered in the original foreclosure
proceeding did not have the effect of depriving the second mortgagee of his right of
redemption. It is well recognized doctrine that a decree of foreclosure in a suit to which
the holders of a second lien are not parties leaves the equity of redemption in favor of
such lien holders unforeclosed and unaffected. (Sioux City etc. R. Co. vs. Trust Co., 82 Fed.,
124; 173 U. S., 99; 43 Law. ed., 628.) From this circumstance arises the necessity, which
confronted the plaintiff in this case, of bringing an independent foreclosure proceeding
3
against the second mortgagee; and the fact that the plaintiff, as first mortgagee, has
already foreclosed as against the original debtor and his transferee, is obstacle whatever
to the maintenance of such action against the second mortgagee. The purpose of the
second proceeding is not to obtain a second decree against the second mortgagee for the
same relief covered by the first decree but to secure the foreclosure of an equity of
redemption which was not touched by the first suit (Curtis vs. Gooding, 99 Ind., 45; Shirk
vs. Andrews, 92 Ind., 509; Morey vs. City of Duluth, 69 Minn., 5). The right of a court to
entertain such a proceeding as that now before us is recognized in a standard
encyclopedic work in the following words: "After completed foreclosure under a senior
mortgage, a junior encumbrancer may be given, by the court, the right to redeem the
senior mortgage and protect his own lien. Where a junior encumbrancer has been given,
by the court, the right to redeem after the completed foreclosure under a senior
mortgage, he must exercise his right within the time limited or be barred thereof."
(Mortgages, 42 C. J., 374.)

In the case before us the trial court conceded to the defendant the same period of time,
i. e., three months, within which to redeem, as is allowed to any mortgage debtor; and
amount which the court fixed as necessary to effect redemption is that which was found
to be the amount due to the creditor in the original foreclosure decree.

There being no error in the judgment appealed from, the same must be affirmed, and it
is so ordered, with costs against the appellant.

Avanceña, C. J., Johnson, Malcolm, Villamor, Ostrand and Villa-Real., JJ., concur.

