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RESORT v G.R. No. 128567 pay the judgment obligation had not yet lapsed (in essence, the exercise of
GROUP September 2, 1994: The Motion to Quash was denied-- the subject judgment had
September 1, 2000 PURISIMA, J. become final and executory, and execution was now a matter of right. This was
TOPIC IN SYLLABUS: Judicial foreclosure Digest By:amb opposed by Huerta, which brought up the same to the CA via a petition for
SUMMARY: Syndicated won in a judicial foreclosure case. Huerta Alba, from certiorari averring the same arguments as the Motion to Quash.
1994-1995, kept questioning and seeking clarification, as it wanted to know the September 6, 1994: An auction sale was conducted and Syndicated Management
kind of redemptionary right applicable. The courts ruled that it was an equity of was declared the highest bidder. The sale was registered in the ROD on October 21
redemption with a ~90-day period. However, much later on (after filing pleading of the same year.
after pleading and motion after motion), Huerta invoked the provisions of the September 7, 1994: In the RTC, Huerta filed an Ex-Parte Motion for Clarification
General Banking Act, claiming that the original mortgagee was a bank, thus on the question on w/n the twelve month period of redemption for ordinary
allowing for a one-year period. The RTC allowed this in order to stay execution, execution applied in this case.
but the CA and SC set aside the RTC, noting that the invocation of the GBA should September 26, 1994: The RTC ruled that the applicable rule was equity of
have been during the answer, when invocation of the same as a counterclaim would redemption under Rule 68 (so the twelve month rule does not apply). Thereafter,
have defeated/qualified the relief prayed for. As such, it was estopped from Huerta filed an Exception to this order, as well as Motion to Set Aside Order,
invoking the same. claiming that the order materially altered the April 30, 1992 decision, declaring
that the judgment shall be satisfied under the rules on sale of real estate under
DOCTRINE:In judicial foreclosure, what is granted under Rule 68 is an equity of execution.
redemption, and not a right of redemption (the former has a much shorter period). September 30, 1994: The CA ruled that the period involved was a 150-day period
The exception to the rule is if the mortgagee is a bank, in which case a one-year (equity of redemption), computed from notification of Entry of Judgment (around
period from registration of the certificate of sale is allowed under the General March 14, 1994), such that the equity of redemption expired on September 11,
Banking Act (now GB Law). However, this period must be invoked at the first 1994. An MR was filed as to this decision.
instance during the Answer, as a Counterclaim. December 23, 1994: MR denied. Case(s) with the CA eventually became final and
executory on January 25, 1995.
FACTS: February 10, 1995: Trial court confirmed the sale of properties, and declared that
October 19, 1989: Syndicated Management filed a complaint for judicial foreclosure all pending incidents relating to its September 26, 1994 order had become moot and
of mortgage before the RTC Makati, seeking to foreclose four parcels of land academic. TCTs were then issued in favor of Syndicated.
mortgaged by Huerta Alba to Intercon Fund (where Syndicated was the assignee of February 27, 1995: Huerta FILED YET ANOTHER MOTION FOR
the loan). In its answer, Huerta Alba questioned the assignment as an ULTRA CLARIFICATION, this time with the CA. It sought clarification of the date of
VIRES act, and questioned the correctness of the charges and interest on the commencement of the one year period for redemption of the properties in question
mortgage debt. (on the ground that the lending entity may have been a credit institution; under the
April 30, 1992: RTC granted the foreclosure. General Banking Act, there would be a one year redemption period, not merely the
Sometime after: The case was appealed to the CA, which dismissed the appeal on shorter equity of redemption). This was merely NOTED by the CA, as all the
the ground of late payment of docket fees. The case was brought to the SC via rule decisions so far are now final and executory. As to the argument on the one year
65 certiorari. period, it should have ventilated this in the first instance, when it was seeking
December 13, 1993: SC affirmed the CA decision. An MR was filed against this clarification as to the 150-day period. Huerta took no further step from this ruling.
