FIRST DIVISION

[G.R. No. 136804. February 19, 2003]

MANUFACTURERS HANOVER TRUST CO. and/or CHEMICAL BANK, petitioners,

vs. RAFAEL MA. GUERRERO, respondent.

DECISION
CARPIO, J.:

The Case

This is a petition for review under Rule 45 of the Rules of Court to set aside the Court of
Appeals[1] Decision of August 24, 1998 and Resolution of December 14, 1998 in CA-G.R. SP No.
42310[2] affirming the trial courts denial of petitioners motion for partial summary judgment.

The Antecedents

On May 17, 1994, respondent Rafael Ma. Guerrero (Guerrero for brevity) filed a complaint
for damages against petitioner Manufacturers Hanover Trust Co. and/or Chemical Bank (the Bank
for brevity) with the Regional Trial Court of Manila (RTC for brevity). Guerrero sought payment
of damages allegedly for (1) illegally withheld taxes charged against interests on his checking
account with the Bank; (2) a returned check worth US$18,000.00 due to signature verification
problems; and (3) unauthorized conversion of his account. Guerrero amended his complaint on
April 18, 1995.
On September 1, 1995, the Bank filed its Answer alleging, inter alia, that by stipulation
Guerreros account is governed by New York law and this law does not permit any of Guerreros
claims except actual damages. Subsequently, the Bank filed a Motion for Partial Summary
Judgment seeking the dismissal of Guerreros claims for consequential, nominal, temperate, moral
and exemplary damages as well as attorneys fees on the same ground alleged in its Answer. The
Bank contended that the trial should be limited to the issue of actual damages. Guerrero opposed
the motion.
The affidavit of Alyssa Walden, a New York attorney, supported the Banks Motion for Partial
Summary Judgment. Alyssa Waldens affidavit (Walden affidavit for brevity) stated that Guerreros
New York bank account stipulated that the governing law is New York law and that this law bars
all of Guerreros claims except actual damages. The Philippine Consular Office in New York
authenticated the Walden affidavit.
The RTC denied the Banks Motion for Partial Summary Judgment and its motion for
reconsideration on March 6, 1996 and July 17, 1996, respectively. The Bank filed a petition for
certiorari and prohibition with the Court of Appeals assailing the RTC Orders. In its Decision dated
August 24, 1998, the Court of Appeals dismissed the petition. On December 14, 1998, the Court
of Appeals denied the Banks motion for reconsideration.

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 Hence, the instant petition.

The Ruling of the Court of Appeals

The Court of Appeals sustained the RTC orders denying the motion for partial summary
judgment. The Court of Appeals ruled that the Walden affidavit does not serve as proof of the
New York law and jurisprudence relied on by the Bank to support its motion. The Court of Appeals
considered the New York law and jurisprudence as public documents defined in Section 19, Rule
132 of the Rules on Evidence, as follows:

SEC. 19. Classes of Documents. For the purpose of their presentation in evidence, documents
are either public or private.

Public documents are:

(a) The written official acts, or records of the official acts of the sovereign authority,
official bodies and tribunals, and public officers, whether of the Philippines, or of a
foreign country;

x x x.

The Court of Appeals opined that the following procedure outlined in Section 24, Rule 132
should be followed in proving foreign law:

SEC. 24. Proof of official record. The record of public documents referred to in paragraph (a) of
Section 19, when admissible for any purpose, may be evidenced by an official publication
thereof or by a copy attested by the officer having the legal custody of the record, or by his
deputy, and accompanied, if the record is not kept in the Philippines, with a certificate that such
officer has the custody. If the office in which the record is kept is in a foreign country, the
certificate may be made by a secretary of the embassy or legation, consul general, consul, vice
consul, or consular agent or by any officer in the foreign service of the Philippines stationed in
the foreign country in which the record is kept, and authenticated by the seal of his office.

The Court of Appeals likewise rejected the Banks argument that Section 2, Rule 34 of the old
Rules of Court allows the Bank to move with the supporting Walden affidavit for partial summary
judgment in its favor. The Court of Appeals clarified that the Walden affidavit is not the supporting
affidavit referred to in Section 2, Rule 34 that would prove the lack of genuine issue between the
parties. The Court of Appeals concluded that even if the Walden affidavit is used for purposes of
summary judgment, the Bank must still comply with the procedure prescribed by the Rules to
prove the foreign law.

The Issues

The Bank contends that the Court of Appeals committed reversible error in -

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x x x HOLDING THAT [THE BANKS] PROOF OF FACTS TO SUPPORT ITS MOTION FOR
SUMMARY JUDGMENT MAY NOT BE GIVEN BY AFFIDAVIT;

x x x HOLDING THAT [THE BANKS] AFFIDAVIT, WHICH PROVES FOREIGN LAW AS A FACT, IS
HEARSAY AND THEREBY CANNOT SERVE AS PROOF OF THE NEW YORK LAW RELIED UPON BY
PETITIONERS IN THEIR MOTION FOR SUMMARY JUDGMENT x x x.[3]

First, the Bank argues that in moving for partial summary judgment, it was entitled to use
the Walden affidavit to prove that the stipulated foreign law bars the claims for consequential,
moral, temperate, nominal and exemplary damages and attorneys fees. Consequently, outright
dismissal by summary judgment of these claims is warranted.
Second, the Bank claims that the Court of Appeals mixed up the requirements of Rule 35 on
summary judgments and those of a trial on the merits in considering the Walden affidavit as
hearsay. The Bank points out that the Walden affidavit is not hearsay since Rule 35 expressly
permits the use of affidavits.
Lastly, the Bank argues that since Guerrero did not submit any opposing affidavit to refute
the facts contained in the Walden affidavit, he failed to show the need for a trial on his claims for
damages other than actual.

The Courts Ruling

The petition is devoid of merit.

The Bank filed its motion for partial summary judgment pursuant to Section 2, Rule 34 of the
old Rules of Court which reads:

Section 2. Summary judgment for defending party. A party against whom a claim, counterclaim,
or cross-claim is asserted or a declaratory relief is sought may, at any time, move with
supporting affidavits for a summary judgment in his favor as to all or any part thereof.

A court may grant a summary judgment to settle expeditiously a case if, on motion of either
party, there appears from the pleadings, depositions, admissions, and affidavits that no important
issues of fact are involved, except the amount of damages. In such event, the moving party is
entitled to a judgment as a matter of law.[4]
In a motion for summary judgment, the crucial question is: are the issues raised in the
pleadings genuine, sham or fictitious, as shown by affidavits, depositions or admissions
accompanying the motion?[5]
A genuine issue means an issue of fact which calls for the presentation of evidence as
distinguished from an issue which is fictitious or contrived so as not to constitute a genuine issue
for trial.[6]
A perusal of the parties respective pleadings would show that there are genuine issues of
fact that necessitate formal trial. Guerreros complaint before the RTC contains a statement of the
ultimate facts on which he relies for his claim for damages. He is seeking damages for what he
asserts as illegally withheld taxes charged against interests on his checking account with the

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Bank, a returned check worth US$18,000.00 due to signature verification problems, and
unauthorized conversion of his account. In its Answer, the Bank set up its defense that the agreed
foreign law to govern their contractual relation bars the recovery of damages other than
actual. Apparently, facts are asserted in Guerreros complaint while specific denials and affirmative
defenses are set out in the Banks answer.
True, the court can determine whether there are genuine issues in a case based merely on
the affidavits or counter-affidavits submitted by the parties to the court. However, as correctly
ruled by the Court of Appeals, the Banks motion for partial summary judgment as supported by
the Walden affidavit does not demonstrate that Guerreros claims are sham, fictitious or
contrived. On the contrary, the Walden affidavit shows that the facts and material allegations as
pleaded by the parties are disputed and there are substantial triable issues necessitating a formal
trial.
There can be no summary judgment where questions of fact are in issue or where material
allegations of the pleadings are in dispute.[7] The resolution of whether a foreign law allows only
the recovery of actual damages is a question of fact as far as the trial court is concerned since
foreign laws do not prove themselves in our courts.[8] Foreign laws are not a matter of judicial
notice.[9] Like any other fact, they must be alleged and proven. Certainly, the conflicting
allegations as to whether New York law or Philippine law applies to Guerreros claims present a
clear dispute on material allegations which can be resolved only by a trial on the merits.
Under Section 24 of Rule 132, the record of public documents of a sovereign authority or
tribunal may be proved by (1) an official publication thereof or (2) a copy attested by the
officer having the legal custody thereof. Such official publication or copy must be
accompanied, if the record is not kept in the Philippines, with a certificate that the attesting officer
has the legal custody thereof. The certificate may be issued by any of the authorized Philippine
embassy or consular officials stationed in the foreign country in which the record is kept, and
authenticated by the seal of his office. The attestation must state, in substance, that the copy is
a correct copy of the original, or a specific part thereof, as the case may be, and must be under
the official seal of the attesting officer.
Certain exceptions to this rule were recognized in Asiavest Limited v. Court of
Appeals[10] which held that:

x x x:

Although it is desirable that foreign law be proved in accordance with the above rule, however,
the Supreme Court held in the case of Willamette Iron and Steel Works v. Muzzal, that Section
41, Rule 123 (Section 25, Rule 132 of the Revised Rules of Court) does not exclude the
presentation of other competent evidence to prove the existence of a foreign law. In that case,
the Supreme Court considered the testimony under oath of an attorney-at-law of San Francisco,
California, who quoted verbatim a section of California Civil Code and who stated that the same
was in force at the time the obligations were contracted, as sufficient evidence to establish the
existence of said law. Accordingly, in line with this view, the Supreme Court in the Collector of
Internal Revenue v. Fisher et al., upheld the Tax Court in considering the pertinent law of
California as proved by the respondents witness. In that case, the counsel for respondent
testified that as an active member of the California Bar since 1951, he is familiar with the
revenue and taxation laws of the State of California. When asked by the lower court to state the
pertinent California law as regards exemption of intangible personal properties, the witness

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cited Article 4, Sec. 13851 (a) & (b) of the California Internal and Revenue Code as published in
Derrings California Code, a publication of Bancroft-Whitney Co., Inc. And as part of his
testimony, a full quotation of the cited section was offered in evidence by
respondents. Likewise, in several naturalization cases, it was held by the Court that evidence of
the law of a foreign country on reciprocity regarding the acquisition of citizenship, although not
meeting the prescribed rule of practice, may be allowed and used as basis for favorable action,
if, in the light of all the circumstances, the Court is satisfied of the authenticity of the written
proof offered. Thus, in a number of decisions, mere authentication of the Chinese Naturalization
Law by the Chinese Consulate General of Manila was held to be competent proof of that law.
(Emphasis supplied)

The Bank, however, cannot rely on Willamette Iron and Steel Works v.
Muzzal or Collector of Internal Revenue v. Fisher to support its cause. These cases involved
attorneys testifying in open court during the trial in the Philippines and quoting the particular
foreign laws sought to be established. On the other hand, the Walden affidavit was taken
abroad ex parteand the affiant never testified in open court. The Walden affidavit cannot be
considered as proof of New York law on damages not only because it is self-serving but also
because it does not state the specific New York law on damages. We reproduce portions of the
Walden affidavit as follows:

3. In New York, [n]ominal damages are damages in name only, trivial sums such as six cents or
$1. Such damages are awarded both in tort and contract cases when the plaintiff establishes a
cause of action against the defendant, but is unable to prove actual damages. Dobbs, Law of
Remedies, 3.32 at 294 (1993). Since Guerrero is claiming for actual damages, he cannot ask for
nominal damages.

4. There is no concept of temperate damages in New York law. I have reviewed Dobbs, a well-
respected treatise, which does not use the phrase temperate damages in its index. I have also
done a computerized search for the phrase in all published New York cases, and have found no
cases that use it. I have never heard the phrase used in American law.

5. The Uniform Commercial Code (UCC) governs many aspects of a Banks relationship with its
depositors. In this case, it governs Guerreros claim arising out of the non-payment of the
$18,000 check.Guerrero claims that this was a wrongful dishonor. However, the UCC states that
justifiable refusal to pay or accept as opposed to dishonor, occurs when a bank refuses to pay a
check for reasons such as a missing indorsement, a missing or illegible signature or a forgery,
3-510, Official Comment 2. .. to the Complaint, MHT returned the check because it had no
signature card on . and could not verify Guerreros signature. In my opinion, consistent with the
UCC, that is a legitimate and justifiable reason not to pay.

6. Consequential damages are not available in the ordinary case of a justifiable refusal to
pay. UCC 1-106 provides that neither consequential or special or punitive damages may be had
except as specifically provided in the Act or by other rule of law. UCC 4-103 further provides
that consequential damages can be recovered only where there is bad faith. This is more
restrictive than the New York common law, which may allow consequential damages in a
breach of contract case (as does the UCC where there is a wrongful dishonor).

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7. Under New York law, requests for lost profits, damage to reputation and mental distress are
considered consequential damages. Kenford Co., Inc. v. Country of Erie, 73 N.Y.2d 312, 319,
540 N.Y.S.2d 1, 4-5 (1989) (lost profits); Motif Construction Corp. v. Buffalo Savings Bank, 50
A.D.2d 718, 374 N.Y.S..2d 868, 869-70 (4th Dept 1975) damage to reputation); Dobbs, Law of
Remedies 12.4(1) at 63 (emotional distress).

8. As a matter of New York law, a claim for emotional distress cannot be recovered for a breach
of contract. Geler v. National Westminster Bank U.S.A., 770 F. Supp. 210, 215 (S.D.N.Y.
1991); Pitcherello v. Moray Homes, Ltd., 150 A.D.2d 860,540 N.Y.S.2d 387, 390 (3d Dept
1989) Martin v. Donald Park Acres, 54 A.D.2d 975, 389 N.Y.S..2d 31, 32 (2nd Dept
1976). Damage to reputation is also not recoverable for a contract. Motif Construction Corp. v.
Buffalo Savings Bank, 374 N.Y.S.2d at 869-70.

9. In cases where the issue is the breach of a contract to purchase stock, New York courts will
not take into consideration the performance of the stock after the breach. Rather, damages will
be based on the value of the stock at the time of the breach, Aroneck v. Atkin, 90 A.D.2d 966,
456 N.Y.S.2d 558, 559 (4th Dept 1982), app. den. 59 N.Y.2d 601, 449 N.E.2d 1276, 463
N.Y.S.2d 1023 (1983).

10. Under New York law, a party can only get consequential damages if they were the type that
would naturally arise from the breach and if they were brought within the contemplation of
parties as the probable result of the breach at the time of or prior to contracting. Kenford Co.,
Inc. v. Country of Erie, 73 N.Y.2d 312, 319, 540 N.Y.S.2d 1, 3 (1989), (quoting Chapman v.
Fargo, 223 N.Y. 32, 36 (1918).

11. Under New York law, a plaintiff is not entitled to attorneys fees unless they are provided by
contract or statute. E.g., Geler v. National Westminster Bank, 770 F. Supp. 210, 213 (S.D.N.Y.
1991); Camatron Sewing Mach, Inc. v. F.M. Ring Assocs., Inc., 179 A.D.2d 165, 582 N.Y.S.2d
396 (1st Dept 1992); Stanisic v. Soho Landmark Assocs., 73 A.D.2d 268, 577 N.Y.S.2d 280, 281
(1st Dept 1991). There is no statute that permits attorneys fees in a case of this type.

12. Exemplary, or punitive damages are not allowed for a breach of contract, even where the
plaintiff claims the defendant acted with malice. Geler v. National Westminster Bank, 770
F.Supp. 210, 215 (S.D.N.Y. 1991); Catalogue Service of chester[11]_v. Insurance Co. of North
America, 74 A.D.2d 837, 838, 425 N.Y.S.2d 635, 637 (2d Dept 1980); Senior v. Manufacturers
Hanover Trust Co., 110 A.D.2d 833, 488 N.Y.S.2d 241, 242 (2d Dept 1985).

13. Exemplary or punitive damages may be recovered only where it is alleged and proven that
the wrong supposedly committed by defendant amounts to a fraud aimed at the public
generally and involves a high moral culpability. Walker v. Sheldon, 10 N.Y.2d 401, 179 N.E.2d
497, 223 N.Y.S.2d 488 (1961).

14. Furthermore, it has been consistently held under New York law that exemplary damages are
not available for a mere breach of contract for in such a case, as a matter of law, only a private
wrong and not a public right is involved. Thaler v. The North Insurance Company, 63 A.D.2d
921, 406 N.Y.S.2d 66 (1st Dept 1978).[12]

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 The Walden affidavit states conclusions from the affiants personal interpretation and opinion
of the facts of the case vis a vis the alleged laws and jurisprudence without citing any law in
particular. The citations in the Walden affidavit of various U.S. court decisions do not constitute
proof of the official records or decisions of the U.S. courts. While the Bank attached copies of
some of the U.S. court decisions cited in the Walden affidavit, these copies do not comply with
Section 24 of Rule 132 on proof of official records or decisions of foreign courts.
The Banks intention in presenting the Walden affidavit is to prove New York law and
jurisprudence. However, because of the failure to comply with Section 24 of Rule 132 on how to
prove a foreign law and decisions of foreign courts, the Walden affidavit did not prove the current
state of New York law and jurisprudence. Thus, the Bank has only alleged, but has not proved,
what New York law and jurisprudence are on the matters at issue.
Next, the Bank makes much of Guerreros failure to submit an opposing affidavit to the
Walden affidavit. However, the pertinent provision of Section 3, Rule 35 of the old Rules of Court
did not make the submission of an opposing affidavit mandatory, thus:

SEC. 3. Motion and proceedings thereon. The motion shall be served at least ten (10) days
before the time specified for the hearing. The adverse party prior to the day of hearing may
serve opposing affidavits. After the hearing, the judgment sought shall be rendered
forthwith if the pleadings, depositions and admissions on file, together with the affidavits, show
that, except as to the amount of damages, there is no genuine issue as to any material fact and
that the moving party is entitled to a judgment as a matter of law. (Emphasis supplied)

It is axiomatic that the term may as used in remedial law, is only permissive and not mandatory.[13]
Guerrero cannot be said to have admitted the averments in the Banks motion for partial
summary judgment and the Walden affidavit just because he failed to file an opposing
affidavit.Guerrero opposed the motion for partial summary judgment, although he did not present
an opposing affidavit. Guerrero may not have presented an opposing affidavit, as there was no
need for one, because the Walden affidavit did not establish what the Bank intended to
prove. Certainly, Guerrero did not admit, expressly or impliedly, the veracity of the statements in
the Walden affidavit. The Bank still had the burden of proving New York law and jurisprudence
even if Guerrero did not present an opposing affidavit. As the party moving for summary
judgment, the Bank has the burden of clearly demonstrating the absence of any genuine issue of
fact and that any doubt as to the existence of such issue is resolved against the movant.[14]
Moreover, it would have been redundant and pointless for Guerrero to submit an opposing
affidavit considering that what the Bank seeks to be opposed is the very subject matter of the
complaint. Guerrero need not file an opposing affidavit to the Walden affidavit because his
complaint itself controverts the matters set forth in the Banks motion and the Walden affidavit. A
party should not be made to deny matters already averred in his complaint.
There being substantial triable issues between the parties, the courts a quo correctly denied
the Banks motion for partial summary judgment. There is a need to determine by presentation
of evidence in a regular trial if the Bank is guilty of any wrongdoing and if it is liable for damages
under the applicable laws.
This case has been delayed long enough by the Banks resort to a motion for partial summary
judgment. Ironically, the Bank has successfully defeated the very purpose for which summary

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judgments were devised in our rules, which is, to aid parties in avoiding the expense and loss of
time involved in a trial.
WHEREFORE, the petition is DENIED for lack of merit. The Decision dated August 24, 1998
and the Resolution dated December 14, 1998 of the Court of Appeals in CA-G.R. SP No. 42310 is
AFFIRMED.
SO ORDERED.
Davide, Jr., C.J., (Chairman), Vitug and Azcuna, JJ., concur.
Ynares-Santiago, J., no part.

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 FIRST DIVISION

[G.R. No. 111985. June 30, 1994.]

INDUSTRIAL TIMBER CORP. and/or LORENZO TANGSOC, Petitioners, v. NATIONAL

LABOR RELATIONS COMMISSION, CONCORDIA DOS PUEBLOS and LOLITA
SANCHEZ, Respondents.

SYLLABUS

1. REMEDIAL LAW; CIVIL PROCEDURE; JUDGMENT; RULE AND EXCEPTION ON THE

MODIFICATION THEREOF AFTER ITS FINALITY. — It is true that after a judgment has become
final and executory, it can no longer be modified or otherwise disturbed. However, this principle
admits of exceptions, as where facts and circumstances transpire which render its execution
impossible or unjust and it therefore becomes necessary, "in the interest of justice, to direct its
modification in order to harmonize the disposition with the prevailing circumstances (Seavan
Carrier Inc. v. GTI Sportswear Corp., 137 SCRA 580) or whenever it is necessary to accomplish
the aims of justice (Pascual v. Tan, 85 Phil. 164; Central Textile Mills v. United Textile Workers
Union, 94 SCRA 883). In the case at bar, the modification of the judgment, rendered by the
Labor Arbiter on 4 May 1993, is warranted by the fact that the Bank had been placed under
liquidation thereby permanently foreclosing the possibility for the Bank to resume its business.
Reinstatement of Galindez, as Cashier, therefore was rendered inappropriate considering the
Bank’s eventual closure.

2. ID.; ID.; ID.; ID.; APPLIED TO CASE AT BAR. — Applying this exception to the case at bar,
we note with approval the following observations of the Solicitor General: It may be true that
the amount of backwages and other benefits due to the private respondents as recomputed, is
not in harmony with the literal import of the dispositive portion of the decision subject of
execution. However, sight must not be lost of the fact that at the time the recomputation was
made in 1992, five (5) years had already elapsed from the time the Labor Arbiter rendered his
Decision on February 26, 1987. Thus, a recomputation was necessary to arrive at a just and
proper determination of the monetary awards due the private respondents. Indeed, the back
wages and other benefits awarded by Arbiter Solamo to each of the private respondents in the
amount of P24,300.00 correspond merely to the period between their illegal dismissal on April
26, 1986, up to the time of the rendition of the decision on February 26, 1987. There is no
dispute that from April 26, 1986, to this date, the private respondents have not been reinstated
nor has payment of the monetary awards decreed by the NLRC been made them.

3. ID.; ID.; SERVICE OF PLEADINGS; RULE IF MADE BY ORDINARY MAIL OR BY PRIVATE

MESSENGERIAL SERVICE. — On the issue of the timeless of the petitioners’ motion for
reconsideration, we find that the NLRC correctly applied the rule that where a pleading is filed
by ordinary mail or by private messengerial service, it is deemed filed on the day it is actually
received by the court, not on the day it was mailed or delivered to the messengerial service. As
this Court held in Benguet Electric Cooperative, Inc. v. NLRC, (209 SCRA 55 [1992]): The
established rule is that the date of delivery of pleadings to a private letter-forwarding agency is
not to be considered as the date of filing thereof in court, and that in such cases, the date of

9|Page
actual receipt by the court, and not the date of delivery to the private carrier, is deemed the
date of filing of that pleading.

4. ID.; ID.; PLEADINGS; RULE IN THE FILING THEREOF IF LAST DAY FALLS ON A SATURDAY.
— The 10th day for filing the motion for reconsideration was June 26, 1993, which fell on a
Saturday. The last day for filing would have been the following business day, June 28, 1993,
which was a Monday. The petitioners’ counsel claims he was able to deliver the pleading to JRS-
Butuan on June 26, 1993, but the motion for reconsideration reached the Commission on June
29, 1993, or a day late.

DECISION

CRUZ, J.:

In the earlier case of Industrial Timber Corporation v. NLRC, G.R. No. 83616, 1 this Court
affirmed the finding of the NLRC that the petitioners are the employers of private respondents
and remanded the case for a determination of the validity of the quitclaim allegedly signed by
the latter.

In its resolution dated February 3, 1992, 2 the NLRC affirmed in toto the decision of Labor
Arbiter Amado M. Solamo on February 26, 1987, ordering the petitioners to reinstate the private
respondents (complainants therein) without loss of seniority rights and privileges, and to pay
them back wages, ECOLA, 13th month pay, holiday pay, vacation and sick leave pay in the
amount of P24,300 each, moral and exemplary damages of P10,000 each, and attorney’s fees
equivalent to 10% of the total award.

In view of the lapse of time since the promulgation of the decision, the NLRC likewise directed
the petitioners to pay the private respondents severance benefits equivalent to one month pay
for every year of service computed from the date of their employment up to the promulgation
of the resolution should reinstatement of the private respondents to their former position be no
longer possible. 3

This resolution became final and executory on March 9, 1992, and entry of judgment was made
on March 25, 1992.