4
G.R. No. L-3619 October 29, 1951
BERNARDO TIGLAO, plaintiff-appellee,
vs.
ENGRACIO BOTONES, defendant-appellant.
Barrera, Calanog and Alafriz for appellant.
Enrico I. de la Cruz for appellee.
PARAS, C.J.:,
In civil case No. 5115 of the Court of First Instance of Tarlac in which Bernardo Tiglao was
the plaintiff and Engracio Botones the defendant, judgment was rendered on March 24,
1943, the dispositive part of which reads as follows: "El Juzgado, de acuerdo con dicho
convenio, condena al demandado al pago de la catidad de P4,000 con los intereses de 12
por ciento al año desde el 29 de Noviembre de 1937 hasta su pago completo y se le ordena
que deposite esta cantidad en poder del Escribano dentro del plazo de 90 dias, de lo
contrario se ordenara la ejecucion de la sentencia vendiendo en publica subasta los
bienes hipotecados, con las costas a cargo del demandado."
Upon motion of the plaintiff, the Court of First Instance of Tarlac on July 20, 1943, ordered
the issuance of a writ of execution. Accordingly, on October 9, 1943, the provincial sheriff
sold at public auction the mortgaged properties to the plaintiff as the highest bidder. On
March 7, 1944, the plaintiff filed an ex parte motion with the Court of First Instance of
Tarlac, for the confirmation of the sale in his favor. On March 22, 1944, the court issued
the following order: " As prayed for in the "Motion for confirmation of the sheriff's sale
dated October 9, 1943, of lots Nos. 784 and 1146 of the cadastral survey of Concepcion,
executed by the Provincial Sheriff of Tarlac in favor of Bernardo Tiglao, pursuant to the
order of execution entered herein, the said sale is hereby APPROVED."
On May 7, 1948, the plaintiff filed with the Court of First Instance of Tarlac a motion for
the issuance of a writ of possession. The defendant filed an opposition alleging (1) that
the judgment of March 24, 1943, is null and void, because the defendant's former counsel
had no special authority to settle the case in the manner stated in said judgment, and (2)
that the sheriff's sale was not legally confirmed, because the defendant was not given
notice of the motion for confirmation or its hearing. On June 30, 1948, the court granted
plaintiff's motion for the issuance of a writ of possession. The defendant filed on July 7,
1948, a motion for reconsideration and under date of September 9, 1948, a motion
invoking moratorium under Republic Act No. 342 and praying that all proceedings be
suspended. In its order of October 12, 1948, the Court of First Instance of Tarlac denied
the motion for reconsideration. The defendant appealed.
Appellant's first contention is that the trial court erred in sustaining the order confirming
the sheriff's sale and in issuing the corresponding writ of possession in favor of the
appellee. Under section 3 of rule 70 of the Rules of Court, the sale of mortgaged property
"when confirmed by an order of the court . . . shall operate to divest the rights of all the
parties to the action and to vest their rights in the purchaser, subject to such rights of
redemption as may be allowed by law." The effect of confirmation was more elaborately
explained in the case of Raymundo vs. Sunico, 25 Phil., 365, 368-369, as follows: "As the
title to mortgaged real property does not vest in the purchaser until after the
confirmation of the sale, he has, prior to that time, no right to the possession of such
property, and no legal cause of complaint against the defendants, who remain in
possession, exercising the rights of ownership. On the other hand, the mortgagors have
no means, until the confirmation of compelling the purchaser to comply with the terms
of the sale. Should the mortgagors attempt to compel a purchaser to pay in his money,
an answer on the part of the purchaser to the effect that the sale had not been confirmed
would be sufficient. The confirmation operates to divest the title out of the former owner
and to vest it in the purchaser. It is at this time when the rights or title passes, and not
before. Sales of mortgaged real estate should be more strictly scrutinized than ordinary
sales under execution. In the former the title, as we have said, passes to the purchaser
upon confirmation by the court, and the defendant or debtor has no right to redeem
within the statutory period granted in cases ordinary execution sales. In some of the
States of the American Union there are statutes permitting the mortgagor to redeem after
the foreclosure sale has been confirmed. There is no such privilege extended to him by
statute in the Philippine Islands. The right of the mortgagor and those claiming under him
to redeem for mortgagee is extinguished by the foreclosure when the same has been
properly made. But, up to the time of confirmation the title remains in the mortgagor."
In said case this Court held that a hearing "is a very essential part of those proceedings
because the hearing gives the interested parties an opportunity to lay before the court
their reasons why the sale should or should not be confirmed, and it is the result of this
hearing which diverts the title if the sale is confirmed."
In the case of Grimalt vs. Velasquez, 36 Phil., 936, 938, this Court, relying upon its decision
in Raymundo vs. Sunico, supra, ruled that "in order that a foreclosure sale may be validly
confirmed by the court, it is necessary that a hearing be given the interested parties at
which they may have an opportunity to show cause why the sale should not be confirmed;
that a failure to give notice is good cause for setting aside the sale."
In the cases of La Urbana vs. Belando, 54 Phil. 930, and Anderson vs. Reyes, 54 Phil. 944,
it was held, following the decision in Grimalt vs. Velasquez, supra, that after the sale of
mortgaged property and before its confirmation, the court may still grant the judgment
debtor an opportunity to pay the amount of the judgment. In other words, until a sheriff's
sale is validly confirmed, the judgment debtor may exercise a right of redemption.
5
Notice and hearing of motion for confirmation are therefore essential to the validity of
the order of confirmation, not only to enable the interested parties to resist the motion
but also to inform them of the time when their right of redemption is cut off.
It is argued for the appellee that because section 3 of Rule 70 does not carry the last part
of section 257 of Act 190 to the effect that "should the court decline to confirm the sale,
for good cause shown, and should set it aside, it shall order a resale in accordance with
law," the cases hereinabove cited are no longer efficacious. We disagree. The fact that
the present rules still require confirmation of the sheriff's sale implies the power of the
court to either confirm the same or not, when asked. And the court may properly exercise
its judgment on the matter only after hearing both parties. Indeed, there is reason to
suppose that the omitted provision is superflous.
The case of Commonwealth of the Philippines vs. Ching yap, 70 Phil., 116, citing So Chu vs.
Nepomuceno, 29 Phil., 208, Jaranillo vs. Jacinto, 43 Phil. 588, Price vs. Sontua, 60 Phil. 410,
and National Investment Board vs. Peña, G.R. No. 46448, May 29, 1939, invoked by the
appellee, is obviously not controlling. In said case this Court found that notice of the
motion for confirmation was sent to the judgment debtors at their address of record and
when said notice was returned to the judgment creditor, the latter filed it with the clerk
of court in accordance with Rule 20 of the Rules of Court of First Instance. What the
creditor did was held sufficient, because if the debtors failed to receive the notice sent to
their address appearing in the record, it was their fault. The statement in said case,
therefore, that lack of notice does not deprive the court of its jurisdiction to approve a
sheriff's sale, was purely an obiter dictum. Moreover, the cases of So Chu vs.
Nepomuceno, Jaranillo vs. Jacinto, Price vs. Sontua, and National Investment Board vs.
Peña, did not involve situations in which confirmation of sheriff's sale was upheld
although there was no notice or hearing. .
In the more recent case of Somera vs. Navarro, 42 Off. Gaz., 2106, it was contended that
no 3-day notice of the motion for confirmation was given, because the hearing of the
motion was set for July 26, 1941, the notice was mailed to the appellants on July 23 and
was received by them on July 26, the appellants were present and at their instance said
hearing was postponed to August 9. Other postponements were conceded and the
motion was not heard until December 4, 1942. This Court held: "Resulta evidente, por
tanto, que la regla sobre notificaciones se cumplio substancialmente, y que toda discusion
ahora sobre el particularveine a ser meramente academica, porque, aun suponiendo que
la primera notificacion haya sido irregular, de ella no se siquio ningun perjuicio para los
apelantes, toda vez que la mocion no se considero y resolvio sino despues de varias
transferencias, de los cuales aquellos habian sido debidamente avisados." We have thus
inferentially recognized the essential need for notice of motion for confirmation of a
sheriff's sale, for, on the contrary supposition. we would have summarily dismissed
appellant's contention and held that notice and hearing were unnecessary.
In the case at bar, the lower court undoubtedly had acquired jurisdiction over the
foreclosure proceedings but, in confirming the sheriff's sale without the essential
requisite as to notice of the motion for confirmation, it exceeded its power, with the result
that the order of confirmation is null and void. As stated by Mr. Justice Feria in Caluag et
al.,*46 Off. Gaz., 514. "a wrong, or for that matter a correct, decision is void, and may be
set aside either directly or collaterally, where the court exceeds its jurisdiction and power
in rendering it." In Ang Lam vs. Rosillosa,** 47 Off. Gaz., Supp.(12), 103, it was held that "a
void judgment may be assailed or impugned at any time either directly or collaterally, by
means of a petition filed in the same case or by means of a separate action, or by resisting
such judgment in any action or proceeding wherein it is invoked." Hence there is no merit
in appellee's contention that the order of confirmation had become final and cannot be
set aside after the 6-month period provided in rule 38 of the Rules of Court, within which
relief could be asked, had expire.
The second contention of the appellant is that the trial court erred in not suspending the
proceedings because of the Moratorium Law (Republic Act No. 342). This contention is
untenable. The foreclosure judgment had long become final. By his motion for
confirmation of the sheriff's sale and his motion for a writ of possession, the appellee
sought to recover, not a monetary obligation, but the properties sold to him at public
auction. What was held in Barrozo vs. Macaraeg, 46 Off. Gaz., 4932, is decisive against
appellant's position. "The debt moratorium merely prohibited the enforcement by action
of the debts therein included; and in this case no one is attempting to force anybody to
pay his debt. The judgment debtor whose property has been sold is not in debt for the
redemption money. He could not be required by action to redeem. Hence, he is not
entitled to invoke the suspension."
Wherefore the order of March 22, 1944, confirming the sheriff's sale of the mortgaged
properties, being null and void, the order of June 30, 1948, granting appellee's motion for
the issuance of a writ of possession is hereby set aside, without prejudice to appellee's
right to move anew for the confirmation of the sheriff's sale in his favor, with due notice
and hearing. So ordered without costs.
Feria, Pablo, Bengzon, Padilla, Tuason, Reyes, Jugo and Bautista Angelo, JJ., concur.
6
G.R. No. 72806 January 9, 1989
EPIFANIO CRUZ and EVELINA CRUZ, petitioners,
vs.
INTERMEDIATE APPELLATE COURT, CALIXTRO O. ADRIATICO, RUFINO J. SANTIAGO and
GODOFREDO VALMEO, respondents.
Magtanggol C. Gunigundo for petitioners.
Padlan, Sutton, Morales, Tuy & Associates for respondents.
REGALADO, J.:
Petitioners seek herein the review and reversal of the decision of the respondent
Intermediate Appellate Court in AC-G.R. No. SP-06317 1 which dismissed their petition
for certiorari questioning, inter alia, the judicial foreclosure and the judicial confirmation
of the subsequent sale of their property pursuant to the judgment of the therein
respondent Regional Trial Court of Bulacan, Malolos Branch VIII; 2 as well as the
resolution 3 of the herein respondent court denying their motion for reconsideration.
The challenged decision of the respondent court provides the factual background of this
case, thus:
The relevant and undisputed facts indicate that petitioners mortgaged certain properties
to private respondents who eventually sued them for non-payment and for the judicial
foreclosure of aforementioned mortgages under Rule 68 of the Rules of Court. In the
course of the proceedings a compromise agreement was reached and this became the
basis of the Judgment on Compromise issued by the respondent Judge of the Regional
Trial Court (RTC) of Bulacan.
Pertinent parts of the Agreement, as embodied in the decision, reads:
3. Upon full payment of the sums of P55,000.00 and P320,000.00 within the period agreed
upon, the plaintiff shall deliver to the defendants Transfer Certificate of Title No. T-32286
(M) of the Registry of Deeds of Bulacan, Meycauayan Branch, together with all the
documents submitted to the plaintiff;
4. Should the defendants fail to pay the sums agreed upon within the period stipulated,
the defendants shall pay plaintiff the entire sum of P92,149.00 under the Deed of Real
Estate Mortgage attached to the complaint as Annex 'C' and an additional sum of
P44,700.00 as attorney's fees;
5. Upon failure of the defendants to pay the sums agreed upon within the period
stipulated, plaintiff shall be entitled to a writ of execution directing the foreclosure of all
the mortgages subject matter of this litigation and to the principal sum of P300,000.00 in
the Deed of Real Estate Mortgage attached to the complaint as Annex 'B shall be added
the sum of P44,700.00 as attorney's fees.
For failure of the petitioners to comply with certain provisions of the agreement, private
respondent moved for a writ of execution. The mortgaged properties were foreclosed
upon in an auction sale and were purchased by the private respondents as the highest
bidder. The sale was latter judicially confirmed. 4
Preliminarily, We dispose of the procedural issue raised by petitioners over the statement
of respondent court that appeal should have been their proper remedy in said court at
that juncture, since their objections to the judicial foreclosure proceeding and the
subsequent confirmation of the sale, if correct, would constitute errors of judgment and
not of jurisdiction. Petitioners' justification of their remedy, contending that the
compromise agreement was null and void and that the writ of execution thereafter issued
and enforced was invalid, as well as their arguments thereon, are pointless at this stage.
The fact remains that, obviously in the broader interests of justice, the respondent court
nevertheless proceeded to decide the petition for certiorari and ruled on the specific
points raised therein in a manner akin to what would have been done on assignments of
error in a regular appeal. The petition therein was, therefore, disposed of on the merits
and not on a dismissal due to erroneous choice of remedies or technicalities.
Central to the controversy as the vital issue for resolution, instead, is the submission of
petitioners that the aforestated judgment on compromise was null and void ab
initio because it allegedly "denied them their equity of redemption under Sec. 2, Rule 68
of the Rules of Court, by not allowing the petitioners to pay 'into court within a period of
not less than ninety (90) days from the date of the service of said order,' and that it is only
if the petitioners default in said payment that the property should be sold to pay the
judgment debt." 5
The provision relied upon reads as follows:
Sec. 2. Judgment on foreclosure for payment or sale. — If upon the trial in such action the
court shall find the facts set forth in the complaint to be true, it shall ascertain the amount
due to the plaintiff upon the mortgage debt or obligation, including interest and costs,
and shall render judgment for the sum so found due and order the same to be paid into
court within a period of ninety (90) days from the date of the service of such order, and
that in default of such payment the property be sold to realize the mortgage debt and
costs.
7
The procedure outlined therein obviously refers to the situation where a full-blown trial,
with the introduction of evidence is entailed, such that the trial court has to thereafter
determine whether the allegations in the complaint have been proved, then ascertain the
total amount due to the plaintiff, and thereafter render judgment for such amount with
an order for the payment thereof in accordance with the prescription of the aforequoted
section, sans the agreement of the parties on those particulars. There being no such
agreement, the specified procedure has necessarily to be followed and the minimum
period of ninety (90) days for payment, also referred to as the period for the exercise of
the equity, as distinguished from the right, of redemption has to be observed and
provided for in the judgment in the foreclosure suit. Jurisprudentially, it has also been
held that the exercise of the equity of redemption may be made beyond the 90-days
period but before the foreclosure sale is confirmed by the court. 6
It stands to reason, however, that the aforesaid procedure cannot be of substantial
application to, and can be modified by, a valid agreement of the parties, such as in the
compromise agreement subject of and constituting the basis for the judgment on
compromise rendered in Civil Case No. 7418-M of the Regional Trial Court of Bulacan, as
hereinbefore stated. The dispositions of Section 2 of Rule 68 clearly cannot apply since
the parties therein had specifically agreed on the amounts to be paid, when they should
be paid and the effects of non-payment or violation of the terms of their agreement. Thus,
the petitioners undertook to pay on the obligation subject of the compromise agreement,
P55,000.00 on or before August 20, 1984 and P320,000.00 on or before September 30,
1984 7 and, in case of default on their part, the consequences are spelled out in
Paragraphs 3, 4 and 5 of their aforequoted compromise agreement, 8 all of which are
premised on the precise contingency of failure by the petitioners to comply within the
period stipulated.
Paragraph 5 lucidly provides that, upon the happening of the aforesaid contingency
contemplated therein, private respondent Godofredo Valmeo shall be entitled to a writ
of execution directing the foreclosure of all the mortgages subject matter of said litigation.
It is noteworthy that this particular proviso is what distinguishes this case from other
judicial foreclosure cases decided on the bases of compromise agreements but which did
not have the same specification. Ineluctably, therefore, the petitioners herein thereby
waived their so called equity of redemption and the case was necessarily removed from
the operation of Section 2, Rule 68 insofar as its provisions are inconsistent with the
judgment on compromise.
This is not an isolated proposition as it may initially appear. True, the procedural
requirement in Section 2 grants a substantive right to the mortgagor, consisting of the so-
called equity of redemption, which after the ordinary adversarial course of a controverted
trial of a case may not be omitted in the relief to be awarded in the judgment
therein. 9 The same, however, may be waived, as already demonstrated.
In the same manner, the procedural requirements for the appointment of and
proceedings by commissioners in actions for expropriation 10 and judicial partition11 may
be said to likewise confer substantive rights on the party defendants therein, which
procedural steps may not be omitted over their objection but can likewise be waived or
dispensed with on mutual agreement. In these three special civil actions, although
dissimilar in the specific procedure in their special features, their rationale and specific
objectives are congruent in that they afford added protection to proprietary rights, but
which additional protection may be waived, as by stipulations to that effect in
compromise agreements.
It is hornbook knowledge that a judgment on compromise has the effect of res judicata on
the parties and should not be disturbed except for vices of consent or forgery. 12 To
challenge the same, a party must move in the trial court to set aside the said judgment
and also to annul the compromise agreement itself, before be can appeal from that
judgment. 13 Definitely, the petitioners have ignored these remedial avenues.
There can be no pretension that the compromise agreement as formulated and approved
is contrary to law, public policy or morals or that the same was tainted with circumstances
vitiating consent. The petitioners entered into the same duly assisted by competent
counsel and the entire judicial proceeding was under judicial scrutiny and supervision.
Hence, as correctly observed by the respondent court:
(1) Re the 'equity of redemption'. It is true that under Rule 68 of the Rules of Court, the
debtor-mortgagor is allowed a period of 90 days within which to pay his debt, to prevent
foreclosure, but this right, to Our mind was impliedly waived when the parties signed the
compromise agreement, which was later embodied in the Judgment. The agreement in
effect says that upon breach of the same (and this fact is not disputed), foreclosure should
be resorted to. The agreement was clear that payment had to be made within
the stipulated period. It would be absurd to say that after said stipulated period,
petitioners would still be given an additional 90-day period for the 'equity'. Had
petitioners intended still an exercise in 'equity', they should have insisted on a
clarificatory provision in the agreement. 14
Petitioners next shift to the writ of execution pursuant to which the foreclosure sale was
conducted by respondent sheriff, stigmatizing it as a falsified writ of execution. This is
unwarranted and baseless.
What actually transpired was that the respondent Branch Clerk of Court issued a writ of
execution on October 9, 1984 containing the following directives:
NOW THEREFORE, you are hereby commanded to execute and make effective the
aforequoted decision of this Honorable Court dated August 20, 1984 and make a return
8
of this writ within sixty (60) days from receipt hereof. But if sufficient property cannot be Cecilio de la Merced) that he was allowing petitioners 'to redeem'. BUT this was without
found thereon, then we command you that of the land and building of said defendants any authorization from the private respondents. In fact, in due time, private respondents
you make the said sum of money. 15 were able to inform the respondent Judge of this non-authorization and the Judge was
able to rectify her previous order allowing such 'redemption'. Be it noted that
This honest and inconsequential mistake on the part of the respondent clerk, aforementioned previous counsel's services were TERMINATED by the private
subsequently rectified by the respondent sheriff, was satisfactorily explained by the court respondents. 20
a quo in its order resolving several motions on May 27, 1985 16 as follows:
Petitioners close their jeremiad by an appeal for consideration on ground of equity.
As to the alleged defect in the writ of execution, the mortgagors could have moved to However, We also recognize the principle of countervailing equity in favor of the adverse
have the writ quashed before the confirmation of the sale, but they failed to raise that party, opposed to that which petitioners seek to be recognized, and which should not be
point or any point for that matter. He alleged defect in the writ of execution is that it subordinated because it is of equal strength and equally deserving of consideration.
differs from that quoted in the notice of sale. The writ issued by the Branch Clerk of Court
included an extra sentence which reads: 'But if sufficient personal property cannot be WHEREFORE, the petition at bar is hereby DENIED, with costs against the petitioners.
found thereon, then we command you that of the land and buildings of said defendants
you make the said sum of money.' The surplusage is understandable and excusable as SO ORDERED.
these wordings are usually included in the standard form copied by the stenographer in Melencio-Herrera, Padilla and Sarmiento, JJ., *concur.
ordinary writs of execution. It has been held that if the writ of execution does not conform
to the judgment, the writ may be amended so that the judgment may be properly satisfied. Paras, J., took no part.
In fact, the slight difference between the writ handed by the Branch Clerk and that
reproduced in the notice of sale was for the reason that the Deputy Sheriff, realizing the
imperfection of the original writ, rectified it by eliminating the surplusage to make it
conform to the terms of the judgment. Although the better step that should have been
taken by the sheriff was to inform the Branch Clerk about it for the proper amendment,
the rectification done by said sheriff, in effect, was confirmed and adopted by the court
when it confirmed the sale without any objection from the herein movants. At any rate,
there is no showing of any detriment to the interest of the mortgagee resulting from this
rectification. 17

Petitioners' complaints about the supposed irregularity in the publication of the notice of
sale involve questions of fact which cannot be resolved by this Court. Furthermore,
petitioners had all the opportunity, in the several motions filed in and heard by the trial
court and especially in the hearing for the confirmation of sale, to ventilate the alleged
irregularities but they never did so.

Neither are We inclined to nor justified in disturbing the factual findings of the respondent
court debunking petitioners' claim that private respondent Valmeo had, subsequent to
the foreclosure sale of the property, agreed to allow petitioners to redeem the property.
In reliance upon the findings of the trial court in its orders of October 8, 1984 18 and March
20, 1985, 19 the respondent court categorically declared:

(5) Re the 'new agreement to redeem'. There was actually NO SUCH AGREEMENT. True,
petitioners had been informed in Court by private respondents' previous counsel (Atty.

