1.) G.R. No.
237428, May 11, 2018 Should government pay at all for reasonable expenses incurred in the construction of the Terminal? Indeed it
REPUBLIC OF THE PHILIPPINES, REPRESENTED BY SOLICITOR GENERAL JOSE C. CALIDA,
Petitioner, v. MARIA LOURDES P. A. SERENO, Respondent.
---In separate file due to number of pages---
2.) G.R. No. 166429 December 19, 2005
REPUBLIC OF THE PHILIPPINES, Represented by Executive Secretary Eduardo R. Ermita, the
DEPARTMENT OF TRANSPORTATION AND COMMUNICATIONS (DOTC), and the MANILA
INTERNATIONAL AIRPORT AUTHORITY (MIAA), Petitioners,
vs.
HON. HENRICK F. GINGOYON, In his capacity as Presiding Judge of the Regional Trial Court, Branch 117,
Pasay City and PHILIPPINE INTERNATIONAL AIR TERMINALS CO., INC., Respondents.
DECISION
TINGA, J.:
The Ninoy Aquino International Airport Passenger Terminal III (NAIA 3) was conceived, designed and constructed to
serve as the country’s show window to the world. Regrettably, it has spawned controversies. Regrettably too, despite
the apparent completion of the terminal complex way back it has not yet been operated. This has caused
immeasurable economic damage to the country, not to mention its deplorable discredit in the international
community.
In the first case that reached this Court, Agan v. PIATCO,1 the contracts which the Government had with the
contractor were voided for being contrary to law and public policy. The second case now before the Court involves
the matter of just compensation due the contractor for the terminal complex it built. We decide the case on the basis
of fairness, the same norm that pervades both the Court’s 2004 Resolution in the first case and the latest expropriation
law.
The present controversy has its roots with the promulgation of the Court’s decision in Agan v. PIATCO,2 promulgated
in 2003 (2003 Decision). This decision nullified the "Concession Agreement for the Build-Operate-and-Transfer
Arrangement of the Ninoy Aquino International Airport Passenger Terminal III" entered into between the Philippine
Government (Government) and the Philippine International Air Terminals Co., Inc. (PIATCO), as well as the
amendments and supplements thereto. The agreement had authorized PIATCO to build a new international airport
terminal (NAIA 3), as well as a franchise to operate and maintain the said terminal during the concession period of 25
years. The contracts were nullified, among others, that Paircargo Consortium, predecessor of PIATCO, did not
possess the requisite financial capacity when it was awarded the NAIA 3 contract and that the agreement was
contrary to public policy.3
At the time of the promulgation of the 2003 Decision, the NAIA 3 facilities had already been built by PIATCO and
were nearing completion.4 However, the ponencia was silent as to the legal status of the NAIA 3 facilities following
the nullification of the contracts, as well as whatever rights of PIATCO for reimbursement for its expenses in the
construction of the facilities. Still, in his Separate Opinion, Justice Panganiban, joined by Justice Callejo, declared as
follows:
should, otherwise it will be unjustly enriching itself at the expense of Piatco and, in particular, its funders,
contractors and investors — both local and foreign. After all, there is no question that the State needs and will
make use of Terminal III, it being part and parcel of the critical infrastructure and transportation-related programs of
government.5
PIATCO and several respondents-intervenors filed their respective motions for the reconsideration of the 2003
Decision. These motions were denied by the Court in its Resolution dated 21 January 2004 (2004 Resolution).6
However, the Court this time squarely addressed the issue of the rights of PIATCO to refund, compensation or
reimbursement for its expenses in the construction of the NAIA 3 facilities. The holding of the Court on this crucial
point follows:
This Court, however, is not unmindful of the reality that the structures comprising the NAIA IPT III facility
are almost complete and that funds have been spent by PIATCO in their construction. For the government to
take over the said facility, it has to compensate respondent PIATCO as builder of the said structures. The
compensation must be just and in accordance with law and equity for the government can not unjustly enrich
itself at the expense of PIATCO and its investors.7
After the promulgation of the rulings in Agan, the NAIA 3 facilities have remained in the possession of PIATCO,
despite the avowed intent of the Government to put the airport terminal into immediate operation. The Government
and PIATCO conducted several rounds of negotiation regarding the NAIA 3 facilities.8 It also appears that arbitral
proceedings were commenced before the International Chamber of Commerce International Court of Arbitration and
the International Centre for the Settlement of Investment Disputes,9 although the Government has raised
jurisdictional questions before those two bodies.10
Then, on 21 December 2004, the Government11 filed a Complaint for expropriation with the Pasay City Regional
Trial Court (RTC), together with an Application for Special Raffle seeking the immediate holding of a special raffle.
The Government sought upon the filing of the complaint the issuance of a writ of possession authorizing it to take
immediate possession and control over the NAIA 3 facilities.
The Government also declared that it had deposited the amount of ₱3,002,125,000.0012 (3 Billion)13 in Cash with
the Land Bank of the Philippines, representing the NAIA 3 terminal’s assessed value for taxation purposes.14
The case15 was raffled to Branch 117 of the Pasay City RTC, presided by respondent judge Hon. Henrick F.
Gingoyon (Hon. Gingoyon). On the same day that the Complaint was filed, the RTC issued an Order16 directing the
issuance of a writ of possession to the Government, authorizing it to "take or enter upon the possession" of the NAIA
3 facilities. Citing the case of City of Manila v. Serrano,17 the RTC noted that it had the ministerial duty to issue the
writ of possession upon the filing of a complaint for expropriation sufficient in form and substance, and upon deposit
made by the government of the amount equivalent to the assessed value of the property subject to expropriation. The
RTC found these requisites present, particularly noting that "[t]he case record shows that [the Government has]
deposited the assessed value of the [NAIA 3 facilities] in the Land Bank of the Philippines, an authorized depositary,
as shown by the certification attached to their complaint." Also on the same day, the RTC issued a Writ of Possession.
According to PIATCO, the Government was able to take possession over the NAIA 3 facilities immediately after the
Writ of Possession was issued.18
1
However, on 4 January 2005, the RTC issued another Order designed to supplement its 21 December 2004 Order and
the Writ of Possession. In the 4 January 2005 Order, now assailed in the present petition, the RTC noted that its
earlier issuance of its writ of possession was pursuant to Section 2, Rule 67 of the 1997 Rules of Civil Procedure.
However, it was observed that Republic Act No. 8974 (Rep. Act No. 8974), otherwise known as "An Act to Facilitate
the Acquisition of Right-of-Way, Site or Location for National Government Infrastructure Projects and For Other
Purposes" and its Implementing Rules and Regulations (Implementing Rules) had amended Rule 67 in many respects.
There are at least two crucial differences between the respective procedures under Rep. Act No. 8974 and Rule 67.
Under the statute, the Government is required to make immediate payment to the property owner upon the filing of
the complaint to be entitled to a writ of possession, whereas in Rule 67, the Government is required only to make an
initial deposit with an authorized government depositary. Moreover, Rule 67 prescribes that the initial deposit be
equivalent to the assessed value of the property for purposes of taxation, unlike Rep. Act No. 8974 which provides, as
the relevant standard for initial compensation, the market value of the property as stated in the tax declaration or the
current relevant zonal valuation of the Bureau of Internal Revenue (BIR), whichever is higher, and the value of the
improvements and/or structures using the replacement cost method.
Accordingly, on the basis of Sections 4 and 7 of Rep. Act No. 8974 and Section 10 of the Implementing Rules, the
RTC made key qualifications to its earlier issuances. First, it directed the Land Bank of the Philippines, Baclaran
Branch (LBP-Baclaran), to immediately release the amount of US$62,343,175.77 to PIATCO, an amount which the
RTC characterized as that which the Government "specifically made available for the purpose of this expropriation;"
and such amount to be deducted from the amount of just compensation due PIATCO as eventually determined by the
RTC. Second, the Government was directed to submit to the RTC a Certificate of Availability of Funds signed by
authorized officials to cover the payment of just compensation. Third, the Government was directed "to maintain,
preserve and safeguard" the NAIA 3 facilities or "perform such as acts or activities in preparation for their direct
operation" of the airport terminal, pending expropriation proceedings and full payment of just compensation.
However, the Government was prohibited "from performing acts of ownership like awarding concessions or leasing
any part of [NAIA 3] to other parties."19
The very next day after the issuance of the assailed 4 January 2005 Order, the Government filed an Urgent Motion
for Reconsideration, which was set for hearing on 10 January 2005. On 7 January 2005, the RTC issued another
Order, the second now assailed before this Court, which appointed three (3) Commissioners to ascertain the amount
of just compensation for the NAIA 3 Complex. That same day, the Government filed a Motion for Inhibition of Hon.
Gingoyon.
The RTC heard the Urgent Motion for Reconsideration and Motion for Inhibition on 10 January 2005. On the same
day, it denied these motions in an Omnibus Order dated 10 January 2005. This is the third Order now assailed before
this Court. Nonetheless, while the Omnibus Order affirmed the earlier dispositions in the 4 January 2005 Order, it
excepted from affirmance "the superfluous part of the Order prohibiting the plaintiffs from awarding concessions or
leasing any part of [NAIA 3] to other parties."20
Thus, the present Petition for Certiorari and Prohibition under Rule 65 was filed on 13 January 2005. The petition
prayed for the nullification of the RTC orders dated 4 January 2005, 7 January 2005, and 10 January 2005, and for the
inhibition of Hon. Gingoyon from taking further action on the expropriation case. A concurrent prayer for the
issuance of a temporary restraining order and preliminary injunction was granted by this Court in a Resolution dated
14 January 2005.21
The Government, in imputing grave abuse of discretion to the acts of Hon. Gingoyon, raises five general arguments,
to wit:
(i) that Rule 67, not Rep. Act No. 8974, governs the present expropriation proceedings;
(ii) that Hon. Gingoyon erred when he ordered the immediate release of the amount of US$62.3 Million to PIATCO
considering that the assessed value as alleged in the complaint was only ₱3 Billion;
(iii) that the RTC could not have prohibited the Government from enjoining the performance of acts of ownership;
(iv) that the appointment of the three commissioners was erroneous; and
(v) that Hon. Gingoyon should be compelled to inhibit himself from the expropriation case.22
Before we delve into the merits of the issues raised by the Government, it is essential to consider the crucial holding
of the Court in its 2004 Resolution in Agan, which we repeat below:
This Court, however, is not unmindful of the reality that the structures comprising the NAIA IPT III facility are
almost complete and that funds have been spent by PIATCO in their construction. For the government to take over
the said facility, it has to compensate respondent PIATCO as builder of the said structures. The compensation
must be just and in accordance with law and equity for the government can not unjustly enrich itself at the
expense of PIATCO and its investors.23
This pronouncement contains the fundamental premises which permeate this decision of the Court. Indeed, Agan,
final and executory as it is, stands as governing law in this case, and any disposition of the present petition must
conform to the conditions laid down by the Court in its 2004 Resolution.
The 2004 Resolution Which IsLaw of This Case Generally Permits Expropriation
The pronouncement in the 2004 Resolution is especially significant to this case in two aspects, namely: (i) that
PIATCO must receive payment of just compensation determined in accordance with law and equity; and (ii)
that the government is barred from taking over NAIA 3 until such just compensation is paid. The parties cannot
be allowed to evade the directives laid down by this Court through any mode of judicial action, such as the complaint
for eminent domain.
It cannot be denied though that the Court in the 2004 Resolution prescribed mandatory guidelines which the
Government must observe before it could acquire the NAIA 3 facilities. Thus, the actions of respondent judge under
review, as well as the arguments of the parties must, to merit affirmation, pass the threshold test of whether such
propositions are in accord with the 2004 Resolution.
The Government does not contest the efficacy of this pronouncement in the 2004 Resolution,24 thus its application
to the case at bar is not a matter of controversy. Of course, questions such as what is the standard of "just
compensation" and which particular laws and equitable principles are applicable, remain in dispute and shall be
resolved forthwith.
The Government has chosen to resort to expropriation, a remedy available under the law, which has the added benefit
of an integrated process for the determination of just compensation and the payment thereof to PIATCO. We
appreciate that the case at bar is a highly unusual case, whereby the Government seeks to expropriate a building
2
complex constructed on land which the State already owns.25 There is an inherent illogic in the resort to eminent
domain on property already owned by the State. At first blush, since the State already owns the property on which
NAIA 3 stands, the proper remedy should be akin to an action for ejectment.
However, the reason for the resort by the Government to expropriation proceedings is understandable in this case.
The 2004 Resolution, in requiring the payment of just compensation prior to the takeover by the Government of
NAIA 3, effectively precluded it from acquiring possession or ownership of the NAIA 3 through the unilateral
exercise of its rights as the owner of the ground on which the facilities stood. Thus, as things stood after the 2004
Resolution, the right of the Government to take over the NAIA 3 terminal was preconditioned by lawful order on the
payment of just compensation to PIATCO as builder of the structures.
The determination of just compensation could very well be agreed upon by the parties without judicial intervention,
and it appears that steps towards that direction had been engaged in. Still, ultimately, the Government resorted to its
inherent power of eminent domain through expropriation proceedings. Is eminent domain appropriate in the first
place, with due regard not only to the law on expropriation but also to the Court’s 2004 Resolution in Agan?
The right of eminent domain extends to personal and real property, and the NAIA 3 structures, adhered as they are to
the soil, are considered as real property.26 The public purpose for the expropriation is also beyond dispute. It should
also be noted that Section 1 of Rule 67 (on Expropriation) recognizes the possibility that the property sought to be
expropriated may be titled in the name of the
Republic of the Philippines, although occupied by private individuals, and in such case an averment to that effect
should be made in the complaint. The instant expropriation complaint did aver that the NAIA 3 complex "stands on a
parcel of land owned by the Bases Conversion Development Authority, another agency of [the Republic of the
Philippines]."27
Admittedly, eminent domain is not the sole judicial recourse by which the Government may have acquired the NAIA
3 facilities while satisfying the requisites in the 2004 Resolution. Eminent domain though may be the most effective,
as well as the speediest means by which such goals may be accomplished. Not only does it enable immediate
possession after satisfaction of the requisites under the law, it also has a built-in procedure through which just
compensation may be ascertained. Thus, there should be no question as to the propriety of eminent domain
proceedings in this case.
Still, in applying the laws and rules on expropriation in the case at bar, we are impelled to apply or construe these
rules in accordance with the Court’s prescriptions in the 2004 Resolution to achieve the end effect that the
Government may validly take over the NAIA 3 facilities. Insofar as this case is concerned, the 2004 Resolution is
effective not only as a legal precedent, but as the source of rights and prescriptions that must be guaranteed, if not
enforced, in the resolution of this petition. Otherwise, the integrity and efficacy of the rulings of this Court will be
severely diminished.
It is from these premises that we resolve the first question, whether Rule 67 of the Rules of Court or Rep. Act No.
8974 governs the expropriation proceedings in this case.
Application of Rule 67 Violatesthe 2004 Agan Resolution
The Government insists that Rule 67 of the Rules of Court governs the expropriation proceedings in this case to the
exclusion of all other laws. On the other hand, PIATCO claims that it is Rep. Act No. 8974 which does apply. Earlier,
we had adverted to the basic differences between the statute and the procedural rule. Further elaboration is in order.
Rule 67 outlines the procedure under which eminent domain may be exercised by the Government. Yet by no means
does it serve at present as the solitary guideline through which the State may expropriate private property. For
example, Section 19 of the Local Government Code governs as to the exercise by local government units of the
power of eminent domain through an enabling ordinance. And then there is Rep. Act No. 8974, which covers
expropriation proceedings intended for national government infrastructure projects.
Rep. Act No. 8974, which provides for a procedure eminently more favorable to the property owner than Rule 67,
inescapably applies in instances when the national government expropriates property "for national government
infrastructure projects."28 Thus, if expropriation is engaged in by the national government for purposes other than
national infrastructure projects, the assessed value standard and the deposit mode prescribed in Rule 67 continues to
apply.
Under both Rule 67 and Rep. Act No. 8974, the Government commences expropriation proceedings through the filing
of a complaint. Unlike in the case of local governments which necessitate an authorizing ordinance before
expropriation may be accomplished, there is no need under Rule 67 or Rep. Act No. 8974 for legislative authorization
before the Government may proceed with a particular exercise of eminent domain. The most crucial difference
between Rule 67 and Rep. Act No. 8974 concerns the particular essential step the Government has to undertake to be
entitled to a writ of possession.
The first paragraph of Section 2 of Rule 67 provides:
SEC. 2. Entry of plaintiff upon depositing value with authorized government depository. — Upon the filing of the
complaint or at any time thereafter and after due notice to the defendant, the plaintiff shall have the right to take or
enter upon the possession of the real property involved if he deposits with the authorized government depositary
an amount equivalent to the assessed value of the property for purposes of taxation to be held by such bank
subject to the orders of the court. Such deposit shall be in money, unless in lieu thereof the court authorizes the
deposit of a certificate of deposit of a government bank of the Republic of the Philippines payable on demand
to the authorized government depositary.
In contrast, Section 4 of Rep. Act No. 8974 relevantly states:
SEC. 4. Guidelines for Expropriation Proceedings.— Whenever it is necessary to acquire real property for the right-
of-way, site or location for any national government infrastructure project through expropriation, the appropriate
proceedings before the proper court under the following guidelines:
a) Upon the filing of the complaint, and after due notice to the defendant, the implementing agency shall immediately
pay the owner of the property the amount equivalent to the sum of (1) one hundred percent (100%) of the value of the
property based on the current relevant zonal valuation of the Bureau of Internal Revenue (BIR); and (2) the value of
the improvements and/or structures as determined under Section 7 hereof;
...
3
c) In case the completion of a government infrastructure project is of utmost urgency and importance, and there is no
existing valuation of the area concerned, the implementing agency shall immediately pay the owner of the property
its proffered value taking into consideration the standards prescribed in Section 5 hereof.
Upon completion with the guidelines abovementioned, the court shall immediately issue to the implementing agency
an order to take possession of the property and start the implementation of the project.
Before the court can issue a Writ of Possession, the implementing agency shall present to the court a certificate of
availability of funds from the proper official concerned.
...
As can be gleaned from the above-quoted texts, Rule 67 merely requires the Government to deposit with an
authorized government depositary the assessed value of the property for expropriation for it to be entitled to a writ of
possession. On the other hand, Rep. Act No. 8974 requires that the Government make a direct payment to the
property owner before the writ may issue. Moreover, such payment is based on the zonal valuation of the BIR in the
case of land, the value of the improvements or structures under the replacement cost method,29 or if no such
valuation is available and in cases of utmost urgency, the proffered value of the property to be seized.
It is quite apparent why the Government would prefer to apply Rule 67 in lieu of Rep. Act No. 8974. Under Rule 67,
it would not be obliged to immediately pay any amount to PIATCO before it can obtain the writ of possession since
all it need do is deposit the amount equivalent to the assessed value with an authorized government depositary.
Hence, it devotes considerable effort to point out that Rep. Act No. 8974 does not apply in this case, notwithstanding
the undeniable reality that NAIA 3 is a national government project. Yet, these efforts fail, especially considering the
controlling effect of the 2004 Resolution in Agan on the adjudication of this case.
It is the finding of this Court that the staging of expropriation proceedings in this case with the exclusive use of Rule
67 would allow for the Government to take over the NAIA 3 facilities in a fashion that directly rebukes our 2004
Resolution in Agan. This Court cannot sanction deviation from its own final and executory orders.
Section 2 of Rule 67 provides that the State "shall have the right to take or enter upon the possession of the real
property involved if [the plaintiff] deposits with the authorized government depositary an amount equivalent to the
assessed value of the property for purposes of taxation to be held by such bank subject to the orders of the court."30 It
is thus apparent that under the provision, all the Government need do to obtain a writ of possession is to deposit the
amount equivalent to the assessed value with an authorized government depositary.
Would the deposit under Section 2 of Rule 67 satisfy the requirement laid down in the 2004 Resolution that "[f]or the
government to take over the said facility, it has to compensate respondent PIATCO as builder of the said structures"?
Evidently not.
If Section 2 of Rule 67 were to apply, PIATCO would be enjoined from receiving a single centavo as just
compensation before the Government takes over the NAIA 3 facility by virtue of a writ of possession. Such an
injunction squarely contradicts the letter and intent of the 2004 Resolution. Hence, the position of the Government
sanctions its own disregard or violation the prescription laid down by this Court that there must first be just
compensation paid to PIATCO before the Government may take over the NAIA 3 facilities.
Thus, at the very least, Rule 67 cannot apply in this case without violating the 2004 Resolution. Even assuming that
Rep. Act No. 8974 does not govern in this case, it does not necessarily follow that Rule 67 should then apply. After
all, adherence to the letter of Section 2, Rule 67 would in turn violate the Court’s requirement in the 2004 Resolution
that there must first be payment of just compensation to PIATCO before the Government may take over the property.
It is the plain intent of Rep. Act No. 8974 to supersede the system of deposit under Rule 67 with the scheme of
"immediate payment" in cases involving national government infrastructure projects. The following portion of the
Senate deliberations, cited by PIATCO in its Memorandum, is worth quoting to cogitate on the purpose behind the
plain meaning of the law:
THE CHAIRMAN (SEN. CAYETANO). "x x x Because the Senate believes that, you know, we have to pay the
landowners immediately not by treasury bills but by cash.
Since we are depriving them, you know, upon payment, ‘no, of possession, we might as well pay them as much,
‘no, hindi lang 50 percent.
xxx
THE CHAIRMAN (REP. VERGARA). Accepted.
xxx
THE CHAIRMAN (SEN. CAYETANO). Oo. Because this is really in favor of the landowners, e.
THE CHAIRMAN (REP. VERGARA). That’s why we need to really secure the availability of funds.
xxx
THE CHAIRMAN (SEN. CAYETANO). No, no. It’s the same. It says here: iyong first paragraph, diba? Iyong
zonal – talagang magbabayad muna. In other words, you know, there must be a payment kaagad. (TSN,
Bicameral Conference on the Disagreeing Provisions of House Bill 1422 and Senate Bill 2117, August 29, 2000, pp.
14-20)
xxx
THE CHAIRMAN (SEN. CAYETANO). Okay, okay, ‘no. Unang-una, it is not deposit, ‘no. It’s payment."
REP. BATERINA. It’s payment, ho, payment." (Id., p. 63)31
It likewise bears noting that the appropriate standard of just compensation is a substantive matter. It is well within the
province of the legislature to fix the standard, which it did through the enactment of Rep. Act No. 8974. Specifically,
this prescribes the new standards in determining the amount of just compensation in expropriation cases relating to
national government infrastructure projects, as well as the manner of payment thereof. At the same time, Section 14
of the Implementing Rules recognizes the continued applicability of Rule 67 on procedural aspects when it provides
"all matters regarding defenses and objections to the complaint, issues on uncertain ownership and conflicting claims,
4
effects of appeal on the rights of the parties, and such other incidents affecting the complaint shall be resolved under
the provisions on expropriation of Rule 67 of the Rules of Court."32
Given that the 2004 Resolution militates against the continued use of the norm under Section 2, Rule 67, is it then
possible to apply Rep. Act No. 8974? We find that it is, and moreover, its application in this case complements rather
than contravenes the prescriptions laid down in the 2004 Resolution.
Rep. Act No. 8974 Fitsto the Situation at Bar and Complements the2004 Agan Resolution
Rep. Act No. 8974 is entitled "An Act To Facilitate The Acquisition Of Right-Of-Way, Site Or Location For National
Government Infrastructure Projects And For Other Purposes." Obviously, the law is intended to cover expropriation
proceedings intended for national government infrastructure projects. Section 2 of Rep. Act No. 8974 explains what
are considered as "national government projects."
Sec. 2. National Government Projects. – The term "national government projects" shall refer to all national
government infrastructure, engineering works and service contracts, including projects undertaken by government-
owned and controlled corporations, all projects covered by Republic Act No. 6957, as amended by Republic Act No.
7718, otherwise known as the Build-Operate-and-Transfer Law, and other related and necessary activities, such as
site acquisition, supply and/or installation of equipment and materials, implementation, construction, completion,
operation, maintenance, improvement, repair and rehabilitation, regardless of the source of funding.
As acknowledged in the 2003 Decision, the development of NAIA 3 was made pursuant to a build-operate-and-
transfer arrangement pursuant to Republic Act No. 6957, as amended,33 which pertains to infrastructure or
development projects normally financed by the public sector but which are now wholly or partly implemented by the
private sector.34 Under the build-operate-and-transfer scheme, it is the project proponent which undertakes the
construction, including the financing, of a given infrastructure facility.35 In Tatad v. Garcia,36 the Court
acknowledged that the operator of the EDSA Light Rail Transit project under a BOT scheme was the owner of the
facilities such as "the rail tracks, rolling stocks like the coaches, rail stations, terminals and the power plant."37
There can be no doubt that PIATCO has ownership rights over the facilities which it had financed and constructed.
The 2004 Resolution squarely recognized that right when it mandated the payment of just compensation to PIATCO
prior to the takeover by the Government of NAIA 3. The fact that the Government resorted to eminent domain
proceedings in the first place is a concession on its part of PIATCO’s ownership. Indeed, if no such right is
recognized, then there should be no impediment for the Government to seize control of NAIA 3 through ordinary
ejectment proceedings.
Since the rights of PIATCO over the NAIA 3 facilities are established, the nature of these facilities should now be
determined. Under Section 415(1) of the Civil Code, these facilities are ineluctably immovable or real property, as
they constitute buildings, roads and constructions of all kinds adhered to the soil.38 Certainly, the NAIA 3 facilities
are of such nature that they cannot just be packed up and transported by PIATCO like a traveling circus caravan.
Thus, the property subject of expropriation, the NAIA 3 facilities, are real property owned by PIATCO. This point is
critical, considering the Government’s insistence that the NAIA 3 facilities cannot be deemed as the "right-of-way",
"site" or "location" of a national government infrastructure project, within the coverage of Rep. Act No. 8974.
There is no doubt that the NAIA 3 is not, under any sensible contemplation, a "right-of-way." Yet we cannot agree
with the Government’s insistence that neither could NAIA 3 be a "site" or "location". The petition quotes the
definitions provided in Black’s Law Dictionary of "location’" as the specific place or position of a person or thing and
‘site’ as pertaining to a place or location or a piece of property set aside for specific use.’"39 Yet even Black’s Law
Dictionary provides that "[t]he term [site] does not of itself necessarily mean a place or tract of land fixed by definite
boundaries."40 One would assume that the Government, to back up its contention, would be able to point to a clear-
cut rule that a "site" or "location" exclusively refers to soil, grass, pebbles and weeds. There is none.
Indeed, we cannot accept the Government’s proposition that the only properties that may be expropriated under Rep.
Act No. 8974 are parcels of land. Rep. Act No. 8974 contemplates within its coverage such real property constituting
land, buildings, roads and constructions of all kinds adhered to the soil. Section 1 of Rep. Act No. 8974, which sets
the declaration of the law’s policy, refers to "real property acquired for national government infrastructure projects
are promptly paid just compensation."41 Section 4 is quite explicit in stating that the scope of the law relates to the
acquisition of "real property," which under civil law includes buildings, roads and constructions adhered to the soil.
It is moreover apparent that the law and its implementing rules commonly provide for a rule for the valuation of
improvements and/or structures thereupon separate from that of the land on which such are constructed. Section 2 of
Rep. Act No. 8974 itself recognizes that the improvements or structures on the land may very well be the subject of
expropriation proceedings. Section 4(a), in relation to Section 7 of the law provides for the guidelines for the
valuation of the improvements or structures to be expropriated. Indeed, nothing in the law would prohibit the
application of Section 7, which provides for the valuation method of the improvements and or structures in the
instances wherein it is necessary for the Government to expropriate only the improvements or structures, as in this
case.
The law classifies the NAIA 3 facilities as real properties just like the soil to which they are adhered. Any sub-
classifications of real property and divergent treatment based thereupon for purposes of expropriation must be based
on substantial distinctions, otherwise the equal protection clause of the Constitution is violated. There may be perhaps
a molecular distinction between soil and the inorganic improvements adhered thereto, yet there are no purposive
distinctions that would justify a variant treatment for purposes of expropriation. Both the land itself and the
improvements thereupon are susceptible to private ownership independent of each other, capable of pecuniary
estimation, and if taken from the owner, considered as a deprivation of property. The owner of improvements seized
through expropriation suffers the same degree of loss as the owner of land seized through similar means. Equal
protection demands that all persons or things similarly situated should be treated alike, both as to rights conferred and
responsibilities imposed. For purposes of expropriation, parcels of land are similarly situated as the buildings or
improvements constructed thereon, and a disparate treatment between those two classes of real property infringes the
equal protection clause.
Even as the provisions of Rep. Act No. 8974 call for that law’s application in this case, the threshold test must still be
met whether its implementation would conform to the dictates of the Court in the 2004 Resolution. Unlike in the case
of Rule 67, the application of Rep. Act No. 8974 will not contravene the 2004 Resolution, which requires the
payment of just compensation before any takeover of the NAIA 3 facilities by the Government. The 2004 Resolution
does not particularize the extent such payment must be effected before the takeover, but it unquestionably requires at
least some degree of payment to the private property owner before a writ of possession may issue. The utilization of
Rep. Act No. 8974 guarantees compliance with this bare minimum requirement, as it assures the private property
owner the payment of, at the very least, the proffered value of the property to be seized. Such payment of the
proffered value to the owner, followed by the issuance of the writ of possession in favor of the Government, is
precisely the schematic under Rep. Act No. 8974, one which facially complies with the prescription laid down in the
2004 Resolution.
Clearly then, we see no error on the part of the RTC when it ruled that Rep. Act No. 8974 governs the instant
expropriation proceedings.
5
The Proper Amount to be Paid under Rep. Act No. 8974
Then, there is the matter of the proper amount which should be paid to PIATCO by the Government before the writ of
possession may issue, consonant to Rep. Act No. 8974.
At this juncture, we must address the observation made by the Office of the Solicitor General in behalf of the
Government that there could be no "BIR zonal valuations" on the NAIA 3 facility, as provided in Rep. Act No. 8974,
since zonal valuations are only for parcels of land, not for airport terminals. The Court agrees with this point, yet does
not see it as an impediment for the application of Rep. Act No. 8974.
It must be clarified that PIATCO cannot be reimbursed or justly compensated for the value of the parcel of land on
which NAIA 3 stands. PIATCO is not the owner of the land on which the NAIA 3 facility is constructed, and it should
not be entitled to just compensation that is inclusive of the value of the land itself. It would be highly disingenuous to
compensate PIATCO for the value of land it does not own. Its entitlement to just compensation should be limited to
the value of the improvements and/or structures themselves. Thus, the determination of just compensation cannot
include the BIR zonal valuation under Section 4 of Rep. Act No. 8974.
Under Rep. Act No. 8974, the Government is required to "immediately pay" the owner of the property the amount
equivalent to the sum of (1) one hundred percent (100%) of the value of the property based on the current relevant
zonal valuation of the [BIR]; and (2) the value of the improvements and/or structures as determined under Section 7.
As stated above, the BIR zonal valuation cannot apply in this case, thus the amount subject to immediate payment
should be limited to "the value of the improvements and/or structures as determined under Section 7," with Section 7
referring to the "implementing rules and regulations for the equitable valuation of the improvements and/or structures
on the land." Under the present implementing rules in place, the valuation of the improvements/structures are to be
based using "the replacement cost method."42 However, the replacement cost is only one of the factors to be
considered in determining the just compensation.
In addition to Rep. Act No. 8974, the 2004 Resolution in Agan also mandated that the payment of just compensation
should be in accordance with equity as well. Thus, in ascertaining the ultimate amount of just compensation, the duty