The private respondents meanwhile had filed on March 20, 1992, an ex parte motion for
issuance of a writ of execution with manifestation that from February 26, 1987, up to the
present, they have not been reinstated and thus were entitled to back salaries for the said
period and until actual reinstatement shall have been made.chanrobles virtual lawlibrary

Executive Labor Arbiter Benjamin E. Pelaez thereupon directed the Fiscal Examiner of the
Arbitration Branch to compute the actual amount that the private respondents should receive.
In a report dated March 22, 1992, 4 Fiscal Examiner Renrico N. Pacamo found that each of
them was entitled to P175,964.84, representing three years back wages, ECOLA under Wage
Order No. 6, 13th month pay, legal holiday pay, vacation and sick leave pay and other

10 | P a g e
privileges under the collective bargaining agreement likewise for a period of three years. In
addition, the private respondents should also be awarded moral and exemplary damages of
P10,000 each and attorney’s fees equivalent to 10% of the total monetary award. In sum, the
petitioners were held liable to the private respondents for the total amount of P387,122.65.

Both the petitioners and the private respondents filed their respective objections to this
computation. Meanwhile, the Executive Labor Arbiter transferred the case to Labor Arbiter Leon
P. Murillo, who thereafter issued an order dated November 19, 1992, 5 concurring with the
computation of the Fiscal Examiner Pacamo.

The Commission, on appeal of the computation, only made a slight modification of the amount
of the award and directed the petitioners to pay the private respondents the sum of
P375,795.20. 6 The motion for reconsideration filed by the petitioners through JRS-Butuan, a
private letter-forwarding company, reached the NLRC a day late and was denied on August 31,
1993, mainly for tardiness. 7

In this petition now before us, the NLRC is faulted with grave abuse of discretion for merely
modifying the award of damages and denying the motion for reconsideration.chanrobles
virtualawlibrary chanrobles.com:chanrobles.com.ph

On the first issue, the petitioners submit that the NLRC decision of February 3, 1992, which
affirmed in toto the order of Arbiter Solamo and remanded the case for immediate execution
need not be recomputed because the monetary awards due the private respondents had
already been determined and fixed in the said order. It is argued that to allow the decision of
Arbiter Murillo to prevail and sizably increase the monetary award to the private respondents
would in effect allow an arbiter to change a decision of the Commission that has become final
and executory. Arbiter Murillo’s duty, it is stressed, is limited to the ministerial act of executing
the NLRC decision.

We disagree.

It is true that after a judgment has become final and executory, it can no longer be modified or
otherwise disturbed. However, this principle admits of exceptions, as where facts and
circumstances transpire which render its execution impossible or unjust and it therefore
becomes necessary, "in the interest of justice, to direct its modification in order to harmonize
the disposition with the prevailing circumstances." 8

The general rule is indeed, that once a judgment becomes final and executory, said judgment
can no longer be disturbed, altered or modified. That principle, however, admits of exceptions
as in cases where, because of supervening events, it becomes imperative, in the higher interest
of justice, to direct its modification in order to harmonize the disposition with the prevailing
circumstances (Seavan Carrier Inc. v. GTI Sportswear Corp., 137 SCRA 580) or whenever it is
necessary to accomplish the aims of justice (Pascual v. Tan, 85 Phil 164; Central Textile Mills v.
United Textile Workers Union, 94 SCRA 883). In the case at bar, the modification of the
judgment, rendered by the Labor Arbiter on 4 May 1993, is warranted by the fact that the Bank
had been placed under liquidation thereby permanently foreclosing the possibility for the Bank
to resume its business. Reinstatement of Galindez, as Cashier, therefore was rendered
inappropriate considering the Bank’s eventual closure. (Emphasis supplied). 9

11 | P a g e
Applying this exception to the case at bar, we note with approval the following observations of
the Solicitor General: 10

It may be true that the amount of backwages and other benefits due to the private respondents
as recomputed, is not in harmony with the literal import of the dispositive portion of the
decision subject of execution. However, sight must not be lost of the fact that at the time the
recomputation was made in 1992, five (5) years had already elapsed from the time the Labor
Arbiter rendered his Decision on February 26, 1987. Thus, a recomputation was necessary to
arrive at a just and proper determination of the monetary awards due the private respondents.

Indeed, the back wages and other benefits awarded by Arbiter Solamo to each of the private
respondents in the amount of P24,300.00 correspond merely to the period between their illegal
dismissal on April 26, 1986, up to the time of the rendition of the decision on February 26,
1987. There is no dispute that from April 26, 1986, to this date, the private respondents have
not been reinstated nor has payment of the monetary awards decreed by the NLRC been made
them.chanroblesvirtualawlibrary

A similar action was taken in the recent case of Sampaguita Garments Corporation v. NLRC, 11
where this Court upheld the nullification of a decision of the NLRC ordering the reinstatement of
an employee after her conviction of the same offense of which she was absolved in the
administrative case.

On the issue of the timeless of the petitioners’ motion for reconsideration, we find that the
NLRC correctly applied the rule that where a pleading is filed by ordinary mail or by private
messengerial service, it is deemed filed on the day it is actually received by the court, not on
the day it was mailed or delivered to the messengerial service.

As this Court held in Benguet Electric Cooperative, Inc. v. NLRC: 12

The established rule is that the date of delivery of pleadings to a private letter-forwarding
agency is not to be considered as the date of filing thereof in court, and that in such cases, the
date of actual receipt by the court, and not the date of delivery to the private carrier, is deemed
the date of filing of that pleading.

The 10th day for filing the motion for reconsideration was June 26, 1993, which fell on a
Saturday. The last day for filing would have been the following business day, June 28, 1993,
which was a Monday. The petitioners’ counsel claims he was able to deliver the pleading to JRS-
Butuan on June 26, 1993, but the motion for reconsideration reached the Commission on June
29, 1993, or a day late.chanroblesvirtualawlibrary

At any rate, the respondent Commission noted that the motion contained no substantial matters
to warrant the reconsideration sought and could have been denied just the same on that
ground.

WHEREFORE, the petition is DISMISSED. The resolutions of the respondent NLRC dated May
31, 1993, and August 31, 1993, are AFFIRMED, with costs against the petitioners. It is so
ordered.

12 | P a g e
 Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. 70895 May 30, 1986

HABALUYAS ENTERPRISES, INC. and PEDRO HABALUYAS, petitioners,

vs.
JUDGE MAXIMO M. JAPSON, Manila Regional Trial Court, Branch 36; SHUGO NODA &
CO., LTD., and SHUYA NODA, respondents.

Norberto J. Quisumbing for respondents.

RESOLUTION

FERIA, J.:

Respondents have filed a motion for reconsideration of the Decision of the Second Division of
the Court promulgated on August 5, 1985 which granted the petition for certiorari and
prohibition and set aside the order of respondent Judge granting private respondents' motion
for new trial.

The issue in this case is whether the fifteen-day period within which a party may file a motion
for reconsideration of a final order or ruling of the Regional Trial Court may be extended.

Section 39 of The Judiciary Reorganization Act, Batas Pambansa Blg. 129, reduced the period
for appeal from final orders or judgments of the Regional Trial Courts (formerly Courts of First
Instance) from thirty (30) to fifteen (15) days and provides a uniform period of fifteen days for
appeal from final orders, resolutions, awards, judgments, or decisions of any court counted
from notice thereof, except in habeas corpus cases where the period for appeal remains at
forty- eight (48) hours. To expedite appeals, only a notice of appeal is required and a record on
appeal is no longer required except in appeals in special proceedings under Rule 109 of the
Rules of Court and in other cases wherein multiple appeals are allowed. Section 19 of the
Interim Rules provides that in these exceptional cases, the period for appeal is thirty (30) days
since a record on appeal is required. Moreover Section 18 of the Interim Rules provides that no
appeal bond shall be required for an appeal, and Section 4 thereof disallows a second motion
for reconsideration of a final order or judgment.

All these amendments are designed, as the decision sought to be reconsidered rightly states, to
avoid the procedural delays which plagued the administration of justice under the Rules of
Court which are intended to assist the parties in obtaining a just, speedy and inexpensive
administration of justice.

However, the law and the Rules of Court do not expressly prohibit the filing of a motion for
extension of time to file a motion for reconsideration of a final order or judgment.

13 | P a g e
In the case of Gibbs vs. Court, of First Instance (80 Phil. 160), the Court dismissed the petition
for certiorari and ruled that the failure of defendant's attorney to file the petition to set aside
the judgment within the reglementary period was due to excusable neglect, and, consequently,
the record on appeal was allowed. The Court did not rule that the motion for extension of time
to file a motion for new trial or reconsideration could not be granted.

In the case of Roque vs. Gunigundo (Administrative Case No. 1684, March 30, 1979, 89 SCRA
178), a division of the Court cited the Gibbs decision to support a statement that a motion to
extend the reglementary period for filing the motion for reconsideration is not authorized or is
not in order.

The Intermediate Appellate Court is sharply divided on this issue. Appeals have been dismissed
on the basis of the original decision in this case.

After considering the able arguments of counsels for petitioners and respondents, the Court
resolved that the interest of justice would be better served if the ruling in the original decision
were applied prospectively from the time herein stated. The reason is that it would be unfair to
deprive parties of their right to appeal simply because they availed themselves of a procedure
which was not expressly prohibited or allowed by the law or the Rules. On the other hand, a
motion for new trial or reconsideration is not a pre-requisite to an appeal, a petition for review
or a petition for review on certiorari, and since the purpose of the amendments above referred
to is to expedite the final disposition of cases, a strict but prospective application of the said
ruling is in order. Hence, for the guidance of Bench and Bar, the Court restates and clarifies the
rules on this point, as follows:

1.) Beginning one month after the promulgation of this Resolution, the rule shall be strictly
enforced that no motion for extension of time to file a motion for new trial or
reconsideration may be filed with the Metropolitan or Municipal Trial Courts, the Regional Trial
Courts, and the Intermediate Appellate Court. Such a motion may be filed only in cases pending
with the Supreme Court as the court of last resort, which may in its sound discretion either
grant or deny the extension requested.

2.) In appeals in special proceedings under Rule 109 of the Rules of Court and in other cases
wherein multiple appeals are allowed, a motion for extension of time to file the record on
appeal may be filed within the reglementary period of thirty (30) days. (Moya vs. Barton, 76
Phil. 831; Heirs of Nantes vs. Court of Appeals, July 25, 1983, 123 SCRA 753.) If the court
denies the motion for extension, the appeal must be taken within the original period (Bello vs.
Fernando, January 30, 1962, 4 SCRA 135), inasmuch as such a motion does not suspend the
period for appeal (Reyes vs. Sta. Maria, November 20, 1972, 48 SCRA 1). The trial court may
grant said motion after the expiration of the period for appeal provided it was filed within the
original period. (Valero vs. Court of Appeals, June 28, 1973, 51 SCRA 467; Berkenkotter vs.
Court of Appeals, September 28, 1973, 53 SCRA 228).

All appeals heretofore timely taken, after extensions of time were granted for the filing of a motion for
new trial or reconsideration, shall be allowed and determined on the merits.

WHEREFORE, the motion for reconsideration of, and to set aside, the decision of August 5, 1985 is
granted and the petition is dismissed. No costs. SO ORDEred.

14 | P a g e
 THIRD DIVISION

ALBINO JOSEF, G.R. No. 165060

Petitioner,
Present:
Ynares-Santiago, J. (Chairperson),
- versus - Austria-Martinez,
Tinga,*
Chico-Nazario, and
Nachura, JJ.
OTELIO SANTOS,
Respondent. Promulgated:
November 27, 2008
x ---------------------------------------------------------------------x

DECISION

YNARES-SANTIAGO, J.:

This petition for review on certiorari under Rule 45 of the Rules of Court assails the
November 17, 2003[1] Resolution of the Court of Appeals in CA-G.R. SP No. 80315, dismissing
petitioners special civil action of certiorari for failure to file a prior motion for reconsideration, and
the May 7, 2004[2] Resolution denying the motion for reconsideration.

Petitioner Albino Josef was the defendant in Civil Case No. 95-110-MK, which is a case for
collection of sum of money filed by herein respondent Otelio Santos, who claimed that petitioner
failed to pay the shoe materials which he bought on credit from respondent on various dates in
1994.

After trial, the Regional Trial Court of Marikina City, Branch 272, found petitioner liable to
respondent in the amount of P404,836.50 with interest at 12% per annum reckoned from January
9, 1995 until full payment.[3]

Petitioner appealed[4] to the Court of Appeals, which affirmed the trial courts decision in
toto. Petitioner filed before this Court a petition for review on certiorari, but it was dismissed in
[5]

a Resolution dated February 18, 2002.[6] The Judgment became final and executory on May 21,
2002.

On February 17, 2003, respondent moved for issuance of a writ of execution,[7] which was
opposed by petitioner.[8] In an Order dated July 16, 2003,[9] the trial court granted the motion,
the dispositive portion of which reads, as follows:

15 | P a g e
 WHEREFORE, premises considered, the motion for issuance of writ of
execution is hereby granted. Let a writ of execution be issued commanding the
Sheriff of this Court to execute the decision dated December 18, 1996.

SO ORDERED.[10]

A writ of execution was issued on August 20, 2003[11] and enforced on August 21,
2003. On August 29, 2003, certain personal properties subject of the writ of execution were
auctioned off. Thereafter, a real property located at Marikina City and covered by Transfer
Certificate of Title (TCT) No. N-105280 was sold on October 28, 2003 by way of public auction to
fully satisfy the judgment credit. Respondent emerged as the winning bidder and a Certificate of
Sale[12] dated November 6, 2003 was issued in his favor.

On November 5, 2003, petitioner filed an original petition for certiorari with the Court of
Appeals, questioning the sheriffs levy and sale of the abovementioned personal and real
properties. Petitioner claimed that the personal properties did not belong to him but to his
children; and that the real property covered by TCT No. N-105280 was his family home thus
exempt from execution.

On November 17, 2003, the Court of Appeals issued the assailed Resolution dismissing
the petition for failure of petitioner to file a motion for reconsideration of the trial courts July 16,
2003 Order granting the motion for execution and ordering the issuance of a writ therefor, as
well as for his failure to indicate in his petition the timeliness of its filing as required under the
Rules of Court. On May 7, 2004, the appellate court denied petitioners motion for reconsideration.

Thus, the instant petition which raises the following issues:

I.
WHETHER OR NOT THE LEVY AND SALE OF THE PERSONAL BELONGINGS OF THE
PETITIONERS CHILDREN AS WELL AS THE ATTACHMENT AND SALE ON PUBLIC
AUCTION OF HIS FAMILY HOME TO SATISFY THE JUDGMENT AWARD IN FAVOR
OF RESPONDENT IS LEGAL.

II.
WHETHER OR NOT THE DISMISSAL OF THE PETITIONERS PETITION FOR
CERTIORARI BY THE HONORABLE COURT OF APPEALS IS JUSTIFIED UNDER THE
CIRCUMSTANCES.

Petitioner argues that the trial court sheriff erroneously attached, levied and sold on
execution the real property covered by TCT No. N-105280 because the same is his family home;
that the execution sale was irregular because it was conducted without complying with the notice
and posting of requirements; and that the personal and real properties were sold for inadequate

16 | P a g e
prices as to shock the conscience. The real property was allegedly worth P8 million but was sold
for only P848,448.64.

Petitioner also argues that the appellate court gravely abused its discretion in dismissing
the petition based purely on technical grounds, i.e., his failure to file a motion for reconsideration
of the trial courts order granting execution, and his failure to indicate in his petition for certiorari
the timeliness of filing the same with the Court of Appeals.

Respondent, on the other hand, argues that petitioners alleged family home has not been
shown to have been judicially or extrajudicially constituted, obviously referring to the provisions
on family home of the Civil Code not those of the Family Code which should apply in this case;
that petitioner has not shown to the courts satisfaction that the personal properties executed
upon and sold belonged to his children. Respondent argues that he is entitled to satisfaction of
judgment considering the length of time it took for the parties to litigate and the various remedies
petitioner availed of which have delayed the case.

The petition is meritorious.

Petitioner, in his opposition to respondents motion for issuance of a writ of execution,

claimed that he was insolvent; that he had no property to answer for the judgment credit; that
the house and lot in which he was residing at the time was his family home thus exempt from
execution; that the household furniture and appliances found therein are likewise exempt from
execution; and that these furniture and appliances belonged to his children Jasmin Josef and Jean
Josef Isidro. Thus, as early as during proceedings prior to the issuance of the writ of execution,
petitioner brought to the fore the issue of exemption from execution of his home, which he
claimed to be a family home in contemplation of the civil law.

However, instead of inquiring into the nature of petitioners allegations in his opposition,
the trial court ignored the same and granted respondents motion for execution. The full text of
the July 16, 2003 Order provides, as follows:

This resolves the Motion for the Issuance of Writ of Execution filed by
plaintiff thru counsel and the Opposition thereto filed by the defendant on her own
behalf.

The records show that a decision was rendered by this Court in favor of
the plaintiff on December 18, 1995 which decision was affirmed by the Court of
Appeals on June 26, 2001 and by the Supreme Court on February 18, 2002.
On June 18, 2003, this Court received the entire records of the case from the Court
of Appeals.

Considering the foregoing, it is now the ministerial duty of the Court to

issue a writ of execution pursuant to Sec. 1, Rule 39 of the Rules of Court.

17 | P a g e
 WHEREFORE, premises considered, the motion for issuance of writ of
execution is hereby granted. Let a writ of execution be issued commanding the
Sheriff of this Court to execute the decision dated December 18, 1996.

SO ORDERED.[13]

The above Order did not resolve nor take into account petitioners allegations in his
Opposition, which are material and relevant in the resolution of the motion for issuance of a writ
of execution. This is serious error on the part of the trial court. It should have made an earnest
determination of the truth to petitioners claim that the house and lot in which he and his children
resided was their duly constituted family home. Since it did not, its July 16, 2003 Order is thus
null and void. Where a judgment or judicial order is void it may be said to be a lawless thing,
which can be treated as an outlaw and slain at sight, or ignored wherever and whenever it exhibits
its head.[14]

The family home is a real right which is gratuitous, inalienable and free from attachment,
constituted over the dwelling place and the land on which it is situated, which confers upon a
particular family the right to enjoy such properties, which must remain with the person
constituting it and his heirs. It cannot be seized by creditors except in certain special cases.[15]

Upon being apprised that the property subject of execution allegedly constitutes
petitioners family home, the trial court should have observed the following procedure:

1. Determine if petitioners obligation to respondent falls under either of the

exceptions under Article 155[16] of the Family Code;

2. Make an inquiry into the veracity of petitioners claim that the property
was his family home;[17] conduct an ocular inspection of the premises; an
examination of the title; an interview of members of the community where the
alleged family home is located, in order to determine if petitioner actually resided
within the premises of the claimed family home; order a submission of
photographs of the premises, depositions, and/or affidavits of proper
individuals/parties; or a solemn examination of the petitioner, his children and
other witnesses. At the same time, the respondent is given the opportunity to
cross-examine and present evidence to the contrary;

3. If the property is accordingly found to constitute petitioners family

home, the court should determine:

a) if the obligation sued upon was contracted or incurred prior to,

or after, the effectivity of the Family Code;[18]

b) if petitioners spouse is still alive, as well as if there are other

beneficiaries of the family home;[19]

18 | P a g e
 c) if the petitioner has more than one residence for the purpose of
determining which of them, if any, is his family home;[20] and

d) its actual location and value, for the purpose of applying the
provisions of Articles 157[21] and 160[22] of the Family Code.

The family home is the dwelling place of a person and his family, a sacred symbol of family
love and repository of cherished memories that last during ones lifetime.[23] It is the sanctuary of
that union which the law declares and protects as a sacred institution; and likewise a shelter for
the fruits of that union. It is where both can seek refuge and strengthen the tie that binds them
together and which ultimately forms the moral fabric of our nation. The protection of the family
home is just as necessary in the preservation of the family as a basic social institution, and since
no custom, practice or agreement destructive of the family shall be recognized or given
effect,[24] the trial courts failure to observe the proper procedures to determine the veracity of
petitioners allegations, is unjustified.

The same is true with respect to personal properties levied upon and sold at
auction. Despite petitioners allegations in his Opposition, the trial court did not make an effort to
determine the nature of the same, whether the items were exempt from execution or not, or
whether they belonged to petitioner or to someone else.[25]

Respondent moved for issuance of a writ of execution on February 17, 2003 while
petitioner filed his opposition on June 23, 2003. The trial court granted the motion on July 16,
2003, and the writ of execution was issued on August 20, 2003. Clearly, the trial court had enough
time to conduct the crucial inquiry that would have spared petitioner the trouble of having to seek
relief all the way to this Court. Indeed, the trial courts inaction on petitioners plea resulted in
serious injustice to the latter, not to mention that its failure to conduct an inquiry based on the
latters claim bordered on gross ignorance of the law.

Being void, the July 16, 2003 Order could not have conferred any right to respondent. Any
writ of execution based on it is likewise void. Although we have held in several cases[26] that a
claim for exemption from execution of the family home should be set up and proved before the
sale of the property at public auction, and failure to do so would estop the party from later
claiming the exemption since the right of exemption is a personal privilege granted to the
judgment debtor which must be claimed by the judgment debtor himself at the time of the levy
or within a reasonable period thereafter, the circumstances of the instant case are
different. Petitioner claimed exemption from execution of his family home soon after respondent
filed the motion for issuance of a writ of execution, thus giving notice to the trial court and
respondent that a property exempt from execution may be in danger of being subjected to levy
and sale. Thereupon, the trial court is called to observe the procedure as herein laid out; on the
other hand, the respondent should observe the procedure prescribed in Article 160 of the Family
Code, that is, to obtain an order for the sale on execution of the petitioners family home, if so,
and apply the proceeds less the maximum amount allowed by law under Article 157 of the Code

19 | P a g e
which should remain with the petitioner for the rebuilding of his family home to his judgment
credit. Instead, both the trial court and respondent completely ignored petitioners argument that
the properties subject of the writ are exempt from execution.

Indeed, petitioners resort to the special civil action of certiorari in the Court of Appeals
was belated and without benefit of the requisite motion for reconsideration, however, considering
the gravity of the issue, involving as it does matters that strike at the very heart of that basic
social institution which the State has a constitutional and moral duty to preserve and protect, as
well as petitioners constitutional right to abode, all procedural infirmities occasioned upon this
case must take a back seat to the substantive questions which deserve to be answered in full.

WHEREFORE, the Petition for Review on Certiorari is GRANTED. The November 17,
2003 and May 7, 2004 Resolutions of the Court of Appeals in CA-G.R. SP No. 80315
are REVERSED and SET ASIDE. The July 16, 2003 Order of
the Regional Trial Court of Marikina City, Branch 272 in Civil Case No. 95-110-MK, as well as the
writ or writs of execution thus issued in said case, are hereby DECLARED VOID, and all acts
proceeding therefrom and any title obtained by virtue thereof are likewiseDECLARED VOID.

The trial court is hereby DIRECTED (1) to conduct a solemn inquiry into the nature of
the real property covered by Transfer Certificate of Title No. N-105280, with a view toward
determining whether the same is petitioner Albino Josefs family home, and if so, apply the
pertinent provisions of the Family Code and Rule 39 of the Rules of Court; and (2) to conduct an
inquiry into the ownership of all other properties that were levied upon and sold, with the aim of
determining as well whether these properties are exempt from execution under existing law.

Respondent Otelio Santos is hereby DIRECTED to hold the abovementioned real and
personal properties, or the proceeds thereof, in trust to await the outcome of the trial courts
inquiry.

Finally, the trial court is DIRECTED to resolve, with utmost dispatch, Civil Case No. 95-
110-MK within sixty (60) days from receipt of a copy of this Decision.

SO ORDERED.

20 | P a g e
 SECOND DIVISION

[G.R. No. 162100 : January 18, 2012]

PENTA CAPITAL FINANCE CORPORATION, PETITIONER, VS. THE HONORABLE

TEODORO BAY, PRESIDING JUDGE OF THE REGIONAL TRIAL COURT, QUEZON CITY,
BRANCH 86; ANGELITO ACOSTA, DEPUTY SHERIFF OF RTC QC BRANCH 86; BIBIANO
REYNOSO IV, AND COMMERCIAL CREDIT CORPORATION OF QUEZON CITY,
RESPONDENTS.

[G.R. NO. 162395]

BIBIANO REYNOSO IV, PETITIONER, PENTA CAPITAL FINANCE CORPORATION,

RESPONDENT.

