SPEC PRO 3rd Batch Rule 66, 67 and 68 predecessor of PIATCO, did not possess the requisite financial

or of PIATCO, did not possess the requisite financial capacity when it was
awarded the NAIA 3 contract and that the agreement was contrary to public policy.3
1

GR NO. 23728 Republic vs Sereno - too long :D At the time of the promulgation of the 2003 Decision, the NAIA 3 facilities had already
been built by PIATCO and were nearing completion.4 However, the ponencia was silent
2 as to the legal status of the NAIA 3 facilities following the nullification of the contracts,
as well as whatever rights of PIATCO for reimbursement for its expenses in the
construction of the facilities. Still, in his Separate Opinion, Justice Panganiban, joined
G.R. No. 166429 December 19, 2005 by Justice Callejo, declared as follows:

REPUBLIC OF THE PHILIPPINES, Represented by Executive Secretary Eduardo Should government pay at all for reasonable expenses incurred in the
R. Ermita, the DEPARTMENT OF TRANSPORTATION AND COMMUNICATIONS construction of the Terminal? Indeed it should, otherwise it will be unjustly
(DOTC), and the MANILA INTERNATIONAL AIRPORT AUTHORITY enriching itself at the expense of Piatco and, in particular, its funders, contractors
(MIAA), Petitioners, and investors — both local and foreign. After all, there is no question that the State
vs. needs and will make use of Terminal III, it being part and parcel of the critical
HON. HENRICK F. GINGOYON, In his capacity as Presiding Judge of the Regional infrastructure and transportation-related programs of government.5
Trial Court, Branch 117, Pasay City and PHILIPPINE INTERNATIONAL AIR
TERMINALS CO., INC., Respondents.
PIATCO and several respondents-intervenors filed their respective motions for the
reconsideration of the 2003 Decision. These motions were denied by the Court in
DECISION its Resolution dated 21 January 2004 (2004 Resolution).6However, the Court this time
squarely addressed the issue of the rights of PIATCO to refund, compensation or
TINGA, J.: reimbursement for its expenses in the construction of the NAIA 3 facilities. The holding
of the Court on this crucial point follows:

The Ninoy Aquino International Airport Passenger Terminal III (NAIA 3) was conceived,
This Court, however, is not unmindful of the reality that the structures comprising
designed and constructed to serve as the country’s show window to the world.
the NAIA IPT III facility are almost complete and that funds have been spent by
Regrettably, it has spawned controversies. Regrettably too, despite the apparent
PIATCO in their construction. For the government to take over the said facility, it
completion of the terminal complex way back it has not yet been operated. This has
has to compensate respondent PIATCO as builder of the said structures. The
caused immeasurable economic damage to the country, not to mention its deplorable
compensation must be just and in accordance with law and equity for the
discredit in the international community.
government can not unjustly enrich itself at the expense of PIATCO and its
investors.7
In the first case that reached this Court, Agan v. PIATCO,1 the contracts which the
Government had with the contractor were voided for being contrary to law and public
policy. The second case now before the Court involves the matter of just compensation
due the contractor for the terminal complex it built. We decide the case on the basis of
fairness, the same norm that pervades both the Court’s 2004 Resolution in the first case After the promulgation of the rulings in Agan, the NAIA 3 facilities have remained in the
and the latest expropriation law. possession of PIATCO, despite the avowed intent of the Government to put the airport
terminal into immediate operation. The Government and PIATCO conducted several
rounds of negotiation regarding the NAIA 3 facilities. 8 It also appears that arbitral
The present controversy has its roots with the promulgation of the Court’s decision
proceedings were commenced before the International Chamber of Commerce
in Agan v. PIATCO,2 promulgated in 2003 (2003 Decision). This decision nullified the
International Court of Arbitration and the International Centre for the Settlement of
"Concession Agreement for the Build-Operate-and-Transfer Arrangement of the Ninoy
Investment Disputes,9 although the Government has raised jurisdictional questions
Aquino International Airport Passenger Terminal III" entered into between the Philippine
before those two bodies.10
Government (Government) and the Philippine International Air Terminals Co., Inc.
(PIATCO), as well as the amendments and supplements thereto. The agreement had
authorized PIATCO to build a new international airport terminal (NAIA 3), as well as a Then, on 21 December 2004, the Government11 filed a Complaint for expropriation with
franchise to operate and maintain the said terminal during the concession period of 25 the Pasay City Regional Trial Court (RTC), together with an Application for Special
years. The contracts were nullified, among others, that Paircargo Consortium, Raffle seeking the immediate holding of a special raffle. The Government sought upon
the filing of the complaint the issuance of a writ of possession authorizing it to take
immediate possession and control over the NAIA 3 facilities.
The Government also declared that it had deposited the amount of
₱3,002,125,000.0012 (3 Billion)13 in Cash with the Land Bank of the Philippines,
representing the NAIA 3 terminal’s assessed value for taxation purposes. 14
The case15 was raffled to Branch 117 of the Pasay City RTC, presided by respondent
judge Hon. Henrick F. Gingoyon (Hon. Gingoyon). On the same day that
the Complaint was filed, the RTC issued an Order16 directing the issuance of a writ of
possession to the Government, authorizing it to "take or enter upon the possession" of
the NAIA 3 facilities. Citing the case of City of Manila v. Serrano,17 the RTC noted that
it had the ministerial duty to issue the writ of possession upon the filing of a complaint
for expropriation sufficient in form and substance, and upon deposit made by the
government of the amount equivalent to the assessed value of the property subject to
expropriation. The RTC found these requisites present, particularly noting that "[t]he
case record shows that [the Government has] deposited the assessed value of the
[NAIA 3 facilities] in the Land Bank of the Philippines, an authorized depositary, as
shown by the certification attached to their complaint." Also on the same day, the RTC
issued a Writ of Possession. According to PIATCO, the Government was able to take
possession over the NAIA 3 facilities immediately after the Writ of Possession was
issued.18
However, on 4 January 2005, the RTC issued another Order designed to supplement
its 21 December 2004 Orderand the Writ of Possession. In the 4 January 2005 Order,
now assailed in the present petition, the RTC noted that its earlier issuance of its writ of
possession was pursuant to Section 2, Rule 67 of the 1997 Rules of Civil Procedure.
However, it was observed that Republic Act No. 8974 (Rep. Act No. 8974), otherwise
known as "An Act to Facilitate the Acquisition of Right-of-Way, Site or Location for
National Government Infrastructure Projects and For Other Purposes" and its
Implementing Rules and Regulations (Implementing Rules) had amended Rule 67 in
many respects.
There are at least two crucial differences between the respective procedures under Rep.
Act No. 8974 and Rule 67. Under the statute, the Government is required to make
immediate payment to the property owner upon the filing of the complaint to be entitled
to a writ of possession, whereas in Rule 67, the Government is required only to make
an initial deposit with an authorized government depositary. Moreover, Rule 67
prescribes that the initial deposit be equivalent to the assessed value of the property for
purposes of taxation, unlike Rep. Act No. 8974 which provides, as the relevant standard
for initial compensation, the market value of the property as stated in the tax declaration
or the current relevant zonal valuation of the Bureau of Internal Revenue (BIR),
whichever is higher, and the value of the improvements and/or structures using the
replacement cost method.
Accordingly, on the basis of Sections 4 and 7 of Rep. Act No. 8974 and Section 10 of
the Implementing Rules, the RTC made key qualifications to its earlier issuances. First,
it directed the Land Bank of the Philippines, Baclaran Branch (LBP-Baclaran), to
immediately release the amount of US$62,343,175.77 to PIATCO, an amount which the
RTC characterized as that which the Government "specifically made available for the
purpose of this expropriation;" and such amount to be deducted from the amount of just
compensation due PIATCO as eventually determined by the RTC. Second, the
Government was directed to submit to the RTC a Certificate of Availability of Funds
signed by authorized officials to cover the payment of just compensation. Third, the
Government was directed "to maintain, preserve and safeguard" the NAIA 3 facilities or
"perform such as acts or activities in preparation for their direct operation" of the airport
terminal, pending expropriation proceedings and full payment of just compensation.
However, the Government was prohibited "from performing acts of ownership like
awarding concessions or leasing any part of [NAIA 3] to other parties."19
The very next day after the issuance of the assailed 4 January 2005 Order, the
Government filed an Urgent Motion for Reconsideration, which was set for hearing on
10 January 2005. On 7 January 2005, the RTC issued another Order, the second now
assailed before this Court, which appointed three (3) Commissioners to ascertain the
amount of just compensation for the NAIA 3 Complex. That same day, the Government
filed a Motion for Inhibitionof Hon. Gingoyon.
The RTC heard the Urgent Motion for Reconsideration and Motion for Inhibition on 10
January 2005. On the same day, it denied these motions in an Omnibus Order dated
10 January 2005. This is the third Order now assailed before this Court. Nonetheless,
while the Omnibus Order affirmed the earlier dispositions in the 4 January 2005 Order,
it excepted from affirmance "the superfluous part of the Order prohibiting the plaintiffs
from awarding concessions or leasing any part of [NAIA 3] to other parties." 20
Thus, the present Petition for Certiorari and Prohibition under Rule 65 was filed on 13
January 2005. The petition prayed for the nullification of the RTC orders dated 4 January
2005, 7 January 2005, and 10 January 2005, and for the inhibition of Hon. Gingoyon
from taking further action on the expropriation case. A concurrent prayer for the
issuance of a temporary restraining order and preliminary injunction was granted by this
Court in a Resolution dated 14 January 2005.21
The Government, in imputing grave abuse of discretion to the acts of Hon. Gingoyon,
raises five general arguments, to wit:
(i) that Rule 67, not Rep. Act No. 8974, governs the present expropriation proceedings;
(ii) that Hon. Gingoyon erred when he ordered the immediate release of the amount of
US$62.3 Million to PIATCO considering that the assessed value as alleged in the
complaint was only ₱3 Billion;
(iii) that the RTC could not have prohibited the Government from enjoining the
performance of acts of ownership;
(iv) that the appointment of the three commissioners was erroneous; and
(v) that Hon. Gingoyon should be compelled to inhibit himself from the expropriation
case.22
Before we delve into the merits of the issues raised by the Government, it is essential
to consider the crucial holding of the Court in its 2004 Resolution in Agan, which we
repeat below:
This Court, however, is not unmindful of the reality that the structures comprising the
NAIA IPT III facility are almost complete and that funds have been spent by PIATCO in
their construction. For the government to take over the said facility, it has to
compensate respondent PIATCO as builder of the said structures. The
compensation must be just and in accordance with law and equity for the
government can not unjustly enrich itself at the expense of PIATCO and its
investors.23
This pronouncement contains the fundamental premises which permeate this decision
of the Court. Indeed, Agan, final and executory as it is, stands as governing law in this
case, and any disposition of the present petition must conform to the conditions laid
down by the Court in its 2004 Resolution.
The 2004 Resolution Which Is Law of This Case Generally Permits Expropriation
The pronouncement in the 2004 Resolution is especially significant to this case
in two aspects, namely: (i) that PIATCO must receive payment of just
compensation determined in accordance with law and equity; and (ii) that the
government is barred from taking over NAIA 3 until such just compensation is
paid. The parties cannot be allowed to evade the directives laid down by this Court
through any mode of judicial action, such as the complaint for eminent domain.
It cannot be denied though that the Court in the 2004 Resolution prescribed mandatory
guidelines which the Government must observe before it could acquire the NAIA 3
facilities. Thus, the actions of respondent judge under review, as well as the arguments
of the parties must, to merit affirmation, pass the threshold test of whether such
propositions are in accord with the 2004 Resolution.
The Government does not contest the efficacy of this pronouncement in the
2004 Resolution,24 thus its application
to the case at bar is not a matter of controversy. Of course, questions such as what is
the standard of "just compensation" and which particular laws and equitable principles
are applicable, remain in dispute and shall be resolved forthwith.
The Government has chosen to resort to expropriation, a remedy available under the
law, which has the added benefit of an integrated process for the determination of just
compensation and the payment thereof to PIATCO. We appreciate that the case at bar
is a highly unusual case, whereby the Government seeks to expropriate a building
complex constructed on land which the State already owns.25 There is an inherent illogic
in the resort to eminent domain on property already owned by the State. At first blush,
since the State already owns the property on which NAIA 3 stands, the proper remedy
should be akin to an action for ejectment.
However, the reason for the resort by the Government to expropriation proceedings is
understandable in this case. The 2004 Resolution, in requiring the payment of just
compensation prior to the takeover by the Government of
NAIA 3, effectively precluded it from acquiring possession or ownership of the NAIA 3
through the unilateral exercise of its rights as the owner of the ground on which the
facilities stood. Thus, as things stood after the 2004 Resolution, the right of the
Government to take over the NAIA 3 terminal was preconditioned by lawful order on the
payment of just compensation to PIATCO as builder of the structures.
The determination of just compensation could very well be agreed upon by the parties
without judicial intervention, and it appears that steps towards that direction had been
engaged in. Still, ultimately, the Government resorted to its inherent power of eminent
domain through expropriation proceedings. Is eminent domain appropriate in the first
place, with due regard not only to the law on expropriation but also to the Court’s 2004
Resolution in Agan?
The right of eminent domain extends to personal and real property, and the NAIA 3
structures, adhered as they are to the soil, are considered as real property. 26 The public
purpose for the expropriation is also beyond dispute. It should also be noted that Section
1 of Rule 67 (on Expropriation) recognizes the possibility that the property sought to be
expropriated may be titled in the name of the
Republic of the Philippines, although occupied by private individuals, and in such case
an averment to that effect should be made in the complaint. The instant expropriation
complaint did aver that the NAIA 3 complex "stands on a parcel of land owned by the
Bases Conversion Development Authority, another agency of [the Republic of the
Philippines]."27
Admittedly, eminent domain is not the sole judicial recourse by which the Government
may have acquired the NAIA 3 facilities while satisfying the requisites in the 2004
Resolution. Eminent domain though may be the most effective, as well as the speediest
means by which such goals may be accomplished. Not only does it enable immediate
possession after satisfaction of the requisites under the law, it also has a built-in
procedure through which just compensation may be ascertained. Thus, there should be
no question as to the propriety of eminent domain proceedings in this case.
Still, in applying the laws and rules on expropriation in the case at bar, we are impelled
to apply or construe these rules in accordance with the Court’s prescriptions in the 2004
Resolution to achieve the end effect that the Government may validly take over the
NAIA 3 facilities. Insofar as this case is concerned, the 2004 Resolution is effective not
only as a legal precedent, but as the source of rights and prescriptions that must be
guaranteed, if not enforced, in the resolution of this petition. Otherwise, the integrity and
efficacy of the rulings of this Court will be severely diminished.
It is from these premises that we resolve the first question, whether Rule 67 of the Rules
of Court or Rep. Act No. 8974 governs the expropriation proceedings in this case.
Application of Rule 67 Violates the 2004 Agan Resolution
The Government insists that Rule 67 of the Rules of Court governs the expropriation
proceedings in this case to the exclusion of all other laws. On the other hand, PIATCO
claims that it is Rep. Act No. 8974 which does apply. Earlier, we had adverted to the
basic differences between the statute and the procedural rule. Further elaboration is in
order.
Rule 67 outlines the procedure under which eminent domain may be exercised by the
Government. Yet by no means does it serve at present as the solitary guideline through
which the State may expropriate private property. For example, Section 19 of the Local
Government Code governs as to the exercise by local government units of the power of
eminent domain through an enabling ordinance. And then there is Rep. Act No. 8974,
which covers expropriation proceedings intended for national government infrastructure
projects.
Rep. Act No. 8974, which provides for a procedure eminently more favorable to the
property owner than Rule 67, inescapably applies in instances when the national
government expropriates property "for national government infrastructure
projects."28 Thus, if expropriation is engaged in by the national government for purposes
other than national infrastructure projects, the assessed value standard and the deposit
mode prescribed in Rule 67 continues to apply.
Under both Rule 67 and Rep. Act No. 8974, the Government commences expropriation
proceedings through the filing of a complaint. Unlike in the case of local governments
which necessitate an authorizing ordinance before expropriation may be accomplished,
there is no need under Rule 67 or Rep. Act No. 8974 for legislative authorization before
the Government may proceed with a particular exercise of eminent domain. The most
crucial difference between Rule 67 and Rep. Act No. 8974 concerns the particular
essential step the Government has to undertake to be entitled to a writ of possession.
The first paragraph of Section 2 of Rule 67 provides:
SEC. 2. Entry of plaintiff upon depositing value with authorized government depository.
— Upon the filing of the complaint or at any time thereafter and after due notice to the
defendant, the plaintiff shall have the right to take or enter upon the possession of the
real property involved if he deposits with the authorized government depositary an
amount equivalent to the assessed value of the property for purposes of taxation
to be held by such bank subject to the orders of the court. Such deposit shall be
in money, unless in lieu thereof the court authorizes the deposit of a certificate of
deposit of a government bank of the Republic of the Philippines payable on
demand to the authorized government depositary.
In contrast, Section 4 of Rep. Act No. 8974 relevantly states:
SEC. 4. Guidelines for Expropriation Proceedings.— Whenever it is necessary to
acquire real property for the right-of-way, site or location for any national government
infrastructure project through expropriation, the appropriate proceedings before the
proper court under the following guidelines:
a) Upon the filing of the complaint, and after due notice to the defendant, the
implementing agency shall immediately pay the owner of the property the amount
equivalent to the sum of (1) one hundred percent (100%) of the value of the property
based on the current relevant zonal valuation of the Bureau of Internal Revenue (BIR);
and (2) the value of the improvements and/or structures as determined under Section 7
hereof;
...
c) In case the completion of a government infrastructure project is of utmost urgency
and importance, and there is no existing valuation of the area concerned, the
implementing agency shall immediately pay the owner of the property its proffered value
taking into consideration the standards prescribed in Section 5 hereof.
Upon completion with the guidelines abovementioned, the court shall immediately issue
to the implementing agency an order to take possession of the property and start the
implementation of the project.
Before the court can issue a Writ of Possession, the implementing agency shall present
to the court a certificate of availability of funds from the proper official concerned.
...
As can be gleaned from the above-quoted texts, Rule 67 merely requires the
Government to deposit with an authorized government depositary the assessed value
of the property for expropriation for it to be entitled to a writ of possession. On the other
hand, Rep. Act No. 8974 requires that the Government make a direct payment to the
property owner before the writ may issue. Moreover, such payment is based on the
zonal valuation of the BIR in the case of land, the value of the improvements or
structures under the replacement cost method,29 or if no such valuation is available and
in cases of utmost urgency, the proffered value of the property to be seized.
It is quite apparent why the Government would prefer to apply Rule 67 in lieu of Rep.
Act No. 8974. Under Rule 67, it would not be obliged to immediately pay any amount to
PIATCO before it can obtain the writ of possession since all it need do is deposit the
amount equivalent to the assessed value with an authorized government depositary.
Hence, it devotes considerable effort to point out that Rep. Act No. 8974 does not apply
in this case, notwithstanding the undeniable reality that NAIA 3 is a national government
project. Yet, these efforts fail, especially considering the controlling effect of the 2004
Resolution in Agan on the adjudication of this case.
It is the finding of this Court that the staging of expropriation proceedings in this case
with the exclusive use of Rule 67 would allow for the Government to take over the NAIA
3 facilities in a fashion that directly rebukes our 2004 Resolution in Agan. This Court
cannot sanction deviation from its own final and executory orders.
Section 2 of Rule 67 provides that the State "shall have the right to take or enter upon
the possession of the real property involved if [the plaintiff] deposits with the authorized
government depositary an amount equivalent to the assessed value of the property for
purposes of taxation to be held by such bank subject to the orders of the court." 30It is
thus apparent that under the provision, all the Government need do to obtain a writ of
possession is to deposit the amount equivalent to the assessed value with an authorized
government depositary.
Would the deposit under Section 2 of Rule 67 satisfy the requirement laid down in the
2004 Resolution that "[f]or the government to take over the said facility, it has to
compensate respondent PIATCO as builder of the said structures"? Evidently not.
If Section 2 of Rule 67 were to apply, PIATCO would be enjoined from receiving a single
centavo as just compensation before the Government takes over the NAIA 3 facility by
virtue of a writ of possession. Such an injunction squarely contradicts the letter and
intent of the 2004 Resolution. Hence, the position of the Government sanctions its own
disregard or violation the prescription laid down by this Court that there must first be just
compensation paid to PIATCO before the Government may take over the NAIA 3
facilities.
Thus, at the very least, Rule 67 cannot apply in this case without violating the 2004
Resolution. Even assuming that Rep. Act No. 8974 does not govern in this case, it does
not necessarily follow that Rule 67 should then apply. After all, adherence to the letter
of Section 2, Rule 67 would in turn violate the Court’s requirement in the 2004
Resolution that there must first be payment of just compensation to PIATCO before the
Government may take over the property.
It is the plain intent of Rep. Act No. 8974 to supersede the system of deposit under Rule
67 with the scheme of "immediate payment" in cases involving national government
infrastructure projects. The following portion of the Senate deliberations, cited by
PIATCO in its Memorandum, is worth quoting to cogitate on the purpose behind the
plain meaning of the law:
THE CHAIRMAN (SEN. CAYETANO). "x x x Because the Senate believes that, you
know, we have to pay the landowners immediately not by treasury bills but by
cash.
Since we are depriving them, you know, upon payment, ‘no, of possession, we
might as well pay them as much, ‘no, hindi lang 50 percent.
xxx
THE CHAIRMAN (REP. VERGARA). Accepted.
xxx
THE CHAIRMAN (SEN. CAYETANO). Oo. Because this is really in favor of the
landowners, e.
THE CHAIRMAN (REP. VERGARA). That’s why we need to really secure the availability
of funds.
xxx
THE CHAIRMAN (SEN. CAYETANO). No, no. It’s the same. It says here: iyong first
paragraph, diba? Iyong zonal – talagang magbabayad muna. In other words, you
know, there must be a payment kaagad. (TSN, Bicameral Conference on the
Disagreeing Provisions of House Bill 1422 and Senate Bill 2117, August 29, 2000, pp.
14-20)
xxx
THE CHAIRMAN (SEN. CAYETANO). Okay, okay, ‘no. Unang-una, it is not deposit,
‘no. It’s payment."
REP. BATERINA. It’s payment, ho, payment." (Id., p. 63)31
It likewise bears noting that the appropriate standard of just compensation is a
substantive matter. It is well within the province of the legislature to fix the standard,
which it did through the enactment of Rep. Act No. 8974. Specifically, this prescribes
the new standards in determining the amount of just compensation in expropriation
cases relating to national government infrastructure projects, as well as the manner of
payment thereof. At the same time, Section 14 of the Implementing Rules recognizes
the continued applicability of Rule 67 on procedural aspects when it provides "all
matters regarding defenses and objections to the complaint, issues on uncertain
ownership and conflicting claims, effects of appeal on the rights of the parties, and such
other incidents affecting the complaint shall be resolved under the provisions on
expropriation of Rule 67 of the Rules of Court."32
Given that the 2004 Resolution militates against the continued use of the norm under
Section 2, Rule 67, is it then possible to apply Rep. Act No. 8974? We find that it is, and
moreover, its application in this case complements rather than contravenes the
prescriptions laid down in the 2004 Resolution.
Rep. Act No. 8974 Fits to the Situation at Bar and Complements the 2004 Agan
Resolution
Rep. Act No. 8974 is entitled "An Act To Facilitate The Acquisition Of Right-Of-Way,
Site Or Location For National Government Infrastructure Projects And For Other
Purposes." Obviously, the law is intended to cover expropriation proceedings intended
for national government infrastructure projects. Section 2 of Rep. Act No. 8974 explains
what are considered as "national government projects."
Sec. 2. National Government Projects. – The term "national government projects" shall
refer to all national government infrastructure, engineering works and service contracts,
including projects undertaken by government-owned and controlled corporations, all
projects covered by Republic Act No. 6957, as amended by Republic Act No. 7718,
otherwise known as the Build-Operate-and-Transfer Law, and other related and
necessary activities, such as site acquisition, supply and/or installation of equipment
and materials, implementation, construction, completion, operation, maintenance,
improvement, repair and rehabilitation, regardless of the source of funding.
As acknowledged in the 2003 Decision, the development of NAIA 3 was made pursuant
to a build-operate-and-transfer arrangement pursuant to Republic Act No. 6957, as
amended,33 which pertains to infrastructure or development projects normally financed
by the public sector but which are now wholly or partly implemented by the private