of the trial court is to ensure that such amount conforms not only to the law, such as Rep. Act No. 8974, but to
principles of equity as well.
Admittedly, there is no way, at least for the present, to immediately ascertain the value of the improvements and
structures since such valuation is a matter for factual determination.43 Yet Rep. Act No. 8974 permits an expedited
means by which the Government can immediately take possession of the property without having to await precise
determination of the valuation. Section 4(c) of Rep. Act No. 8974 states that "in case the completion of a government
infrastructure project is of utmost urgency and importance, and there is no existing valuation of the area
concerned, the implementing agency shall immediately pay the owner of the property its proferred value, taking
into consideration the standards prescribed in Section 5 [of the law]."44 The "proffered value" may strike as a highly
subjective standard based solely on the intuition of the government, but Rep. Act No. 8974 does provide relevant
standards by which "proffered value" should be based,45 as well as the certainty
of judicial determination of the propriety of the proffered value.46
In filing the complaint for expropriation, the Government alleged to have deposited the amount of ₱3 Billion
earmarked for expropriation, representing the assessed value of the property. The making of the deposit, including the
determination of the amount of the deposit, was undertaken under the erroneous notion that Rule 67, and not Rep. Act
No. 8974, is the applicable law. Still, as regards the amount, the Court sees no impediment to recognize this sum of
₱3 Billion as the proffered value under Section 4(b) of Rep. Act No. 8974. After all, in the initial determination of the
proffered value, the Government is not strictly required to adhere to any predetermined standards, although its
proffered value may later be subjected to judicial review using the standards enumerated under Section 5 of Rep. Act
No. 8974.
How should we appreciate the questioned order of Hon. Gingoyon, which pegged the amount to be immediately paid
to PIATCO at around $62.3 Million? The Order dated 4 January 2005, which mandated such amount, proves
problematic in that regard. While the initial sum of ₱3 Billion may have been based on the assessed value, a standard
which should not however apply in this case, the RTC cites without qualification Section 4(a) of Rep. Act No. 8974
as the basis for the amount of $62.3 Million, thus leaving the impression that the BIR zonal valuation may form part
of the basis for just compensation, which should not be the case. Moreover, respondent judge made no attempt to
apply the enumerated guidelines for determination of just compensation under Section 5 of Rep. Act No. 8974, as
required for judicial review of the proffered value.
The Court notes that in the 10 January 2005 Omnibus Order, the RTC noted that the concessions agreement entered
into between the Government and PIATCO stated that the actual cost of building NAIA 3 was "not less than" US$350
Million.47 The RTC then proceeded to observe that while Rep. Act No. 8974 required the immediate payment to
PIATCO the amount equivalent to 100% of the value of NAIA 3, the amount deposited by the Government
constituted only 18% of this value. At this point, no binding import should be given to this observation that the actual
cost of building NAIA 3 was "not less than" US$350 Million, as the final conclusions on the amount of just
compensation can come only after due ascertainment in accordance with the standards set under Rep. Act No. 8974,
not the declarations of the parties. At the same time, the expressed linkage between the BIR zonal valuation and the
amount of just compensation in this case, is revelatory of erroneous thought on the part of the RTC.
We have already pointed out the irrelevance of the BIR zonal valuation as an appropriate basis for valuation in this
case, PIATCO not being the owner of the land on which the NAIA 3 facilities stand. The subject order is flawed
insofar as it fails to qualify that such standard is inappropriate.
It does appear that the amount of US$62.3 Million was based on the certification issued by the LBP-Baclaran that the
Republic of the Philippines maintained a total balance in that branch amounting to such amount. Yet the actual
representation of the $62.3 Million is not clear. The Land Bank Certification expressing such amount does state that it
was issued upon request of the Manila International Airport Authority "purportedly as guaranty deposit for the
expropriation complaint."48 The Government claims in its Memorandum that the entire amount was made available
as a guaranty fund for the final and executory judgment of the trial court, and not merely for the issuance of the writ
of possession.49 One could readily conclude that the entire amount of US$62.3 Million was intended by the
Government to answer for whatever guaranties may be required for the purpose of the expropriation complaint.
Still, such intention the Government may have had as to the entire US$62.3 Million is only inferentially established.
In ascertaining the proffered value adduced by the Government, the amount of ₱3 Billion as the amount deposited
characterized in the complaint as "to be held by [Land Bank] subject to the [RTC’s] orders,"50 should be deemed as
controlling. There is no clear evidence that the Government intended to offer US$62.3 Million as the initial payment
of just compensation, the wording of the Land Bank Certification notwithstanding, and credence should be given to
the consistent position of the Government on that aspect.
In any event, for the RTC to be able to justify the payment of US$62.3 Million to PIATCO and not ₱3 Billion Pesos,
he would have to establish that the higher amount represents the valuation of the structures/improvements, and not
the BIR zonal valuation on the land wherein NAIA 3 is built. The Order dated 5 January 2005 fails to establish such
integral fact, and in the absence of contravening proof, the proffered value of ₱3 Billion, as presented by the
Government, should prevail.
6
Strikingly, the Government submits that assuming that Rep. Act No. 8974 is applicable, the deposited amount of ₱3
Billion should be considered as the proffered value, since the amount was based on comparative values made by the
City Assessor.51 Accordingly, it should be deemed as having faithfully complied with the requirements of the
statute.52 While the Court agrees that ₱3 Billion should be considered as the correct proffered value, still we cannot
deem the Government as having faithfully complied with Rep. Act No. 8974. For the law plainly requires direct
payment to the property owner, and not a mere deposit with the authorized government depositary. Without such
direct payment, no writ of possession may be obtained.
Writ of Possession May Not Be Implemented Until Actual
Receipt by PIATCO of Proferred Value
The Court thus finds another error on the part of the RTC. The RTC authorized the issuance of the writ of possession
to the Government notwithstanding the fact that no payment of any amount had yet been made to PIATCO, despite
the clear command of Rep. Act No. 8974 that there must first be payment before the writ of possession can issue.
While the RTC did direct the LBP-Baclaran to immediately release the amount of US$62 Million to PIATCO, it
should have likewise suspended the writ of possession, nay, withdrawn it altogether, until the Government shall have
actually paid PIATCO. This is the inevitable consequence of the clear command of Rep. Act No. 8974 that requires
immediate payment of the initially determined amount of just compensation should be effected. Otherwise, the
overpowering intention of Rep. Act No. 8974 of ensuring payment first before transfer of repossession would be
eviscerated.
Rep. Act No. 8974 represents a significant change from previous expropriation laws such as Rule 67, or even Section
19 of the Local Government Code. Rule 67 and the Local Government Code merely provided that the Government
deposit the initial amounts53 antecedent to acquiring possession of the property with, respectively, an authorized
Government depositary54 or the proper court.55 In both cases, the private owner does not receive compensation prior
to the deprivation of property. On the other hand, Rep. Act No. 8974 mandates immediate payment of the initial just
compensation prior to the issuance of the writ of possession in favor of the Government.
Rep. Act No. 8974 is plainly clear in imposing the requirement of immediate prepayment, and no amount of statutory
deconstruction can evade such requisite. It enshrines a new approach towards eminent domain that reconciles the
inherent unease attending expropriation proceedings with a position of fundamental equity. While expropriation
proceedings have always demanded just compensation in exchange for private property, the previous deposit
requirement impeded immediate compensation to the private owner, especially in cases wherein the determination
of the final amount of compensation would prove highly disputed. Under the new modality prescribed by Rep. Act
No. 8974, the private owner sees immediate monetary recompense with the same degree of speed as the taking of
his/her property.
While eminent domain lies as one of the inherent powers of the State, there is no requirement that it undertake a
prolonged procedure, or that the payment of the private owner be protracted as far as practicable. In fact, the
expedited procedure of payment, as highlighted under Rep. Act No. 8974, is inherently more fair, especially to the
layperson who would be hard-pressed to fully comprehend the social value of expropriation in the first place.
Immediate payment placates to some degree whatever ill-will that arises from expropriation, as well as satisfies the
demand of basic fairness.
The Court has the duty to implement Rep. Act No. 8974 and to direct compliance with the requirement of immediate
payment in this case. Accordingly, the Writ of Possession dated 21 December 2004 should be held in abeyance,
pending proof of actual payment by the Government to PIATCO of the proffered value of the NAIA 3 facilities,
which totals ₱3,002,125,000.00.
Rights of the Government upon Issuance of the Writ of Possession
Once the Government pays PIATCO the amount of the proffered value of ₱3 Billion, it will be entitled to the Writ of
Possession. However, the Government questions the qualification imposed by the RTC in its 4 January 2005 Order
consisting of the prohibition on the Government from performing acts of ownership such as awarding concessions or
leasing any part of NAIA 3 to other parties. To be certain, the RTC, in its 10 January 2005 Omnibus Order, expressly
stated that it was not affirming "the superfluous part of the Order [of 4 January 2005] prohibiting the plaintiffs from
awarding concessions or leasing any part of NAIA [3] to other parties."56 Still, such statement was predicated on the
notion that since the Government was not yet the owner of NAIA 3 until final payment of just compensation, it was
obviously incapacitated to perform such acts of ownership.
In deciding this question, the 2004 Resolution in Agan cannot be ignored, particularly the declaration that "[f]or the
government to take over the said facility, it has to compensate respondent PIATCO as builder of the said structures."
The obvious import of this holding is that unless PIATCO is paid just compensation, the Government is barred from
"taking over," a phrase which in the strictest sense could encompass even a bar of physical possession of NAIA 3,
much less operation of the facilities.
There are critical reasons for the Court to view the 2004 Resolution less stringently, and thus allow the operation by
the Government of NAIA 3 upon the effectivity of the Writ of Possession. For one, the national prestige is diminished
every day that passes with the NAIA 3 remaining mothballed. For another, the continued non-use of the facilities
contributes to its physical deterioration, if it has not already. And still for another, the economic benefits to the
Government and the country at large are beyond dispute once the NAIA 3 is put in operation.
Rep. Act No. 8974 provides the appropriate answer for the standard that governs the extent of the acts the
Government may be authorized to perform upon the issuance of the writ of possession. Section 4 states that "the court
shall immediately issue to the implementing agency an order to take possession of the property and start the
implementation of the project." We hold that accordingly, once the Writ of Possession is effective, the Government
itself is authorized to perform the acts that are essential to the operation of the NAIA 3 as an international airport
terminal upon the effectivity of the Writ of Possession. These would include the repair, reconditioning and
improvement of the complex, maintenance of the existing facilities and equipment, installation of new facilities and
equipment, provision of services and facilities pertaining to the facilitation of air traffic and transport, and other
services that are integral to a modern-day international airport.
The Government’s position is more expansive than that adopted by the Court. It argues that with the writ of
possession, it is enabled to perform acts de jure on the expropriated property. It cites Republic v. Tagle,57 as well as
the statement therein that "the expropriation of real property does not include mere physical entry or occupation of
land," and from them concludes that "its mere physical entry and occupation of the property fall short of the taking of
title, which includes all the rights that may be exercised by an owner over the subject property."
This conclusion is indeed lifted directly from statements in Tagle,58 but not from the ratio decidendi of that case.
Tagle concerned whether a writ of possession in favor of the Government was still necessary in light of the fact that it
was already in actual possession of the property. In ruling that the Government was entitled to the writ of possession,
the Court in Tagle explains that such writ vested not only physical possession, but also the legal right to possess the
7
property. Continues the Court, such legal right to possess was particularly important in the case, as there was a
pending suit against the Republic for unlawful detainer, and the writ of possession would serve to safeguard the
Government from eviction.59
At the same time, Tagle conforms to the obvious, that there is no transfer of ownership as of yet by virtue of the writ
of possession. Tagle may concede that the Government is entitled to exercise more than just the right of possession by
virtue of the writ of possession, yet it cannot be construed to grant the Government the entire panoply of rights that
are available to the owner. Certainly, neither Tagle nor any other case or law, lends support to the Government’s
proposition that it acquires beneficial or equitable ownership of the expropriated property merely through the writ of
possession.
Indeed, this Court has been vigilant in defense of the rights of the property owner who has been validly deprived of
possession, yet retains legal title over the expropriated property pending payment of just compensation. We reiterated
the various doctrines of such import in our recent holding in Republic v. Lim:60
The recognized rule is that title to the property expropriated shall pass from the owner to the expropriator only upon
full payment of the just compensation. Jurisprudence on this settled principle is consistent both here and in other
democratic jurisdictions. In Association of Small Landowners in the Philippines, Inc. et al., vs. Secretary of Agrarian
Reform[61 ], thus:
"Title to property which is the subject of condemnation proceedings does not vest the condemnor until the
judgment fixing just compensation is entered and paid, but the condemnor’s title relates back to the date on which
the petition under the Eminent Domain Act, or the commissioner’s report under the Local Improvement Act, is filed.
x x x Although the right to appropriate and use land taken for a canal is complete at the time of entry, title to
the property taken remains in the owner until payment is actually made. (Emphasis supplied.)
In Kennedy v. Indianapolis, the US Supreme Court cited several cases holding that title to property does not pass to
the condemnor until just compensation had actually been made. In fact, the decisions appear to be uniform to this
effect. As early as 1838, in Rubottom v. McLure, it was held that ‘actual payment to the owner of the condemned
property was a condition precedent to the investment of the title to the property in the State’ albeit ‘not to the
appropriation of it to public use.’ In Rexford v. Knight, the Court of Appeals of New York said that the construction
upon the statutes was that the fee did not vest in the State until the payment of the compensation although the
authority to enter upon and appropriate the land was complete prior to the payment. Kennedy further said that ‘both
on principle and authority the rule is . . . that the right to enter on and use the property is complete, as soon as
the property is actually appropriated under the authority of law for a public use, but that the title does not
pass from the owner without his consent, until just compensation has been made to him."
Our own Supreme Court has held in Visayan Refining Co. v. Camus and Paredes, that:
‘If the laws which we have exhibited or cited in the preceding discussion are attentively examined it will be
apparent that the method of expropriation adopted in this jurisdiction is such as to afford absolute
reassurance that no piece of land can be finally and irrevocably taken from an unwilling owner until
compensation is paid....’"(Emphasis supplied.)
Clearly, without full payment of just compensation, there can be no transfer of title from the landowner to the
expropriator. Otherwise stated, the Republic’s acquisition of ownership is conditioned upon the full payment of just
compensation within a reasonable time.
Significantly, in Municipality of Biñan v. Garcia[62 ] this Court ruled that the expropriation of lands consists of two
stages, to wit:
"x x x The first is concerned with the determination of the authority of the plaintiff to exercise the power of eminent
domain and the propriety of its exercise in the context of the facts involved in the suit. It ends with an order, if not of
dismissal of the action, "of condemnation declaring that the plaintiff has a lawful right to take the property sought to
be condemned, for the public use or purpose described in the complaint, upon the payment of just compensation to be
determined as of the date of the filing of the complaint" x x x.
The second phase of the eminent domain action is concerned with the determination by the court of "the just
compensation for the property sought to be taken." This is done by the court with the assistance of not more than
three (3) commissioners. x x x.
It is only upon the completion of these two stages that expropriation is said to have been completed. In Republic v.
Salem Investment Corporation[63 ] , we ruled that, "the process is not completed until payment of just
compensation." Thus, here, the failure of the Republic to pay respondent and his predecessors-in-interest for a period
of 57 years rendered the expropriation process incomplete.
Lim serves fair warning to the Government and its agencies who consistently refuse to pay just compensation due to
the private property owner whose property had been
expropriated. At the same time, Lim emphasizes the fragility of the rights of the Government as possessor pending the
final payment of just compensation, without diminishing the potency of such rights. Indeed, the public policy,
enshrined foremost in the Constitution, mandates that the Government must pay for the private property it
expropriates. Consequently, the proper judicial attitude is to guarantee compliance with this primordial right to just
compensation.
Final Determination of Just Compensation Within 60 Days
The issuance of the writ of possession does not write finis to the expropriation proceedings. As earlier pointed out,
expropriation is not completed until payment to the property owner of just compensation. The proffered value stands
as merely a provisional determination of the amount of just compensation, the payment of which is sufficient to
transfer possession of the property to the Government. However, to effectuate the transfer of ownership, it is
necessary for the Government to pay the property owner the final just compensation.
In Lim, the Court went as far as to countenance, given the exceptional circumstances of that case, the reversion of the
validly expropriated property to private ownership due to the failure of the Government to pay just compensation in
that case.64 It was noted in that case that the Government deliberately refused to pay just compensation. The Court
went on to rule that "in cases where the government failed to pay just compensation within five (5) years from the
finality of the judgment in the expropriation proceedings, the owners concerned shall have the right to recover
possession of their property."65
Rep. Act No. 8974 mandates a speedy method by which the final determination of just compensation may be had.
Section 4 provides:
In the event that the owner of the property contests the implementing agency’s proffered value, the court shall
determine the just compensation to be paid the owner within sixty (60) days from the date of filing of the
8
expropriation case. When the decision of the court becomes final and executory, the implementing agency shall pay
the owner the difference between the amount already paid and the just compensation as determined by the court.
We hold that this provision should apply in this case. The sixty (60)-day period prescribed in Rep. Act No. 8974 gives
teeth to the law’s avowed policy "to ensure that owners of real property acquired for national government
infrastructure projects are promptly paid just compensation."66 In this case, there already has been irreversible delay
in the prompt payment of PIATCO of just compensation, and it is no longer possible for the RTC to determine the just
compensation due PIATCO within sixty (60) days from the filing of the complaint last 21 December 2004, as
contemplated by the law. Still, it is feasible to effectuate the spirit of the law by requiring the trial court to make such
determination within sixty (60) days from finality of this decision, in accordance with the guidelines laid down in
Rep. Act No. 8974 and its Implementing Rules.
Of course, once the amount of just compensation has been finally determined, the Government is obliged to pay
PIATCO the said amount. As shown in Lim and other like-minded cases, the Government’s refusal to make such
payment is indubitably actionable in court.
Appointment of Commissioners
The next argument for consideration is the claim of the Government that the RTC erred in appointing the three
commissioners in its 7 January 2005 Order without prior consultation with either the Government or PIATCO, or
without affording the Government the opportunity to object to the appointment of these commissioners. We can
dispose of this argument without complication.
It must be noted that Rep. Act No. 8974 is silent on the appointment of commissioners tasked with the ascertainment
of just compensation.67 This protocol though is sanctioned under Rule 67. We rule that the appointment of
commissioners under Rule 67 may be resorted to, even in expropriation proceedings under Rep. Act No. 8974, since
the application of the provisions of Rule 67 in that regard do not conflict with the statute. As earlier stated, Section 14
of the Implementing Rules does allow such other incidents affecting the complaint to be resolved under the
provisions on expropriation of Rule 67 of the Rules of Court. Even without Rule 67, reference during trial to a
commissioner of the examination of an issue of fact is sanctioned under Rule 32 of the Rules of Court.
But while the appointment of commissioners under the aegis of Rule 67 may be sanctioned in expropriation
proceedings under Rep. Act No. 8974, the standards to be observed for the determination of just compensation are
provided not in Rule 67 but in the statute. In particular, the governing standards for the determination of just
compensation for the NAIA 3 facilities are found in Section 10 of the Implementing Rules for Rep. Act No. 8974,
which provides for the replacement cost method in the valuation of improvements and structures.68
Nothing in Rule 67 or Rep. Act No. 8974 requires that the RTC consult with the parties in the expropriation case on
who should be appointed as commissioners. Neither does the Court feel that such a requirement should be imposed in
this case. We did rule in Municipality of Talisay v. Ramirez69 that "there is nothing to prevent [the trial court] from
seeking the recommendations of the parties on [the] matter [of appointment of commissioners], the better to ensure
their fair representation."70 At the same time, such solicitation of recommendations is not obligatory on the part of
the court, hence we cannot impute error on the part of the RTC in its exercise of solitary discretion in the appointment
of the commissioners.
What Rule 67 does allow though is for the parties to protest the appointment of any of these commissioners, as
provided under Section 5 of the Rule. These objections though must be made filed within ten (10) days from service
of the order of appointment of the commissioners.71 In this case, the proper recourse of the Government to challenge
the choice of the commissioners is to file an objection with the trial court, conformably with Section 5, Rule 67, and
not as it has done, assail the same through a special civil action for certiorari. Considering that the expropriation
proceedings in this case were effectively halted seven (7) days after the Order appointing the commissioners,72 it is
permissible to allow the parties to file their objections with the RTC within five (5) days from finality of this decision.
Insufficient Ground for Inhibition of Respondent Judge
The final argument for disposition is the claim of the Government is that Hon. Gingoyon has prejudged the
expropriation case against the Government’s cause and, thus, should be required to inhibit himself. This grave charge
is predicated on facts which the Government characterizes as "undeniable." In particular, the Government notes that
the 4 January 2005 Order was issued motu proprio, without any preceding motion, notice or hearing. Further, such
order, which directed the payment of US$62 Million to PIATCO, was attended with error in the computation of just
compensation. The Government also notes that the said Order was issued even before summons had been served on
PIATCO.
The disqualification of a judge is a deprivation of his/her judicial power73 and should not be allowed on the basis of
mere speculations and surmises. It certainly cannot be predicated on the adverse nature of the judge’s rulings towards
the movant for inhibition, especially if these rulings are in accord with law. Neither could inhibition be justified
merely on the erroneous nature of the rulings of the judge. We emphasized in Webb v. People:74
To prove bias and prejudice on the part of respondent judge, petitioners harp on the alleged adverse and erroneous
rulings of respondent judge on their various motions. By themselves, however, they do not sufficiently prove
bias and prejudice to disqualify respondent judge. To be disqualifying, the bias and prejudice must be shown
to have stemmed from an extrajudicial source and result in an opinion on the merits on some basis other than
what the judge learned from his participation in the case. Opinions formed in the course of judicial proceedings,
although erroneous, as long as they are based on the evidence presented and conduct observed by the judge, do not
prove personal bias or prejudice on the part of the judge. As a general rule, repeated rulings against a litigant, no
matter how erroneous and vigorously and consistently expressed, are not a basis for disqualification of a judge
on grounds of bias and prejudice. Extrinsic evidence is required to establish bias, bad faith, malice or corrupt
purpose, in addition to the palpable error which may be inferred from the decision or order itself. Although
the decision may seem so erroneous as to raise doubts concerning a judge's integrity, absent extrinsic evidence,
the decision itself would be insufficient to establish a case against the judge. The only exception to the rule is
when the error is so gross and patent as to produce an ineluctable inference of bad faith or malice.75
The Government’s contentions against Hon. Gingoyon are severely undercut by the fact that the 21 December 2004
Order, which the 4 January 2005 Order sought to rectify, was indeed severely flawed as it erroneously applied the
provisions of Rule 67 of the Rules of Court, instead of Rep. Act No. 8974, in ascertaining compliance with the
requisites for the issuance of the writ of possession. The 4 January
2005 Order, which according to the Government establishes Hon. Gingoyon’s bias, was promulgated precisely to
correct the previous error by applying the correct provisions of law. It would not speak well of the Court if it
sanctions a judge for wanting or even attempting to correct a previous erroneous order which precisely is the right
move to take.
Neither are we convinced that the motu proprio issuance of the 4 January 2005 Order, without the benefit of notice or
hearing, sufficiently evinces bias on the part of Hon. Gingoyon. The motu proprio amendment by a court of an
erroneous order previously issued may be sanctioned depending on the circumstances, in line with the long-
recognized principle that every court has inherent power to do all things reasonably necessary for the administration
9
of justice within the scope of its jurisdiction.76 Section 5(g), Rule 135 of the Rules of Court further recognizes the
inherent power of courts "to amend and control its process and orders so as to make them conformable to law and
justice,"77 a power which Hon. Gingoyon noted in his 10 January 2005 Omnibus Order.78 This inherent power
includes the right of the court to reverse itself, especially when in its honest opinion it has committed an error or
mistake in judgment, and that to adhere to its decision will cause injustice to a party litigant.79
Certainly, the 4 January 2005 Order was designed to make the RTC’s previous order conformable to law and justice,
particularly to apply the correct law of the case. Of course, as earlier established, this effort proved incomplete, as the
4 January 2005 Order did not correctly apply Rep. Act No. 8974 in several respects. Still, at least, the 4 January 2005
Order correctly reformed the most basic premise of the case that Rep. Act No. 8974 governs the expropriation
proceedings.
Nonetheless, the Government belittles Hon. Gingoyon’s invocation of Section 5(g), Rule 135 as "patently without
merit". Certainly merit can be seen by the fact that the 4 January 2005 Order reoriented the expropriation proceedings
towards the correct governing law. Still, the Government claims that the unilateral act of the RTC did not conform to
law or justice, as it was not afforded the right to be heard.
The Court would be more charitably disposed towards this argument if not for the fact that the earlier order with the 4
January 2005 Order sought to correct was itself issued without the benefit of any hearing. In fact, nothing either in
Rule 67 or Rep. Act No. 8975 requires the conduct of a hearing prior to the issuance of the writ of possession, which
by design is available immediately upon the filing of the complaint provided that the requisites attaching thereto are
present. Indeed, this expedited process for the obtention of a writ of possession in expropriation cases comes at the
expense of the rights of the property owner to be heard or to be deprived of possession. Considering these predicates,
it would be highly awry to demand that an order modifying the earlier issuance of a writ of possession in an
expropriation case be barred until the staging of a hearing, when the issuance of the writ of possession itself is not
subject to hearing. Perhaps the conduct of a hearing under these circumstances would be prudent. However, hearing is
not mandatory, and the failure to conduct one does not establish the manifest bias required for the inhibition of the
judge.
The Government likewise faults Hon. Gingoyon for using the amount of US$350 Million as the basis for the 100%
deposit under Rep. Act No. 8974. The Court has noted that this statement was predicated on the erroneous belief that
the BIR zonal valuation applies as a standard for determination of just compensation in this case. Yet this is manifest
not of bias, but merely of error on the part of the judge. Indeed, the Government was not the only victim of the errors
of the RTC in the assailed orders. PIATCO itself was injured by the issuance by the RTC of the writ of possession,
even though the former had yet to be paid any amount of just compensation. At the same time, the Government was
also prejudiced by the erroneous ruling of the RTC that the amount of US$62.3 Million, and not ₱3 Billion, should be
released to PIATCO.
The Court has not been remiss in pointing out the multiple errors committed by the RTC in its assailed orders, to the
prejudice of both parties. This attitude of error towards all does not ipso facto negate the charge of bias. Still, great
care should be had in requiring the inhibition of judges simply because the magistrate did err. Incompetence may be a
ground for administrative sanction, but not for inhibition, which requires lack of objectivity or impartiality to sit on a
case.
The Court should necessarily guard against adopting a standard that a judge should be inhibited from hearing the case
if one litigant loses trust in the judge. Such loss of trust on the part of the Government may be palpable, yet inhibition
cannot be grounded merely on the feelings of the party-litigants. Indeed, every losing litigant in any case can resort to
claiming that the judge was biased, and he/she will gain a sympathetic ear from friends, family, and people who do
not understand the judicial process. The test in believing such a proposition should not be the vehemence of the
litigant’s claim of bias, but the Court’s judicious estimation, as people who know better than to believe any old cry of
"wolf!", whether such bias has been irrefutably exhibited.
The Court acknowledges that it had been previously held that "at the very first sign of lack of faith and trust in his
actions, whether well-grounded or not, the judge has no other alternative but to inhibit himself from the case."80 But
this doctrine is qualified by the entrenched rule that "a judge may not be legally prohibited from sitting in a litigation,
but when circumstances appear that will induce doubt to his honest actuations and probity in favor of either party, or
incite such state of mind, he should conduct a careful self-
examination. He should exercise his discretion in a way that the people's faith in the Courts of Justice is not
impaired."81 And a self-assessment by the judge that he/she is not impaired to hear the case will be respected by the
Court absent any evidence to the contrary. As held in Chin v. Court of Appeals:
An allegation of prejudgment, without more, constitutes mere conjecture and is not one of the "just and valid reasons"
contemplated in the second paragraph of Rule 137 of the Rules of Court for which a judge may inhibit himself from
hearing the case. We have repeatedly held that mere suspicion that a judge is partial to a party is not enough. Bare
allegations of partiality and prejudgment will not suffice in the absence of clear and convincing evidence to overcome
the presumption that the judge will undertake his noble role to dispense justice according to law and evidence and
without fear or favor. There should be adequate evidence to prove the allegations, and there must be showing that the
judge had an interest, personal or otherwise, in the prosecution of the case. To be a disqualifying circumstance, the
bias and prejudice must be shown to have stemmed from an extrajudicial source and result in an opinion on the merits
on some basis other than what the judge learned from his participation in the case.82
The mere vehemence of the Government’s claim of bias does not translate to clear and convincing evidence of
impairing bias. There is no sufficient ground to direct the inhibition of Hon. Gingoyon from hearing the expropriation
case.
In conclusion, the Court summarizes its rulings as follows:
(1) The 2004 Resolution in Agan sets the base requirement that has to be observed before the Government may take
over the NAIA 3, that there must be payment to PIATCO of just compensation in accordance with law and equity.
Any ruling in the present expropriation case must be conformable to the dictates of the Court as pronounced in the
Agan cases.
(2) Rep. Act No. 8974 applies in this case, particularly insofar as it requires the immediate payment by the
Government of at least the proffered value of the NAIA 3 facilities to PIATCO and provides certain valuation
standards or methods for the determination of just compensation.
(3) Applying Rep. Act No. 8974, the implementation of Writ of Possession in favor of the Government over NAIA 3
is held in abeyance until PIATCO is directly paid the amount of ₱3 Billion, representing the proffered value of NAIA
3 under Section 4(c) of the law.
(4) Applying Rep. Act No. 8974, the Government is authorized to start the implementation of the NAIA 3 Airport
terminal project by performing the acts that are essential to the operation of the NAIA 3 as an international airport
terminal upon the effectivity of the Writ of Possession, subject to the conditions above-stated. As prescribed by the
Court, such authority encompasses "the repair, reconditioning and improvement of the complex, maintenance of the
existing facilities and equipment, installation of new facilities and equipment, provision of services and facilities
10
pertaining to the facilitation of air traffic and transport, and other services that are integral to a modern-day DANTE O. TINGA
international airport."83 Associate Justice