February 16, 1994: MR denied with finality. March 31, 1995: Syndicated filed a Motion for Issuance of Writ of Possession with
March 10, 1994: Huerta filed a motion for leave to present as second MR, but the the RTC. When the hearing for the Motion for Issuance of Writ of Possession took
leave was denied. place weeks later, Huerta's counsel suddenly entered appearance and asked for time
March 14, 1994: Decision became final and executory. to interpose their opposition. In its opposition, Huerta also filed a Motion to
July 4, 1994: Syndicated filed with the RTC a motion for execution, which was Compel Private Respondent (Syndicated) to Accept Redemption. There, it asserted
granted. When the sheriff attempted to levy on the properties, Huerta would filed its right to redemption under the General Banking Act on the ground that the
an Urgent Motion to Quash and Set Aside the Writ on the ground that the records original mortgagee was a credit institution.
of the case were still with the CA (therefore premature); thus, the 150-day period to
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July 21, 1995: This motion was GRANTED on the basis of the General Banking Bacaling v. Muya G.R. Nos. 148404-05
Act. April 11, 2002 De Leon, Jr., J.
TOPIC IN SYLLABUS: Judicial Foreclosure Digest By: Bries
Syndicated challenged the order via petition for CPM with the SC, which was SUMMARY: Nelita Bacaling and her spouse Ramon were owners of 3 parcels of
referred to the CA. In a resolution dated November 14, 1996, the CA ruled in favor land. In 1955 the landholding was subdivided into 110 sub-lots. The landholding
of Syndicated, hence this present petition by Huerta with the Supreme Court. was processed and approved as "residential" or "subdivision" by the NUPC. The
Bureau of Lands approved the corresponding subdivision plan for purposes of
PETITIONER’S ARGUMENT(S): There was a right of redemption given that developing the property into a low-cost residential community. In 1957, a real
the mortgagee was a credit institution. Such right of redemption under the General estate loan was granted to the spouses Bacaling by GSIS for the development of the
Banking Act has a one-year period from registration of certificate of sale. subdivision. To secure repayment, the Bacalings executed in favor of the GSIS a
REM over the 110 sub-lots. The Bacalings failed to pay the amortizations on the
ISSUE(S):What kind of right did Huerta have: a right to redemption, or an equity loan and consequently the mortgage constituted on the 110 sub-lots was foreclosed
of redemption? Was it seasonably invoked? (EQUITY OF REDEMPTION, not by the GSIS. The respondents entered and occupied the sub-lots—they claimed in
seasonably invoked) 1964 they were legally instituted by Bacaling’s administrator/overseer as tenant-
tillers, religiously paying rent and securing certificates of land transfer. In 1977 the
HELD: DENIED. City Council of Iloilo enacted Zoning Ordinance No. 212 declaring the sub-lots as
In Limpin v IAC, the Court held that in a judicial foreclosure, there is no right of "residential". Nelita, in 1989 was eventually able to restore to herself ownership of
redemption under the law similar to extrajudicial foreclosure (where Act 3135 the 110 sub-lots, and sell the land to Jose Juan Tong—she appointed him as her
grants a one-year period). The law declares that a judicial foreclosure sale, when attorney-in-fact, under an irrevocable SPA. 10 years after the perfection and
confirmed by an order of the Court, operates to divest the rights of all the parties to execution of the sale, Bacaling filed a complaint to nullify the contract of sale. DAR
the action and to vest the same in favor of the purchaser, subject to such rights of Region VI and Central Office: dismissed. OP reversed and found that the land had
redemption as may be allowed by law. An example of such is if the mortgagee is a been converted from agricultural to residential. SC: OP affirmed.
bank (under PNB Charter and General Banking Act), where a one year period from
registration of the certificate of sale exists. Outside of such, what only exists is an DOCTRINE: Only foreclosures of mortgages in favor of banking institutions and
equity of redemption, which is the right of the defendant mortgagor to extinguish those made extrajudicially are subject to legal redemption
the mortgage and retain ownership of the property by paying the secured debt PROCEDURAL ANTECEDENTS: Petition for Review of a consolidated CA
within the 90-day period after the judgment becomes final, in accordance with Rule Decision and its Resolution reversing the Decision and Resolution of the Office of
68, or even after the foreclosure sale but prior to its confirmation. the President.