sector.34 Under the build-operate-and-transfer scheme, it is the project proponent which
undertakes the construction, including the financing, of a given infrastructure
facility.35 In Tatad v. Garcia,36 the Court acknowledged that the operator of the EDSA
Light Rail Transit project under a BOT scheme was the owner of the facilities such as
"the rail tracks, rolling stocks like the coaches, rail stations, terminals and the power
plant."37
There can be no doubt that PIATCO has ownership rights over the facilities which it had
financed and constructed. The 2004 Resolution squarely recognized that right when it
mandated the payment of just compensation to PIATCO prior to the takeover by the
Government of NAIA 3. The fact that the Government resorted to eminent domain
proceedings in the first place is a concession on its part of PIATCO’s ownership. Indeed,
if no such right is recognized, then there should be no impediment for the Government
to seize control of NAIA 3 through ordinary ejectment proceedings.
Since the rights of PIATCO over the NAIA 3 facilities are established, the nature of these
facilities should now be determined. Under Section 415(1) of the Civil Code, these
facilities are ineluctably immovable or real property, as they constitute buildings, roads
and constructions of all kinds adhered to the soil.38 Certainly, the NAIA 3 facilities are of
such nature that they cannot just be packed up and transported by PIATCO like a
traveling circus caravan.
Thus, the property subject of expropriation, the NAIA 3 facilities, are real property owned
by PIATCO. This point is critical, considering the Government’s insistence that the NAIA
3 facilities cannot be deemed as the "right-of-way", "site" or "location" of a national
government infrastructure project, within the coverage of Rep. Act No. 8974.
There is no doubt that the NAIA 3 is not, under any sensible contemplation, a "right-of-
way." Yet we cannot agree with the Government’s insistence that neither could NAIA 3
be a "site" or "location". The petition quotes the definitions provided in Black’s Law
Dictionary of "location’" as the specific place or position of a person or thing and ‘site’
as pertaining to a place or location or a piece of property set aside for specific
use.’"39 Yet even Black’s Law Dictionary provides that "[t]he term [site] does not of itself
necessarily mean a place or tract of land fixed by definite boundaries." 40 One would
assume that the Government, to back up its contention, would be able to point to a
clear-cut rule that a "site" or "location" exclusively refers to soil, grass, pebbles and
weeds. There is none.
Indeed, we cannot accept the Government’s proposition that the only properties that
may be expropriated under Rep. Act No. 8974 are parcels of land. Rep. Act No. 8974
contemplates within its coverage such real property constituting land, buildings, roads
and constructions of all kinds adhered to the soil. Section 1 of Rep. Act No. 8974, which
sets the declaration of the law’s policy, refers to "real property acquired for national
government infrastructure projects are promptly paid just compensation." 41 Section 4 is
quite explicit in stating that the scope of the law relates to the acquisition of "real
property," which under civil law includes buildings, roads and constructions adhered to
the soil.
It is moreover apparent that the law and its implementing rules commonly provide for a
rule for the valuation of improvements and/or structures thereupon separate from that
of the land on which such are constructed. Section 2 of Rep. Act No. 8974 itself
recognizes that the improvements or structures on the land may very well be the subject
of expropriation proceedings. Section 4(a), in relation to Section 7 of the law provides
for the guidelines for the valuation of the improvements or structures to be expropriated.
Indeed, nothing in the law would prohibit the application of Section 7, which provides for
the valuation method of the improvements and or structures in the instances wherein it
is necessary for the Government to expropriate only the improvements or structures, as
in this case.
The law classifies the NAIA 3 facilities as real properties just like the soil to which they
are adhered. Any sub-classifications of real property and divergent treatment based
thereupon for purposes of expropriation must be based on substantial distinctions,
otherwise the equal protection clause of the Constitution is violated. There may be
perhaps a molecular distinction between soil and the inorganic improvements adhered
thereto, yet there are no purposive distinctions that would justify a variant treatment for
purposes of expropriation. Both the land itself and the improvements thereupon are
susceptible to private ownership independent of each other, capable of pecuniary
estimation, and if taken from the owner, considered as a deprivation of property. The
owner of improvements seized through expropriation suffers the same degree of loss
as the owner of land seized through similar means. Equal protection demands that all
persons or things similarly situated should be treated alike, both as to rights conferred
and responsibilities imposed. For purposes of expropriation, parcels of land are similarly
situated as the buildings or improvements constructed thereon, and a disparate
treatment between those two classes of real property infringes the equal protection
clause.
Even as the provisions of Rep. Act No. 8974 call for that law’s application in this case,
the threshold test must still be met whether its implementation would conform to the
dictates of the Court in the 2004 Resolution. Unlike in the case of Rule 67, the
application of Rep. Act No. 8974 will not contravene the 2004 Resolution, which requires
the payment of just compensation before any takeover of the NAIA 3 facilities by the
Government. The 2004 Resolution does not particularize the extent such payment must
be effected before the takeover, but it unquestionably requires at least some degree of
payment to the private property owner before a writ of possession may issue. The
utilization of Rep. Act No. 8974 guarantees compliance with this bare minimum
requirement, as it assures the private property owner the payment of, at the very least,
the proffered value of the property to be seized. Such payment of the proffered value to
the owner, followed by the issuance of the writ of possession in favor of the Government,
is precisely the schematic under Rep. Act No. 8974, one which facially complies with
the prescription laid down in the 2004 Resolution.
Clearly then, we see no error on the part of the RTC when it ruled that Rep. Act No.
8974 governs the instant expropriation proceedings.
The Proper Amount to be Paid under Rep. Act No. 8974
Then, there is the matter of the proper amount which should be paid to PIATCO by the
Government before the writ of possession may issue, consonant to Rep. Act No. 8974.
At this juncture, we must address the observation made by the Office of the Solicitor
General in behalf of the Government that there could be no "BIR zonal valuations" on
the NAIA 3 facility, as provided in Rep. Act No. 8974, since zonal valuations are only for
parcels of land, not for airport terminals. The Court agrees with this point, yet does not
see it as an impediment for the application of Rep. Act No. 8974.
It must be clarified that PIATCO cannot be reimbursed or justly compensated for the
value of the parcel of land on which NAIA 3 stands. PIATCO is not the owner of the land
on which the NAIA 3 facility is constructed, and it should not be entitled to just
compensation that is inclusive of the value of the land itself. It would be highly
disingenuous to compensate PIATCO for the value of land it does not own. Its
entitlement to just compensation should be limited to the value of the improvements
and/or structures themselves. Thus, the determination of just compensation cannot
include the BIR zonal valuation under Section 4 of Rep. Act No. 8974.
Under Rep. Act No. 8974, the Government is required to "immediately pay" the owner
of the property the amount equivalent to the sum of (1) one hundred percent (100%) of
the value of the property based on the current relevant zonal valuation of the [BIR]; and
(2) the value of the improvements and/or structures as determined under Section 7. As
stated above, the BIR zonal valuation cannot apply in this case, thus the amount subject
to immediate payment should be limited to "the value of the improvements and/or
structures as determined under Section 7," with Section 7 referring to the "implementing
rules and regulations for the equitable valuation of the improvements and/or structures
on the land." Under the present implementing rules in place, the valuation of the
improvements/structures are to be based using "the replacement cost
method."42 However, the replacement cost is only one of the factors to be considered in
determining the just compensation.
In addition to Rep. Act No. 8974, the 2004 Resolution in Agan also mandated that the
payment of just compensation should be in accordance with equity as well. Thus, in
ascertaining the ultimate amount of just compensation, the duty of the trial court is to
ensure that such amount conforms not only to the law, such as Rep. Act No. 8974, but
to principles of equity as well.
Admittedly, there is no way, at least for the present, to immediately ascertain the value
of the improvements and structures since such valuation is a matter for factual
determination.43 Yet Rep. Act No. 8974 permits an expedited means by which the
Government can immediately take possession of the property without having to await
precise determination of the valuation. Section 4(c) of Rep. Act No. 8974 states that "in
case the completion of a government infrastructure project is of utmost urgency and
importance, and there is no existing valuation of the area concerned, the
implementing agency shall immediately pay the owner of the property its proferred
value, taking into consideration the standards prescribed in Section 5 [of the law]."44 The
"proffered value" may strike as a highly subjective standard based solely on the intuition
of the government, but Rep. Act No. 8974 does provide relevant standards by which
"proffered value" should be based,45 as well as the certainty
of judicial determination of the propriety of the proffered value.46
In filing the complaint for expropriation, the Government alleged to have deposited the
amount of ₱3 Billion earmarked for expropriation, representing the assessed value of
the property. The making of the deposit, including the determination of the amount of
the deposit, was undertaken under the erroneous notion that Rule 67, and not Rep. Act
No. 8974, is the applicable law. Still, as regards the amount, the Court sees no
impediment to recognize this sum of ₱3 Billion as the proffered value under Section 4(b)
of Rep. Act No. 8974. After all, in the initial determination of the proffered value, the
Government is not strictly required to adhere to any predetermined standards, although
its proffered value may later be subjected to judicial review using the standards
enumerated under Section 5 of Rep. Act No. 8974.
How should we appreciate the questioned order of Hon. Gingoyon, which pegged the
amount to be immediately paid to PIATCO at around $62.3 Million? The Order dated 4
January 2005, which mandated such amount, proves problematic in that regard. While
the initial sum of ₱3 Billion may have been based on the assessed value, a standard
which should not however apply in this case, the RTC cites without qualification Section
4(a) of Rep. Act No. 8974 as the basis for the amount of $62.3 Million, thus leaving the
impression that the BIR zonal valuation may form part of the basis for just
compensation, which should not be the case. Moreover, respondent judge made no
attempt to apply the enumerated guidelines for determination of just compensation
under Section 5 of Rep. Act No. 8974, as required for judicial review of the proffered
value.
The Court notes that in the 10 January 2005 Omnibus Order, the RTC noted that the
concessions agreement entered into between the Government and PIATCO stated that
the actual cost of building NAIA 3 was "not less than" US$350 Million. 47 The RTC then
proceeded to observe that while Rep. Act No. 8974 required the immediate payment to
PIATCO the amount equivalent to 100% of the value of NAIA 3, the amount deposited
by the Government constituted only 18% of this value. At this point, no binding import
should be given to this observation that the actual cost of building NAIA 3 was "not less
than" US$350 Million, as the final conclusions on the amount of just compensation can
come only after due ascertainment in accordance with the standards set under Rep. Act
No. 8974, not the declarations of the parties. At the same time, the expressed linkage
between the BIR zonal valuation and the amount of just compensation in this case, is
revelatory of erroneous thought on the part of the RTC.
We have already pointed out the irrelevance of the BIR zonal valuation as an
appropriate basis for valuation in this case, PIATCO not being the owner of the land on
which the NAIA 3 facilities stand. The subject order is flawed insofar as it fails to qualify
that such standard is inappropriate.
It does appear that the amount of US$62.3 Million was based on the certification issued
by the LBP-Baclaran that the Republic of the Philippines maintained a total balance in
that branch amounting to such amount. Yet the actual representation of the $62.3 Million
is not clear. The Land Bank Certification expressing such amount does state that it was
issued upon request of the Manila International Airport Authority "purportedly as
guaranty deposit for the expropriation complaint."48 The Government claims in its
Memorandum that the entire amount was made available as a guaranty fund for the
final and executory judgment of the trial court, and not merely for the issuance of the
writ of possession.49 One could readily conclude that the entire amount of US$62.3
Million was intended by the Government to answer for whatever guaranties may be
required for the purpose of the expropriation complaint.
Still, such intention the Government may have had as to the entire US$62.3 Million is
only inferentially established. In ascertaining the proffered value adduced by the
Government, the amount of ₱3 Billion as the amount deposited characterized in the
complaint as "to be held by [Land Bank] subject to the [RTC’s] orders," 50 should be
deemed as controlling. There is no clear evidence that the Government intended to offer
US$62.3 Million as the initial payment of just compensation, the wording of the Land
Bank Certification notwithstanding, and credence should be given to the consistent
position of the Government on that aspect.
In any event, for the RTC to be able to justify the payment of US$62.3 Million to PIATCO
and not ₱3 Billion Pesos, he would have to establish that the higher amount represents
the valuation of the structures/improvements, and not the BIR zonal valuation on the
land wherein NAIA 3 is built. The Order dated 5 January 2005 fails to establish such
integral fact, and in the absence of contravening proof, the proffered value of ₱3 Billion,
as presented by the Government, should prevail.
Strikingly, the Government submits that assuming that Rep. Act No. 8974 is applicable,
the deposited amount of ₱3 Billion should be considered as the proffered value, since
the amount was based on comparative values made by the City
Assessor.51 Accordingly, it should be deemed as having faithfully complied with the
requirements of the statute.52 While the Court agrees that ₱3 Billion should be
considered as the correct proffered value, still we cannot deem the Government as
having faithfully complied with Rep. Act No. 8974. For the law plainly requires direct
payment to the property owner, and not a mere deposit with the authorized government
depositary. Without such direct payment, no writ of possession may be obtained.
Writ of Possession May Not Be Implemented Until Actual Receipt by PIATCO of
Proferred Value
The Court thus finds another error on the part of the RTC. The RTC authorized the
issuance of the writ of possession to the Government notwithstanding the fact that no
payment of any amount had yet been made to PIATCO, despite the clear command of
Rep. Act No. 8974 that there must first be payment before the writ of possession can
issue. While the RTC did direct the LBP-Baclaran to immediately release the amount of
US$62 Million to PIATCO, it should have likewise suspended the writ of possession,
nay, withdrawn it altogether, until the Government shall have actually paid PIATCO.
This is the inevitable consequence of the clear command of Rep. Act No. 8974 that
requires immediate payment of the initially determined amount of just compensation
should be effected. Otherwise, the overpowering intention of Rep. Act No. 8974 of
ensuring payment first before transfer of repossession would be eviscerated.
Rep. Act No. 8974 represents a significant change from previous expropriation laws
such as Rule 67, or even Section 19 of the Local Government Code. Rule 67 and the
Local Government Code merely provided that the Government deposit the initial
amounts53 antecedent to acquiring possession of the property with, respectively, an
authorized
Government depositary54 or the proper court.55 In both cases, the private owner does
not receive compensation prior to the deprivation of property. On the other hand, Rep.
Act No. 8974 mandates immediate payment of the initial just compensation prior to the
issuance of the writ of possession in favor of the Government.
Rep. Act No. 8974 is plainly clear in imposing the requirement of immediate
prepayment, and no amount of statutory deconstruction can evade such requisite. It
enshrines a new approach towards eminent domain that reconciles the inherent unease
attending expropriation proceedings with a position of fundamental equity. While
expropriation proceedings have always demanded just compensation in exchange for
private property, the previous deposit requirement impeded immediate compensation
to the private owner, especially in cases wherein the determination
of the final amount of compensation would prove highly disputed. Under the new
modality prescribed by Rep. Act No. 8974, the private owner sees immediate monetary
recompense with the same degree of speed as the taking of his/her property.
While eminent domain lies as one of the inherent powers of the State, there is no
requirement that it undertake a prolonged procedure, or that the payment of the private
owner be protracted as far as practicable. In fact, the expedited procedure of payment,
as highlighted under Rep. Act No. 8974, is inherently more fair, especially to the
layperson who would be hard-pressed to fully comprehend the social value of
expropriation in the first place. Immediate payment placates to some degree whatever
ill-will that arises from expropriation, as well as satisfies the demand of basic fairness.
The Court has the duty to implement Rep. Act No. 8974 and to direct compliance with
the requirement of immediate payment in this case. Accordingly, the Writ of Possession
dated 21 December 2004 should be held in abeyance, pending proof of actual payment
by the Government to PIATCO of the proffered value of the NAIA 3 facilities, which
totals ₱3,002,125,000.00.
Rights of the Government upon Issuance of the Writ of Possession
Once the Government pays PIATCO the amount of the proffered value of ₱3 Billion, it
will be entitled to the Writ of Possession. However, the Government questions the
qualification imposed by the RTC in its 4 January 2005 Orderconsisting of the
prohibition on the Government from performing acts of ownership such as awarding
concessions or leasing any part of NAIA 3 to other parties. To be certain, the RTC, in
its 10 January 2005 Omnibus Order, expressly stated that it was not affirming "the
superfluous part of the Order [of 4 January 2005] prohibiting the plaintiffs from awarding
concessions or leasing any part of NAIA [3] to other parties."56 Still, such statement was
predicated on the notion that since the Government was not yet the owner of NAIA 3
until final payment of just compensation, it was obviously incapacitated to perform such
acts of ownership.
In deciding this question, the 2004 Resolution in Agan cannot be ignored, particularly
the declaration that "[f]or the government to take over the said facility, it has to
compensate respondent PIATCO as builder of the said structures." The obvious import
of this holding is that unless PIATCO is paid just compensation, the Government is
barred from "taking over," a phrase which in the strictest sense could encompass even
a bar of physical possession of NAIA 3, much less operation of the facilities.
There are critical reasons for the Court to view the 2004 Resolution less stringently, and
thus allow the operation by the Government of NAIA 3 upon the effectivity of the Writ of
Possession. For one, the national prestige is diminished every day that passes with the
NAIA 3 remaining mothballed. For another, the continued non-use of the facilities
contributes to its physical deterioration, if it has not already. And still for another, the
economic benefits to the Government and the country at large are beyond dispute once
the NAIA 3 is put in operation.
Rep. Act No. 8974 provides the appropriate answer for the standard that governs the
extent of the acts the Government may be authorized to perform upon the issuance of
the writ of possession. Section 4 states that "the court shall immediately issue to the
implementing agency an order to take possession of the property and start the
implementation of the project." We hold that accordingly, once the Writ of Possession
is effective, the Government itself is authorized to perform the acts that are essential to
the operation of the NAIA 3 as an international airport terminal upon the effectivity of
the Writ of Possession. These would include the repair, reconditioning and improvement
of the complex, maintenance of the existing facilities and equipment, installation of new
facilities and equipment, provision of services and facilities pertaining to the facilitation
of air traffic and transport, and other services that are integral to a modern-day
international airport.
The Government’s position is more expansive than that adopted by the Court. It argues
that with the writ of possession, it is enabled to perform acts de jure on the expropriated
property. It cites Republic v. Tagle,57 as well as the statement therein that "the
expropriation of real property does not include mere physical entry or occupation of
land," and from them concludes that "its mere physical entry and occupation of the
property fall short of the taking of title, which includes all the rights that may be exercised
by an owner over the subject property."
This conclusion is indeed lifted directly from statements in Tagle,58 but not from the ratio
decidendi of that case. Tagle concerned whether a writ of possession in favor of the
Government was still necessary in light of the fact that it was already in actual
possession of the property. In ruling that the Government was entitled to the writ of
possession, the Court in Tagle explains that such writ vested not only physical
possession, but also the legal right to possess the property. Continues the Court, such
legal right to possess was particularly important in the case, as there was a pending suit
against the Republic for unlawful detainer, and the writ of possession would serve to
safeguard the Government from eviction.59
At the same time, Tagle conforms to the obvious, that there is no transfer of ownership
as of yet by virtue of the writ of possession. Tagle may concede that the Government is
entitled to exercise more than just the right of possession by virtue of the writ of
possession, yet it cannot be construed to grant the Government the entire panoply of
rights that are available to the owner. Certainly, neither Tagle nor any other case or law,
lends support to the Government’s proposition that it acquires beneficial or equitable
ownership of the expropriated property merely through the writ of possession.
Indeed, this Court has been vigilant in defense of the rights of the property owner who
has been validly deprived of possession, yet retains legal title over the expropriated
property pending payment of just compensation. We reiterated the various doctrines of
such import in our recent holding in Republic v. Lim:60
The recognized rule is that title to the property expropriated shall pass from the owner
to the expropriator only upon full payment of the just compensation. Jurisprudence
on this settled principle is consistent both here and in other democratic jurisdictions.
In Association of Small Landowners in the Philippines, Inc. et al., vs. Secretary of the facts involved in the suit. It ends with an order, if not of dismissal of the action, "of
Agrarian Reform[61 ], thus: condemnation declaring that the plaintiff has a lawful right to take the property sought
to be condemned, for the public use or purpose described in the complaint, upon the
payment of just compensation to be determined as of the date of the filing of the
"Title to property which is the subject of condemnation proceedings does not
complaint" x x x.
vest the condemnor until the judgment fixing just compensation is entered and
paid, but the condemnor’s title relates back to the date on which the petition under the
Eminent Domain Act, or the commissioner’s report under the Local Improvement Act, is The second phase of the eminent domain action is concerned with the determination
filed. by the court of "the just compensation for the property sought to be taken." This is done
by the court with the assistance of not more than three (3) commissioners. x x x.
x x x Although the right to appropriate and use land taken for a canal is complete
at the time of entry, title to the property taken remains in the owner until payment It is only upon the completion of these two stages that expropriation is said to have been
is actually made. (Emphasis supplied.) completed. In Republic v. Salem Investment Corporation[63 ] , we ruled that, "the
process is not completed until payment of just compensation." Thus, here, the failure of
the Republic to pay respondent and his predecessors-in-interest for a period of 57 years
In Kennedy v. Indianapolis, the US Supreme Court cited several cases holding that title
rendered the expropriation process incomplete.
to property does not pass to the condemnor until just compensation had actually been
made. In fact, the decisions appear to be uniform to this effect. As early as 1838,
in Rubottom v. McLure, it was held that ‘actual payment to the owner of the Lim serves fair warning to the Government and its agencies who consistently refuse to
condemned property was a condition precedent to the investment of the title to pay just compensation due to the private property owner whose property had been
the property in the State’ albeit ‘not to the appropriation of it to public
use.’ In Rexford v. Knight, the Court of Appeals of New York said that the construction
expropriated. At the same time, Lim emphasizes the fragility of the rights of the
upon the statutes was that the fee did not vest in the State until the payment of the
Government as possessor pending the final payment of just compensation, without
compensation although the authority to enter upon and appropriate the land was
diminishing the potency of such rights. Indeed, the public policy, enshrined foremost in
complete prior to the payment. Kennedy further said that ‘both on principle and
the Constitution, mandates that the Government must pay for the private property it
authority the rule is . . . that the right to enter on and use the property is complete,
expropriates. Consequently, the proper judicial attitude is to guarantee compliance with
as soon as the property is actually appropriated under the authority of law for a
this primordial right to just compensation.
public use, but that the title does not pass from the owner without his consent,
until just compensation has been made to him."
Final Determination of Just Compensation Within 60 Days
Our own Supreme Court has held in Visayan Refining Co. v. Camus and Paredes, that:
The issuance of the writ of possession does not write finis to the expropriation
proceedings. As earlier pointed out, expropriation is not completed until payment to the
‘If the laws which we have exhibited or cited in the preceding discussion are
property owner of just compensation. The proffered value stands as merely a provisional
attentively examined it will be apparent that the method of expropriation adopted
determination of the amount of just compensation, the payment of which is sufficient to
in this jurisdiction is such as to afford absolute reassurance that no piece of land
transfer possession of the property to the Government. However, to effectuate the
can be finally and irrevocably taken from an unwilling owner until compensation
transfer of ownership, it is necessary for the Government to pay the property owner the
is paid....’"(Emphasis supplied.)
final just compensation.