9
G.R. No. L-25802 January 31, 1972
DEVELOPMENT BANK OF THE PHILIPPINES, plaintiff-appellee,
vs.
LEONOR R. VDA. DE MOLL, SEBASTIAN MOLL, JR., BACILISO MOLL, ERIBERTO MOLL,
ESTRELLA MOLL, SALVADOR MOLL, SEGUNDO MOLL and AURORA MOLL, defendants-
appellants.
Jesus A. Avancena and Benedicto C. Legaspi for plaintiff-appellee.
Cesario A. Fabicante for defendant Eriberto Moll.
Jose S. Sarte for defendants-appellants Leonor R. Vda. de Moll, et al.
BARREDO, J.:p
Appeal from the decision of the Court of First Instance of Manila in its Civil Case No. 56037
sentencing appellants to jointly and severally pay to the appellee Development Bank of
the Philippines the sum of P1,648,591.45, claimed by the said Bank to be the deficiency
or unpaid balance of appellants' overdue obligation under certain agricultural and
industrial loans it had granted to appellants after applying to the said loans the proceeds
of the extrajudicial foreclosure and public auction sale of the properties mortgaged to
secure their payment, plus attorney's fees and costs.
It appears that on April 12, 1947 and December 15, 1947, the appellee Development Bank
of the Philippines (then known as the Rehabilitation Finance Corporation) granted
agricultural loans in the amounts of P120,000.00 and P22,000.00, respectively, in favor of
one Sebastian Moll, Sr. who, to secure the payment of said loans, mortgaged in favor of
the appellee Bank fourteen (14) parcels of land — comprising the property known as
"Hacienda Moll" — covered by certificates of title and tax declarations issued by the land
registry of the province of Camarines Sur. Said Sebastian Moll, Sr. having subsequently
died, his heirs (appellants) executed on May 14, 1949 an extrajudicial partition of his
estate, including the properties above-mentioned, adjudicating the same to themselves,
albeit binding themselves, jointly and severally, to assume payment of the indebtedness
of the deceased with the appellee Bank; and starting from the said date, appellants
themselves applied for and were granted by the appellee Bank new and additional loans,
to wit: May 14, 1949 — an industrial loan of P150,000.00; May 28, 1951 — an additional
agricultural loan of P100,000.00; and May 31, 1951 — another industrial loan of
P580,000.00. The additional agricultural loan was granted by the appellee Bank on the
security of the same properties already mortgaged to the appellee Bank by appellants'
predecessor in interest, earlier stated; while the new industrial loans were secured by
mortgages on machineries, equipment and some other real estate.
Appellants thereafter failed to comply with the terms of the loan contracts as they fell
due. Consequently, the above-mentioned mortgages on their properties were
extrajudicially foreclosed under the provisions of Act 3135, as amended; and in the public
auction sale thereof subsequently conducted by the Provincial Sheriff of Camarines Sur
on June 30, 1962, the 14 parcels of land mortgaged to secure payment of the agricultural
loans and the machineries, equipment and other real estate mortgaged to secure
payment of the industrial loans were awarded in favor of the appellee Bank — as the sole
and highest bidder — for the amounts of P176,174.50 and P19,750.00, respectively,
which were accordingly applied to the payment of the corresponding portions of the said
loans.
As the proceeds of the foreclosure sales aforesaid were not sufficient to cover the loan
indebtedness of appellants, the appellee Bank then instituted the present case in the
Court of First Instance of Manila on January 23, 1964, for the purpose of recovering so
the complaint alleges, the sums of P173,117.55, on account of the agricultural loans, and
P1,475,473.90, on account of the industrial loans, which it claims to be the outstanding
balances or deficiencies under the two types of loans obtained by appellants.
In their answer, appellants admit the existence of their indebtedness to the appellee Bank
under the loan contracts mentioned in the latter's complaint; but they deny and dispute,
among others, the deficiency claims of the appellee Bank, contending at the same time,
by way of affirmative and special defenses, that the extrajudicial foreclosure and public
auction sales of the properties mortgaged had been carried out by the sheriff irregularly
and improperly in violation of the pertinent provisions of Rule 39 of the Rules of Court
and had thus resulted in the sale for unconscionable prices of their mortgaged properties
which, according to appellants' own estimate, have a total actual value of not less than
P5,000,000.00.
It appears, further, that the corresponding deeds and certificates of sale issued in favor
of the appellee Bank in consequence of the disputed foreclosure proceeding and public
auction sales were registered with the Register of Deeds concerned only on November
11, 1964 and December 7, 1964 — some ten (10) months later than the commencement
of the present action for collection of the deficiency claim of the appellee Bank. .
After trial, the court below rendered the decision appealed from which, as stated earlier
in the opening paragraph hereof, sustains the above-mentioned deficiency claims of the
appellee Development Bank of the Philippines. .
In this appeal, appellants assail the said judgment thus: .
10
"I. THE HONORABLE COURT A QUO ERRED IN NOT SETTING ASIDE THE ALLEGED AUCTION
SALE ON JUNE 30,1962, OF THE MORTGAGED PROPERTIES BY THE DEFENDANTS-
APPELLANTS TO THE PLAINTIFF-APPELLEE, ON THE GROUND THAT THE SELLING AUCTION
PRICES OF SAID PROPERTIES WERE UNJUST, DISPROPORTIONATE AND UNCONSCIONABLE
IN THE LIGHT OF THE FAIR AND CURRENT MARKET VALUE OF THE SAME PROPERTIES AT
THE TIME OF SAID AUCTION SALE. .
"II. THE HONORABLE COURT A QUO ERRED IN NOT DISMISSING THE COMPLAINT AT BAR
FOR RECOVERY OF A DEFICIENCY CLAIM, ON THE GROUND THAT SAID COMPLAINT WAS
OR IS, PREMATURE, FOR THE REASON THAT IT HAD BEEN FILED DURING THE PERIOD OF
LEGAL REDEMPTION GRANTED BY LAW TO DEFENDANTS-APPELLANTS AS MORTGAGE-
DEBTORS." .
The thrust of appellants' argument in respect of the first assignment of error is to the
effect that if in 1947 and 1951 when the agricultural and industrial loans herein involved
were obtained by appellants, the appellee Bank, after due inspection and appraisal of the
securities they offered therefor, had granted them a total agricultural loan of P242,000.00
upon the security of the 14 parcels of land they mortgaged and a total industrial loan of
P770,000.00 upon the security of other lands and machineries and equipment they also
mortgaged, hence, it is inconceivable that after the lapse of more than ten years and the
fast and steadily increasing real estate values these past years, the same properties would
command, in the extrajudicial foreclosure sales conducted by the provincial sheriff of
Camarines Sur in 1962, only the measly sums of P176,174.50 and P19,750.00, respectively,
considering that pursuant to consistent banking practice, the aforesaid amounts of loans
granted would represent only 60% of the actual and current market value of the securities
at the time of the grant of said loans. In short, it is the position of appellants that the
foreclosure sales aforesaid should be set aside because "the total auction selling price of
P195,924.50 for both the collateral securities to the agro-industrial loans, is so inadequate,
disproportionate and shocking to conscience." .
It does appear that the purchase prices in question are considerably out of proportion to
the possible actual market value of appellants' securities. Considering, however, that the
impugned sales were made subject to appellants' right of redemption, the following ruling
in Ponce de Leon vs. Rehabilitation Finance Corporation,1 sufficiently disposes of their
contention: .
In support of their second assignment of error, the Sorianos maintain that the sum of
P10,000.00, for which the Parañaque property was sold to the RFC, is ridiculously
inadequate, considering that said property had been assessed at P59,647.05. This
presense is devoid of merit, for said property was subject to redemption and:
... where there is the right to redeem ... — inadequacy of price should not be material,
because the judgment debtor may re-acquire the property or else sell his right to redeem
and thus recover any loss he claims to have suffered by reason of the price obtained at
the execution sale (Barrozo vs. Macaraig, 83 Phil. 378, 381, Emphasis Ours.)
Then, again, as the trial court had correctly observed:
But, mere inadequacy of the price obtained at the sheriff's sale unless shocking to the
conscience will not be sufficient to set aside the sale if there is no showing that, in the
event of a regular sale, a better price can be obtained. The reason is that, generally, and,
in forced sales, low prices are usually offered (1 Moran's Rules of Court, 834-835).
Considering that in Gov't. of P.I. vs. Soriano, G.R. No. 32196, wherein property worth
P120,000.00 was sold for only P15,000.00, in Philippine National Bank vs. Gonzales, 45
Phil. 693, wherein property valued at P45,000.00 was sold for P15,000.00 and in Cu
Unjieng & Sons v. Mabalacat Sugar Co., 58 Phil. 439, property worth P300,000.00 to
P400,000.00 was sold for P177,000.00, the Court cannot consider the sale of the Bacolod
properties, the Taft Avenue house and lot and the Parañaque property of the Sorianos
null and void for having been sold at inadequate prices shocking to the conscience and
there being no showing that in the event of a resale, better prices can be obtained.'
This ruling was reiterated in the more recent case of De Leon vs. Salvador, et al.,2
... (w)hile in ordinary sales for reasons of equity a transaction may be invalidated on the
ground of inadequacy of price, or when such inadequacy shocks one's conscience as to
justify the courts to interfere, such does not follow when the law gives to the owner the
right to redeem, as when a sale is made at public auction, upon the theory that the lesser
the price the easier it is for the owner to effect the redemption. And so it was aptly said:
"When there is the right to redeem, inadequacy of price should not be material, because
the judgment debtor may reacquire the property or also sell his right to redeem and thus
recover the loss he claims to have suffered by reason of the price obtained at the auction
sale.
At this juncture, it may not be amiss to make it clear that appellants' period to redeem
the properties sold in the extrajudicial foreclosure sales in question is one year,
"computed from the date of the registration of the certificates of sales of the mortgaged
properties," since registered lands are involved in this case, and, as explained lately by
this Court in Quimson, et al. vs. Philippine National Bank, 3 "this Court has uniformly ruled
that redemption from execution sales under ordinary judgments pursuant to Section 30,
Rule 39 of the Rules of Court should be made within twelve (12) months from the
registration of the same and We have uniformly applied the same rule to sales upon
extrajudicial foreclosure of registered lands.".
11
On the other hand, it may also be stressed that actions seeking to set aside auction sales
do not toll the running of the period of redemption; and this We have to emphasize now,
if only to forestall the possibility of the parties' coming up here in the future and praying
for a definite ruling on the matter. This question was resolved in Sumerariz vs.
Development Bank of the Philippines, L-23764, December 26, 1967, 21 SCRA 1374, thus: .
Under the second assignment of error, plaintiffs maintain that the period of one (1) year
to redeem the property in question was suspended by the institution of Case No. 29306
(commenced by Sumerariz and his wife against the DBP and the Sheriff of Manila to set
aside the foreclosure sale involved therein) on March 26, 1956, or three (3) days before
the expiration of said period. We have not found, however, any statute or decision in
support of this pretense. Moreover, up to now plaintiffs have not exercised the right of
redemption. Indeed, although they have intimated their wish to redeem the property in
question, they have not deposited the amount necessary therefor. It may not be amiss to
note that, unlike Section 30 of Rule 39 of the Rules of Court, which permits the extension
of the period of redemption of mortgaged properties, (Enage vs. Vda. e Hijas de F. Escano,
38 Phil. 657) Section 3 of Commonwealth Act No. 459, in relation to Section 9 of Republic
Act No. 85, which governs the redemption of property mortgaged to the Bank, does not
contain a similar provision (Nepomuceno vs. Rehabilitation Finance Corporation, L-14897,
November 23, 1960). Again this question has been definitely settled by the decision in the
previous case declaring that plaintiffs' right of redemption has already been extinguished
in view of their failure to exercise it within the statutory period.
Perforce then We must hold that the foreclosure sales here involved cannot be set aside
on the ground, vigorously alleged by appellants, that the prices obtained therein are
grossly inadequate and unconscionable. Corollarily, We do not deem it necessary to
discuss further and rule upon appellants' claim that the foreclosure sales referred to were
improperly and irregularly conducted by the provincial sheriff of Camarines Sur because
the latter sold the mortgaged properties here involved in mass and within a single day,
although the record appears to be bereft of any concrete showing, other than appellants'
claim that better prices could had been obtained for the said mortgaged securities had
the above-mentioned provincial sheriff conducted the sales in question otherwise.4
Anent appellants' second assignment of error to the effect that the present case was
prematurely instituted on the ground that an action for recovery of an alleged deficiency
claim cannot be legally entertained during the period of redemption, appellants argue in
their brief (pp. 16-18), as follows: .
In the case at bar, the suit to recover deficiency claim was instituted on January 23, 1964,
(page 1 Record on Appeal), but, the Certificate of Sale by the Provincial Sheriff of
Camarines Sur in connection with the auction sale of the collateral securities on the
industrial loans was registered in the Office of the Register of Deeds of said province on
November 11, 1964, and, the Certificate of Sale of said provincial sheriff in connection
with the auction sale of the collateral securities on the agricultural loans, was registered
in the same office on December 7, 1964. Therefore, the present action for recovery of
deficiency claim was filed even before the registration of both Certificates of Sale, as
shown by Exhibit '2' for appellants (pp. 33-34, Record on Appeal). As the running of the
period of one year of the right of redemption commenced from the date and/or dates of
registration of the Certificate of Sale, it is too clear and unassailable that the filing of the
case at bar on January 23, 1964, was improper and premature. For indeed, the filing of a
suit for recovery of a deficiency claim before the commencement or, during the period of
the right of redemption, constitutes a clever anticipation that the auction sale arising from
the effects of extrajudicial foreclosure had been conducted with all the earmarks of
validity, even if it were not. Suppose an auction sale were declared illegal due to
irregularities and violation of the mandate of the law, what would be the effect of such
pronouncement in an action for deficiency claim when such action has no legal basis? If a
suit for recovery of a deficiency judgment or deficiency claim is a legal consequence of an
auction sale arising from judicial or extrajudicial foreclosure, then such suit should await
for the expiration period of the right of redemption within which period, precisely, the
redemptioner may ordinarily institute an action to assail the manner with which the
auction sale was conducted. ... .
In the case of Philippine Bank of Commerce vs. De Vera,5 We held: .
"A reading of the provisions of Act No. 3135, as amended (re extrajudicial foreclosure)
discloses nothing, it is true, as to the mortgagee's right to recover such deficiency. But
neither do we find any provision thereunder which expressly or impliedly prohibits such
recovery. .
Article 2131 of the new Civil Code, on the contrary, expressly provides that "The form,
extent and consequences of a mortgage, both as to its constitution, modification and
extinguishment, and as to other matters not included in this Chapter, shall be governed
by the provisions of the Mortgage Law and of the Land Registration Law." Under the
Mortgage Law, which is still in force, the mortgagee has the right to claim for the
deficiency resulting from the price obtained in the sale of the real property at public
auction and the outstanding obligation at the time of the foreclosure proceedings. (See
Soriano vs. Enriquez, 24 Phil. 584; Banco de Islas Filipinas v. Concepcion e Hijos, 53 Phil.
86; Banco Nacional v. Barreto, 53 Phil. 101). Under the Rules of Court (Sec. 6, Rule 70),
"Upon the sale of any real property, under an order for a sale to satisfy a mortgage or
other incumbrance thereon, if there be a balance due to the plaintiff after applying the
proceeds of the sale, the court, upon motion, should render a judgment against the
defendant for any such balance for which, by the record of the case, he may be personally
liable to the plaintiff,... ." It is true that this refers to a judicial foreclosure, but the
12
underlying principle is the same, that the mortgage is but a security and not a satisfaction
of indebtedness. ... .

