FACTS:

Lourdes Gaspar Bautista applied to the Government for the sale favor of a parcel of
land.After proper investigation, Sales Patent covering said property was issued in
her favor by theDirector of Lands, and was registered in the o?ce of the !egister
of Deeds of "ueva #ci$a, asa result of which %riginal &erti'cate of (itle was
issued in her favor. Said parcel of land waso)ered as security when Bautista
applied for a loan with the !ehabilitation *inance&orporation +!*&?, predecessor in
interest of the plainti)-appellee Development Ban? of thePhilippines +DBP?. %n the
basis of the documents mentioned and the appraisal of theproperty by its appraiser,
the !*& approved a loan of P/,000.00 in favor of Bautista and amortgage contract
was e1ecuted. Bautista failed to pay the amorti2ation on the loan so thatthe !*&
too? steps to foreclose the mortgage e1tra-$udicially. 3n the auction sale, !
*&ac4uired the property being the highest bidder and upon failure on the part of
Bautista toredeem, consolidated ownership thereon. %n or about this time, however,
an action +&ivil&ase "o. 560? was 'led by !u'no !amos and 7uan !amos in the &ourt
of *irst 3nstance of "ueva #ci$a against the Government of the !epublic of the
Philippines and the !*& +assuccessor in interest of Bautista? claiming ownership of
the land in 4uestion. A decision wastitled declaring the certi'cates of title
issued to Bautista, !epublic and !*& as null and void. (hus, the Development Ban?
of the Philippines now appellant, 'led a complaint against oneof its debtors,
Lourdes Gaspar Bautista, now appellee, for the recovery of a sum of
moneyrepresenting the unpaid mortgage indebtedness.

ISSUE:

8hat is the right, if any, of a creditor which previously satis'ed its claim by
foreclosinge1tra$udicially on a mortgage e1ecuted by the debtor, whose title was
thereafter nulli'ed ina $udicial proceeding where she was not brought in as a
party.

HELD:

As the action there was one to annual the title, it was an action strictly in
personam, if that was the case as it was, the $udgment there could not in any way
bind Lourdes who had notac4uired in said decision in any way for what only happened
is that as to the mortgage, theBan? foreclosed, and then sold unto &onrada and when
the title had been annulled, theBan? reimbursed &onrada: stated otherwise, the
annulment of Lourdes; title was aproceeding e1 parte as far as she was concerned
and could not bind her at all: and hermortgage was foreclosed and the Ban? reali2ed
on it, when the Ban? afterwards ac4uiescedin the annulment of the title and too? it
upon itself to reimburse &onrada, the Ban? wasacting on its own peril because it
could not have by that, bound Lourdes at all.After appellant ban? had ac4uired her
title by such e1tra$udicial foreclosure sale and thus,through its own act, seen to
it that her obligation had been satis'ed, it could not thereafter,see? to revive
the same on the allegation that the title in 4uestion was subse4uentlyannulled,
considering that she was not made a party on the occasion of such nulli'cation.3n
the suit before the lower court, the Director of Lands and the "ational (reasurer
of thePhilippines were li?ewise made defendants by appellant ban? because of its
belief that if noright e1isted as against appellee Bautista, recovery could be had
from the Assurance *und.Such a belief 'nds no support in the applicable, law, which
allows recovery only upon ashowing that there be no negligence on the part of the
party sustaining any loss or damageor being deprived of any land or interest
therein by the operation of the Land !egistrationAct.
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(his certainly is not the case here, plainti)-appellant being solely responsible
for thelight in which it now 'nds itself. Accordingly, the Director of Lands and
the "ational (reasurerof the Philippines are li?ewise e1empt from any liability