Clearly, without full payment of just compensation, there can be no transfer of title from
the landowner to the expropriator. Otherwise stated, the Republic’s acquisition of
ownership is conditioned upon the full payment of just compensation within a
reasonable time.
Significantly, in Municipality of Biñan v. Garcia[62 ] this Court ruled that the expropriation
of lands consists of two stages, to wit:
In Lim, the Court went as far as to countenance, given the exceptional circumstances
of that case, the reversion of the validly expropriated property to private ownership due
to the failure of the Government to pay just compensation in that case.64 It was noted in
that case that the Government deliberately refused to pay just compensation. The Court
went on to rule that "in cases where the government failed to pay just compensation
within five (5) years from the finality of the judgment in the expropriation proceedings,
the owners concerned shall have the right to recover possession of their property." 65

"x x x The first is concerned with the determination of the authority of the plaintiff to Rep. Act No. 8974 mandates a speedy method by which the final determination of just
exercise the power of eminent domain and the propriety of its exercise in the context of compensation may be had. Section 4 provides:
In the event that the owner of the property contests the implementing agency’s proffered
value, the court shall determine the just compensation to be paid the owner within sixty
(60) days from the date of filing of the expropriation case. When the decision of the court
becomes final and executory, the implementing agency shall pay the owner the
difference between the amount already paid and the just compensation as determined
by the court.
We hold that this provision should apply in this case. The sixty (60)-day period
prescribed in Rep. Act No. 8974 gives teeth to the law’s avowed policy "to ensure that
owners of real property acquired for national government infrastructure projects
are promptly paid just compensation."66 In this case, there already has been
irreversible delay in the prompt payment of PIATCO of just compensation, and it is no
longer possible for the RTC to determine the just compensation due PIATCO within
sixty (60) days from the filing of the complaint last 21 December 2004, as contemplated
by the law. Still, it is feasible to effectuate the spirit of the law by requiring the trial court
to make such determination within sixty (60) days from finality of this decision, in
accordance with the guidelines laid down in Rep. Act No. 8974 and its Implementing
Rules.
Of course, once the amount of just compensation has been finally determined, the
Government is obliged to pay PIATCO the said amount. As shown in Lim and other like-
minded cases, the Government’s refusal to make such payment is indubitably
actionable in court.
Appointment of Commissioners
The next argument for consideration is the claim of the Government that the RTC erred
in appointing the three commissioners in its 7 January 2005 Order without prior
consultation with either the Government or PIATCO, or without affording the
Government the opportunity to object to the appointment of these commissioners. We
can dispose of this argument without complication.
It must be noted that Rep. Act No. 8974 is silent on the appointment of commissioners
tasked with the ascertainment of just compensation.67 This protocol though is
sanctioned under Rule 67. We rule that the appointment of commissioners under Rule
67 may be resorted to, even in expropriation proceedings under Rep. Act No. 8974,
since the application of the provisions of Rule 67 in that regard do not conflict with the
statute. As earlier stated, Section 14 of the Implementing Rules does allow such other
incidents affecting the complaint to be resolved under the provisions on expropriation of
Rule 67 of the Rules of Court. Even without Rule 67, reference during trial to a
commissioner of the examination of an issue of fact is sanctioned under Rule 32 of the
Rules of Court.
But while the appointment of commissioners under the aegis of Rule 67 may be
sanctioned in expropriation proceedings under Rep. Act No. 8974, the standards to be
observed for the determination of just compensation are provided not in Rule 67 but in
the statute. In particular, the governing standards for the determination of just
compensation for the NAIA 3 facilities are found in Section 10 of the Implementing Rules
for Rep. Act No. 8974, which provides for the replacement cost method in the valuation
of improvements and structures.68
Nothing in Rule 67 or Rep. Act No. 8974 requires that the RTC consult with the parties
in the expropriation case on who should be appointed as commissioners. Neither does
the Court feel that such a requirement should be imposed in this case. We did rule
in Municipality of Talisay v. Ramirez69 that "there is nothing to prevent [the trial court]
from seeking the recommendations of the parties on [the] matter [of appointment of
commissioners], the better to ensure their fair representation."70 At the same time, such
solicitation of recommendations is not obligatory on the part of the court, hence we
cannot impute error on the part of the RTC in its exercise of solitary discretion in the
appointment of the commissioners.
What Rule 67 does allow though is for the parties to protest the appointment of any of
these commissioners, as provided under Section 5 of the Rule. These objections though
must be made filed within ten (10) days from service of the order of appointment of the
commissioners.71 In this case, the proper recourse of the Government to challenge the
choice of the commissioners is to file an objection with the trial court, conformably with
Section 5, Rule 67, and not as it has done, assail the same through a special civil action
for certiorari. Considering that the expropriation proceedings in this case were
effectively halted seven (7) days after the Order appointing the commissioners,72 it is
permissible to allow the parties to file their objections with the RTC within five (5) days
from finality of this decision.
Insufficient Ground for Inhibition of Respondent Judge
The final argument for disposition is the claim of the Government is that Hon. Gingoyon
has prejudged the expropriation case against the Government’s cause and, thus, should
be required to inhibit himself. This grave charge is predicated on facts which the
Government characterizes as "undeniable." In particular, the Government notes that the
4 January 2005 Order was issued motu proprio, without any preceding motion, notice
or hearing. Further, such order, which directed the payment of US$62 Million to
PIATCO, was attended with error in the computation of just compensation. The
Government also notes that the said Order was issued even before summons had been
served on PIATCO.
The disqualification of a judge is a deprivation of his/her judicial power73 and should not
be allowed on the basis of mere speculations and surmises. It certainly cannot be
predicated on the adverse nature of the judge’s rulings towards the movant for inhibition,
especially if these rulings are in accord with law. Neither could inhibition be justified
merely on the erroneous nature of the rulings of the judge. We emphasized in Webb v.
People:74
To prove bias and prejudice on the part of respondent judge, petitioners harp on the
alleged adverse and erroneous rulings of respondent judge on their various
motions. By themselves, however, they do not sufficiently prove bias and
prejudice to disqualify respondent judge. To be disqualifying, the bias and
prejudice must be shown to have stemmed from an extrajudicial source and
result in an opinion on the merits on some basis other than what the judge learned
from his participation in the case. Opinions formed in the course of judicial
proceedings, although erroneous, as long as they are based on the evidence presented
and conduct observed by the judge, do not prove personal bias or prejudice on the part
of the judge. As a general rule, repeated rulings against a litigant, no matter how
erroneous and vigorously and consistently expressed, are not a basis for
disqualification of a judge on grounds of bias and prejudice. Extrinsic evidence
is required to establish bias, bad faith, malice or corrupt purpose, in addition to
the palpable error which may be inferred from the decision or order itself.
Although the decision may seem so erroneous as to raise doubts concerning a
judge's integrity, absent extrinsic evidence, the decision itself would be
insufficient to establish a case against the judge. The only exception to the rule
is when the error is so gross and patent as to produce an ineluctable inference of
bad faith or malice.75
The Government’s contentions against Hon. Gingoyon are severely undercut by the fact
that the 21 December 2004 Order, which the 4 January 2005 Order sought to rectify,
was indeed severely flawed as it erroneously applied the provisions of Rule 67 of the
Rules of Court, instead of Rep. Act No. 8974, in ascertaining compliance with the
requisites for the issuance of the writ of possession. The 4 January
2005 Order, which according to the Government establishes Hon. Gingoyon’s bias, was
promulgated precisely to correct the previous error by applying the correct provisions of
law. It would not speak well of the Court if it sanctions a judge for wanting or even
attempting to correct a previous erroneous order which precisely is the right move to
take.
Neither are we convinced that the motu proprio issuance of the 4 January 2005 Order,
without the benefit of notice or hearing, sufficiently evinces bias on the part of Hon.
Gingoyon. The motu proprio amendment by a court of an erroneous order previously
issued may be sanctioned depending on the circumstances, in line with the long-
recognized principle that every court has inherent power to do all things reasonably
necessary for the administration of justice within the scope of its jurisdiction. 76 Section
5(g), Rule 135 of the Rules of Court further recognizes the inherent power of courts "to
amend and control its process and orders so as to make them conformable to law and
justice,"77 a power which Hon. Gingoyon noted in his 10 January 2005 Omnibus
Order.78 This inherent power includes the right of the court to reverse itself, especially
when in its honest opinion it has committed an error or mistake in judgment, and that to
adhere to its decision will cause injustice to a party litigant. 79
Certainly, the 4 January 2005 Order was designed to make the RTC’s previous order
conformable to law and justice, particularly to apply the correct law of the case. Of
course, as earlier established, this effort proved incomplete, as the 4 January
2005 Order did not correctly apply Rep. Act No. 8974 in several respects. Still, at least,
the 4 January 2005 Order correctly reformed the most basic premise of the case that
Rep. Act No. 8974 governs the expropriation proceedings.
Nonetheless, the Government belittles Hon. Gingoyon’s invocation of Section 5(g), Rule
135 as "patently without merit". Certainly merit can be seen by the fact that the 4 January
2005 Order reoriented the expropriation proceedings towards the correct governing law.
Still, the Government claims that the unilateral act of the RTC did not conform to law or
justice, as it was not afforded the right to be heard.
The Court would be more charitably disposed towards this argument if not for the fact
that the earlier order with the 4 January 2005 Order sought to correct was itself issued
without the benefit of any hearing. In fact, nothing either in Rule 67 or Rep. Act No. 8975
requires the conduct of a hearing prior to the issuance of the writ of possession, which
by design is available immediately upon the filing of the complaint provided that the
requisites attaching thereto are present. Indeed, this expedited process for the obtention
of a writ of possession in expropriation cases comes at the expense of the rights of the
property owner to be heard or to be deprived of possession. Considering these
predicates, it would be highly awry to demand that an order modifying the earlier
issuance of a writ of possession in an expropriation case be barred until the staging of
a hearing, when the issuance of the writ of possession itself is not subject to hearing.
Perhaps the conduct of a hearing under these circumstances would be prudent.
However, hearing is not mandatory, and the failure to conduct one does not establish
the manifest bias required for the inhibition of the judge.
The Government likewise faults Hon. Gingoyon for using the amount of US$350 Million
as the basis for the 100% deposit under Rep. Act No. 8974. The Court has noted that
this statement was predicated on the erroneous belief that the BIR zonal valuation
applies as a standard for determination of just compensation in this case. Yet this is
manifest not of bias, but merely of error on the part of the judge. Indeed, the Government
was not the only victim of the errors of the RTC in the assailed orders. PIATCO itself
was injured by the issuance by the RTC of the writ of possession, even though the
former had yet to be paid any amount of just compensation. At the same time, the
Government was also prejudiced by the erroneous ruling of the RTC that the amount of
US$62.3 Million, and not ₱3 Billion, should be released to PIATCO.
The Court has not been remiss in pointing out the multiple errors committed by the RTC
in its assailed orders, to the prejudice of both parties. This attitude of error towards all
does not ipso facto negate the charge of bias. Still, great care should be had in requiring
the inhibition of judges simply because the magistrate did err. Incompetence may be a
ground for administrative sanction, but not for inhibition, which requires lack of
objectivity or impartiality to sit on a case.
The Court should necessarily guard against adopting a standard that a judge should be
inhibited from hearing the case if one litigant loses trust in the judge. Such loss of trust
on the part of the Government may be palpable, yet inhibition cannot be grounded
merely on the feelings of the party-litigants. Indeed, every losing litigant in any case can
resort to claiming that the judge was biased, and he/she will gain a sympathetic ear from
friends, family, and people who do not understand the judicial process. The test in
believing such a proposition should not be the vehemence of the litigant’s claim of bias,
but the Court’s judicious estimation, as people who know better than to believe any old
cry of "wolf!", whether such bias has been irrefutably exhibited.
The Court acknowledges that it had been previously held that "at the very first sign of
lack of faith and trust in his actions, whether well-grounded or not, the judge has no
other alternative but to inhibit himself from the case." 80 But this doctrine is qualified by
the entrenched rule that "a judge may not be legally prohibited from sitting in a litigation,
but when circumstances appear that will induce doubt to his honest actuations and
probity in favor of either party, or incite such state of mind, he should conduct a careful
self-
examination. He should exercise his discretion in a way that the people's faith in the
Courts of Justice is not impaired."81 And a self-assessment by the judge that he/she is
not impaired to hear the case will be respected by the Court absent any evidence to the
contrary. As held in Chin v. Court of Appeals:
An allegation of prejudgment, without more, constitutes mere conjecture and is not one
of the "just and valid reasons" contemplated in the second paragraph of Rule 137 of the
Rules of Court for which a judge may inhibit himself from hearing the case. We have
repeatedly held that mere suspicion that a judge is partial to a party is not enough. Bare
allegations of partiality and prejudgment will not suffice in the absence of clear and
convincing evidence to overcome the presumption that the judge will undertake his
noble role to dispense justice according to law and evidence and without fear or favor.
There should be adequate evidence to prove the allegations, and there must be showing
that the judge had an interest, personal or otherwise, in the prosecution of the case. To
be a disqualifying circumstance, the bias and prejudice must be shown to have
stemmed from an extrajudicial source and result in an opinion on the merits on some
basis other than what the judge learned from his participation in the case. 82
The mere vehemence of the Government’s claim of bias does not translate to clear and
convincing evidence of impairing bias. There is no sufficient ground to direct the
inhibition of Hon. Gingoyon from hearing the expropriation case.
In conclusion, the Court summarizes its rulings as follows:
(1) The 2004 Resolution in Agan sets the base requirement that has to be observed
before the Government may take over the NAIA 3, that there must be payment to
PIATCO of just compensation in accordance with law and equity. Any ruling in the
present expropriation case must be conformable to the dictates of the Court as
pronounced in the Agan cases.
(2) Rep. Act No. 8974 applies in this case, particularly insofar as it requires the
immediate payment by the Government of at least the proffered value of the NAIA 3
facilities to PIATCO and provides certain valuation standards or methods for the
determination of just compensation.
(3) Applying Rep. Act No. 8974, the implementation of Writ of Possession in favor of the
Government over NAIA 3 is held in abeyance until PIATCO is directly paid the amount
of ₱3 Billion, representing the proffered value of NAIA 3 under Section 4(c) of the law.
(4) Applying Rep. Act No. 8974, the Government is authorized to start the
implementation of the NAIA 3 Airport terminal project by performing the acts that are
essential to the operation of the NAIA 3 as an international airport terminal upon the
effectivity of the Writ of Possession, subject to the conditions above-stated. As
prescribed by the Court, such authority encompasses "the repair, reconditioning and
improvement of the complex, maintenance of the existing facilities and equipment,
installation of new facilities and equipment, provision of services and facilities pertaining
to the facilitation of air traffic and transport, and other services that are integral to a
modern-day international airport."83
(5) The RTC is mandated to complete its determination of the just compensation within
sixty (60) days from finality of this Decision. In doing so, the RTC is obliged to comply
with "law and equity" as ordained in Again and the standard set under Implementing
Rules of Rep. Act No. 8974 which is the "replacement cost method" as the standard of
valuation of structures and improvements.
(6) There was no grave abuse of discretion attending the RTC Order appointing the
commissioners for the purpose of determining just compensation. The provisions on
commissioners under Rule 67 shall apply insofar as they are not inconsistent with Rep.
Act No. 8974, its Implementing Rules, or the rulings of the Court in Agan.
(7) The Government shall pay the just compensation fixed in the decision of the trial
court to PIATCO immediately upon the finality of the said decision.
(8) There is no basis for the Court to direct the inhibition of Hon. Gingoyon.
All told, the Court finds no grave abuse of discretion on the part of the RTC to warrant
the nullification of the questioned orders. Nonetheless, portions of these orders should
be modified to conform with law and the pronouncements made by the Court herein.
WHEREFORE, the Petition is GRANTED in PART with respect to the orders dated 4
January 2005 and 10 January 2005 of the lower court. Said orders are AFFIRMED with
the following MODIFICATIONS:
1) The implementation of the Writ of Possession dated 21 December 2005 is HELD IN
ABEYANCE, pending payment by petitioners to PIATCO of the amount of Three Billion
Two Million One Hundred Twenty Five Thousand Pesos (₱3,002,125,000.00),
representing the proffered value of the NAIA 3 facilities;
2) Petitioners, upon the effectivity of the Writ of Possession, are authorized start the
implementation of the Ninoy Aquino International Airport Pasenger Terminal III project
by performing the acts that are essential to the operation of the said International Airport
Passenger Terminal project;
3) RTC Branch 117 is hereby directed, within sixty (60) days from finality of this
Decision, to determine the just compensation to be paid to PIATCO by the Government.
The Order dated 7 January 2005 is AFFIRMED in all respects subject to the qualification
that the parties are given ten (10) days from finality of this Decision to file, if they so
choose, objections to the appointment of the commissioners decreed therein.
The Temporary Restraining Order dated 14 January 2005 is hereby LIFTED.
No pronouncement as to costs.
SO ORDERED.
3 Unfortunately, the bank had been unable to consolidate ownership in its name.
G.R. No. 173085 January 19, 2011
PHILIPPINE VETERANS BANK, Petitioner,
vs.
BASES CONVERSION DEVELOPMENT AUTHORITY, LAND BANK OF THE
PHILIPPINES, ARMANDO SIMBILLO, CHRISTIAN MARCELO, ROLANDO DAVID,
RICARDO BUCUD, PABLO SANTOS, AGRIFINA ENRIQUEZ, CONRADO
ESPELETA, CATGERUBE CASTRO, CARLITO MERCADO and ALFREDO
SUAREZ,Respondents.
DECISION
ABAD, J.:
This case is about the authority of the court in an expropriation case to adjudicate
questions of ownership of the subject properties where such questions involve the
determination of the validity of the issuance to the defendants of Certificates of Land
Ownership Awards (CLOAs) and Emancipation Patents (EPs), questions that fall within
the jurisdiction of the Department of Agrarian Reform Adjudication Board (DARAB).
The Facts and the Case
In late 2003 respondent Bases Conversion Development Authority (BCDA), a
government corporation, filed several expropriation actions before the various branches
of the Regional Trial Court (RTC) of Angeles City, for acquisition of lands needed for
the construction of the Subic-Clark-Tarlac Expressway Project. Ten of these cases were
raffled to Branch 58 of the court1 and it is these that are the concern of the present
petition.
The defendants in Branch 58 cases were respondents Armando Simbillo, Christian
Marcelo, Rolando David, Ricardo Bucud, Pablo Santos, Agrifina Enriquez, Conrado
Espeleta, Catgerube Castro, Carlito Mercado, and Alfredo Suarez. They were the
registered owners of the expropriated lands that they acquired as beneficiaries of the
comprehensive agrarian reform program. Another defendant was Land Bank of the
Philippines, the mortgagee of the lands by virtue of the loans it extended for their
acquisition. The lands in these cases were located in Porac and Floridablanca,
Pampanga.
On learning of the expropriation cases before Branch 58, petitioner Philippine Veterans
Bank (PVB) filed motions to intervene in all the cases with attached complaints-in-
intervention, a remedy that it adopted in similar cases with the other branches. PVB
alleged that the covered properties actually belonged to Belmonte Agro-Industrial
Development Corp. which mortgaged the lands to PVB in 1976. PVB had since
foreclosed on the mortgages and bought the same at public auction in 1982.
But, in its order of August 18, 2004,2 Branch 58 denied PVB’s motion for intervention on
the ground that the intervention amounts to a third-party complaint that is not allowed in
expropriation cases and that the intervention would delay the proceedings in the cases
before it. Besides, said Branch 58, PVB had a pending action for annulment of the titles
issued to the individual defendants and this was pending before Branch 62 of the court.
PVB filed its motion for reconsideration but Branch 58 denied the same, prompting the
bank to file a petition for certiorari with the Court of Appeals (CA).3 On January 26, 2006
the CA rendered a decision, dismissing the petition for lack of merit.4 It also denied in a
resolution dated June 2, 20065 PVB’s motion for reconsideration.
Meanwhile, on April 3, 2006 Branch 58 issued separate decisions in all 10 cases before
it, granting the expropriation of the subject properties. The court noted the uncertainty
as to the ownership of such properties but took no action to grant BCDA’s prayer in its
complaint that it determine the question of ownership of the same pursuant to Section
9, Rule 67 of the Revised Rules of Civil Procedure.6
The Issue Presented
The issue presented in this case is whether or not the CA erred in holding that PVB was
not entitled to intervene in the expropriation cases before Branch 58 of the Angeles City
RTC.
The Court’s Ruling
PVB maintains that in deciding the case, the RTC and the CA ignored Section 9, Rule
67 of the 1997 Rules of Civil Procedure, which authorizes the court adjudicating the
expropriation case to hear and decide conflicting claims regarding the ownership of the
properties involved while the compensation for the expropriated property is in the
meantime deposited with the court. Section 9 provides:
Sec. 9. Uncertain ownership; conflicting claims. – If the ownership of the property taken SO ORDERED.
is uncertain, or there are conflicting claims to any part thereof, the court may order any
sum or sums awarded as compensation for the property to be paid to the court for the
4
benefit of the person adjudged in the same proceeding to be entitled thereto. But the
judgment shall require the payment of the sum or sums awarded to either the defendant
or the court before the plaintiff can enter upon the property, or retain it for the public use G.R. No. 170375 October 13, 2010
or purpose if entry has already been made.
REPUBLIC OF THE PHILIPPINES, Petitioner,
PVB’s point regarding the authority of the court in expropriation cases to hear and vs.
adjudicate conflicting claims over the ownership of the lands involved in such cases is HON. MAMINDIARA P. MANGOTARA, in his capacity as Presiding Judge of the
valid. But such rule obviously cannot apply to PVB for the following reasons: Regional Trial Court, Branch 1, Iligan City, Lanao del Norte, and MARIA CRISTINA
FERTILIZER CORPORATION, and the PHILIPPINE NATIONAL
1. At the time PVB tried to intervene in the expropriation cases, its conflict with the BANK, Respondents,
farmer beneficiaries who held CLOAs, EPs, or TCTs emanating from such titles were
already pending before Angeles City RTC Branch 62, a co-equal branch of the same x - - - - - - - - - - - - - - - - - - - - - - -x
court. Branch 58 had no authority to pre-empt Branch 62 of its power to hear and
adjudicate claims that were already pending before it.
G.R. No. 170505

2. Of course, subsequently, after the CA dismissed PVB’s petition on January 26, 2006,
the latter filed a motion for reconsideration, pointing out that it had in the meantime LAND TRADE REALTY CORPORATION, Petitioner,
already withdrawn the actions it filed with Branch 62 after learning from the decision of vs.
the Supreme Court in Department of Agrarian Reform v. Cuenca,7 that jurisdiction over NATIONAL POWER CORPORATION and NATIONAL TRANSMISSION
cases involving the annulment of CLOAs and EPs were vested by Republic Act 6657 in CORPORATION (TRANSCO),Respondents,
the DARAB.8
x - - - - - - - - - - - - - - - - - - - - - - -x
PVB now points out that, since there was no longer any impediment in RTC Branch 58
taking cognizance of its motion for intervention and adjudicating the parties’ conflicting G.R. Nos. 173355-56
claims over the expropriated properties, the CA was in error in not reconsidering its
decision.
NATIONAL POWER CORPORATION, Petitioner,
vs.
But PVB’s withdrawal of its actions from Branch 62 cannot give Branch 58 comfort. As HON. COURT OF APPEALS (Special Twenty-Third Division, Cagayan de Oro City),
PVB itself insists, jurisdiction over the annulment of the individual defendants’ CLOAs and LAND TRADE REALTY CORPORATION, Respondents,
and EPs (which titles if annulled would leave PVB’s titles to the lands unchallenged) lies
with the DARAB. Branch 58 would still have no power to adjudicate the issues of
ownership presented by the PVB’s intervention. x - - - - - - - - - - - - - - - - - - - - - - -x

Actually, PVB’s remedy was to secure an order from Branch 58 to have the proceeds G.R. No. 173401
of the expropriation deposited with that branch in the meantime, pending adjudication
of the issues of ownership of the expropriated lands by the DARAB. Section 9 above REPUBLIC OF THE PHILIPPINES, Petitioner,
empowers the court to order payment to itself of the proceeds of the expropriation vs.
whenever questions of ownership are yet to be settled. There is no reason why this rule DEMETRIA CACHO, represented by alleged Heirs DEMETRIA CONFESOR VIDAL
should not be applied even where the settlement of such questions is to be made by and/or TEOFILO CACHO, AZIMUTH INTERNATIONAL DEVELOPMENT
another tribunal.1avvphi1 CORPORATION and LAND TRADE REALTY CORPORATION,Respondents.

WHEREFORE, the Court DENIES the petition and AFFIRMS the decision of the Court x - - - - - - - - - - - - - - - - - - - - - - -x
of Appeals dated January 26, 2006 and its resolution dated June 2, 2006 in CA-G.R.
SP 88144.
G.R. Nos. 173563-64 2) In G.R. Nos. 178779 and 178894 (Quieting of Title Case), the
Court DENIES the consolidated Petitions for Review of Landtrade Realty
Corporation, Teofilo Cacho, and/or Atty. Godofredo Cabildo for lack of merit.
NATIONAL TRANSMISSION CORPORATION, Petitioner,
It AFFIRMS the Decision dated January 19, 2007 and Resolution dated July
vs.
4, 2007 of the Court of Appeals in CA-G.R. CV. No. 00456, affirming in
HON. COURT OF APPEALS (Special Twenty-Third Division, Cagayan de Oro City),
toto the Decision dated July 17, 2004 of the Regional Trial Court, Branch 3 of
and LAND TRADE REALTY CORPORATION as represented by Atty. Max C.
Iligan City, Lanao del Norte, in Civil Case No. 4452. Costs against Landtrade
Tabimina, Respondents,
Realty Corporation, Teofilo Cacho, and Atty. Godofredo Cabildo.

x - - - - - - - - - - - - - - - - - - - - - - -x
3) In G.R. No. 170505 (The Ejectment or Unlawful Detainer Case – execution
pending appeal before the Regional Trial Court), the Court DENIES the
G.R. No. 178779 Petition for Review of Landtrade Realty Corporation for being moot and
academic given that the Regional Trial Court, Branch 1 of Iligan City, Lanao
del Norte had already rendered a Decision dated December 12, 2005 in Civil
LAND TRADE REALTY CORPORATION, Petitioner,
Case No. 6613. No costs.
vs.
DEMETRIA CONFESOR VIDAL and AZIMUTH INTERNATIONAL DEVELOPMENT
CORPORATION,Respondents, 4) In G.R. Nos. 173355-56 and 173563-64 (The Ejectment or Unlawful
Detainer Case – execution pending appeal before the Court of Appeals), the
Court GRANTS the consolidated Petitions for Certiorari and Prohibition of
x - - - - - - - - - - - - - - - - - - - - - - -x
the National Power Corporation and National Transmission Corporation.
It SETS ASIDE the Resolution dated June 30, 2006 of the Court of Appeals
G.R. No. 178894 in CA-G.R. SP Nos. 00854 and 00889 for having been rendered with grave
abuse of discretion amounting to lack or excess of jurisdiction. It
further ORDERSthe Court of Appeals to issue a writ of preliminary injunction
TEOFILO CACHO and/or ATTY. GODOFREDO CABILDO, Petitioner, enjoining the execution of the Decision dated December 12, 2005 of the
vs. Regional Trial Court, Branch 1 of Iligan City, Lanao del Norte, in Civil Case
DEMETRIA CONFESOR VIDAL and AZIMUTH INTERNATIONAL DEVELOPMENT No. 6613, while the same is pending appeal before the Court of Appeals in
CORPORATION,Respondents. CA-G.R. SP Nos. 00854 and 00889. It finally DIRECTS the Court of Appeals
to resolve without further delay the pending appeals before it, in CA-G.R. SP
RESOLUTION Nos. 00854 and 00889, in a manner not inconsistent with this Decision. No
costs.
LEONARDO-DE CASTRO, J.:
5) In G.R. No. 173401 (Cancellation of Titles and Reversion Case), the
Court GRANTS the Petition for Review of the Republic of the Philippines.
On July 7, 2010, the First Division of this Court promulgated its Decision in seven It REVERSES and SETS ASIDE the Orders dated December 13, 2005 and
consolidated Petitions, with the following dispositive portion: May 16, 2006 of the Regional Trial Court, Branch 4 of Iligan City in Civil Case
No. 6686. It further ORDERS the reinstatement of the Complaint in Civil Case
WHEREFORE, premises considered, the Court renders the following judgment in the No. 6686 and the return of the original record of the case to the court of origin
Petitions at bar: for further proceedings. No costs.1