Under the provisions of section 6 of Rule 70 — now section 6 of Rule 68 of the revised
Rules of Court — above-cited, it is expressly provided that "if there be a balance due to
the plaintiff after applying the proceeds of the sale, the court, upon motion, shall render
judgment against the defendant for any such balance for which, by the record of the case,
he may be personally liable to the plaintiff, upon which execution may issue immediately
if the balance is all due at the time of the rendition of the judgment." Said provisions are
equivalent to those of section 260 of the old Code of Civil Procedure, under which it was
held in a case,6 "that in order that a decree for any balance for which the mortgagor may
be personally liable to the mortgagee may be issued, it is necessary that the sale of the
mortgaged real property has been made according to the decree for said sale to satisfy
the judgment; that there has remained a balance due the mortgagee after applying the
proceeds of the sale to the debt; (and) that the mortgagee presents a motion for the
issuance of a decree for said balance", while in another case, 7 it was said that "Section
260 requires the rendition and entry of a judgment for the deficiency against the
defendant, who shall be personally liable to the plaintiff, and execution may issue on said
judgment at once." We believe it is apparent from the provisions and decisions above-
quoted that once the auction sale of the mortgaged property is effected and the resulting
deficiency in the mortgage debt is ascertained, the mortgagee-creditor is then and there
entitled to secure a deficiency judgment which may immediately be executed, whether
or not the mortgagor is still entitled to redeem the property sold. We hold then that
appellants' right to redeem their auctioned properties could not be a bar to the present
action of appellee to recover the deficiencies which it claims to have resulted after
applying the proceeds of the foreclosure sales here involved in payment of appellants'
mortgage debt. .

WHEREFORE, the decision appealed from is affirmed, with costs against appellants.

Concepcion, C.J., Reyes, J.B.L., Makalintal, Zaldivar, Teehankee, Villamor and Makasiar, JJ.,
concur.

Castro and Fernando, JJ., took no part.

13
G.R. No. 91779 February 7, 1991
GRAND FARMS, INC. and PHILIPPINE SHARES CORPORATION, petitioners,
vs.
COURT OF APPEALS, JUDGE ADRIAN R. OSORIO, as Presiding Judge of the Regional Trial
Court, Branch 171, Valenzuela, Metro Manila; ESPERANZA ECHIVERRI, as Clerk of Court
& Ex-Officio Sheriff of the Regional Trial Court of Valenzuela, Metro Manila; SERGIO
CABRERA, as Deputy Sheriff-in-Charge; and BANCO FILIPINO SAVINGS AND MORTGAGE
BANK, respondents.
Balgos & Perez for petitioners.
Sycip, Salazar, Hernandez & Gatmaitan for private respondent.
REGALADO, J.:
The propriety of a summary judgment is raised in issue in the instant petition, with herein
petitioners appealing the decision1 of respondent court in CA-G.R. SP No. 17535, dated
November 29, 1989, which found no grave abuse of discretion on the part of respondent
judge in denying petitioners' motion for summary judgment.2
The antecedents of this case are clear and undisputed. Sometime on April 15, 1988,
petitioners filed Civil Case No. 2816-V88 in the Regional Trial Court of Valenzuela, Metro
Manila for annulment and/or declaration of nullity of the extrajudicial foreclosure
proceedings over their mortgaged properties, with damages, against respondents clerk
of court, deputy sheriff and herein private respondent Banco Filipino Savings and
Mortgage Bank.3
Soon after private respondent had filed its answer to the complaint, petitioners filed a
request for admission by private respondent of the allegation, inter alia, that no formal
notice of intention to foreclose the real estate mortgage was sent by private respondent
to petitioners.4
Private respondent, through its deputy liquidator, responded under oath to the request
and countered that petitioners were "notified of the auction sale by the posting of notices
and the publication of notice in the Metropolitan Newsweek, a newspaper of general
circulation in the province where the subject properties are located and in the Philippines
on February 13, 20 and 28, 1988."5
On the basis of the alleged implied admission by private respondent that no formal notice
of foreclosure was sent to petitioners, the latter filed a motion for summary judgment
contending that the foreclosure was violative of the provisions of the mortgage contract,
specifically paragraph (k) thereof which provides:
k) All correspondence relative to this Mortgage, including demand letters, summons,
subpoena or notifications of any judicial or extrajudical actions shall be sent to the
Mortgagor at the address given above or at the address that may hereafter be given in
writing by the Mortgagor to the Mortgagee, and the mere act of sending any
correspondence by mail or by personal delivery to the said address shall be valid and
effective notice to the Mortgagor for all legal purposes, and the fact that any
communication is not actually received by the Mortgagor, or that it has been returned
unclaimed to the Mortgagee, or that no person was found at the address given, or that
the address is fictitious, or cannot be located, shall not excuse or relieve the Mortgagor
from the effects of such notice;6
The motion was opposed by private respondent which argued that petitioners' reliance
on said paragraph (k) of the mortgage contract fails to consider paragraphs (b) and (d) of
the same contract, which respectively provide as follows:
b) . . . For the purpose of extra-judicial foreclosure, the Mortgagor (plaintiff) hereby
appoints the Mortgagee (BF) his attorney-in-fact to sell the property mortgaged, to sign
all documents and perform any act requisite and necessary to accomplish said purpose
and to appoint its substitutes as such attorney-in-fact, with the same powers as above-
specified. The Mortgagor hereby expressly waives the term of thirty (30) days or any other
term granted or which may hereafter be granted him by law as the period which must
elapse before the Mortgagee shall be entitled to foreclose this mortgage, it being
specifically understood and agreed that the said Mortgagee may foreclose this mortgage
at any time after the breach of any conditions hereof. . . .
xxx xxx xxx
d) Effective upon the breach of any conditions of the mortgage and in addition to the
remedies herein stipulated, the Mortgagee is hereby likewise appointed attorney-in-fact
of the Mortgagor with full powers and authority, with the use of force, if necessary, to
take actual possession of the mortgaged property, without the necessity for any judicial
order or any permission of power to collect rents, to eject tenants, to lease or sell the
mortgaged property, or any part thereof, at public or private sale without previous notice
or adverstisement of any kind and execute the corresponding bills of sale, lease or other
agreement that may be deemed convenient, to make repairs or improvement to the
mortgaged property and pay for the same and perform any other act which the
Mortgagor may deem convenient . . .7
On February 27, 1989, the trial court issued an order, denying petitioners' motion for
summary judgment.8Petitioners' motion for reconsideration was likewise denied by
14
respondent-judge on the ground that genuine and substantial issues exist which require
the presentation of evidence during the trial, to wit: (a) whether or not the loan has
matured; (b) whether or not private respondent notified petitioners of the foreclosure of
their mortgage; (c) whether or not the notice by publication of the foreclosure constitutes
sufficient notice to petitioners under the mortgage contract; (d) whether or not the
applicant for foreclosure of the mortgage was a duly authorized representative of private
respondent; and (e) whether or not the foreclosure was enjoined by a resolution of this
Court.9
Petitioners thereafter went on a petition for certiorari to respondent court attacking said
orders of denial as having been issued with grave abuse of discretion. As earlier adverted
to, respondent court dismissed the petition, holding that no personal notice was required
to foreclose since private respondent was constituted by petitioners as their attorney-in-
fact to sell the mortgaged property. It further held that paragraph (k) of the mortgage
contract merely specified the address where correspondence should be sent and did not
impose an additional condition on the part of private respondent to notify petitioners
personally of the foreclosure. Respondent court also denied petitioners motion for
reconsideration, hence the instant petition.
We rule for petitioners.
The Rules of Court authorize the rendition of a summary judgment if the pleadings,
depositions and admissions on file, together with the affidavits, show that, except as to
the amount of damages, there is no issue as to any material fact and that the moving
party is entitled to a judgment as a matter of law. 10 Although an issue may be raised
formally by the pleadings but there is no genuine issue of fact, and all the facts are within
the judicial knowledge of the court, summary judgment may be granted.11
The real test, therefore, of a motion for summary judgment is whether the pleadings,
affidavits and exhibits in support of the motion are sufficient to overcome the opposing
papers and to justify a finding as a matter of law that there is no defense to the action or
that the claim is clearly meritorious.12
Applying said criteria to the case at bar, we find petitioners' action in the court below for
annulment and/or declaration of nullity of the foreclosure proceedings and damages ripe
for summary judgment. Private respondent tacitly admitted in its answer to petitioners'
request for admission that it did not send any formal notice of foreclosure to petitioners.
Stated otherwise, and as is evident from the records, there has been no denial by private
respondent that no personal notice of the extrajudicial foreclosure was ever sent to
petitioners prior thereto. This omission, by itself, rendered the foreclosure defective and
irregular for being contrary to the express provisions of the mortgage contract. There is
thus no further necessity to inquire into the other issues cited by the trial court, for the
foreclosure may be annulled solely on the basis of such defect.
While private respondent was constituted as their attorney-in-fact by petitioners, the
inclusion of the aforequoted paragraph (k) in the mortgage contract nonetheless
rendered personal notice to the latter indispensable. As we stated in Community Savings
& Loan Association, Inc., et al. vs. Court of Appeals, et al.,13 where we had the occasion to
construe an identical provision:
On the other important point that militates against the petitioners' first ground for this
petition is the fact that no notice of the foreclosure proceedings was ever sent by CSLA to
the deceased mortgagor Antonio Esguerra or his heirs in spite of an express stipulation in
the mortgage agreement to that effect. Said Real Estate Mortgage provides, in Sec. 10
thereof that:
(10) All correspondence relative to this mortgage, including demand letters, summons,
subpoenas, or notifications of any judicial or extrajudicial actions shall be sent to the
Mortgagor at the address given above or at the address that may hereafter be given in
writing by the Mortgagor to the Mortgagee, and the mere act of sending any
correspondence by mail or by personal delivery to the said address shall be valid and
effective notice to the Mortgagor for all legal purposes, . . . (Emphasis in the original text.)
The Court of Appeals, in appreciating the foregoing provision ruled that it is an additional
stipulation between the parties.1âwphi1 As such, it is the law between them and as it not
contrary to law, morals, good customs and public policy, the same should be complied
with faithfully (Article 1306, New Civil Code of the Philippines). Thus, while publication of
the foreclosure proceedings in the newspaper of general circulation was complied with,
personal notice is still required, as in the case at bar, when the same was mutually agreed
upon by the parties as additional condition of the mortgage contract. Failure to comply
with this additional stipulation would render illusory Article 1306 of the New Civil Code
of the Philippines (p. 37, Rollo).
On the issue of whether or not CSLA notified the private respondents of the extrajudicial
foreclosure sale in compliance with Sec. 10 of the mortgage agreement the Court of
Appeals found as follows:
As the record is bereft of any evidence which even impliedly indicate that the required
notice of the extrajudicial foreclosure was ever sent to the deceased debtor-mortgagor
Antonio Esguerra or to his heirs, the extrajudicial foreclosure proceedings on the property
in question are fatally defective and are not binding on the deceased debtor-mortgagor
or to his heirs (p. 37, Rollo)
15
Hence, even on the premise that there was no attendant fraud in the proceedings, the Melencio-Herrera, Padilla and Sarmiento, JJ., concur.
failure of the petitioner bank to comply with the stipulation in the mortgage document is Paras, J., took no part.
fatal to the petitioners' cause.