(5) The RTC is mandated to complete its determination of the just compensation within sixty (60) days from finality
of this Decision. In doing so, the RTC is obliged to comply with "law and equity" as ordained in Again and the
standard set under Implementing Rules of Rep. Act No. 8974 which is the "replacement cost method" as the standard
of valuation of structures and improvements.

(6) There was no grave abuse of discretion attending the RTC Order appointing the commissioners for the purpose of
determining just compensation. The provisions on commissioners under Rule 67 shall apply insofar as they are not
inconsistent with Rep. Act No. 8974, its Implementing Rules, or the rulings of the Court in Agan.

(7) The Government shall pay the just compensation fixed in the decision of the trial court to PIATCO immediately
upon the finality of the said decision.

(8) There is no basis for the Court to direct the inhibition of Hon. Gingoyon.

All told, the Court finds no grave abuse of discretion on the part of the RTC to warrant the nullification of the
questioned orders. Nonetheless, portions of these orders should be modified to conform with law and the
pronouncements made by the Court herein.

WHEREFORE, the Petition is GRANTED in PART with respect to the orders dated 4 January 2005 and 10 January
2005 of the lower court. Said orders are AFFIRMED with the following MODIFICATIONS:

1) The implementation of the Writ of Possession dated 21 December 2005 is HELD IN ABEYANCE, pending
payment by petitioners to PIATCO of the amount of Three Billion Two Million One Hundred Twenty Five Thousand
Pesos (₱3,002,125,000.00), representing the proffered value of the NAIA 3 facilities;

2) Petitioners, upon the effectivity of the Writ of Possession, are authorized start the implementation of the Ninoy
Aquino International Airport Pasenger Terminal III project by performing the acts that are essential to the operation
of the said International Airport Passenger Terminal project;

3) RTC Branch 117 is hereby directed, within sixty (60) days from finality of this Decision, to determine the just
compensation to be paid to PIATCO by the Government.

The Order dated 7 January 2005 is AFFIRMED in all respects subject to the qualification that the parties are given
ten (10) days from finality of this Decision to file, if they so choose, objections to the appointment of the
commissioners decreed therein.

The Temporary Restraining Order dated 14 January 2005 is hereby LIFTED.

No pronouncement as to costs.

SO ORDERED.