1) In G.R. No. 170375 (Expropriation Case), the Court GRANTS the Petition
for Review of the Republic of the Philippines. It REVERSES and SETS
ASIDE the Resolutions dated July 12, 2005 and October 24, 2005 of the
Regional Trial Court, Branch 1 of Iligan City, Lanao del Norte. It
further ORDERS the reinstatement of the Complaint in Civil Case No. 106,
the admission of the Supplemental Complaint of the Republic, and the return
of the original record of the case to the court of origin for further proceedings.
No costs.
In a Resolution2 dated August 25, 2010, the Court denied with finality the separate
motions for reconsideration filed by [1] Teofilo Cacho (Teofilo) and Atty. Godofredo
Cabildo (Atty. Cabildo); [2] Land Trade Realty Corporation (LANDTRADE); and [3]
Demetria Vidal (Vidal), Azimuth International Development Corporation (AZIMUTH),
and Maria Cristina Fertilizer Corporation (MCFC), considering that the basic issues
were already passed upon and there was no substantial argument to warrant a
modification of the previous judgment of the Court.
Also in the August 25, 2010 Resolution, the Court denied the joint motion of Vidal,
AZIMUTH, and MCFC to refer the cases to the Court En Banc because per SC Circular
No. 2-89 dated February 7, 1989, as amended by the Resolution dated November 18,
1993, the Court En Banc is not an appellate court to which decisions or resolutions of
the Divisions may be appealed. It is for this same reason that the Court is now similarly
denying the Motion [To Refer to Court En Banc G.R. Nos. 178779 and 178894, G.R.
Nos. 170505, 173355-56, 173562-64 (sic) and G.R. No. 173401] of LANDTRADE.
Thus, the only other matter left for determination of this Court is the Motion for Leave to
File and Admit Attached Motion for Clarification, with the appended Motion for
Clarification, of the Republic of the Philippines (Republic). The Republic is concerned
that the pronouncements of this Court as regards the Quieting of Title Case (G.R. Nos.
178779 and 178894) would effectively bar or limit the prosecution of the Cancellation of
Titles and Reversion Case (G.R. No. 173401) and Expropriation Case (G.R. No.
170375). Hence, the Republic seeks the following reliefs from this Court:
WHEREFORE, it is respectfully prayed that a clarification be made confirming that:
1. The pronouncement in G.R. Nos. 178779 and 178894 that: "Azimuth is the
successor-in-interest of Demetria Vidal to the extent of 23 hectares" is without
prejudice to the final disposition of Civil Case No. 6686 for reversion; and,
2. The pronouncement in G.R. Nos. 178779 and 178894, on Demetria Vidal
Confesor’s heirship vis-à-vis her supposed right to transfer title to Azimuth, is
without prejudice to the outcome of Civil Case No. 106 (Expropriation) where
the government may present eveidence (sic) to belie the aforestated heirship
andor (sic) Demetria Confesor Vidal’s entitlement to just compensation.
Other reliefs deemed just and equitable under the premises are likewise prayed for. 3
The Court only partly grants the Motion for Clarification of the Republic.
In the Quieting of Title Case, the Court held:
Thus, the Court of Appeals did not err when it affirmed in toto the judgment of the RTC-
Branch 3 which declared, among other things, that (a) Vidal is the sole surviving heir of
Doña Demetria, who alone has rights to and interest in the subject parcels of land; (b)
AZIMUTH is Vidal’s successor-in-interest to portions of the said properties in
accordance with the 1998 Memorandum of Agreement and 2004 Deed of Conditional
Conveyance; (c) Teofilo is not the son or heir of Doña Demetria; and (d) Teofilo, Atty.
Cabildo, and their transferees/assignees, including LANDTRADE, have no valid right to
or interest in the same properties. (Emphasis supplied.)4
Of the total land area of 38.23 hectares covered by Original Certificate of Title (OCT)
Nos. 0-1200 (a.f.) and 0-1201 (a.f.), in the name of Doña Demetria Cacho (Doña
Demetria), Vidal transferred her rights to and interests in a portion thereof, measuring
23 hectares, to AZIMUTH by virtue of the aforementioned 1998 Memorandum of
Agreement and 2004 Deed of Conditional Conveyance. However, it should be stressed
that the main issue in the Quieting of Title Case was who between Vidal and Teofilo had
valid title to the subject properties as Doña Demetria’s rightful surviving heir. The extent
or area of the properties inherited was not put into question in said case.
Moreover, the Court also ordered in its July 7, 2010 Decision that the Cancellation of
Titles and Reversion Case be reinstated before the Regional Trial Court, Branch 4
(RTC-Branch 4) of Iligan City, Lanao del Norte. It is the main contention of the Republic
in said case that OCT Nos. 0-1200 (a.f.) and 0-1201 (a.f.) are null and void because
they covered parcels of land beyond those granted by the land registration court to Doña
Demetria in GLRO Record Nos. 6908 and 6909. Should the RTC-Branch 4 affirm the
nullity of the two OCTs, then it can order the cancellation of said certificates of title and
the reversion to the Republic of the parcels of land unlawfully included therein.1avvphi1
The Court agrees with the Republic that necessarily, the rights to and interests in the
entire 38.23 hectares, covered by OCT Nos. 0-1200 (a.f.) and 0-1201 (a.f.), claimed by
Vidal as the declared sole heir of Doña Demetria in the Quieting of Title Case, should
be without prejudice to the outcome of the Cancellation of Titles and Reversion Case
yet to be heard by the RTC-Branch 4. As Vidal’s successor-in-interest to the 23 hectares
of the subject properties, AZIMUTH only stepped into the former’s shoes in so far as
said portion is concerned. No one can acquire a right greater than what the transferor
himself has. As the saying goes, the spring cannot rise higher than its source. 5 As a
consequence, the rights to and interests in the 23-hectare portion of the subject
properties, acquired by AZIMUTH under the 1998 Memorandum of Agreement and
2004 Deed of Conditional Conveyance, referred to by this Court in the Quieting of Title
Case, are likewise dependent on the final judgment in the Cancellation of Titles and
Reversion Case.
As to whether the Republic may still challenge Vidal’s heirship in the Expropriation
Case, this is an issue not raised in any of the Petitions resolved by this Court in its July
7, 2010 Decision. It involves legal and factual matters that need to be argued and
established in the Expropriation Case, which was ordered reinstated by this Court
before the RTC-Branch 1. Thus, it is beyond the ambit of this Court to determine by
mere motion for clarification of the Republic.
WHEREFORE, premises considered, the Court hereby RESOLVES:
(1) TO DENY WITH FINALITY the Motion [To Refer to Court En Banc G.R.
Nos. 178779 and 178894, G.R. Nos. 170505, 173355-56, 173562-64 (sic)
and G.R. No. 173401] of Land Trade Realty Corporation;
(2) TO PARTLY GRANT the Motion for Clarification of the Republic of the
Philippines by declaring that the rights to and interests in the 23-hectare
portion of the subject properties, transferred by Demetria Vidal to Azimuth
International Development Corporation by virtue of the 1998 Memorandum of
Agreement and 2004 Deed of Conditional Conveyance, referred to by this
 Court in G.R. Nos. 178779 and 178894 (Quieting of Title Case), shall be
without prejudice to the outcome of Civil Case No. 6686 (Cancellation of Titles
and Reversion Case), which this Court, in its Decision dated July 7, 2010,
ordered reinstated before the Regional Trial Court, Branch 4 of Iligan City,
Lanao del Norte; and
(3) TO ORDER that no further pleadings shall be entertained in these
consolidated cases and that entry of judgment be made in due course.
SO ORDERED.
5 3135, as amended, and P.D. 385. For the purpose of extrajudicial foreclosure, the
G.R. No. 153951. July 29, 2005
PHILIPPINE NATIONAL BANK, Petitioners,
vs.
SANAO MARKETING CORPORATION, SPOUSES AMADO A. SANAO and
SOLEDAD F. SANAO and SPOUSES WILLIAM (Willy) F. SANAO and HELEN
SANAO and the COURT OF APPEALS, Respondents.
DECISION
TINGA, J.:
Before the Court is a Petition for Review1 under Rule 45 of the Rules of Court, wherein
petitioner Philippine National Bank (PNB) seeks the review of the Decision2 rendered
by the Court of Appeals Thirteenth Division in C.A. G.R. SP No. 63162. The
assailed Decision nullified two orders3 of the Regional Trial Court (RTC) of Pili,
Camarines Sur, Branch 32, which respectively granted PNB’s petition for issuance of a
writ of possession over seven (7) parcels of land and directed the execution pending
appeal of such writ of possession.
The antecedents are as follows:
In July 1997, Sanao Marketing Corporation, the spouses Amado A. Sanao and Soledad
F. Sanao and the spouses William (Willy) F. Sanao and Helen Sanao (all respondents
herein), as joint and solidary debtors, obtained a loan in the amount of One Hundred
Fifty Million Pesos (₱150,000,000.00) from PNB secured by a real estate mortgage of
several parcels of land situated in the municipalities of Pili, Tigaon and Camaligan, all
of Camarines Sur, and Naga City.4 The contract expressly provided that the mortgage
shall be governed by the provisions of Act No. 3135, as amended. 5 The pertinent
portions of said contract provide that:
....
F. FORECLOSURE, POWER OF ATTORNEY, RECEIVERSHIP
If at any time the Mortgagors fail or refuse to pay the obligation herein secured, or any
of the amortization of such indebtedness when due, or to comply with any of the
conditions and stipulations herein agreed, or shall during the time this mortgage is in
force, institute insolvency proceedings or be involuntarily declared insolvent, or shall
use the proceeds of this loan for purposes other than those specified herein, or if the
mortgage cannot be recorded in or the Mortgagors fail to register the same with the
corresponding Registry of Deeds, then all the obligations of the Mortgagors secured by
this mortgage and all the amortization thereof shall immediately become due, payable
and defaulted and the Mortgagee may immediately foreclose this mortgage judicially in
accordance with the Rules of Court, or extrajudicially in accordance with Act No.
Mortgagors hereby appoint the Mortgagee their Attorney-in-Fact to sell the properties
mortgaged under Act No. 3135, as amended, to sign all documents and perform any
act requisite and necessary to accomplish said purpose and to appoint its substitute as
Attorney-in-Fact with the same powers as above specified. In case of judicial
foreclosure, the Mortgagors hereby consent to the appointment of the Mortgagee or of
any of its employees as receiver, without any bond, to take charge of the mortgaged
properties at once, and to hold possession of the same and the rents, benefits and
profits derived from the mortgaged properties before the sale, less costs and expenses
of the receivership. . . . 6
For failure of respondents to fully pay the loan upon its maturity, PNB caused the
extrajudicial foreclosure of the mortgage through a certain Atty. Marvel C. Clavecilla
(Atty. Clavecilla), a notary public for and in the City of Naga. The Notice of Extra-Judicial
Foreclosure Sale announced that the sale of 13 titles consisting of 14 parcels of land
located in Camarines Sur and Naga City is scheduled on 22 March 1999 at nine o’clock
in the morning or soon thereafter, at the entrance of the Municipal Court of Pili,
Camarines Sur. This notice was published in the 7, 14 and 21 February 1999 issues of
the Vox Bikol- a weekly tabloid published every Sunday and circulated in the Bicol
region and continents with Bicol communities.7
Thereafter, Atty. Clavecilla executed a Provisional Certificate of Sale8 dated 26 April
1999 certifying that on the 22nd day of March 1999, at exactly ten o’clock in the morning,
he sold at a public auction at the "lobby/main entrance of the Regional Trial Court, Hall
of Justice, Naga City" the mortgaged properties to PNB for Two Hundred Thirteen
Million One Hundred Sixty-Two Thousand Seven Hundred Eighty- Seven and Fifty
Centavos (₱213,162,787.50), which amount the latter considered as payment pro
tanto of petitioners’ loan.9 This Provisional Certificate of Sale was registered with the
Registry of Deeds of Camarines Sur on 3 May 1999 and with the Registry of Deeds of
Naga City on 16 June 1999 for the properties respectively covered by their registries. 10
On 26 April 2000, respondents Amado A. Sanao and Sanao Marketing Corporation filed
a complaint11 with the RTC of Naga City, Branch 61, against PNB, the Register of Deeds
of the City of Naga and the Province of Camarines Sur, and Atty. Clavecilla, for the court
to declare the Provisional Certificate of Sale and the auction and foreclosure
proceedings null and void.12
On 11 August 2000, PNB filed with the RTC of Pili, Camarines Sur, Branch 32, a petition
for the issuance of a writ of possession, docketed therein as Spec. Proc. P-1182, over
the properties located in Pili that are covered by Transfer Certificates of Title Nos.
21448, 24221, 14133, 15218, 15489, 13856, 15216.13
To the petition, respondents Amado A. Sanao and Sanao Marketing Corporation
interposed an answer in opposition, with special and affirmative defenses. 14
PNB countered with its comments/reply to opposition. 15
On 24 November 2000, the RTC of Pili issued its first assailed order,16 granting the writ
of possession prayed for by PNB.
Amado A. Sanao and Sanao Marketing Corporation filed a Motion for Reconsideration
w/ Opposition to the Motion for Execution Pending Appeal,17 which was denied per the
second assailed order18 dated 24 January 2001 of the RTC of Pili.19
Respondents then filed a Petition20 for certiorari and prohibition under Rule 65 of the
Rules of Court before the Court of Appeals, imputing grave abuse of discretion on the
part of the RTC of Pili in the issuance of the two assailed orders. The Petition likewise
prayed for the issuance of a temporary restraining order which the Court of Appeals
granted on 15 February 2001, enjoining the RTC of Pili and PNB from implementing the
challenged orders.
In their Memorandum,21 respondents pointed out that the PNB had allegedly failed to
submit the application for extrajudicial foreclosure of mortgage to the proper clerk of
court after payment of the filing fee, in contravention of Supreme Court Administrative
Order No. 3 and Administrative Circular No. 3-98. In addition, respondents averred that
the foreclosure sale was null and void as it was done at the lobby/main entrance of the
RTC Hall of Justice, Naga City and not at the entrance of the Municipal Trial Court of
Pili, Camarines Sur as published.22
PNB, on the other hand, posited that the invoked administrative order is not applicable
as extrajudicial proceedings conducted by a notary public, as in the case at bar, do not
fall within the contemplation of the directive.23
With regard to the variance of the venues of the auction sale as published in Vox
Bikol and as recorded in the Provisional Certificate of Sale, PNB asserted that there
was no violation of Act No. 313524 or of the terms of the real estate mortgage
contract,25 as the sale of the mortgaged properties located in Camarines Sur were held
in Naga City which is well within the territorial jurisdiction of said province. 26
The Court of Appeals ruled in favor of herein respondents.27 The Court of Appeals
rendered a litany of lapses that the notary public committed in the conduct of the
foreclosure proceedings which in its estimation had effectively undermined the
soundness of the foreclosure sale. Accordingly, the Court of Appeals held that
the Provisional Certificate of Sale, upon which the issuance of the writ of possession
was based, is fatally infirm, and that consequently, the writ of possession was not validly
issued as the procedural requirements for its issuance were not satisfied. 28
Thus, the Court of Appeals declared null and void the two assailed orders of the RTC
of Pili for having been issued with grave abuse of discretion amounting to lack or excess
of jurisdiction.29
Aggrieved by the Decision, PNB filed the instant petition, arguing in the main that in
nullifying the orders of the RTC of Pili, the Court of Appeals departed from the accepted
and usual course of judicial proceedings as the issuance of writs of possession is purely
ministerial on the part of the trial court.30
In their comment,31 respondents point out that the instant petition should not be given
due course as it is not sufficient in form and substance. Respondents proffered the
following grounds, thus: (1) there was no special of attorney or Board Resolution or
Secretary’s Certificate attached to the petition which could serve as basis for the
petitioners’ signatory Domitila A. Amon to verify or attest to the truth of the allegations
contained therein, in violation of existing laws and jurisprudence on the matter; (2)
petitioners failed to move for a reconsideration of the assailed Decision of the Court of
Appeals; (3) petitioners failed to disclose another similar case involving the same legal
issues now pending in the Twelfth Division of the Court of Appeals, docketed as C.A.
G.R. CV No. 73718, which is an appeal from an original petition for issuance of writ of
possession filed by the same petitioner before the RTC of San Jose, Camarines Sur,
Branch 58; (4) petitioner failed to furnish the Twelfth Division of the Court of Appeals a
copy of the petition in C.A. G.R. No. 73718 pending therein, in violation of Section 5,
Rule 7 of the 1997 Rules of Civil Procedure, which failure could lead to conflicting
resolutions, between two divisions of the Court of Appeals and to the giving of
inadequate information to the Supreme Court; and (5) the petition was only
accompanied by Annexes A, B, C, D and E, which annexes do not satisfy the
requirements laid down in Sections 4 and 5 of Rule 45 of the Rules of Court. 32
Respondents also reiterate that the PNB in the conduct of the extrajudicial foreclosure
proceedings did not comply with Administrative Order No. 3 and Administrative Circular
No. 3-98, and that the notice of publication was not sufficient to justify the execution of
the Provisional Certificate of Sale.33
Traversing the alleged procedural errors, PNB in its Reply34 raise the following
arguments:
First, Mrs. Domitila A. Amon had authority to sign and verify its petition under Board
Resolution No. 15 dated 8 October 1997,35 in line with her authority to prosecute and
defend cases for and/or against the bank.36
Second, there are exceptions to the general rule that a motion for reconsideration must
first be filed before elevating a case to a higher court. PNB insists that the Decision of
the Court of Appeals is a patent nullity as it runs counter to the provisions of Act No.
3135 and existing jurisprudence stating that Administrative Order No. 3 covers judicial
foreclosures.37 As such, the filing of a motion for reconsideration prior to elevating the
case on certiorari may be dispensed with.
Lastly, the case which according to respondents is not mentioned in the certification of
non-forum shopping was commenced by respondents themselves, not PNB, and that
the issues similar to those in the instant case have yet to be raised in respondents’
appeal to the Court of Appeals. Moreover, the subject matter and the properties involved
in the other case are altogether different.38
There is merit in the petition.
A writ of possession is "a writ of execution employed to enforce a judgment to recover
the possession of land. It commands the sheriff to enter the land and give possession
of it to the person entitled under the judgment."39
A writ of possession may be issued under the following instances:40 (1)in land
registration proceedings under Section 17 of Act 496; 41 (2) in a judicial foreclosure,
provided the debtor is in possession of the mortgaged realty and no third person, not a
party to the foreclosure suit, had intervened; (3) in an extrajudicial foreclosure of a real
estate mortgage under Section 7 of Act No. 3135, as amended by Act No. 4118;42 and
(4) in execution sales (last paragraph of Section 33, Rule 39 of the Rules of Court).43
The present case falls under the third instance. Under Section 7 of Act No. 3135, as
amended by Act No. 4118, a writ of possession may be issued either (1) within the one-
year redemption period, upon the filing of a bond, or (2) after the lapse of the redemption
period, without need of a bond.44 Section 7 of Act No. 3135, as amended by Act No.
4118, provides:
SECTION 7. In any sale made under the provisions of this Act, the purchaser may
petition the Court of First Instance of the province or place where the property or any
part thereof is situated, to give him possession thereof during the redemption period,
furnishing bond in an amount equivalent to the use of the property for a period of twelve
months, to indemnify the debtor in case it be shown that the sale was made without
violating the mortgage or without complying with the requirements of this Act. Such
petition shall be made under oath and filed in form of an ex parte motion in the
registration or cadastral proceedings if the property is registered, or in special
proceedings in case of property registered under the Mortgage Law or under section
one hundred and ninety-four of the Administrative Code, or of any other real property
encumbered with a mortgage duly registered in the office of any register of deeds in
accordance with any existing law, and in each case the clerk of court shall, upon the
filing of such petition, collect the fees specified in paragraph eleven of section one
hundred and fourteen of Act Numbered Four hundred and ninety-six, and the court shall,
upon approval of the bond, order that a writ of possession issue, addressed to the sheriff
of the province in which the property is situated, who shall execute said order
immediately.
Under the above-quoted provision, the purchaser in a foreclosure sale may apply for a
writ of possession during the redemption period by filing an ex parte motion under oath
for that purpose in the corresponding registration or cadastral proceeding in the case of
property covered by a Torrens title. Upon the filing of such motion and the approval of
the corresponding bond, the law also in express terms directs the court to issue the
order for a writ of possession.45
A writ of possession may also be issued after consolidation of ownership of the property
in the name of the purchaser. It is settled that the buyer in a foreclosure sale becomes
the absolute owner of the property purchased if it is not redeemed during the period of
one year after the registration of sale. As such, he is entitled to the possession of the
property and can demand it any time following the consolidation of ownership in his
name and the issuance of a new transfer certificate of title. In such a case, the bond
required in Section 7 of Act No. 3135 is no longer necessary. Possession of the land
then becomes an absolute right of the purchaser as confirmed owner. Upon proper
application and proof of title, the issuance of the writ of possession becomes a
ministerial duty of the court.46 It was held, thus:
As the purchaser of the properties in the extra-judicial foreclosure sale, the PNCB is
entitled to a writ of possession therefore. The law on extrajudicial foreclosure of
mortgage provides that a purchaser in an extrajudicial foreclosure sale may take
possession of the foreclosed property even before the expiration of the redemption
period, provided he furnishes the necessary bond. Possession of the property may be
obtained by filing an ex parte motion with the regional trial court of the province or place
where the property is situated. Upon filing of the motion and the required bond, it
becomes a ministerial duty of the court to order the issuance of a writ of possession in
favor of the purchaser. After the expiration of the one-year period without redemption
being effected by the property owner, the right of the purchaser to the possession of the
foreclosed property becomes absolute. The basis of this right to possession is the
purchaser’s ownership of the property. Mere filing of an ex parte motion for the issuance
of the writ of possession would suffice, and no bond is required. 47
Any question regarding the regularity and validity of the sale, as well as the consequent
cancellation of the writ, is to be determined in a subsequent proceeding as outlined in
Section 8 of Act No. 3135, as amended by Act No. 4118. Such question is not to be
raised as a justification for opposing the issuance of the writ of possession, since, under
the Act, the proceeding is ex parte.48
In case it is disputed that there was violation of the mortgage or that the procedural
requirements for the foreclosure sale were not followed, Section 8 of Act No. 3135, as
amended by Act No. 4118, provides, to wit:
SECTION 8. The debtor may, in the proceedings in which possession was requested,
but not later than thirty days after the purchaser was given possession, petition that the
sale be set aside and the writ of possession cancelled, specifying the damages suffered
by him, because the mortgage was not violated or the sale was not made in accordance
with the provisions hereof, and the court shall take cognizance of this petition in
accordance with the summary procedure provided for in section one hundred and twelve
of Act Number Four hundred and ninety-six; and if it finds the complaint of the debtor
justified, it shall dispose in his favor of all or part of the bond furnished by the person
who obtained possession. Either of the parties may appeal from the order of the judge
in accordance with section fourteen of Act Numbered Four hundred and ninety-six; but
the order of possession shall continue in effect during the pendency of the appeal.
The law is clear that the purchaser must first be placed in possession. If the trial court
later finds merit in the petition to set aside the writ of possession, it shall dispose the
bond furnished by the purchaser in favor of the mortgagor. Thereafter, either party may
appeal from the order of the judge. The rationale for the mandate is to allow the
purchaser to have possession of the foreclosed property without delay, such possession
being founded on his right of ownership.49
It has been consistently held that the duty of the trial court to grant a writ of possession
is ministerial. Such writ issues as a matter of course upon the filing of the proper motion
and the approval of the corresponding bond. The court neither exercises its official
discretion nor judgment.50 The judge issuing the order following these express
provisions of law cannot be charged with having acted without jurisdiction or with grave
abuse of discretion.51 If only to stress the writ’s ministerial character, we have, in
previous cases, disallowed injunction to prohibit its issuance, just as we have held that
the issuance of the same may not be stayed by a pending action for annulment of
mortgage or the foreclosure itself.52
In the case at bar, PNB has sufficiently established its right to the writ of possession. It
presented as documentary exhibits the contract of real estate mortgage 53 and
the Provisional Certificate of Sale54 on the face of which appears proof of its registration
with the Registry of Deeds in Camarines Sur on 3 May 1999. There is also no dispute
that the lands were not redeemed within one year from the registration of the Provisional
Certificate of Sale. It should follow, therefore, that PNB has acquired an absolute right,
as purchaser, to the writ of possession. The RTC of Pili had the ministerial duty to issue
that writ, as it did actually, upon mere motion, conformably to Section 7 of Act No. 3135,
as amended.55
However on certiorari, the Court of Appeals declared null and void the orders of the
RTC of Pili granting the writ of possession and denying respondents’ motion for
reconsideration. The Court of Appeals exhaustively discussed the reasons for such a
declaration, noting the procedural errors of PNB in the conduct of the foreclosure
proceedings which allegedly rendered the foreclosure sale and the Provisional
Certificate of Sale of doubtful validity.
The Court of Appeals relied on the case of Cometa v. Intermediate Appellate Court56 in
holding that "for a writ of possession to be validly issued …. in an extrajudicial
foreclosure proceeding, all the procedural requirements should be complied with. Any
flaw afflicting its stages could affect the validity of its issuance."57 The Court of Appeals
reproached the RTC of Pili Sur for granting the writ despite the existence of these
alleged procedural lapses.
This was erroneous. The judge to whom an application for writ of possession is filed
need not look into the validity of the mortgage or the manner of its foreclosure. In the
issuance of a writ of possession, no discretion is left to the trial court. Any question
regarding the cancellation of the writ or in respect of the validity and regularity of the
public sale should be determined in a subsequent proceeding as outlined in Section 8
of Act No. 3135.58
In fact, the question of the validity of the foreclosure proceedings can be threshed out
in Civil Case No. RTC 2000-00074, pending before the RTC of Naga City, Branch 61,
which was filed by respondents before PNB had filed a petition for the issuance of a writ
of possession. The Court of Appeals should not have ruled on factual issues on which
the RTC of Naga had yet to make any finding. Besides, a review of such factual matters
is not proper in a petition for certiorari.
Having noted the foregoing, the Court dispenses with the need to discuss the
soundness of the foreclosure proceedings, the authenticity of the Provisional Certificate
of Sale, and the applicability of Supreme Court Administrative Order No. 3 and
Administrative Circular No. 3-98. A review of the foregoing matters properly lies within
the jurisdiction of the RTC of Naga City, Branch 61.
It is worthy of note that the pendency of the case for annulment of the foreclosure
proceedings is not a bar to the issuance of the writ of possession. 59 Pending such
proceedings whose subject is the validity of the foreclosure proceedings, the purchaser
in a foreclosure sale is entitled to the possession of property. Until such time the
foreclosure sale is annulled, the issuance of the writ of possession is ministerial on the
part of the RTC of Pili.60
In addition, the Court of Appeals’ reliance on the case of Cometa61 is misplaced. The
cited case involved the issuance of a writ of possession following an execution sale.
The declaration therein that the issuance of said writ is dependent on the valid execution
of the procedural stages preceding it does not contemplate writs of possession available
in extrajudicial foreclosures of real estate mortgages under Section 7 of Act No. 3135,
as amended by Act No. 4118.
Considering that the RTC of Pili issued the writ of possession in compliance with the
provisions of Act No. 3135, as amended, it cannot be charged with having acted in
excess of its jurisdiction or with grave abuse of discretion. Absent grave abuse of
discretion, respondents should have filed an ordinary appeal instead of a petition for
certiorari. The soundness of the order granting the writ of possession is a matter of
judgment with respect to which the remedy is ordinary appeal. An error of judgment
committed by a court in the exercise of its legitimate jurisdiction is not the same as
"grave abuse of discretion." Errors of judgment are correctible by appeal, while those of
jurisdiction are reviewable by certiorari.62
Palpably, the Court of Appeals exceeded its jurisdiction when it granted respondents’
petition for certiorari and set aside the orders dated 24 November 2000 and 24 January
2001 of the RTC of Pili in Spec. Proc No. P-1182, and also when it made a determination
as to the validity of the foreclosure proceedings in clear violation of Act No. 3135. The
contention, therefore, that the Court should not entertain the instant petition until a
motion for reconsideration has been filed may not hold water where the proceeding in
which the error occurred is a patent nullity. Thus, we hold that a motion for
reconsideration may be dispensed with in the instant case. 63
Anent the other procedural grounds for the denial of the instant petition, suffice it to say
that PNB’s rejoinder has sufficiently refuted respondents’ assertions. We find and so
hold that there was substantial compliance with the procedural requirements of the
Court.
Although belatedly filed, the Resolution of the PNB Board amply demonstrates Mrs.
Domitila A. Amon’s authority to sign and verify the instant petition. PNB likewise was
not obligated to disclose the alluded case pending before the Court of Appeals as it was
not initiated by the bank and, more importantly, the subject matter and the properties
involved therein are altogether different.64 It is well to remember at this point that rules
of procedure are but mere tools designed to facilitate the attainment of justice. Their
strict and rigid application which would result in technicalities that tend to frustrate rather
than promote substantial justice, must always be avoided.65 In proper cases, procedural
rules may be relaxed or suspended in the interest of substantial justice.66 And the power
of the Court to except a particular case from its rules whenever the purposes of justice
require it cannot be questioned.67
WHEREFORE, the instant petition is GRANTED. The Decision of the Court of Appeals
dated 11 June 2002 in CA-G.R. S.P. No. 63162 is REVERSED and SET ASIDE. The
orders dated 24 November 2000 and 24 January 2001 of the Regional Trial Court of
Pili, Camarines Sur, Branch 32 in Spec. Pro. No. P-1182 directing the issuance of a writ
of possession in favor of PNB are AFFIRMED.
SO ORDERED.
6 The parties stipulated in their Credit Agreement dated September 19, 1995,5 that failure
G.R. No. 165662 May 3, 2006
SELEGNA MANAGEMENT AND DEVELOPMENT CORPORATION; and Spouses
EDGARDO and ZENAIDA ANGELES, Petitioners,
vs.
UNITED COCONUT PLANTERS BANK,* Respondent.
DECISION
PANGANIBAN, CJ:
A writ of preliminary injunction is issued to prevent an extrajudicial foreclosure, only
upon a clear showing of a violation of the mortgagor’s unmistakable right.
Unsubstantiated allegations of denial of due process and prematurity of a loan are not
sufficient to defeat the mortgagee’s unmistakable right to an extrajudicial foreclosure.
The Case
Before us is a Petition for Review1 under Rule 45 of the Rules of Court, assailing the
May 4, 2004 Amended Decision2 and the October 12, 2004 Resolution3 of the Court of
Appeals (CA) in CA-GR SP No. 70966. The challenged Amended Decision disposed
thus:
"WHEREFORE, the Motion for Reconsideration is GRANTED. The July 18, 2003
Decision is hereby REVERSED and SET ASIDE and another one entered GRANTING
the petition and REVERSING and SETTING ASIDE the March 15, 2002 Order of the
Regional Trial Court, Branch 58, Makati City in Civil Case No. 99-1061."4
The assailed Resolution denied reconsideration.
The Facts
On September 19, 1995, Petitioners Selegna Management and Development
Corporation and Spouses Edgardo and Zenaida Angeles were granted a credit facility
in the amount of P70 million by Respondent United Coconut Planters Bank (UCPB). As
security for this credit facility, petitioners executed real estate mortgages over several
parcels of land located in the cities of Muntinlupa, Las Piñas, Antipolo and Quezon; and
over several condominium units in Makati. Petitioners were likewise required to execute
a promissory note in favor of respondent every time they availed of the credit facility. As
required in these notes, they paid the interest in monthly amortizations.
to pay "any availment of the accommodation or interest, or any sum due" shall constitute
an event of default,6 which shall consequently allow respondent bank to "declare [as
immediately due and payable] all outstanding availments
of the accommodation together with accrued interest and any other sum payable." 7
In need of further business capital, petitioners obtained from UCPB an increase in their
credit facility.8 For this purpose, they executed a Promissory Note for P103,909,710.82,
which was to mature on March 26, 1999.9 In the same note, they agreed to an interest
rate of 21.75 percent per annum, payable by monthly amortizations.
On December 21, 1998, respondent sent petitioners a demand letter, worded as follows:
"Gentlemen:
"With reference to your loan with principal outstanding balance of [P103,909,710.82], it
appears from the records of United Coconut Planters Bank that you failed to pay interest
amortizations amounting to [P14,959,525.10] on the Promissory Note on its due date,
30 May 1998.
"x x x xxx xxx
"Accordingly, formal demand is hereby made upon you to pay your outstanding
obligations in the total amount of P14,959,525.10, which includes unpaid interest and
penalties as of 21 December 1998 due on the promissory note, eight (8) days from date
hereof."10
Respondent decided to invoke the acceleration provision in their Credit Agreement.
Accordingly, through counsel, it relayed its move to petitioners on January 25, 1999 in
a letter, which we quote:
"Gentlemen:
"x x x xxx xxx
"It appears from the record of [UCPB] that you failed to pay the monthly interest due on
said obligation since May 30, 1998 as well as the penalty charges due thereon. Despite
repeated demands, you refused and continue to refuse to pay the same. Under the
Credit Agreements/Letter Agreements you executed, failure to pay when due any
installments of the loan or interest or any sum due thereunder, is an event of default.
"Consequently, we hereby inform you that our client has declared your principal
obligation in the amount of [P103,909,710.82], interest and sums payable under the
Credit Agreement/Letter Agreement/Promissory Note to be immediately due and
payable.
"Accordingly, formal demand is hereby made upon you to please pay within five (5) days
from date hereof or up to January 29, 1999 the principal amount of [P103,909,710.82],
with the interest, penalty and other charges due thereon, which as of January 25, 1999
amounts to [P17,351,478.55]."11
Respondent sent another letter of demand on March 4, 1999. It contained a final
demand on petitioners "to settle in full [petitioners’] said past due obligation to [UCPB]
within five (5) days from [petitioners’] receipt of [the] letter."12
In response, petitioners paid respondent the amount of P10,199,473.96 as partial
payment of the accrued interests.13 Apparently unsatisfied, UCPB applied for
extrajudicial foreclosure of petitioners’ mortgaged properties.
When petitioners received the Notice of Extra Judicial Foreclosure Sale on May 18,
1999, they requested UCPB to give them a period of sixty (60) days to update their
accrued interest charges; and to restructure or, in the alternative, to negotiate for a
takeout of their account.14
On May 25, 1999, the Bank denied petitioners’ request in these words:
"This is to reply to your letter dated May 20, 1999, which confirms the request you made
the previous day when you paid us a visit.
"As earlier advised, your account has been referred to external counsel for appropriate
legal action. Demand has also been made for the full settlement of your account.
"We regret that the Bank is unable to grant your request unless a definite offer is made
for settlement."15
In order to forestall the extrajudicial foreclosure scheduled for May 31, 1999, petitioners
filed a Complaint16(docketed as Civil Case No. 99-1061) for "Damages, Annulment of
Interest, Penalty Increase and Accounting with Prayer for Temporary Restraining
Order/Preliminary Injunction." All subsequent proceedings in the trial court and in the
CA involved only the propriety of issuing a TRO and a writ of preliminary injunction.
Judge Josefina G. Salonga,17 then executive judge of the Regional Trial Court (RTC) of
Makati City, denied the Urgent Ex-parte Motion for Immediate Issuance of a Temporary
Restraining Order (TRO), filed by petitioners. Judge Salonga denied their motion on the
ground that no great or irreparable injury would be inflicted on them if the parties would
first be heard.18 Unsatisfied, petitioners filed an Ex-Parte Motion for Reconsideration, by
reason of which the case was eventually raffled to Branch 148, presided by Judge Oscar
B. Pimentel.19
After due hearing, Judge Pimentel issued an Order dated May 31, 1999, granting a 20-
day TRO on the scheduled foreclosure of the Antipolo properties, on the ground that
the Notice of Foreclosure had indicated an inexistent auction venue.20 To resolve that
issue, respondent filed a Manifestation21 that it would withdraw all its notices relative to
the foreclosure of the mortgaged properties, and that it would re-post or re-publish a
new set of notices. Accordingly, in an Order dated September 6, 1999,22 Judge Pimentel
denied petitioners’ application for a TRO for having been rendered moot by
respondent’s Manifestation.23
Subsequently, respondent filed new applications for foreclosure in the cities where the
mortgaged properties were located. Undaunted, petitioners filed another Motion for the
Issuance of a TRO/Injunction and a Supplementary Motion for the Issuance of
TRO/Injunction with Motion to Clarify Order of September 6, 1999.24
On October 27, 1999, Judge Pimentel issued an Order25 granting a 20-day TRO in favor
of petitioners. After several hearings, he issued his November 26, 1999
Order,26 granting their prayer for a writ of preliminary injunction on the foreclosures, but
only for a period of twenty (20) days. The Order states:
"Admitted by defendant witness is the fact that in all the notices of foreclosure sale of
the properties of the plaintiffs x x x it is stated in each notice that the property will be
sold at public auction to satisfy the mortgage indebtedness of plaintiffs which as of
August 31, 1999 amounts to P131,854,773.98.
"x x x xxx xxx
"As the court sees it, this is the problem that should be addressed by the defendant in
this case and in the meantime, the notice of foreclosure sale should be held in abeyance
until such time as these matters are clarified and cleared by the defendants x x x Should
the defendant be able to remedy the situation this court will have no more alternative
but to allow the defendant to proceed to its intended action.
"x x x xxx xxx
"WHEREFORE, premises considered, and finding compelling reason at this point in
time to grant the application for preliminary injunction, the same is hereby granted upon
posting of a preliminary injunction bond in the amount of P3,500,000.00 duly approved
by the court, let a writ of preliminary injunction be issued."27
The corresponding Writ of Preliminary Injunction28 was issued on November 29, 1999.
Respondent moved for reconsideration. On the other hand, petitioners filed a Motion to
Clarify Order of November 26, 1999. Conceding that the November 26 Order had
granted an injunction during the pendency of the case, respondent contended that the
injunctive writ merely restrained it for a period of 20 (twenty) days.
On December 29, 2000, Judge Pimentel issued an Order29 granting respondent’s
Motion for Reconsideration and clarifying his November 26, 1999 Order in this manner:
"There may have been an error in the Writ of Preliminary Injunction issued dated
November 29, 1999 as the same [appeared to be actually] an extension of the TRO
issued by this Court dated 27 October 1999 for another 20 days period. Plaintiff’s seeks
to enjoin defendants for an indefinite period pending trial of the case.
"Be that as it may, the Court actually did not have any intention of restraining the
defendants from foreclosing plaintiff[s’] property for an indefinite period and during the
entire proceeding of the case x x x.
"x x x xxx xxx
"What the [c]ourt wanted the defendants to do was to merely modify the notice of [the]
auction sale in order that the amount of P131,854,773.98 x x x would not appear to be
the value of each property being sold on auction. x x x.30
"WHEREFORE, premises considered and after finding merit on the arguments raised
by herein defendants to be impressed with merit, and having stated in the Order dated
26 November 1999 that no other alternative recourse is available than to allow the
defendants to proceed with their intended action, the Court hereby rules:
"1.] To give due course to defendant[‘]s motion for reconsideration, as the same is
hereby GRANTED, however, with reservation that this Order shall take effect upon after
its[] finality[.]"31
Consequently, respondent proceeded with the foreclosure sale of some of the
mortgaged properties. On the other hand, petitioners filed an "[O]mnibus [M]otion [for
Reconsideration] and to [S]pecify the [A]pplication of the P92 [M]illion [R]ealized from
the [F]oreclosure [S]ale x x x."32 Before this Omnibus Motion could be resolved, Judge
Pimentel inhibited himself from hearing the case.33
The case was then re-raffled to Branch 58 of the RTC of Makati City, presided by Judge
Escolastico U. Cruz.34 The proceedings before him were, however, all nullified by the
Supreme Court in its En Banc Resolution dated September 18, 2001. 35 He was
eventually dismissed from service.36
The case was re-raffled to the pairing judge of Branch 58, Winlove M. Dumayas. On
March 15, 2002, Judge Dumayas granted petitioners’ Omnibus Motion for
Reconsideration and Specification of the Foreclosure Proceeds, as follows:
"WHEREFORE, premises considered, the Motion to Reconsider the Order dated
December 29, 2000 is hereby granted and the Order of November 26, 1999 granting
the preliminary injunction is reinstated subject however to the condition that all
properties of plaintiffs which were extrajudicially foreclosed though public bidding are
subject to an accounting. [A]nd for this purpose defendant bank is hereby given fifteen
(15) days from notice hereof to render an accounting on the proceeds realized from the
foreclosure of plaintiffs’ mortgaged properties located in Antipolo, Makati, Muntinlupa
and Las Piñas."37
The aggrieved respondent filed before the Court of Appeals a Petition for Certiorari,
seeking the nullification of the RTC Order dated March 15, 2002, on the ground that it
was issued with grave abuse of discretion.38
The Special Fifteenth Division, speaking through Justice Rebecca de Guia-Salvador,
affirmed the ruling of Judge Dumayas. It held that petitioners had a clear right to an
injunction, based on the fact that respondent had kept them in the dark as to how and
why their principal obligation had ballooned to almost P132 million. The CA held that
respondent’s refusal to give them a detailed accounting had prevented the
determination of the maturity of the obligation and precluded the possibility of a "Whether or not the Honorable Court of Appeals supported its Amended Decision by
foreclosure of the mortgaged properties. Moreover, their payment of P10 million had the invoking jurisprudence not applicable and completely identical with the instant case.
effect of updating, and thereby averting the maturity of, the outstanding obligation. 39
"III
Respondent filed a Motion for Reconsideration, which was granted by a Special Division
of Five of the Former Special Fifteenth Division.
"Whether or not the Honorable Court of Appeals failed to establish its finding that RTC
Judge Winlove Dumayas has acted with grave abuse of discretion." 48
Ruling of the Court of Appeals
The resolution of this case hinges on two issues: 1) whether petitioners are in default;
Citing China Banking Corporation v. Court of Appeals,40 the appellate court held in its and 2) whether there is basis for preliminarily enjoining the extrajudicial foreclosure. The
Amended Decision41 that the foreclosure proceedings should not be enjoined in the light other issues raised will be dealt with in the resolution of these two main questions.
of the clear failure of petitioners to meet their obligations upon maturity. 42
The Court’s Ruling
Also citing Zulueta v. Reyes,43 the CA, through Justice Jose Catral Mendoza, went on
to say that a pending question on accounting did not warrant an injunction on the
The Petition has no merit.
foreclosure.