DECISION

SERENO, J.:

Before us is a consolidated Petition for Review on Certiorari under Rule 45 impugning the
Decision dated 30 July 2003 and Resolution dated 9 February 2004 of the Court of
Appeals,[1] which modified the interests applied by the trial court in computing the judgment
awards; but affirmed the Orders dated 3 and 19 April, 23 May, 2 August, and 3 October 2002
issued by the trial court in the course of execution proceedings.cralaw

Penta Capital Finance Corporation (Penta) was originally known as Commercial Credit
Corporation (CCC), a financing and investment firm, which established in different parts of the
country certain franchise companies, including Commercial Credit Corporation of Quezon City
(CCC-QC). CCC designated its own employees as resident managers of its franchise companies,
with Bibiano Reynoso IV (Reynoso) as resident manager of CCC-QC.

CCC-QC accepts funds from depositors to whom it issues interest-bearing promissory notes. In
view of the exclusive management contract between CCC and CCC-QC, the latter would
sell/discount and/or assign its receivables to the former, which loans them out to various
borrowers as money market placements.[2]

In view of the Central Bank’s promulgation of the DOSRI Rule,[3] CCC subsequently created CCC
Equity Corporation (CCC Equity), a wholly owned subsidiary, to which it had transferred its 30%
equity and two seats in the franchise corporations’ board of directors. In February 1976, CCC
allegedly transferred to its stockholders all its shares in CCC Equity as property dividends.

Under the new setup, CCC Equity substituted CCC in the management contract with the
franchise companies. Several CCC-QC officials, like Reynoso, became employees of CCC Equity
and received salaries and allowances from the latter. Still, all employees of CCC-QC remained
qualified members of the Commercial Credit Corporation Employees Pension Plan, even when
CCC-QC was already partly owned by CCC Equity and technically had nothing to do with CCC.

21 | P a g e
Reynoso deposited personal funds to CCC-QC, which in return issued to him interest-bearing
Promissory Notes.[4]

In a separate transaction, Reynoso mortgaged to CCC his house and lot in Valle Verde, Pasig
City.[5] The latter later foreclosed the property, and the title thereto was later consolidated in its
name when no redemption was made.

On 15 August 1980, CCC-QC instituted with the Regional Trial Court of Quezon City, Branch
86[6] (RTC QC), a Complaint[7] against Reynoso for a sum of money with preliminary
attachment, on the allegation that he had embezzled company funds amounting to
P1,300,593.11. Reynoso filed a Counterclaim[8]based on his money placements with CCC-QC, as
shown by 23 checks he had issued in its favor.

During the pendency of the case, or on 2 September 1983, CCC changed its name to General
Credit Corporation (GCC).

On 14 January 1985, the RTC QC – then presided by Judge Antonio Solano – rendered a
Decision[9]dismissing CCC-QC’s Complaint, but granting Reynoso’s Counterclaim. The dispositive
portion of the Decision reads:

Premises considered, the court finds the complaint without merit. Accordingly, said complaint is
hereby DISMISSED.

By reason of said complaint, defendant Bibiano Reynoso IV suffered degradation, humiliation

and mental anguish.

On the counterclaim, which the Court finds to be meritorious, plaintiff corporation is hereby
ordered:

a) to pay defendant the sum of P185,000.00 plus 14% interest per annum from October 2,
1980 until fully paid;

b) to pay defendant P3,639,470.82 plus interest thereon at the rate of 14% per annum from
June 24, 1981, the date of filing of Amended Answer, until fully paid; from this amount may be
deducted the remaining obligation of defendant under the promissory note of October 24, 1977,
in the sum of P9,738.00 plus penalty at the rate of 1% per month from December 24, 1977
until fully paid;

c) to pay defendants P200,000.00 as moral damages;

d) to pay defendants P100,000.00 as exemplary damages;

e) to pay defendants ?25,000.00 as and for attorney's fees; plus costs of the suit.

SO ORDERED.

This Decision became final and executory on 27 May 1989.[10]

22 | P a g e
On 24 July 1989, the RTC QC issued a Writ of Execution on the “goods and chattels of plaintiff
COMMERCIAL CREDIT CORPORATION.”[11] When the writ was returned unsatisfied on 11
December 1989, Reynoso filed a Motion for Issuance of Alias Writ of Execution and, thereafter,
a Motion for examination of the financial records of CCC-QC. In the course of opposing his
Motion, CCC-QC President Dr. Concepcion vda. de Blaylock (Blaylock) alleged that the company
had not been operating for about 10 years, and that “the Commercial Credit Corporation of the
Philippines took possession of the premises of the office of CCC-QC, together with all its records
and documents. ...”[12]

On 16 August 1991, the RTC QC again ordered the issuance of the alias writ against “the goods
and chattels of plaintiff COMMERCIAL CREDIT CORPORATION.”

There being no leviable properties of CCC-QC, Sheriff Edgardo Tanangco reported that on 23
August 1991, he “levied whatever rights, interests, titles, participation said plaintiff may have”
over the Valle Verde property, which was registered in the name of “Commercial Credit
Corporation.” The said property was sold on execution on 20 September 1991 by Deputy Sheriff
Edgardo Tanangco at public auction, with Reynoso as the highest and sole bidder in the amount
of P650,151.50. This amount was credited as partial satisfaction of the judgment
obligation.[13] Meanwhile, the Notice of Sheriff’s Sale was sent to “General Credit Corporation
(Formerly Commercial Credit Corporation, ACE Bldg., RADA corner dela Rosa Sts., Makati, Metro
Manila” on 2 October 1991, but this notice was returned with the notation “RTS UNKNOWN AT
GIVEN ADDRESS 10-9.”

On 29 October 1991, Deputy Sheriff Tanangco issued a Sheriff's Certification of Sale of the
levied property.

On 11 November 1991, Reynoso filed a second Alias Writ of Execution, arguing that CCC-QC
and CCC were one and the same, and praying that the sheriff be directed to levy upon CCC’s
personal and real properties. Attached to the Motion was the 23 February 1990 Decision of
Hearing Officer Antonio Esteves in Securities and Exchange Commission (SEC) Case No. 2581,
entitled “Avelina G. Ramoso, et al. v. General Credit Corporation et al.,” which held that CCC
(then known as GCC) and CCC-QC, together with others, were one and the same
corporation.[14]

On 22 November 1991, CCC’s counsel appeared before the RTC QC and was granted time to file
a comment on the Alias Writ of Execution.[15] In its Special Appearance and Opposition,[16] CCC
alleged that it was not a party to the case, and that the cited Decision in SEC Case No. 2581
was still pending resolution of the SEC en banc. CCC also moved that further levies on its other
properties be stopped. On 9 December 1991, the RTC QC ordered the issuance of the second
alias writ.[17] On 18 December 1991, CCC filed an Omnibus Motion 1) to reconsider the Order of
9 December 1991; 2) to quash the alias writ of 21 August 1991; and 3) to nullify the sale of its
Valle Verde property.[18] Attached to this Motion was a copy of a SEC Certification that SEC Case
No. 2581 was still pending. This Omnibus Motion was denied by the RTC QC in its 13 February
1992 Order due to the admission by CCC in the latter’s pleading that it was an alter ego of CCC-
QC.[19]

To recover its Valle Verde property, CCC filed with the Regional Trial Court of Pasig City, Branch
167 (RTC Pasig),[20] on 21 February 1992, an action for terceria (third-party claim) against

23 | P a g e
Reynoso and Quezon City Deputy Sheriff Edgardo Tanangco. CCC prayed that (1) the levy on
the Valle Verde property be declared void; (2) respondents be enjoined from consolidating
ownership over the property pending resolution of the suit; and (3) respondents be enjoined
from making further levies on petitioner's properties to answer for any liability under the
Decision in Civil Case No. Q-30583.

The RTC Pasig denied the prayer for injunction of CCC, prompting the latter to file on 13 March
1992 a Petition for Certiorari with prayer for preliminary injunction and/or temporary restraining
order. Docketed in the Court of Appeals (CA) as CA-G.R. SP No. 27518, the Petition was filed
against Reynoso, Deputy Sheriff Tanangco, and Judge Flores of RTC Pasig (and also,
subsequently, against Judge Solano of RTC QC).

Meanwhile, noting that the records failed to show that CCC had taken a legal step to suspend
the implementation of its Order dated 9 December 1991, the RTC QC issued another Alias Writ
of Execution against the goods and chattels of petitioner GCC on 6 March 1992.[21]

On 6 April 1992, the RTC QC’s issuance of the second Alias Writ of Execution was impugned by
the CCC in the CA via a Petition for Certiorari with prayer for preliminary injunction and/or
temporary restraining order, docketed as CA-G.R. SP No. 27683. RTC QC Judge Solano,
Reynoso and Deputy Sheriff Tanangco were named respondents therein.

Meanwhile, CCC/GCC changed its name to Penta Capital Finance Corporation (Penta) on 1
December 1993.

The CA consolidated CA-G.R. SP Nos. 27683 and 27518. On 7 July 1994, it granted the Petition,
nullified the Alias Writ of Execution, and declared that the proper remedy for the Valle Verde
property was the terceria filed with the Pasig court.[22]

Reynoso questioned this CA Decision via a Petition for Review before the Supreme Court (SC),
docketed as G.R. No. 116124-25 and entitled “Reynoso v. Court of Appeals.” On 22 November
2000, this Court issued a Decision23 overturning that of the CA. CCC filed a Motion for
Reconsideration, but it was denied by this Court on 6 August 2001.

On 21 December 2001, CCC registered with the Sheriff of Quezon City a third-party claim (with
an Affidavit of Third-Party Claim executed by petitioner's president, Jovencio Cinco) on its Valle
Verde property; two condominium units under Condominium Certificates of Title Nos. 5462 and
5463; bank deposits; and various office equipment, all subjects of the Notice of Garnishment
and Notice of Levy upon personal properties. CCC stated that it was exercising its right of
redemption ad cautelam over the Valle Verde property. It remitted to the sheriff Metrobank
Cashier's Check No. 2610004069 in the amount of P703,987.36, inclusive of interest amounting
to P53,095.71.

On 12 March 2002, CCC filed with the RTC QC a Motion to Quash the Alias Writ of Execution on
its Valle Verde property and the Alias Writ of Execution dated 6 March 1992 pertaining to its
two condominium units on the 10th floor of the ACT Tower Condominium.

Judge Teodoro Bay, who took over from Judge Solano upon the latter’s retirement as presiding
judge of the RTC QC, denied the Motion to Quash the Writ of Execution in the Order dated 3

24 | P a g e
April 2002. Judge Bay reasoned that, as finally decided by the SC in Reynoso v. Court of
Appeals, CCC-QC, CCC, and GCC were one and the same corporation.

In an Order dated 19 April 2002, the RTC QC directed the issuance of another Alias Writ of
Execution to implement its 1985 Decision in response to Reynoso’s Ex Parte Motion to Issue an
Alias Writ of Execution on the ground that while the ruling in CA-G.R. SP No. 27518 had
previously enjoined the sheriff from levying on the properties of CCC and selling them on
execution, the SC had already overturned the said CA ruling.

The Alias Writ of Execution was then issued, commanding Sheriff Angelito Acosta (who had
taken the place of deceased Deputy Sheriff Edgardo Tanangco) to execute on the “goods and
chattels of Commercial Credit Corporation of Quezon City/General Credit Corporation/Penta
Capital Finance Corporation.”

On 29 April 2002, CCC filed an Urgent Consolidated Motion praying that 1) the execution be
quashed; 2) the sheriff be required to file a monthly report in accordance with Section 14, Rule
39 of the Rules of Court; and 3) the RTC QC declare itself without jurisdiction to resolve with
finality the issue of piercing the corporate veil, since the issue was within the jurisdiction of the
RTC Pasig City in Civil Case No. 61777 (92).

In an Order dated 23 May 2002, the RTC QC denied CCC’s Consolidated Motion and required
the parties to submit their own computation of the amount of execution. Reynoso filed his
Compliance; CCC filed a Compliance Ad Cautelam and, the next day, a Motion to resolve/clarify
in the interest of substantial justice. The Motion of CCC sought to reopen discussions on the
matter of piercing its corporate veil of fiction.

In its Order dated 2 August 2002, the RTC QC denied CCC's Motion to resolve/clarify,
reiterating that the issue had already been resolved with finality by the SC.

In its Order dated 9 August 2002, the RTC QC issued an Order determining that the sum of
P71,768,227.35[24] minus the outstanding obligation of Reynoso to CCC was the proper
computation of the award in his favor. In its Order dated 3 October 2002, the RTC QC
reiterated its 9 August 2002 Order.

On 8 October 2002, CCC filed with the CA another Petition for Certiorari and Prohibition,
docketed as CA-G.R. SP No. 73207 and entitled “Penta Capital Finance Corporation v. Judge
Teodoro Bay, et al.,” to nullify the RTC QC Orders dated 3 and 19 April, 23 May, 2 and 9 August
and 3 October 2002 as well as the Alias Writ of Execution dated 23 April 2002 and Notice of
Sheriff's Sale dated 17 May 2002.

In its Decision dated 30 July 2003,[25] the CA declared as excessive the interests fixed by
the RTC QC. It held that Reynoso was entitled to recover from CCC only the amount of
P13,947,240.04, based on the computation[26] made in the presence of the parties by the CA’s
chief accountant, Carmencita Angelo. The appellate court, however, affirmed the RTC QC
Orders dated 3 and 19 April, 23 May, 2 and August, and 3 October 2002.

Both parties filed their respective Motions for Reconsideration of the Decision of the CA, which
subsequently denied both motions.

25 | P a g e
CCC then filed an appeal by certiorari with this Court, docketed as G.R. No. 162100,
wherein it raises the following issues: (1) the interest computation made by the RTC QC
was grossly excessive; (2) the execution is tainted with irregularities; and (3) the RTC QC judge
should have suspended execution of the properties of petitioner and allowed it to pursue its
third-party claim to its logical conclusion.

Respondent Reynoso also filed a Petition for Review with this Court, docketed as
G.R. No. 162395, questioning the CA’s reduction of the the sum due him under the RTC QC
Decision. Reynoso argues that the CA failed to consider that the two judgment amounts were
money market placements that were “rolled over.” Thus, the principal (original placement)
earns interest (in this case, 14% per annum) after the lapse of the agreed period. The earned
interest plus the principal becomes the new principal/placement, which again earns interest
when the placement is rolled over. Under the terms of the money market placement, the
outstanding balance earns 14% interest per annum, until both principal and interest are paid.
Aside from these interest earnings, a 12% interest per annum on the entire judgment award is
applied also, as the awards partook of the nature of forbearance of credit when it remained
unsatisfied after the finality of the judgment.

In its Resolution dated 27 April 2004, this Court ordered the consolidation of the two cases.

Consolidated Issues

1. Whether the CA seriously erred in not holding that execution proceedings before the
RTC QC was tainted with irregularities

2. Whether the CA seriously erred in not finding that the RTC QC should have suspended
execution of the properties of CCC/Penta and allowed the latter to pursue its third party
claim to its logical conclusion

3. Whether the CA seriously erred in holding that Penta’s right of redemption had
prescribed
4. Whether the CA seriously erred in its computation of interest

Our Ruling

We affirm the CA Decision in toto.

On the first issue

In Reynoso v. Court of Appeals,[27] CCC/GCC/Penta assailed the validity of the execution

proceedings in the RTC QC on various grounds, mainly the fact that the latter had allowed the
levy and sale of the Valle Verde property. Allegedly, this property was not owned by judgment
debtor CCC-QC, but by CCC/GCC/Penta itself – an entity separate and distinct from the former.
We held in the said case, though, that since the circumstances warranted piercing the corporate
veil, judgment in favor of Reynoso may be executed against GCC (now Penta), an alter ego of

26 | P a g e
CCC-QC.

CCC/GCC/Penta presented the same arguments in Reynoso, as it has done now. Even assuming
that any of its present arguments is novel, it would be unavailing if it is based on the same
factual milieu under which the Reynoso ruling was made. The orderly administration of justice
and basic considerations of fair play abhor a piecemeal presentation of points of law, theories,
issues, and arguments.[28] At any rate, CCC/GCC/Penta fails to identify any change in the facts
upon which Reynoso was predicated as to warrant a different conclusion in the present case.

Thus, the Court’s ruling in Reynoso may be considered “the law of the case” in respect of the
validity of the execution proceedings against CCC/Penta. The principle of the law of the case is
embodied in Section 47(b) and (c), Rule 39 of the Rules of Court.[29] As we explained in Litton
Mills, Inc. v. Galleon Trader, Inc.,[30] this principle holds that “(w)hatever has been irrevocably
established as the controlling legal rule between the parties in a case continues to be the law of
the case, whether correct on general principles or not, so long as the facts on which such
decision was predicated continue to be facts of the case before the Court. Once a judgment has
become final, the issues therein should be laid to rest.”

As Reynoso has long become final and can no longer be modified, the continued insistence of
CCC/GCC/Penta that the execution proceedings were invalid cannot be entertained.

On the second issue

CCC insists that the RTC QC should have suspended execution insofar as the properties of
CCC/Penta were concerned, and that the trial court should have allowed petitioner to pursue its
third-party claim to its logical conclusion.

We disagree. As discussed in the first section, CCC and CCC-QC are one and the same entity in
the context of the subject execution of the judgment in favor of Reynoso. Meanwhile, the
remedy of terceria is available only to a third person other than the judgment obligor or the
latter’s agent who claims a property levied on.31 Hence, not being a third party to the
execution proceedings, the remedy of terceria is not available to CCC/Penta.

On the third issue

Again, we find no error in the Decision of the CA, holding that Penta’s right of redemption has
prescribed. We quote with approval the pertinent portion of its assailed Decision in this regard:

Penta’s right of redemption over the Valle Verde property was recognized by respondent Judge
in the Order dated April 3, 2002, considering that CCC-QC, CCC and GCC, which was later
renamed Penta Capital, are one and the same corporation as ruled with finality by the Supreme
Court. Nonetheless, we agree with Reynoso that Penta Capital can no longer exercise its right
to redeem the Valle Verde property.

Record shows that the Valle Verde property, which was registered in the name of CCC under
TCT No. 29940, was levied upon and sold at public auction on October 29, 1991 with Reynoso
as the highest bidder. The certificate of sale in favor of Reynoso was registered on TCT No.
29940 on November 7, 1991. Section 28, Rule 39 of the Rules of Civil Procedure provides that

27 | P a g e
the judgment obligor or redemptioner may redeem the property from the purchaser at any time
within one (1) year from the date of the registration of the certificate of sale. Inasmuch as one
year is composed of 365 days, CCC or its successors-in-interest had only until November 6,
1992 within which to redeem the Valle Verde property. However, it was only on December 21,
2002 that Penta Capital sent a notice to the Sheriff that it was redeeming ad cautelam the Valle
Verde property, together with a cashier’s check for P 703,897.36, inclusive of interest. On
February 20, 1992, Penta Capital filed with the Regional Trial Court of Pasig City a third-party
claim with respect to the Valle Verde property and other properties that may be levied upon by
Deputy Sheriff Edgardo C. Tanangco of respondent court.

Penta Capital’s argument that it could not redeem the Valle Verde property within the one year
period, which expired on November 6, 1992, in view of the temporary restraining order issued
by this Court on March 13, 1992, the writ of preliminary injunction issued on April 7, 1994 and
the decision dated July 7, 1994 of this Court in CA-G.R. SP No. 27518, does not persuade us.

As correctly pointed out by Reynoso, the injunction issued by this Court in CA-G.R. SP No.
27518 did not cover the Valle Verde property. The temporary restraining order and injunction
issued by this Court in said case merely enjoined the respondents therein from conducting an
auction sale on execution of the properties of GCC, as well as from initiating similar acts of
levying upon and selling on execution other properties of the latter until Civil Case No. 61777
before the Regional Trial Court of Pasig City shall have been finally terminated. On the other
hand, the levy and sale of the Valle Verde property had already been consummated when the
temporary restraining order and injunction were issued by this Court. Settled is the rule that
consummated acts can no longer be restrained by injunction. Injunction would not lie where the
acts sought to have been enjoined had already become a fait accompli or an accomplished or
consummated act.

The right of redemption should be exercised within the period prescribed by law. The right to
redeem becomes functus officio on the date of its expiry and its exercise after the period is not
really one of redemption but a repurchase.[32]

On the fourth issue

The RTC QC ruled that CCC/GCC/Penta should pay Reynoso the following amounts:

a) to pay defendant the sum of P185,000.00 plus 14% interest per annum from October 2,
1980 until fully paid;

b) to pay defendant P3,639,470.82 plus interest thereon at the rate of 14% per annum from
June 24, 1981, the date of filing of Amended Answer, until fully paid; from this amount may be
deducted the remaining obligation of defendant under the promissory note of October 24, 1977,
in the sum of P9,738.00 plus penalty at the rate of 1% per month from December 24, 1977
until fully paid;

c) to pay defendants P200,000.00 as moral damages;

d) to pay defendants P100,000.00 as exemplary damages;

28 | P a g e
e) to pay defendants P25,000.00 as and for attorney's fees; plus costs of the suit.

Based on the above figures, the RTC QC eventually computed the award to Reynoso as
P71,768,227.35. When this matter reached the CA, its chief accountant computed the judgment
award at P13,947,240.04, after both parties had agreed to deduct from the total judgment
award the sum of P 650,150.50 paid by Reynoso for the Valle Verde property. The CA’s
computation is as follows:

A. Principal Amount P185,000.00

Interest therein @ 14% per annum from
October 2, 1980 up to November 30, 2002 573,986.57
Total P758,986.57
B. Principal Amount P3,639,470.82
Interest therein @ 14 per annum from
June 24 to November 30, 2002 9,912,788.77
P13,552,259.59
Less: The sum of P9,738.00
Penalty @ 1% per mo. from
December 24, 1977 up to
November 24, 2002 29,116.62 P38,854.62
Sub-total P13,513,404.97
Less: Bid Price of Auctioned Property
bought by defendant 650,151.50
Total P12,863,253.47
C. Moral Damages P 200,000.00
D. Exemplary Damages P 100,000.00
E. Attorney’s Fees P 25,000.00
TOTAL AMOUNT DUE as of November 30, 2002 P13,947.240.04
===========

* Note 1 Penalty of 1% per month on P9,738 loan is computed from December 24, 1997 up to
November 24, 2002 only.

** Note 2 Amount of Bid Price on Auctioned sale in the amount of P650,151.50 was already
deducted from the total amount due.”[33]

Two things must be priorly explained regarding the above computation of the CA. First, the
principal amounts in items A and B (P185,000.00 and P3,639,470.82, respectively) were
subjected to a 14% per annum interest only until 30 November 2002, because the CA’s chief
accountant who prepared the computation on 21 November 2002 had anticipated that the
parties would be settling the matter by the end of November 2002. Second, the interest on the
sum of P9,738 (which was deducted from the principal amount in item B) was subjected to a
penalty until 24 November 2002, only because the RTC QC judgment pegged the interest rate
thereon at 1% per month, commencing on 24 December 1977. Accordingly, the interest was
computed on a month-to-month basis.

Both parties impugn the computation by the CA of interest on the judgment awards. On the one

29 | P a g e
hand, Reynoso claims that its computation was deficient, because two items in the judgment
pertain to money market placements. These placements were subject to “roll overs” – in this
case, pertaining to the reinvestment of the principal together with its earned interest of 14%
per annum, which shall earn another 14% per annum, and so forth. Reynoso further alleges
that the resulting amount should be subjected to the 12% per annum legal interest on the
judgment awards after finality of the judgment, pursuant to the rule laid down in Eastern
Shipping Lines, Inc. v. Court of Appeals [34] and Crismina Garments, Inc. v. Court of
Appeals.[35] On the other hand, CCC claims that the CA’s computation was excessive, because
the judgment award should be subject to a 12% interest rate only.

We uphold the CA ruling on the computation of interest on the judgment awards pertaining to
the principal amounts P185,000.00 and P3,639,470.82.