FACTS: Nelita Bacaling and her spouse Ramon were owners of 3 parcels of land in
The right under RA 337 must be invoked seasonably.The facts show that it was Brgy. Cubay, Jaro, Iloilo City. These lots were duly covered by their respective
only on May 2, 1995, when Huerta filed the Motion to Compel Private Respondent TCTS. In 1955 the landholding was subdivided into 110 sub-lots covered by their
to Accept Redemption, when the right was first invoked. However, it should have respective TCTs, inclusive of the Registry of Deeds of the City of Iloilo. On May
invoked the right as a counterclaim to its answer, because it could have affected 16, 1955, the landholding was processed and approved as "residential" or
their rights entirely given thatthe General Banking Act had provisions that could "subdivision" by the National Urban Planning Commission (NUPC). On May 24,
have favored Huerta other than the one-year redemption period. (The counterclaim 1955 the Bureau of Lands approved the corresponding subdivision plan for
could have defeated/qualified the judgment/relief.) As such, it was now estopped purposes of developing the said property into a low-cost residential community
from invoking the same. which the spouses referred to as the Bacaling-Moreno Subdivision.
(Note that the TC invoked RA 337 later on, and the TC granted this invocation in In 1957, a real estate loan of P600,000 was granted to the spouses Bacaling by
its July 1995 order. This should not have been granted, as it effectively modified the GSIS for the development of the subdivision. To secure repayment, the Bacalings
law of the case, which was that the right afforded to Huerta was an unqualified executed in favor of the GSIS a REM over their parcels of land including the 110
equity of redemption. Granting this motion contradicted the CA's earlier rulings.) sub-lots. Out of the approved loan only P240,000 was released to them. The
Bacalings failed to pay the amortizations on the loan and consequently the
mortgage constituted on the 110 sub-lots was foreclosed by the GSIS. Nelita

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Bacaling (by then a widow) in 1989 was eventually able to restore to herself the irrevocable SPA, Tong (together with Bacaling) filed a petition for cancellation
ownership of the 110 sub-lots. of the certificates of land transfer against respondents and a certain Ruel with the
DAR Region VI Office. The DAR, however, dismissed the petition on the ground
According to the findings of the Office of the President, in 1972 and thereafter, that there had been no legitimate conversion of the classification of the sub-lots
respondents Muya, Crispin Amor, Jereza, Lazarte and Tonocante entered and from agricultural to residential prior to Oct. 21, 1972 when Operation Land
occupied the 110 sub-lots and grabbed exclusively for themselves the said 9.9631 Transfer under P.D. No. 72 took effect. Bacaling and Tong appealed to the DAR
hectare landholding. Apparently, respondents took advantage of the onset of Central Office but their appeal was rejected. The MR failed to overturn the ruling
martial law and the foreclosure of the lots by GSIS. They sowed the lots as if they of the Central Office Order.
were their own, and altered the roads, drainage, boundaries and monuments
established. Bacaling and Tong appealed the adverse DAR Orders to the Office of the President,
which reversed them and found that the land had been completely converted from
Respondents claim that in 1964 they were legally instituted by Bacalings agricultural to residential lots as a result of the declarations of the NUPC and the
administrator/overseer as tenant-tillers of the land on sharing basis with two and a Bureau of Lands and the factual circumstances, i.e., the GSIS loan with real estate
half hectares each for Muya, Amor, Tonocante and Lazarte, and one and a half mortgage, the division of the original 3 parcels into 110 sub-lots under individual
hectares for Jereza. In 1974, their relationship with the landowner was changed to certificates of title, and the establishment of residential communities adjacent to the
one of leasehold. They religiously delivered their rental payments to Bacaling as subject property, which proved the intention of spouses Bacaling to develop a
agricultural lessor. In 1980, they secured certificates of land transfer in their names residential subdivision. The OP Decision also categorically acknowledged the
for the sub-lots. They have made various payments to the Land Bank of the competence of the NUPC and the Bureau of Lands to classify the 110 sub-lots into
Philippines as amortizing owners-cultivators of their respective tillage. residential areas. Separate MRs were denied.

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

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