11

3.) G.R. No. 173085 January 19, 2011
PHILIPPINE VETERANS BANK, Petitioner,
vs.
BASES CONVERSION DEVELOPMENT AUTHORITY, LAND BANK OF THE PHILIPPINES,
ARMANDO SIMBILLO, CHRISTIAN MARCELO, ROLANDO DAVID, RICARDO BUCUD, PABLO
SANTOS, AGRIFINA ENRIQUEZ, CONRADO ESPELETA, CATGERUBE CASTRO, CARLITO
MERCADO and ALFREDO SUAREZ, Respondents.
DECISION
ABAD, J.:
This case is about the authority of the court in an expropriation case to adjudicate questions of ownership of the
subject properties where such questions involve the determination of the validity of the issuance to the defendants of
Certificates of Land Ownership Awards (CLOAs) and Emancipation Patents (EPs), questions that fall within the
jurisdiction of the Department of Agrarian Reform Adjudication Board (DARAB).
The Facts and the Case
In late 2003 respondent Bases Conversion Development Authority (BCDA), a government corporation, filed several
expropriation actions before the various branches of the Regional Trial Court (RTC) of Angeles City, for acquisition
of lands needed for the construction of the Subic-Clark-Tarlac Expressway Project. Ten of these cases were raffled to
Branch 58 of the court1 and it is these that are the concern of the present petition.
The defendants in Branch 58 cases were respondents Armando Simbillo, Christian Marcelo, Rolando David, Ricardo
Bucud, Pablo Santos, Agrifina Enriquez, Conrado Espeleta, Catgerube Castro, Carlito Mercado, and Alfredo Suarez.
They were the registered owners of the expropriated lands that they acquired as beneficiaries of the comprehensive
agrarian reform program. Another defendant was Land Bank of the Philippines, the mortgagee of the lands by virtue
of the loans it extended for their acquisition. The lands in these cases were located in Porac and Floridablanca,
Pampanga.
On learning of the expropriation cases before Branch 58, petitioner Philippine Veterans Bank (PVB) filed motions to
intervene in all the cases with attached complaints-in-intervention, a remedy that it adopted in similar cases with the
other branches. PVB alleged that the covered properties actually belonged to Belmonte Agro-Industrial Development
Corp. which mortgaged the lands to PVB in 1976. PVB had since foreclosed on the mortgages and bought the same
at public auction in 1982. Unfortunately, the bank had been unable to consolidate ownership in its name.
But, in its order of August 18, 2004,2 Branch 58 denied PVB’s motion for intervention on the ground that the
intervention amounts to a third-party complaint that is not allowed in expropriation cases and that the intervention
would delay the proceedings in the cases before it. Besides, said Branch 58, PVB had a pending action for annulment
of the titles issued to the individual defendants and this was pending before Branch 62 of the court.
PVB filed its motion for reconsideration but Branch 58 denied the same, prompting the bank to file a petition for
certiorari with the Court of Appeals (CA).3 On January 26, 2006 the CA rendered a decision, dismissing the petition
for lack of merit.4 It also denied in a resolution dated June 2, 20065 PVB’s motion for reconsideration.
Meanwhile, on April 3, 2006 Branch 58 issued separate decisions in all 10 cases before it, granting the expropriation
of the subject properties. The court noted the uncertainty as to the ownership of such properties but took no action to
grant BCDA’s prayer in its complaint that it determine the question of ownership of the same pursuant to Section 9,
Rule 67 of the Revised Rules of Civil Procedure.6
The Issue Presented
The issue presented in this case is whether or not the CA erred in holding that PVB was not entitled to intervene in
the expropriation cases before Branch 58 of the Angeles City RTC.
The Court’s Ruling
PVB maintains that in deciding the case, the RTC and the CA ignored Section 9, Rule 67 of the 1997 Rules of Civil
Procedure, which authorizes the court adjudicating the expropriation case to hear and decide conflicting claims
regarding the ownership of the properties involved while the compensation for the expropriated property is in the
meantime deposited with the court. Section 9 provides:
Sec. 9. Uncertain ownership; conflicting claims. – If the ownership of the property taken is uncertain, or there are
conflicting claims to any part thereof, the court may order any sum or sums awarded as compensation for the property
to be paid to the court for the benefit of the person adjudged in the same proceeding to be entitled thereto. But the
judgment shall require the payment of the sum or sums awarded to either the defendant or the court before the
plaintiff can enter upon the property, or retain it for the public use or purpose if entry has already been made.
PVB’s point regarding the authority of the court in expropriation cases to hear and adjudicate conflicting claims over
the ownership of the lands involved in such cases is valid. But such rule obviously cannot apply to PVB for the
following reasons:
1. At the time PVB tried to intervene in the expropriation cases, its conflict with the farmer beneficiaries who held
CLOAs, EPs, or TCTs emanating from such titles were already pending before Angeles City RTC Branch 62, a co-
equal branch of the same court. Branch 58 had no authority to pre-empt Branch 62 of its power to hear and adjudicate
claims that were already pending before it.
2. Of course, subsequently, after the CA dismissed PVB’s petition on January 26, 2006, the latter filed a motion for
reconsideration, pointing out that it had in the meantime already withdrawn the actions it filed with Branch 62 after
learning from the decision of the Supreme Court in Department of Agrarian Reform v. Cuenca,7 that jurisdiction over
cases involving the annulment of CLOAs and EPs were vested by Republic Act 6657 in the DARAB. 8
PVB now points out that, since there was no longer any impediment in RTC Branch 58 taking cognizance of its
motion for intervention and adjudicating the parties’ conflicting claims over the expropriated properties, the CA was
in error in not reconsidering its decision.
But PVB’s withdrawal of its actions from Branch 62 cannot give Branch 58 comfort. As PVB itself insists,
jurisdiction over the annulment of the individual defendants’ CLOAs and EPs (which titles if annulled would leave
12
PVB’s titles to the lands unchallenged) lies with the DARAB. Branch 58 would still have no power to adjudicate the
issues of ownership presented by the PVB’s intervention.

Actually, PVB’s remedy was to secure an order from Branch 58 to have the proceeds of the expropriation deposited
with that branch in the meantime, pending adjudication of the issues of ownership of the expropriated lands by the
DARAB. Section 9 above empowers the court to order payment to itself of the proceeds of the expropriation
whenever questions of ownership are yet to be settled. There is no reason why this rule should not be applied even
where the settlement of such questions is to be made by another tribunal.1avvphi1

WHEREFORE, the Court DENIES the petition and AFFIRMS the decision of the Court of Appeals dated January
26, 2006 and its resolution dated June 2, 2006 in CA-G.R. SP 88144.

SO ORDERED.

ROBERTO A. ABAD
Associate Justice

13
 x - - - - - - - - - - - - - - - - - - - - - - -x

4.) G.R. No. 170375 October 13, 2010 G.R. No. 178779

REPUBLIC OF THE PHILIPPINES, Petitioner, LAND TRADE REALTY CORPORATION, Petitioner,

vs. vs.
HON. MAMINDIARA P. MANGOTARA, in his capacity as Presiding Judge of the Regional Trial Court, DEMETRIA CONFESOR VIDAL and AZIMUTH INTERNATIONAL DEVELOPMENT CORPORATION,
Branch 1, Iligan City, Lanao del Norte, and MARIA CRISTINA FERTILIZER CORPORATION, and the Respondents,
PHILIPPINE NATIONAL BANK, Respondents,
x - - - - - - - - - - - - - - - - - - - - - - -x
x - - - - - - - - - - - - - - - - - - - - - - -x
G.R. No. 178894
G.R. No. 170505
TEOFILO CACHO and/or ATTY. GODOFREDO CABILDO, Petitioner,
LAND TRADE REALTY CORPORATION, Petitioner, vs.
vs. DEMETRIA CONFESOR VIDAL and AZIMUTH INTERNATIONAL DEVELOPMENT CORPORATION,
NATIONAL POWER CORPORATION and NATIONAL TRANSMISSION CORPORATION (TRANSCO), Respondents.
Respondents,
RESOLUTION
x - - - - - - - - - - - - - - - - - - - - - - -x
LEONARDO-DE CASTRO, J.:
G.R. Nos. 173355-56
On July 7, 2010, the First Division of this Court promulgated its Decision in seven consolidated Petitions, with the
NATIONAL POWER CORPORATION, Petitioner, following dispositive portion:
vs.
HON. COURT OF APPEALS (Special Twenty-Third Division, Cagayan de Oro City), and LAND TRADE WHEREFORE, premises considered, the Court renders the following judgment in the Petitions at bar:
REALTY CORPORATION, Respondents,
1) In G.R. No. 170375 (Expropriation Case), the Court GRANTS the Petition for Review of the Republic
x - - - - - - - - - - - - - - - - - - - - - - -x of the Philippines. It REVERSES and SETS ASIDE the Resolutions dated July 12, 2005 and October 24,
2005 of the Regional Trial Court, Branch 1 of Iligan City, Lanao del Norte. It further ORDERS the
G.R. No. 173401 reinstatement of the Complaint in Civil Case No. 106, the admission of the Supplemental Complaint of the
Republic, and the return of the original record of the case to the court of origin for further proceedings. No
REPUBLIC OF THE PHILIPPINES, Petitioner, costs.
vs.
DEMETRIA CACHO, represented by alleged Heirs DEMETRIA CONFESOR VIDAL and/or TEOFILO 2) In G.R. Nos. 178779 and 178894 (Quieting of Title Case), the Court DENIES the consolidated
CACHO, AZIMUTH INTERNATIONAL DEVELOPMENT CORPORATION and LAND TRADE REALTY Petitions for Review of Landtrade Realty Corporation, Teofilo Cacho, and/or Atty. Godofredo Cabildo for
CORPORATION, Respondents. lack of merit. It AFFIRMS the Decision dated January 19, 2007 and Resolution dated July 4, 2007 of the
Court of Appeals in CA-G.R. CV. No. 00456, affirming in toto the Decision dated July 17, 2004 of the
x - - - - - - - - - - - - - - - - - - - - - - -x Regional Trial Court, Branch 3 of Iligan City, Lanao del Norte, in Civil Case No. 4452. Costs against
Landtrade Realty Corporation, Teofilo Cacho, and Atty. Godofredo Cabildo.
G.R. Nos. 173563-64
3) In G.R. No. 170505 (The Ejectment or Unlawful Detainer Case – execution pending appeal before the
Regional Trial Court), the Court DENIES the Petition for Review of Landtrade Realty Corporation for
NATIONAL TRANSMISSION CORPORATION, Petitioner, being moot and academic given that the Regional Trial Court, Branch 1 of Iligan City, Lanao del Norte
vs. had already rendered a Decision dated December 12, 2005 in Civil Case No. 6613. No costs.
HON. COURT OF APPEALS (Special Twenty-Third Division, Cagayan de Oro City), and LAND TRADE
REALTY CORPORATION as represented by Atty. Max C. Tabimina, Respondents,

14
 4) In G.R. Nos. 173355-56 and 173563-64 (The Ejectment or Unlawful Detainer Case – execution
pending appeal before the Court of Appeals), the Court GRANTS the consolidated Petitions for
Certiorari and Prohibition of the National Power Corporation and National Transmission Corporation. It
SETS ASIDE the Resolution dated June 30, 2006 of the Court of Appeals in CA-G.R. SP Nos. 00854 and
00889 for having been rendered with grave abuse of discretion amounting to lack or excess of jurisdiction.
It further ORDERS the Court of Appeals to issue a writ of preliminary injunction enjoining the execution
of the Decision dated December 12, 2005 of the Regional Trial Court, Branch 1 of Iligan City, Lanao del
Norte, in Civil Case No. 6613, while the same is pending appeal before the Court of Appeals in CA-G.R.
SP Nos. 00854 and 00889. It finally DIRECTS the Court of Appeals to resolve without further delay the
pending appeals before it, in CA-G.R. SP Nos. 00854 and 00889, in a manner not inconsistent with this
Decision. No costs.
5) In G.R. No. 173401 (Cancellation of Titles and Reversion Case), the Court GRANTS the Petition for
Review of the Republic of the Philippines. It REVERSES and SETS ASIDE the Orders dated December
13, 2005 and May 16, 2006 of the Regional Trial Court, Branch 4 of Iligan City in Civil Case No. 6686. It
further ORDERS the reinstatement of the Complaint in Civil Case No. 6686 and the return of the original
record of the case to the court of origin for further proceedings. No costs.1
In a Resolution2 dated August 25, 2010, the Court denied with finality the separate motions for reconsideration filed
by [1] Teofilo Cacho (Teofilo) and Atty. Godofredo Cabildo (Atty. Cabildo); [2] Land Trade Realty Corporation
(LANDTRADE); and [3] Demetria Vidal (Vidal), Azimuth International Development Corporation (AZIMUTH), and
Maria Cristina Fertilizer Corporation (MCFC), considering that the basic issues were already passed upon and there
was no substantial argument to warrant a modification of the previous judgment of the Court.
Also in the August 25, 2010 Resolution, the Court denied the joint motion of Vidal, AZIMUTH, and MCFC to refer
the cases to the Court En Banc because per SC Circular No. 2-89 dated February 7, 1989, as amended by the
Resolution dated November 18, 1993, the Court En Banc is not an appellate court to which decisions or resolutions of
the Divisions may be appealed. It is for this same reason that the Court is now similarly denying the Motion [To
Refer to Court En Banc G.R. Nos. 178779 and 178894, G.R. Nos. 170505, 173355-56, 173562-64 (sic) and G.R. No.
173401] of LANDTRADE.
Thus, the only other matter left for determination of this Court is the Motion for Leave to File and Admit Attached
Motion for Clarification, with the appended Motion for Clarification, of the Republic of the Philippines (Republic).
The Republic is concerned that the pronouncements of this Court as regards the Quieting of Title Case (G.R. Nos.
178779 and 178894) would effectively bar or limit the prosecution of the Cancellation of Titles and Reversion Case
(G.R. No. 173401) and Expropriation Case (G.R. No. 170375). Hence, the Republic seeks the following reliefs from
this Court:
WHEREFORE, it is respectfully prayed that a clarification be made confirming that:
1. The pronouncement in G.R. Nos. 178779 and 178894 that: "Azimuth is the successor-in-interest of
Demetria Vidal to the extent of 23 hectares" is without prejudice to the final disposition of Civil Case No.
6686 for reversion; and,
2. The pronouncement in G.R. Nos. 178779 and 178894, on Demetria Vidal Confesor’s heirship vis-à-vis
her supposed right to transfer title to Azimuth, is without prejudice to the outcome of Civil Case No. 106
(Expropriation) where the government may present eveidence (sic) to belie the aforestated heirship andor
(sic) Demetria Confesor Vidal’s entitlement to just compensation.
Other reliefs deemed just and equitable under the premises are likewise prayed for.3
The Court only partly grants the Motion for Clarification of the Republic.
In the Quieting of Title Case, the Court held:
Thus, the Court of Appeals did not err when it affirmed in toto the judgment of the RTC-Branch 3 which declared,
among other things, that (a) Vidal is the sole surviving heir of Doña Demetria, who alone has rights to and interest in
the subject parcels of land; (b) AZIMUTH is Vidal’s successor-in-interest to portions of the said properties in
accordance with the 1998 Memorandum of Agreement and 2004 Deed of Conditional Conveyance; (c) Teofilo is not
the son or heir of Doña Demetria; and (d) Teofilo, Atty. Cabildo, and their transferees/assignees, including
LANDTRADE, have no valid right to or interest in the same properties. (Emphasis supplied.) 4
Of the total land area of 38.23 hectares covered by Original Certificate of Title (OCT) Nos. 0-1200 (a.f.) and 0-1201
(a.f.), in the name of Doña Demetria Cacho (Doña Demetria), Vidal transferred her rights to and interests in a portion
thereof, measuring 23 hectares, to AZIMUTH by virtue of the aforementioned 1998 Memorandum of Agreement and
2004 Deed of Conditional Conveyance. However, it should be stressed that the main issue in the Quieting of Title
Case was who between Vidal and Teofilo had valid title to the subject properties as Doña Demetria’s rightful
surviving heir. The extent or area of the properties inherited was not put into question in said case.
Moreover, the Court also ordered in its July 7, 2010 Decision that the Cancellation of Titles and Reversion Case be
reinstated before the Regional Trial Court, Branch 4 (RTC-Branch 4) of Iligan City, Lanao del Norte. It is the main
contention of the Republic in said case that OCT Nos. 0-1200 (a.f.) and 0-1201 (a.f.) are null and void because they
covered parcels of land beyond those granted by the land registration court to Doña Demetria in GLRO Record Nos.
6908 and 6909. Should the RTC-Branch 4 affirm the nullity of the two OCTs, then it can order the cancellation of
said certificates of title and the reversion to the Republic of the parcels of land unlawfully included therein.1avvphi1
The Court agrees with the Republic that necessarily, the rights to and interests in the entire 38.23 hectares, covered by
OCT Nos. 0-1200 (a.f.) and 0-1201 (a.f.), claimed by Vidal as the declared sole heir of Doña Demetria in the Quieting
of Title Case, should be without prejudice to the outcome of the Cancellation of Titles and Reversion Case yet to be
heard by the RTC-Branch 4. As Vidal’s successor-in-interest to the 23 hectares of the subject properties, AZIMUTH
only stepped into the former’s shoes in so far as said portion is concerned. No one can acquire a right greater than
what the transferor himself has. As the saying goes, the spring cannot rise higher than its source.5 As a consequence,
the rights to and interests in the 23-hectare portion of the subject properties, acquired by AZIMUTH under the 1998
Memorandum of Agreement and 2004 Deed of Conditional Conveyance, referred to by this Court in the Quieting of
Title Case, are likewise dependent on the final judgment in the Cancellation of Titles and Reversion Case.
As to whether the Republic may still challenge Vidal’s heirship in the Expropriation Case, this is an issue not raised
in any of the Petitions resolved by this Court in its July 7, 2010 Decision. It involves legal and factual matters that
need to be argued and established in the Expropriation Case, which was ordered reinstated by this Court before the
RTC-Branch 1. Thus, it is beyond the ambit of this Court to determine by mere motion for clarification of the
Republic.
WHEREFORE, premises considered, the Court hereby RESOLVES:
(1) TO DENY WITH FINALITY the Motion [To Refer to Court En Banc G.R. Nos. 178779 and 178894,
G.R. Nos. 170505, 173355-56, 173562-64 (sic) and G.R. No. 173401] of Land Trade Realty Corporation;
15
 (2) TO PARTLY GRANT the Motion for Clarification of the Republic of the Philippines by declaring that
the rights to and interests in the 23-hectare portion of the subject properties, transferred by Demetria Vidal
to Azimuth International Development Corporation by virtue of the 1998 Memorandum of Agreement and
2004 Deed of Conditional Conveyance, referred to by this Court in G.R. Nos. 178779 and 178894
(Quieting of Title Case), shall be without prejudice to the outcome of Civil Case No. 6686 (Cancellation
of Titles and Reversion Case), which this Court, in its Decision dated July 7, 2010, ordered reinstated
before the Regional Trial Court, Branch 4 of Iligan City, Lanao del Norte; and

(3) TO ORDER that no further pleadings shall be entertained in these consolidated cases and that entry of
judgment be made in due course.

SO ORDERED.