Referring to Eastern Shipping Lines and Crismina Garments, which Reynoso claimed to be
supportive of his position, the CA elucidated as follows:

The above-mentioned cases state that the imposition of interest at the rate of 12% per annum
from finality of judgment applies only where the rate of interest decreed in the judgment of the
court is only 6% per annum, in accordance with Article 2209 of the Civil Code. Thus, the
dispositive portions of the decisions in the above-mentioned cases provided for payment of
interest at 6% per annum from the date of the filing of the complaint until the finality of the
judgment and a 12% interest per annum, in lieu of 6% interest per annum, upon finality of the
judgment until it is fully satisfied. In the case at bench, the decision in Civil Case No. Q-30583
ordered the payment of interest at the rate of 14% per annum from October 2, 1980, with
respect to the amount of P 185,000.00, and from June 24, 1981, with respect to the amount of
P 3,639,470.82, until the same shall have been fully paid. Inasmuch as the rate of interest
imposed in Civil Case No. Q-30583 is even higher than 12% per annum, Reynoso is no longer
entitled to the payment of 12% interest upon finality of the judgment.[36]

In fine, Eastern Shipping merely provides that in the absence of a written stipulation, the
applicable interest rate to be imposed in judgments involving a forbearance of credit shall be
12% per annum in accordance with Central Bank (CB) Circular No. 416. On the other hand, if
the judgment refers to payment of indemnities in the concept of damages arising from a breach
or a delay in the performance of obligations in general, the applicable interest rate shall be 6%
per annum, in accordance with Article 2206 of the Civil Code. Both interest rates apply from the
time of judicial or extrajudicial demand until the finality of the judgment. However, from the
time the judgment of the court awarding a sum of money becomes final until it is satisfied, the
award it granted shall be considered a forbearance of credit, whether or not the judgment
award actually pertained to one. Accordingly, during this interim period, the interest rate of
12% per annum for forbearance of money shall apply.[37]

In the present case, the parties agreed in writing to apply an annual interest rate of 14% to the
amounts covered by the Promissory Notes. The trial court ruled that after the finality of
judgment, as long as the subject amounts remain unpaid, they shall bear 14% annual interest
in lieu of the default interest rate for forbearance of credit, which is 12% per annum. The RTC
QC’s application of 14% interest rate from the finality of the judgment until its full satisfaction is
permitted to remain herein, only because the judgment has become final – as it was not
impugned at all before the CA – and therefore, can no longer be modified. It is not meant to

30 | P a g e
overturn the Court’s consistent application of the 12% interest rate in court judgments
awarding a sum of money from the time it becomes final until it is satisfied.

We further uphold the CA’s rejection of Reynoso’s computation, which incorporates “roll overs”
of the said two items in the judgment awards.

Reynoso argues that the “roll over” could be implied from the trial court Decision, considering
that the two items in the judgment (P185,000.00 and P3,639,470.82) pertained to his money
market placements, and considering further that the trial court applied such rollovers to its
subsequent computation.

We are not convinced. The mere fact that RTC QC’s subsequent computation applied rollovers is
an insufficient basis to rule that these were proper. We stress that “execution must conform to
that ordained or decreed in the dispositive part of the decision; consequently, where the order
of execution is not in harmony with and exceeds the judgment which gives it life, the order
has pro tanto no validity.”[38] In the present case, we observe that nowhere in the RTC QC
judgment is there a provision calling for the “roll over” of the P185,000.00 and P 3,639,470.82
awards.

Also, while it is true that the said judgment awards correspond to the amounts Reynoso
invested as money market placements, he himself points out in his Petition that each placement
is a separate and distinct transaction. He explains that a rollover is a “new and independent
transaction where the amount of money market placement is considered as a fresh infusion of a
principal amount regardless of the fact that part of the amount ‘rolled over’ was in reality the
interest earned from the original placement or the immediately preceding ‘roll-over’
transaction.”39 Thus, a money market transaction does not necessarily include a rollover, which
would take place only if the parties agree to the reinvestment of the proceeds of the earlier
money market transaction. The parties’ agreement to a rollover is a separate transaction
whereby the new placement, consisting of the original placement plus the earned interest,
becomes the new placement that shall earn interest at the end of the agreed period. In the
present case, it does not appear that there was an agreement between CCC-QC and Reynoso
for the automatic rollover of all of his placements.

Finally, Reynoso is entitled to interest on the moral and exemplary damages, as well as the
attorney’s fees awarded him. As stressed in our above discussion of Eastern Shipping, an award
of a sum of money shall be considered as a forbearance of credit once it becomes final,
whether or not the award actually pertained to one. Hence, from its finality until its satisfaction,
the judgment award to Reynoso of moral and exemplary damages, as well as attorney’s fees,
shall be subject to the interest rate of 12% per annum.cralaw

WHEREFORE, premises considered, the consolidated Petitions are hereby DENIED. The Court
of Appeals assailed Decision and Resolution are AFFIRMED with MODIFICATION in that an
interest rate of 12% per annum is to be applied to the awards of moral and exemplary damages
and attorney’s fees from the finality until the satisfaction of the 14 January 1985 Decision of the
Regional Trial Court of Quezon City, Branch 86 in Civil Case No. Q-30583.

SO ORDERED.

31 | P a g e
 Republic of the Philippines
SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 89870 May 28, 1991

DAVID S. TILLSON, petitioner,

vs.
HON. COURT OF APPEALS, HON. JUDGE LOURDES K TAYAO-JAGUROS, JOHN M.
COONEY, DEPUTY SHERIFF ROLANDO A. BALINGIT, and LT. COL. JUAN
REYNALDO, respondents.

Guevara Law Office for petitioner.

Edilberto Barot, Jr., for J. Cooney.

NARVASA, J.:

Sometime in May, 1987, David S. Tillson brought suit in the Regional Trial Court at Pasig, Rizal
against (1) Leonard La Pierre (alleged to be doing business under several trade names, viz.: La
Pierre International Yachts, La Pierre Distributors International, La Pierre Contracting Co., Ltd.)
and (2) Seacraft International Corporation. The action was described as one for "specific
performance and damages with prayer for preliminary injunction and restraining order." It was
docketed as Civil Case No. 54587 and assigned to Branch 165.

Briefly, Tillson's complaint alleged that:

1) he entered into a contract with Leonard- La Pierre for the construction of a yacht,
named "Creala 40," at a cost of U.S. $65,000.00, to be delivered to Tillson in Manila in
July, 1986;

2) it was Seacraft International Corporation that actually undertook the construction of

the boat, advances on the price being made by Tillson;

3) the money thus advanced was, however, used by La Pierre and Seacraft for the
construction, not of the "Creala 40," but of another vessel, "Creala 36."

Upon these factual averments, Tillson prayed that both defendants be ordered (a) to complete
construction of "Creala 40," removing from "Creala 36" all parts placed therein originally
intended for "Creala 40," and using and placing them in the latter; and (b) jointly and severally,
to pay to Tillson such damages as might be adjudged proper and attorney's fees of U.S.
$5,000.00.

32 | P a g e
On Tillson's application, the Trial Court issued two (2) writs: one, of preliminary injunction
forbidding the removal of "Creala 40" from its location at the time, and the other, of preliminary
attachment which was levied on "Creala 36."

Summonses were duly served on both defendants.

Only Seacraft filed answer, denying Tillson's claims to the vessels and asserting that there was
no privity between it and Tillson relative to the construction of the "Creala 40." La Pierre failed
to answer within the reglementary period and was consequently declared in default.

The Court thereafter received Tillson's evidence against La Pierre ex parte and on the basis
thereof, rendered judgment by default against La Pierre on March 2, 1988, which contained the
following dispositive portion:

WHEREFORE, judgment is hereby rendered in favor of the plaintiff as against defendant

Leonard La Pierre and the latter is hereby ordered to pay plaintiff the following:

U.S. $52,000.00, representing advances made by plaintiff to defendant, plus interest of

12% per annum from 1985 until fully paid; moral damages, U.S. $5,000.00; actual
damages, U.S. $10,000.00 and attorney's fees, U.S. $20,000.00, and costs of suit.

The judgment became final and executory, no appeal having been taken by La Pierre. The
action however continued as regards his co-defendant, Seacraft International Corporation
(hereafter, simply Seacraft).

At Tillson's instance, the Trial Court authorized execution of the default judgment against La
Pierre. In July, 1988, the Sheriff levied on, and subsequently took possession of, the two (2)
yachts above mentioned, "Creala 36" and "Creala 40."

Seacraft filed a third-party claim in respect of both vessels in accordance with Section 17, Rule
39 of the Rules of Court, contending that the yachts belonged to it, and not to La Pierre. Tillson
thereupon posted a bond to indemnify the Sheriff against such third-party claim insofar as it
was asserted against "Creala 40." The execution sale of the "Creala 40" was then scheduled
and held on February 7, 1989 by the Sheriff, resulting in the boat's being struck off to Tillson as
the highest bidder.

On October 10, 1988, the "Creala 36" was somehow delivered by the Sheriff to Tillson's
counsel, Atty. Alberto Guevara, Jr. It was thereafter moved by Tillson to the Manila Yacht Club.

But a claim for that same vessel ("Creala 36") was being put forth by a certain John M. Cooney,
grounded on a compromise agreement between him and La Pierre. Indeed, there was then
pending in another branch of the same Regional Trial Court an action which had been
commenced by Cooney against La Pierre as early as October 15, 1987, docketed as Civil Case
No. 55152. The action was originally assigned to Branch 158, but was later transferred to
Branch 166.1 On November 11, 1988, said Branch 166 issued orders directing the sheriff to take
immediate possession of "Creala 36" and deliver it to Cooney after the expiration of five days.
Tillson promptly instituted a certiorari action in the Court of Appeals, praying for nullification of
that order.2

33 | P a g e
The Court of Appeals dismissed Tillson's action, by Decision promulgated on December 27,
1988.3 It found that no valid levy on attachment had been effected of the "Creala 36" in Civil
Case No. 54587; that, on the other hand, the vessel had been properly attached by the Sheriff
in Case No. 55152 but subsequently had been "forcibly taken from the latter's custody by
petitioner Tillson and his men who did not issue a receipt and showed no written order from
any lawful authority." The Appellate Court consequently upheld the order for the seizure and
retaking from Tillson of the "Creala 36," but prohibited release thereof to Cooney "pending the
final disposition of his case."

Cooney next turned his attention to the "Creala 40" which, as above stated, had been earlier
acquired by Tillson at the auction sale on February 7, 1989 in Civil Case No. 54587. On April 12,
1989, Cooney filed with the Regional Trial Court of Manila an action against Tillson for
annulment of the sale and for delivery thereof to him by way of replevin. In his complaint he
alleged that by a deed of sale executed on December 5, 1988 by Seacraft, on authority of its
board of directors, he had become owner of the "Creala 40;" that in conspiracy with the Sheriff
and other persons, Tillson had illegally acquired possession of the vessel; that as owner, he was
entitled to a "preliminary order for the immediate delivery" upon "a bond in a reasonable
amount," and, "after trial of the issues," to be declared owner and recover damages from the
defendants. To his complaint he attached (1) his affidavit stating inter alia that "the boat would
be probably valued conservatively at P300,000" and "has not been taken for tax assessment or
fine pursuant to law, or seized under execution, or an attachment against the property of herein
plaintiff," and (2) a bond in the amount of P800,000.00 issued by Utility Assurance Corporation
denominated "Plaintiffs Bond for Manual Delivery of Personal Property (Replevin Bond)." The
action was docketed as Civil Case No. 89-48520 and assigned to Branch 21, presided over by
Hon. Lourdes K. Tayao-Jaguros. Judge Jaguros ordered the issuance of "the corresponding Writ
of Replevin of Personal Property," on April 17, 1989. The "writ of replevin" issued on the same
day but, as will shortly be narrated, custody of the vessel was not taken by the Sheriff until
three days later.

On April 20, 1989, Cooney filed a "Manifestation/Motion" stating that when the Sheriff went to
the place where the vessel was moored, he discovered that "the number of the boat (sought to
be seized) had been deliberately tampered with," and prayed that the Court authorize "the
sheriff . . . and such other governmental agency or agencies deputized to aid . . . (the sheriff)
seize and take possession (of the vessel) under the existing writ of replevin . . . . Cooney filed
an amended manifestation on the same day, stating additional details of the alleged tampering,
and adding to his prayer the request that the Sheriff "deposit (the yacht) for safekeeping with
the Philippine Coast Guard, pending determination and/or resolution by this Honorable Court of
this motion." On the same day, the Court granted the motion and ordered (a) "the sheriff to
deposit the boat for safekeeping with the Philippine Coast Guard at the Farola Compound,
Binondo," and (b) also "the defendants and/or any person claiming rights under them . . . to
turn over the possession of the said boat to the Philippine Coast Guard, in the meantime, until
further orders . . . ." In virtue of this Order of April 20, 1989, the Sheriff took custody of the
"Creala 40" and delivered it for safekeeping to the Coast Guard. It is pertinent to state that both
defendants, Tillson and Sheriff Sofronio Villarin, while denying any hand in the alleged
tampering, subsequently admitted "that the boat, now in the possession of the Coast Guard
upon pertinent Order . . . is the Boat, subject of the Replevin Order . . . ."

34 | P a g e
On the following day, April 21, 1989, Tillson's counsel, Mr. Alberto B. Guevarra, Jr., filed an
"Appearance and Urgent Ex-Parte Motion." He alleged that on April 20 he had "secured copy of
the complaint and related documents;" that his client was submitting himself to the jurisdiction
of the Court "as if summons had been served upon him," that he was aware of the bond filed
by Cooney "in accordance with Section 3 of Rule 60, and another Order for the Coast Guard to
take custody of the boat; that he had no objection to the boat remaining temporarily with the
Coast Guard and/or the Sheriff; that Tillson had "valid defenses to traverse the complaint of
Cooney;" and he prayed that his appearance be made of record and—

. . . That the Sheriff and/or the Coastguard, be ordered to keep possession of the Boat,
for the requisite five (5) days, keeping said Boat in its present location, without moving
same, until Tillson can file the necessary counter Bond, in accordance with Section 5 of
Rule 60 of the Rules of Court, or as otherwise may be mandated, under Rule 60 of the
Rules of Court.

Then on April 25, 1989, Tillson filed thru counsel an "Urgent Motion for Approval of Bond (and)
Surrender of Creala 40," submitting a bond issued by Domestic Insurance Co. of the Philippines
in the amount of P800,000.00 and praying that the boat seized from him by the sheriff "be
ordered returned/surrendered/released to Tillson, in accordance with Section 5 of Rule 60 of
the Rules of Court." A copy of the motion and the bond was sent by registered mail to and in
due course received by, Cooney's attorney, Mr. Edilberto Barot, Jr.

However, the Trial Court refused to order re-delivery of the boat to Tillson. In an Order dated
May 5, 1989, it held that the provision for the return of seized property on a counterbond in
Rule 60—

. . . is not exactly applicable to the situation . . . because said provision presupposes

that possession is to be given to the plaintiff, however, . . . the writ precisely ordered
that the possession and control of Creala 40 . . . be put under the Coast Guard which is
a disinterested third person; . . . (and to) transfer . . . possession and control of the
boat to either party would render the case moot and academic.

Once again, Tillson went to the Court of Appeals. He filed a petition for certiorari, prohibition
and mandamus to nullify the Order of May 5, 1989 and compel re-delivery of the "Creala 40" to
him. This action was docketed as CA-G.R. SP No. 17586. Once again, the verdict of the
Appellate Tribunal went against Tillson.4 By Decision promulgated on September 1, 1989, the
Court denied his petition on two grounds: first, since the boat was not delivered to Cooney,
"there is no replevin in legal contemplation . . . (and) no replevin bond and redelivery bond to
speak of," and second, even if the case be considered one of replevin, Tillson had failed to
furnish a copy of his redelivery bond to the plaintiff within the time set therefor, in violation of
the relevant requirements of Rule 60.

At the same time, Tillson also had to be dealing with Seacraft International Corporation. While
the matter of the ownership and custody of the "Creala 36" was being disputed in Civil Case No.
55152 and CA-G.R. SP No. 16122, as above narrated, and before the public auction of the
"Creala 40" could be conducted (on February 7, 1989) in execution of the default judgment
rendered in Civil Case No. 54587, Seacraft made another move to get both boats back. It filed
an "Urgent Motion to Restrain Plaintiff and the Provincial Sheriffs and to Dismiss the Case

35 | P a g e
against Seacraft." Tillson opposed the motion, contending that La Pierre had left the country to
avoid prosecution and deportation for circumvention of the immigration laws; that Seacraft and
its ostensible officers were merely his dummies; and that Seacraft had breached the
Corporation Code by misrepresenting itself as a 100% Filipino corporation when in truth its
stock was owned by La Pierre, a foreigner. He prayed that the Court pierce the veil of corporate
fiction in respect of Seacraft and declare that La Pierre was the actual owner of "Creala 36" and
"Creala 40."

Chiefly on these issues, the Trial Court received the parties' proofs and arguments. Thereafter
the Court rendered judgment on the merits,5 under date of February 7, 1990: (a) finding that
the evidence "abundantly established that defendant Seacraft International Corporation is a
mere alter ego of La Pierre, used and utilized by the latter to defraud his creditors," and (b)
making the following dispositions, to wit:

l — Declaring Seacraft International Corporation as a mere dummy of La Pierre,

consequently, annulling and disregarding its supposed separate corporation fiction and
personality;

2 — Ordering any and all assets in the name of Seacraft International Corporation which
are not otherwise encumbered, shall be answerable for the satisfaction of the Judgment,
now final and executory, issued by the court in favor of the plaintiff and against
defendant La Pierre;

3 — Dismissing the Complaint-in-Intervention of John Quinn for failure to prosecute and

the Counterclaim of defendant Seacraft . . ., and

4 — Ordering Seacraft to pay costs.

There was yet another proceeding involving Tillson and Seacraft in another forum, the
Securities & Exchange Commission. The proceeding, commenced at Tillson's instance, SEC Case
No. 3610, was for the revocation of Seacraft's certificate of registration on the ground of fraud.
Summons was served on Seacraft "thru its incorporating directors/stockholders." However, no
answer was ever filed or appearance made in behalf of Seacraft. Seacraft was accordingly
declared in default.

John M. Cooney filed a motion for intervention, alleging that he had acquired Seacraft's
properties. The motion was denied by the Commission in an Order dated February 12, 1990,
which declared Cooney's acquisition of Seacraft's assets to have no relation to the cancellation
of Seacraft's registration on account of fraud by its incorporators/directors. Cooney's motion for
reconsideration was denied by Order dated February 12, 1990, the Commission considering it a
"mere scrap of paper" for failure of the movant to set the motion for hearing, and because filed
beyond the reglementary period therefor. Thereafter, evidence was received, after which a
Decision was rendered on August 20, 1990 which—upon a finding that there was "ample proof"
that "Seacraft was a mere dummy of La Pierre and that La Pierre is the real owner of
SEACRAFT" — revoked the franchise or certificate of registration of Seacraft International
Corporation and directed the appointment of a receiver to liquidate its corporate affairs in
accordance with Section 122 of the Corporation Code.

36 | P a g e
Turning back to the decision promulgated by the Court of Appeals in CA-G.R. SP No. 17586—
denying Tillson's petition to nullify Judge Jaguro's Order of May 5, 1980 in Civil Case No. 89-
48520 and compel re-delivery of the "Creala 40" to him, it is Tillson's thesis that fundamental
errors were committed by the Appellate Tribunal when in that judgment it ruled that —

1) the provisions of Rule 60 were inapplicable upon the following ratiocination:

In essence, since the trial court ordered the boat to be custodia legis under the
temporary physical control of the Coast Guard, the provisions of Rule 60 on replevin find
no application under the circumstances at bar. As the boat was not delivered to plaintiff
John M. Cooney, the replevin bond filed by him does not serve the purpose for which
the said bond was filed. Consequently, as there is no obligation on the part of John M.
Cooney to return the boat which was not placed in his possession, the filing of the
counterbond for the redelivery of the boat to petitioner becomes of no virtue
whatsoever.

In fine, as there is no replevin in legal contemplation, there is no replevin bond and

redelivery bond to speak of . . .;

and

2) assuming Rule 60 to be applicable, Tillson had failed to furnish a copy of his redelivery bond
to the plaintiff within the time set therefor by said rule, i.e., "within five (5) days from the date
the sheriff took possession of the property."

The term replevin is popularly understood as "the return to or recovery by a person of goods or
chattels claimed to be wrongfully taken or detained upon the person's giving security to try the
matter in court and return the goods if defeated in the action;" "the writ by or the common-law
action in which goods and chattels are replevied," i.e., taken or gotten back by a writ for
replevin;"6 and to replevy, means to recover possession by an action of replevin; to take
possession of goods or chattels under a replevin order.7 Bouvier's Law Dictionary
defines replevin as "a form of action which lies to regain the possession of personal chattels
which have been taken from the plaintiff unlawfully . . ., (or as) the writ by virtue of which the
sheriff proceeds at once to take possession of the property therein described and transfer it to
the plaintiff upon his giving pledges which are satisfactory to the sheriff to prove his title, or
return the chattels taken if he fail so to do; the same authority states that the term, "to
replevy" means "to re-deliver goods which have been distrained to the original possessor of
them, on his giving pledges in an action of replevin."8 The term therefore may refer either to
the action itself, for the recovery of personality, or the provisional remedy traditionally
associated with it, by which possession of the property may be obtained by the plaintiff and
retained during the pendency of the action. In this jurisdiction, the provisional remedy is
identified in Rule 60 of the Rules of Court as an order for delivery of personal property.

That the action commenced by Cooney against Tillson, et al. on April 12, 1989, in the Manila
Regional Trial Court of Manila was one for replevin — and the provisional remedy therein
applied for, the writ or order of delivery just described — hardly admits of doubt. The facts set
out in his complaint and the affidavit accompanying it, as well as his filing of a bond in double

37 | P a g e
the value of the property sought to be recovered, show that Cooney filed the action precisely
with Rule 60 in mind. This is evident from a perusal of Sections 1 and 2 of the Rule.9

Sec. 1. Application. — Whenever the complaint in an action prays for the recovery of
possession of personal property, the plaintiff may, at the commencement of the action
or at any time before answer, apply for an order for the delivery of such property to him
in the manner hereinafter provided.

Sec. 2. Affidavit and bond. — Upon applying for such order the plaintiff must show by
his own affidavit or that of some other person who personally knows the facts:

(a) That the plaintiff is the owner of the property claimed, particularly describing it, or is
entitled to the possession thereof;

(b) That the property is wrongfully detained by the defendant, alleging the cause of
detention thereof according to his best knowledge, information and belief,

(c) That it has not been taken for a tax assessment or fine pursuant to law, or seized
under an execution, or an attachment against the property of the plaintiff, or, if so
seized, that it is exempt from such seizure; and

(d) The actual value of the property.

The plaintiff must also give a bond, executed to the defendant in double the value of the
property as stated in the affidavit aforementioned, for the return of the property to the
defendant if the return thereof be adjudged, and for the payment to the defendant of
such sum as he may recover from the plaintiff in the action.

As will be noted, Cooney's complaint incorporates the factual allegations necessary to bring his
cause within the operation of Rule 60 of the Rules of Court. In his complaint he asserts that he
is the owner of the "Creala 40" in virtue of a deed of sale executed in his favor on December 5,
1988 by Seacraft; that he was being deprived of possession thereof by Tillson, who was acting
in conspiracy with the Sheriff and other persons; that as owner, he was entitled to a
"preliminary order for the immediate delivery" upon "a bond in a reasonable amount" and,
"after trial of the issues," to have his ownership vindicated and recover damages from the
defendants. Annexed to his complaint were (1) his affidavit stating inter alia that "the boat
would be probably valued conservatively at P300,000.00" and "has not been taken for tax
assessment or fine pursuant to law, or seized under execution, or an attachment against the
property of herein plaintiff," and (2) a bond in the amount of P800,000.00 entitled "Plaintiffs's
Bond for Manual Delivery of Personal Property (Replevin Bond)."

And that it was so understood by the Regional Trial Court can scarcely be doubted, too. In her
Order of April 17, 1989, Judge Jaguros directed the issuance of "the corresponding Writ of
Replevin of Personal Property." Moreover, a writ denominated "writ of replevin" issued on the
same day, pursuant to which—and to another order dated April 20, 1989, supra — the sheriff
took possesion of the "Creala 40" on April 20, 1989.

38 | P a g e
The case is not removed from the operation of Rule 60 by the fact that after the property was
taken from the defendant it was not turned over to the plaintiff Cooney (but) to the Coast
Guard, on instructions of the Trial Court. That circumstance is totally inconsequential.

For one thing, it does not alter the reality of the defendant's loss of possession; it is
unreasonable to approve of the taking of the boat from his possession pursuant to Rule 60, and
then deny him the remedies prescribed by that self same rule; and if the seizure was not
effected in accordance with Rule 60, then the seizure was unjustified.

For another, property seized under a writ of delivery or replevin is not supposed to be turned
over to the plaintiff until after the lapse of five (5) days, a proposition that is made plain by
Section 6 of Rule 60:

Sec. 6. Disposition of property by officer.— If within five (5) days after the taking of the
property by the officer, the defendant does not object to the sufficiency of the bond, or
of the surety or sureties thereon, or require the return of the property as provided in the
last preceding section; or if the defendant so objects, and the plaintiffs first or new bond
is approved; or if the defendant so requires, and his bond is objected to and found
insufficient and he does not forthwith file an approved bond, the property shall be
delivered to the plaintiff. If for any reason the property is not delivered to the plaintiff,
the officer must return it to the defendant.