First Issue:
Parenthetically, the CA added that petitioners were not without recourse or protection.
Further, it noted their pending action for annulment of interest, damages and
accounting. It likewise said that they could protect themselves by causing the annotation Default
of lis pendens on the titles of the mortgaged or foreclosed properties.
The resolution of the present controversy necessarily begins with a determination of
In his Separate Concurring Opinion,44 Justice Magdangal M. de Leon added that a prior respondent’s right to foreclose the mortgaged properties extrajudicially.
accounting was not essential to extrajudicial foreclosure. He cited Abaca Corporation v.
Garcia,45 which had ruled that Act No. 3135 did not require mortgaged properties to be
It is a settled rule of law that foreclosure is proper when the debtors are in default of the
sold by lot or by only as much as would cover just the obligation. Thus, he concluded
that a request for accounting -- for the purpose of determining whether the proceeds of payment of their obligation. In fact, the parties stipulated in their credit agreements,
the auction would suffice to cover the indebtedness -- would not justify an injunction on mortgage contracts and promissory notes that respondent was authorized to foreclose
on the mortgages, in case of a default by petitioners. That this authority was granted is
the foreclosure.
not disputed.

Petitioners filed a Motion for Reconsideration dated May 31, 2004, which the appellate
Mora solvendi, or debtor’s default, is defined as a delay49 in the fulfillment of an
court denied.46
obligation, by reason of a cause imputable to the debtor. 50 There are three requisites
necessary for a finding of default. First, the obligation is demandable and liquidated;
Hence, this Petition.47 second, the debtor delays performance; third, the creditor judicially or extrajudicially
requires the debtor’s performance.51
Issues
Mortgagors’ Default of Monthly Interest Amortizations
Petitioners raise the following issues for our consideration:
In the present case, the Promissory Note executed on March 29, 1998, expressly states
that petitioners had an obligation to pay monthly interest on the principal obligation.
p align="center">"I
From respondent’s demand letter,52 it is clear and undisputed by petitioners that they
failed to meet those monthly payments since May 30, 1998. Their nonpayment is
"Whether or not the Honorable Court of Appeals denied the petitioners of due process. defined as an "event of default" in the parties’ Credit Agreement, which we quote:

"II
"Section 8.01. Events of Default. Each of the following events and occurrences shall Lack of Accounting
constitute an Event of Default of this AGREEMENT:
Petitioners do not even attempt to deny the aforementioned matters. They assert,
"1. The CLIENT shall fail to pay, when due, any availment of the Accommodation or though, that they have a right to a detailed accounting before they can be declared in
interest, or any other sum due thereunder in accordance with the terms default. As regards the three requisites of default, they say that the first requisite --
thereof;1avvphil.net liquidated debt -- is absent. Continuing with foreclosure on the basis of an unliquidated
obligation allegedly violates their right to due process. They also maintain that their
partial payment of P10 million averted the maturity of their obligation.59
"x x x xxx x x x"

On the other hand, respondent asserts that questions regarding the running balance of
"Section 8.02. Consequences of Default. (a) If an Event of Default shall occur and be
the obligation of petitioners are not valid reasons for restraining the foreclosure.
continuing, the Bank may:
Nevertheless, it maintains that it has furnished them a detailed monthly statement of
account.
"1. By written notice to the CLIENT, declare all outstanding availments of the
Accommodation together with accrued interest and any other sum payable hereunder
A debt is liquidated when the amount is known or is determinable by inspection of the
to be immediately due and payable without presentment, demand or notice of any kind,
terms and conditions of the relevant promissory notes and related
other than the notice specifically required by this Section, all of which are expressly
documentation.60 Failure to furnish a debtor a detailed statement of account does not
waived by the CLIENT[.]"53
ipso facto result in an unliquidated obligation.

Considering that the contract is the law between the parties, 54 respondent is justified in
Petitioners executed a Promissory Note, in which they stated that their principal
invoking the acceleration clause declaring the entire obligation immediately due and
obligation was in the amount of P103,909,710.82, subject to an interest rate of 21.75
payable.55 That clause obliged petitioners to pay the entire loan on January 29, 1999,
percent per annum.61 Pursuant to the parties’ Credit Agreement, petitioners likewise
the date fixed by respondent.56
know that any delay in the payment of the principal obligation will subject them to a
penalty charge of one percent per month, computed from the due date until the
Petitioners’ failure to pay on that date set into effect Article IX of the Real Estate obligation is paid in full.62
Mortgage,57 worded thus:
It is in fact clear from the agreement of the parties that when the payment is accelerated
"If, at any time, an event of default as defined in the credit agreements, promissory due to an event of default, the penalty charge shall be based on the total principal
notes and other related loan documents referred to in paragraph 5 of ARTICLE I hereof amount outstanding, to be computed from the date of acceleration until the obligation is
(sic), or the MORTGAGOR and/or DEBTOR shall fail or refuse to pay the SECURED paid in full.63 Their Credit Agreement even provides for the application of payments.64 It
OBLIGATIONS, or any of the amortization of such indebtedness when due, or to comply appears from the agreements that the amount of total obligation is known or, at the very
any (sic) of the conditions and stipulations herein agreed, x x x then all the obligations least, determinable.
of the MORTGAGOR secured by this MORTGAGE and all the amortizations thereof
shall immediately become due, payable and defaulted and the MORTGAGEE may
Moreover, when they made their partial payment, petitioners did not question the
immediately foreclose this MORTGAGE judicially in accordance with the Rules of Court,
principal, interest or penalties demanded from them. They only sought additional time
or extrajudicially in accordance with Act No. 3135, as amended, and Presidential Decree
to update their interest payments or to negotiate a possible restructuring of their
No. 385. For the purpose of extrajudicial foreclosure, the MORTGAGOR hereby
account.65 Hence, there is no basis for their allegation that a statement of account was
appoints the MORTGAGEE his/her/its attorney-in-fact to sell the property mortgaged
necessary for them to know their obligation. We cannot impair respondent’s right to
under Act No. 3135, as amended, to sign all documents and perform any act requisite
foreclose the properties on the basis of their unsubstantiated allegation of a violation of
and necessary to accomplish said purpose and to appoint its substitutes as such
due process.
attorney-in-fact with the same powers as above specified. x x x[.]"58

In Spouses Estares v. CA,66 we did not find any justification to grant a preliminary
The foregoing discussion satisfactorily shows that UCPB had every right to apply for
injunction, even when the mortgagors were disputing the amount being sought from
extrajudicial foreclosure on the basis of petitioners’ undisputed and continuing default.
them. We held in that case that "[u]pon the nonpayment of the loan, which was secured
by the mortgage, the mortgaged property is properly subject to a foreclosure sale."67
Petitioners’ Debt Considered Liquidated Despite the Alleged
Compared with Estares, the denial of injunctive relief in this case is even more There are no circumstances that would indicate a renunciation of the right of respondent
imperative, because the present petitioners do not even assail the amounts due from to foreclose the mortgaged properties extrajudicially, on the basis of petitioners’
them. Neither do they contend that a detailed accounting would show that they are not continuing default. On the contrary, it asserted its right by filing an application for
in default. A pending question regarding the due amount was not a sufficient reason to extrajudicial foreclosure after receiving the partial payment. Clearly, it did not intend to
enjoin the foreclosure in Estares. Hence, with more reason should injunction be denied give petitioners more time to meet their obligation.
in the instant case, in which there is no dispute as to the outstanding obligation of
petitioners.
Parenthetically, respondent cannot be reproved for accepting their partial payment.
While Article 1248 of the Civil Code states that creditors cannot be compelled to accept
At any rate, whether respondent furnished them a detailed statement of account is a partial payments, it does not prohibit them from accepting such payments.
question of fact that this Court need not and will not resolve in this instance. As held in
Zulueta v. Reyes,68 in which there was no genuine controversy as to the amounts due
Second Issue:
and demandable, the foreclosure should not be restrained by the unnecessary question
of accounting.
Enjoining the Extrajudicial Foreclosure
Maturity of the Loan Not Averted by Partial Compliance with Respondent’s Demand
A writ of preliminary injunction is a provisional remedy that may be resorted to by
litigants, only to protect or preserve their rights or interests during the pendency of the
Petitioners allege that their partial payment of P10 million on March 25, 1999, had the
principal action. To authorize a temporary injunction, the plaintiff must show, at least
effect of forestalling the maturity of the loan;69 hence the foreclosure proceedings are
prima facie, a right to the final relief.75 Moreover, it must show that the invasion of the
premature. 70 We disagree.
right sought to be protected is material and substantial, and that there is an urgent and
paramount necessity for the writ to prevent serious damage.76
To be sure, their partial payment did not extinguish the obligation. The Civil Code states
that a debt is not paid "unless the thing x x x in which the obligation consists has been
In the absence of a clear legal right, the issuance of the injunctive writ constitutes grave
completely delivered x x x."71 Besides, a late partial payment could not have possibly
abuse of discretion. Injunction is not designed to protect contingent or future rights. It is
forestalled a long-expired maturity date.
not proper when the complainant’s right is doubtful or disputed. 77

The only possible legal relevance of the partial payment was to evidence the
As a general rule, courts should avoid issuing this writ, which in effect disposes of the
mortgagee’s amenability to granting the mortgagor a grace period. Because the partial
main case without trial.78 In Manila International Airport Authority v. CA,79 we urged
payment would constitute a waiver of the mortgagee’s vested right to foreclose, the
courts to exercise caution in issuing the writ, as follows:
grant of a grace period cannot be casually assumed; 72 the bank’s agreement must be
clearly shown. Without a doubt, no express agreement was entered into by the parties.
Petitioners only assumed that their partial payment had satisfied respondent’s demand "x x x. We remind trial courts that while generally the grant of a writ of preliminary
and obtained for them more time to update their account.73 injunction rests on the sound discretion of the court taking cognizance of the case,
extreme caution must be observed in the exercise of such discretion. The discretion of
the court a quo to grant an injunctive writ must be exercised based on the grounds and
Petitioners are mistaken. When creditors receive partial payment, they are not ipso facto
in the manner provided by law. Thus, the Court declared in Garcia v. Burgos:
deemed to have abandoned their prior demand for full payment. Article 1235 of the Civil
Code provides:
‘It has been consistently held that there is no power the exercise of which is more
delicate, which requires greater caution, deliberation and sound discretion, or more
"When the obligee accepts the performance, knowing its incompleteness or irregularity,
dangerous in a doubtful case, than the issuance of an injunction. It is the strong arm of
and without expressing any protest or objection, the obligation is deemed fully complied
equity that should never be extended unless to cases of great injury, where courts of
with."
law cannot afford an adequate or commensurate remedy in damages.

Thus, to imply that creditors accept partial payment as complete performance of their
‘Every court should remember that an injunction is a limitation upon the freedom of
obligation, their acceptance must be made under circumstances that indicate their
action of the defendant and should not be granted lightly or precipitately. It should be
intention to consider the performance complete and to renounce their claim arising from
granted only when the court is fully satisfied that the law permits it and the emergency
the defect.74
demands it.’"80 (Citations omitted)
Petitioners do not have any clear right to be protected. As shown in our earlier findings,
they failed to substantiate their allegations that their right to due process had been
violated and the maturity of their obligation forestalled. Since they indisputably failed to
meet their obligations in spite of repeated demands, we hold that there is no legal
justification to enjoin respondent from enforcing its undeniable right to foreclose the
mortgaged properties.
In any case, petitioners will not be deprived outrightly of their property. Pursuant to
Section 47 of the General Banking Law of 2000,81 mortgagors who have judicially or
extrajudicially sold their real property for the full or partial payment of their obligation
have the right to redeem the property within one year after the sale. They can redeem
their real estate by paying the amount due, with interest rate specified, under the
mortgage deed; as well as all the costs and expenses incurred by the bank. 82
Moreover, in extrajudicial foreclosures, petitioners have the right to receive any surplus
in the selling price. This right was recognized in Sulit v. CA, 83 in which the Court held
that "if the mortgagee is retaining more of the proceeds of the sale than he is entitled
to, this fact alone will not affect the validity of the sale but simply gives the mortgagor a
cause of action to recover such surplus."84
Petitioners failed to demonstrate the prejudice they would probably suffer by reason of
the foreclosure. Also, it is clear that they would be adequately protected by law. Hence,
we find no legal basis to reverse the assailed Amended Decision of the CA dated May
4, 2004.
WHEREFORE, the Petition is DENIED and the assailed Amended Decision and
Resolution AFFIRMED. Costs against petitioners.
SO ORDERED.
7
G.R. No. 160479 June 8, 2005
SPOUSES GODOFREDO V. ARQUIZA and REMEDIOS D. ARQUIZA, petitioners,
vs.
COURT OF APPEALS and EQUITABLE PCIBANK, respondents.
DECISION
CALLEJO, SR., J.:
Before us is a petition for review on certiorari of the Decision1 of the Court of Appeals
(CA) in CA-G.R. CV No. 74592 and its Resolution denying the motion for
reconsideration of the said decision. The assailed decision affirmed the decision of the
Regional Trial Court (RTC) of Quezon City, Branch 221, granting the ex parte petition
for the issuance of a writ of possession in LRC Case No. Q-14150(01).
The petitioners, spouses Godofredo V. Arquiza and Remedios D. Arquiza, obtained a
loan from private respondent Equitable PCIBank for ₱2.5 million. To secure the payment
thereof, the petitioners executed a Real Estate Mortgage over their parcel of land
covered by Transfer Certificate of Title (TCT) No. N-143274 of the Registry of Deeds of
Quezon City.2
When the spouses defaulted in the payment of their loan, the private respondent filed a
petition for extrajudicial foreclosure of the real estate mortgage. A public auction was
held on October 18, 1999 in accordance with Act No. 3135, as amended by Act No.
4118 during which the mortgaged property, together with all the improvements existing
thereon, was sold to the private respondent as the highest bidder.3 Accordingly, a
Certificate of Sale4 over the property was issued in favor of the private respondent. This
was registered with the Registry of Deeds of Quezon City on November 22, 1999. 5
Following the expiry date of the redemption period without the petitioners having
exercised their right to redeem the property, the private respondent consolidated its
ownership over the subject property.6 As a consequence, the Registry of Deeds issued
TCT No. N-2216507 in the name of the private respondent, canceling the petitioners’
former title.
The petitioners filed a complaint against the private respondent and the sheriffs with the
Regional Trial Court (RTC) of Quezon City for the declaration of the nullity of the
promissory note, real estate mortgage and the foreclosure sale and damages with a
plea for injunctive relief for the suspension redemption period. The case was docketed
as Civil Case No. Q-98-34094.8
Meanwhile, the private respondent demanded that the petitioners vacate and surrender
possession of the subject property, but the latter refused to do so. This compelled the
private respondent to file an Ex Parte Petition for Issuance of a Writ of
Possession,9 docketed as LRC Case No. Q-14150(01) also with the Quezon City RTC.
Instead of acting on the petition and receiving the evidence of the private respondent ex
parte, as mandated by Act No. 3135, as amended, the RTC set the case for hearing at
8:30 a.m. of August 30, 2001, and ordered that a copy of the petition be served on the
petitioners.10 The latter filed their Answer alleging that (1) the private respondent failed
to incorporate a Certificate of Non-Forum Shopping in its petition; and (2) the petition
was abated by the pendency of their complaint in Civil Case No. Q-98-34094 involving
the non-payment of their mortgage obligation, the validity of the foreclosure sale of the
mortgaged property and their failure to redeem the same. The petitioners prayed that
the trial court dismiss the petition outright.11 They appended to their answer a copy of
their amended and supplemental complaint in Civil Case No. Q-98-34094.
The trial court conducted a hearing of the petition during which the petitioners and the
private respondent adduced their respective evidence.
On February 22, 2002, the trial court rendered a Decision in LRC Case No. Q-14150(01)
granting the petition, thus:
WHEREFORE, the Court holds that the Instant Petition for Issuance of a Writ of
Possession is meritorious and should be granted. Let a writ of possession be issued in
favor of the petitioner and directing the Respondents Sps. Godofredo and Remedios
Arquiza and all persons claiming rights and interest under them to vacate the premises
and place the petitioner in possession thereof.
The petitioner Equitable PCIBank is directed to coordinate with the Branch Clerk of
Court, this Court, for the expeditious issuance and implementation of the Writ of
Possession.
SO ORDERED.12
The petitioners appealed the decision to the CA alleging that:
1. THAT THE LOWER COURT ERRED IN GIVING DUE COURSE TO THE "EX-
PARTE PETITION FOR ISSUANCE OF WRIT OF POSSESSION" AND IN NOT
DISMISSING THE SAME FOR BEING INDEROGATION OF THE APPELLANTS’
RIGHT TO A DUE PROCESS OF LAW;
2. THAT THE LOWER COURT ERRED IN NOT APPLYING IN THIS CASE THE WELL-
ESTABLISHED RULE ON "LITIS PENDENCIA" BY NOT DISMISSING THE "EX-
PARTE PETITION, etc." IN QUESTION FOR THE REASON "THAT THERE IS
ANOTHER ACTION PENDING BETWEEN THE SAME PARTIES FOR THE SAME
CAUSE; (Sec. 1(e), Rule 16, Rules of Court).
3. THAT THE LOWER COURT ERRED IN IGNORING THE RULE AGAINST "FORUM
SHOPPING" AND THE MANDATORY REQUIREMENT FOR A "CERTIFICATION OF
NON-FORUM SHOPPING" IN AN INITIATORY PLEADING LIKE PETITIONER-
APPELLEES’ ÉX-PARTE PETITION, etc." IN QUESTION AND FOR NOT
DISMISSING SAID PLEADING ON THE GROUND "THAT A CONDITION
PRECEDENT FOR FILING THE CLAIM HAS NOT BEEN COMPLIED WITH" (Sec. 1(j),
Rule 16, Rules of Court).
4. THAT THE LOWER COURT ERRED IN HOLDING TO THE EFFECT THAT
SECTIONS 4 & 5, RULE 7 OF THE 1997 RULES OF CIVIL PROCEDURE DOES NOT
APPLY TO THE "EX-PARTE PETITION, etc." IN QUESTION BECAUSE ALLEGEDLY
THE CASE AT BAR IS A LAND REGISTRATION CASE.
5. THAT THE LOWER COURT ERRED IN RENDERING A DECISION GRANTING THE
RELIEF PRAYED FOR IN THE "EX-PARTE PETITION, etc. FOR THE ISSUANCE OF
A WRIT OF POSSESSION AGAINST THE RESPONDENTS-APPELLANTS ALBEIT
NO EVIDENCE WAS ADDUCED PROVING THAT THE SUBJECT REAL ESTATE
MORTGAGE AND ITS FORECLOSURE, AMONG OTHER SUBSEQUENT
PROCEEDINGS, ARE LAWFUL, VALID AND REGULAR, IN CIRCUMVENTION OF
THE PREJUDICIAL ISSUES PRECISELY RAISED IN THE PENDING CIVIL CASE NO.
Q-98-34094 INVOLVING THE DECLARATION OF NULLITY OF SAID MORTGAGE
AND RELATED TRANSACTIONS.13
The CA rendered judgment affirming the appealed decision. The CA held that the
petition for the issuance of a writ of possession was not an initiatory pleading; hence, a
certification against forum shopping was not necessary. The appellate court also held
that there could be no forum shopping because a petition for the issuance of a writ of
possession is but an incident in the transfer of title. The CA held that the rule requiring
the highest bidder to be placed in possession of the property is founded on the right of
ownership, which becomes absolute after title thereto has been issued in favor of the
new owner, and that the court must aid in effecting its delivery.14
The motion for reconsideration of the decision having been denied by the CA, the
petitioners filed their petition for review on certiorari with this Court and raised the
following issues:
Firstly, is it right, proper and just for the Court below to completely ignore and disregard
a related prior and pending action between the same parties where the very basis of
the right of possession over the subject property sought to be enforced as a result of
the foreclosure of a "mortgage" is being assailed in court for being NULL AND VOID ab
initio OR INEXISTENT?
Secondly, is it right, proper and just for the Court below to summarily close its eyes to
the patent and obvious flaw or irregularity of the "mortgage" in the appreciation of the
evidence offered in support of the Ex-Parte Petition For the Issuance of a Writ of
Possession?
Thirdly, does the application of Section 7 of Act 3135, as amended by Act 4118, as the
Court below did, exclude or preclude the effectivity or applicability of the mandate
against forum shopping, of the requirement for certification in pleadings against forum
shopping, of the principle of "litis pendentia," and of due process of law?15
The petitioners assert that the ex parte petition for the issuance of the writ of possession
should have been dismissed by the RTC for failure to attach a certification against forum
shopping. They claim that this requirement is mandatory and there is no law exempting
the private respondent’s ex parte petition from compliance therewith.16
The petitioners contend that they are legally entitled to be protected in their possession
over the subject property pending the resolution of Civil Case No. Q-98-34094 for the
declaration of nullity of the promissory note, real estate mortgage, and foreclosure sale.
They argue that the issuance of a writ of possession preempted and pre-judged the
outcome of Civil Case No. Q-98-34094. The petitioners maintain that the ex
parte petition for the issuance of a writ of possession violated the petitioners’ right to
procedural due process considering that Section 4, Rule 15 of the Rules of Court
requires every written motion to be set for hearing, except for those which would not
prejudice the rights of the adverse party.17
The petitioners maintain that the private respondent failed to substantiate its ex
parte petition for the issuance of the writ of possession. They fault the trial court for not
scrutinizing judiciously the private respondent’s evidence because had it done so, it
would have noted the nullity of the mortgage, which appears to have been executed not
by the owners of the subject property. They question the private respondent’s failure to
attach the promissory notes evidencing their loan, which would have shown that the real
estate mortgage was executed prior to the execution of the said promissory notes. The
petitioners aver that the private respondent failed to prove the validity and legality of the
real estate mortgage, and without a valid mortgage, there can be no valid foreclosure
sale or valid title.18
For its part, the private respondent contends that the requirement for the filing of a
certificate of non-forum shopping is not applicable, considering that the ex parte motion
for the issuance of a writ of possession is not an initiatory pleading.19 It submits that litis
pendentia does not exist because there is no identity of the issues and the reliefs prayed
for between the present case and Civil Case No. Q-98-34094. Hence, forum shopping
cannot likewise exist.20
The private respondent maintains that after the expiration of the redemption period and
the consolidation of ownership over the property, it had the right to be placed in
possession thereof without the need of a separate and independent action. It posits that
the right to possess an extrajudicially foreclosed property is not affected by the
pendency of an action for annulment of foreclosure proceedings. The private
respondent stresses that the issuance of a writ of possession is a ministerial function of
the court, and should be issued as a matter of course upon the filing of the proper ex
parte motion.21
It asserts that the petitioners were not denied their right to due process because,
notwithstanding the grant of the writ of possession, they may still resort to another
proceeding to question the regularity and validity of the foreclosure sale. It points out
that the petitioners should appreciate the fact that the court a quo allowed them to
participate in the proceedings even if the motion for issuance of a writ of possession
was ex parte in nature.22Finally, the private respondent avers that it had presented
sufficient evidence to show that it is entitled to the possession of the subject property.23
The petition is denied for lack of merit.
The assailed ruling of the CA is correct. The certification against forum shopping is
required only in a complaint or other initiatory pleading.24 The ex parte petition for the
issuance of a writ of possession filed by the respondent is not an initiatory pleading.
Although the private respondent denominated its pleading as a petition, it is,
nonetheless, a motion. What distinguishes a motion from a petition or other pleading is
not its form or the title given by the party executing it, but rather its purpose. The office
of a motion is not to initiate new litigation, but to bring a material but incidental matter
arising in the progress of the case in which the motion is filed. 25 A motion is not an
independent right or remedy, but is confined to incidental matters in the progress of a
cause. It relates to some question that is collateral to the main object of the action and
is connected with and dependent upon the principal remedy.26 An application for a writ
of possession is a mere incident in the registration proceeding. Hence, although it was
denominated as a "petition," it was in substance merely a motion. Thus, the CA correctly
made the following observations:
Such petition for the issuance of a writ of possession is filed in the form of an ex
parte motion, inter alia, in the registration or cadastral proceedings if the property is
registered. Apropos, as an incident or consequence of the original registration or
cadastral proceedings, the motion or petition for the issuance of a writ of possession,
not being an initiatory pleading, dispels the requirement of a forum-shopping
certification. Axiomatic is that the petitioner need not file a certification of non-forum
shopping since his claims are not initiatory in character (Ponciano vs. Parentela, Jr.,
331 SCRA 605 [2000])27
It bears stressing that Section 7 of Act No. 3135, as amended by Act No. 4118,
specifically provides that the buyer at public auction may file a verified petition in the
form of an ex parte motion.
SEC. 7. In any sale made under the provisions of this Act, the purchaser may petition
the Court of First Instance (now Regional Trial Court) of the province or place where the
property or any part thereof is situated, to give him possession thereof during the
redemption period, furnishing bond in an amount equivalent to the use of the property
for a period of twelve months, to indemnify the debtor in case it be shown that the sale
was made without violating the mortgage or without complying with the requirements of
this Act. Such petition shall be made under oath and filed in form of an ex
parte motion in the registration or cadastral proceedings if the property is
registered, or in special proceedings in the case of property registered under the
Mortgage Law or under Sec. 194 of the Administrative Code, or of any other real
property encumbered with a mortgage duly registered in the office of any register of
deeds in accordance with any existing law, and in each case the clerk of court shall,
upon the filing of such petition, collect the fees specified in par. 11 of Sec. 114 of Act
No. 496, and the court shall, upon the filing of the bond, order that a writ of possession
issue, addressed to the sheriff of the province in which the property is situated, who
shall execute said order immediately.
Indeed, it is well-settled that an ordinary action to acquire possession in favor of the
purchaser at an extrajudicial foreclosure of real property is not necessary. There is no
law in this jurisdiction whereby the purchaser at a sheriff’s sale of real property is obliged
to bring a separate and independent suit for possession after the one-year period for
redemption has expired and after he has obtained the sheriff’s final certificate of
sale.28 The basis of this right to possession is the purchaser’s ownership of the property.
The mere filing of an ex parte motion for the issuance of the writ of possession would
suffice, and no bond is required.29lawphil.net
The Court rejects the contention of the petitioners that the RTC erred in not dismissing In this case, the RTC opted not to conduct an ex parte hearing. It went out of its way
the petition of the private respondent on the grounds of forum shopping and litis and set the application for a writ of possession for hearing as shown by the trial court’s
pendentia, in view of the pendency of Civil Case No. Q-98-34094. Order40 dated June 25, 2001. Moreover, the petitioners were allowed to file an
Answer,41 and a Rejoinder42 to the private respondent’s Reply. The petitioners were
even allowed to adduce and offer documentary evidence. 43 What the fundamental law
The requisites of litis pendentia are the following: (a) identity of parties, or at least such
prohibits is total absence of opportunity to be heard. When a party has been afforded
as representing the same interests in both actions; (b) identity of rights asserted and
opportunity to present his side, such party cannot feign denial of due process. 44
relief prayed for, the relief being founded on the same facts; and (c) the identity of the
two cases such that judgment in one, regardless of which party is successful, would
amount to res judicata in the other.30 And one element of res judicata is that the The petitioners’ contention that the private respondent failed to sufficiently establish its
judgment or order must be on the merits of the case.31 right to a writ of possession is belied by the evidence. In support of its application for a
writ of possession, the private respondent submitted the following documentary
evidence: (1) real estate mortgage; (2) TCT No. N-143274 in the name of the petitioners,
As heretofore ruled by the Court, the petition of the private respondent for a writ of
and the annotations on its back of the real estate mortgage, certificate of sale, and the
possession was not an ordinary action. Any order or decision of the RTC in LRC Case
consolidation of ownership; (3) the petition for sale; (4) affidavit of publication of the
No. Q-14150(01) is not determinative of the merits of Civil Case No. Q-98-34094.
extrajudicial sale; (5) TCT No. N-221650 in the name of the private respondent; (6)
notice to vacate; (7) petitioners’ reply to the notice to vacate; and (8) affidavit of
Well established is the rule that after the consolidation of title in the buyer’s name for consolidation of ownership.
failure of the mortgagor to redeem, the writ of possession becomes a matter of right. Its
issuance to a purchaser in an extrajudicial foreclosure is merely a ministerial
The petitioners fault the trial court for not delving into the validity of the mortgage and
function.32 The issuance of the writ of possession being a ministerial function, and
the foreclosure proceeding before granting the petition for a writ of possession. This
summary in nature, it cannot be said to be a judgment on the merits, but simply an
contention is barren of legal basis. The judge to whom an application for writ of
incident in the transfer of title. Hence, a separate case for annulment of mortgage and
possession is filed need not look into the validity of the mortgage or the manner of its
foreclosure sale cannot be barred by litis pendentia or res judicata.33
foreclosure. In the issuance of a writ of possession, no discretion is left to the trial court.
Any question regarding the cancellation of the writ or in respect of the validity and
Conversely, we reject the petitioners’ argument that the ex parte petition for the regularity of the public sale should be determined in a subsequent proceeding as
issuance of a writ of possession should have been dismissed on the ground of forum outlined in Section 8 of Act No. 3135.45
shopping. The test to determine whether a party violated the rule against forum
shopping is whether the elements of litis pendentia are present, or whether a final
IN VIEW OF ALL THE FOREGOING, the petition is DENIED for lack of merit. The
judgment in one case will amount to res judicata in another.34 In other words, when litis
Decision and Resolution of the Court of Appeals in CA-G.R. CV No. 74592 are
pendentia or res judicata does not exist, neither can forum shopping exist. Having
AFFIRMED. Costs against the petitioner.
settled that litis pendentia does not exist, it follows then that no forum shopping likewise
exists in this case. The Court’s ruling in Ong vs. Court of Appeals35 is instructive, thus:
SO ORDERED.
As a rule, any question regarding the validity of the mortgage or its foreclosure cannot
be a legal ground for refusing the issuance of a writ of possession. Regardless of 8
whether or not there is a pending suit for annulment of the mortgage or the foreclosure
itself, the purchaser is entitled to a writ of possession, without prejudice of course to the
eventual outcome of said case.36 G.R. No. 138567. March 04, 2005

Likewise barren of merit is the petitioners’ contention that they were denied their right DEVELOPMENT BANK OF THE PHILIPPINES, Petitioners,
to due process by the RTC. vs.
SPOUSES WILFREDO GATAL and AZUCENA GATAL, Respondents.