TERESITA J. LEONARDO-DE CASTRO

Associate Justice

16

5.) G.R. No. 153951. July 29, 2005
PHILIPPINE NATIONAL BANK, Petitioners,
vs.
SANAO MARKETING CORPORATION, SPOUSES AMADO A. SANAO and SOLEDAD F. SANAO and
SPOUSES WILLIAM (Willy) F. SANAO and HELEN SANAO and the COURT OF APPEALS, Respondents.
DECISION
TINGA, J.:
Before the Court is a Petition for Review1 under Rule 45 of the Rules of Court, wherein petitioner Philippine National
Bank (PNB) seeks the review of the Decision2 rendered by the Court of Appeals Thirteenth Division in C.A. G.R. SP
No. 63162. The assailed Decision nullified two orders3 of the Regional Trial Court (RTC) of Pili, Camarines Sur,
Branch 32, which respectively granted PNB’s petition for issuance of a writ of possession over seven (7) parcels of
land and directed the execution pending appeal of such writ of possession.
The antecedents are as follows:
In July 1997, Sanao Marketing Corporation, the spouses Amado A. Sanao and Soledad F. Sanao and the spouses
William (Willy) F. Sanao and Helen Sanao (all respondents herein), as joint and solidary debtors, obtained a loan in
the amount of One Hundred Fifty Million Pesos (₱150,000,000.00) from PNB secured by a real estate mortgage of
several parcels of land situated in the municipalities of Pili, Tigaon and Camaligan, all of Camarines Sur, and Naga
City.4 The contract expressly provided that the mortgage shall be governed by the provisions of Act No. 3135, as
amended.5 The pertinent portions of said contract provide that:
....
F. FORECLOSURE, POWER OF ATTORNEY, RECEIVERSHIP
If at any time the Mortgagors fail or refuse to pay the obligation herein secured, or any of the amortization of such
indebtedness when due, or to comply with any of the conditions and stipulations herein agreed, or shall during the
time this mortgage is in force, institute insolvency proceedings or be involuntarily declared insolvent, or shall use the
proceeds of this loan for purposes other than those specified herein, or if the mortgage cannot be recorded in or the
Mortgagors fail to register the same with the corresponding Registry of Deeds, then all the obligations of the
Mortgagors secured by this mortgage and all the amortization thereof shall immediately become due, payable and
defaulted and the Mortgagee may immediately foreclose this mortgage judicially in accordance with the Rules of
Court, or extrajudicially in accordance with Act No. 3135, as amended, and P.D. 385. For the purpose of extrajudicial
foreclosure, the Mortgagors hereby appoint the Mortgagee their Attorney-in-Fact to sell the properties mortgaged
under Act No. 3135, as amended, to sign all documents and perform any act requisite and necessary to accomplish
said purpose and to appoint its substitute as Attorney-in-Fact with the same powers as above specified. In case of
judicial foreclosure, the Mortgagors hereby consent to the appointment of the Mortgagee or of any of its employees
as receiver, without any bond, to take charge of the mortgaged properties at once, and to hold possession of the same
and the rents, benefits and profits derived from the mortgaged properties before the sale, less costs and expenses of
the receivership. . . . 6
For failure of respondents to fully pay the loan upon its maturity, PNB caused the extrajudicial foreclosure of the
mortgage through a certain Atty. Marvel C. Clavecilla (Atty. Clavecilla), a notary public for and in the City of Naga.
The Notice of Extra-Judicial Foreclosure Sale announced that the sale of 13 titles consisting of 14 parcels of land
located in Camarines Sur and Naga City is scheduled on 22 March 1999 at nine o’clock in the morning or soon
thereafter, at the entrance of the Municipal Court of Pili, Camarines Sur. This notice was published in the 7, 14 and 21
February 1999 issues of the Vox Bikol- a weekly tabloid published every Sunday and circulated in the Bicol region
and continents with Bicol communities.7
Thereafter, Atty. Clavecilla executed a Provisional Certificate of Sale8 dated 26 April 1999 certifying that on the 22nd
day of March 1999, at exactly ten o’clock in the morning, he sold at a public auction at the "lobby/main entrance of
the Regional Trial Court, Hall of Justice, Naga City" the mortgaged properties to PNB for Two Hundred Thirteen
Million One Hundred Sixty-Two Thousand Seven Hundred Eighty- Seven and Fifty Centavos (₱213,162,787.50),
which amount the latter considered as payment pro tanto of petitioners’ loan.9 This Provisional Certificate of Sale
was registered with the Registry of Deeds of Camarines Sur on 3 May 1999 and with the Registry of Deeds of Naga
City on 16 June 1999 for the properties respectively covered by their registries. 10
On 26 April 2000, respondents Amado A. Sanao and Sanao Marketing Corporation filed a complaint 11 with the RTC
of Naga City, Branch 61, against PNB, the Register of Deeds of the City of Naga and the Province of Camarines Sur,
and Atty. Clavecilla, for the court to declare the Provisional Certificate of Sale and the auction and foreclosure
proceedings null and void.12
On 11 August 2000, PNB filed with the RTC of Pili, Camarines Sur, Branch 32, a petition for the issuance of a writ of
possession, docketed therein as Spec. Proc. P-1182, over the properties located in Pili that are covered by Transfer
Certificates of Title Nos. 21448, 24221, 14133, 15218, 15489, 13856, 15216.13
To the petition, respondents Amado A. Sanao and Sanao Marketing Corporation interposed an answer in opposition,
with special and affirmative defenses.14
PNB countered with its comments/reply to opposition.15
On 24 November 2000, the RTC of Pili issued its first assailed order, 16 granting the writ of possession prayed for by
PNB.
Amado A. Sanao and Sanao Marketing Corporation filed a Motion for Reconsideration w/ Opposition to the Motion
for Execution Pending Appeal,17 which was denied per the second assailed order18 dated 24 January 2001 of the RTC
of Pili.19
Respondents then filed a Petition20 for certiorari and prohibition under Rule 65 of the Rules of Court before the Court
of Appeals, imputing grave abuse of discretion on the part of the RTC of Pili in the issuance of the two assailed
orders. The Petition likewise prayed for the issuance of a temporary restraining order which the Court of Appeals
granted on 15 February 2001, enjoining the RTC of Pili and PNB from implementing the challenged orders.
In their Memorandum,21 respondents pointed out that the PNB had allegedly failed to submit the application for
extrajudicial foreclosure of mortgage to the proper clerk of court after payment of the filing fee, in contravention of
Supreme Court Administrative Order No. 3 and Administrative Circular No. 3-98. In addition, respondents averred
that the foreclosure sale was null and void as it was done at the lobby/main entrance of the RTC Hall of Justice, Naga
City and not at the entrance of the Municipal Trial Court of Pili, Camarines Sur as published.22
17
PNB, on the other hand, posited that the invoked administrative order is not applicable as extrajudicial proceedings
conducted by a notary public, as in the case at bar, do not fall within the contemplation of the directive.23
With regard to the variance of the venues of the auction sale as published in Vox Bikol and as recorded in the
Provisional Certificate of Sale, PNB asserted that there was no violation of Act No. 313524 or of the terms of the real
estate mortgage contract,25 as the sale of the mortgaged properties located in Camarines Sur were held in Naga City
which is well within the territorial jurisdiction of said province.26
The Court of Appeals ruled in favor of herein respondents.27 The Court of Appeals rendered a litany of lapses that the
notary public committed in the conduct of the foreclosure proceedings which in its estimation had effectively
undermined the soundness of the foreclosure sale. Accordingly, the Court of Appeals held that the Provisional
Certificate of Sale, upon which the issuance of the writ of possession was based, is fatally infirm, and that
consequently, the writ of possession was not validly issued as the procedural requirements for its issuance were not
satisfied.28
Thus, the Court of Appeals declared null and void the two assailed orders of the RTC of Pili for having been issued
with grave abuse of discretion amounting to lack or excess of jurisdiction. 29
Aggrieved by the Decision, PNB filed the instant petition, arguing in the main that in nullifying the orders of the RTC
of Pili, the Court of Appeals departed from the accepted and usual course of judicial proceedings as the issuance of
writs of possession is purely ministerial on the part of the trial court. 30
In their comment,31 respondents point out that the instant petition should not be given due course as it is not sufficient
in form and substance. Respondents proffered the following grounds, thus: (1) there was no special of attorney or
Board Resolution or Secretary’s Certificate attached to the petition which could serve as basis for the petitioners’
signatory Domitila A. Amon to verify or attest to the truth of the allegations contained therein, in violation of existing
laws and jurisprudence on the matter; (2) petitioners failed to move for a reconsideration of the assailed Decision of
the Court of Appeals; (3) petitioners failed to disclose another similar case involving the same legal issues now
pending in the Twelfth Division of the Court of Appeals, docketed as C.A. G.R. CV No. 73718, which is an appeal
from an original petition for issuance of writ of possession filed by the same petitioner before the RTC of San Jose,
Camarines Sur, Branch 58; (4) petitioner failed to furnish the Twelfth Division of the Court of Appeals a copy of the
petition in C.A. G.R. No. 73718 pending therein, in violation of Section 5, Rule 7 of the 1997 Rules of Civil
Procedure, which failure could lead to conflicting resolutions, between two divisions of the Court of Appeals and to
the giving of inadequate information to the Supreme Court; and (5) the petition was only accompanied by Annexes A,
B, C, D and E, which annexes do not satisfy the requirements laid down in Sections 4 and 5 of Rule 45 of the Rules
of Court.32
Respondents also reiterate that the PNB in the conduct of the extrajudicial foreclosure proceedings did not comply
with Administrative Order No. 3 and Administrative Circular No. 3-98, and that the notice of publication was not
sufficient to justify the execution of the Provisional Certificate of Sale.33
Traversing the alleged procedural errors, PNB in its Reply34 raise the following arguments:
First, Mrs. Domitila A. Amon had authority to sign and verify its petition under Board Resolution No. 15 dated 8
October 1997,35 in line with her authority to prosecute and defend cases for and/or against the bank.36
Second, there are exceptions to the general rule that a motion for reconsideration must first be filed before elevating a
case to a higher court. PNB insists that the Decision of the Court of Appeals is a patent nullity as it runs counter to the
provisions of Act No. 3135 and existing jurisprudence stating that Administrative Order No. 3 covers judicial
foreclosures.37 As such, the filing of a motion for reconsideration prior to elevating the case on certiorari may be
dispensed with.
Lastly, the case which according to respondents is not mentioned in the certification of non-forum shopping was
commenced by respondents themselves, not PNB, and that the issues similar to those in the instant case have yet to be
raised in respondents’ appeal to the Court of Appeals. Moreover, the subject matter and the properties involved in the
other case are altogether different.38
There is merit in the petition.
A writ of possession is "a writ of execution employed to enforce a judgment to recover the possession of land. It
commands the sheriff to enter the land and give possession of it to the person entitled under the judgment." 39
A writ of possession may be issued under the following instances:40 (1)in land registration proceedings under Section
17 of Act 496;41 (2) in a judicial foreclosure, provided the debtor is in possession of the mortgaged realty and no third
person, not a party to the foreclosure suit, had intervened; (3) in an extrajudicial foreclosure of a real estate mortgage
under Section 7 of Act No. 3135, as amended by Act No. 4118;42 and (4) in execution sales (last paragraph of Section
33, Rule 39 of the Rules of Court).43
The present case falls under the third instance. Under Section 7 of Act No. 3135, as amended by Act No. 4118, a writ
of possession may be issued either (1) within the one-year redemption period, upon the filing of a bond, or (2) after
the lapse of the redemption period, without need of a bond.44 Section 7 of Act No. 3135, as amended by Act No. 4118,
provides:
SECTION 7. In any sale made under the provisions of this Act, the purchaser may petition the Court of First Instance
of the province or place where the property or any part thereof is situated, to give him possession thereof during the
redemption period, furnishing bond in an amount equivalent to the use of the property for a period of twelve months,
to indemnify the debtor in case it be shown that the sale was made without violating the mortgage or without
complying with the requirements of this Act. Such petition shall be made under oath and filed in form of an ex parte
motion in the registration or cadastral proceedings if the property is registered, or in special proceedings in case of
property registered under the Mortgage Law or under section one hundred and ninety-four of the Administrative
Code, or of any other real property encumbered with a mortgage duly registered in the office of any register of deeds
in accordance with any existing law, and in each case the clerk of court shall, upon the filing of such petition, collect
the fees specified in paragraph eleven of section one hundred and fourteen of Act Numbered Four hundred and
ninety-six, and the court shall, upon approval of the bond, order that a writ of possession issue, addressed to the
sheriff of the province in which the property is situated, who shall execute said order immediately.
Under the above-quoted provision, the purchaser in a foreclosure sale may apply for a writ of possession during the
redemption period by filing an ex parte motion under oath for that purpose in the corresponding registration or
cadastral proceeding in the case of property covered by a Torrens title. Upon the filing of such motion and the
approval of the corresponding bond, the law also in express terms directs the court to issue the order for a writ of
possession.45
A writ of possession may also be issued after consolidation of ownership of the property in the name of the purchaser.
It is settled that the buyer in a foreclosure sale becomes the absolute owner of the property purchased if it is not
redeemed during the period of one year after the registration of sale. As such, he is entitled to the possession of the
property and can demand it any time following the consolidation of ownership in his name and the issuance of a new
18
transfer certificate of title. In such a case, the bond required in Section 7 of Act No. 3135 is no longer necessary.
Possession of the land then becomes an absolute right of the purchaser as confirmed owner. Upon proper application
and proof of title, the issuance of the writ of possession becomes a ministerial duty of the court.46 It was held, thus:
As the purchaser of the properties in the extra-judicial foreclosure sale, the PNCB is entitled to a writ of possession
therefore. The law on extrajudicial foreclosure of mortgage provides that a purchaser in an extrajudicial foreclosure
sale may take possession of the foreclosed property even before the expiration of the redemption period, provided he
furnishes the necessary bond. Possession of the property may be obtained by filing an ex parte motion with the
regional trial court of the province or place where the property is situated. Upon filing of the motion and the required
bond, it becomes a ministerial duty of the court to order the issuance of a writ of possession in favor of the purchaser.
After the expiration of the one-year period without redemption being effected by the property owner, the right of the
purchaser to the possession of the foreclosed property becomes absolute. The basis of this right to possession is the
purchaser’s ownership of the property. Mere filing of an ex parte motion for the issuance of the writ of possession
would suffice, and no bond is required.47
Any question regarding the regularity and validity of the sale, as well as the consequent cancellation of the writ, is to
be determined in a subsequent proceeding as outlined in Section 8 of Act No. 3135, as amended by Act No. 4118.
Such question is not to be raised as a justification for opposing the issuance of the writ of possession, since, under the
Act, the proceeding is ex parte.48
In case it is disputed that there was violation of the mortgage or that the procedural requirements for the foreclosure
sale were not followed, Section 8 of Act No. 3135, as amended by Act No. 4118, provides, to wit:
SECTION 8. The debtor may, in the proceedings in which possession was requested, but not later than thirty days
after the purchaser was given possession, petition that the sale be set aside and the writ of possession cancelled,
specifying the damages suffered by him, because the mortgage was not violated or the sale was not made in
accordance with the provisions hereof, and the court shall take cognizance of this petition in accordance with the
summary procedure provided for in section one hundred and twelve of Act Number Four hundred and ninety-six; and
if it finds the complaint of the debtor justified, it shall dispose in his favor of all or part of the bond furnished by the
person who obtained possession. Either of the parties may appeal from the order of the judge in accordance with
section fourteen of Act Numbered Four hundred and ninety-six; but the order of possession shall continue in effect
during the pendency of the appeal.
The law is clear that the purchaser must first be placed in possession. If the trial court later finds merit in the petition
to set aside the writ of possession, it shall dispose the bond furnished by the purchaser in favor of the mortgagor.
Thereafter, either party may appeal from the order of the judge. The rationale for the mandate is to allow the
purchaser to have possession of the foreclosed property without delay, such possession being founded on his right of
ownership.49
It has been consistently held that the duty of the trial court to grant a writ of possession is ministerial. Such writ
issues as a matter of course upon the filing of the proper motion and the approval of the corresponding bond. The
court neither exercises its official discretion nor judgment.50 The judge issuing the order following these express
provisions of law cannot be charged with having acted without jurisdiction or with grave abuse of discretion.51 If only
to stress the writ’s ministerial character, we have, in previous cases, disallowed injunction to prohibit its issuance, just
as we have held that the issuance of the same may not be stayed by a pending action for annulment of mortgage or the
foreclosure itself.52
In the case at bar, PNB has sufficiently established its right to the writ of possession. It presented as documentary
exhibits the contract of real estate mortgage53 and the Provisional Certificate of Sale54 on the face of which appears
proof of its registration with the Registry of Deeds in Camarines Sur on 3 May 1999. There is also no dispute that the
lands were not redeemed within one year from the registration of the Provisional Certificate of Sale. It should follow,
therefore, that PNB has acquired an absolute right, as purchaser, to the writ of possession. The RTC of Pili had the
ministerial duty to issue that writ, as it did actually, upon mere motion, conformably to Section 7 of Act No. 3135, as
amended.55
However on certiorari, the Court of Appeals declared null and void the orders of the RTC of Pili granting the writ of
possession and denying respondents’ motion for reconsideration. The Court of Appeals exhaustively discussed the
reasons for such a declaration, noting the procedural errors of PNB in the conduct of the foreclosure proceedings
which allegedly rendered the foreclosure sale and the Provisional Certificate of Sale of doubtful validity.
The Court of Appeals relied on the case of Cometa v. Intermediate Appellate Court56 in holding that "for a writ of
possession to be validly issued …. in an extrajudicial foreclosure proceeding, all the procedural requirements should
be complied with. Any flaw afflicting its stages could affect the validity of its issuance." 57 The Court of Appeals
reproached the RTC of Pili Sur for granting the writ despite the existence of these alleged procedural lapses.
This was erroneous. The judge to whom an application for writ of possession is filed need not look into the validity of
the mortgage or the manner of its foreclosure. In the issuance of a writ of possession, no discretion is left to the trial
court. Any question regarding the cancellation of the writ or in respect of the validity and regularity of the public sale
should be determined in a subsequent proceeding as outlined in Section 8 of Act No. 3135.58
In fact, the question of the validity of the foreclosure proceedings can be threshed out in Civil Case No. RTC 2000-
00074, pending before the RTC of Naga City, Branch 61, which was filed by respondents before PNB had filed a
petition for the issuance of a writ of possession. The Court of Appeals should not have ruled on factual issues on
which the RTC of Naga had yet to make any finding. Besides, a review of such factual matters is not proper in a
petition for certiorari.
Having noted the foregoing, the Court dispenses with the need to discuss the soundness of the foreclosure
proceedings, the authenticity of the Provisional Certificate of Sale, and the applicability of Supreme Court
Administrative Order No. 3 and Administrative Circular No. 3-98. A review of the foregoing matters properly lies
within the jurisdiction of the RTC of Naga City, Branch 61.
It is worthy of note that the pendency of the case for annulment of the foreclosure proceedings is not a bar to the
issuance of the writ of possession.59 Pending such proceedings whose subject is the validity of the foreclosure
proceedings, the purchaser in a foreclosure sale is entitled to the possession of property. Until such time the
foreclosure sale is annulled, the issuance of the writ of possession is ministerial on the part of the RTC of Pili. 60
In addition, the Court of Appeals’ reliance on the case of Cometa61 is misplaced. The cited case involved the issuance
of a writ of possession following an execution sale. The declaration therein that the issuance of said writ is dependent
on the valid execution of the procedural stages preceding it does not contemplate writs of possession available in
extrajudicial foreclosures of real estate mortgages under Section 7 of Act No. 3135, as amended by Act No. 4118.
Considering that the RTC of Pili issued the writ of possession in compliance with the provisions of Act No. 3135, as
amended, it cannot be charged with having acted in excess of its jurisdiction or with grave abuse of discretion. Absent
grave abuse of discretion, respondents should have filed an ordinary appeal instead of a petition for certiorari. The
soundness of the order granting the writ of possession is a matter of judgment with respect to which the remedy is
19
ordinary appeal. An error of judgment committed by a court in the exercise of its legitimate jurisdiction is not the
same as "grave abuse of discretion." Errors of judgment are correctible by appeal, while those of jurisdiction are
reviewable by certiorari.62

Palpably, the Court of Appeals exceeded its jurisdiction when it granted respondents’ petition for certiorari and set
aside the orders dated 24 November 2000 and 24 January 2001 of the RTC of Pili in Spec. Proc No. P-1182, and also
when it made a determination as to the validity of the foreclosure proceedings in clear violation of Act No. 3135. The
contention, therefore, that the Court should not entertain the instant petition until a motion for reconsideration has
been filed may not hold water where the proceeding in which the error occurred is a patent nullity. Thus, we hold that
a motion for reconsideration may be dispensed with in the instant case.63

Anent the other procedural grounds for the denial of the instant petition, suffice it to say that PNB’s rejoinder has
sufficiently refuted respondents’ assertions. We find and so hold that there was substantial compliance with the
procedural requirements of the Court.

Although belatedly filed, the Resolution of the PNB Board amply demonstrates Mrs. Domitila A. Amon’s authority to
sign and verify the instant petition. PNB likewise was not obligated to disclose the alluded case pending before the
Court of Appeals as it was not initiated by the bank and, more importantly, the subject matter and the properties
involved therein are altogether different.64 It is well to remember at this point that rules of procedure are but mere
tools designed to facilitate the attainment of justice. Their strict and rigid application which would result in
technicalities that tend to frustrate rather than promote substantial justice, must always be avoided. 65 In proper cases,
procedural rules may be relaxed or suspended in the interest of substantial justice.66 And the power of the Court to
except a particular case from its rules whenever the purposes of justice require it cannot be questioned. 67

WHEREFORE, the instant petition is GRANTED. The Decision of the Court of Appeals dated 11 June 2002 in CA-
G.R. S.P. No. 63162 is REVERSED and SET ASIDE. The orders dated 24 November 2000 and 24 January 2001 of
the Regional Trial Court of Pili, Camarines Sur, Branch 32 in Spec. Pro. No. P-1182 directing the issuance of a writ
of possession in favor of PNB are AFFIRMED.

SO ORDERED.

Puno, (Chairman), Austria-Martinez, Callejo, Sr., and Chico-Nazario, JJ., concur.

20

6.) G.R. No. 165662 May 3, 2006
SELEGNA MANAGEMENT AND DEVELOPMENT CORPORATION; and Spouses EDGARDO and
ZENAIDA ANGELES, Petitioners,
vs.
UNITED COCONUT PLANTERS BANK,* Respondent.
DECISION
PANGANIBAN, CJ:
A writ of preliminary injunction is issued to prevent an extrajudicial foreclosure, only upon a clear showing of a
violation of the mortgagor’s unmistakable right. Unsubstantiated allegations of denial of due process and prematurity
of a loan are not sufficient to defeat the mortgagee’s unmistakable right to an extrajudicial foreclosure.
The Case
Before us is a Petition for Review1 under Rule 45 of the Rules of Court, assailing the May 4, 2004 Amended
Decision2 and the October 12, 2004 Resolution3 of the Court of Appeals (CA) in CA-GR SP No. 70966. The
challenged Amended Decision disposed thus:
"WHEREFORE, the Motion for Reconsideration is GRANTED. The July 18, 2003 Decision is hereby REVERSED
and SET ASIDE and another one entered GRANTING the petition and REVERSING and SETTING ASIDE the
March 15, 2002 Order of the Regional Trial Court, Branch 58, Makati City in Civil Case No. 99-1061."4
The assailed Resolution denied reconsideration.
The Facts
On September 19, 1995, Petitioners Selegna Management and Development Corporation and Spouses Edgardo and
Zenaida Angeles were granted a credit facility in the amount of P70 million by Respondent United Coconut Planters
Bank (UCPB). As security for this credit facility, petitioners executed real estate mortgages over several parcels of
land located in the cities of Muntinlupa, Las Piñas, Antipolo and Quezon; and over several condominium units in
Makati. Petitioners were likewise required to execute a promissory note in favor of respondent every time they
availed of the credit facility. As required in these notes, they paid the interest in monthly amortizations.
The parties stipulated in their Credit Agreement dated September 19, 1995,5 that failure to pay "any availment of the
accommodation or interest, or any sum due" shall constitute an event of default,6 which shall consequently allow
respondent bank to "declare [as immediately due and payable] all outstanding availments
of the accommodation together with accrued interest and any other sum payable." 7
In need of further business capital, petitioners obtained from UCPB an increase in their credit facility. 8 For this
purpose, they executed a Promissory Note for P103,909,710.82, which was to mature on March 26, 1999.9 In the
same note, they agreed to an interest rate of 21.75 percent per annum, payable by monthly amortizations.
On December 21, 1998, respondent sent petitioners a demand letter, worded as follows:
"Gentlemen:
"With reference to your loan with principal outstanding balance of [P103,909,710.82], it appears from the records of
United Coconut Planters Bank that you failed to pay interest amortizations amounting to [P14,959,525.10] on the
Promissory Note on its due date, 30 May 1998.
"x x x xxx xxx
"Accordingly, formal demand is hereby made upon you to pay your outstanding obligations in the total amount of
P14,959,525.10, which includes unpaid interest and penalties as of 21 December 1998 due on the promissory note,
eight (8) days from date hereof."10
Respondent decided to invoke the acceleration provision in their Credit Agreement. Accordingly, through counsel, it
relayed its move to petitioners on January 25, 1999 in a letter, which we quote:
"Gentlemen:
"x x x xxx xxx
"It appears from the record of [UCPB] that you failed to pay the monthly interest due on said obligation since May
30, 1998 as well as the penalty charges due thereon. Despite repeated demands, you refused and continue to refuse to
pay the same. Under the Credit Agreements/Letter Agreements you executed, failure to pay when due any
installments of the loan or interest or any sum due thereunder, is an event of default.
"Consequently, we hereby inform you that our client has declared your principal obligation in the amount of
[P103,909,710.82], interest and sums payable under the Credit Agreement/Letter Agreement/Promissory Note to be
immediately due and payable.
"Accordingly, formal demand is hereby made upon you to please pay within five (5) days from date hereof or up to
January 29, 1999 the principal amount of [P103,909,710.82], with the interest, penalty and other charges due thereon,
which as of January 25, 1999 amounts to [P17,351,478.55]."11
Respondent sent another letter of demand on March 4, 1999. It contained a final demand on petitioners "to settle in
full [petitioners’] said past due obligation to [UCPB] within five (5) days from [petitioners’] receipt of [the] letter." 12
In response, petitioners paid respondent the amount of P10,199,473.96 as partial payment of the accrued interests. 13
Apparently unsatisfied, UCPB applied for extrajudicial foreclosure of petitioners’ mortgaged properties.
21
When petitioners received the Notice of Extra Judicial Foreclosure Sale on May 18, 1999, they requested UCPB to
give them a period of sixty (60) days to update their accrued interest charges; and to restructure or, in the alternative,
to negotiate for a takeout of their account.14
On May 25, 1999, the Bank denied petitioners’ request in these words:
"This is to reply to your letter dated May 20, 1999, which confirms the request you made the previous day when you
paid us a visit.
"As earlier advised, your account has been referred to external counsel for appropriate legal action. Demand has also
been made for the full settlement of your account.
15
"We regret that the Bank is unable to grant your request unless a definite offer is made for settlement."
In order to forestall the extrajudicial foreclosure scheduled for May 31, 1999, petitioners filed a Complaint 16
(docketed as Civil Case No. 99-1061) for "Damages, Annulment of Interest, Penalty Increase and Accounting with
Prayer for Temporary Restraining Order/Preliminary Injunction." All subsequent proceedings in the trial court and in
the CA involved only the propriety of issuing a TRO and a writ of preliminary injunction.
Judge Josefina G. Salonga,17 then executive judge of the Regional Trial Court (RTC) of Makati City, denied the
Urgent Ex-parte Motion for Immediate Issuance of a Temporary Restraining Order (TRO), filed by petitioners. Judge
Salonga denied their motion on the ground that no great or irreparable injury would be inflicted on them if the parties
would first be heard.18 Unsatisfied, petitioners filed an Ex-Parte Motion for Reconsideration, by reason of which the
case was eventually raffled to Branch 148, presided by Judge Oscar B. Pimentel.19
After due hearing, Judge Pimentel issued an Order dated May 31, 1999, granting a 20-day TRO on the scheduled
foreclosure of the Antipolo properties, on the ground that the Notice of Foreclosure had indicated an inexistent
auction venue.20 To resolve that issue, respondent filed a Manifestation21 that it would withdraw all its notices relative
to the foreclosure of the mortgaged properties, and that it would re-post or re-publish a new set of notices.
Accordingly, in an Order dated September 6, 1999,22 Judge Pimentel denied petitioners’ application for a TRO for
having been rendered moot by respondent’s Manifestation.23
Subsequently, respondent filed new applications for foreclosure in the cities where the mortgaged properties were
located. Undaunted, petitioners filed another Motion for the Issuance of a TRO/Injunction and a Supplementary
Motion for the Issuance of TRO/Injunction with Motion to Clarify Order of September 6, 1999.24
On October 27, 1999, Judge Pimentel issued an Order25 granting a 20-day TRO in favor of petitioners. After several
hearings, he issued his November 26, 1999 Order,26 granting their prayer for a writ of preliminary injunction on the
foreclosures, but only for a period of twenty (20) days. The Order states:
"Admitted by defendant witness is the fact that in all the notices of foreclosure sale of the properties of the plaintiffs x
x x it is stated in each notice that the property will be sold at public auction to satisfy the mortgage indebtedness of
plaintiffs which as of August 31, 1999 amounts to P131,854,773.98.
"x x x xxx xxx
"As the court sees it, this is the problem that should be addressed by the defendant in this case and in the meantime,
the notice of foreclosure sale should be held in abeyance until such time as these matters are clarified and cleared by
the defendants x x x Should the defendant be able to remedy the situation this court will have no more alternative but
to allow the defendant to proceed to its intended action.
"x x x xxx xxx
"WHEREFORE, premises considered, and finding compelling reason at this point in time to grant the application for
preliminary injunction, the same is hereby granted upon posting of a preliminary injunction bond in the amount of
P3,500,000.00 duly approved by the court, let a writ of preliminary injunction be issued."27
The corresponding Writ of Preliminary Injunction28 was issued on November 29, 1999.
Respondent moved for reconsideration. On the other hand, petitioners filed a Motion to Clarify Order of November
26, 1999. Conceding that the November 26 Order had granted an injunction during the pendency of the case,
respondent contended that the injunctive writ merely restrained it for a period of 20 (twenty) days.
On December 29, 2000, Judge Pimentel issued an Order29 granting respondent’s Motion for Reconsideration and
clarifying his November 26, 1999 Order in this manner:
"There may have been an error in the Writ of Preliminary Injunction issued dated November 29, 1999 as the same
[appeared to be actually] an extension of the TRO issued by this Court dated 27 October 1999 for another 20 days
period. Plaintiff’s seeks to enjoin defendants for an indefinite period pending trial of the case.
"Be that as it may, the Court actually did not have any intention of restraining the defendants from foreclosing
plaintiff[s’] property for an indefinite period and during the entire proceeding of the case x x x.
"x x x xxx xxx
"What the [c]ourt wanted the defendants to do was to merely modify the notice of [the] auction sale in order that the
amount of P131,854,773.98 x x x would not appear to be the value of each property being sold on auction. x x x.30
"WHEREFORE, premises considered and after finding merit on the arguments raised by herein defendants to be
impressed with merit, and having stated in the Order dated 26 November 1999 that no other alternative recourse is
available than to allow the defendants to proceed with their intended action, the Court hereby rules:
"1.] To give due course to defendant[‘]s motion for reconsideration, as the same is hereby GRANTED, however, with
reservation that this Order shall take effect upon after its[] finality[.]"31
Consequently, respondent proceeded with the foreclosure sale of some of the mortgaged properties. On the other
hand, petitioners filed an "[O]mnibus [M]otion [for Reconsideration] and to [S]pecify the [A]pplication of the P92
[M]illion [R]ealized from the [F]oreclosure [S]ale x x x."32 Before this Omnibus Motion could be resolved, Judge
Pimentel inhibited himself from hearing the case.33
22
The case was then re-raffled to Branch 58 of the RTC of Makati City, presided by Judge Escolastico U. Cruz. 34 The Petitioners filed a Motion for Reconsideration dated May 31, 2004, which the appellate court denied.46
proceedings before him were, however, all nullified by the Supreme Court in its En Banc Resolution dated September
18, 2001.35 He was eventually dismissed from service.36 Hence, this Petition.47