We do not agree with respondent court that paragraph (k) of the mortgage contract in
question was intended merely to indicate the address to which the communications
stated therein should be sent. This interpretation is rejected by the very text of said
paragraph as above construed. We do not see any conceivable reason why the
interpretation placed on an identically worded provision in the mortgage contract
involved in Community Savings & Loan Association, Inc. should not be adopted with
respect to the same provision involved in the case at bar.

Nor may private respondent validly claim that we are supposedly interpreting paragraph
(k) in isolation and without taking into account paragraphs (b) and (d) of the same
contract. There is no irreconcillable conflict between, as in fact a reconciliation should be
made of, the provisions of paragraphs (b) and (d) which appear first in the mortgage
contract and those in paragraph (k) which follow thereafter and necessarily took into
account the provisions of the preceding two paragraphs. 14 The notices respectively
mentioned in paragraphs (d) and (k) are addressed to the particular purposes
contemplated therein. Those mentioned in paragraph (k) are specific and additional
requirements intended for the mortgagors so that, thus apprised, they may take the
necessary legal steps for the protection of their interests such as the payment of the loan
to prevent foreclosure or to subsequently arrange for redemption of the property
foreclosed.

What private respondent would want is to have paragraph (k) considered as non-existent
and consequently disregarded, a proposition which palpably does not merit consideration.
Furthermore, it bears mention that private respondent having caused the formulation
and preparation of the printed mortgage contract in question, any obscurity that it
imputes thereto or which supposedly appears therein should not favor it as a contracting
party.15

Now, as earlier discussed, to still require a trial notwithstanding private respondent's

admission of the lack of such requisite notice would be a superfluity and would work
injustice to petitioners whose obtention of the relief to which they are plainly and
patently entitled would be further delayed. That undesirable contingency is obviously one
of the reasons why our procedural rules have provided for summary judgments.

WHEREFORE, the decision appealed from is hereby REVERSED and SET ASIDE and this case
is REMANDED to the court of origin for further proceedings in conformity with this
decision. This judgment is immediately executory.

SO ORDERED.
16
G.R. No. 100480 May 1, 1993
BLANCA CONSUELO ROXAS, petitioner,
vs.
COURT OF APPEALS and RURAL BANK OF DUMALAG, INC., respondents.
Lamberto S. Roxas for petitioner.
Villareal Law Offices for private respondent.
NOCON, J.:
This is a petition for review on certiorari seeking reversal of the decision of public
respondent Court of Appeals in CA-G.R. CV No. 21140, dated May 23, 1991,1 which set
aside the decision of the Regional Trial Court of Roxas City, Sixth Judicial Riegion, Branch
18, in Civil Case No. V-4543, dated January 20, 1989.
The antecedent facts are, as follows:
Petitioner Blanca Consuelo Roxas is the owner of a parcel of land (Lot No. 3108) located
at Tanza Norte, Panay, Capiz, containing an area of 14.7238 hectares and covered by Tax
Declaration No. 5129. On December 22, 1969, she executed a special power of attorney
appointing her brother, the late Manuel Roxas, as her attorney-in-fact for the purpose of
applying for an agricultural loan with private respondent Rural Bank of Dumalag, Inc. using
said land as collateral. Armed with said special power of attorney, Manuel Roxas applied
for, was granted and received an agricultural loan in the amount of P2,000.00 from
private respondent on December 26, 1969. As security for the loan, he executed the
corresponding real estate mortgage over the subject land.
On October 24, 1973, private respondent foreclosed the real estate mortgage for failure
to pay the loan on maturity. On January 7, 1974, the subject land was sold at public
auction to private respondent, being the highest bidder for P3,009.37. For failure to
exercise the right of redemption, private respondent consilidated its ownership over the
subject land. On October 4, 1982, possession thereof was taken from Jennifer Roxas,
daughter of Manuel Roxas, and delivered by the sheriff to private respondent.
On September 2, 1981, petitioner filed a complaint for cancellation of foreclosure of
mortgage and annulment of auction sale against private respondent before the Regional
Trial Court of Roxas City, docketed as Civil Case No. V-4543.
In her complaint, petitioner claimed that Manuel Roxas never informed her about the
approval of the loan. When the loan matured, she did not received any demand for
payment from private respondent nor was there any information from Manuel Roxas
about the maturity of the loan. The foreclosure did not comply with the requirement of
giving written notices to all possible redemptioners, neither did Manuel Roxas inform her
about the foreclosure. In 1974, she learned of the foreclosure for a certain Rosario
Pelobello. In that same year, she went to private respondent to inquire about the status
of her loan, that is, the amount of her total account and for that matter, she asked for a
statement of account. Her request was refused or ignored. After repeated requests
therefor went unheeded, she consulted her lawyer, who sent a letter to private
respondent, requesting for said statement of account. On May 10, 1981, she wrote
another letter to private respondent, reiterating her previous request. Private respondent
finally replied, informing petitioner that it already foreclosed the subject land and it can
no longer be redeemed since the redemption period has expired on March 6, 1975.
Petitioner was able to obtain her statement of account only on August 19, 1981. She
consigned with the trial court the amount of P4,194.50 as redemption price of the subject
land.
Refuting the claims of petitioner, private respondent contended in its answer that
petitioner never cared about the payment of her loan although she knew of the status of
her account; that she was duly notified of the foreclosure and public auction sale since
notice to Manuel Roxas, her agent, was notice to the principal; that the sheriff duly posted
copies of the notice of foreclosure sale in conspicuous public places before the actual
auction sale; and that she acted negligently in not taking steps to redeem the subject land.
On January 20, 1989, the trial court rendered judgment in favor of petitioner. The
dispositive portion of its decision reads:
WHEREFORE, a decision is rendered declaring:
1. As null and void the public auction sale of Lot 3108 mortgaged by plaintiff Consuelo D.
Roxas thru her attorney-in-fact Manuel D. Roxas in favor of the defendant Rural Bank of
Dumalag, (Capiz) Inc. conducted by the Provincial Sheriff Ex-Officio of Capiz on January 7,
1974, and all proceedings connected therewith, or related to the sale at public auction of
Lot 3108 situated at Tanza Norte, Panay, Capiz, including the cancellation of the
Certificate of Public Auction;
2. Allowing plaintiff Consuelo D. Roxas to redeem the land from the defendant Rural Bank
of Dumalag (Capiz) Inc., for the amount of P4,194.50 as consigned by plaintiff with this
court;
3. Ordering defendant Riral Bank to reconvey the mortgaged premises to plaintiff
Consuelo D. Roxas or her representative;
4. Costs against the defendants.
17
SO ORDERED.2
The trial court ratiocinated that private respondent failed to give notice of foreclosure to
petitioner as owner of the property and there was no compliance with the requirements
of Section 5 of Republic Act No. 720,3 as amended by Republic Act No. 5939, the pertinent
portion of which, provides:
The foreclosure of mortgages covering loans granted by rural banks shall be exempt from
the publication in newspapers now required by law where the total amount of the loan,
including interests due and unpaid, does not exceed three thousand pesos. It shall be
sufficient publication in such cases if the notices of foreclosure are posted in at least three
of the most conspicuous public places in the municipality and barrio where the land
mortgaged is situated during the period of sixty days immediately preceding the public
auction. Proof of publication as required herein shall be accomplished by affidavit of the
sheriff or officer conducting the foreclosure sale and shall be attached with the records
of the case:. . . . (emphasis supplied)
The notices of foreclosure were posted in the municipality where the subject land was
located and in Roxas City, but not in the barrio. Moreover, there was no affidavit of the
sheriff who conducted the sale, attached to the records of the case.
On elevating the matter to the Court of Appeals, said court reversed the decision of the
trial court.4 According to the appellate court, Section 5 of R.A. NO. 720 does not require
personal notification to the martgagor in case of foreclosure and there was substantial
compliance with the requirements of said law.
Hence, the present petition seeking reversal by petitioner of respondent court's and
raising as issues whether or not respondent court acted correctly:
1) in reversing the decision of the trial court, despite failure to post notices in the barrio
where the land lies;
2) in not allowing redemption or recovery of the land on equitable, if not legal ground;
and
3) in not passing upon the issue of gross inadequacy of price.
Elaborating on these issues, petitioners asserts that the failure to post the notice in the
barrio where the mortgaged property is situated rendered the foreclosure and sale by
public auction void. She invokes Our ruling in the case of Tambunting, et al. v. Court of
Appeals, et al.,5 which held that the statutory provisions governing publication of notice
of mortgage foreclosure sales must be strictly complied with, and that a slight deviation
therefrom will invalidate the notice and render the sale voidable. If recovery cannot be
had under the strict provisions of law, it must be allowed under the liberal consideration
of equity in view of the special circumstances in this case: first, private respondent
admitted that it was always its paractice of notifying mortgagors of the maturity of their
loans, yet, in the case of petitioner, it did not do so; second, despite earlier requests,
private respondent gave the statement of account only in 1981; third, even after the
supposed foreclosure of the land in 1974, private respondent allowed petitioner to have
possession thereof, paying the taxes in her name until 1982, when private respondent
started to demand possession. The price paid by private respondent was only P3,009.37
while the total area of the subject land is more than fourteen hectares and a fishpond at
the time of the sale in 1974.
The dcision of respondent court is set aside.
The basic issue in this petition is easy to resolve by refering to Our previous decisions.
It is settled doctrine that failure to publish notice of auction sale as required by the statute
constitutes a jurisdiction defects with invalidates the sale.6 Even slight deviations
therefrom are not allowed.7
Section 5 of R.A. No. 720, as amended by R.A. No. 5939, provides that notices of
foreclosure should be posted in at least three (3) of the most conspicuous public places
in the municipality and barrio where the land mortgaged is situated.
In the case at bar, the Certificate of Posting which was executed by the sheriff states that
he posted three (3) copies of the notice of public auction sale in three (3) conspicuous
public places in the municipality of Panay, where the subject land was situated and in like
manner in Roxas City, where the public auction sale took place.8 It is beyond despute that
there was a failure to publish the notices of auction sale as required by law. Section 5
provides further that proof of publication shall be accomplished by an affidavit of the
sheriff or officer conducting the foreclosure sale. In this case, the sheriff executed a
certificate of posting, which is not the affidavit required by law. The rationale behind this
is simple: an affidavit is a sworn statement in writing. Strict compliance with the
aforementioned provisions is mandated. We, therefore, cannot sustain the view of
respondent court that there was substantial compliance with Section 5 of R.A. No. 720,
as amended, with respect to the affidavit of posting by the sheriff and the non-posting of
the required notice in the barrio where the land mortgaged is situated. Instead, We
declare the foreclosure and public auction sale of the subject land void.
With the conclusion thus reached, We find it unnecessary to resolve the other issues
raised by petitioner.
WHEREFORE, the petitioner is hereby GRANTED. The decision of the Court of Appeals
dated May 23, 1991 is SET ASIDE. The decision of the trial court is AFFIRMED, subject to
the MODIFICATION that paragraphs 2 and 3 are deleted. In lieu thereof: 2) petitioner is
18
required to pay forthwith private respondent the principal amount of her loan which is
P2,000.00 plus interest thereon at the rate stipulated upon or in the anbsence thereof, at
the legal rate per annum computed from the date the loan was obtained until the date of
consignation with the trial court; 3) declaring private respondent as entitled, in case of
failure of petitioner to pay in full her obligation with interest as aforementioned within
sixty (60) days from notice hereof, to foreclose its mortgage on Lot No. 3108, after due
compliance with the publication requirements of Section 5 of R.A. No. 720, as amended
by R.A. No. 5939, at public auction sale.

SO ORDERED.

Narvasa, C.J., Padilla and Regalado, JJ., concur.