Section 7 of Act No. 3135, as amended, specifically provides that a petition (for a writ
of possession) is in the nature of an ex parte motion in which the court hears only one DECISION
side of the controversy.37 An ex parte proceeding presupposes a right of the petitioners
to which there is no adverse party.38 An ex parte proceeding merely means that it is SANDOVAL-GUTIERREZ, J.:
taken or granted at the instance and for the benefit of one party, and without notice to
or contestation by any party adversely affected.39
Before us for resolution is the petition for review on certiorari1 assailing the
Decision2 dated January 18, 1999 of the Court of Appeals and its Resolution3 dated
April 27, 1999 in CA-G.R. SP No. 47736, "Development Bank of the Philippines,
petitioner, vs. Hon. Raineldo T. Son, in his capacity as Presiding Judge of Branch 47,
Regional Trial Court of Tagbilaran City, and Spouses Wilfredo Gatal and Azucena Gatal,
respondents."
Records show that sometime in 1993, spouses Wilfredo and Azucena Gatal,
respondents, obtained a loan of ₱1,500,000.00 from the Development Bank of the
Philippines (DBP), petitioner. The loan was secured by a real estate mortgage over a
commercial lot at No. 3 J.A. Clarin Street, Tagbilaran City, covered by Transfer
Certificate of Title No. T-22697 of the Registry of Deeds, same city. For failure of
respondents to pay their loan, petitioner foreclosed the mortgage in December 1994. In
January 1996, the title of the lot was consolidated in the name of petitioner DBP.
On October 29, 1996, the property was offered for sale at public auction, but none of
the bidders was able to meet the bid price ceiling.
On November 18, 1996, petitioner offered the property for negotiated sale on condition
that the buyer must pay 20% of the selling price as down payment, the balance payable
under the terms of the interested buyer.
Respondents then submitted their bid in the amount of ₱2,160,000.00 and made a
deposit equivalent to 10% of the bid price. However, another buyer, Jimmy Torrefranca,
offered a bid of ₱2,300,000.00, or ₱140,000.00 higher than respondents’ bid. Upon
learning of Torrefranca’s offer, respondents wrote4 petitioner requesting that they will
match his bid. But petitioner rejected respondents’ request because Torrefranca was
already declared the preferred bidder.5
Aggrieved, respondents, filed with the Regional Trial Court (RTC), Branch 4,
Tagbilaran City a complaint for injunction with prayer for a temporary restraining order
and a preliminary injunction, docketed as Civil Case No. 5996. The action sought to (a)
declare the sale of the property to Torrefranca void and uphold respondents’ right of
pre-emption; and (b) maintain the status quo between the parties prior to the filing of
the suit.
On February 22, 1997, the RTC issued an Order granting respondents’ application for
a preliminary injunction.
Meantime, on August 27, 1997, petitioner filed with the same RTC, Branch 47, a
petition for issuance of a writ of possession, docketed as Civil Case No. 6097. On
October 31, 1997, the court issued a writ of possession in favor of petitioner.
On November 12, 1997, respondents filed with Branch 47 a motion to dismiss Civil Case
No. 6097 and a motion to quash the writ of possession on the ground that there is
another case (Civil Case No. 5996 for injunction) pending before Branch 4 involving the
same parties, the same subject matter and the same legal issues.
On December 18, 1997, Branch 47 issued an Order dismissing Civil Case No. 6097 and
recalling its earlier Order granting the writ of possession on the ground of litis pendentia.
Petitioner DBP filed a motion for reconsideration but was denied by Branch 47 in an
Order dated February 10, 1998.
Thereafter, petitioner filed with the Court of Appeals a petition for certiorari assailing the
Orders dated December 18, 1997 and February 10, 1998 of Branch 47, docketed as
CA-G.R. SP No. 47736. On January 18, 1999, the Appellate Court rendered its Decision
dismissing the petition, thus upholding the challenged Orders.
Petitioner filed a motion for reconsideration but was denied in a Resolution dated April
27, 1999.
Hence, the instant petition.
The fundamental issue for our resolution is whether the Court of Appeals committed a
reversible error in holding that the trial court correctly dismissed Civil Case No. 6097 on
the ground of litis pendentia.
The petition is meritorious.
One of the grounds for dismissing an action is when there is litis pendentia as provided
under Section 1(e), Rule 16, of the 1997 Rules of Civil Procedure, as amended, thus:
"SECTION 1. Grounds. – Within the time for but before filing the answer to the complaint
or pleading asserting a claim, a motion to dismiss may be made on any of the following
grounds:
xxx
(e) That there is another action pending between the same parties for the same cause;
x x x."
For litis pendentia to lie as a ground for a motion to dismiss, the following requisites
must be present: (1) that the parties to the action are the same; (2) that there is
substantial identity in the causes of action and reliefs sought; and (3) that the result of
the first action is determinative of the second in any event and regardless of which party
is successful.6
It is undisputed that both cases involve the same parties and the same property. Civil
Case No. 5996 is an action for injunction filed by respondents against petitioner DBP.
It seeks to declare the sale of the property to Torrefranca void and to order petitioner
DBP "to respect respondents’ right of pre-emption;" and maintain the status
quobetween the parties.
Upon the other hand, Civil Case No. 6097 is a petition for the issuance of a writ of
possession filed by petitioner DBP, being the purchaser of the lot at the public auction.
Clearly, the rights asserted and the reliefs sought by the parties in both cases are not
identical. Thus, respondents’ claim of litis pendentia is unavailing.
Section 33, Rule 39 of the same Rules provides:
"SECTION 33. Deed and possession to be given at expiration of redemption period; by
whom executed or given. – If no redemption be made within one (1) year from the date
of the registration of the certificate of sale, the purchaser is entitled to a conveyance
and possession of the property; x x x.
Upon the expiration of the right of redemption, the purchaser or redemptioner shall be
substituted to and acquire all the rights, title, interest and claim of the judgment obligor
to the property as of the time of the levy. The possession of the property shall be given
to the purchaser or last redemptioner by the same officer unless a third party is actually
holding the property adversely to the judgment obligor."
Corollarily, Section 7 of Act 3135,7 as amended by Act 4118, reads:
"Sec. 7. In any sale made under the provisions of this Act, the purchaser may petition
the Court of First Instance of the province or place where the property or any part thereof
is situated, to give him possession thereof during the redemption period, furnishing bond
in an amount equivalent to the use of the property for a period of twelve months, to
indemnify the debtor in case it be shown that the sale was made without complying with
the requirements of this Act. x x x"
In Tan Soo Huat vs. Ongwico,8 we ruled that "once a mortgaged estate is extrajudicially
sold, and is not redeemed within the reglementary period, no separate and
independent action is necessary to obtain possession of the property. The
purchaser at the public auction has only to file a petition for issuance of a writ of
possession pursuant to Section 33 of Rule 39 of the Rules of Court."
To give effect to the right of possession, the purchaser must invoke the aid of the court
and ask for a writ or possession9 without need of bringing a separate independent suit
for this purpose.10
Records show that title to the property has been consolidated to petitioner DBP. Thus,
its petition for a writ of possession is in order.
Obviously, the RTC (Branch 47) erred when it granted respondents’ motion to dismiss
and recalled the writ of possession it earlier issued. Where, as here, the title is
consolidated in the name of the mortgagee, the writ of possession becomes a matter
of right on the part of the mortgagee, and it is a ministerial duty on the part of the trial
court to issue the same. The pendency of a separate civil suit questioning the validity of
the sale of the mortgaged property cannot bar the issuance of the writ of possession.
The rule equally applies to separate civil suits questioning the validity of the mortgage
or its foreclosure and the validity of the public auction sale. 11
There being no litis pendentia, the Court of Appeals likewise erred in applying the
doctrine of non-interference between courts of equal rank. Under the said doctrine, a
trial court has no authority to interfere with the proceedings of a court of equal
jurisdiction.12 When Branch 47 issued the writ of possession, it did not interfere with
the jurisdiction of Branch 4 in the injunction case. It merely exercised its ministerial
function of issuing the writ of possession.
Finally, we do not find merit in respondents’ contention that petitioner violated the rule
against forum shopping. Forum shopping exists where the elements of litis
pendentia are present or where a final judgment in one case will amount to res
judicata in the other.13 This situation is not present here.
WHEREFORE, the petition is GRANTED. The Decision of the Court of Appeals dated
January 18, 1999 and its Resolution dated April 27, 1999 in CA-G.R. SP No. 47736 are
REVERSED.
SO ORDERED.
9
G.R. No. 181873 November 27, 2013
SPOUSES PIO DATO and SONIA Y. SIA, Petitioners,
vs.
BANK OF THE PHILIPPINE ISLANDS, Respondent.
DECISION
REYES, J.:
This is a petition for review on Certiorari1 of the Decision2 dated July 25, 2007 and
Resolution3 dated February 8, 2008 of the Court of Appeals (CA) in CA-G.R. CV No.
61289, affirming with modifications the Decision4 dated December 15, 1997 of the
Regional Trial Court (R TC) of Cebu City, Branch 18 The RTC dismissed herein Despite the cancellation of the real estate mortgage, Spouses Sia failed to make good
petitioners complaint and declared the extrajudicial foreclosure sale, the subject of this their promise to sell the lots to pay off their loans. BPI, through Padilla, sent a follow-up
petition valid and binding. demand letter to Spouses Sia dated July 11, 1991 requesting payment of the principal
loan amounting to ₱4,240,000.00 as well as all unpaid interests, penalties and charges
thereon on or before July 30, 1991.11 Spouses Sia, through a letter dated July 19, 1991,
Antecedent Facts
acknowledged their account to BPI and stated therein that they are "seriously
considering selling some of their ‘choiced’ real estate properties to service their debt to
On May 23, 1990, petitioners Spouses Pio Dato (Pio) and Sonia Y. Sia (Spouses Sia) BPI x x x."12
applied for a ₱240,000.00 loan which was granted by the Bank of the Philippine Islands
(BPI) with a term of six months and secured by a real estate mortgage over a parcel of
On August 3, 1993, Spouses Sia filed a complaint13 with the RTC of Cebu City praying
land owned by Spouses Sia denominated as Lot 1, situated in Labangon, Cebu, covered
for the issuance of a temporary restraining order (TRO) to maintain status quo, award
by Transfer Certificate of Title (TCT) No. 102434. Subsequently, on August 8, 1990,
of moral and exemplary damages, attorney’s fees and litigation costs. In the said
Spouses Sia availed of a ₱4 Million Revolving Promissory Note Line with a term of one
complaint, Spouses Sia alleged that BPI "deliberately refused to comply with the
year, secured by the same real estate mortgage over TCT No. 102434. 5
condition/undertaking of the loan for IGLF endorsement and approval" until the maturity
date of the loan lapsed to their great prejudice and irreparable damage.14
Spouses Sia alleged that their loan was "precipitated by the representation of the [BPI]
that the same will be indorsed to [Industrial Guarantee and Loan Fund] (IGLF) [in order]
Spouses Sia failed to pay notwithstanding the numerous demands made by BPI, leading
for the spouses to be able to avail of a much lower interest rate and longer payment
to the extrajudicial foreclosure of the real estate mortgage covered by TCT No. 102434
terms."6
which secured Spouses Sia’s loans of ₱240,000.00 and ₱4 Million. The lot was sold at
a public auction held on August 9, 1993, with BPI as the sole bidder in the amount of
Before the ₱240,000.00 and ₱4 Million loans matured, Spouses Sia approached BPI ₱10,060,080.20.15 The certificate of sale was issued on August 10, 1993 upon payment
through Mona Padilla (Padilla), account officer of BPI for additional loans. One was for of all the required registration fees.16
₱2 Million, and another was for ₱2.8 Million. After some discussion with Padilla,
Spouses Sia agreed to obtain a Credit Facility of ₱5.7 Million using the same collaterals
In the course of the trial proceedings, Spouses Sia alleged that they discovered that the
offered in their previous loans and four additional parcels of land, namely, TCT Nos.
document embodying the cancellation of the real estate mortgage presented by BPI
87010, 102435, 102436 and 102437.7
(over the four lots previously released by BPI for the Credit Line Agreement Facility),
stated the following:
On November 23, 1990, Spouses Sia obtained ₱800,000.00 from their Credit Facility of
₱5.7 Million which was credited to their current account with BPI after executing a
[T]he consideration for this cancellation being the full and complete payment made by
Promissory Note for the same amount. While Spouses Sia paid some of the interest on
the said debtor/s- mortgagor/s to the creditor-mortgagee of the obligation secured
their loans, the amount was insufficient to cover the principal amount of said loans.8
thereby in the principal amount of FIVE MILLION SEVEN HUNDRED THOUSAND
ONLY PESOS ([P]5,700,000.00) Philippine Currency, together with the corresponding
On February 13, 1991, Padilla sent a written reminder to Spouses Sia to settle all unpaid interest thereon up to this date.17
interest before February 22, 1991. Yet the spouses failed to pay the same. Their
principal loans of ₱240,000.00 and ₱4 Million loan also remained unsettled. BPI,
Spouses Sia thereafter amended their complaint claiming that the bank inserted and
through Padilla and Assistant Vice President, Danilo A. Quinto sent another demand
annotated a falsified/illegal Real Estate Mortgage of ₱5.7 Million, purportedly availed of
letter to them requesting payment of the outstanding loan.9
by Spouses Sia.18 They alleged "that TCT No. 102434 was never intended to secure a
fabricated and falsified loan of ₱5,700,000.00 or for any loan [by] whomsoever,
Spouses Sia still failed to pay the principal amount of ₱4,240,000.00 exclusive of accommodated by [BPI] using [Spouses Sia’s] collaterals."19
interest, penalties and other charges. But the amount of ₱800,000.00 from the ₱5.7
Million Credit Facility was paid through a Letter of Credit. As the ₱240,000.00 and ₱4
Lastly, the spouses claimed extinguishment of their obligation. They alleged that as BPI
Million loans of Spouses Sia were not yet settled, BPI cancelled the ₱5.7 Million Credit
credited the payment of ₱5.7 Million to their account, which is more than sufficient to
facility. To facilitate and assist Spouses Sia in paying off their loans, the four lots which
cover their promissory notes of ₱240,000.00 and ₱4 Million, their obligation with the BPI
secured the ₱5.7 Million Credit Line Facility were released. Spouses Sia agreed to sell
was totally extinguished as of August 5, 1991 and that the foreclosure proceedings on
the lots and use the proceeds thereof to make partial payments of their loans.
TCT No. 102343 is illegal and baseless for they have the right as of August 5, 1991 to
Consequently, BPI issued a cancellation of the real estate mortgage over the four lots
secure full release of said lot by such payment of ₱5.7 Million. 20
which secured the ₱5.7 Million Credit Line Facility.10
Spouses Sia prayed for ₱5 Million as moral damages, ₱2 Million as exemplary
damages, attorney’s fees equivalent to 25% of the adjudged amount plus ₱350.00 per
court appearance but not less than ₱350,000.00 and for whatever proven damages of
not less than ₱500,000.00. In their Second Supplemental Complaint, Spouses Sia
prayed for additional ₱25 Million as moral damages, ₱6 Million as exemplary damages
and 25% attorney’s fees based on the additional damages but not less than
₱200,000.00.21
During the pendency of the instant case, the one-year redemption period had lapsed
without Spouses Sia exercising their right to redeem the subject property. Thus on
January 27, 1995, BPI filed a supplemental answer with counterclaim, alleging therein
that with the expiration of the period of redemption, BPI is entitled to a writ of possession
over foreclosed property and the occupancy of Spouses Sia on the foreclosed property
entitles BPI to a reasonable compensation which is conservatively pegged at
₱10,000.00 per month from the date of the issuance of the certificate of sale in favor of
BPI.22
The RTC Ruling
On December 15, 1997, the RTC rendered its judgment in favor of BPI and against
Spouses Sia, the dispositive portion of which states:
WHEREFORE, premises all considered, JUDGMENT is hereby rendered in favor of
[BPI] and against Spouses Sia as follows:
1. Dismissing [Spouses Sia’s] complaint, supplemental and amended complaint for lack
of merit; 2. Declaring the extrajudicial foreclosure sale conducted on August 8, 1993 as
valid and binding; 3. Declaring defendant [BPI] as absolute and legal owner of Lot No.
1 covered by TCT No. 102434 as well as the residential house and all improvements
thereon; 4. Ordering [Spouses Sia] to pay defendant [BPI’s] counsel the sum of
₱500,000.00 as attorney’s fees; ordering to pay defendant [BPI] the sum of ₱10,000.00
per month from August 10, 1994 for use and occupancy of the foreclosed properties
until the same are vacated and possession delivered to defendant [BPI]; to pay the sum
of ₱1,000,000.00 as exemplary damages so as to prevent others from following
[Spouses Sia’s] filing a suit to prevent payment of a just and valid debt; the sum of
₱2,000,000.00 as compensatory damages; the sum of ₱50,000.00 as litigation
expenses as well as costs of the suit.
SO ORDERED.23
The RTC found that "there is no logical and valid reason to support the allegations in
the complaint for Breach of Contract, Rescission and Cancellation of Contract with
Damages."24
The RTC also found that BPI could not be held guilty of delay in endorsing the loan to
IGLF because BPI, through Padilla, never committed itself to make such endorsement.
There was no contract, either oral or written, which would prove that there was any
agreement between BPI and Spouses Sia to endorse their loans to the IGLF. Petitioner
Pio asked for the restructuring of his loans after he failed to pay his ₱240,000.000 and
₱4 Million loans. As petitioner Pio wanted to obtain an industrial loan for a longer period,
Padilla merely suggested to them to obtain loans through IGLF of the Development
Bank of the Philippines, if qualified to do so. Spouses Sia could not however, qualify
because their loans were on the "past due status’ and there was also a diversion of the
proceeds of their loans.25
The alleged verbal agreement between [Spouses Sia] and [BPI] that the latter would
endorse the ₱4 Million to IGLF is a clear violation of the parol evidence rule which
provides that "when the terms of an agreement have been reduced to writing, it is to be
considered as containing all such terms and therefore, there can be between the parties
and the successors in interest no evidence of the terms of the agreement other than the
contents of the writing" (Rule 130, Section 7 of the Rules of Court). 26
As regards the testimony of petitioner Pio that the real estate mortgage covering the
₱5.7 Million credit facility was falsified, the RTC also found no legal and factual basis
therein because petitioner Pio admitted the authenticity of their signatures appearing on
the Promissory Notes and Real Estate Mortgages evidencing the various loans and
credit facility from BPI. Spouses Sia admitted under oath that their signatures appearing
on the Real Estate Mortgage document (Exh. "23") to secure the ₱5.7 Million Credit
facility are their signatures. They in effect admitted the authenticity of those documents
as well as the correctness of the matters incorporated therein. As held by this Court in
the case of Heirs of Amparo del Rosario v. Aurora Santos, et al.,27 "when a party admits
the genuineness of a document, he also admits that the words and figures of the
documents are set out correctly."28
On the topic of extinguishment of obligation, Spouses Sia failed to sway the RTC to their
assertions of payment by way of donation by an unknown third party. The RTC
considered the explanation of the bank as worthy of credence, as it had extensively
discussed, to wit:
Culled from the evidence on record, [Spouses Sia] in addition to the ₱240,000.00 and
₱4,000,000.00 loans, sometime in November 1990 requested for additional loans from
defendant bank. Plaintiff Pio Dato Sia applied for ₱2,000,000.00 loan sometime in
November, 1990 and ₱2.8 Million per loan application dated December 8, 1990 (Exh.
"25"). As there were several loans which Pio Dato Sia applied for, Mona Padilla advised
him that it would be more practical to obtain Credit Facility or Credit Line to cover
contingent financial requirements of his business. Plaintiff Pio Dato agreed to obtain a
Credit Facility of ₱5.7 Million. To cover such facility, plaintiff Pio Dato Sia submitted four
(4) additional collaterals covered by titles. Subsequently, he executed a Real Estate
Mortgage to secure the Credit Line of ₱5.7 Million, dated November 22, 1990 (Exh. "23-
C"). The signatures of [Spouses Sia] on this document are admitted by [Spouses Sia]
to be genuine. On the same date November 22, 1993, [Spouses Sia] made an initial
availment from the ₱5.7 Million Credit Facility as evidenced by Exhibit "23". The amount
of ₱800,000.00 was credited to [Spouses Sia’s] Current Account No. 1303-2188-97 per
Credit Memo (Exh. "27"). Such availment was fully paid by [Spouses Sia]. After the first
availment, [Spouses Sia] wanted to obtain another availment from said Credit facility After the denial of their Motion for Reconsideration in the CA Resolution dated February
but [BPI] could no longer approve such application due to [Spouses Sia’s] failure to pay 8, 2008, Spouses Sia raised a myriad of issues33 before this Court via the instant petition
the principal loan of ₱240,000.00 and interest thereof which matured on November 11, for review on certiorari dated March 3, 2008.
1990. As clearly setforth in the agreement, [BPI] can suspend availments from the Credit
Facility in the event of [Spouses Sia’s] default in the payment of any other existing loans
Pending the resolution of this case, Spouses Sia filed on September 20, 2013 an Urgent
with [BPI]. Thereafter, [Spouses Sia] also failed to pay their ₱4,000,000.00 loan with
Motion for Issuance of Temporary Restraining Order and/or Writ of Preliminary
[BPI]. As no additional loan could be granted to [Spouses Sia], the latter requested the
Injunction34 alleging that in an Order35 dated December 5, 2011, Judge Sylva G.
release of their four (4) collaterals which were used to secure the ₱5.7 Million Credit
Aguirre-Paderanga of the RTC of Cebu City, Branch 16, ordered the issuance of a Writ
Facility and per loan documents all other existing loans with [BPI]. x x x [Spouses Sia]
of Possession over TCT No. 130468 (Formerly TCT No. 102434) after BPI filed an Ex-
admitted having received the four titles which were released by [BPI] upon [Spouses
Parte Motion for Issuance of a Writ of Possession.36
Sia’s] request as well as the cancellation of the mortgage on the ₱5.7 Million Credit
Facility after [Spouses Sia’s] payment of the ₱800,000.00 availment. It is this
cancellation of mortgage which [Spouses Sia] are trying to use to escape payment of Pursuant to the said Order, a writ of possession was issued by the Clerk of Court of the
their ₱240,000.00 and ₱4 Million loans as well as unpaid interest, penalties and RTC Branch 16, directing Sheriff Generoso Regalado to issue a Notice to Vacate. 37
charges. [BPI] argued that it is the distorted concept of [Spouses Sia] that since the
cancellation of the Real Estate Mortgage mentions the Credit facility of ₱5.7 Million, that
Spouses Sia filed a Motion for Reconsideration38 of the RTC Branch 16 Order granting
someone paid [BPI] the sum of ₱5.7 Million. x x x.29 (Emphasis and underscoring ours)
the Motion for Issuance of the Writ of Possession, which was subsequently denied in
an Order39 dated March 8, 2012. Spouses Sia then filed a Motion to Recall and to Quash
The RTC further explained: Writ of Possession which was also denied in an Order40 dated April 20, 2012. A Motion
for Reconsideration of the Order denying the Motion to Recall and to Quash Writ of
Possession was filed by Spouses Sia which was denied once more in an Order41 dated
It is a mistaken notion of [Spouses Sia] that the cancellation of Real Estate Mortgage
September 7, 2012.42
presupposed an alleged payment made by a third person to [BPI] of the sum of ₱5.7
Million.
An Urgent Motion for Issuance of Temporary Restraining Order and/or Writ of
Preliminary Injunction43 was filed by Spouses Sia on September 20, 2013 before the
There is no iota of evidence establishing any payment in the sum of ₱5.7 Million from
Court as they have received a Second Notice to Vacate on Writ of Possession.
[Spouses Sia] or from any third persons to [BPI] to settle any account of [Spouses Sia].
x x x [Spouses Sia] admitted that they have not paid their ₱240,000.00 and ₱4 Million
loans to [BPI]. On October 17, 2013, Spouses Sia filed before the Court an Extremely Urgent
Reiterative Motion for Issuance of Temporary Restraining Order and/or Writ of
Preliminary Injunction to Enjoin Enforcement of Third Notice to Vacate dated October
The cancellation of mortgage refers only to the Real Estate Mortgage covering the
8, 2013, giving Spouses Sia ten (10) days from receipt thereof within which to vacate
Credit Facility.30 (Emphasis ours)
the premises.

Spouses Sia timely filed a Motion for Reconsideration which was denied by the
Issues
RTC.31 Spouses Sia next filed an appeal before the CA.

Basically, the issues presented by Spouses Sia boil down to the following:
The CA Ruling

I.
The CA rendered its Decision on July 25, 2007, affirming the RTC Decision with
Modification, as follows:
WHETHER THE CA ERRED IN HOLDING THAT BPI DID NOT BREACH ITS
CONTRACT WITH SPOUSES SIA CONCERNING THE IGLF ENDORSEMENT
WHEREFORE, in view of the foregoing, the instant appeal is PARTLY GRANTED. The
Decision of the Regional Trial Court is hereby AFFIRMED with MODIFICATIONS by
deleting the award to BPI of compensatory and exemplary damages. II.