Hence, whether the property remained with the sheriff, or was given over to another officer
designated by the Court is of no significance, and certainly should not be taken as disabling the
defendant from moving for the return of the property to him by either of the modes set out in
Section 5 of Rule 60: (1) by objecting to the sufficiency of the plaintiff's replevin bond, or (2) if
he does not so object, by filing a counter-bond "in double the value of the property as stated in
the plaintiff's affidavit."

There is, therefore, no reason whatsoever to refuse to apply Rule 60 to the case at bar.

The next issue is whether or not Tillson, as defendant in the replevin action. had properly
complied with the requisites of Rule 60 for the return to him of the seized vessel. The provision
of the Rules upon which the issue turns is Section 5, Rule 60. It reads as follows:

Sec. 5. Return of property.— If the defendant objects to the sufficiency of the plaintiffs
bond, or of the surety or sureties thereon, he cannot require the return of the property
as in this section provided; but if he does not so object, he may, at any time before the
delivery of the property to the plaintiff, require the return thereof, by filing with the clerk
or judge of the court a bond executed to the plaintiff, in double the value of the
property as stated in the plaintiffs affidavit, for the delivery of the property to the
plaintiff, if such delivery be adjudged, and for the payment of such sum to him as may
be recovered against the defendant, and by serving a copy of such bond on the plaintiff
or his attorney.

Now, it is plain from the record that Tillson's counsel had presented an "Appearance and
Urgent Ex-Parte Motion" on April 21, 1989 announcing that he would "file the necessary counter
Bond, in accordance with Section 5 of Rule 60 of the Rules of Court," and that on April 25,

39 | P a g e
1989, he did post a bond in the amount of P800,000.00 for that very purpose, that amount
being more than double the value of the boat stated by Cooney, P300,000.00. The original of
the bond was attached to an "Urgent Motion for Approval of Bond and Surrender of the Creala
40" filed on April 25, 1989 by Tillson's attorney. Copies of the urgent motion and of the bond
itself were sent by registered mail to Cooney's counsel on the same day,10 and were
subsequently received by the latter in due course.11 The urgent motion was set for hearing on
May 2, 1989, but on that day, the Court reset the hearing to May 5, 1989 to give Cooney's
attorney an opportunity to be heard. At the hearing on May 5, 1989, among other things, the
registry return card evidencing receipt of the urgent motion and bond was shown to the
Court,12 but as above already stated, the Trial Court nevertheless refused to order the return of
the boat to Tillson, which action the Court of Appeals later upheld.

Upon these facts, the Court rules that Tillson had substantially complied with the requirements
of Section 5, Rule 60 for the return to him of the vessel in question.

The amount of the bond, P800,000.00, was adequate. It was more than double the sum of
P300,000.00, which was the value stated by Cooney in the affidavit attached to his complaint in
support of his application for 'the provisional remedy of writ of delivery or replevin, supra.

The counter-bond was posted within the period prescribed by Rule 60, i.e., "within five (5) days
after the taking of the property by the officer,"13 and "before the delivery of the property to the
plaintiff."14

A copy of the counter-bond was sent to the plaintiff (Cooney) on the fifth day "after the taking
of the property by the officer." The copy having been sent by registered mail, it was received
after said fifth day. Cooney does not deny that the copy of the bond was indeed sent to him on
the fifth day, and that he actually received it afterwards; and it is a fact that on the day on
which the Trial Court re-scheduled the hearing on the motion for approval of the bond and for
return-of the property, May 5, 1989, Cooney had already received the copy of the bond. What
he postulates is that his receipt of the counter-bond after the fifth day, was a fatal defect
prescribing return of the vessel to Tillson, a proposition which the Court of Appeals sustained.
The proposition is unacceptable to the Court. It accords unwarranted importance to technicality.
If technicality were indeed to be the order of the day, Tillson could also claim timeliness of
Cooney's receipt of a copy of the bond since, as the record shows, Cooney did receive the copy
within the time stated by Section 5 of Rule 60, i.e,. "before the delivery of the property to the
plaintiff." He could also claim that the requirement of service of the counter-bond on the
plaintiff cannot be all that important since there is no provision in Rule 60 imposing that
requirement, which appears to have been derived simply from the general prerequisite laid
down for pleadings, motions, notices, orders and other papers filed with the court.15

In Case and Nantz v. Jugo, et al., a 1946 case16 where a copy of the counter-bond was never
given the plaintiff although it had been seen and read by the latter's attorney, this Court held
that there had been substantial compliance with the requirement of service of the defendant's
counter-bond. "Since the sole purpose of furnishing a copy of the counter-bond," said the
Court, "is to enable the plaintiff to see if the bond is in the prescribed form and for the right
amount and to resist the return of the property to the defendant if it is not, that opportunity
was afforded the petitioners to the fullest extent when their attorney was shown in the sheriffs
office the defendant's counter-bond. After the plaintiff's attorney read or saw the counter-bond,

40 | P a g e
service of a copy thereof on him became purposeless, unnecessary formality. There is no
reason why the maxim, "equity regards substance rather than form," should not hold good
here.

Considering the established facts, and the additional circumstance that the record shows no
prejudice whatever to have been caused to plaintiff Cooney by the omission of service of the
counter-bond on him, there is no reason why the same disposition should not be made here as
in Case, and substance rather than form be made to prevail.

One last word, concerning the third-party claim filed by Seacraft over the "Creala 36" and
"Creala 40." These two boats, it will be recalled, constituted the res in Civil Case No. 54578 and
had been levied on in execution of the default judgment in said case against Seacraft's co-
defendant, Leonard La Pierre. Seacraft filed its claim supposedly in accordance with Section 17,
Rule 39, viz.:

Sec. 17. Proceedings where property claimed by third person.— If property levied on be
claimed by any other person than the judgment debtor or his agent, and such person
make an affidavit of his title thereto or right to the possession thereof, stating the
grounds of such right or title, and serve the same upon the officer making the levy, and
a copy thereof upon the judgment creditor, the officer shall not be bound to keep the
property, unless such judgment creditor or his agent, on demand of the officer,
indemnify the officer against such claim by a bond in a sum not greater than the value
of the property levied on. In case of disagreement as to such value, the same shall be
determined by the court issuing the writ of execution.

The officer is not liable for damages, for the taking or keeping of the property, to any
third-party claimant unless a claim is made by the latter and unless an action for
damages is brought by him against the officer within one hundred twenty (120) days
from the date of the filing of the bond. But nothing herein contained shall prevent such
claimant or any third person from vindicating his claim to the property by any proper
action.

xxx xxx xxx

It should be apparent that this provision, and others like it,17 providing for an expeditious mode
of recovering property alleged to have been wrongfully or erroneously taken by a sheriff
pursuant to a writ of execution or other process, has reference to a stranger to the action, and
not to a party therein. The remedy thereby granted is meant to accord said stranger, whose
property is taken by the sheriff to secure or satisfy a judgment against a party to said action, a
speedy, simple, and expeditious method of getting it back. All he has to do is draw up "an
affidavit of his title thereto or right to the possession thereof, stating the grounds of such right
or title, and serve the same upon the officer making the levy, and a copy thereof upon the
judgment creditor."

If the sheriff is persuaded of the validity of the third party's claim, then he gives back the
property.1âwphi1 The purpose of the provision is achieved. On the other hand, if the sheriff is
not convinced and opts to retain the property (requiring the judgment creditor to post an

41 | P a g e
indemnity bond to answer for any liability he may incur by reason of such retention), the third
party may then vindicate "his claim to the property by any proper action.

A party to the action, however, has no business filing a third party claim over property involved
in that action and which he himself claims to belong to him. He is evidently not the stranger, or
third party, contemplated by the aforementioned Section 17, Rule 39. He has the standing, and
the opportunity at any time, to ask the Court for relief against any alleged errors, excesses or
irregularities of the sheriff. It is incongruous to seek relief from a sheriff which the Court itself
could as easily and expeditiously grant.

WHEREFORE, the Decision of the Court of Appeals promulgated in CA-G.R. SP No. 17586 on
September 1, 1989 is REVERSED and SET ASIDE, and another rendered ANNULLING AND
SETTING ASIDE the Order of the Trial Court of May 15, 1989 in Civil Case No. 89-48520 and
COMMANDING the Sheriff of Manila, the Coast Guard and/or their deputies and representatives
immediately to deliver possession of the Creala 40 (Hull No. 4001, LPY-G-5-86) to the
petitioner, with costs against respondent John M. Cooney.

SO ORDERED.

Cruz, Gancayco, Griño-Aquino and Medialdea, JJ., concur.

42 | P a g e
 FIRST DIVISION

ANNIE FERMIN, a.k.a. G.R. No. 147977

ANITA SAGACO, and
AURELIO LEO KIGIS, Present:
Petitioners,
PUNO, C.J., Chairperson,
CARPIO,
CORONA,
- versus - AZCUNA, and
LEONARDO-DE CASTRO, JJ.

HON. ANTONIO M. ESTEVES,

in his capacity as Presiding Judge
of Branch 5, Regional Trial Court,
Baguio City, and Promulgated:
MARIANO TANENGLIAN,
Respondents. March 26, 2008

x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

DECISION

CARPIO, J.:

The Case

Before the Court is a petition for review[1] with prayer for a writ of preliminary injunction or the
issuance of a temporary restraining order, assailing the 28 April 2000Decision[2] and 24 April
2001 Resolution[3] of the Court of Appeals in CA-G.R. SP No. 48373.

The Antecedent Facts

On 15 October 1986, Mariano Tanenglian (respondent) filed an action for quieting of title and
damages against Anselmo Arizo, Fred Balusdan, Gregorio Carreon, Teodita Ceril,
Corazon Dapnisan, Mario Dapnisan, Rogel Estrada, Aida Fermin, Marilou Fernandez, Michael
Fernandez, Teofilo Fulmana, Andrew Herrero, Simeon Jastan, Rogelio
(Rodolfo) Lachica, Naty Lachica, Manuel Lagartera, Juliano Landisen, Maximino Lapid, Silvestre
Lorenzo, Timoteo Lubusan (Dapnisan), Helen Matale, Soledad Nabunat,

43 | P a g e
Damian Peera, Eliseo Pidazo, Pablito Sacpa, Ananao Santos, Esteban Santos, Juanito Santos,
and Samson Santos (Arizo, et al.). The case was docketed as Civil Case No. 925-R.

In a Decision[4] dated 28 June 1991, the Regional Trial Court of Baguio City, Branch 5 (trial court)
ruled:

WHEREFORE, judgment is hereby rendered in favor of the plaintiff and against the
defendants as follows:

(a) Ordering the defendants to respect and recognize plaintiffs ownership of the
two (2) parcels of land in question;

(b) Ordering the defendants to remove their

houses/structures/constructions/improvements from the subject parcels of land
and surrender the possession of the premises they are respectively occupying to
the plaintiff; and

(c) Ordering the defendants to pay, jointly and severally, the plaintiff the amount
of P10,000.00 for and as attorneys fees plus the costs of the suit.

SO ORDERED.[5]

On appeal, the Court of Appeals affirmed the trial courts ruling in its Decision dated 18 February
1994. Arizo, et al. filed a petition for review before this Court, but it was denied in a Resolution
dated 2 August 1995. This Court denied Arizo, et al.s first and second motions for reconsideration
in its Resolutions dated 15 January 1996 and 4 March 1996, respectively. An Entry of Judgment
was issued on 8 April 1996.

On 16 December 1996, the trial court granted respondents motion for execution. In a Special
Order of Demolition[6] dated 30 April 1998, the trial court ordered:

WHEREFORE, Defendants, their agents, assigns, representatives and/or

successors-in-interest are hereby given a period of fifteen (15) days from notice
within which to remove their improvements from the premises subject of this case.

The Deputy Sheriff assigned to this Court is likewise hereby ordered to cause the
demolition of all improvements which he may find within the premises immediately
after the expiration of the abovesaid period with the survey report of the
committee to be made as a parameter in compliance with this Order; and to
simultaneously place Plaintiff in possession thereof.

Expenses of the demolition shall be borne by the Plaintiff.

44 | P a g e
 SO ORDERED.[7]

The trial court issued an Alias Writ of Execution[8] on even date.

Annie Fermin, a.k.a. Anita Sagaco, and Aurelio Leo Kigis (petitioners) filed a petition for certiorari
and prohibition with prayer for the issuance of a temporary restraining order and a writ of
preliminary injunction before the Court of Appeals. They alleged that the deputy sheriff was
poised to implement the Special Order of Demolition not only against Arizo, et al. but also against
them. Petitioners alleged that they were deprived of their right to due process because they were
never made defendants in Civil Case No. 925-R.Petitioners alleged that they entered into the
possession and occupancy of the lands as members of an indigenous cultural community in the
honest perception and belief that the lands formed part of their ancestral lands. Petitioners further
alleged that their occupancy of the lands was not pursuant to any agreement entered into with
anyone of the defendants in Civil Case No. 925-R or any of the defendants predecessors-in-
interest. Further, they alleged that it was not even established that their residential structures
were within the area subject of Civil Case No. 925-R.

The Ruling of the Court of Appeals

In its 28 April 2000 Decision, the Court of Appeals denied the petition and affirmed the Special
Order of Demolition.

The Court of Appeals ruled that respondents right to the subject parcels of land had already been
settled with finality. The Court of Appeals ruled that had petitioners been in good faith regarding
their possession of the land, they could have intervened in Civil Case No. 925-R under Rule 19 of
the 1997 Rules of Civil Procedure. The Court of Appeals further ruled that had petitioners been
really unaware of the proceedings or aggrieved because of the damage posed by the Special
Order of Demolition, they could just have apprised the trial court of their adverse claim and move
for the issuance of the necessary terceria under Section 43, Rule 39 of the 1997 Rules of Civil
Procedure. The Court of Appeals ruled that since petitioners failed to avail of these remedies or
any other possible remedies in law, they could no longer prevent respondents exercise of his
rights of ownership by belatedly complaining about their supposed property rights.

Petitioners filed a motion for reconsideration.

45 | P a g e
In its 24 April 2001 Resolution, the Court of Appeals denied the motion.

Hence, the petition before this Court.

The Issue

The issue in this case is whether the Special Order of Demolition may be enforced against
petitioners who were not party-defendants in Civil Case No. 925-R.

The Ruling of this Court

The petition has merit.

The generally accepted principle is that no man shall be affected by any proceeding to which he
is a stranger, and strangers to a case are not bound by a judgment rendered by the
court.[9] Execution of a judgment can only be issued against one who is a party to the action, and
not against one who, not being a party in the case, did not have his day in court.[10] Due process
requires that a court decision can only bind a party to the litigation and not against one who did
not have his day in court.[11]

In this case, petitioners were not parties in Civil Case No. 925-R. Petitioners allegation that their
possession did not arise from an agreement with the defendants or the predecessors-in-interest
of the defendants in Civil Case No. 925-R remains unrebutted by respondent. The Special Order
of Demolition only binds the defendants in Civil Case No. 925-R as well as their agents, assigns,
representatives, or successors-in-interest. In the absence of proof that petitioners are agents,
assigns, representatives, or successors-in-interest of the defendants in Civil Case No. 925-R, the
Special Order of Demolition may not be enforced against them.

The Court of Appeals ruled that petitioners could have intervened in Civil Case No. 925-R. Yet,
there was no evidence that petitioners were aware of the pendency of Civil Case No. 925-R. We
cannot accept respondents assertion that the pendency of Civil Case No. 925-R could not have
escaped petitioners notice because it was frequently talked about in the community.

The Court of Appeals also ruled that petitioners could have availed themselves of the remedy
under Section 43, Rule 39 of the 1997 Rules of Civil Procedure, thus:

46 | P a g e
 Sec. 43. Proceedings when indebtedness denied or another person claims the
property. - If it appears that a person or corporation, alleged to have property of
the judgment obligor or to be indebted to him, claims an interest in the property
adverse to him or denies the debt, the court may authorize, by an order made to
that effect, the judgment obligee to institute an action against such person or
corporation for the recovery of such interest or debt, forbid a transfer or other
disposition of such interest or debt within one hundred twenty (120) days from
notice of the order, and may punish disobedience of such order as for
contempt. Such order may be modified or vacated at any time by the court which
issued it, or by the court in which the action is brought, upon such terms as may
be just.

In this case, Arizo, et al. are not judgment obligors as contemplated in Section 43, Rule 39 of the
1997 Rules of Civil Procedure. Neither are petitioners indebted to Arizo, et al. It was not even
established that petitioners are in possession of the property of Arizo, et al. In fact, petitioners
alleged that it was not established that their residential structures are within the area subject of
Civil Case No. 925-R. In other words, Section 43, Rule 39 of the 1997 Rules of Civil Procedure,
which would allow the judgment obligee to recover indebtedness due to the judgment obligor,
does not apply in this case.

When the Court of Appeals referred to the remedy of terceria, it must be referring to Section 16,
Rule 39, not Section 43, Rule 39 of the 1997 Rules of Civil Procedure,[12]which provides:

Sec. 16. Proceedings where property claimed by third person. - If the property
levied on is claimed by any person other than the judgment obligor or his agent,
and such person makes an affidavit of his title thereto or right to the possession
thereof, stating the grounds of such right or title, and serves the same upon the
officer making the levy and a copy thereof upon the judgment obligee, the officer
shall not be bound to keep the property, unless such judgment obligee, on demand
of the officer, files a bond approved by the court to indemnify the third-party
claimant in a sum not less than the value of the property levied on. In case of
disagreement as to such value, the same shall be determined by the court issuing
the writ of execution. No claim for damages for the taking or keeping of the
property may be enforced against the bond unless the action therefor is filed within
one hundred twenty (120) days from the date of the filing of the bond.

The officer shall not be liable for damages for the taking or keeping of the property,
to any third-party claimant if such bond is filed. Nothing herein contained shall
prevent such claimant or any third person from vindicating his claim to the property
in a separate action, or prevent the judgment obligee from claiming damages in
the same or separate action against a third-party claimant who filed a frivolous or
plainly spurious claim.

47 | P a g e
 xxxx

The remedy of terceria is available to a third person other than the judgment obligor or his agent
who claims a property levied on. In this case, the property was not levied on and put on
auction. The implementation of the Special Order of Demolition would result in the destruction of
petitioners property. Further, terceria is not a speedy and adequate remedy insofar as petitioners
are concerned considering that the Special Order of Demolition ordered the Deputy Sheriff to
cause the demolition of all the improvements immediately after the expiration of the 15-day
period granted upon the defendants, their agents, assigns, representatives, or
successors-in-interest to remove their improvements on the premises.

The Court recognizes the finality of the trial courts Decision in Civil Case No. 925-R. However,
petitioners are contesting whether their residential structures are within the area subject of Civil
Case No. 925-R. Since petitioners are not parties to Civil Case No. 925-R, respondent has to file
the proper action against petitioners to enforce his property rights within the bounds of the law
and our rules.[13] Petitioners right to possession, if any, should be threshed out in a proper court
proceeding.

WHEREFORE, we SET ASIDE the 28 April 2000 Decision and 24 April 2001 Resolution of the
Court of Appeals in CA-G.R. SP No. 48373. We make permanent the temporary restraining order
issued by this Court on 25 June 2001 enjoining the enforcement of the Special Order of
Demolition dated 30 April 1998 against petitioners.

SO ORDERED.

48 | P a g e
 THIRD DIVISION

CHINA BANKING CORPORATION, G.R. No. 184252

Petitioner,
Present:
Ynares-Santiago, J. (Chairperson),
- versus - Chico-Nazario,

Velasco, Jr.,

Nachura, and

Peralta, JJ.

SPS. WENCESLAO & MARCELINA

MARTIR, Promulgated:

Respondents.

September 11, 2009

x ---------------------------------------------------------------------------------------- x

DECISION

YNARES-SANTIAGO, J.:

Assailed is the November 28, 2007 Decision[1] of the Court of Appeals in CA-G.R. CV No.
00477 which reversed the April 27, 2004 Decision[2] of the Regional Trial Court of General Santos
City, Branch 23; invalidated the foreclosure; and ordered the cancellation of the Certificate of
Sale in favor of petitioner, China Banking Corporation.Also assailed is the August 6, 2008
Resolution[3] which denied the motion for reconsideration.

In 1994, respondents, spouses Wenceslao and Marcelina Martir, executed real estate
mortgages in favor of petitioner China Banking Corporation over three parcels of land described
under TCT No. 50485, OCT No. (P-29452) (P-11287) P-1897, and OCT No. P-2754, as security
for their credit line in the amount of P1,800,000.00.[4] The loan was released in tranches, and for
every amount released, respondents executed the corresponding promissory note.

49 | P a g e
 On September 12, 1997, respondents failed to pay the monthly interests on the
promissory notes, thus a demand letter dated October 8, 1997[5] was sent reminding them of
their obligation. Respondents still failed to pay; hence, the promissory notes and the credit line
were no longer renewed by petitioner. A final demand letter dated December 29, 1997[6] was
sent through registered mail to respondents by petitioners counsel. At that time, respondents
total obligation amounted to P1,705,000.00.

On May 20, 1998, upon the application of petitioner, the properties subject of the real
estate mortgages were extrajudicially foreclosed and sold at public auction for P2,400,000.00
with petitioner as the sole bidder. A Certificate of Sale[7] was issued in favor of petitioner on May
21, 1998, and registered with the Register of Deeds on June 6, 1998.

From March to May 1999, respondents sent series of letters[8] to petitioner inquiring the amount
of loan availed from the credit line, as well as the amount needed to redeem the foreclosed
properties. Petitioner, however, failed to respond to the inquiry. In a letter dated May 11,
1999,[9] respondents formally offered to pay the amount of P1,300,000.00 to petitioner. Said
amount was based on petitioners letter dated October 8, 1997 stating that the principal obligation
amounts to P1,300,000.00.

On May 17, 1999, respondents filed a complaint for nullification of the foreclosure
proceedings[10] alleging non-compliance with the jurisdictional requirements of publication,
posting, registration, payment of filing fees and sheriff fees, and failure to report the extrajudicial
foreclosure proceedings and sale to the Executive Judge. Respondents also imputed bad faith on
the part of petitioner, which allegedly prevented them from redeeming their properties.

In a Decision dated April 27, 2004, the Regional Trial Court upheld the validity of the foreclosure
proceedings, but stated that respondents failure to redeem the properties was caused by
petitioner. Hence, the trial court granted respondents the alternative remedy of redeeming the
properties. The dispositive portion of the Decision reads:[11]

WHEREFORE, considering that the case was filed in 1999, while the
requirement for the payment of docket fees, as well as the registration fees

50 | P a g e
 required on the petition for foreclosure of mortgage per the Supreme Court
Administrative Matter 99-10-05 regarding such procedure in extra-judicial
foreclosure of mortgage took effect only on January 15, 2000, the foreclosure
could not be invalidated even if there was non-compliance with the Court
Administrative Matter 99-10-05. However, the expiration of the period to redeem
being without the plaintiff having been able to do so, was caused by the defendant
bank; therefore, the plaintiff is hereby granted the alternative remedy of
redeeming the properties, in accordance with law and with the mortgage contract
entered into by the parties.

SO ORDERED.

On appeal, the Court of Appeals reversed the decision of the trial court. It invalidated the
foreclosure and ordered the cancellation of the registration of the Certificate of Sale in favor of
petitioner. It also ordered respondents to pay petitioner their loans with interest, without
prejudice to the right of petitioner to foreclose the real estate mortgage upon respondents failure
to pay their obligations. The dispositive portion of the November 28, 2007 Decision reads:[12]

WHEREFORE, the appealed Decision of the Regional Trial Court of General

Santos City, Branch 23 is REVERSED. The Register of Deeds of General Santos City
is hereby ORDERED to cancel the registration of Certificate of Sale in favor of
appellee Bank. Likewise, the appellants are ORDERED to pay the appellee Bank
their loans with interest as stipulated in the contract of loan, without prejudice to
the right of the appellee Bank to foreclose the real estate mortgage upon the
appellants failure to pay their obligations.

SO ORDERED.

Petitioner moved for reconsideration but was denied. Hence, the instant petition raising
the following issues:[13]

I.

THE HONORABLE COURT OF APPEALS GRAVELY ERRED WHEN IT HELD THAT

THE EXTRA-JUDICIAL FORECLOSURE SALE WAS VOID BASED ON THE GROUND
THAT THE NEWSPAPER WHERE THE NOTICE OF AUCTION SALE WAS PUBLISHED

51 | P a g e
 WAS NOT AN ACCREDITED NEWSPAPER, WHICH CONTENTION IS NOT A
REQUIREMENT UNDER EXISTING LAWS AND JURISPRUDENCE.

II.

THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN ITS RULING WHEN IT

FAILED TO APPRECIATE THE FACT THAT THERE WAS SUBSTANTIAL
COMPLIANCE IN BOTH THE POSTING OF THE NOTICE OF EXTRA-JUDICIAL
FORECLOSURE SALE AS WELL AS THE PUBLICATION OF THE SAME IN A
NEWSPAPER OF GENERAL CIRCULATION BY THE FORECLOSING NOTARY PUBLIC.

The petition is meritorious.

In invalidating the extrajudicial foreclosure and sale, the appellate court found that the
posting and publication requirements were not met, thus:

In this case, the appellee Bank failed to comply with both the requirements
of posting and publication. The notice of extrajudicial foreclosure and sale was
posted in the barangay hall and Hall of Justice of General Santos City for only
fourteen (14) days, i.e. from May 6 to May 20, 1998 in violation of the mandated
twenty (20) day period. Likewise, the publication in SUN STAR, a local newspaper,
was not valid on the ground that said newspaper is not an accredited newspaper
of general circulation in General Santos City pursuant to P.D. No. 1079. This is
confirmed by the Certification of Mr. Elmer D. Lastimosa, Clerk of Court VI, Office
of the Clerk of Court of the Regional Trial Court, General Santos City, dated
January 12, 1999 which states that:

xxxx

THIS IS TO CERTIFY that SUN-STAR, General Santos

published by Ang Peryodiko Dabaw, Inc. with editorial and business
address at Halieus Mall, Pendatun Avenue, corner Lukban Street,
General Santos City is not an accredited local newspaper
insofar as this Court is concerned and therefore not
qualified to publish judicial notices, court orders and
summonses and all similar announcement arising from
court litigation required by law to be published, as provided
in Section 1 of P.D. No. 1079.

52 | P a g e
 xxxx

THIS IS TO FURTHER CERTIFY that SUN-STAR General

Santos has filed a Petition for Accreditation docketed as
Miscellaneous Case No. 1797 now pending consideration before the
sala of Honorable Executive Judge Antonio S. Alano.[14]

The requirements for posting and publication in extrajudicial foreclosure are set out in Act
No. 3135, as amended:

Sec. 3. Notice shall be given by posting notices of the sale for not less than
twenty days in at least three public places of the municipality or city where the
property is situated, and if such property is worth more than four hundred pesos,
such notice shall also be published once a week for at least three consecutive
weeks in a newspaper of general circulation in the municipality or city.

Jurisprudence, however, has decreed that the publication of the notice of sale in a
newspaper of general circulation alone is more than sufficient compliance with the notice-posting
requirements of the law.[15] The Court has elucidated that:

We take judicial notice of the fact that newspaper publications have more
far-reaching effects than posting on bulletin boards in public places. There is a
greater probability that an announcement or notice published in a newspaper of
general circulation, which is distributed nationwide, shall have a readership of
more people than that posted in a public bulletin board, no matter how strategic
its location may be, which caters only to a limited few. Hence, the publication of
the notice of sale in the newspaper of general circulation alone is more than
sufficient compliance with the notice-posting requirement of the law. By such
publication, a reasonably wide publicity had been effected such that those
interested might attend the public sale, and the purpose of the law had been
thereby subserved.

The object of a notice of sale is to inform the public of the nature and
condition of the property to be sold, and of the time, place and terms of the sale.

53 | P a g e
 Notices are given for the purpose of securing bidders and to prevent a sacrifice of
the property. If these objects are attained, immaterial errors and mistakes will not
affect the sufficiency of the notice; but if mistakes or omissions occur in the notices
of sale, which are calculated to deter or mislead bidders, to depreciate the value
of the property, or to prevent it from bringing a fair price, such mistakes or
omissions will be fatal to the validity of the notice, and also to the sale made
pursuant thereto.[16]

The focal issue, then, is whether the requirement of publication was complied with.

Presidential Decree 1079, the governing law at the time of the subject foreclosure, requires that
notices shall be published in newspapers or publications published, edited and circulated in the
same city and/or province where the requirement of general circulation applies, thus:

Section 1. All notices of auction sales in extra-judicial foreclosure of real

estate mortgage under Act No. 3135 as amended, judicial notices such as notices
of sale on execution of real properties, notices in special proceedings, court orders
and summonses and all similar announcements arising from court litigation
required by law to be published in a newspaper or periodical of general circulation
in particular provinces and/or cities shall be published in newspapers or
publications published, edited and circulated in the same city and/or province
where the requirement of general circulation applies; Provided, That the province
or city where the publications principal office is located shall be considered the
place where it is edited and published: Provided, further, That in the event there
is no newspaper or periodical published in the locality, the same may be published
in the newspaper or periodical published, edited and circulated in the nearest city
or province: Provided, finally, That no newspaper or periodical which has not been
authorized by law to publish and which has not been regularly published for at
least one year before the date of publication of the notices or announcements
which may be assigned to it shall be qualified to publish the said notices.

Presidential Decree 1079 requires a newspaper of general circulation. A newspaper of

general circulation is published for the dissemination of local news and general information; it has
a bona fide subscription list of paying subscribers; and it is published at regular intervals. The
newspaper must not also be devoted to the interest or published for the entertainment of a
particular class, profession, trade, calling, race or religious denomination. The newspaper need
not have the largest circulation so long as it is of general circulation.[17]

54 | P a g e
 Presidential Decree 1079, however, does not require accreditation. The requirement of
accreditation was imposed by the Court only in 2001, through A.M. No. 01-1-07-SC or
the Guidelines in the Accreditation of Newspapers and Periodicals Seeking to Publish Judicial and
Legal Notices and Other Similar Announcements and in the Raffle Thereof.This circular cannot be
applied retroactively to the case at bar as it will impair petitioners rights.

Moreover, as held in Metrobank v. Peafiel,[18] the accreditation by the presiding judge is

not conclusive that a newspaper is of general circulation, as each case must be decided on its
own merits and evidence.

The accreditation of Maharlika Pilipinas by the Presiding Judge of the RTC

is not decisive of whether it is a newspaper of general circulation
in Mandaluyong City. This Court is not bound to adopt the Presiding Judges
determination, in connection with the said accreditation, that Maharlika Pilipinas is
a newspaper of general circulation. The court before which a case is pending is
bound to make a resolution of the issues based on the evidence on record.[19]

In the instant case, the Affidavit of Publication executed by the account executive of Sun
Star General Santos expressly provided that the said newspaper is of general circulation and is
published in the City of General Santos.[20] This is prima facie proof that Sun Star General Santos
is generally circulated in General Santos City, the place where the properties are located. Notably,
respondents did not claim that the subject newspaper was not generally circulated in the city, but
only that it was not accredited by the court. Hence, there was valid publication and consequently,
the extrajudicial foreclosure and sale are valid.

We now come to the question of whether respondents can redeem their properties on the
basis of the alleged bad faith of petitioner.

The Court rules in the negative.

55 | P a g e
 In effecting redemption, the mortgagor has the duty of tendering payment before the
redemption period expires. While the complaint alleged that respondents made an offer to
redeem the subject properties within the period of redemption, it did not allege that there was
an actual tender of payment of the redemption price as required by the rules.[21]The letter dated
May 11, 1999 is only a formal offer to redeem, unaccompanied by an actual tender of the
redemption price. The said letter reads:[22]
May 11, 1999

Aparente-Salvani St.,

Dadiangas Heights

General Santos City

THE CHINA BANKING CORPORATION

General Santos City

Sir:

This is with reference to my letter dated May 4, 1999 which remained

unanswered up to the present.

I have been asking for the total amount of the loan with your bank so that
the proper amount of redemption can be determined, as you also refuse to give
us the amount of redemption.

Per my computation, the principal obligation is only P1,300,000.00 for

which the redemption amount should be based. Because of your failure and refusal
consider this as a formal tender of redemption in the principal amount of
P1,300,000.00. This tender is made without however waiving my right to question
the validity of the foreclosure proceedings.

Your reply is highly appreciated, otherwise your failure to do so within a

period of two (2) days will constrain us to file the necessary action in court to
protect my interest.

56 | P a g e
 Very truly yours,

(signed)

WENCESLAO V. MARTIR JR.,

This tender of payment is also made to:

ATTY. LORETO B. ACHARON

Notary Public who conducted the

Extrajudicial Sale

The general rule in redemption is that it is not sufficient that a person offering to redeem
manifests his desire to do so. The statement of intention must be accompanied by an actual and
simultaneous tender of payment. This constitutes the exercise of the right to repurchase.[23]

In several cases decided by the Court where the right to repurchase was held to have
been properly exercised, there was an unequivocal tender of payment for the full amount of the
repurchase price. Otherwise, the offer to redeem is ineffectual. Bona fide redemption necessarily
implies a reasonable and valid tender of the entire repurchase price, otherwise the rule on the
redemption period fixed by law can easily be circumvented.[24]

Moreover, jurisprudence also characterizes a valid tender of payment as one where the full
redemption price is tendered.

Consequently, in this case, the offer by respondents on July 24, 1986 to

redeem the foreclosed properties for P1,872,935 and the subsequent consignation
in court of P1,500,000 on August 27, 1986, while made within the period of
redemption, was ineffective since the amount offered and actually consigned not

57 | P a g e
 only did not include the interest but was in fact also way below the P2,782,554.66
paid by the highest bidder/purchaser of the properties during the auction sale.

In Bodiongan vs. Court of Appeals, we held:

In order to effect a redemption, the judgment debtor must pay the

purchaser the redemption price composed of the following: (1) the price
which the purchaser paid for the property; (2) interest of 1% per month
on the purchase price; (3) the amount of any assessments or taxes which
the purchaser may have paid on the property after the purchase; and (4)
interest of 1% per month on such assessments and taxes x x x.

Furthermore, Article 1616 of the Civil Code of the Philippines provides:

The vendor cannot avail himself of the right to repurchase without

returning to the vendee the price of the sale x x x.

It is not difficult to understand why the redemption price should either be

fully offered in legal tender or else validly consigned in court. Only by such
means can the auction winner be assured that the offer to redeem is being
made in good faith.[25]

Respondents repeated requests for information as regards the amount of loan availed
from the credit line and the amount of redemption, and petitioners failure to accede to said
requests do not invalidate the foreclosure. Respondents can find other ways to know the
redemption price. For one, they can examine the Certificate of Sale registered with the Register
of Deeds to verify the purchase price, or upon the filing of their complaint, they could have moved
for a computation of the redemption price and consigned the same to the court. At any rate,
whether or not respondents were diligent in asserting their willingness to pay is
irrelevant. Redemption within the period allowed by law is not a matter of intent but a question
of payment or valid tender of the full redemption price within said period. [26]

58 | P a g e
 Even the complaint instituted by respondents cannot aid their plight because the
institution of an action to annul a foreclosure sale does not suspend the running of the redemption
period.
Moreover, the period within which to redeem the property sold at a sheriffs sale is
not suspended by the institution of an action to annul the foreclosure sale. It is
clear, then, that petitioners have lost any right or interest over the subject property
primarily because of their failure to redeem the same in the manner and within
the period prescribed by law. Their belated attempts to question the legality and
validity of the foreclosure proceedings and public auction must accordingly fail.[27]

Indeed, the law allows respondents the right to redeem their foreclosed properties. But
in so granting that right, the law intended that their offer to redeem be valid and effective,
accompanied by an actual tender of the redemption price. Fixing a definite term within which the
property should be redeemed is meant to avoid prolonged economic uncertainty over the
ownership of the thing sold.[28]

WHEREFORE, the petition is GRANTED. The November 28, 2007 Decision and the
August 6, 2008 Resolution of the Court of Appeals in CA-G.R. CV No. 00477 are REVERSED AND
SET ASIDE. The April 27, 2004 Decision of the Regional Trial Court of General Santos City,
Branch 23 upholding the validity of the extra-judicial foreclosure sale
is REINSTATED and AFFIRMED with the MODIFICATION that respondents are no longer
allowed to redeem their properties.

SO ORDERED.

59 | P a g e
 SECOND DIVISION

BPI FAMILY SAVINGS G.R. No. 176019

BANK, INC.,

Petitioner,
Present:

CARPIO, J., Chairperson,

NACHURA,
- versus -
PERALTA,

ABAD, and

MENDOZA, JJ.

GOLDEN POWER DIESEL

SALES CENTER, INC. Promulgated:
and RENATO C. TAN,

Respondents.
January 12, 2011

x-----------------------------------------x

DECISION

CARPIO, J.:

The Case

60 | P a g e
This is a petition for review1 of the 13 March 2006 Decision2 and 19 December 2006
Resolution3 of the Court of Appeals in CA-G.R. SP No. 78626. In its 13 March 2006 Decision, the
Court of Appeals denied petitioner BPI Family Savings Bank, Inc.ʼs (BPI Family) petition for
mandamus and certiorari. In its 19 December 2006 Resolution, the Court of Appeals denied
BPI Familyʼs motion for reconsideration.

The Facts

On 26 October 1994, CEDEC Transport, Inc. (CEDEC) mortgaged two parcels of land covered by
Transfer Certificate of Title (TCT) Nos. 134327 and 134328 situated in Malibay, Pasay City,
including all the improvements thereon (properties), in favor of BPI Family to secure a loan
of P6,570,000. On the same day, the mortgage was duly annotated on the titles under Entry
No. 94-2878. On 5 April and 27 November 1995, CEDEC obtained from BPI Family additional
loans of P2,160,000 and P1,140,000, respectively, and again mortgaged the same properties.
These latter mortgages were duly annotated on the titles under Entry Nos. 95-6861 and 95-
11041, respectively, on the same day the loans were obtained.

Despite demand, CEDEC defaulted in its mortgage obligations. On 12 October 1998, BPI Family
filed with the ex-officio sheriff of the Regional Trial Court of Pasay City (RTC) a verified petition
for extrajudicial foreclosure of real estate mortgage over the properties under Act No. 3135, as
amended.4

On 10 December 1998, after due notice and publication, the sheriff sold the properties at public
auction. BPI Family, as the highest bidder, acquired the properties for P13,793,705.31. On 14
May 1999, the Certificate of Sheriffʼs Sale, dated 24 February 1999, was duly annotated on the
titles covering the properties.

On 15 May 1999, the one-year redemption period expired without CEDEC redeeming the
properties. Thus, the titles to the properties were consolidated in the name of BPI Family. On
13 September 2000, the Registry of Deeds of Pasay City issued new titles, TCT Nos. 142935
and 142936, in the name of BPI Family.

However, despite several demand letters, CEDEC refused to vacate the properties and to
surrender possession to BPI Family. On 31 January 2002, BPI Family filed an Ex-Parte Petition
for Writ of Possession over the properties with Branch 114 of the Regional Trial Court of Pasay
City (trial court). In its 27 June 2002 Decision, the trial court granted BPI Familyʼspetition.5 On
12 July 2002, the trial court issued the Writ of Possession.

61 | P a g e
On 29 July 2002, respondents Golden Power Diesel Sales Center, Inc. and Renato C.
Tan6 (respondents) filed a Motion to Hold Implementation of the Writ of
Possession.7 Respondents alleged that they are in possession of the properties which they
acquired from CEDEC on 10 September 1998 pursuant to the Deed of Absolute Sale with
Assumption of Mortgage (Deed of Sale).8 Respondents argued that they are third persons
claiming rights adverse to CEDEC, the judgment obligor and they cannot be deprived of
possession over the properties. Respondents also disclosed that they filed a complaint before
Branch 111 of the Regional Trial Court of Pasay City, docketed as Civil Case No. 99-0360, for
the cancellation of the Sheriffʼs Certificate of Sale and an order to direct BPI Family to honor
and accept the Deed of Absolute Sale between CEDEC and respondents.9

On 12 September 2002, the trial court denied respondents motion.10 Thereafter, the trial court
issued an alias writ of possession which was served upon CEDEC and all other persons claiming
rights under them.

However, the writ of possession expired without being implemented. On 22 January 2003, BPI
Family filed an Urgent Ex-Parte Motion to Order the Honorable Branch Clerk of Court to Issue
Alias Writ of Possession. In an Order dated 27 January 2003, the trial court granted
BPI Familyʼs motion.

Before the alias writ could be implemented, respondent Renato C. Tan filed with the trial court
an Affidavit of Third Party Claim11 on the properties. Instead of implementing the writ, the
sheriff referred the matter to the trial court for resolution.

On 11 February 2003, BPI Family filed an Urgent Motion to Compel Honorable Sheriff and/or his
Deputy to Enforce Writ of Possession and to Break Open the properties. In its 7 March 2003
Resolution, the trial court denied BPI Familyʼs motion and ordered the sheriff to suspend the
implementation of the alias writ of possession.12 According to the trial court, the order granting
the alias writ of possession should not affect third persons holding adverse rights to the
judgment obligor. The trial court admitted that in issuing the first writ of possession it failed to
take into consideration respondents complaint before Branch 111 claiming ownership of the
property. The trial court also noted that respondents were in actual possession of the properties
and had been updating the payment of CEDECʼs loan balances with BPI Family. Thus, the trial
court found it necessary to amend its 12 September 2002 Order and suspend the
implementation of the writ of possession until Civil Case No. 99-0360 is resolved.

62 | P a g e
BPI Family filed a motion for reconsideration. In its 20 June 2003 Resolution, the trial court
denied the motion.13

BPI Family then filed a petition for mandamus and certiorari with application for a temporary
restraining order or preliminary injunction before the Court of Appeals. BPI Family argued that
the trial court acted with grave abuse of discretion amounting to lack or excess of jurisdiction
when it ordered the suspension of the implementation of the alias writ of possession. According
to BPI Family, it was the ministerial duty of the trial court to grant the writ of possession in its
favor considering that it was now the owner of the properties and that once issued, the writ
should be implemented without delay.

The Court of Appeals dismissed BPI Familyʼs petition. The dispositive portion of the 13 March
2006 Decision reads:

WHEREFORE, the instant Petition for Writ of Mandamus and Writ of Certiorari with
Application for a TRO and/or Preliminary Injunction is hereby DENIED. The
twin Resolutions dated March 7, 2003 and June 20, 2003, both issued by the public
respondent in LRC Case No. 02-0003, ordering the sheriff to suspend the
implementation of the Alias Writ of Possession issued in favor of the petitioner, and
denying its Urgent Omnibus Motion thereof, respectively, are hereby AFFIRMED.

SO ORDERED.14

BPI Family filed a motion for reconsideration. In its 19 December 2006 Resolution, the Court of
Appeals denied the motion.

The Ruling of the Court of Appeals

The Court of Appeals ruled that the trial court did not commit grave abuse of discretion in
suspending the implementation of the alias writ of possession because respondents were in
actual possession of the properties and are claiming rights adverse to CEDEC, the judgment
obligor. According to the Court of Appeals, the principle that the implementation of the writ of
possession is a mere ministerial function of the trial court is not without exception. The Court of
Appeals held that the obligation of the court to issue an ex parte writ of possession in favor of

63 | P a g e
the purchaser in an extrajudicial foreclosure sale ceases to be ministerial once it appears that
there is a third party in possession of the property who is claiming a right adverse to that of the
debtor or mortgagor.

The Issues

BPI Family raises the following issues:

A.

The Honorable Court of Appeals seriously erred in upholding the finding of the
Honorable Regional Trial Court that despite the fact that private respondents merely
stepped into the shoes of mortgagor CEDEC, being the vendee of the properties in
question, they are categorized as third persons in possession thereof who are claiming a
right adverse to that of the debtor/mortgagor CEDEC.

B.

The Honorable Court of Appeals gravely erred in sustaining the aforementioned twin
orders suspending the implementation of the writ of possession on the ground that the
annulment case filed by private respondents is still pending despite the established
ruling that pendency of a case questioning the legality of a mortgage or auction sale
cannot be a ground for the non-issuance and/or non-implementation of a writ of
possession.15

The Ruling of the Court

The petition is meritorious.

BPI Family argues that respondents cannot be considered a third party who is claiming a right
adverse to that of the debtor or mortgagor because respondents, as vendee, merely stepped

64 | P a g e
into the shoes of CEDEC, the vendor and judgment obligor. According to BPI Family,
respondents are mere extensions or successors-in-interest of CEDEC. BPI Family also argues
that the pendency of an action questioning the validity of a mortgage or auction sale cannot be
a ground to oppose the implementation of a writ of possession.

On the other hand, respondents insist that they are third persons who claim rights over the
properties adverse to CEDEC. Respondents argue that the obligation of the court to issue an ex
parte writ of possession in favor of the purchaser in an extrajudicial foreclosure sale ceases to
be ministerial once it appears that there is a third party in possession of the property who is
claiming a right adverse to that of the judgment obligor.

In extrajudicial foreclosures of real estate mortgages, the issuance of a writ of possession is

governed by Section 7 of Act No. 3135, as amended, which provides:

SECTION 7. In any sale made under the provisions of this Act, the purchaser may
petition the Court of First Instance (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 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 the 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.

This procedure may also be availed of by the purchaser seeking possession of the foreclosed
property bought at the public auction sale after the redemption period has expired without
redemption having been made.16

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In China Banking Corporation v. Lozada,17 we ruled:

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.18 (Emphasis supplied)

Thus, the general rule is that a purchaser in a public auction sale of a foreclosed property is
entitled to a writ of possession and, upon an ex parte petition of the purchaser, it is ministerial
upon the trial court to issue the writ of possession in favor of the purchaser.

There is, however, an exception. Section 33, Rule 39 of the Rules of Court provides:

Section 33. Deed and possession to be given at expiration of redemption period; by

whom executed or given. - 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. (Emphasis
supplied)

Therefore, in an extrajudicial foreclosure of real property, when the foreclosed property is in the
possession of a third party holding the same adversely to the judgment obligor, the issuance by
the trial court of a writ of possession in favor of the purchaser of said real property ceases to be
ministerial and may no longer be done ex parte.19 The procedure is for the trial court to order a
hearing to determine the nature of the adverse possession.20 For the exception to apply,
however, the property need not only be possessed by a third party, but also held by the third
party adversely to the judgment obligor.

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In this case, BPI Family invokes the general rule that they are entitled to a writ of possession
because respondents are mere successors-in-interest of CEDEC and do not possess the
properties adversely to CEDEC. Respondents, on the other hand, assert the exception and insist
that they hold the properties adversely to CEDEC and that their possession is a sufficient
obstacle to the ex parte issuance of a writ of possession in favor of BPI Family.

Respondentsʼ argument fails to persuade the Court. It is clear that respondents acquired
possession over the properties pursuant to the Deed of Sale which provides that
for P15,000,000CEDEC will sell, transfer and convey to respondents the properties free from all
liens and encumbrances excepting the mortgage as may be subsisting in favor of the BPI
FAMILY SAVINGS BANK.21 Moreover, the Deed of Sale provides that respondents bind
themselves to assume the payment of the unpaid balance of the mortgage indebtedness of the
VENDOR (CEDEC) amounting to P7,889,472.48, as of July 31, 1998, in favor of the
aforementioned mortgagee (BPI Family) by the mortgage instruments and does hereby further
agree to be bound by the precise terms and conditions therein contained.22

In Roxas v. Buan,23 we ruled:

It will be recalled that Roxasʼ possession of the property was premised on its alleged
sale to him by Valentin for the amount of P100,000.00. Assuming this to be true, it is
readily apparent that Roxasholds title to and possesses the property
as Valentinʼs transferee. Any right he has to the property is necessarily derived from that
of Valentin. As transferee, he steps into the latterʼs shoes. Thus, in the instant case,
considering that the property had already been sold at public auction pursuant to an
extrajudicial foreclosure, the only interest that may be transferred
by Valentin to Roxas is the right to redeem it within the period prescribed by
law. Roxas is therefore the successor-in-interest of Valentin, to whom the latter had
conveyed his interest in the property for the purpose of redemption.
Consequently, Roxasʼ occupancy of the property cannot be considered adverse to
Valentin.24

In this case, respondentsʼ possession of the properties was premised on the sale to them by
CEDEC for the amount of P15,000,000. Therefore, respondents hold title to and possess the
properties as CEDECʼs transferees and any right they have over the properties is derived from
CEDEC. As transferees of CEDEC, respondents merely stepped into CEDECs shoes and are
necessarily bound to acknowledge and respect the mortgage CEDEC had earlier executed in
favor of BPI Family.25 Respondents are the successors-in-interest of CEDEC and
thus, respondentsʼ occupancy over the properties cannot be considered adverse to CEDEC.

67 | P a g e
Moreover, in China Bank v. Lozada,26 we discussed the meaning of a third party who is actually
holding the property adversely to the judgment obligor. We stated:

The exception provided under Section 33 of Rule 39 of the Revised Rules of Court
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.27

In this case, respondents cannot claim that their right to possession over the properties is
analogous to any of these. Respondents cannot assert that their right of possession is adverse
to that of CEDEC when they have no independent right of possession other than what they
acquired from CEDEC. Since respondents are not holding the properties adversely to CEDEC,
being the latterʼs successors-in-interest, there was no reason for the trial court to order the
suspension of the implementation of the writ of possession.