The case was re-raffled to the pairing judge of Branch 58, Winlove M. Dumayas. On March 15, 2002, Judge Issues
Dumayas granted petitioners’ Omnibus Motion for Reconsideration and Specification of the Foreclosure Proceeds, as
follows:
Petitioners raise the following issues for our consideration:
"WHEREFORE, premises considered, the Motion to Reconsider the Order dated December 29, 2000 is hereby
granted and the Order of November 26, 1999 granting the preliminary injunction is reinstated subject however to the I
condition that all properties of plaintiffs which were extrajudicially foreclosed though public bidding are subject to an
accounting. [A]nd for this purpose defendant bank is hereby given fifteen (15) days from notice hereof to render an "Whether or not the Honorable Court of Appeals denied the petitioners of due process.
accounting on the proceeds realized from the foreclosure of plaintiffs’ mortgaged properties located in Antipolo,
Makati, Muntinlupa and Las Piñas."37 II

The aggrieved respondent filed before the Court of Appeals a Petition for Certiorari, seeking the nullification of the "Whether or not the Honorable Court of Appeals supported its Amended Decision by invoking jurisprudence not
RTC Order dated March 15, 2002, on the ground that it was issued with grave abuse of discretion.38 applicable and completely identical with the instant case.

The Special Fifteenth Division, speaking through Justice Rebecca de Guia-Salvador, affirmed the ruling of Judge III
Dumayas. It held that petitioners had a clear right to an injunction, based on the fact that respondent had kept them in
the dark as to how and why their principal obligation had ballooned to almost P132 million. The CA held that
"Whether or not the Honorable Court of Appeals failed to establish its finding that RTC Judge Winlove Dumayas has
respondent’s refusal to give them a detailed accounting had prevented the determination of the maturity of the
acted with grave abuse of discretion."48
obligation and precluded the possibility of a foreclosure of the mortgaged properties. Moreover, their payment of P10
million had the effect of updating, and thereby averting the maturity of, the outstanding obligation. 39
The resolution of this case hinges on two issues: 1) whether petitioners are in default; and 2) whether there is basis for
preliminarily enjoining the extrajudicial foreclosure. The other issues raised will be dealt with in the resolution of
Respondent filed a Motion for Reconsideration, which was granted by a Special Division of Five of the Former
these two main questions.
Special Fifteenth Division.

The Court’s Ruling

Ruling of the Court of Appeals

The Petition has no merit.

Citing China Banking Corporation v. Court of Appeals,40 the appellate court held in its Amended Decision41 that the
foreclosure proceedings should not be enjoined in the light of the clear failure of petitioners to meet their obligations
upon maturity.42 First Issue:

Also citing Zulueta v. Reyes,43 the CA, through Justice Jose Catral Mendoza, went on to say that a pending question
on accounting did not warrant an injunction on the foreclosure.
Parenthetically, the CA added that petitioners were not without recourse or protection. Further, it noted their pending
action for annulment of interest, damages and accounting. It likewise said that they could protect themselves by
causing the annotation of lis pendens on the titles of the mortgaged or foreclosed properties.
In his Separate Concurring Opinion,44 Justice Magdangal M. de Leon added that a prior accounting was not essential
to extrajudicial foreclosure. He cited Abaca Corporation v. Garcia,45 which had ruled that Act No. 3135 did not
require mortgaged properties to be sold by lot or by only as much as would cover just the obligation. Thus, he
concluded that a request for accounting -- for the purpose of determining whether the proceeds of the auction would
suffice to cover the indebtedness -- would not justify an injunction on the foreclosure.
Default
The resolution of the present controversy necessarily begins with a determination of respondent’s right to foreclose
the mortgaged properties extrajudicially.
It is a settled rule of law that foreclosure is proper when the debtors are in default of the payment of their obligation.
In fact, the parties stipulated in their credit agreements, mortgage contracts and promissory notes that respondent was
authorized to foreclose on the mortgages, in case of a default by petitioners. That this authority was granted is not
disputed.
Mora solvendi, or debtor’s default, is defined as a delay49 in the fulfillment of an obligation, by reason of a cause
imputable to the debtor.50 There are three requisites necessary for a finding of default. First, the obligation is

23
demandable and liquidated; second, the debtor delays performance; third, the creditor judicially or extrajudicially
requires the debtor’s performance.51
Mortgagors’ Default of Monthly Interest Amortizations
In the present case, the Promissory Note executed on March 29, 1998, expressly states that petitioners had an
obligation to pay monthly interest on the principal obligation. From respondent’s demand letter, 52 it is clear and
undisputed by petitioners that they failed to meet those monthly payments since May 30, 1998. Their nonpayment is
defined as an "event of default" in the parties’ Credit Agreement, which we quote:
"Section 8.01. Events of Default. Each of the following events and occurrences shall constitute an Event of Default of
this AGREEMENT:
"1. The CLIENT shall fail to pay, when due, any availment of the Accommodation or interest, or any other sum due
thereunder in accordance with the terms thereof;1avvphil.net
"x x x xxx x x x"
"Section 8.02. Consequences of Default. (a) If an Event of Default shall occur and be continuing, the Bank may:
"1. By written notice to the CLIENT, declare all outstanding availments of the Accommodation together with accrued
interest and any other sum payable hereunder to be immediately due and payable without presentment, demand or
notice of any kind, other than the notice specifically required by this Section, all of which are expressly waived by the
CLIENT[.]"53
Considering that the contract is the law between the parties,54 respondent is justified in invoking the acceleration
clause declaring the entire obligation immediately due and payable.55 That clause obliged petitioners to pay the entire
loan on January 29, 1999, the date fixed by respondent.56
Petitioners’ failure to pay on that date set into effect Article IX of the Real Estate Mortgage,57 worded thus:
"If, at any time, an event of default as defined in the credit agreements, promissory notes and other related loan
documents referred to in paragraph 5 of ARTICLE I hereof (sic), or the MORTGAGOR and/or DEBTOR shall fail or
refuse to pay the SECURED OBLIGATIONS, or any of the amortization of such indebtedness when due, or to
comply any (sic) of the conditions and stipulations herein agreed, x x x then all the obligations of the MORTGAGOR
secured by this MORTGAGE and all the amortizations thereof shall immediately become due, payable and defaulted
and the MORTGAGEE may immediately foreclose this MORTGAGE judicially in accordance with the Rules of
Court, or extrajudicially in accordance with Act No. 3135, as amended, and Presidential Decree No. 385. For the
purpose of extrajudicial foreclosure, the MORTGAGOR hereby appoints the MORTGAGEE his/her/its attorney-in-
fact to sell the property mortgaged under Act No. 3135, as amended, to sign all documents and perform any act
requisite and necessary to accomplish said purpose and to appoint its substitutes as such attorney-in-fact with the
same powers as above specified. x x x[.]"58
The foregoing discussion satisfactorily shows that UCPB had every right to apply for extrajudicial foreclosure on the
basis of petitioners’ undisputed and continuing default.
Petitioners’ Debt Considered Liquidated Despite the Alleged
Lack of Accounting
Petitioners do not even attempt to deny the aforementioned matters. They assert, though, that they have a right to a
detailed accounting before they can be declared in default. As regards the three requisites of default, they say that the
first requisite -- liquidated debt -- is absent. Continuing with foreclosure on the basis of an unliquidated obligation
allegedly violates their right to due process. They also maintain that their partial payment of P10 million averted the
maturity of their obligation.59
On the other hand, respondent asserts that questions regarding the running balance of the obligation of petitioners are
not valid reasons for restraining the foreclosure. Nevertheless, it maintains that it has furnished them a detailed
monthly statement of account.
A debt is liquidated when the amount is known or is determinable by inspection of the terms and conditions of the
relevant promissory notes and related documentation.60 Failure to furnish a debtor a detailed statement of account
does not ipso facto result in an unliquidated obligation.
Petitioners executed a Promissory Note, in which they stated that their principal obligation was in the amount of
P103,909,710.82, subject to an interest rate of 21.75 percent per annum.61 Pursuant to the parties’ Credit Agreement,
petitioners likewise know that any delay in the payment of the principal obligation will subject them to a penalty
charge of one percent per month, computed from the due date until the obligation is paid in full.62
It is in fact clear from the agreement of the parties that when the payment is accelerated due to an event of default, the
penalty charge shall be based on the total principal amount outstanding, to be computed from the date of acceleration
until the obligation is paid in full.63 Their Credit Agreement even provides for the application of payments.64 It
appears from the agreements that the amount of total obligation is known or, at the very least, determinable.
Moreover, when they made their partial payment, petitioners did not question the principal, interest or penalties
demanded from them. They only sought additional time to update their interest payments or to negotiate a possible
restructuring of their account.65 Hence, there is no basis for their allegation that a statement of account was necessary
for them to know their obligation. We cannot impair respondent’s right to foreclose the properties on the basis of their
unsubstantiated allegation of a violation of due process.
In Spouses Estares v. CA,66 we did not find any justification to grant a preliminary injunction, even when the
mortgagors were disputing the amount being sought from them. We held in that case that "[u]pon the nonpayment of
the loan, which was secured by the mortgage, the mortgaged property is properly subject to a foreclosure sale." 67
Compared with Estares, the denial of injunctive relief in this case is even more imperative, because the present
petitioners do not even assail the amounts due from them. Neither do they contend that a detailed accounting would
show that they are not in default. A pending question regarding the due amount was not a sufficient reason to enjoin
the foreclosure in Estares. Hence, with more reason should injunction be denied in the instant case, in which there is
no dispute as to the outstanding obligation of petitioners.
At any rate, whether respondent furnished them a detailed statement of account is a question of fact that this Court
need not and will not resolve in this instance. As held in Zulueta v. Reyes,68 in which there was no genuine
controversy as to the amounts due and demandable, the foreclosure should not be restrained by the unnecessary
question of accounting.
24
Maturity of the Loan Not Averted by Partial Compliance with Respondent’s Demand
Petitioners allege that their partial payment of P10 million on March 25, 1999, had the effect of forestalling the
maturity of the loan;69 hence the foreclosure proceedings are premature. 70 We disagree.
To be sure, their partial payment did not extinguish the obligation. The Civil Code states that a debt is not paid
"unless the thing x x x in which the obligation consists has been completely delivered x x x."71 Besides, a late partial
payment could not have possibly forestalled a long-expired maturity date.
The only possible legal relevance of the partial payment was to evidence the mortgagee’s amenability to granting the
mortgagor a grace period. Because the partial payment would constitute a waiver of the mortgagee’s vested right to
foreclose, the grant of a grace period cannot be casually assumed;72 the bank’s agreement must be clearly shown.
Without a doubt, no express agreement was entered into by the parties. Petitioners only assumed that their partial
payment had satisfied respondent’s demand and obtained for them more time to update their account. 73
Petitioners are mistaken. When creditors receive partial payment, they are not ipso facto deemed to have abandoned
their prior demand for full payment. Article 1235 of the Civil Code provides:
"When the obligee accepts the performance, knowing its incompleteness or irregularity, and without expressing any
protest or objection, the obligation is deemed fully complied with."
Thus, to imply that creditors accept partial payment as complete performance of their obligation, their acceptance
must be made under circumstances that indicate their intention to consider the performance complete and to renounce
their claim arising from the defect.74
There are no circumstances that would indicate a renunciation of the right of respondent to foreclose the mortgaged
properties extrajudicially, on the basis of petitioners’ continuing default. On the contrary, it asserted its right by filing
an application for extrajudicial foreclosure after receiving the partial payment. Clearly, it did not intend to give
petitioners more time to meet their obligation.
Parenthetically, respondent cannot be reproved for accepting their partial payment. While Article 1248 of the Civil
Code states that creditors cannot be compelled to accept partial payments, it does not prohibit them from accepting
such payments.
Second Issue:
Enjoining the Extrajudicial Foreclosure
A writ of preliminary injunction is a provisional remedy that may be resorted to by litigants, only to protect or
preserve their rights or interests during the pendency of the principal action. To authorize a temporary injunction, the
plaintiff must show, at least prima facie, a right to the final relief.75 Moreover, it must show that the invasion of the
right sought to be protected is material and substantial, and that there is an urgent and paramount necessity for the
writ to prevent serious damage.76
In the absence of a clear legal right, the issuance of the injunctive writ constitutes grave abuse of discretion.
Injunction is not designed to protect contingent or future rights. It is not proper when the complainant’s right is
doubtful or disputed.77
As a general rule, courts should avoid issuing this writ, which in effect disposes of the main case without trial. 78 In
Manila International Airport Authority v. CA,79 we urged courts to exercise caution in issuing the writ, as follows:
"x x x. We remind trial courts that while generally the grant of a writ of preliminary injunction rests on the sound
discretion of the court taking cognizance of the case, extreme caution must be observed in the exercise of such
discretion. The discretion of the court a quo to grant an injunctive writ must be exercised based on the grounds and in
the manner provided by law. Thus, the Court declared in Garcia v. Burgos:
‘It has been consistently held that there is no power the exercise of which is more delicate, which requires greater
caution, deliberation and sound discretion, or more dangerous in a doubtful case, than the issuance of an injunction. It
is the strong arm of equity that should never be extended unless to cases of great injury, where courts of law cannot
afford an adequate or commensurate remedy in damages.
‘Every court should remember that an injunction is a limitation upon the freedom of action of the defendant and
should not be granted lightly or precipitately. It should be granted only when the court is fully satisfied that the law
permits it and the emergency demands it.’"80 (Citations omitted)
Petitioners do not have any clear right to be protected. As shown in our earlier findings, they failed to substantiate
their allegations that their right to due process had been violated and the maturity of their obligation forestalled. Since
they indisputably failed to meet their obligations in spite of repeated demands, we hold that there is no legal
justification to enjoin respondent from enforcing its undeniable right to foreclose the mortgaged properties.
In any case, petitioners will not be deprived outrightly of their property. Pursuant to Section 47 of the General
Banking Law of 2000,81 mortgagors who have judicially or extrajudicially sold their real property for the full or
partial payment of their obligation have the right to redeem the property within one year after the sale. They can
redeem their real estate by paying the amount due, with interest rate specified, under the mortgage deed; as well as all
the costs and expenses incurred by the bank.82
Moreover, in extrajudicial foreclosures, petitioners have the right to receive any surplus in the selling price. This right
was recognized in Sulit v. CA,83 in which the Court held that "if the mortgagee is retaining more of the proceeds of
the sale than he is entitled to, this fact alone will not affect the validity of the sale but simply gives the mortgagor a
cause of action to recover such surplus."84
Petitioners failed to demonstrate the prejudice they would probably suffer by reason of the foreclosure. Also, it is
clear that they would be adequately protected by law. Hence, we find no legal basis to reverse the assailed Amended
Decision of the CA dated May 4, 2004.
WHEREFORE, the Petition is DENIED and the assailed Amended Decision and Resolution AFFIRMED. Costs
against petitioners.
SO ORDERED.
ARTEMIO V. PANGANIBAN
Chief Justice
Chairman, First Division
25