19
G.R. No. 70987 January 30, 1987
GREGORIO Y. LIMPIN, JR. and ROGELIO SARMIENTO, petitioners,
vs.
INTERMEDIATE APPELLATE COURT and GUILLERMO PONCE, respondents.
Danilo A. Basa for petitioners.
Sycip, Salazar, Feliciano & Hernandez Law Office and Eugenio C. Lindo for private
respondent.
NARVASA, J:
Assailed in this petition for review is the decision of the Intermediate Appellate Court in
A.C.-G.R. No. 02516, entitled "Guillermo Ponce, versus Hon. Antonio P. Solano, etc., et
al.," the dispositive portion of which reads —
WHEREFORE, the orders dated October 16, 1983 1 and December 19, 1983 of the
respondent court, so far as they deny the confirmation of the sale of the lots formerly
covered by TCT Nos. 92836 and 92837, are SET ASIDE and the respondent court is hereby
ORDERED to confirm the sale and issue a writ of possession to the petitioner with respect
to the aforesaid lots, subject to the equity of redemption of the respondent Rogelio V.
Sarmiento. Without costs.
SO ORDERED.
The conflict in claims resulting from the mortgage and subsequent sale to different
persons of the same real property, and the execution sale thereof at a still later date at
the instance of yet another party, is what is chiefly involved in the case at bar, as well as
the matter of the remedies available to correct errors in the execution of a final and
executory judgment.
On February 28, 1973, four lots covered by TCTs Nos. 92836, 92837, 92839 and 92840 of
the Register of Deeds of Quezon City were mortgaged by the spouses Jose and Marcelina
Aquino to Guillermo Ponce and his wife Adela (since deceased) as security for a loan of
P2,200,000.00. The mortgages were registered on March 1, 1973. Two of the lots, those
covered by TCTs Nos. 92836 and 92837, were afterwards sold in 1978 by the Aquinos to
the Butuan Bay Wood Export Corporation, which caused an adverse claim to be annotated
on the certificates of title on February 24, 1978. 2
In 1979, Gregorio Y. Limpin, Jr. obtained a money Judgement against Butuan Bay Wood
Export Corporation in Civil Case No. 10463 of the Court of First Instance of Davao. To
satisfy the judgment, the lots covered by TCTs Nos. 92836 and 92837 were levied upon
on September 3, 1980 and sold at public auction to Limpin as the highest bidder for the
sum of P517,485.41 on October 6, 1980. On order of the trial court, the covering titles
were cancelled and in their stead TCTs Nos. 285450 and 285451 were issued to Limpin.
On November 21, 1981, Limpin sold the two lots to Rogelio M. Sarmiento. By virtue of
said sale, TCTs Nos. 285450 and 285451 were cancelled on November 4, 1983, and
replaced by TCTs Nos. 307100 and 397124 in Sarmiento's name. 3
On September 2, 1980 (a day before Limpin's levy on the two lots), Ponce filed suit against
the Aquino spouses for judicial foreclosure of the mortgage over the Aquinos' four lots.
The case was docketed as Civil Case No. Q-30726 of the former Court of First Instance of
Quezon City. On June 8, 1982, judgment was rendered in favor of Ponce. After the
judgment became final, the Trial Court, in an order dated September 13, 1983, directed
the sale at public auction of the four (4) mortgaged lots to satisfy the judgment. On
October 12, 1983, the four lots, including those formerly covered by TCTs Nos. 92836 and
92837, were sold to Ponce himself whose bid of P5,200,000.00 was the highest and
exactly correspond to the judgment debt. On the same day, the sheriff's certificate of sale
was registered. 4
Ponce then moved for the confirmation of the sale and the issuance of a writ of possession
in his favor covering an the four lots. But the Trial Court, by order dated October 26, 1983,
confirmed only the sale of the lots covered by TCTs Nos. 02839 and 92840, refusing to
confirm the sale or issue a writ of possession in regard to the lots covered by TCTs Nos.
92836 and 92837 on the ground that those titles had already been cancelled and new
ones issued to Gregorio F. Limpin, by order of February 16, 1982 of the Court of First
Instance of Davao City in Civil Case No. 10463, already referred to.
Ponce filed a motion for reconsideration and notified Limpin. Limpin however refused to
participate in the hearings contending that the Court had no jurisdiction over his person;
but he did comment that the mortgage over the lots covered by TCTs Nos. 92836 and
92837 had been released by Ponce by virtue of a "Partial Release of Real Estate Mortgage"
dated July 20, 1977. The Trial Court denied Ponce's motion for reconsideration,
whereupon he sought corrective relief by filing a special civil action for certiorari and
mandamus in the Intermediate Appellate Court, impleading Limpin and Rogelio M.
Sarmiento, Limpin's vendee, as private respondents. 5
After hearing and submission by the parties of extensive memoranda as well as
documentary evidence, the respondent Appellate Court rendered the questioned
decision on February 28, 1985, setting aside the judgment of the Trial Court which denied
the confirmation of the sale of the lots formerly covered by TCTs Nos. 92836 and 92837,
and ordering said Court to confirm the same and issue a writ of possession to Ponce with
respect thereto, subject to Sarmiento's equity of redemption.
20
Hence, this petition for review, filed by Limpin and Sarmiento.
The petition should be denied.
The petitioners' contention that the action of certiorari and mandamus (instituted by
Ponce in the Intermediate Appellate Court) was not the proper remedy is not well taken.
The Appellate Court disposed of this preliminary issue as follows:
Nor is there any merit in the argument of the respondents that petitioner's remedy is to
appeal from the orders denying the motion for confirmation of the sale. The respondents
claim that these orders are final orders and cite in support of their contention the decision
in Domalante vs. Martinez, 20 SCRA 1136 (1967), where it was held that "An order of
confirmation in court foreclosure proceedings is a final order, not merely interlocutory.
The right of appeal therefore, has long been recognized." The Court was there speaking
of an order confirming the sale, as between the parties to a mortgage, not of an order,
such as the ones herein in question, denying confirmation because a third party, not a
party in the foreclosure proceedings, asserts a right to the properties sought to be
foreclosed. Only a separate proceeding, such as the present case, could possibly
determine mine the rights of such party. (See Rivero de Ortega v. Natividad, 71 Phil. 340
(1941).lwphl@itç 6
Certain it is that courts have plenary authority and control over the execution of their final
and executory judgments and orders. 7 Indeed, once that authority i timely and properly
in voked, it becomes the court's ministerial and mandatory function to direct execution. 8
That authority lasts until the judgments are fully satisfied, subject only to the time
limitations prescribed therefor. 9With particular reference to the execution of a judgment
hi a mortgage foreclosure action, the authority to direct and effect the same exists until
the confirmation of the foreclosure sale (and issuance and implementation of the writ of
possession), confirmation being the final act which disposes of the case. 10
Certain it is too, that execution of final and executory judgments may no longer be
contested and prevented, and no appeal should lie therefrom; otherwise, cases would be
interminable, and there would be negation of the overmastering need to end
litigations. 11
There may, to be sure, be instances when an error may be committed in the course of
execution proceedings prejudicial to the rights of a party. These instances, rare though
they may be, do call for correction by a superior court, as where —
1) the writ of executio nvaries the judgment 12
2) there has been a change in the situation of the parties making execution inequitable or
unjust; 13
3) execution is sought to be enforced against property exempt from execution; 14
4) it appears that the controversy has never been submitted to the judgment of the
court; 15
5) the terms of the judgment are not clear enough and there remains room for
interpretation thereof; 16 or,
6) it appears that the writ of execution has been improvidently issued, or that it is
defective in substance, or is issued against the wrong party, or that the judgment debt
has been paid or otherwise satisfied, or the writ was issued without authority;17
In these exceptional circumstances, considerations of justice and equity dictate that there
be some mode available to the party aggrieved of elevating the question to a higher court,
That mode of elevation may be either by appeal (writ of error or certiorari, 18 or by a
special civil action of certiorari, prohibition, or mandamus.) 19
The petitioners also question the jurisdiction of the Intermediate Appellate Court over
their persons, alleging that they were not original parties to the action for judicial
foreclosure. It appears, however, that despite awareness of this ostensible defect, they
fully participated without objection in the certiorari and mandamus proceedings before
the respondent Appellate Court. Having thus voluntarily appeared and seen the case
through its final resolution, they cannot now be permitted to turn about and repudiate
the Appellate Court's jurisdiction over them.
This Court has ruled:
* * * * And as we have previously quoted approvingly "a party cannot invoke the
jurisdiction of a court to secure affirmative relief against his opponent and, after obtaining
or failing to obtain such relief, repudiate or question that same jurisdiction." While the
jurisdiction of a tribunal may be challenged at any time, sound public policy bars the
petitioners from so doing after having procured that jurisdiction themselves, speculating
on the fortunes of litigation.
xxx xxx xxx
The petitioners, to borrow the language of Justice Bautista Angelo, "cannot adopt a
posture of double-dealing without running afoul of the doctrine of estoppel." The
principle of estoppel is in the interest of a sound administration of the laws. It should
deter those who are disposed to trifle with the courts by taking inconsistent positions
contrary to the elementary principles of right dealing and good faith. For this reason, this
Court closes the door to the petitioners' challenge against the jurisdiction of the Court of
Appellants' and will not even honor the question with a pronouncement.20
21
Petitioner, however, is estopped, on ground of public policy, from invoking the plea of
lack of jurisdiction after submitting itself to the jurisdiction of the Court of Appeals and
assailing its jurisdiction only after an adverse judgment was rendered against the
petitioner. ... 21
The petitioners further argue that the Appellate Court erred in according superiority to
the mortgage rights of Ponce over the levy and sale in favor of petitioner Limpin and the
subsequent sale of the property to petitioner Sarmiento.
The Appellate Court correctly ruled that the rights and interests of petitioners Limpin and
Sarmiento to the property in question are subordinate to those of respondent Ponce, who
holds a prior and senior lien. According to said Court:
* * * This case is controlled by the decision in Santiago v. Dionisio, 92 Phil. 495 (1935). In
the Santiago case, Ramon San Diego mortgaged his land to Eulalia Resurreccion. Later he
sold it to Apolonia Santiago. As the mortgage debt was not paid, Resurreccion had the
mortgage foreclosed. The Supreme Court upheld the sale to Dionisio, subject, however,
to the equity of redemption of Santiago. The Court stated:
... [T]he effect of the failure to implead a subordinate lienholder or subsequent purchaser
or both is to render the foreclosure ineffective as against them, with the result that there
remains in their favor the "unforeclosed equity of redemption." But the foreclosure is
valid as between the parties to the suit. (Ibid; 2 Moran's Rules of Court, 3rd ed., p. 239)
Applied to this case, this means that the sale to Ponce, as the highest bidder in the
foreclosure sale of the two lots in question should have been confirmed, subject to
Limpin's (and now Sarmiento's equity to redemption. As held in Santiago v. Dionisio supra,
the registration of the lands, first in the name of Limpin and later of Sarmiento, was
premature. At most what they were entitled to was the registration of their equity of
redemption. 22
Moreover:
The superiority of the mortgagee's lien over that of a subsequent judgment creditor is
now expressly provided in Rule 39, Section 16 of the Revised Rules of Court, which states
with regard to the effect of levy on execution that it shall create a lien in favor of a
judgment creditor over the right title and interest of the judgment debtor in such property
at the time of the levy, subject to the liens or encumbrances then existing. 23
It is well settled that a recorded mortgage is a right in rem, a hen on the property whoever
its owner may be. 24 The recordation of the mortgage in this case put the whole world,
petitioners included, on constructive notice of its existence and warned everyone who
thereafter dealt with the property on which it was constituted that he would have to
reckon with that encumbrance. Hence, Limpin's subsequent purchase of the "interests
and participation" of Butuan Bay Wood Export Corporation in the lots covered by TCTs
Nos. 92836 and 92837, as well as the sale of the same to Sarmiento on November 21,
1981, were both subject to said mortgage. On the other hand, Ponce's purchase of the
lots mortgaged to him at the foreclosure sale on October 12, 1983, was subject to no prior
lien or encumbrance, and could in no way be affected or prejudiced by a subsequent or
junior lien, such as that of Limpin. 25 Petitioner Sarmiento having acquired no better right
than his predecessor-in-interest, petitioner Limpin, his title must likewise fail.
The fact that at the time Ponce foreclosed the mortgage on October 21, 1983, the lots
had already been bought by Limpin and subsequently sold to Sarmiento is of no
consequence, since the settled doctrine is that the effects of the foreclosure sale retroact
to the date of registration of the mortgage, i.e., March 1, 1973 in the present case.
* * * It is well to note that the mortgage in favor of the late Ramon Eugelio was annotated
on November 13, 1952 at the back of the certificates of title in controversy, while the
adverse claim was only annotated on the same certificate more than one year later, on
December 21, 1953. Hence, the adverse claim could not effect the rights of the
mortgagee; and the fact that the foreclosure of the mortgage and the consequent public
auction sale have been effected long after the annotation of the adverse claim is of no
moment, because the foreclosure sale retroacts to the date of registration of the
mortgage. 26
Anent the claim that respondent Ponce executed a deed of partial release of his mortgage
on July 20, 1977, the evidence discloses that Ponce and Jose Aquino, the mortgagor,
thereafter executed separate affidavits dated December 1, 1983, stating that the said
partial release was void, not only for want of consideration but also for lack of the
signatures of Ponce's two sons who at the time of the execution of the document, were
co-mortgagees as successors and heirs of Mrs. Adela Ponce. Moreover, the Deed of Partial
Release was not registered but had simply been attached, together with the Deed of Sale
of the lands to Butuan Bay Wood Export Corporation, to said corporation's affidavit of
adverse claim, the last being the document which was actually registered, on February 4,
1978 as already stated. Thus the mortgage in favor of Ponce and his late wife was still
subsisting, when the notice of levy in favor of Limpin was annotated on the original of
OCTs Nos. 92836 and 92837, and even when the execution sale in favor of Limpin
pursuant to the levy was registered. Said annotation was cancelled only on November 25,
1981, after the properties had been sold on execution to Limpin on October 6, 1981.
The petitioners finally assert that respondent Ponce did not have a right of action for
foreclosure over the lots in question in the Trial Court, much less to pursue this case, first
in the respondent Intermediate Appellate Court and now, before this Court, because as
early as August 18, 1976, he and his wife had donated the lots to the Doña Josefa Edralin
22
Marcos Foundation and the donation had been accepted on August 31, 1976. However,
that donation was never registered, a fact that the petitioners admit. Even if this Court
were inclined to take up that issue now, though raised only for the first time, it is obvious
that no resolution thereof could possibly improve the petitioners' position as against that
of the private respondent or the latter's transferee.