SO ORDERED.32 WHETHER THE CANCELLATION OF THE ₱5.7 MILLION CREDIT FACILITY OF

SPOUSES SIA RAISES A LEGAL ISSUE
The Court’s Ruling Thereafter, Spouses Sia changed their stance and insisted that there was no Credit
Line Facility agreement of ₱5.7 Million. Spouses Sia further alleged that it was the
banking officers of BPI who borrowed the ₱5.7 Million and who prepared the
The petition has no merit.
Cancellation of the Real Estate Mortgage. But the cancellation was credited in favor of
Spouses Sia. Payment should be therefore credited in their favor to extinguish the loans
BPI did not commit Breach of of ₱4 Million and ₱240,000.00 and that BPI is obligated to return the excess amount of
₱1,460,000.00 by way of solutio indebiti.47
Contract
The Court is hardly convinced with Spouses Sia’s arguments. Both the RTC and the CA
have profusely examined the evidence on the record, wherein the following
The Court concurs with the CA and the RTC that BPI did not commit breach of contract
observations were gathered:
against Spouses Sia. In ruling so, the CA found that petitioner Pio admitted the
execution and genuineness of the notarized contract of real estate mortgage and
promissory note, including the signature of Spouses Sia on the letter of advice to signify The bases of the extrajudicial foreclosure proceeding were the three real estate
their conformity with the terms and conditions during his oral testimony. 44 Furthermore, mortgage contracts executed by Sps. Sia in favor of BPI, to wit:
the CA ruled that jurisprudence laid down the consequences of admission:
1. over TCT No. 102434 and its improvements for ₱240,000.00 dated August
By the admission of the due execution of a document, it means that the party whose 10, 1990;
signature it bears admits that he signed it voluntarily or that it was signed by another for
him and with his authority; and by the admission of the genuineness of the document,
2. over TCT No. 102434 and its improvements for ₱4,000,000.00 dated May
it means that the party whose signature it bears admits that at the time it was signed it
24, 1990; and
was in the words and figures exactly as set out in the pleading of the party relying upon
it.45
3. over TCT No. 102434 and its improvements, and TCT Nos. 87010, 102435,
102436 and 102437 for ₱5,700,000.00 dated November 22, 1990.
The Court finds no cause to deviate from the factual findings of both the RTC and the
CA. "The settled rule is that conclusions and findings of fact of the trial court are entitled
to great weight on appeal and should not be disturbed unless for strong and cogent Paragraph 6 of the aforecited real estate mortgage contracts provides that:
reasons because the trial court is in a better position to examine real evidence, as well
as observe the demeanor of the witnesses while testifying in the case. The fact that the
"In the event that the Mortgagor/Debtor herein, should fail or refuse to pay any of the
CA adopted the findings of fact of the trial court makes the same binding upon this
sums of money secured by this mortgage, or any part thereof, in accordance with the
Court."46
terms and conditions herein set forth or those stipulated in the correlative promissory
note(s), or should he/it fail to perform any of the conditions stipulated herein, or those
Since both the RTC and the CA found no evidence on record to support Spouses Sia’s in the promissory note(s), then and in any such case the Mortgagee shall have the right
bare assertions that the endorsement to IGLF is a condition precedent to their contract at its election, to foreclose this mortgage, x x x."
of loan with BPI, the Court is inclined to disregard Spouses Sia’s contentions on this
score.
xxxx

There is no legal issue as regard to

At the outset, Sps. Sia admitted that they have not updated the interest due for their
loans and in fact, they intentionally stopped servicing the interest, more particularly for
the cancellation of the ₱5.7 Million the ₱4,000,000.00 loan because of the alleged breach of contract by BPI. x x x.

Credit Line Facility xxxx

Initially, Spouses Sia insisted that the foreclosure of their real estate mortgage was x x x In fact, it was admitted by Mr. Sia in his oral testimony that his only basis for the
premature because BPI violated their agreement to have their loan endorsed to IGLF. claim of full payment was the cancellation of real estate mortgage executed by BPI on
August 2, 1991. Based on such document, they assumed that a third person whom they
did not know, paid in their behalves by way of donation. Sps. Sia were not even able to
present a deed of donation but only a deed of acceptance of donation.48 (Emphasis ours
and italics supplied)
Another argument posited by Spouses Sia is that, they neither executed any ₱5.7 Million
promissory note nor did they receive ₱5.7 Million from BPI. 49 Thus, there is no existing
₱5.7 Million Credit Line Facility Agreement as far as they are concerned. It appears
from the allegations in their pleadings that Spouses Sia have misconstrued the concept
of a Credit Line Facility Agreement. The Court has previously defined a credit line as
the following:
[A] credit line is "that amount of money or merchandise which a banker, merchant, or
supplier agrees to supply to a person on credit and generally agreed to in advance." It
is the fixed limit of credit granted by a bank, retailer, or credit card issuer to a customer,
to the full extent of which the latter may avail himself of his dealings with the former but
which he must not exceed and is usually intended to cover a series of transactions in
which case, when the customer’s line of credit is nearly exhausted, he is expected to
reduce his indebtedness by payments before making any further drawings.50 (Citations
omitted and emphasis and underscoring ours)
Thus, contrary to the belief and understanding of Spouses Sia, BPI does not have to
require the execution of promissory note of the entire ₱5.7 Million since a credit line as
stated above, is merely a fixed limit of credit. Furthermore, still applying the above
quoted definition, a credit line usually presupposes a series of transactions until the
credit line is nearly exhausted. BPI is not obliged to release the amount of ₱5.7 Million
to Spouses Sia all at once, in a single transaction.
In this case, BPI allowed the release only of ₱800,000.00 out of the ₱5.7 Million credit
line and precluded any more availments since Spouses Sia have not yet satisfied their
obligation to pay their loans of ₱4 Million and ₱240,000.00. Again, Spouses Sia are
reminded that the Court is not a trier of facts. As the RTC and the CA both found, the
release of the four collaterals was done to assist Spouses Sia in paying off their loans,
not due to payment of ₱5.7 Million by Spouses Sia or any other person on their behalf.
Spouses Sia read much into the Cancellation of the Real Estate Mortgage contract
when in fact, the release was made for their benefit.
In any case, the extrajudicial foreclosure which is the subject of the present case
pertains to Spouses Sia’s failure to pay their ₱240,000.00 and ₱4 Million loans. The
Court sees no real issue as regards the ₱5.7 Million credit line since it is as plain as day
that the entire ₱5.7 Million was not availed of by Spouses Sia and that the real estate
mortgages securing such credit line were cancelled in their favor. Spouses Sia thwart
the issue towards the ₱5.7 Million credit line when the real issue is their non-payment
of ₱4 Million and ₱240,000.00 loans, which eventually led to the extrajudicial foreclosure
of TCT No. 102434.
It is a settled rule of law that foreclosure is proper when the debtors are in default of the
payment of their obligation.51 As the CA had appositely considered, due to Spouses
Sia’s failure to pay their loans covered by Promissory Notes (PN) Nos. 90/98 and
90/152, the extrajudicial foreclosure of the real estate mortgage is valid and binding
against them:
Finding for the non-payment of obligations covered by PN Nos. 90/98 and 90/152, Sps.
Sia’s prayer to declare null and void the extrajudicial foreclosure of the subject real
estate mortgage is now foiled. Therefore, the extrajudicial foreclosure and the
corresponding certificate of sale executed on August 9, 1993 for the subject real estate
property covered by TCT No. 102434 which sought to reach the property and subject it
to the payment of Sps. Sia’s obligations was valid and binding. We further rule that for
failure of Sps. Sia to exercise the right of redemption, the right to consolidate ownership
on the foreclosed property was validly exercised by BPI.52
Prayer for Issuance of Writ of
Preliminary Injunction must be denied
In their Extremely Urgent Reiterative Motion For Issuance of Temporary Restraining
Order and/or Writ of Preliminary Injunction filed on October 17, 2013, Spouses Sia
referred to the ruling of this Court in Cometa v. Intermediate Appellate Court53 where it
was held that an issue in a separate case wherein the validity of levy and sale of
properties is questioned, is one that requires pre-emptive resolution.54
A scrutiny of the above-cited case reveals that it is not applicable to this case. In
Cometa, the property which was the subject of dispute was sold after levy and execution
when the judgment award was not satisfied in another case for damages. Therein
petitioner Herco Realty, assailed the validity of the execution sale and contended that
the ownership of the lots had been transferred to it by Cometa before such execution
sale. The ownership of the property sold in the execution sale was put into the very
issue.
Whereas in this case, the property owned by Spouses Sia covered by TCT No. 102434
was mortgaged to BPI as security for their loans. The same property was sold after it
was extrajudicially foreclosed. Hence, the facts in Cometa and this case cannot be any
more different. Spouses Sia cannot invoke the application of the Court’s ruling in
Cometa to a case which is poles apart to it.
The pending suit questioning the validity of the extrajudicial foreclosure of mortgage
does not entitle Spouses Sia to a suspension of the issuance of writ of possession. The
Court calls to mind its ruling in Baldueza v. CA55:
The Court upholds the decision of the Court of Appeals as respondent bank is entitled
to possession of the subject property. In several cases 56, this Court has held:
"It is settled [that] the buyer in a foreclosure sale becomes the absolute owner of the
property purchased if it is not redeemed during the period of one year after the
registration of the sale. As such, he is entitled to the possession of the property and can
demand it at any time following the consolidation of ownership in his name and the
issuance to him of a new transfer certificate of title. The buyer can in fact demand
possession of the land even during the redemption period except that he has to post a
bond in accordance with Section 7 of Act 3135 as amended.
No such bond is required after the redemption period if the property is not redeemed.
Possession of the land then becomes an absolute right of the purchaser as confirmed
owner. Upon proper application and proof of title, the issuance of the writ of possession
becomes a ministerial duty of the court."
The facts show that petitioner mortgaged the subject property to respondent bank. Upon
maturity of the loan, petitioner failed to pay the loan despite demand. The property was
foreclosed and sold in a public auction where respondent bank was the highest
bidder.1âwphi1 Petitioner failed to redeem the property within the one-year redemption
period. Respondent bank consolidated its ownership over the property and a new title
was issued in its favor. Hence, it became the ministerial duty of the court to issue the
writ of possession applied for by respondent bank.
Despite the pending suit for annulment of the mortgage and Notice of Sheriff’s Sale,
respondent bank is entitled to a writ of possession, without prejudice to the eventual
outcome of the said case.57 (Citation omitted and emphasis and underscoring ours)
Based on the reasons discussed above, the Court holds that there is no basis for the
issuance of a Temporary Restraining Order/Writ of Preliminary Injunction to enjoin the
enforcement of the third notice to vacate dated October 8, 2013.
Reduction of Attorney’s Fees and
Litigation Expenses is in order
The Court is in consonance with the CA and RTC that BPI is entitled to receive rental
fees as the new owner of the property covered by TCT No. 102434 (Now TCT No.
130468)58, following the Court’s ruling in F. David Enterprises v. Insular Bank of Asia
and America59, that the buyer in a foreclosure sale becomes the absolute owner of the
property purchased if it is not redeemed during the period of one year after the
registration of the sale.60
Also, the Court agrees with the RTC and CA that the award of attorney’s fees and
litigation expenses is warranted owing to the fact that BPI was compelled to engage the
services of a counsel to protect its rights. It is so stated under Article 2208 of the Civil
Code that attorney’s fees and expenses of litigation may be recovered by a party when
an act or omission has compelled him to litigate with third persons or to incur expenses
to protect his interest. However, the Court deems the award of ₱500,000.00 as
attorney’s fees and ₱50,000 for litigation expenses, as excessive, considering the
nature of this case. Award of attorney’s fees, being part of a party’s liquidated damages,
may be equitably reduced.61
WHEREFORE, the instant petition is DENIED. The Decision dated July 25, 2007 and
Resolution dated February 8, 2008 of the Court of Appeals are AFFIRMED with
MODIFICATIONS. The award of attorney’s fees and litigation expenses are hereby
reduced to ₱50,000.00.
The prayer for the issuance of a Temporary Restraining Order/Writ of Preliminary
Injunction is
DENIED.
SO ORDERED.
10
G.R. No. 184045 January 22, 2014
SPOUSES NICASIO C. MARQUEZ AND ANITA J. MARQUEZ, Petitioners,
vs.
SPOUSES CARLITO ALINDOG AND CARMEN ALINDOG, Respondents.
DECISION
PERLAS-BERNABE, J.:
Assailed in this petition for review on certiorari1 are the Decision2 dated February 29,
2008 and Resolution3 dated August 6, 2008 of the Court of Appeals (CA) in CA-G.R.
SP No. 97744 finding no grave abuse of discretion on the part of the Regional Trial
Court of Tagaytay City, Branch 18 (RTC) in issuing the Orders dated November 14,
20054and January 17, 2007[[5 ]] in SCA No. TG-05-2521. Based on these orders, a writ
of preliminary injunction was issued against petitioners-spouses Nicasio C. Marquez
and Anita J. Marquez (Sps. Marquez), enjoining them from taking possession of the
property subject of this case despite the consolidation of their title over the same.
The Facts
Records show that sometime in June 1998, petitioner Anita J. Marquez (Anita) extended
a loan in the amount of ₱500,000.00 to a certain Benjamin Gutierrez (Gutierrez). As
security therefor, Gutierrez executed a Deed of Real Estate Mortgage6 dated June 16,
1998 over a parcel of land located in Tagaytay City with an area of 660 square meters,
more or less, covered by Transfer Certificate of Title (TCT) No. T-134437 (subject
property), registered under the name of Benjamin A. Gutierrez, married to Liwanag
Camerin (Sps. Gutiererez). The mortgage was duly annotated on the dorsal portion of
TCT No. T-13443, which Sps. Marquez had verified as clean prior to the mortgage.8
Since Gutierrez defaulted in the payment of his loan obligation, Anita sought the extra-
judicial foreclosure of the subject property. At the public auction sale held on January
19, 2000, Anita emerged as the highest bidder for the amount of ₱1,171,000.00.9 Upon
Gutierrez’s failure to redeem the same property within the prescribed period therefor,
title was consolidated under TCT No. T-4193910 on November 5, 2001 (in the name of
Anita J. Marquez, married to Nicasio C. Marquez) which, however, bore an annotation
of adverse claim11 dated March 2, 2000 in the names of respondents-spouses Carlito
and Carmen Alindog (Sps. Alindog). Said annotation was copied from an earlier
annotation on TCT No. T-13443 made only after the subject property’s mortgage to Sps.
Marquez.
Subsequently, or on March 21, 2000, Sps. Alindog filed a civil case for annulment of
real estate mortgage and certificate of sale with prayer for damages against Sps.
Marquez and a certain Agripina Gonzales (Gonzales) before the RTC, docketed as Civil
Case No. TG-1966 (annulment case). In their complaint,12 Sps. Alindog alleged that
they purchased13 the subject property from Gutierrez way back in September 1989, but
were unable to secure a certificate of title in their names because Gonzales – to whom
they have entrusted said task – had deceived them in that they were assured that the
said certificate was already being processed when such was not the case. 14Eventually,
they found out that the property had already been mortgaged to Sps. Marquez, and that
when they tried to contact Gonzales for an explanation, she could no longer be found.
Separately, Sps. Alindog averred that when the mortgage was executed in favor of Sps.
Marquez, Gutierrez was already dead.15
In their defense,16 Sps. Marquez disputed Sps. Alindog’s ownership over the subject
property, arguing that the purported sale in the latter’s favor was never registered and
therefore, not binding upon them. Further, they insisted that their certificate of title, TCT
No. T-41939, was already indefeasible, and cannot be attacked collaterally.
Meanwhile, on March 16, 2005, Anita filed an ex-parte petition for the issuance of a writ
of possession17 (ex-parte petition) before the RTC, docketed as LRC Case No. TG-05-
1068, claiming that the same is ministerial on the court’s part following the consolidation
of her and her husband’s title over the subject property. Impleaded in said petition are
Sps. Gutierrez, including all persons claiming rights under them.
The RTC Rulings and Subsequent Proceedings
In an Order18 dated August 1, 2005, the RTC granted Anita’s ex-parte petition and
thereby directed the issuance of a writ of possession in her favor. Consequently, a
notice to vacate19 dated September 23, 2005 was issued by Acting Sheriff Teodorico V.
Cosare (Sheriff Cosare) against Sps. Gutierrez and all persons claiming rights under
them. Sps. Alindog were served with a copy of the said notice to vacate on September
27, 2005.20
Claiming that they would suffer irreparable injury if the implementation of the writ of
possession in favor of Sps. Marquez would be left unrestrained, Sps. Alindog sought
the issuance of a temporary restraining order (TRO) and/or writ of preliminary injunction
with prayer for damages,21 in a separate case docketed as SCA No. TG-05-
252122(injunction case) which was raffled to the same court.
While it appears that the RTC issued a 72-hour TRO on September 29, 2005 in Sps.
Alindog’s favor, records nonetheless show that said order was not extended to a full 20-
day TRO.23 To this end, the Sheriff’s Return24 dated November 14, 2005 shows that
Sheriff Cosare was able to implement the writ of possession on November 11, 2005,
turning over the possession of the subject property to Sps. Marquez.
After further proceedings on the injunction case, the RTC, through an Order 25 dated
November 14, 2005, issued a writ of preliminary injunction enjoining Sps. Marquez from
taking possession of the subject property until after the controversy has been fully
resolved on the merits. The said issuance was based on the RTC’s appreciation of the
initial evidence adduced by Sps. Alindog, concluding that they appear to have a right to
be protected. Thus, notwithstanding the consolidation of Sps. Marquez’s title over the
subject property, the RTC granted Sps. Alindog’s prayer for injunctive relief, holding that
any further dispossession on their part would cause them irreparable injury. 26
Aggrieved, Sps. Marquez moved for reconsideration,27 essentially pointing out that, as
the confirmed and registered owners of the subject property, they are entitled to its
possession as a matter of right. They argued that pursuant to Sections 7 28 and 829 of
Act No. 3135,30 as amended by Act No. 4118,31 the RTC was legally bound to place
them in possession of the subject property pending resolution of the annulment case.
Further, it is their position that the purpose for the issuance of the injunctive writ – i.e.,
to restrain the implementation of the writ of possession – had already been rendered
moot and academic by its actual enforcement in the interim.
For their part, Sps. Alindog filed a Motion for Approval of Cash Bond and to Regain
Possession32 of the subject property.
In an Order33 dated January 17, 2007, the RTC denied the motion of Sps. Marquez,
while granted that of Sps. Alindog. Unperturbed, Sps. Marquez elevated the case to the
CA on certiorari.34
The CA Ruling
In a Decision35 dated February 29, 2008, the CA denied Sps. Marquez’s petition as it
found no grave abuse of discretion on the RTC’s part when it issued the injunctive writ
that enjoined Sps. Marquez from taking possession of the subject property. It observed
that Sps. Alindog had indeed "adduced prima facie proof of their right to possess the
subject property"36 while the annulment case was pending, adding that the latter’s "right
to remain in possession"37 proceeds from the fact of the subject property’s earlier sale
to them. Thus, while Sps. Marquez concededly had a right to possess the subject
property on account of the consolidation of the title in their names, the CA nonetheless
found no fault on the part of the RTC for "proceeding with caution"38 in weighing the
conflicting claims of the parties and subsequently issuing the writ of preliminary
injunction in Sps. Alindog’s favor.
Dissatisfied, Sps. Marquez moved for reconsideration39 which was, however, denied in
a Resolution40 dated August 6, 2008, hence, this petition.
The Issue Before the Court
The essential issue in this case is whether or not the CA erred in finding no grave abuse
of discretion on the part of the RTC when it issued the injunctive writ which enjoined
Sps. Marquez from taking possession of the subject property.
The Court’s Ruling
The petition is meritorious.
It is an established rule that the purchaser in an extra-judicial foreclosure sale is entitled
to the possession of the property and can demand that he be placed in possession of
the same either during (with bond) or after the expiration (without bond) of the
redemption period therefor. To this end, the Court, in China Banking Corp. v. Sps.
Lozada41 (China Banking Corp.), citing several cases on the matter, explained that a
writ of possession duly applied for by said purchaser should issue as a matter of course,
and thus, merely constitutes a ministerial duty on the part of the court, viz.: 42
The procedure for extrajudicial foreclosure of real estate mortgage is governed by Act
No. 3135, as amended. The purchaser at the public auction sale of an extrajudicially
foreclosed real property may seek possession thereof in accordance with Section 7 of
Act No. 3135, as amended, which provides:
SEC. 7. In any sale made under the provisions of this Act, the purchaser may petition
the Court of First Instance of the province or place where the property or any part thereof
is situated, to give him possession thereof during the redemption period, furnishing bond
in an amount equivalent to the use of the property for a period of twelve months, to
indemnify the debtor in case it be shown that the sale was made without violating the
mortgage or without complying with the requirements of this Act. Such petition shall be
made under oath and filed in form or an ex parte motion in the registration or cadastral
proceedings if the property is registered, or in special proceedings in the case of
property registered under the Mortgage Law or under section one hundred and ninety-
four of the Administrative Code, or of any other real property encumbered with a
mortgage duly registered in the office of any register of deeds in accordance with any
existing law, and in each case the clerk of court shall, upon the filing of such petition,
collect the fees specified in paragraph eleven of section one hundred and fourteen of
Act Numbered Four hundred and ninety six as amended by Act Numbered Twenty-eight
hundred and sixty-six, and the court shall, upon approval of the bond, order that a writ
of possession issue addressed to the sheriff of the province in which the property is
situated, who shall execute said order immediately.
The Court expounded on the application of the foregoing provision in De Gracia v. San
Jose, thus:
As may be seen, the law expressly authorizes the purchaser to petition for a writ of
possession during the redemption period by filing an ex parte motion under oath for that
purpose in the corresponding registration or cadastral proceeding in the case of property
with Torrens title; and upon the filing of such motion and the approval of the
corresponding bond, the law also in express terms directs the court to issue the order
for a writ of possession. Under the legal provisions above copied, the order for a writ of
possession issues as a matter of course upon the filing of the proper motion and the
approval of the corresponding bond. No discretion is left to the court. And any question
regarding the regularity and validity of the sale (and the consequent cancellation of the
writ) is left to be determined in a subsequent proceeding as outlined in section 8. Such
question is not to be raised as a justification for opposing the issuance of the writ of
possession, since, under the Act, the proceeding for this is ex parte.
Strictly, Section 7 of Act No. 3135, as amended, refers to a situation wherein the
purchaser seeks possession of the foreclosed property during the 12-month period for
redemption. Upon the purchaser’s filing of the ex parte petition and posting of the
appropriate bond, the RTC shall, as a matter of course, order the issuance of the writ of
possession in the purchaser’s favor.
In IFC Service Leasing and Acceptance Corporation v. Nera, the Court reasoned that if
under Section 7 of Act No. 3135, as amended, the RTC has the power during the period
of redemption to issue a writ of possession on the ex parte application of the purchaser,
there is no reason why it should not also have the same power after the expiration of
the redemption period, especially where a new title has already been issued in the name
of the purchaser. Hence, the procedure under Section 7 of Act No. 3135, as amended,
may be availed of by a purchaser seeking possession of the foreclosed property he
bought at the public auction sale after the redemption period has expired without
redemption having been made.
xxxx
It is thus settled that the buyer in a foreclosure sale becomes the absolute owner of the
property purchased if it is not redeemed during the period of one year after the
registration of the sale. As such, he is entitled to the possession of the said property
and can demand it at any time following the consolidation of ownership in his name and
the issuance to him of a new transfer certificate of title. The buyer can in fact demand
possession of the land even during the redemption period except that he has to post a
bond in accordance with Section 7 of Act No. 3135, as amended. No such bond is
required after the redemption period if the property is not redeemed. Possession of the
land then becomes an absolute right of the purchaser as confirmed owner. Upon proper
application and proof of title, the issuance of the writ of possession becomes a
ministerial duty of the court. (Emphases and underscoring supplied; citations and
emphases in the original omitted)
In the case of Spouses Espiridion v. CA,43 the Court expounded on the ministerial nature
of the foregoing issuance as follows:44
The issuance of a writ of possession to a purchaser in a public auction is a ministerial
act.1âwphi1 After the consolidation of title in the buyer’s name for failure of the
mortgagor to redeem the property, the writ of possession becomes a matter of right. Its
issuance to a purchaser in an extrajudicial foreclosure sale is merely a ministerial
function. The trial court has no discretion on this matter. Hence, any talk of discretion in
connection with such issuance is misplaced.
A clear line demarcates a discretionary act from a ministerial one. Thus:
The distinction between a ministerial and discretionary act is well delineated. A purely
ministerial act or duty is one which an officer or tribunal performs in a given state of
facts, in a prescribed manner, in obedience to the mandate of a legal authority, without
regard to or the exercise of his own judgment upon the propriety or impropriety of the
act done. If the law imposes a duty upon a public officer and gives him the right to decide
how or when the duty shall be performed, such duty is discretionary and not ministerial.
The duty is ministerial only when the discharge of the same requires neither the exercise
of official discretion or judgment.
Clearly, the use of discretion and the performance of a ministerial act are mutually
exclusive. (Emphases and underscoring supplied; citations omitted)
The ministerial issuance of a writ of possession in favor of the purchaser in an extra-
judicial foreclosure sale, however, admits of an exception. Section 33,45 Rule 39 of the
Rules of Court (Rules) pertinently provides that the possession of the mortgaged
property may be awarded to a purchaser in an extra-judicial foreclosure unless a third
party is actually holding the property by adverse title or right. In the recent case of Rural
Bank of Sta. Barbara (Iloilo), Inc. v. Centeno,46 citing the case of China Banking Corp.,
the Court illumined that "the phrase ‘a third party who is actually holding the property
adversely to the judgment obligor’ contemplates a situation in which a third party holds
the property by adverse title or right, such as that of a co-owner, tenant or usufructuary.
The co-owner, agricultural tenant, and usufructuary possess the property in their own
right, and they are not merely the successor or transferee of the right of possession of
another co-owner or the owner of the property. Notably, the property should not only be
possessed by a third party, but also held by the third party adversely to the judgment
obligor."47 In other words, as mentioned in Villanueva v. Cherdan Lending Investors
Corporation,48 the third person must therefore claim a right superior to that of the original
mortgagor.
In this case, it is clear that the issuance of a writ of possession in favor of Sps. Marquez,
who had already consolidated their title over the extra-judicially foreclosed property, is
merely ministerial in nature. The general rule as herein stated – and not the exception
found under Section 33, Rule 39 of the Rules – should apply since Sps. Alindog hinged
their claim over the subject property on their purported purchase of the same from its
previous owner, i.e., Sps. Gutierrez (with Gutierrez being the original mortgagor).
Accordingly, it cannot be seriously doubted that Sps. Alindog are only the latter’s (Sps.
Gutierrez) successors-in-interest who do not have a right superior to them.
That said, the RTC therefore gravely abused its discretion when it issued the injunctive
writ which enjoined Sps. Marquez from taking possession of the subject property. To be
sure, grave abuse of discretion arises when a lower court or tribunal patently violates
the Constitution, the law or existing jurisprudence.49 Here, while the RTC had initially
issued a writ of possession in favor of Sps. Marquez, it defied existing jurisprudence
when it effectively rescinded the said writ by subsequently granting Sps. Alindog's
prayer for injunctive relief. The RTC's finding anent the initial evidence adduced by Sps.
Alindog constitutes improper basis to justify the issuance of the writ of preliminary
injunction in their favor since, in the first place, it had no authority to exercise any
discretion in this respect. Jurisprudence is clear on the matter: without the exception
under Section 33, Rule 39 of the Rules availing, the issuance of a writ of possession in
favor of the purchaser of an extra-judicially foreclosed property - such as Sps.
Marquez in this case - should come as a matter of course, and, in such regard,
constitutes only a ministerial duty on the part of the court. Besides, it was improper for
the RTC to have issued a writ of preliminary injunction since the act sought to be
enjoined, i.e., the implementation of the writ of possession, had already been
accomplished in the interim and thus, rendered the matter moot. Case law instructs that
injunction would not lie where the acts sought to be enjoined had already become fait
accompli (meaning, an accomplished or consummated act). 50 Hence, since the
consummation of the act sought to be restrained had rendered Sps. Alindog's injunction
petition moot, the issuance of the said injunctive writ was altogether improper.
All told, by acting averse to well-settled jurisprudential rules and resultantly depriving
Sps. Marquez of their right of possession over the subject property, the Court therefore
concludes that the RTC gravely abused its discretion in this case. In effect, the CA's
contrary ruling thereto is hereby reversed and set aside, which consequentially leads to
the nullification of the writ of preliminary injunction issued by the RTC in favor of Sps.
Alindog, and the reinstatement of the writ of possession issued by the same court in
favor of Sps. Marquez. It must, however, be noted that these pronouncements are
without prejudice to any separate action which Sps. Alindog may file in order to recover
ownership of the subject property.
WHEREFORE, the petition is GRANTED. The Decision dated February 29, 2008 and
Resolution dated August 6, 2008 of the Court of Appeals in CA-G.R. SP No. 97744, as
well as the Orders dated November 14, 2005 and January 17, 2007 of the Regional
Trial Court of Tagaytay City, Branch 18 in SCA No. TG-05-2521 are hereby REVERSED
and SET ASIDE. Accordingly, the writ of preliminary injunction in SCA No. TG-05-2521
is NULLIFIED, while the Writ of Possession in LRC Case No. TG-05-1068 is
REINSTATED.
SO ORDERED.
11
G.R. No. 173820 April 16, 2012
PRODUCERS BANK OF THE PHILIPPINES, Petitioner, Case No. 90-787 before the same court. The RTC thereafter ordered the consolidation
vs. of the two cases, Civil Case No. 1587-A and LR Case No. 90-787.
EXCELSA INDUSTRIES, INC., Respondent.
On December 18, 1997, the RTC rendered a decision upholding the validity of the
DECISION extrajudicial foreclosure and ordering the issuance of a writ of possession in favor of
petitioner.15
PERALTA, J.:
Aggrieved, respondent availed of two modes of appeal. Respondent appealed Civil
Case No. 1587-A via ordinary appeal16 to the CA which was docketed as CA-G.R. CV
This is a petition for review on certiorari under Rule 45 of the Rules of Court filed by
No. 59931 and raffled to the First Division. Respondent likewise filed a special civil
petitioner Producers Bank of the Philippines against respondent Excelsa Industries, Inc.
action for certiorari under Rule 65 of the Rules of Court as to LR Case No. 90-78717 also
assailing the Court of Appeals (CA) Decision1 dated April 4, 2006 and Resolution2 dated
before the CA which was docketed as CA-G.R. SP. No. 46514 and was raffled to the
July 19, 2006 in CA-G.R. SP No. 46514. The assailed decision reversed the Regional
Tenth Division. In both cases, respondent assailed the December 18, 1997 Decision of
Trial Court (RTC)3 Decision4 dated December 16, 1997 in the consolidated cases
the RTC which is actually a joint decision on the two consolidated cases subject of the
docketed as LR Case No. 90-787 and Civil Case No. 1587-A, while the assailed
separate actions.
resolution denied petitioner’s motion for reconsideration for lack of merit.