7.) G.R. No. 160479 June 8, 2005
SPOUSES GODOFREDO V. ARQUIZA and REMEDIOS D. ARQUIZA, petitioners,
vs.
COURT OF APPEALS and EQUITABLE PCIBANK, respondents.
DECISION
CALLEJO, SR., J.:
Before us is a petition for review on certiorari of the Decision1 of the Court of Appeals (CA) in CA-G.R. CV No.
74592 and its Resolution denying the motion for reconsideration of the said decision. The assailed decision affirmed
the decision of the Regional Trial Court (RTC) of Quezon City, Branch 221, granting the ex parte petition for the
issuance of a writ of possession in LRC Case No. Q-14150(01).
The petitioners, spouses Godofredo V. Arquiza and Remedios D. Arquiza, obtained a loan from private respondent
Equitable PCIBank for ₱2.5 million. To secure the payment thereof, the petitioners executed a Real Estate Mortgage
over their parcel of land covered by Transfer Certificate of Title (TCT) No. N-143274 of the Registry of Deeds of
Quezon City.2
When the spouses defaulted in the payment of their loan, the private respondent filed a petition for extrajudicial
foreclosure of the real estate mortgage. A public auction was held on October 18, 1999 in accordance with Act No.
3135, as amended by Act No. 4118 during which the mortgaged property, together with all the improvements existing
thereon, was sold to the private respondent as the highest bidder.3 Accordingly, a Certificate of Sale4 over the property
was issued in favor of the private respondent. This was registered with the Registry of Deeds of Quezon City on
November 22, 1999.5
Following the expiry date of the redemption period without the petitioners having exercised their right to redeem the
property, the private respondent consolidated its ownership over the subject property. 6 As a consequence, the Registry
of Deeds issued TCT No. N-2216507 in the name of the private respondent, canceling the petitioners’ former title.
The petitioners filed a complaint against the private respondent and the sheriffs with the Regional Trial Court (RTC)
of Quezon City for the declaration of the nullity of the promissory note, real estate mortgage and the foreclosure sale
and damages with a plea for injunctive relief for the suspension redemption period. The case was docketed as Civil
Case No. Q-98-34094.8
Meanwhile, the private respondent demanded that the petitioners vacate and surrender possession of the subject
property, but the latter refused to do so. This compelled the private respondent to file an Ex Parte Petition for
Issuance of a Writ of Possession,9 docketed as LRC Case No. Q-14150(01) also with the Quezon City RTC.
Instead of acting on the petition and receiving the evidence of the private respondent ex parte, as mandated by Act
No. 3135, as amended, the RTC set the case for hearing at 8:30 a.m. of August 30, 2001, and ordered that a copy of
the petition be served on the petitioners.10 The latter filed their Answer alleging that (1) the private respondent failed
to incorporate a Certificate of Non-Forum Shopping in its petition; and (2) the petition was abated by the pendency of
their complaint in Civil Case No. Q-98-34094 involving the non-payment of their mortgage obligation, the validity of
the foreclosure sale of the mortgaged property and their failure to redeem the same. The petitioners prayed that the
trial court dismiss the petition outright.11 They appended to their answer a copy of their amended and supplemental
complaint in Civil Case No. Q-98-34094.
The trial court conducted a hearing of the petition during which the petitioners and the private respondent adduced
their respective evidence.
On February 22, 2002, the trial court rendered a Decision in LRC Case No. Q-14150(01) granting the petition, thus:
WHEREFORE, the Court holds that the Instant Petition for Issuance of a Writ of Possession is meritorious and
should be granted. Let a writ of possession be issued in favor of the petitioner and directing the Respondents Sps.
Godofredo and Remedios Arquiza and all persons claiming rights and interest under them to vacate the premises and
place the petitioner in possession thereof.
The petitioner Equitable PCIBank is directed to coordinate with the Branch Clerk of Court, this Court, for the
expeditious issuance and implementation of the Writ of Possession.
SO ORDERED.12
The petitioners appealed the decision to the CA alleging that:
1. THAT THE LOWER COURT ERRED IN GIVING DUE COURSE TO THE "EX-PARTE PETITION FOR
ISSUANCE OF WRIT OF POSSESSION" AND IN NOT DISMISSING THE SAME FOR BEING
INDEROGATION OF THE APPELLANTS’ RIGHT TO A DUE PROCESS OF LAW;
2. THAT THE LOWER COURT ERRED IN NOT APPLYING IN THIS CASE THE WELL-ESTABLISHED RULE
ON "LITIS PENDENCIA" BY NOT DISMISSING THE "EX-PARTE PETITION, etc." IN QUESTION FOR THE
REASON "THAT THERE IS ANOTHER ACTION PENDING BETWEEN THE SAME PARTIES FOR THE SAME
CAUSE; (Sec. 1(e), Rule 16, Rules of Court).
3. THAT THE LOWER COURT ERRED IN IGNORING THE RULE AGAINST "FORUM SHOPPING" AND THE
MANDATORY REQUIREMENT FOR A "CERTIFICATION OF NON-FORUM SHOPPING" IN AN INITIATORY
PLEADING LIKE PETITIONER-APPELLEES’ ÉX-PARTE PETITION, etc." IN QUESTION AND FOR NOT
DISMISSING SAID PLEADING ON THE GROUND "THAT A CONDITION PRECEDENT FOR FILING THE
CLAIM HAS NOT BEEN COMPLIED WITH" (Sec. 1(j), Rule 16, Rules of Court).
4. THAT THE LOWER COURT ERRED IN HOLDING TO THE EFFECT THAT SECTIONS 4 & 5, RULE 7 OF
THE 1997 RULES OF CIVIL PROCEDURE DOES NOT APPLY TO THE "EX-PARTE PETITION, etc." IN
QUESTION BECAUSE ALLEGEDLY THE CASE AT BAR IS A LAND REGISTRATION CASE.
5. THAT THE LOWER COURT ERRED IN RENDERING A DECISION GRANTING THE RELIEF PRAYED
FOR IN THE "EX-PARTE PETITION, etc. FOR THE ISSUANCE OF A WRIT OF POSSESSION AGAINST THE
RESPONDENTS-APPELLANTS ALBEIT NO EVIDENCE WAS ADDUCED PROVING THAT THE SUBJECT
REAL ESTATE MORTGAGE AND ITS FORECLOSURE, AMONG OTHER SUBSEQUENT PROCEEDINGS,
ARE LAWFUL, VALID AND REGULAR, IN CIRCUMVENTION OF THE PREJUDICIAL ISSUES PRECISELY
RAISED IN THE PENDING CIVIL CASE NO. Q-98-34094 INVOLVING THE DECLARATION OF NULLITY
OF SAID MORTGAGE AND RELATED TRANSACTIONS.13
26
The CA rendered judgment affirming the appealed decision. The CA held that the petition for the issuance of a writ of
possession was not an initiatory pleading; hence, a certification against forum shopping was not necessary. The
appellate court also held that there could be no forum shopping because a petition for the issuance of a writ of
possession is but an incident in the transfer of title. The CA held that the rule requiring the highest bidder to be placed
in possession of the property is founded on the right of ownership, which becomes absolute after title thereto has been
issued in favor of the new owner, and that the court must aid in effecting its delivery. 14
The motion for reconsideration of the decision having been denied by the CA, the petitioners filed their petition for
review on certiorari with this Court and raised the following issues:
Firstly, is it right, proper and just for the Court below to completely ignore and disregard a related prior and pending
action between the same parties where the very basis of the right of possession over the subject property sought to be
enforced as a result of the foreclosure of a "mortgage" is being assailed in court for being NULL AND VOID ab
initio OR INEXISTENT?
Secondly, is it right, proper and just for the Court below to summarily close its eyes to the patent and obvious flaw or
irregularity of the "mortgage" in the appreciation of the evidence offered in support of the Ex-Parte Petition For the
Issuance of a Writ of Possession?
Thirdly, does the application of Section 7 of Act 3135, as amended by Act 4118, as the Court below did, exclude or
preclude the effectivity or applicability of the mandate against forum shopping, of the requirement for certification in
pleadings against forum shopping, of the principle of "litis pendentia," and of due process of law? 15
The petitioners assert that the ex parte petition for the issuance of the writ of possession should have been dismissed
by the RTC for failure to attach a certification against forum shopping. They claim that this requirement is mandatory
and there is no law exempting the private respondent’s ex parte petition from compliance therewith.16
The petitioners contend that they are legally entitled to be protected in their possession over the subject property
pending the resolution of Civil Case No. Q-98-34094 for the declaration of nullity of the promissory note, real estate
mortgage, and foreclosure sale. They argue that the issuance of a writ of possession preempted and pre-judged the
outcome of Civil Case No. Q-98-34094. The petitioners maintain that the ex parte petition for the issuance of a writ
of possession violated the petitioners’ right to procedural due process considering that Section 4, Rule 15 of the Rules
of Court requires every written motion to be set for hearing, except for those which would not prejudice the rights of
the adverse party.17
The petitioners maintain that the private respondent failed to substantiate its ex parte petition for the issuance of the
writ of possession. They fault the trial court for not scrutinizing judiciously the private respondent’s evidence because
had it done so, it would have noted the nullity of the mortgage, which appears to have been executed not by the
owners of the subject property. They question the private respondent’s failure to attach the promissory notes
evidencing their loan, which would have shown that the real estate mortgage was executed prior to the execution of
the said promissory notes. The petitioners aver that the private respondent failed to prove the validity and legality of
the real estate mortgage, and without a valid mortgage, there can be no valid foreclosure sale or valid title. 18
For its part, the private respondent contends that the requirement for the filing of a certificate of non-forum shopping
is not applicable, considering that the ex parte motion for the issuance of a writ of possession is not an initiatory
pleading.19 It submits that litis pendentia does not exist because there is no identity of the issues and the reliefs prayed
for between the present case and Civil Case No. Q-98-34094. Hence, forum shopping cannot likewise exist. 20
The private respondent maintains that after the expiration of the redemption period and the consolidation of
ownership over the property, it had the right to be placed in possession thereof without the need of a separate and
independent action. It posits that the right to possess an extrajudicially foreclosed property is not affected by the
pendency of an action for annulment of foreclosure proceedings. The private respondent stresses that the issuance of
a writ of possession is a ministerial function of the court, and should be issued as a matter of course upon the filing of
the proper ex parte motion.21
It asserts that the petitioners were not denied their right to due process because, notwithstanding the grant of the writ
of possession, they may still resort to another proceeding to question the regularity and validity of the foreclosure
sale. It points out that the petitioners should appreciate the fact that the court a quo allowed them to participate in the
proceedings even if the motion for issuance of a writ of possession was ex parte in nature.22 Finally, the private
respondent avers that it had presented sufficient evidence to show that it is entitled to the possession of the subject
property.23
The petition is denied for lack of merit.
The assailed ruling of the CA is correct. The certification against forum shopping is required only in a complaint or
other initiatory pleading.24 The ex parte petition for the issuance of a writ of possession filed by the respondent is not
an initiatory pleading. Although the private respondent denominated its pleading as a petition, it is, nonetheless, a
motion. What distinguishes a motion from a petition or other pleading is not its form or the title given by the party
executing it, but rather its purpose. The office of a motion is not to initiate new litigation, but to bring a material but
incidental matter arising in the progress of the case in which the motion is filed.25 A motion is not an independent
right or remedy, but is confined to incidental matters in the progress of a cause. It relates to some question that is
collateral to the main object of the action and is connected with and dependent upon the principal remedy. 26 An
application for a writ of possession is a mere incident in the registration proceeding. Hence, although it was
denominated as a "petition," it was in substance merely a motion. Thus, the CA correctly made the following
observations:
Such petition for the issuance of a writ of possession is filed in the form of an ex parte motion, inter alia, in the
registration or cadastral proceedings if the property is registered. Apropos, as an incident or consequence of the
original registration or cadastral proceedings, the motion or petition for the issuance of a writ of possession, not being
an initiatory pleading, dispels the requirement of a forum-shopping certification. Axiomatic is that the petitioner need
not file a certification of non-forum shopping since his claims are not initiatory in character (Ponciano vs. Parentela,
Jr., 331 SCRA 605 [2000])27
It bears stressing that Section 7 of Act No. 3135, as amended by Act No. 4118, specifically provides that the buyer at
public auction may file a verified petition in the form of an ex parte motion.
SEC. 7. In any sale made under the provisions of this Act, the purchaser may petition the Court of First Instance (now
Regional Trial Court) of the province or place where the property or any part thereof is situated, to give him
possession thereof during the redemption period, furnishing bond in an amount equivalent to the use of the property
for a period of twelve months, to indemnify the debtor in case it be shown that the sale was made without violating
the mortgage or without complying with the requirements of this Act. Such petition shall be made under oath and
filed in form of an ex parte motion in the registration or cadastral proceedings if the property is registered, or
in special proceedings in the case of property registered under the Mortgage Law or under Sec. 194 of the
Administrative Code, or of any other real property encumbered with a mortgage duly registered in the office of any
register of deeds in accordance with any existing law, and in each case the clerk of court shall, upon the filing of such
petition, collect the fees specified in par. 11 of Sec. 114 of Act No. 496, and the court shall, upon the filing of the
27
bond, order that a writ of possession issue, addressed to the sheriff of the province in which the property is situated,
who shall execute said order immediately.
Indeed, it is well-settled that an ordinary action to acquire possession in favor of the purchaser at an extrajudicial
foreclosure of real property is not necessary. There is no law in this jurisdiction whereby the purchaser at a sheriff’s
sale of real property is obliged to bring a separate and independent suit for possession after the one-year period for
redemption has expired and after he has obtained the sheriff’s final certificate of sale. 28 The basis of this right to
possession is the purchaser’s ownership of the property. The mere filing of an ex parte motion for the issuance of the
writ of possession would suffice, and no bond is required.29lawphil.net
The Court rejects the contention of the petitioners that the RTC erred in not dismissing the petition of the private
respondent on the grounds of forum shopping and litis pendentia, in view of the pendency of Civil Case No. Q-98-
34094.
The requisites of litis pendentia are the following: (a) identity of parties, or at least such as representing the same
interests in both actions; (b) identity of rights asserted and relief prayed for, the relief being founded on the same
facts; and (c) the identity of the two cases such that judgment in one, regardless of which party is successful, would
amount to res judicata in the other.30 And one element of res judicata is that the judgment or order must be on the
merits of the case.31
As heretofore ruled by the Court, the petition of the private respondent for a writ of possession was not an ordinary
action. Any order or decision of the RTC in LRC Case No. Q-14150(01) is not determinative of the merits of Civil
Case No. Q-98-34094.
Well established is the rule that after the consolidation of title in the buyer’s name for failure of the mortgagor to
redeem, the writ of possession becomes a matter of right. Its issuance to a purchaser in an extrajudicial foreclosure is
merely a ministerial function.32 The issuance of the writ of possession being a ministerial function, and summary in
nature, it cannot be said to be a judgment on the merits, but simply an incident in the transfer of title. Hence, a
separate case for annulment of mortgage and foreclosure sale cannot be barred by litis pendentia or res judicata.33
Conversely, we reject the petitioners’ argument that the ex parte petition for the issuance of a writ of possession
should have been dismissed on the ground of forum shopping. The test to determine whether a party violated the rule
against forum shopping is whether the elements of litis pendentia are present, or whether a final judgment in one case
will amount to res judicata in another.34 In other words, when litis pendentia or res judicata does not exist, neither
can forum shopping exist. Having settled that litis pendentia does not exist, it follows then that no forum shopping
likewise exists in this case. The Court’s ruling in Ong vs. Court of Appeals35 is instructive, thus:
As a rule, any question regarding the validity of the mortgage or its foreclosure cannot be a legal ground for refusing
the issuance of a writ of possession. Regardless of whether or not there is a pending suit for annulment of the
mortgage or the foreclosure itself, the purchaser is entitled to a writ of possession, without prejudice of course to the
eventual outcome of said case.36
Likewise barren of merit is the petitioners’ contention that they were denied their right to due process by the RTC.
Section 7 of Act No. 3135, as amended, specifically provides that a petition (for a writ of possession) is in the nature
of an ex parte motion in which the court hears only one side of the controversy.37 An ex parte proceeding presupposes
a right of the petitioners to which there is no adverse party.38 An ex parte proceeding merely means that it is taken or
granted at the instance and for the benefit of one party, and without notice to or contestation by any party adversely
affected.39
In this case, the RTC opted not to conduct an ex parte hearing. It went out of its way and set the application for a writ
of possession for hearing as shown by the trial court’s Order40 dated June 25, 2001. Moreover, the petitioners were
allowed to file an Answer,41 and a Rejoinder42 to the private respondent’s Reply. The petitioners were even allowed to
adduce and offer documentary evidence.43 What the fundamental law prohibits is total absence of opportunity to be
heard. When a party has been afforded opportunity to present his side, such party cannot feign denial of due process. 44
The petitioners’ contention that the private respondent failed to sufficiently establish its right to a writ of possession is
belied by the evidence. In support of its application for a writ of possession, the private respondent submitted the
following documentary evidence: (1) real estate mortgage; (2) TCT No. N-143274 in the name of the petitioners, and
the annotations on its back of the real estate mortgage, certificate of sale, and the consolidation of ownership; (3) the
petition for sale; (4) affidavit of publication of the extrajudicial sale; (5) TCT No. N-221650 in the name of the
private respondent; (6) notice to vacate; (7) petitioners’ reply to the notice to vacate; and (8) affidavit of consolidation
of ownership.
The petitioners fault the trial court for not delving into the validity of the mortgage and the foreclosure proceeding
before granting the petition for a writ of possession. This contention is barren of legal basis. The judge to whom an
application for writ of possession is filed need not look into the validity of the mortgage or the manner of its
foreclosure. In the issuance of a writ of possession, no discretion is left to the trial court. Any question regarding the
cancellation of the writ or in respect of the validity and regularity of the public sale should be determined in a
subsequent proceeding as outlined in Section 8 of Act No. 3135.45
IN VIEW OF ALL THE FOREGOING, the petition is DENIED for lack of merit. The Decision and Resolution of
the Court of Appeals in CA-G.R. CV No. 74592 are AFFIRMED. Costs against the petitioner.
SO ORDERED.
Austria-Martinez, (Acting Chairman), Tinga, and Chico-Nazario, JJ., concur.
Puno, (Chairman), on official leave.
28

8.) G.R. No. 138567. March 04, 2005
DEVELOPMENT BANK OF THE PHILIPPINES, Petitioners,
vs.
SPOUSES WILFREDO GATAL and AZUCENA GATAL, Respondents.
DECISION
SANDOVAL-GUTIERREZ, J.:
Before us for resolution is the petition for review on certiorari1 assailing the Decision2 dated January 18, 1999 of the
Court of Appeals and its Resolution3 dated April 27, 1999 in CA-G.R. SP No. 47736, "Development Bank of the
Philippines, petitioner, vs. Hon. Raineldo T. Son, in his capacity as Presiding Judge of Branch 47, Regional Trial
Court of Tagbilaran City, and Spouses Wilfredo Gatal and Azucena Gatal, respondents."
Records show that sometime in 1993, spouses Wilfredo and Azucena Gatal, respondents, obtained a loan of
₱1,500,000.00 from the Development Bank of the Philippines (DBP), petitioner. The loan was secured by a real
estate mortgage over a commercial lot at No. 3 J.A. Clarin Street, Tagbilaran City, covered by Transfer Certificate of
Title No. T-22697 of the Registry of Deeds, same city. For failure of respondents to pay their loan, petitioner
foreclosed the mortgage in December 1994. In January 1996, the title of the lot was consolidated in the name of
petitioner DBP.
On October 29, 1996, the property was offered for sale at public auction, but none of the bidders was able to meet the
bid price ceiling.
On November 18, 1996, petitioner offered the property for negotiated sale on condition that the buyer must pay 20%
of the selling price as down payment, the balance payable under the terms of the interested buyer.
Respondents then submitted their bid in the amount of ₱2,160,000.00 and made a deposit equivalent to 10% of the
bid price. However, another buyer, Jimmy Torrefranca, offered a bid of ₱2,300,000.00, or ₱140,000.00 higher than
respondents’ bid. Upon learning of Torrefranca’s offer, respondents wrote4 petitioner requesting that they will match
his bid. But petitioner rejected respondents’ request because Torrefranca was already declared the preferred bidder. 5
Aggrieved, respondents, filed with the Regional Trial Court (RTC), Branch 4, Tagbilaran City a complaint for
injunction with prayer for a temporary restraining order and a preliminary injunction, docketed as Civil Case No.
5996. The action sought to (a) declare the sale of the property to Torrefranca void and uphold respondents’ right of
pre-emption; and (b) maintain the status quo between the parties prior to the filing of the suit.
On February 22, 1997, the RTC issued an Order granting respondents’ application for a preliminary injunction.
Meantime, on August 27, 1997, petitioner filed with the same RTC, Branch 47, a petition for issuance of a writ of
possession, docketed as Civil Case No. 6097. On October 31, 1997, the court issued a writ of possession in favor of
petitioner.
On November 12, 1997, respondents filed with Branch 47 a motion to dismiss Civil Case No. 6097 and a motion to
quash the writ of possession on the ground that there is another case (Civil Case No. 5996 for injunction) pending
before Branch 4 involving the same parties, the same subject matter and the same legal issues.
On December 18, 1997, Branch 47 issued an Order dismissing Civil Case No. 6097 and recalling its earlier Order
granting the writ of possession on the ground of litis pendentia.
Petitioner DBP filed a motion for reconsideration but was denied by Branch 47 in an Order dated February 10, 1998.
Thereafter, petitioner filed with the Court of Appeals a petition for certiorari assailing the Orders dated December 18,
1997 and February 10, 1998 of Branch 47, docketed as CA-G.R. SP No. 47736. On January 18, 1999, the Appellate
Court rendered its Decision dismissing the petition, thus upholding the challenged Orders.
Petitioner filed a motion for reconsideration but was denied in a Resolution dated April 27, 1999.
Hence, the instant petition.
The fundamental issue for our resolution is whether the Court of Appeals committed a reversible error in holding that
the trial court correctly dismissed Civil Case No. 6097 on the ground of litis pendentia.
The petition is meritorious.
One of the grounds for dismissing an action is when there is litis pendentia as provided under Section 1(e), Rule 16,
of the 1997 Rules of Civil Procedure, as amended, thus:
"SECTION 1. Grounds. – Within the time for but before filing the answer to the complaint or pleading asserting a
claim, a motion to dismiss may be made on any of the following grounds:
xxx
(e) That there is another action pending between the same parties for the same cause;
x x x."
For litis pendentia to lie as a ground for a motion to dismiss, the following requisites must be present: (1) that the
parties to the action are the same; (2) that there is substantial identity in the causes of action and reliefs sought; and
(3) that the result of the first action is determinative of the second in any event and regardless of which party is
successful.6
It is undisputed that both cases involve the same parties and the same property. Civil Case No. 5996 is an action for
injunction filed by respondents against petitioner DBP. It seeks to declare the sale of the property to Torrefranca void
and to order petitioner DBP "to respect respondents’ right of pre-emption;" and maintain the status quo between the
parties.
Upon the other hand, Civil Case No. 6097 is a petition for the issuance of a writ of possession filed by petitioner
DBP, being the purchaser of the lot at the public auction.
29
Clearly, the rights asserted and the reliefs sought by the parties in both cases are not identical. Thus, respondents’
claim of litis pendentia is unavailing.
Section 33, Rule 39 of the same Rules provides:
"SECTION 33. Deed and possession to be given at expiration of redemption period; by whom executed or given. – If
no redemption be made within one (1) year from the date of the registration of the certificate of sale, the purchaser is
entitled to a conveyance and possession of the property; x x x.
Finally, we do not find merit in respondents’ contention that petitioner violated the rule against forum shopping.
Forum shopping exists where the elements of litis pendentia are present or where a final judgment in one case will
amount to res judicata in the other.13 This situation is not present here.
WHEREFORE, the petition is GRANTED. The Decision of the Court of Appeals dated January 18, 1999 and its
Resolution dated April 27, 1999 in CA-G.R. SP No. 47736 are REVERSED.
SO ORDERED.

Upon the expiration of the right of redemption, the purchaser or redemptioner shall be substituted to and acquire all Panganiban, (Chairman), Corona, and Garcia, JJ., concur.
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 Carpio-Morales, J., on leave.
holding the property adversely to the judgment obligor."

Corollarily, Section 7 of Act 3135,7 as amended by Act 4118, reads:

"Sec. 7. In any sale made under the provisions of this Act, the purchaser may petition the Court of First Instance of
the province or place where the property or any part thereof is situated, to give him possession thereof during the
redemption period, furnishing bond in an amount equivalent to the use of the property for a period of twelve months,
to indemnify the debtor in case it be shown that the sale was made without complying with the requirements of this
Act. x x x"

In Tan Soo Huat vs. Ongwico,8 we ruled that "once a mortgaged estate is extrajudicially sold, and is not redeemed
within the reglementary period, no separate and independent action is necessary to obtain possession of the
property. The purchaser at the public auction has only to file a petition for issuance of a writ of possession
pursuant to Section 33 of Rule 39 of the Rules of Court."