Furthermore, it is settled that a pending action for annulment of mortgage or foreclosure sale
does not stay the issuance of the writ of possession.28 The trial court, where the application for
a writ of possession is filed, does not need to look into the validity of the mortgage or the
manner of its foreclosure.29 The purchaser is entitled to a writ of possession without prejudice
to the outcome of the pending annulment case.30

In this case, the trial court erred in issuing its 7 March 2003 Order suspending the
implementation of the alias writ of possession. Despite the pendency of Civil Case No. 99-0360,
the trial court should not have ordered the sheriff to suspend the implementation of the writ of
possession. BPI Family, as purchaser in the foreclosure sale, is entitled to a writ of possession
without prejudice to the outcome of Civil Case No. 99-0360.

WHEREFORE, we GRANT the petition. We SET ASIDE the 13 March 2006 Decision and the
19 December 2006 Resolution of the Court of Appeals in CA-G.R. SP No. 78626. We SET
ASIDE the 7 March and 20 June 2003 Resolutions of the Regional Trial Court, Branch
114, Pasay City. We ORDER the sheriff to proceed with the implementation of the writ of
possession without prejudice to the outcome of Civil Case No. 99-0360.

SO ORDERED

68 | P a g e
 FIRST DIVISION

ELIGIO P. MALLARI, G.R. No. 157659

Petitioner,
Present:

PUNO, C.J., Chairperson,

-versus- CARPIO-MORALES,
LEONARDO-DE
CASTRO,
BERSAMIN, and
VILLARAMA, JR., JJ.
GOVERNMENT SERVICE
INSURANCE SYSTEM and
THE PROVINCIAL SHERIFF Promulgated:
OF PAMPANGA,
Respondents. January 25, 2010
x----------------------------------------------------------------------x

DECISION

BERSAMIN, J.:

By petition for review on certiorari, the petitioner appeals the decision promulgated
on March 17, 2003, whereby the Court of Appeals (CA) dismissed his petition for certiorari.

Antecedents

In 1968, the petitioner obtained two loans totaling P34,000.00 from respondent
Government Service Insurance System (GSIS). To secure the performance of his obligations, he
mortgaged two parcels of land registered under his and his wife Marcelina Mallari’s names.
However, he paid GSIS about ten years after contracting the obligations only P10,000.00 on May
22, 1978 and P20,000.00 on August 11, 1978.[1]

What followed thereafter was the series of inordinate moves of the petitioner to delay the
efforts of GSIS to recover on the debt, and to have the unhampered possession of the foreclosed
property.

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 After reminding the petitioner of his unpaid obligation on May 2, 1979, GSIS sent
on November 2, 1981 a telegraphic demand to him to update his account. On November 10,
1981, he requested a final accounting, but did not do anything more. Nearly three years later,
on March 21, 1984, GSIS applied for the extrajudicial foreclosure of the mortgage by reason of
his failure to settle his account. On November 22, 1984, he requested an updated computation
of his outstanding account. On November 29, 1984, he persuaded the sheriff to hold the
publication of the foreclosure notice in abeyance, to await action on his pending request for final
accounting (that is, taking his payments of P30,000.00 made in 1978 into account). On December
13, 1984, GSIS responded to his request and rendered a detailed explanation of the account.
On May 30, 1985, it sent another updated statement of account. On July 21, 1986, it finally
commenced extrajudicial foreclosure proceedings against him because he had meanwhile made
no further payments.

On August 22, 1986, the petitioner sued GSIS and the Provincial Sheriff of Pampanga in
the Regional Trial Court (RTC), Branch 44, in San Fernando, Pampanga, docketed as Civil Case
No. 7802,[2] ostensibly to enjoin them from proceeding against him for injunction (with an
application for preliminary injunction). The RTC ultimately decided Civil Case No. 7802 in his
favor, nullifying the extrajudicial foreclosure and auction sale; cancelling Transfer Certificate of
Title (TCT) No. 284272-R and TCT No. 284273-R already issued in the name of GSIS; and
reinstating TCT No. 61171-R and TCT No. 54835-R in his and his wife’s names.[3]

GSIS appealed the adverse decision to the CA, which reversed the RTC on March 27,
1996. [4]

The petitioner elevated the CA decision to this Court via petition for review
on certiorari (G.R. No. 124468).[5]

On September 16, 1996, this Court denied his petition for review.[6] On January 15, 1997,
this Court turned down his motion for reconsideration.[7]

As a result, the CA decision dated March 27, 1996 became final and executory, rendering
unassailable both the extrajudicial foreclosure and auction sale held on September 22, 1986, and
the issuance of TCT No. 284272-R and TCT No. 284273-R in the name of GSIS.

GSIS thus filed an ex parte motion for execution and for a writ of possession
on September 2, 1999.[8] Granting the ex parte motion on October 8, 1999,[9] the RTC issued

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a writ of execution cum writ of possession on October 21, 1999,[10] ordering the sheriff to place
GSIS in possession of the properties.

The sheriff failed to serve the writ, however, partly because of the petitioner’s request for
an extension of time within which to vacate the properties. It is noted that GSIS acceded to the
request.[11]
Yet, the petitioner did not voluntarily vacate the properties, but instead filed a motion for
reconsideration and/or to quash the writ of execution on March 27, 2000.[12]Also, the petitioner
commenced a second case against GSIS and the provincial sheriff in the RTC in San Fernando,
Pampanga (Civil Case No. 12053), ostensibly for consignation (coupled with a prayer for a writ of
preliminary injunction or temporary restraining order). However, the RTC dismissed Civil Case No.
12053 on November 10, 2000 on the ground of res judicata, impelling him to appeal the dismissal
to the CA (C.A.-G.R. CV No. 70300).[13]

In the meanwhile, the petitioner filed a motion dated April 5, 2000 in Civil Case No. 7802
to hold GSIS, et al.[14] in contempt of court for painting the fence of the properties during the
pendency of his motion for reconsideration and/or to quash the writ of execution.[15] He filed
another motion in the same case, dated April 17, 2000, to hold GSIS and its local manager Arnulfo
B. Cardenas in contempt of court for ordering the electric company to cut off the electric services
to the properties during the pendency of his motion for reconsideration and/or to quash the writ
of execution.[16]

To prevent the Presiding Judge of Branch 44 of the RTC from resolving the pending
incidents in Civil Case No. 7802, GSIS moved to inhibit him for alleged partiality towards the
petitioner as borne out by his failure to act on the motion for reconsideration and/or to quash
writ of execution, motions for contempt of court, and motion forissuance of break open order for
more than a year from their filing, praying that the case be re-raffled to another branch of the
RTC.[17] Consequently, Civil Case No. 7802 was re-assigned to Branch 48, whose Presiding Judge
then denied the motions for contempt of court on July 30, 2001, and directed the Branch Clerk
of Court to cause the re-implementation of the writ of execution cum writ of
possession dated October 21, 1999. [18]

The petitioner sought reconsideration,[19] but the Presiding Judge of Branch 48 denied
his motion for reconsideration on February 11, 2002.[20]

Ruling of the CA

71 | P a g e
 By petition for certiorari dated March 15, 2002 filed in the CA, the petitioner assailed the
orders of February 11, 2002, July 30, 2001, October 21, 1999, and October 8, 1999.[21]

On March 17, 2003, however, the CA dismissed the petition for certiorari for lack of
merit, [22]
stating:

We find the instant petition patently devoid of merit. This Court is not
unaware of the legal tactics and maneuvers employed by the petitioner in delaying
the disposition of the subject case (Civil Case No. 7802) which has already become
final and executory upon the final resolution by the Supreme Court affirming the
judgment rendered by the Court of Appeals. We construe the actuation of the
petitioner in resorting to all kinds of avenues accorded by the Rules of Court,
through the filing of several pleadings and/or motions in litigating this case, as
running counter to the intendment of the Rules to be utilized in promoting the
objective of securing a just, speedy and inexpensive disposition of every action
and proceeding.

The issues raised in the present controversy have already been settled in our
existing jurisprudence on the subject. In the case of De Jesus vs. Obnamia,
Jr., the Supreme Court ruled that “generally, no notice or even prior hearing of a
motion for execution is required before a writ of execution is issued when a
decision has already become final.”

The recent accretion to the corpus of our jurisprudence has established the
principle of law, as enunciated in Buaya vs. Stronghold Insurance Co., Inc. that
“once a judgment becomes final and executory, the prevailing party can have it
executed as a matter of right, and the issuance of a Writ of Execution becomes a
ministerial duty of the court.”

The rule is also firmly entrenched in the aforecited Buaya case that “the
effective and efficient administration of justice requires that once a judgment has
become final, the prevailing party should not be deprived of the fruits of the verdict
by subsequent suits on the same issues filed by the same parties. Courts are duty-
bound to put an end to controversies. Any attempt to prolong, resurrect or juggle
them should be firmly struck down. The system of judicial review should not be
misused and abused to evade the operation of final and executory judgments.”

As succinctly put in Tag Fibers, Inc. vs. National Labor Relations Commission,
the Supreme Court is emphatic in saying that “the finality of a decision is a
jurisdictional event that cannot be made to depend on the convenience of a party.”

We find no cogent reason to discompose the findings of the court

below. Thus, we sustain the assailed Orders of the court a quo since no abuse of
discretion has been found to have been committed by the latter in their

72 | P a g e
 issuance. Moreover, this Court finds this petition to be part of the dilatory tactics
of the petitioner to stall the execution of a final and executory decision in Civil
Case No. 7802 which has already been resolved with finality by no less than the
highest tribunal of the land.

WHEREFORE, premises considered, the instant petition is hereby DISMISSED

for lack of merit. Costs against the petitioner.

SO ORDERED.[23]

Issues

Hence, this appeal.

The petitioner insists herein that the CA gravely erred in refusing “to accept the nullity of
the following orders” of the RTC, to wit:

1. THE ORDER OF THE TRIAL COURT DATED OCTOBER 8, 1999, GRANTING

THE EX-PARTE MOTION FOR EXECUTION AND/OR ISSUANCE OF THE WRIT
OF EXECUTION OF POSSESSION IN FAVOR OF THE RESPONDENT GSIS;

2. THE ORDER OF THE TRIAL COURT DATED OCTOBER 21, 1999 GRANTING
THE ISSUANCE AND IMPLEMENTATION OF THE WRIT OF EXECUTION CUM
WRIT OF POSSESSION IN FAVOR OF RESPONDENT GSIS;
3. THE ORDER OF THE TRIAL COURT DATED JULY 30, 2001 DIRECTING TO
CAUSE THE RE-IMPLEMENTATION OF THE WRIT OF EXECUTION CUM WRIT
OF POSSESSION IN FAVOR OF THE RESPONDENT GSIS; and

4. THE ORDER OF THE TRIAL COURT DATED FEBRUARY 11, 2002, DENYING
THE MOTION FOR RECONSIDERATION OF THE ORDER DATED SEPTEMBER
14, 2001, IN RELATION TO THE COURT ORDER DATED JULY 30, 2001.[24]

Ruling of the Court

The petition for review on certiorari absolutely lacks merit.

I
Petition for Certiorari in CA
Was Filed Beyond Reglementary Period

The petition assailed before the CA on certiorari the following orders of the RTC, to wit:

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 1. The order dated October 8, 1999 (granting the ex parte motion for execution
and/or issuance of the writ of execution cum writ of possession of GSIS);[25]

2. The order dated October 21, 1999 (directing the issuance of the writ of
execution cum writ of possession in favor of GSIS);[26]

3. The order dated July 30, 2001 (requiring the Branch Clerk of Court to cause
the re-implementation of the writ of execution cum writ of possession, and
dismissing the motions to hold GSIS, et al. in contempt);[27] and

4. The order dated February 11, 2002 (denying the motion for
reconsideration dated August 17, 2001 seeking the reconsideration of the
order dated July 30, 2001).[28]

The July 30, 2001 order denied the petitioner’s motion for reconsideration and/or to
quash writ of execution, and motion to hold GSIS, Tony Dimatulac, et al. and Arnulfo Cardenas
in contempt; and declared GSIS’s motion for issuance of break open order and for designation of
special sheriff from GSIS Legal Services Group as premature. In turn, the motion for
reconsideration and/or to quash writ of execution denied by the order of July 30,
2001 had merely challenged the orders of October 8, 1999 and October 21, 1999(granting
the writ of execution cum writ of possession as a matter of course).

Considering that the motion for reconsideration dated August 17, 2001 denied by
the order dated February 11, 2002 was in reality and effect a prohibited second motion for
reconsideration vis-à-vis the orders dated October 21, 1999 and October 8, 1999, the assailed
orders dated July 30, 2001, October 21, 1999, and October 8, 1999 could no longer be subject
to attack by certiorari. Thus, the petition for certiorari filed only in March 2002 was already
improper and tardy for being made beyond the 60-day limitation defined in Section 4, Rule 65,
1997 Rules of Civil Procedure, as amended,[29] which requires a petition for certiorari to be filed
“not later than sixty (60) days from notice of the judgment, order or resolution,” or, in case a
motion for reconsideration or new trial is timely filed, whether such motion is required or not,
“the sixty (60) day period shall be counted from notice of the denial of the said motion.”

It is worth emphasizing that the 60-day limitation is considered inextendible, because the
limitation has been prescribed to avoid any unreasonable delay that violates the constitutional
rights of parties to a speedy disposition of their cases.[30]

II

74 | P a g e
 Nature of the Writ of Possession
and its Ministerial Issuance

The petitioner claims that he had not been notified of the motion seeking the issuance of
the writ of execution cum writ of possession; hence, the writ was invalid.

As earlier shown, the CA disagreed with him.

We sustain the CA, and confirm that the petitioner, as defaulting mortgagor, was not
entitled under Act 3135, as amended, and its pertinent jurisprudence to any prior notice of the
application for the issuance of the writ of possession.

A writ of possession, which commands the sheriff to place a person in possession of real
property, may be issued in: (1) land registration proceedings under Section 17 of Act No. 496;
(2) judicial foreclosure, provided the debtor is in possession of the mortgaged property, and no
third person, not a party to the foreclosure suit, had intervened; (3) extrajudicial foreclosure of a
real estate mortgage, pending redemption under Section 7 of Act No. 3135, as amended by Act
No. 4118; and (4) execution sales, pursuant to the last paragraph of Section 33, Rule 39 of
the Rules of Court.[31]
Anent the redemption of property sold in an extrajudicial foreclosure sale made pursuant
to the special power referred to in Section 1[32] of Act No. 3135,[33] as amended, the debtor, his
successor-in-interest, or any judicial creditor or judgment creditor of said debtor, or any person
having a lien on the property subsequent to the mortgage or deed of trust under which the
property is sold has the right to redeem the property at anytime within the term of one year from
and after the date of the sale, such redemption to be
governed by the provisions of Section 464 to Section 466 of the Code of Civil Procedure, to
the extent that said provisions were not inconsistent with the provisions of Act 3135.[34]

In this regard, we clarify that the redemption period envisioned under Act 3135 is
reckoned from the date of the registration of the sale, not from and after the date of the sale, as
the text of Act 3135 shows. Although the original Rules of Court (effective on July 1, 1940)
incorporated Section 464 to Section 466 of the Code of Civil Procedure as its Section 25 (Section
464); Section 26 (Section 465); and Section 27 (Section 466) of Rule 39, with Section 27 still
expressly reckoning the redemption period to be “at any time within twelve months after the
sale;” and although the Revised Rules of Court (effective on January 1, 1964) continued to

75 | P a g e
provide in Section 30 of Rule 39 that the redemption be made from the purchaser “at any time
within

twelve (12) months after the sale,”[35] the 12-month period of redemption came to be held as
beginning “to run not from the date of the sale but from the time of registration of the sale in the
Office of the Register of Deeds.”[36] This construction was due to the fact that the sheriff’s sale of
registered (and unregistered) lands did not take effect as a conveyance, or did not bind the land,
until the sale was registered in the Register of Deeds.[37]

Desiring to avoid any confusion arising from the conflict between the texts of the Rules of
Court (1940 and 1964) and Act No. 3135, on one hand, and the jurisprudence clarifying the
reckoning of the redemption period in judicial sales of real property, on the other hand, the Court
has incorporated in Section 28 of Rule 39 of the current Rules of Court (effective on July 1, 1997)
the foregoing judicial construction of reckoning the redemption period from the date of the
registration of the certificate of sale, to wit:

Sec. 28. Time and manner of, and amounts payable on, successive
redemptions; notice to be given and filed. — The judgment obligor, or
redemptioner, may redeem the property from the purchaser, at any time within
one (1) year from the date of the registration of the certificate of sale,
by paying the purchaser the amount of his purchase, with one per centum per
month interest thereon in addition, up to the time of redemption, together with
the amount of any assessments or taxes which the purchaser may have paid
thereon after purchase, and interest on such last named amount at the same rate;
and if the purchaser be also a creditor having a prior lien to that of the
redemptioner, other than the judgment under which such purchase was made, the
amount of such other lien, with interest.

Property so redeemed may again be redeemed within sixty (60) days after
the last redemption upon payment of the sum paid on the last redemption, with
two per centum thereon in addition, and the amount of any assessments or taxes
which the last redemptioner may have paid thereon after redemption by him, with
interest on such last-named amount, and in addition, the amount of any liens held
by said last redemptioner prior to his own, with interest. The property may be
again, and as often as a redemptioner is so disposed, redeemed from any previous
redemptioner within sixty (60) days after the last redemption, on paying the sum
paid on the last previous redemption, with two per centum thereon in addition,
and the amounts of any assessments or taxes which the last previous
redemptioner paid after the redemption thereon, with interest thereon, and the
amount of any liens held by the last redemptioner prior to his own, with interest.

Written notice of any redemption must be given to the officer who made the
sale and a duplicate filed with the registry of deeds of the place, and if any

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 assessments or taxes are paid by the redemptioner or if he has or acquires any
lien other than that upon which the redemption was made, notice thereof must in
like manner be given to the officer and filed with the registry of deeds; if such
notice be not filed, the property may be redeemed without paying such
assessments, taxes, or liens. (30a) (Emphasis supplied).

Accordingly, the mortgagor or his successor-in-interest must redeem the foreclosed

property within one year from the registration of the sale with the Register of Deeds in order to
avoid the title from consolidating in the purchaser. By failing to redeem thuswise, the mortgagor
loses all interest over the foreclosed property.[38] The purchaser, who has a right to possession
that extends beyond the expiration of the redemption period, becomes the absolute owner of the
property when no redemption is made,[39] that it is no longer necessary for the purchaser to file
the bond required under Section 7 of Act No. 3135, as amended, considering that the possession
of the land becomes his absolute right as the land’s confirmed owner.[40] The consolidation of
ownership in the purchaser’s name and the issuance to him of a new TCT then entitles him to
demand possession of the property at any time, and the issuance of a writ of possession to him
becomes a matter of right upon the consolidation of title in his name.

The court can neither halt nor hesitate to issue the writ of possession. It cannot
exercise any discretion to determine whether or not to issue the writ, for the issuance of the
writ to the purchaser in an extrajudicial foreclosure sale becomes a ministerial function.[41] Verily,
a marked distinction exists between a discretionary act and a ministerial one. A purely ministerial
act or duty is one that 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, not ministerial. The duty is ministerial only when its discharge requires
neither the exercise of official discretion nor the exercise of judgment.[42]

The proceeding upon an application for a writ of possession is ex parte and summary in
nature, brought for the benefit of one party only and without notice being sent by the court to
any person adverse in interest. The relief is granted even without giving an opportunity to be
heard to the person against whom the relief is sought.[43] Its nature as an ex parte petition under
Act No. 3135, as amended, renders the application for the issuance of a writ of possession a non-
litigious proceeding.[44]

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 It is clear from the foregoing that a non-redeeming mortgagor like the petitioner had no
more right to challenge the issuance of the writ of execution cum writ of possessionupon the ex
parte application of GSIS. He could not also impugn anymore the extrajudicial foreclosure, and
could not undo the consolidation in GSIS of the ownership of the properties covered by TCT No.
284272-R and TCT No. 284273-R, which consolidation was already irreversible. Hence, his moves
against the writ of execution cum writ of possession were tainted by bad faith, for he was only
too aware, being his own lawyer, of the dire consequences of his non-redemption within the
period provided by law for that purpose.

III
Dismissal of Petitioner’s Motion for Indirect Contempt
Was Proper and In Accord with the Rules of Court

The petitioner insists that the RTC gravely erred in dismissing his charges for indirect
contempt against GSIS, et al.; and that the CA should have consequently granted his petition
for certiorari.

The petitioner’s insistence is plainly unwarranted.

First of all, Section 4, Rule 71, 1997 Rules of Civil Procedure, provides as follows:

Section 4. How proceedings commenced. — Proceedings for indirect

contempt may be initiated motu proprio by the court against which the contempt
was committed by an order or any other formal charge requiring the respondent
to show cause why he should not be punished for contempt.

In all other cases, charges for indirect contempt shall be

commenced by a verified petition with supporting particulars and
certified true copies of documents or papers involved therein, and upon
full compliance with the requirements for filing initiatory pleadings for
civil actions in the court concerned. If the contempt charges arose out
of or are related to a principal action pending in the court, the petition
for contempt shall allege that fact but said petition shall be docketed,
heard and decided separately, unless the court in its discretion orders
the consolidation of the contempt charge and the principal action for
joint hearing and decision. (n) (Emphasis supplied).

Indeed, a person may be charged with indirect contempt only by either of two alternative
ways, namely: (1) by a verified petition, if initiated by a party; or (2) by an orderor any other
formal charge requiring the respondent to show cause why he should not be punished for

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contempt, if made by a court against which the contempt is committed. In short, a charge of
indirect contempt must be initiated through a verified petition, unless the charge is directly made
by the court against which the contemptuous act is committed.

Justice Regalado has explained why the requirement of the filing of a verified petition for
contempt is mandatory:[45]

1. This new provision clarifies with a regulatory norm the proper procedure
for commencing contempt proceedings. While such proceeding has been
classified as a special civil action under the former Rules, the heterogeneous
practice, tolerated by the courts, has been for any party to file a mere motion
without paying any docket or lawful fees therefor and without complying with the
requirements for initiatory pleadings, which is now required in the second
paragraph of this amended section. Worse, and as a consequence of
unregulated motions for contempt, said incidents sometimes remain pending for
resolution although the main case has already been decided. There are other
undesirable aspects but, at any rate, the same may now be eliminated by this
amendatory procedure.

Henceforth, except for indirect contempt proceedings

initiated motu proprio by order of or a formal charge by the offended
court, all charges shall be commenced by a verified petition with full
compliance with the requirements therefor and shall be disposed of in
accordance with the second paragraph of this section. (Emphasis supplied).

Clearly, the petitioner’s charging GSIS, et al. with indirect contempt by mere motions was
not permitted by the Rules of Court.

And, secondly, even assuming that charges for contempt could be initiated by motion, the
petitioner should have tendered filing fees. The need to tender filing fees derived from the fact
that the procedure for indirect contempt under Rule 71, Rules of Court was an
independent special civil action. Yet, the petitioner did not tender and pay filing fees, resulting in
the trial court not acquiring jurisdiction over the action. Truly, the omission to tender filing fees
would have also warranted the dismissal of the charges.

It seems to be indubitable from the foregoing that the petitioner initiated the charges for
indirect contempt without regard to the requisites of the Rules of Court simply to vex the adverse
party. He thereby disrespected the orderly administration of justice and committed, yet again, an
abuse of procedures.

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 IV
Petitioner Was Guilty of
Misconduct As A Lawyer

The CA deemed it unavoidable to observe that the petition for certiorari brought by the
petitioner to the CA was “part of the dilatory tactics of the petitioner to stall the execution of a
final and executory decision in Civil Case No. 7802 which has already been resolved with finality
by no less than the highest tribunal of the land.”[46]
The observation of the CA deserves our concurrence.

Verily, the petitioner wittingly adopted his aforedescribed worthless and vexatious legal
maneuvers for no other purpose except to delay the full enforcement of the writ of possession,
despite knowing, being himself a lawyer, that as a non-redeeming mortgagor he could no longer
impugn both the extrajudicial foreclosure and the ex parte issuance of the writ of execution cum
writ of possession; and that the enforcement of the duly-issued writ of possession could not be
delayed. He thus deliberately abused court procedures and processes, in order to enable himself
to obstruct and stifle the fair and quick administration of justice in favor of mortgagee and
purchaser GSIS.