On May 30, 2001, the CA (First Division) rendered a decision in CA-G.R. CV No. 59931
The present case stemmed from the same set of facts as in G.R. No. 152071 5 entitled
reversing and setting aside the RTC decision thereby declaring the foreclosure of
"Producers Bank of the Philippines v. Excelsa Industries, Inc.," which the Court
mortgage invalid and annulling the issuance of the writ of possession in favor of
promulgated on May 8, 2009. The relevant facts, as found by the Court in said case,
petitioner.18 Petitioner elevated the case to this Court and was docketed as G.R. No.
are as follows:
152071.

Respondent obtained a loan from petitioner in the form of a bill discounted and secured
On April 4, 2006, the CA (Tenth Division) also rendered the assailed decision in CA-
credit accommodation in the amount of ₱200,000.00, secured by a real estate mortgage
G.R. SP No. 46514, the dispositive portion of which reads:
over real estate properties registered in its name.6 The mortgage secured also loans
that might be extended in the future by petitioner in favor of respondent. 7 Respondent
thereafter applied for a packing credit line or a credit export advance with petitioner WHEREFORE, premises considered, the instant petition is hereby GRANTED.
supported by a letter of credit issued by Kwang Ju Bank, Ltd. of Seoul, Korea, through ACCORDINGLY, the Decision dated December 18, 1997 of the Regional Trial Court of
Bank of the Philippine Islands. The application was approved. 8 When respondent Antipolo, Rizal, Branch 73, is hereby REVERSED.
presented for negotiation to petitioner drafts drawn under the letter of credit and the
corresponding export documents in consideration for its drawings in the amount of
SO ORDERED.19
US$5,739.76 and US$4,585.79, petitioner purchased the drafts and export documents
by paying respondent the peso equivalent of the drawings.9The Korean buyer, however,
refused to pay the export documents prompting petitioner to demand from respondent While declaring that the case had become moot and academic in view of the May 30,
the payment of the peso equivalent of said export documents together with its due and 2001 decision of the CA (First Division), the CA (Tenth Division) decided on the merits
unpaid loans.10 For failure of respondent to heed the demand, petitioner moved for the of the case and resolved two issues, namely: (1) whether or not petitioner was the agent
extrajudicial foreclosure of the real estate mortgage. 11 At the public auction, petitioner of respondent; and (2) whether or not the foreclosure of mortgage was valid. 20 The
emerged as the highest bidder.12 The corresponding certificate of sale was later issued decision substantially echoed the ruling of the CA (First Division) in CA-G.R. CV No.
and eventually registered. For failure of respondent to redeem the properties, the titles 59931.
were consolidated in favor of petitioner and new certificates of title were issued in its
name.13
Aggrieved, petitioner comes before the Court with the following arguments:

On November 17, 1989, respondent instituted an action for the annulment of

I.
extrajudicial foreclosure with prayer for preliminary injunction and damages against
petitioner and the Register of Deeds of Marikina. The case was docketed as Civil Case
No. 1587-A which was raffled to Branch 73 of the RTC of Antipolo, Rizal. 14 On April 5, The Petition for Certiorari should have been immediately dismissed by the
1990, petitioner filed a petition for the issuance of a writ of possession, docketed as LR Court of Appeals on the ground of FORUM SHOPPING.
 II.
The Petition for Certiorari should have been immediately dismissed as there
was a remedy (i.e., Motion for Reconsideration and Appeal) available to the
Respondent.
III.
The respondent’s Petition, purportedly a Petition for Certiorari under Rule 65
of the Rules of Court, did not allege that any tribunal, board or officer
exercising judicial or quasi-judicial functions has acted without or in excess of
jurisdiction or with grave abuse of discretion amounting to lack or excess of
jurisdiction.
IV.
Even if the respondent’s Petition is decided on the issues enumerated by the
Court of Appeals in its questioned Decision, the Petition for Certiorari must
be dismissed for utter lack of merit and for not being supported by the
evidence on record.21
The petition is meritorious.
The case stemmed from two separate cases – one for annulment of foreclosure in Civil
Case No. 1587-A and another case for issuance of the writ of possession in LR Case
No. 90-787. The cases were consolidated by the RTC and were eventually disposed of
in one judgment embodied in the December 18, 1997 RTC decision. This
notwithstanding, respondent treated the cases separately and availed of two remedies,
an appeal in Civil Case No. 1587-A and a petition for certiorari under Rule 65 in LR
Case No. 90-787. The appeal was decided by the CA (First Division) then eventually
settled by the Court in G.R. No. 152071 on May 8, 2009. The petition for certiorari, on
the other hand, was later decided by the CA (Tenth Division), which decision is now the
subject of this present petition.
Respondent herein committed a procedural blunder when it filed a separate petition for
certiorari before the CA, because when the two cases were consolidated and a joint
decision was rendered, the cases lost their identities; and a petition for certiorari is not
the proper remedy to assail a decision granting the issuance of a writ of possession.
Consolidation is a procedural device granted to the court as an aid in deciding how
cases in its docket are to be tried so that the business of the court may be dispatched
expeditiously and with economy while providing justice to the parties.22 It is governed by
Rule 31 of the old Rules of Court23 which states:
Section 1. Consolidation. – When actions involving a common question of law or fact
are pending before the court, it may order a joint hearing or trial of any or all the matters
in issue in the actions; it may order all the actions consolidated; and it may make such
orders concerning proceedings therein as may tend to avoid unnecessary costs or
delay.24
As aptly observed by the Court in Republic of the Philippines v. Sandiganbayan, et
al.,25 Rule 31 is completely silent on the effect/s of consolidation on the cases
consolidated; on the parties and the causes of action involved; and on the evidence
presented in the consolidated cases.26 In the same case, the Court declared that the
effect of consolidation would greatly depend on the sense in which the consolidation is
made. Consolidation of cases may take place in any of the following ways:
(1) Where all except one of several actions are stayed until one is tried, in
which case the judgment in the one trial is conclusive as to the others. This
is not actually consolidation but is referred to as such. (quasi-consolidation)
(2) Where several actions are combined into one, lose their separate identity,
and become a single action in which a single judgment is rendered. This is
illustrated by a situation where several actions are pending between the same
parties stating claims which might have been set out originally in one
complaint. (actual consolidation)
(3) Where several actions are ordered to be tried together but each retains its
separate character and requires the entry of a separate judgment. This type
of consolidation does not merge the suits into a single action, or cause the
parties to one action to be parties to the other. (consolidation for trial)27
In this case, there was a joint hearing and the RTC eventually rendered a Joint Decision
disposing of the cases both as to the validity of the foreclosure (subject of Civil Case
No. 1587-A) and the propriety of the issuance of a writ of possession (subject of LR
Case No. 90-787). This being so, the two cases ceased to be separate and the parties
are left with a single remedy to elevate the issues to the appellate court. This is bolstered
by the fact that when the appeal in CA-G.R. CV No. 59931 was disposed of by the CA
(First Division) by reversing the RTC decision, the appellate court not only declared the
foreclosure of mortgage invalid but likewise annulled the issuance of the writ of
possession. Again, when the Court finally settled the issues in G.R. No. 152071, it
reversed and set aside the CA decision and reinstated that of the RTC thereby disposing
of the said two issues.
Assuming that respondent could still treat the original cases separately and could avail
of separate remedies, the petition for certiorari under Rule 65 was incorrectly availed of
to assail the issuance of the writ of possession.
A special civil action for certiorari could be availed of only if a tribunal, board, or officer
exercising judicial or quasi-judicial functions has acted without or in excess of its or his
jurisdiction, or with grave abuse of discretion amounting to lack or excess of jurisdiction;
and if there is no appeal or any other plain, speedy, and adequate remedy in the ordinary
course of law.28 It has been repeatedly held in a number of cases29 that the remedy of a
party from the trial court’s order granting the issuance of a writ of possession is to file a
petition to set aside the sale and cancel the writ of possession, and the aggrieved party
may then appeal from the order denying or granting said petition.30 When a writ of
possession had already been issued as in this case,31 the proper remedy is an appeal
and not a petition for certiorari.32 To be sure, the trial court’s order granting the writ of
possession is final.33 The soundness of the order granting the writ of possession is a
matter of judgment, with respect to which the remedy of the party aggrieved is ordinary
appeal.34 As respondent availed of the wrong remedy, the appellate court erred in not
dismissing outright the petition for certiorari.
We would like to stress at this point that when respondent received the unfavorable
decision of the RTC dated December 18, 1997, it appealed the decision to the CA
assailing the validity of the foreclosure. The CA (First Division) reversed and set aside
the RTC decision, declared the foreclosure invalid, and annulled the issuance of the writ
of possession.35 When it rendered the assailed decision, the CA (Tenth Division)
addressed the issues raised by respondent which were the very same issues raised by
it in its appeal. In short, the assailed decision was a mere reiteration of the findings and
conclusions of the CA (First Division). This emphasizes the error committed by the CA
(Tenth Division) in rendering the assailed decision.1âwphi1
On May 8, 2009, in G.R. No. 152071, we reversed and set aside the CA (First Division)
decision in CA-G.R. CV No. 59931 and reinstated that of the RTC. In other words, we
settled once and for all the validity of the foreclosure and the propriety of the issuance
of the writ of possession. This should have put to rest the petitioner’s claim over the
properties subject of the foreclosure sale if not for respondent’s erroneous resort to the
court. The rights of the parties should, therefore, be governed by the Court’s decision
in G.R. No. 152071.
WHEREFORE, premises considered, the petition is hereby GRANTED. The Court of
Appeals Decision dated April 4, 2006 and Resolution dated July 19, 2006 in CA-G.R.
SP No. 46514 are SET ASIDE. The parties are bound by the decision of the Court in
G.R. No. 152071 entitled "Producers Bank of the Philippines v. Excelsa Industries, Inc."
promulgated on May 8, 2009.
SO ORDERED.
12
G.R. No. 171206 September 23, 2013
HEIRS OF THE LATE SPOUSES FLA VIANO MAGLASANG and SALUD ADAZA-
MAGLASANG, namely, OSCAR A. MAGLASANG, EDGAR A. MAGLASANG,
CONCEPCION CHONA A. MAGLASANG, GLENDA A. MAGLASANG-ARNAIZ,
LERMA A. MAGLASANG, FELMA A. · MAGLASANG, FE DORIS A. MAGLASANG,
LEOLINO A. MAGLASANG, MARGIE LEILA A. MAGLASANG,MA. MILALIE A.
MAGLASANG, SALUD A. MAGLASANG, and MA. FLASALIE A. MAGLASANG,
REPRESENTING THE ESTATES OF THEIR AFORE-NAMEDDECEASED
PARENTS, Petitioners,
vs.
MANILA BANKING CORPORATION, now substituted by FIRST SOVEREIGN
ASSET MANAGEMENT SPV-AMC, INC. FSAMI, Respondent.
DECISION
PERLAS-BERNABE, J.:
Assailed in this petition for review on certiorari1 are the Decision2 dated July 20, 2005
and Resolution3 dated January 4, 2006 of the Court of Appeals (CA) in CA-G.R. CV No.
50410 which dismissed petitioners’ appeal and affirmed the Decision4 dated April 6,
1987 of the Regional Trial Court of Ormoc City, Branch 12 (RTC) directing petitioners
to jointly and severally pay respondent Manila Banking Corporation the amount of
₱434,742.36, with applicable interests, representing the deficiency of the former’s total
loan obligation to the latter after the extra-judicial foreclosure of the real estate mortgage
subject of this case, including attorney’s fees and costs of suit.
The Facts
On June 16, 1975, spouses Flaviano and Salud Maglasang (Sps.Maglasang) obtained
a credit line from respondent5 in the amount of ₱350,000.00 which was secured by a
real estate mortgage6 executed over seven of their properties7 located in Ormoc City
and the Municipality of Kananga, Province of Leyte.8 They availed of their credit line by
securing loans in the amounts of ₱209,790.50 and ₱139,805.83 on October 24,
1975and March 15, 1976, respectively,9 both of which becoming due and demandable
within a period of one year. Further, the parties agreed that the said loans would earn
interest at 12% per annum (p.a.) and an additional 4% penalty would be charged upon
default.10
After Flaviano Maglasang (Flaviano) died intestate on February 14,1977, his widow
Salud Maglasang (Salud) and their surviving children, herein petitioners Oscar (Oscar),
Concepcion Chona, Lerma, Felma, FeDoris, Leolino, Margie Leila, Ma. Milalie, Salud
and Ma. Flasalie, all surnamed Maglasang, and Glenda Maglasang-Arnaiz,
appointed11 their brother petitioner Edgar Maglasang (Edgar) as their attorney-in-
fact.12 Thus, on March 30, 1977, Edgar filed a verified petition for letters of
administration of the intestate estate of Flaviano before the then Court of First Instance
of Leyte, Ormoc City, Branch 5 (probate court), docketed as Sp. Proc. No. 1604-0.13 On
August 9, 1977, the probate court issued an Order14 granting the petition, thereby
appointing Edgar as the administrator15 of Flaviano’s estate.
In view of the issuance of letters of administration, the probate court, on August 30,
1977, issued a Notice to Creditors16 for the filing of money claims against Flaviano’s
estate. Accordingly, as one of the creditors of Flaviano, respondent notified17 the
probate court of its claim in the amount of ₱382,753.19 as of October 11, 1978, The CA Ruling
exclusive of interests and charges.
In a Decision29 dated July 20, 2005, the CA denied the petitioners’ appeal and affirmed
During the pendency of the intestate proceedings, Edgar and Oscar were able to obtain the RTC’s Decision. At the outset, it pointed out that the probate court erred when it,
several loans from respondent, secured by promissory notes 18 which they signed. through the December 14, 1978 Order, closed and terminated the proceedings in Sp.
Proc. No. 1604-0 without first satisfying the claims of the creditors of the estate – in
particular, respondent – in violation of Section 1, Rule 90 of the Rules.30 As a
In an Order19 dated December 14, 1978 (December 14, 1978 Order),the probate court
consequence, respondent was not able to collect from the petitioners and thereby was
terminated the proceedings with the surviving heirs executing an extra-judicial partition
left with the option of foreclosing the real estate mortgage. 31Further, the CA held that
of the properties of Flaviano’s estate. The loan obligations owed by the estate to
Section 7, Rule 86 of the Rules does not apply to the present case since the same does
respondent, however, remained unsatisfied due to respondent’s certification that
not involve a mortgage made by the administrator over any property belonging to the
Flaviano’s account was undergoing a restructuring. Nonetheless, the probate court
estate of the decedent.32According to the CA, what should apply is Act No. 313533 which
expressly recognized the rights of respondent under the mortgage and promissory
entitles respondent to claim the deficiency amount after the extra-judicial foreclosure of
notes executed by the Sps. Maglasang, specifically, its "right to foreclose the same
the real estate mortgage of Sps. Maglasang’s properties.34
within the statutory period."20

Petitioners’ motion for reconsideration was subsequently denied in a Resolution35 dated

In this light, respondent proceeded to extra-judicially foreclose the mortgage covering
January 4, 2006. Hence, the present recourse.
the Sps. Maglasang’s properties and emerged as the highest bidder at the public
auction for the amount of ₱350,000.00.21 There, however, remained a deficiency on
Sps. Maglasang’s obligation to respondent. Thus, on June 24, 1981, respondent filed a The Issue Before the Court
suit to recover the deficiency amount of ₱250,601.05 as of May 31, 1981 against the
estate of Flaviano, his widow Salud and petitioners, docketed as Civil Case No. 1998-
The essential issue in this case is whether or not the CA erred in affirming the RTC’s
0.22
award of the deficiency amount in favor of respondent.

The RTC Ruling and Subsequent Proceedings

After trial on the merits, the RTC (formerly, the probate court)23 rendered a Decision24 on
April 6, 1987 directing the petitioners to pay respondent, jointly and severally, the
amount of ₱434,742.36 with interest at the rate of 12% p.a., plus a 4% penalty charge,
reckoned from September 5,1984 until fully paid. 25 The RTC found that it was shown,
by a preponderance of evidence, that petitioners, after the extra-judicial foreclosure of
all the properties mortgaged, still have an outstanding obligation in the amount and as
of the date as above-stated. The RTC also found in order the payment of interests and
penalty charges as above-mentioned as well as attorney’s fees equivalent to 10% of
the outstanding obligation.26
Dissatisfied, petitioners elevated the case to the CA on appeal, contending, 27 inter alia,
that the remedies available to respondent under Section 7, Rule 86 of the Rules of Court
(Rules) are alternative and exclusive, such that the election of one operates as a waiver
or abandonment of the others. Thus, when respondent filed its claim against the estate
of Flaviano in the proceedings before the probate court, it effectively abandoned its right
to foreclose on the mortgage. Moreover, even on the assumption that it has not so
waived its right to foreclose, it is nonetheless barred from filing any claim for any
deficiency amount.
During the pendency of the appeal, Flaviano’s widow, Salud, passed away on July 25,
1997.28
Petitioners assert36 that it is not Act No. 3135 but Section 7, Rule 86of the Rules which
applies in this case. The latter provision provides alternative and exclusive remedies for
the satisfaction of respondent’s claim against the estate of Flaviano.37 Corollarily, having
filed its claim against the estate during the intestate proceedings, petitioners argue that
respondent had effectively waived the remedy of foreclosure and, even assuming that
it still had the right to do so, it was precluded from filing a suit for the recovery of the
deficiency obligation.38
Likewise, petitioners maintain that the extra-judicial foreclosure of the subject properties
was null and void, not having been conducted in the capital of the Province of Leyte in
violation of the stipulations in the real estate mortgage contract.39 They likewise deny
any personal liability for the loans taken by their deceased parents. 40
The Court’s Ruling
The petition is partly meritorious.
Claims against deceased persons should be filed during the settlement proceedings of
their estate.41 Such proceedings are primarily governed by special rules found under
Rules 73 to 90 of the Rules, although rules governing ordinary actions may, as far as
practicable, apply suppletorily.42 Among these special rules, Section 7, Rule 86 of the
Rules (Section 7, Rule86) provides the rule in dealing with secured claims against the
estate:
SEC. 7. Mortgage debt due from estate. – A creditor holding a claim against the
deceased secured by a mortgage or other collateral security, may abandon the security
and prosecute his claim in the manner provided in this rule, and share in the general
distribution of the assets of the estate; or he may foreclose his mortgage or realize upon
his security, by action in court, making the executor or administrator a party defendant,
and if there is a judgment for a deficiency, after the sale of the mortgaged premises, or
the property pledged, in the foreclosure or other proceeding to realize upon the security,
he may claim his deficiency judgment in the manner provided in the preceding section;
or he may rely upon his mortgage or other security alone, and foreclose the same at
any time within the period of the statute of limitations, and in that event he shall not be
admitted as a creditor, and shall receive no share in the distribution of the other assets
of the estate; but nothing herein contained shall prohibit the executor or administrator
from redeeming the property mortgaged or pledged, by paying the debt for which it is
held as security, under the direction of the court, if the court shall adjudged it to be for
the best interest of the estate that such redemption shall be made. (Emphasis and
underscoring supplied)
As the foregoing generally speaks of "a creditor holding a claim against the deceased
secured by a mortgage or other collateral security" as above-highlighted, it may be
reasonably concluded that the aforementioned section covers all secured claims,
whether by mortgage or any other form of collateral, which a creditor may enforce
against the estate of the deceased debtor. On the contrary, nowhere from its language
can it be fairly deducible that the said section would – as the CA interpreted – narrowly
apply only to mortgages made by the administrator over any property belonging to the
estate of the decedent. To note, mortgages of estate property executed by the
administrator, are also governed by Rule 89 of the Rules, captioned as "Sales,
Mortgages, and Other Encumbrances of Property of Decedent."
In this accord, it bears to stress that the CA’s reliance on Philippine National Bank v.
CA43 (PNB) was misplaced as the said case did not, in any manner, limit the scope of
Section 7, Rule 86. It only stated that the aforesaid section equally applies to cases
where the administrator mortgages the property of the estate to secure the loan he
obtained.44 Clearly, the pronouncement was a ruling of inclusion and not one which
created a distinction. It cannot, therefore, be doubted that it is Section 7, Rule 86which
remains applicable in dealing with a creditor’s claim against the mortgaged property of
the deceased debtor, as in this case, as well as mortgages made by the administrator,
as that in the PNB case.
Jurisprudence breaks down the rule under Section 7, Rule 86 and explains that the
secured creditor has three remedies/options that he may alternatively adopt for the
satisfaction of his indebtedness. In particular, he may choose to: (a) waive the mortgage
and claim the entire debt from the estate of the mortgagor as an ordinary claim; (b)
foreclose the mortgage judicially and prove the deficiency as an ordinary claim; and (c)
rely on the mortgage exclusively, or other security and foreclose the same before it is
barred by prescription, without the right to file a claim for any deficiency.45 It must,
however, be emphasized that these remedies are distinct, independent and mutually
exclusive from each other; thus, the election of one effectively bars the exercise of the
others. With respect to real properties, the Court in Bank of America v. American Realty
Corporation46 pronounced:
In our jurisdiction, the remedies available to the mortgage creditor are deemed
alternative and not cumulative. Notably, an election of one remedy operates as a waiver
of the other. For this purpose, a remedy is deemed chosen upon the filing of the suit for
collection or upon the filing of the complaint in an action for foreclosure of mortgage,
pursuant to the provision of Rule 68 of the 1997 Rules of Civil Procedure. As to
extrajudicial foreclosure, such remedy is deemed elected by the mortgage creditor upon
filing of the petition not with any court of justice but with the Office of the Sheriff of the
province where the sale is to be made, in accordance with the provisions of Act No.
3135, as amended by Act No.4118.47 (Emphasis supplied)
Anent the third remedy, it must be mentioned that the same includes the option of extra-
judicially foreclosing the mortgage under Act No. 3135,as availed of by respondent in
this case. However, the plain result of adopting the last mode of foreclosure is that the
creditor waives his right to recover any deficiency from the estate. 48 These precepts
were discussed in the PNB case, citing Perez v. Philippine National Bank 49 which
overturned the earlier Pasno v. Ravina ruling:50
Case law now holds that this rule grants to the mortgagee three distinct, independent
and mutually exclusive remedies that can be alternatively pursued by the mortgage
creditor for the satisfaction of his credit in case the mortgagor dies, among them:
(1) to waive the mortgage and claim the entire debt from the estate of the
mortgagor as an ordinary claim;
(2) to foreclose the mortgage judicially and prove any deficiency as an
ordinary claim; and
(3) to rely on the mortgage exclusively, foreclosing the same at anytime
before it is barred by prescription without right to file a claim for any deficiency
In Perez v. Philippine National Bank, reversing Pasno vs. Ravina, we held:
The ruling in Pasno v. Ravina not having been reiterated in any other case, we have
carefully reexamined the same, and after mature deliberation have reached the
conclusion that the dissenting opinion is more in conformity with reason and law. Of the
three alternative courses that section 7, Rule 87 (now Rule 86), offers the mortgage
creditor, to wit, (1) to waive the mortgage and claim the entire debt from the estate of
the mortgagor as an ordinary claim; (2) foreclose the mortgage judicially and prove any
deficiency as an ordinary claim; and (3) to rely on the mortgage exclusively, foreclosing
the same at any time before it is barred by prescription, without right to file a claim for
any deficiency, the majority opinion in Pasno v. Ravina, in requiring a judicial
foreclosure, virtually wipes out the third alternative conceded by the Rules to the
mortgage creditor, and which would precisely include extra-judicial foreclosures by
contrast with the second alternative.
The plain result of adopting the last mode of foreclosure is that the creditor waives his
right to recover any deficiency from the estate. Following the Perez ruling that the third
mode includes
extrajudicial foreclosure sales, the result of extrajudicial foreclosure is that the creditor
waives any further deficiency claim. x x x.51 (Emphases and underscoring supplied;
italics in the original)
To obviate any confusion, the Court observes that the operation of Act No. 3135 does
not entirely discount the application of Section 7, Rule 86, or vice-versa. Rather, the two
complement each other within their respective spheres of operation. On the one hand,
Section 7, Rule 86 lays down the options for the secured creditor to claim against the
estate and, according to jurisprudence, the availment of the third option bars him from
claiming any deficiency amount. On the other hand, after the third option is chosen, the
procedure governing the manner in which the extra-judicial foreclosure should proceed
would still be governed by the provisions of Act No. 3135.Simply put, Section 7, Rule
86 governs the parameters and the extent to which a claim may be advanced against
the estate, whereas Act No. 3135sets out the specific procedure to be followed when
the creditor subsequently chooses the third option – specifically, that of extra-judicially
foreclosing real property belonging to the estate. The application of the procedure under
Act No. 3135 must be concordant with Section 7, Rule 86 as the latter is a special rule
applicable to claims against the estate, and at the same time, since Section 7, Rule 86
does not detail the procedure for extra-judicial foreclosures, the formalities governing
the manner of availing of the third option – such as the place where the application for
extra-judicial foreclosure is filed, the requirements of publication and posting and the
place of sale – must be governed by Act No. 3135.
In this case, respondent sought to extra-judicially foreclose the mortgage of the
properties previously belonging to Sps. Maglasang (and now, their estates) and,
therefore, availed of the third option. Lest it be misunderstood, it did not exercise the
first option of directly filing a claim against the estate, as petitioners assert, since it
merely notified52the probate court of the outstanding amount of its claim against the
estate of Flaviano and that it was currently restructuring the account.53 Thus, having
unequivocally opted to exercise the third option of extra-judicial foreclosure under
Section 7, Rule 86, respondent is now precluded from filing a suit to recover any
deficiency amount as earlier discussed.
As a final point, petitioners maintain that the extra-judicial foreclosure of the subject
properties was null and void since the same was conducted in violation of the stipulation
in the real estate mortgage contract stating that the auction sale should be held in the
capital of the province where the properties are located, i.e., the Province of Leyte.
The Court disagrees.
As may be gleaned from the records, the stipulation under the real estate
mortgage54 executed by Sps. Maglasang which fixed the place of the foreclosure sale
at Tacloban City lacks words of exclusivity which would bar any other acceptable for a
wherein the said sale may be conducted, to wit:
It is hereby agreed that in case of foreclosure of this mortgage under Act 3135, the
auction sale shall be held at the capital of the province if the property is within the
territorial jurisdiction of the province concerned, or shall be held in the city if the property
is within the territorial jurisdiction of the city concerned; x x x. 55
Case law states that absent such qualifying or restrictive words to indicate the
exclusivity of the agreed forum, the stipulated place should only be as an additional, not
a limiting venue.56 As a consequence, the stipulated venue and that provided under Act
No. 3135 can be applied alternatively.
In particular, Section 2 of Act No. 3135 allows the foreclosure sale to be done within the
province where the property to be sold is situated, viz.:
SEC. 2. Said sale cannot be made legally outside of the province which the property
sold is situated; and in case the place within said province in which the sale is to be
made is subject to stipulation, such sale shall be made in said place or in the municipal
building of the municipality in which the property or part thereof is situated. (Italics
supplied) ..
In this regard, since the auction sale was conducted in Ormoc City, which is within the
territorial jurisdiction of the Province of Leyte, then the Court finds sufficient compliance
with the above-cited requirement.
All told, finding that the extra-judicial foreclosure subject of this case was properly
conducted in accordance with the formalities of Act No. 3135,the Court upholds the
same as a valid exercise of respondent's third option under Section 7, Rule 86. To
reiterate, respondent cannot, however, file any suit to recover any deficiency amount
since it effectively waived its right thereto when it chose to avail of extra-judicial
foreclosure as jurisprudence instructs.
WHEREFORE, the petition is PARTLY GRANTED. The complaint for the recovery of
the deficiency amount after extra-judicial foreclosure filed by respondent Manila
Banking Corporation is hereby DISMISSED. The extra-judicial foreclosure of the
mortgaged properties, however, stands.
SO ORDERED.