WHEREFORE, the petition is denied, with costs against petitioners.

SO ORDERED.

Yap (Chairman), Melencio-Herrera, Gutierrez, Jr., Cruz and Gancayco, JJ., * concur.

23
G.R. No. 106953 August 19, 1993
CESAR SAN JOSE AND MARGARITA BATONGBAKAL, petitioners,
vs.
HON. COURT OF APPEALS, SPS. MARCOS DE GUZMAN AND GLORIA DE
GUZMAN, respondents.
Rosendo G. Tansinsin, Jr. for petitioners.
Dioscoro P. Avanceña for private respondents.
PADILLA, J.:
In this Petition for Review, Cesar San Jose and Margarita Batongbakal (hereinafter
referred to as petitioner-spouses), seek to set aside the decision of the Court of
Appeals ** in C.A. G.R. No. 30769-CV entitled "Spouses Cesar San Jose and Margarita
Batongbakal vs. Spouses Marcos de Guzman and Gloria de Guzman".
The relevant facts in this case are as follows:
Petitioner-spouses filed a complaint to annul the extra-judicial foreclosure sale conducted
by the Provincial Sheriff of Bulacan of the property covered by T.C.T. No. T-159703 located
in Duhat, Bocaue, Bulacan.
The land was mortgaged by the petitioner-spouses to private respondent-spouses Marcos
and Gloria de Guzman on 14 April 1972 as security for the payment of a loan of P12,000.00.
For allegedly failing to comply with the conditions of the mortgage, the private
respondent-spouses extra-judicially foreclosed the mortgage and the land was sold at a
sheriff's sale held on 25 November 1975 with respondent-spouses as purchasers thereof.
Consequently, TCT No. T-159703 was cancelled and TCT No. T-30,762(M) was issued in
the name of respondent-spouses.
That there was failure to pay the loan obtained from the respondent-spouses and that
the latter had the right to foreclose the mortgage either judicially or extrajudicially are
not disputed. The only issue to be resolved in this case is whether or not the extra-judicial
foreclosure sale complied with the requirements of Act No. 3135 as amended by Act No.
4118 which governs the extra-judicial foreclosure of real estate mortgage.
Petitioner-spouses contend that the extra-judicial foreclosure sale was null and void for
the following reasons:
1) The Petitioner-spouses were not notified of the extra-judicial foreclosure;
2) The Sheriff's certificate of posting of notice was not presented;
3) There was no proof that the newspaper in which the notice of extra-judicial foreclosure
sale was made was one of general circulation; and
4) The property mentioned in the Notice of Sheriff's Sale and in the minutes of auction
sale was covered by TCT No. T-169705 not by TCT No.
T-159703, the title to the mortgaged property subject of the foreclosure sale.
The trial court upheld the validity of the foreclosure sale. *** On appeal, the Court of
Appeals in its aforecited decision dated 20 March 1992 likewise held that the foreclosure
sale was valid. A Motion for Reconsideration was denied on 26 August 1992. Hence this
petition for review.
The provision of Act No. 3135 as amended by Act No. 4118 relevant to the issues in this
case is Section 3 which states:
Sec. 3. Notice shall be given by posting notices of sale for not less that twenty (20) days
in at least three public places of the municipality or city where the property is situated,
and if such property is worth more than four hundred pesos, such notice shall also be
published once a week for at least three consecutive weeks in a newspaper of general
circulation in the municipality or city.
In Tambunting v. Court of Appeals,1 the Court stressed that the statutory provisions
governing publication of notice of mortgage foreclosure sales must be strictly complied
with, and that even the slightest deviations therefrom will invalidate the notice. In the
case at bar, the Notice of Sheriff's sale referred to the property covered by TCT No. T-
169705. This was the notice actually published in "The New Record" as shown by the
Affidavit of Publication executed by the Business Manager of the aforementioned
publication. The trial court and the Court of Appeals upheld the validity of the Notice
based on the theory that although the property to be sold pursuant to the foreclosure of
mortgage was indeed covered by TCT No. T-159703 and not by TCT No.
T-169705, the technical description, however, in the notice was the actual and correct
technical description of the property. Both the trial court and the Court of Appeals held
that the discrepancy in the title number was "purely a typographical error" which "did not
render null and void the public auction sale held by the Sheriff. The number of the transfer
certificate as an identification of real property is not controlling. What controls is the
technical description."2
We disagree and consequently we reverse the decision of the Court of Appeals.
In the Tambunting case, 3 this Court stated that the failure to advertise a mortgage
foreclosure sale in compliance with statutory requirements constitutes a jurisdictional
24
defect invalidating the sale and that a substantial error or omission in a notice of sale will With costs against the private respondents.
render the notice insufficient and vitiate the sale.
SO ORDERED.
The notice of Sheriff's Sale, in this case, did not state the correct number of the transfer
certificate of title of the property to be sold. This is a substantial and fatal error which Narvasa C. J., Regalado and Nocon, JJ., concur.
resulted in invalidating the entire Notice. That the correct technical description appeared Puno, J., took no part.
on the Notice does not constitute substantial compliance with the statutory requirements.
The purpose of the publication of the Notice of Sheriff's Sale is to inform all interested
parties of the date, time and place of the foreclosure sale of the real property subject
thereof. Logically, this not only requires that the correct date, time and place of the
foreclosure sale appear in the notice but also that any and all interested parties be able
to determine that what is about to be sold at the foreclosure sale is the real property in
which they have an interest.

The Court is not unaware of the fact that the majority of the population do not have the
necessary knowledge to be able to understand the technical descriptions in certificates of
title. It is to be noted and stressed that the Notice is not meant only for individuals with
the training to understand technical descriptions of property but also for the layman with
an interest in the property to be sold, who normally relies on the number of the certificate
of title. To hold that the publication of the correct technical description, with an incorrect
title number, of the property to be sold constitutes substantial compliance would
certainly defeat the purpose of the Notice. This is not to say that a correct statement of
the title number but with an incorrect technical description in the notice of sale
constitutes a valid notice of sale. The Notice of Sheriff's Sale, to be valid, must contain
the correct title number and the correct technical description of the property to be sold.

We need not discuss the other grounds for nullifying the foreclosure sale having found
that there was no compliance with the statutory notice requirement.

WHEREFORE, the decision of the Court of Appeals is hereby SET ASIDE and a new decision
rendered:

1) Declaring the Extra-judicial Foreclosure Sale of the property of the petitioner-

spouses null and void.

2) Ordering the appropriate Register of Deeds to reinstate Transfer Certificate of Title No.
T-159703 in the name of petitioner Margarita Batongbakal married to petitioner Cesar
San Joso, giving it full force and effect as though it had never been cancelled.

3) Ordering the cancellation of Transfer Certificate of Title No.

T-30.762 (M) in the name of private respondent spouses Marcos and Gloria de Guzman
for being void ab initio.

25
G.R. No. L-45322 July 5, 1989 (4) should she fail to pay, or deposit with the Clerk of Court, the above amounts within a
period of ninety (90) days from receipt of a copy of the decision, the four mortgaged lots
GOVERNMENT SERVICE INSURANCE SYSTEM (GSIS), petitioner, would be sold at public auction to satisfy the mortgage debt, and the surplus if any should
vs. be delivered to the defendant Nelita Vda. de Bacaling. (pp. 12-13, Record on Appeal,)
THE COURT OF FIRST INSTANCE OF ILOILO, BRANCH III, ILOILO CITY and NELITA M. VDA.
DE BACALING & MARIA TERESA INTEGRATED DEVELOPMENT Mrs. Bacaling failed to pay the judgment debt within 90 days after receipt of the decision
CORPORATION, respondents. of the court. Consequently, the mortgaged lots were sold at public auction on February
28, 1961. The GSIS was the highest bidder at the sale.
J. T. Barrera and Associates for respondent MATIDO.
On March 1, 1961, the GSIS filed a motion for confirmation of the sale of the property to
Ramon A. Gonzales for Nenita Bacaling. it (p. 25, Record on Appeal). On October 10, 1961, it reiterated said motion and further
asked for a deficiency judgment against the mortgagor, its bid of P74,558.25 being
inadequate to cover the judgment debt which had swelled to P339,302.58 as of August
GRIÑO-AQUINO, J.: 31, 1961 (p. 30, Record on Appeal).

The legal issue presented in this appeal by certiorari is whether, after the judicial
foreclosure of a real estate mortgage and the confirmation of the sale, the trial court may
grant or fix another period for the redemption of the foreclosed property by the assignee
of the mortgagor's equity of redemption.
In 1957, a real estate loan of P600,000 payable in monthly installments within a period of
ten (10) years with 7% interest per annum, was granted to the spouses Ramon and Nelita
Bacaling by the petitioner, Government Service Insurance System (hereafter GSIS) for the
development of the Bacaling-Moreno subdivision. To secure the repayment of the loan,
the Bacalings executed in favor of the GSIS a real estate mortgage on four (4) lots owned
by them. Out of the approved loan of P600,000, only P240,000 had been released to them
by the GSIS as of November 11, 1957.
The Bacalings failed to finish the subdivision project and pay the amortizations on the
loan so the GSIS, on May 22, 1959, filed in the Court of First Instance of Iloilo a complaint
for judicial foreclosure of the mortgage (Civil Case No. 5233). During the pendency of the
case, Ramon Bacaling passed away.
In a decision dated October 5, 1960, the court ordered the widow, for herself and as
administratrix of the estate of Ramon Bacaling, to pay the GSIS:
On December 18, 1972, respondent Maria Teresa Integrated Development Corporation
(MTIDC), as alleged assignee of the mortgagor's "right of redemption," filed a "Motion to
Exercise the Right of Redemption" (p. 34, Record on Appeal). The motion was granted by
the trial court in an order dated December 20, 1972. Check No. MK-45594 of the China
Banking Corporation in the amount of P l,100,000 was delivered by MTIDC to the GSIS as
payment of the redemption price. However, the check was dishonored by the drawee
bank because it was drawn against a closed account.
On motion of the GSIS the court issued on February 3, 1973 an order declaring null and
void the redemption of the property by respondent MTIDC.
Thereafter, written proposals were sent by said respondent to the GSIS for the
redemption of the foreclosed property, but the GSIS required cash payment of the
redemption price.
On October 25, 1975, respondent Nelita Bacaling filed a motion to re-open the case so
she could prove the inadequacy of the price of the sale of the mortgaged property (p. 63,
Record on Appeal). The GSIS filed an opposition. In an order dated December 8, 1975,
respondent court denied Nelita's motion, confirmed the sale of the mortgaged property,
and rendered a deficiency judgment in favor of GSIS (p. 76, Record on Appeal).

(1) P240,000 with interest at 7% per annum from May 22, 1959 until the amount was fully
paid;
(2) to pay the sum of P21,879.56 as accumulated interests on the debt up to February 11,
1959 plus 7% interest per annum, from February 12,1959 until fully paid;
(3) to pay l0% of the judgment as attorney's fees and costs; and
On December 19, 1975, fourteen (14) years after the foreclosure sale on February 28,
1961 and almost three (3) years after the court had annulled on February 3, 1973 its
redemption of the foreclosed property, respondent MTIDC filed a motion for
reconsideration of the court's order and sought the restoration of its right of redemption.
The court, over the strong opposition of the GSIS, reconsidered on January 19, 1976 its
order of December 8, 1975 and granted MTIDC a period of one year after the finality of
its order of January 19, 1976 to redeem the Bacaling properties (p. 94, Record on Appeal).