His conduct contravened Rule 10.03, Canon 10 of the Code of Professional

Responsibility, by which he was enjoined as a lawyer to “observe the rules of procedure and xxx
not [to] misuse them to defeat the ends of justice.” By his dilatory moves, he further breached
and dishonored his Lawyer’s Oath, particularly:[47]

xxx I will not wittingly or willingly promote or sue any groundless, false or
unlawful suit, nor give aid nor consent to the same; I will delay no man for money
or malice, and will conduct myself as a lawyer according to the best of my
knowledge and discretion with all good fidelity as well to the courts as to my clients
xxx

We stress that the petitioner’s being the party litigant himself did not give him the license
to resort to dilatory moves. His zeal to defend whatever rights he then believed he had and to
promote his perceived remaining interests in the property already lawfully transferred to GSIS
should not exceed the bounds of the law, for he remained at all times an officer of the Court
burdened to conduct himself “with all good fidelity as well to the courts as to [his] clients.”[48] His
true obligation as a lawyer should not be warped by any misplaced sense of his rights and

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interests as a litigant, because he was, above all, bound not to unduly delay a case, not to impede
the execution of a judgment, and not to misuse Court processes.[49] Consequently, he must be
made to account for his misconduct as a lawyer.

WHEREFORE, we deny the petition for review on certiorari for lack of merit, and affirm
the decision of the Court of Appeals promulgated on March 17, 2003, with the costs of suit to be
paid by the petitioner.

The Committee on Bar Discipline of the Integrated Bar of the Philippines is directed to
investigate the petitioner for what appear to be (a) his deliberate disregard of the Rules of
Court and jurisprudence pertinent to the issuance and implementation of the writ of possession
under Act No. 3135, as amended; and (b) his witting violations of the Lawyer’s Oath and the Code
of Professional Responsibility.

SO ORDERED.

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 SECOND DIVISION

THE PARENTS-TEACHERS G.R. No. 176518

ASSOCIATION (PTA) OF ST.
MATHEW CHRISTIAN ACADEMY,
GREGORIO INALVEZ, JR.,
ROWENA LAYUG, MALOU
MALVAR, MARILOU BARAQUIO,
GARY SINLAO, LUZVIMINDA Present:
OCAMPO,MARIFE FERNANDEZ,
FERNANDO VICTORIO, ERNESTO CARPIO, J., Chairperson,
AGANON and RIZALINO BRION,
MANGLICMOT, represented by their DEL CASTILLO,
Attorney-in-Fact, GREGORIO ABAD, and
INALVEZ, JR., PEREZ, JJ.
Petitioners,

- versus -

THE METROPOLITAN BANK and

TRUST CO., Promulgated:
Respondent. March 2, 2010
x--------------------------------------------------x

DECISION

DEL CASTILLO, J.:

As a general rule, the issuance of a writ of possession after the foreclosure sale and during the period of
redemption is ministerial. As an exception, it ceases to be ministerial if there is a third party holding the
property adversely to the judgment debtor.

In this case, we find that petitioners right over the foreclosed property is not adverse to that of
the judgment debtor or mortgagor. As such, they cannot seek the quashal or prevent the implementation
of the writ of possession.

Factual Antecedents

The facts of this case as summarized by the Court of Appeals (CA) in its assailed
Decision[1] dated November 29, 2006 are as follows:

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 Sometime in 2001, the spouses Denivin Ilagan and Josefina Ilagan (spouses
Ilagan) applied for and were granted a loan by the [Metropolitan Bank and Trust Co.] in
the amount of x x x (P4,790,000.00) [secured by] x x x a Real Estate Mortgage over the
parcels of land covered by Transfer Certificates of Title with Nos. 300203, 285299,
278042, 300181, 300184, 300191, 300194, and 300202, respectively.

Upon default, an extrajudicial foreclosure was conducted with [Metropolitan Bank

and Trust Co.] being the highest bidder x x x and for which a Certificate of Sale was issued
in its favor.

During the period of redemption, the respondent Bank filed an Ex-Parte Petition
for Issuance of a Writ of Possession docketed as LRC Case No. 6438 by posting x x x the
required bond which was subsequently approved. x x x

[On June 30, 2005], the St. Mathew Christian Academy of Tarlac, Inc. filed a
Petition for Injunction with Prayer for Restraining Order docketed as Special Civil Action
No. 9793 against the respondent Bank and the Provincial Sheriff of Tarlac.

On August 16, 2005, the x x x Judge issued a Joint Decision in LRC Case No. 6438
and Special Civil Action No. 9793, the contents of which are x x x as follows:

JOINT DECISION

Metropolitan Bank x x x is now entitled to a writ of possession, it

being mandatory even during the period of redemption.
The school, St. Mathew Christian [Academy] filed the petition for
injunction on the ground that it cannot be ejected being a third party.
x x x St. Mathew Christian Academy is practically owned by the
mortgagors, spouses Denivin and Josefina Ilagan. Firstly, the lease to St.
Mathew by the Ilagans, as lessor, was for a period of one year from the
execution of the lease contract in 1998. Therefore, the lease should have
expired in 1999. However, since the lease continued after 1999, the lease
is now with a definite period, or monthly, since the payment of lease
rental is monthly. (Articles 1670 and 1687, Civil Code). Therefore, the
lease expires at the end of each month.
Secondly, the lease was not registered and annotated at the back
of the title, and therefore, not binding on third persons. (Article 1648, Civil
Code)

Thirdly, the spouses are the owners or practically the owners of

St. Mathew. Even if it has a separate personality, nevertheless, piercing
the veil of corporate entity is resorted to for the spouses should not be
allowed to commit fraud under the separate entity/personality of St.
Mathew.

In connection with the allegation of the spouses Ilagans that the

mortgage contract contains provision which is pactum commisorium, the

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 Court does not agree. What is prohibited is the automatic appropriation
without the public sale of the mortgaged properties.

The interest charges may be exorbitant, but it does not of itself

cause the nullity of the entire contract of mortgage.

There is also no violation on the proscription on forum

shopping. What is important is that, there is really no other case between
the parties involving the same subject matter.

In fine, St. Mathew is not really a third person. It is bound by the

writ of possession issued by this Court.

WHEREFORE, the writ of possession issued by this Court

dated April 22, 2005 is hereby affirmed, Civil Case No. 9793 is
dismissed. No costs.

SO ORDERED.[2]

Pending resolution of the motion for reconsideration of the said Joint Decision, herein petitioners
Parents-Teachers Association (PTA) of St. Mathew Christian Academy (SMCA) and Gregorio Inalvez, Jr.,
Rowena Layug, Malou Malvar, Marilou Baraquio, Gary Sinlao, Luzviminda Ocampo, Marife Fernandez,
Fernando Victorio, Ernesto Aganon, and Rizalino Manglicmot who are teachers and students of SMCA,
filed a Motion for Leave to file Petition in Intervention[3] in Special Civil Action No. 9793, which was granted
by the trial court in an Order dated November 10, 2005.[4] However, in a subsequent Order
dated December 7, 2005, the trial court reversed its earlier Order by ruling that petitioners intervention
would have no bearing on the issuance and implementation of the writ of possession. Thus, it directed
that the writ be implemented by placing respondent Metropolitan Bank and Trust Company (MBTC) in
physical possession of the property.[5]
Without filing a motion for reconsideration, petitioners assailed the trial courts Order through a
Petition for Certiorari and Prohibition before the CA. However, said petition was dismissed by the CA for
lack of merit in its assailed Decision dated November 29, 2006. It held thus:

Considering that in this case the writ of possession had already been issued x x x
petitioners remedy was to file x x x a petition that the sale be set aside and the writ of
possession cancelled. Instead, petitioners filed the instant Petition for Certiorari.

Moreover, no motion for reconsideration of the said Order directing the issuance
of a writ of possession was filed neither was there any motion for reconsideration of the
assailed Order of 7 December 2005 prior to the institution of the instant Petition

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 for Certiorari to afford the respondent Court an opportunity to correct its alleged
error. The rule is that certiorari as a special civil action will not lie unless a motion for
reconsideration is filed before the respondent tribunal to allow it to correct its imputed
error. While there are exceptions to the rule, none has been invoked by petitioners.

WHEREFORE, premises considered, the instant Petition is hereby DISMISSED for

lack of merit.

SO ORDERED.[6]

Petitioners filed a Motion for Reconsideration but the motion was denied in a Resolution
dated January 29, 2007.
Hence, petitioners filed this Petition for Review on Certiorari.

Issues

1. THE COURT OF APPEALS COMMITTED A CLEAR AND REVERSIBLE ERROR

WHEN IT FAILED AND REFUSED TO CONSIDER THE GROUNDS RELIED UPON IN
THE PETITION BEFORE IT WHEN THE SAME ARE CLEARLY MERITORIOUS AND ARE
BASED ON THE LAW AND JUSTICE;

2. THE COURT OF APPEALS COMMITTED A CLEAR AND REVERSIBLE ERROR

WHEN IT FAILED AND REFUSED TO CONSIDER THAT THE REMEDY AVAILABLE TO
HEREIN PETITIONERS IS THE SPECIAL CIVIL ACTION OF CERTIORARI AND NOT A
PETITION TO SET ASIDE THE FORECLOSURE SALE IN LRC CASE No. 6438;
3. THE COURT OF APPEALS COMMITTED A CLEAR AND REVERSIBLE ERROR IN
RULING THAT A MOTION FOR RECONSIDERATION IS STILL NEEDED BEFORE THE
PETITIONERS COULD FILE A SPECIAL CIVIL ACTION OF CERTIORARI; and

4. THE COURT OF APPEALS COMMITTED A CLEAR AND REVERSIBLE ERROR IN

NOT HOLDING THAT CONSIDERATIONS OF JUSTICE AND EQUITY, AND NOT
TECHNICALITY, SHOULD BE THE BASES FOR THE RESOLUTION OF THE PETITION
BEFORE IT.[7]

Our Ruling

The petition is bereft of merit.

Petitioners are not Third Parties against whom the writ of

possession cannot be issued and implemented.

85 | P a g e
 As a rule, it is ministerial upon the court to issue a writ of possession after the foreclosure sale
and during the period of redemption.[8] Section 7 of Act No. 3135 explicitly authorizes the purchaser in a
foreclosure sale to apply for a writ of possession during the redemption period by filing an ex parte motion
under oath for that purpose 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 with the Regional Trial
Court of the province or place where the real property or any part thereof is situated, in the case of
mortgages duly registered with the Registry of Deeds. Upon filing of such motion and the approval of the
corresponding bond, the law also directs in express terms the said court to issue the order for a writ of
possession.[9]

However, this rule is not without exception. In Barican v. Intermediate

Appellate Court,[10] we held that the obligation of a court to issue an ex parte writ of possession in favor
of the purchaser in an extrajudicial foreclosure sale ceases to be ministerial once it appears that there is
a third party in possession of the property who is claiming a right adverse to that of the
debtor/mortgagor. This ruling was reiterated in Policarpio v. Active Bank[11] where we held that:

Ordinarily, a purchaser of property in an extrajudicial foreclosure sale is entitled

to possession of the property. Thus, whenever the purchaser prays for a writ of
possession, the trial court has to issue it as a matter of course. However, the obligation
of the trial court to issue a writ of possession ceases to be ministerial once it appears that
there is a third party in possession of the property claiming a right adverse to that of
the debtor/mortgagor. Where such third party exists, the trial court should conduct a
hearing to determine the nature of his adverse possession. (Emphasis supplied)

In this case, we find that petitioners cannot be considered as third parties because they are not
claiming a right adverse to the judgment debtor. Petitioner-teachers and students did not claim ownership
of the properties, but merely averred actual physical possession of the subject school
premises.[12] Petitioner-teachers possession of the said premises was based on the employment contracts
they have with the school. As regards the petitioner-students, Alcuaz v. Philippine School of Business
Administration[13] and Non v. Dames II[14] characterized the school-student relationship as contractual in
nature. As such, it would be specious to conclude that the teachers and students hold the subject
premises independent of or adverse to SMCA. In fact, their interest over the school premises is necessarily
inferior to that of the school. Besides, their contracts are with the school and do not attach to the school

86 | P a g e
premises. Moreover, the foreclosure of the current school premises does not prevent the SMCA from
continuing its operations elsewhere.

At this point, it is relevant to note that in the Joint Decision dated August 16, 2005, the trial court
found that SMCA was not a third party and was therefore bound by the said writ of
possession.[15] Consequently, it affirmed the issuance of the writ of possession.

MBTC thus correctly argued that petitioners did not have superior rights to that of SMCA over the
subject property because their supposed possession of the same emanated only from the latter. Since
petitioners possession of the subject school premises stemmed from their employment or enrollment
contracts with the school, as the case may be, necessarily, their right to possess the subject school
premises cannot be adverse to that of the school and of its owners. As such, the petitioners cannot be
deemed third parties as contemplated in Act No. 3135, as amended.

The lack of authority to sign the certificate of non-forum

shopping attached to the Petition for Issuance of Writ of
Possession was an insignificant lapse.

Petitioners further claim that the lack of authority to sign the certificate on non-forum shopping
attached to the Petition for the Issuance of the Writ of Possession rendered the same worthless and should
be deemed as non-existent.[16] MBTC asserts otherwise, citing Spouses Arquiza v. Court of
Appeals[17] where we held that an application for a writ of possession is a mere incident in the registration
proceeding which is in substance merely a motion,[18] and therefore does not require such a certification.

Petitioners contention lacks basis. In Green Asia Construction and Development Corporation v.
Court of Appeals,[19] where the issue of validity of the Certificate of Non-Forum Shopping was questioned
in an application for the issuance of a Writ of Possession, we held that:

x x x it bears stressing that a certification on non-forum shopping is

required only in a complaint or a petition which is an initiatory pleading. In this
case, the subject petition for the issuance of a writ of possession filed by private
respondent is not an initiatory pleading. Although private respondent denominated
its pleading as a petition, it is more properly a motion. What distinguishes a
motion from a petition or other pleading is not its form or the title given by the party

87 | P a g e
 executing it, but its purpose. The purpose of a motion is not to initiate litigation, but to
bring up a matter arising in the progress of the case where the motion is
filed.[20] (Emphasis supplied)

It is not necessary to initiate an original action in order for the purchaser at an extrajudicial
foreclosure of real property to acquire possession.[21] Even if the application for the writ of possession was
denominated as a petition, it was in substance merely a motion.[22] Indeed, any insignificant lapse in the
certification on non-forum shopping filed by the MBTC did not render the writ irregular. After all, no
verification and certification on non-forum shopping need be attached to the motion.[23]

Hence, it is immaterial that the certification on non-forum shopping in the MBTCs petition was
signed by its branch head. Such inconsequential oversight did not render the said petition defective in
form.

The trial courts Order did not violate the petitioner-

students right to quality education and academic
freedom.

We disagree with petitioners assertion that the students right to quality education and academic
freedom was violated. The constitutional mandate to protect and promote the right of all citizens to quality
education at all levels[24] is directed to the State and not to the school.[25] On this basis, the petitioner-
students cannot prevent the MBTC from acquiring possession of the school premises by virtue of a validly
issued writ of possession.

There is likewise no violation of the so-called academic freedom. Article XIV, Section 5(2) of the
Constitution mandates "that academic freedom shall be enjoyed in all institutions of higher
learning." Academic freedom did not go beyond the concept of freedom of intellectual inquiry,[26] which
includes the freedom of professionally qualified persons to inquire, discover, publish and teach the truth
as they see it in the field of their competence subject to no control or authority except of rational methods
by which truths and conclusions are sought and established in these disciplines. It also pertains to the
right of the school or college to decide for itself, its aims and objectives, and how best to attain them - the
grant being given to institutions of higher learning - free from outside coercion or interference save possibly

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when the overriding public welfare calls for some restraint.[27] In Garcia v. The Faculty Admission
Committee, Loyola School of Theology,[28] we held that:

[I]t is to be noted that the reference is to the 'institutions of higher learning' as

the recipients of this boon. It would follow then that the school or college itself is
possessed of such a right. It decides for itself its aims and objectives and how best to
attain them. It is free from outside coercion or interference save possibly when the
overriding public welfare calls for some restraint. It has a wide sphere of autonomy
certainly extending to the choice of students. This constitutional provision is not to be
construed in a niggardly manner or in a grudging fashion. That would be to frustrate its
purpose, nullify its intent. x x x It is the business of a university to provide that atmosphere
which is most conducive to speculation, experiment and creation. It is an atmosphere in
which there prevail the 'four essential freedoms' of a university - to determine for itself on
academic grounds who may teach, what may be taught, how it shall be taught, and who
may be admitted to study.

In this case, except for their bare allegation that if the school will be ejected because of the writ
of possession, the students will necessarily be ejected also[29] and thereby their learning process and other
educational activities shall have been disrupted,[30] petitioners miserably failed to show the relevance of
the right to quality education and academic freedom to their case or how they were violated by the Order
granting the writ of possession to the winning bidder in the extrajudicial foreclosure sale.

The petitioners were accorded due process.

The petitioners argue that the court below did not conduct trial for the presentation of evidence
to support its conclusion that the intervention would have no bearing on the issuance and implementation
of the writ of possession,[31] thereby depriving them of due process.

Petitioners contention is without merit. It is settled that the issuance of a writ of possession is a
ministerial duty of the court.[32] The purchaser of the foreclosed property, upon ex parte application and
the posting of the required bond, has the right to acquire possession of the foreclosed property during the
12-month redemption period.[33]

This ex parte petition for the issuance of a writ of possession under Section 7 of Act No. 3135 is
not, strictly speaking, a "judicial process" as contemplated in Article 433[34] of the Civil Code.[35] As a judicial

89 | P a g e
proceeding for the enforcement of one's right of possession as purchaser in a foreclosure sale, it is not an
ordinary suit by which one party sues another for the enforcement of a wrong or protection of a right, or
the prevention or redress of a wrong.[36]
In Idolor v. Court of Appeals,[37] we described the nature of the ex parte petition for issuance of
possessory writ under Act No. 3135 to be a non-litigious proceeding and summary in nature. As an ex
parte proceeding, it is brought for the benefit of one party only, and without notice to, or consent by any
person adversely interested.[38] It is a proceeding where the relief is granted without requiring an
opportunity for the person against whom the relief is sought to be heard.[39] It does not matter even if the
herein petitioners were not specifically named in the writ of possession nor notified of such
proceedings.[40] In Sagarbarria v. Philippine Business Bank,[41] we rejected therein petitioner's contention
that he was denied due process when the trial court issued the writ of possession without notice.

Here in the present case, we similarly reject petitioners contention that the trial court should have
conducted a trial prior to issuing the Order denying their motion to intervene.[42] As it is, the law does not
require that a petition for a writ of possession may be granted only after documentary and testimonial
evidence shall have been offered to and admitted by the court.[43] As long as a verified petition states the
facts sufficient to entitle the petitioner to the relief requested, the court shall issue the writ prayed
for. There is no need for petitioners to offer any documentary or testimonial evidence for the court to
grant the petition.[44]

The proper remedy for the petitioners is a separate,

distinct and independent suit, provided for under Act No.
3135.

Petitioners assert that Section 8 of Act No. 3135 specifically refers to the debtor as the party who
is required to file a petition for the cancellation of the writ of possession in the same proceeding in which
possession was requested.[45] As they are not the debtors referred to in the said law, petitioners argue
that the filing of a petition for the cancellation of the writ of possession in the same proceeding in which
possession was requested, does not apply to them.[46] Hence, they allege that it was improper for the CA
to conclude that the Petition for Certiorari was the wrong remedy in the case where the writ of possession
was issued.[47]

90 | P a g e
 Respondent, on the other hand, avers that certiorari is available only when there is grave abuse
of discretion amounting to lack or excess of jurisdiction and there is no appeal, or any plain, speedy and
adequate remedy in the ordinary course of law.[48] In the instant case, the respondent argues that the
court merely granted the Writ of Possession in accordance with settled jurisprudence[49] and that the
remedy of certiorari does not lie because there is an available remedy which is an appeal.[50]

We hold that the CA correctly held that the proper remedy is a separate, distinct and independent
suit provided for in Section 8 of Act No. 3135[51] viz:

SEC. 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 canceled, 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
Numbered 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.

In De Gracia v. San Jose,,[52] we held that:

x x x 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. (Emphasis supplied)

Since the writ of possession had already been issued in LRC Case No. 6438 per Order dated
November 29, 2005, the proper remedy is an appeal and not a petition for certiorari,[53] in accordance
with our ruling in Metropolitan Bank and Trust Company v. Tan[54] and Government Service Insurance
System v. Court of Appeals.[55] As long as the court acts within its jurisdiction, any alleged errors committed
in the exercise of its discretion will amount to nothing more than mere errors of judgment, correctable by

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an appeal if the aggrieved party raised factual and legal issues; or a petition for review under Rule 45 of
the Rules of Court if only questions of law are involved.

As a general rule, a motion for reconsideration must be

filed before resort to the special civil action of certiorari is
made.

As a general rule, a motion for reconsideration should precede recourse to certiorari in order to
give the trial court an opportunity to correct the error that it may have committed. The said rule is not
absolute and may be dispensed with in instances where the filing of a motion for reconsideration would
serve no useful purpose, such as when the motion for reconsideration would raise the same point stated
in the motion[56] or where the error is patent for the order is void[57] or where the relief is extremely urgent,
as in cases where execution had already been ordered where the issue raised is one purely of law.[58]

In the case at bar, the petitioners stated in their Petition for Certiorari and Prohibition before the
CA as follows:[59]

18. Respondent sheriff and his deputies are now set to implement the said writ of
possession and are now poised to evict the students and teachers from their classrooms,
grounds and school facilities;

19. Petitioners did not anymore file a motion for reconsideration of said order x x x and is
proceeding directly to this Honorable Court because the filing of a motion for
reconsideration would serve no useful purpose x x x Besides the relief sought is extremely
urgent as the respondent sheriff is set to implement the questioned orders x x x and the
circumstances herein clearly indicate the urgency of judicial intervention x x x hence, this
petition.

Plainly, the petitioners have the burden to substantiate that their immediate resort to the appellate
court is based on any of the exceptions to the general rule. They have to show the urgent and compelling
reasons for such recourse. The afore-cited allegations of the petitioners in their petition before the CA did
not dispense with the burden of establishing that their case falls under any of the exceptions to the general
rule. Unlike the case of Ronquillo v. Court of Appeals[60] cited by the petitioners, where not only was a writ
of execution issued but petitioners properties were already scheduled to be sold at public auction on April
2, 1980 at 10:00 a.m., the herein petitioners failed to show the specificity and imminence of the urgency
confronting their immediate recourse to the appellate court.

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 We therefore hold that the CA correctly found the necessity for a prior resort to a motion for
reconsideration prior to the institution of the Petition for Certiorari.

Considerations of equity do not apply in the instant case.

The petitioners claim that the challenged decision of the CA would show that the petition was
decided on the basis of pure technicality and that the appellate court did not pass upon the merits of the
petition.[61] They further assert that considerations of justice and equity and not technicality, should be the
bases for the resolution of the petition.[62] MBTC, on the other hand, argues that equity may not apply if
there is applicable law and jurisprudence.

In San Luis v. San Luis,[63] we expounded on the concept of justice by holding that:

More than twenty centuries ago, Justinian defined justice as the constant and
perpetual wish to render everyone his due. That wish continues to motivate this Court
when it assesses the facts and the law in every case brought to it for decision. Justice is
always an essential ingredient of its decisions. Thus when the facts warrant, we interpret
the law in a way that will render justice, presuming that it was the intention of the
lawmaker, to begin with, that the law be dispensed with justice.

While equity which has been aptly described as "justice outside legality" is applied only in the
absence of, and never against, statutory law or judicial rules of procedure.[64] Positive rules prevail over all
abstract arguments based on equity contra legem.[65] For all its conceded merit, equity is available only in
the absence of law and not as its replacement.[66]

In this case, justice demands that we conform to the positive mandate of the law as expressed in
Act No. 3135, as amended. Equity has no application as to do so would be tantamount to overruling or
supplanting the express provisions of the law.
In our Resolution[67] dated June 4, 2007, we issued a Temporary Restraining Order enjoining
respondent to desist from implementing the Writ of Possession. We also required petitioners to post a
cash or surety bond in the amount of P50,000.00 within five days from notice, otherwise the temporary
restraining order shall be automatically lifted. The petitioners posted a cash bond in the amount
of P50,000.00 on June 27, 2007 pursuant to our June 4, 2007 Resolution.[68]

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 WHEREFORE, premises considered, the Petition for Review on Certiorari is DENIED for lack of
merit. The temporary restraining order heretofore issued is hereby LIFTED and SET ASIDE. The
Decision of the Court of Appeals dated November 29, 2006 and its Resolution dated January 29,
2007 are AFFIRMED.

SO ORDERED.

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