26
The GSIS sought a reconsideration of that order on the ground that the court may not
extend the period for the redemption of the property (p. 95, Record on Appeal).
On February 12,1976, the court modified its order of January 19, 1976 by giving MTIDC
one (1) year from January 19, 1976 within which to redeem the Bacaling property, instead
of one year from the finality of the January 19, 1976 order (p. 101, Record on Appeal).
Petitioner received a copy of this last order on February 12,1976.
On March 1, 1976, the GSIS appealed by certiorari to this Court raising purely legal
questions (p. 102, Record on Appeal).
In her Comment on the petition for review, Nelita Vda. de Bacaling asked for the dismissal
of GSIS petition on the grounds that: (1) the appeal has become moot and academic
because the one-year redemption period fixed by the trial court had expired without the
properties being redeemed; and (2) the questioned order (dated February 12, 1976) is
also pending appeal in the Court of Appeals (CA-G.R. No. 60842) hence, this case should
be remanded to that Court.
The respondent MTIDC, in its Comment, alleged the same grounds for the dismissal of the
appeal, and further argued the legality of the lower court's order because anyway the
GSIS entertained and encouraged its overtures for the redemption of the foreclosed
property.
On May 30,1977, this Court, through the First Division, gave due course to the petition.
On October 21, 1977, We denied the motion to remand this appeal to the Court of
Appeals.
After the respondents had filed their Comments, the case was declared submitted for
decision on January 27, 1978.
Considering the long lapse of the time that this case has been awaiting adjudication, and
apprehensive that supervening events may have rendered the issues moot and academic,
this Court on September 21, 1988 gave the parties ten (10) days from notice to manifest
whether they are still interested in prosecuting the case. In a Manifestation filed
November 16, 1988, the GSIS declared that it is still interested in prosecuting its appeal.
We find merit in the appeal. Sections 2 and 3, Rule 68 of the Rules of Court provide:
SEC. 2. Judgment on foreclosure for payment or sale. — if upon the trial in such action the
court shall find the facts set forth in the complaint to be true, it shall ascertain the amount
due to the plaintiff upon the mortgage debt or obligation, including interest and costs,
and shall render judgment for the sum so found due and order that the same be paid into
court within a period of not less than ninety (90) days from the date of the service of such
order, and that in default of such payment the property be sold to realize the mortgage
debt and costs.
SEC. 3. Sale of mortgaged property; effect. — When the defendant, after being directed
to do so as provided in the last preceding section, fails to pay the principal, interest, and
costs at the time directed in the order, the court shall order the property to be sold in the
manner and under the regulations that govern sales of real estate under execution. Such
sale shall not affect the rights of persons holding prior encumbrances upon the property
or a part thereof, and when confirmed by an order of the court, it shall operate to divest
the rights of all the parties to the action and to vest their rights in the purchaser,subject
to such rights of redemption as may be allowed by law. (Emphasis supplied.)
There is no right of redemption from a judicial foreclosure sale after the confirmation of
the sale, except those granted by banks or banking institutions as provided by the General
Banking Act (Limpin vs. Intermediate Appellate Court, G.R. No. 70987, Sept. 29,1988). This
has been the consistent interpretation of Rule 68 in a long line of decisions of this Court.
We may say, furthermore, that this Court has already held that in mortgage foreclosures
the rights of the mortgagee and persons holding under him are cut off by the sale when
duly confirmed, and with them the equity of redemption. The reason for that holding is
that the right of redemption being purely statutory, and there being no statute conferring
that right, it does not exist. (Benedicto vs. Yulo, 26 Phil. 166; Emphasis supplied.)
... When the foreclosure sale is validly confirmed by the court title vests upon the
purchaser in the foreclosure sale, and the confirmation retroacts to the date of the
sale (Binalbagan Estate, Inc. vs. Gatuslao, et al., 74 Phil. 128). Only foreclosure of
mortgages to banking institutions (including the Rehabilitation Finance Corporation) and
those made extrajudicially are subject to legal redemption, by express provision of statute,
and the present case does not come under exceptions. (Villar vs. Javier de Paderanga, 97
Phil. 608-609;Emphasis ours.)
Where the foreclosure is judicially effected, however, no equivalent right of redemption
exists. The law (Sec. 3, Rule 68, Rules of Court) declares that a judicial foreclosure sale,
'when confirmed by an order of the court, ... shall operate to divest the rights of all the
parties to the action and to vest their rights in the purchaser, subject to such rights of
redemption as may be allowed by law.' Such rights exceptionally 'allowed by law' (i.e.,
even after confirmation by an order of the court) are those granted by the charter of the
Philippine National Bank (Acts No. 2747 and 2938), and the General Banking Act (R.A. 337)
(See Moran, Comments on the Rules, 1970 Ed., Vol. 3, p. 273, citing Gonzales vs. PNB, 48
Phil. 824,828; and Martin, Rules of Court, etc., 3rd Ed., Vol. 3, p. 289, citing Villar vs. Javier
de Paderanga, 97 Phil. 64; Piano vs. Cayanong 7 SCRA 397). These laws confer on the
mortgagor, his successors in interest or any judgment creditor of the mortgagor, the right
27
to redeem the property sold on the foreclosure-after confirmation by the court of the
foreclosure sale — which right may be exercised within a period of one (1) year, counted
from the date of registration of the certificate of sale in the Registry of Property.

But, to repeat, no such right of redemption exists in case of judicial foreclosure of a

mortgage if the mortgagee is not the PNB or a bank or banking institution. In such a case,
the foreclosure sale when confirmed by an order of the court, ... shall operate to divest
the rights of all the parties to the action and to vest their rights in the purchaser.' There
then exists only what is known as the equity of redemption. This is simply the right of the
defendant mortgagor to extinguish the mortgage and retain ownership of the property
by paying the secured debt within the 90-day period after the judgment becomes final, in
accordance with Rule 68, or even after the foreclosure sale but prior to its confirmation.
(Limpin vs. Intermediate Appellate Court, G.R. No. 70987, September 29, 1988.)

Since the GSIS is not a bank or banking institution, its mortgage is covered by the general
rule that there is no right of redemption after the judicial foreclosure sale has been
confirmed. Hence, Judge Numeriano Estenzo exceeded his jurisdiction and acted with
grave abuse of discretion in granting the respondent, MTIDC, another one-year period to
redeem the Bacaling properties over the opposition of petitioner GSIS as mortgagee-
purchaser thereof at the public sale. His orders dated January 19, 1976 and February 12,
1976 are null and void.

WHEREFORE, the petition for certiorari is granted. The appealed orders dated January 19,
1976 and February 12, 1976 of Judge Numeriano Estenzo in Civil Case No. 5233 are hereby
annulled and set aside.

Costs against the private respondents.

SO ORDERED.

Narvasa, Cruz, Gancayco and Medialdea, JJ., concur.

28
G.R. No. 83498, October 22, 1991
SPS. MIGUEL S. KHO AND JUANITA KHO, PETITIONERS, VS. COURT OF APPEALS AND
BANCO FILIPINO, RESPONDENTS.
DECISION
PARAS, J.:
Petitioners are assailing the propriety of the lifting of the writ of preliminary injunction by
respondent Court of Appeals[1] which writ was issued by Branches IX and XIV of the
Regional Trial Court of Cebu City, alleging that in doing so, respondent Court acted with
grave abuse of discretion amounting to lack of jurisdiction [2] and virtually preempted the
lower court from determining the merits of the issues raised by the petitioners in Civil
Case No. CEB-759 now pending before Branch XIV of the Regional Trial Court of Cebu
City.[3]
The facts of the case are as follows: -
"On January 31, 1978, the spouses Kho (private respondents herein) constituted in favor
of herein petitioner Banco Filipino a real estate mortgage over a parcel of land registered
in the name of plaintiff Miguel Kho and covered by Transfer Certificate of Title No. 63021
of the Register of Deeds of Cebu City, located at Juan Luna St., Cebu City, with an area of
750.72 sq. meters, more or less, to guarantee a loan granted them by petitioner bank.
The real estate mortgage underwent amendments on June 7, 1978, March 5, 1979 and
finally, on September 24, 1980, when it was made to secure private respondents'
obligation with the bank in the total amount of TWO MILLION EIGHT HUNDRED SIXTY
NINE THOUSAND PESOS (P2,869,000.00) Philippine Currency, payable on or before
September 29, 1995.
"After managing to pay the sum of P688,060.00, the Kho spouses defaulted in the
payment of some amortizations. Hence, on May 13, 1982, Banco Filipino extrajudicially
foreclosed the mortgage. As the sole and highest bidder in the auction sale, the petitioner
bank purchased the mortgaged property for the sum of P4,153,865.47 covering the
plaintiff's obligations, interests, penalties and attorney's fees as agreed in the mortgage
contract. The certificate of sale was then duly registered on June 17, 1982."[4]
Counting one year from June 17, 1982, the petitioners had until June 17, 1983, within
which to redeem the property. In the meantime, the foreclosed property was leased out
to third parties and the rentals (fruits thereof) were remitted monthly by petitioners to
respondent bank, being the purchaser in the extrajudicial foreclosure. The end of the
redemption period was then fast approaching but still petitioners had not made any move
to redeem the foreclosed property. Then just about ten (10) days before the end of the
redemption period, on June 7, 1983 to be exact, petitioners filed with the Regional Trial
Court of Cebu (raffled off to Branch IX) a complaint for: "Annulment of Specific
Performance with Preliminary Injunction, etc." against Banco Filipino, The Provincial
Sheriff of Cebu and the Register of Deeds of Cebu Province later docketed as Civil Case
No. CEB-759 which action was actually for the annulment of the extrajudicial foreclosure
of mortgage. The verified complaint of petitioners specifically prayed for:
"x x x the Honorable Court before judgment and after hearing to issue a writ of
preliminary injunction restraining and enjoining the defendants jointly and severally from
obtaining a writ of possession or a final deed of conveyance over plaintiffs' land and
restrain the defendants from registering the same; as well as restraining and enjoining
the defendants from collecting any rentals of the properties of the plaintiffs." (p. 129,
Rollo)
On November 4, 1983, Judge Candido C. Aguinaldo of Branch IX, Regional Trial Court,
Cebu, granted the prayer of petitioners to which respondent bank strongly objected and
in its Urgent Motion to Lift Injunction prayed, to wit: -
"x x x to forthwith lift the order of injunction dated 4 November 1983, and require
plaintiffs to turn over to defendant bank all the income and rents they have received on
the subject property during the redemption period up to and including the date of their
actual remittance of the same.
29
'It is likewise prayed that the scheduled pre-trial conference on 17 May 1983 at WHEREFORE, the instant petition is DENIED for lack of merit. The assailed decision of
8:30 a.m. be cancelled and held in abeyance pending final determination of defendant respondent Court of Appeals lifting the writ of preliminary injunction is hereby AFFIRMED.
bank's motion to lift injunction." (pp. 144-145, Rollo) Let this case be REMANDED to the Regional Trial Court of Cebu City, Branch XIV for further
proceedings on Civil Case CEB-759.
In the meantime, present counsel of record for respondent bank entered his appearance.
Judge Aguinaldo claimed some relationship with him. Hence, the reraffle of the case to SO ORDERED.
another sala, Branch XIV - presided over by Judge Juan Y. Reyes. After more than 5
months' series of extensions, particularly on October 26, 1984, the petitioners finally
submitted their Memorandum in support of their opposition to the respondent bank's
aforestated Motion to Lift Injunction. On April 30, 1985, respondent bank's motion was
denied and a motion for reconsideration was thereafter immediately filed. While the
motion for reconsideration was pending, Judge Reyes retired and again there was a
reraffle of the case which resulted in its being assigned to Judge Meinrado P. Paredes, of
RTC XIII who denied on April 29, 1987, respondent bank's aforestated motion for
reconsideration.

Finally the three (3) above mentioned orders of November 4, 1983 (granting writ of
injunction); April 30, 1985 (denying respondent bank's motion to lift injunction), and April
29, 1987 (denying respondent bank's motion for reconsideration) were all reversed by
respondent Court in its decision dated February 17, 1988.

Petitioners then filed a motion for reconsideration on February 29, 1988 which was
denied thru a Court of Appeals resolution dated March 17, 1988, hence, this petition
dated March 25, 1988 with the following prayer -

"WHEREFORE, petitioners most respectfully pray that the decision of respondent Court
of Appeals dated February 17, 1988 be reversed and the Orders of the lower court dated
November 4, 1983 and April 30, 1985 be restored and further, that preliminary restraining
order and preliminary injunction be issued restraining and enjoining the defendants
jointly and severally from obtaining a writ of possession or a final deed of conveyance
over petitioners' land and to restrain the defendants from registering the same as well as
restraining and enjoining the defendants from collecting any rentals of the properties of
petitioners." (pp. 21-22, Rollo)

This petition is completely without merit.

The law and jurisprudence are clear that both during and after the period of redemption,
the purchaser at the foreclosure sale is entitled as of right to a writ of possession,
regardless of whether or not there is a pending suit for annulment of the mortgage or the
foreclosure itself (without prejudice of course to the eventual outcome of said case).
Hence, an injunction to prohibit the issuance of the writ of possession is entirely out of
place (See Act 3135).

30