To give effect to the right of possession, the purchaser must invoke the aid of the court and ask for a writ or
possession9 without need of bringing a separate independent suit for this purpose.10

Records show that title to the property has been consolidated to petitioner DBP. Thus, its petition for a writ of
possession is in order.

Obviously, the RTC (Branch 47) erred when it granted respondents’ motion to dismiss and recalled the writ of
possession it earlier issued. Where, as here, the title is consolidated in the name of the mortgagee, the writ of
possession becomes a matter of right on the part of the mortgagee, and it is a ministerial duty on the part of the trial
court to issue the same. The pendency of a separate civil suit questioning the validity of the sale of the mortgaged
property cannot bar the issuance of the writ of possession. The rule equally applies to separate civil suits questioning
the validity of the mortgage or its foreclosure and the validity of the public auction sale.11

There being no litis pendentia, the Court of Appeals likewise erred in applying the doctrine of non-interference
between courts of equal rank. Under the said doctrine, a trial court has no authority to interfere with the proceedings
of a court of equal jurisdiction.12 When Branch 47 issued the writ of possession, it did not interfere with the
jurisdiction of Branch 4 in the injunction case. It merely exercised its ministerial function of issuing the writ of
possession.

30

9.) G.R. No. 181873 November 27, 2013
SPOUSES PIO DATO and SONIA Y. SIA, Petitioners,
vs.
BANK OF THE PHILIPPINE ISLANDS, Respondent.
DECISION
REYES, J.:
This is a petition for review on Certiorari1 of the Decision2 dated July 25, 2007 and Resolution3 dated February 8,
2008 of the Court of Appeals (CA) in CA-G.R. CV No. 61289, affirming with modifications the Decision4 dated
December 15, 1997 of the Regional Trial Court (R TC) of Cebu City, Branch 18 The RTC dismissed herein
petitioners complaint and declared the extrajudicial foreclosure sale, the subject of this petition valid and binding.
Antecedent Facts
On May 23, 1990, petitioners Spouses Pio Dato (Pio) and Sonia Y. Sia (Spouses Sia) applied for a ₱240,000.00 loan
which was granted by the Bank of the Philippine Islands (BPI) with a term of six months and secured by a real estate
mortgage over a parcel of land owned by Spouses Sia denominated as Lot 1, situated in Labangon, Cebu, covered by
Transfer Certificate of Title (TCT) No. 102434. Subsequently, on August 8, 1990, Spouses Sia availed of a ₱4 Million
Revolving Promissory Note Line with a term of one year, secured by the same real estate mortgage over TCT No.
102434.5
Spouses Sia alleged that their loan was "precipitated by the representation of the [BPI] that the same will be indorsed
to [Industrial Guarantee and Loan Fund] (IGLF) [in order] for the spouses to be able to avail of a much lower interest
rate and longer payment terms."6
Before the ₱240,000.00 and ₱4 Million loans matured, Spouses Sia approached BPI through Mona Padilla (Padilla),
account officer of BPI for additional loans. One was for ₱2 Million, and another was for ₱2.8 Million. After some
discussion with Padilla, Spouses Sia agreed to obtain a Credit Facility of ₱5.7 Million using the same collaterals
offered in their previous loans and four additional parcels of land, namely, TCT Nos. 87010, 102435, 102436 and
102437.7
On November 23, 1990, Spouses Sia obtained ₱800,000.00 from their Credit Facility of ₱5.7 Million which was
credited to their current account with BPI after executing a Promissory Note for the same amount. While Spouses Sia
paid some of the interest on their loans, the amount was insufficient to cover the principal amount of said loans.8
On February 13, 1991, Padilla sent a written reminder to Spouses Sia to settle all unpaid interest before February 22,
1991. Yet the spouses failed to pay the same. Their principal loans of ₱240,000.00 and ₱4 Million loan also remained
unsettled. BPI, through Padilla and Assistant Vice President, Danilo A. Quinto sent another demand letter to them
requesting payment of the outstanding loan.9
Spouses Sia still failed to pay the principal amount of ₱4,240,000.00 exclusive of interest, penalties and other
charges. But the amount of ₱800,000.00 from the ₱5.7 Million Credit Facility was paid through a Letter of Credit. As
the ₱240,000.00 and ₱4 Million loans of Spouses Sia were not yet settled, BPI cancelled the ₱5.7 Million Credit
facility. To facilitate and assist Spouses Sia in paying off their loans, the four lots which secured the ₱5.7 Million
Credit Line Facility were released. Spouses Sia agreed to sell the lots and use the proceeds thereof to make partial
payments of their loans. Consequently, BPI issued a cancellation of the real estate mortgage over the four lots which
secured the ₱5.7 Million Credit Line Facility.10
Despite the cancellation of the real estate mortgage, Spouses Sia failed to make good their promise to sell the lots to
pay off their loans. BPI, through Padilla, sent a follow-up demand letter to Spouses Sia dated July 11, 1991
requesting payment of the principal loan amounting to ₱4,240,000.00 as well as all unpaid interests, penalties and
charges thereon on or before July 30, 1991.11 Spouses Sia, through a letter dated July 19, 1991, acknowledged their
account to BPI and stated therein that they are "seriously considering selling some of their ‘choiced’ real estate
properties to service their debt to BPI x x x."12
On August 3, 1993, Spouses Sia filed a complaint13 with the RTC of Cebu City praying for the issuance of a
temporary restraining order (TRO) to maintain status quo, award of moral and exemplary damages, attorney’s fees
and litigation costs. In the said complaint, Spouses Sia alleged that BPI "deliberately refused to comply with the
condition/undertaking of the loan for IGLF endorsement and approval" until the maturity date of the loan lapsed to
their great prejudice and irreparable damage.14
Spouses Sia failed to pay notwithstanding the numerous demands made by BPI, leading to the extrajudicial
foreclosure of the real estate mortgage covered by TCT No. 102434 which secured Spouses Sia’s loans of
₱240,000.00 and ₱4 Million. The lot was sold at a public auction held on August 9, 1993, with BPI as the sole bidder
in the amount of ₱10,060,080.20.15 The certificate of sale was issued on August 10, 1993 upon payment of all the
required registration fees.16
In the course of the trial proceedings, Spouses Sia alleged that they discovered that the document embodying the
cancellation of the real estate mortgage presented by BPI (over the four lots previously released by BPI for the Credit
Line Agreement Facility), stated the following:
[T]he consideration for this cancellation being the full and complete payment made by the said debtor/s- mortgagor/s
to the creditor-mortgagee of the obligation secured thereby in the principal amount of FIVE MILLION SEVEN
HUNDRED THOUSAND ONLY PESOS ([P]5,700,000.00) Philippine Currency, together with the corresponding
interest thereon up to this date.17
Spouses Sia thereafter amended their complaint claiming that the bank inserted and annotated a falsified/illegal Real
Estate Mortgage of ₱5.7 Million, purportedly availed of by Spouses Sia.18 They alleged "that TCT No. 102434 was
never intended to secure a fabricated and falsified loan of ₱5,700,000.00 or for any loan [by] whomsoever,
accommodated by [BPI] using [Spouses Sia’s] collaterals."19
Lastly, the spouses claimed extinguishment of their obligation. They alleged that as BPI credited the payment of ₱5.7
Million to their account, which is more than sufficient to cover their promissory notes of ₱240,000.00 and ₱4 Million,
their obligation with the BPI was totally extinguished as of August 5, 1991 and that the foreclosure proceedings on
TCT No. 102343 is illegal and baseless for they have the right as of August 5, 1991 to secure full release of said lot
by such payment of ₱5.7 Million.20
Spouses Sia prayed for ₱5 Million as moral damages, ₱2 Million as exemplary damages, attorney’s fees equivalent to
25% of the adjudged amount plus ₱350.00 per court appearance but not less than ₱350,000.00 and for whatever
proven damages of not less than ₱500,000.00. In their Second Supplemental Complaint, Spouses Sia prayed for
31
additional ₱25 Million as moral damages, ₱6 Million as exemplary damages and 25% attorney’s fees based on the
additional damages but not less than ₱200,000.00.21
During the pendency of the instant case, the one-year redemption period had lapsed without Spouses Sia exercising
their right to redeem the subject property. Thus on January 27, 1995, BPI filed a supplemental answer with
counterclaim, alleging therein that with the expiration of the period of redemption, BPI is entitled to a writ of
possession over foreclosed property and the occupancy of Spouses Sia on the foreclosed property entitles BPI to a
reasonable compensation which is conservatively pegged at ₱10,000.00 per month from the date of the issuance of
the certificate of sale in favor of BPI.22
The RTC Ruling
On December 15, 1997, the RTC rendered its judgment in favor of BPI and against Spouses Sia, the dispositive
portion of which states:
WHEREFORE, premises all considered, JUDGMENT is hereby rendered in favor of [BPI] and against Spouses Sia
as follows:
1. Dismissing [Spouses Sia’s] complaint, supplemental and amended complaint for lack of merit; 2. Declaring the
extrajudicial foreclosure sale conducted on August 8, 1993 as valid and binding; 3. Declaring defendant [BPI] as
absolute and legal owner of Lot No. 1 covered by TCT No. 102434 as well as the residential house and all
improvements thereon; 4. Ordering [Spouses Sia] to pay defendant [BPI’s] counsel the sum of ₱500,000.00 as
attorney’s fees; ordering to pay defendant [BPI] the sum of ₱10,000.00 per month from August 10, 1994 for use and
occupancy of the foreclosed properties until the same are vacated and possession delivered to defendant [BPI]; to pay
the sum of ₱1,000,000.00 as exemplary damages so as to prevent others from following [Spouses Sia’s] filing a suit
to prevent payment of a just and valid debt; the sum of ₱2,000,000.00 as compensatory damages; the sum of
₱50,000.00 as litigation expenses as well as costs of the suit.
SO ORDERED.23
The RTC found that "there is no logical and valid reason to support the allegations in the complaint for Breach of
Contract, Rescission and Cancellation of Contract with Damages."24
The RTC also found that BPI could not be held guilty of delay in endorsing the loan to IGLF because BPI, through
Padilla, never committed itself to make such endorsement. There was no contract, either oral or written, which would
prove that there was any agreement between BPI and Spouses Sia to endorse their loans to the IGLF. Petitioner Pio
asked for the restructuring of his loans after he failed to pay his ₱240,000.000 and ₱4 Million loans. As petitioner Pio
wanted to obtain an industrial loan for a longer period, Padilla merely suggested to them to obtain loans through
IGLF of the Development Bank of the Philippines, if qualified to do so. Spouses Sia could not however, qualify
because their loans were on the "past due status’ and there was also a diversion of the proceeds of their loans.25
The alleged verbal agreement between [Spouses Sia] and [BPI] that the latter would endorse the ₱4 Million to IGLF
is a clear violation of the parol evidence rule which provides that "when the terms of an agreement have been reduced
to writing, it is to be considered as containing all such terms and therefore, there can be between the parties and the
successors in interest no evidence of the terms of the agreement other than the contents of the writing" (Rule 130,
Section 7 of the Rules of Court).26
As regards the testimony of petitioner Pio that the real estate mortgage covering the ₱5.7 Million credit facility was
falsified, the RTC also found no legal and factual basis therein because petitioner Pio admitted the authenticity of
their signatures appearing on the Promissory Notes and Real Estate Mortgages evidencing the various loans and
credit facility from BPI. Spouses Sia admitted under oath that their signatures appearing on the Real Estate Mortgage
document (Exh. "23") to secure the ₱5.7 Million Credit facility are their signatures. They in effect admitted the
authenticity of those documents as well as the correctness of the matters incorporated therein. As held by this Court in
the case of Heirs of Amparo del Rosario v. Aurora Santos, et al.,27 "when a party admits the genuineness of a
document, he also admits that the words and figures of the documents are set out correctly."28
On the topic of extinguishment of obligation, Spouses Sia failed to sway the RTC to their assertions of payment by
way of donation by an unknown third party. The RTC considered the explanation of the bank as worthy of credence,
as it had extensively discussed, to wit:
Culled from the evidence on record, [Spouses Sia] in addition to the ₱240,000.00 and ₱4,000,000.00 loans, sometime
in November 1990 requested for additional loans from defendant bank. Plaintiff Pio Dato Sia applied for
₱2,000,000.00 loan sometime in November, 1990 and ₱2.8 Million per loan application dated December 8, 1990
(Exh. "25"). As there were several loans which Pio Dato Sia applied for, Mona Padilla advised him that it would be
more practical to obtain Credit Facility or Credit Line to cover contingent financial requirements of his business.
Plaintiff Pio Dato agreed to obtain a Credit Facility of ₱5.7 Million. To cover such facility, plaintiff Pio Dato Sia
submitted four (4) additional collaterals covered by titles. Subsequently, he executed a Real Estate Mortgage to
secure the Credit Line of ₱5.7 Million, dated November 22, 1990 (Exh. "23-C"). The signatures of [Spouses Sia] on
this document are admitted by [Spouses Sia] to be genuine. On the same date November 22, 1993, [Spouses Sia]
made an initial availment from the ₱5.7 Million Credit Facility as evidenced by Exhibit "23". The amount of
₱800,000.00 was credited to [Spouses Sia’s] Current Account No. 1303-2188-97 per Credit Memo (Exh. "27"). Such
availment was fully paid by [Spouses Sia]. After the first availment, [Spouses Sia] wanted to obtain another availment
from said Credit facility but [BPI] could no longer approve such application due to [Spouses Sia’s] failure to pay the
principal loan of ₱240,000.00 and interest thereof which matured on November 11, 1990. As clearly setforth in the
agreement, [BPI] can suspend availments from the Credit Facility in the event of [Spouses Sia’s] default in the
payment of any other existing loans with [BPI]. Thereafter, [Spouses Sia] also failed to pay their ₱4,000,000.00 loan
with [BPI]. As no additional loan could be granted to [Spouses Sia], the latter requested the release of their four (4)
collaterals which were used to secure the ₱5.7 Million Credit Facility and per loan documents all other existing loans
with [BPI]. x x x [Spouses Sia] admitted having received the four titles which were released by [BPI] upon [Spouses
Sia’s] request as well as the cancellation of the mortgage on the ₱5.7 Million Credit Facility after [Spouses Sia’s]
payment of the ₱800,000.00 availment. It is this cancellation of mortgage which [Spouses Sia] are trying to use to
escape payment of their ₱240,000.00 and ₱4 Million loans as well as unpaid interest, penalties and charges. [BPI]
argued that it is the distorted concept of [Spouses Sia] that since the cancellation of the Real Estate Mortgage
mentions the Credit facility of ₱5.7 Million, that someone paid [BPI] the sum of ₱5.7 Million. x x x.29 (Emphasis
and underscoring ours)
The RTC further explained:
It is a mistaken notion of [Spouses Sia] that the cancellation of Real Estate Mortgage presupposed an alleged
payment made by a third person to [BPI] of the sum of ₱5.7 Million.
There is no iota of evidence establishing any payment in the sum of ₱5.7 Million from [Spouses Sia] or from any
third persons to [BPI] to settle any account of [Spouses Sia]. x x x [Spouses Sia] admitted that they have not paid
their ₱240,000.00 and ₱4 Million loans to [BPI].
The cancellation of mortgage refers only to the Real Estate Mortgage covering the Credit Facility.30 (Emphasis ours)
32
Spouses Sia timely filed a Motion for Reconsideration which was denied by the RTC.31 Spouses Sia next filed an
appeal before the CA.
The CA Ruling
The CA rendered its Decision on July 25, 2007, affirming the RTC Decision with Modification, as follows:
WHEREFORE, in view of the foregoing, the instant appeal is PARTLY GRANTED. The Decision of the Regional
Trial Court is hereby AFFIRMED with MODIFICATIONS by deleting the award to BPI of compensatory and
exemplary damages.
SO ORDERED.32
After the denial of their Motion for Reconsideration in the CA Resolution dated February 8, 2008, Spouses Sia raised
a myriad of issues33 before this Court via the instant petition for review on certiorari dated March 3, 2008.
Pending the resolution of this case, Spouses Sia filed on September 20, 2013 an Urgent Motion for Issuance of
Temporary Restraining Order and/or Writ of Preliminary Injunction34 alleging that in an Order35 dated December 5,
2011, Judge Sylva G. Aguirre-Paderanga of the RTC of Cebu City, Branch 16, ordered the issuance of a Writ of
Possession over TCT No. 130468 (Formerly TCT No. 102434) after BPI filed an Ex-Parte Motion for Issuance of a
Writ of Possession.36
Pursuant to the said Order, a writ of possession was issued by the Clerk of Court of the RTC Branch 16, directing
Sheriff Generoso Regalado to issue a Notice to Vacate.37
Spouses Sia filed a Motion for Reconsideration38 of the RTC Branch 16 Order granting the Motion for Issuance of
the Writ of Possession, which was subsequently denied in an Order39 dated March 8, 2012. Spouses Sia then filed a
Motion to Recall and to Quash Writ of Possession which was also denied in an Order40 dated April 20, 2012. A
Motion for Reconsideration of the Order denying the Motion to Recall and to Quash Writ of Possession was filed by
Spouses Sia which was denied once more in an Order41 dated September 7, 2012.42
An Urgent Motion for Issuance of Temporary Restraining Order and/or Writ of Preliminary Injunction43 was filed by
Spouses Sia on September 20, 2013 before the Court as they have received a Second Notice to Vacate on Writ of
Possession.
On October 17, 2013, Spouses Sia filed before the Court an Extremely Urgent Reiterative Motion for Issuance of
Temporary Restraining Order and/or Writ of Preliminary Injunction to Enjoin Enforcement of Third Notice to Vacate
dated October 8, 2013, giving Spouses Sia ten (10) days from receipt thereof within which to vacate the premises.
Issues
Basically, the issues presented by Spouses Sia boil down to the following:
I.
WHETHER THE CA ERRED IN HOLDING THAT BPI DID NOT BREACH ITS CONTRACT WITH SPOUSES
SIA CONCERNING THE IGLF ENDORSEMENT
II.
WHETHER THE CANCELLATION OF THE ₱5.7 MILLION CREDIT FACILITY OF SPOUSES SIA RAISES A
LEGAL ISSUE
The Court’s Ruling
The petition has no merit.
BPI did not commit Breach of
Contract
The Court concurs with the CA and the RTC that BPI did not commit breach of contract against Spouses Sia. In
ruling so, the CA found that petitioner Pio admitted the execution and genuineness of the notarized contract of real
estate mortgage and promissory note, including the signature of Spouses Sia on the letter of advice to signify their
conformity with the terms and conditions during his oral testimony.44 Furthermore, the CA ruled that jurisprudence
laid down the consequences of admission:
By the admission of the due execution of a document, it means that the party whose signature it bears admits that he
signed it voluntarily or that it was signed by another for him and with his authority; and by the admission of the
genuineness of the document, it means that the party whose signature it bears admits that at the time it was signed it
was in the words and figures exactly as set out in the pleading of the party relying upon it.45
The Court finds no cause to deviate from the factual findings of both the RTC and the CA. "The settled rule is that
conclusions and findings of fact of the trial court are entitled to great weight on appeal and should not be disturbed
unless for strong and cogent reasons because the trial court is in a better position to examine real evidence, as well as
observe the demeanor of the witnesses while testifying in the case. The fact that the CA adopted the findings of fact
of the trial court makes the same binding upon this Court."46
Since both the RTC and the CA found no evidence on record to support Spouses Sia’s bare assertions that the
endorsement to IGLF is a condition precedent to their contract of loan with BPI, the Court is inclined to disregard
Spouses Sia’s contentions on this score.
There is no legal issue as regard to
the cancellation of the ₱5.7 Million
Credit Line Facility
Initially, Spouses Sia insisted that the foreclosure of their real estate mortgage was premature because BPI violated
their agreement to have their loan endorsed to IGLF.
33
Thereafter, Spouses Sia changed their stance and insisted that there was no Credit Line Facility agreement of ₱5.7
Million. Spouses Sia further alleged that it was the banking officers of BPI who borrowed the ₱5.7 Million and who
prepared the Cancellation of the Real Estate Mortgage. But the cancellation was credited in favor of Spouses Sia.
Payment should be therefore credited in their favor to extinguish the loans of ₱4 Million and ₱240,000.00 and that
BPI is obligated to return the excess amount of ₱1,460,000.00 by way of solutio indebiti.47
The Court is hardly convinced with Spouses Sia’s arguments. Both the RTC and the CA have profusely examined the
evidence on the record, wherein the following observations were gathered:
The bases of the extrajudicial foreclosure proceeding were the three real estate mortgage contracts executed by Sps.
Sia in favor of BPI, to wit:
1. over TCT No. 102434 and its improvements for ₱240,000.00 dated August 10, 1990;
2. over TCT No. 102434 and its improvements for ₱4,000,000.00 dated May 24, 1990; and
3. over TCT No. 102434 and its improvements, and TCT Nos. 87010, 102435, 102436 and 102437 for
₱5,700,000.00 dated November 22, 1990.
Paragraph 6 of the aforecited real estate mortgage contracts provides that:
"In the event that the Mortgagor/Debtor herein, should fail or refuse to pay any of the sums of money secured by this
mortgage, or any part thereof, in accordance with the terms and conditions herein set forth or those stipulated in the
correlative promissory note(s), or should he/it fail to perform any of the conditions stipulated herein, or those in the
promissory note(s), then and in any such case the Mortgagee shall have the right at its election, to foreclose this
mortgage, x x x."
xxxx
At the outset, Sps. Sia admitted that they have not updated the interest due for their loans and in fact, they
intentionally stopped servicing the interest, more particularly for the ₱4,000,000.00 loan because of the alleged
breach of contract by BPI. x x x.
xxxx
x x x In fact, it was admitted by Mr. Sia in his oral testimony that his only basis for the claim of full payment was the
cancellation of real estate mortgage executed by BPI on August 2, 1991. Based on such document, they assumed that
a third person whom they did not know, paid in their behalves by way of donation. Sps. Sia were not even able to
present a deed of donation but only a deed of acceptance of donation.48 (Emphasis ours and italics supplied)
Another argument posited by Spouses Sia is that, they neither executed any ₱5.7 Million promissory note nor did
they receive ₱5.7 Million from BPI.49 Thus, there is no existing ₱5.7 Million Credit Line Facility Agreement as far
as they are concerned. It appears from the allegations in their pleadings that Spouses Sia have misconstrued the
concept of a Credit Line Facility Agreement. The Court has previously defined a credit line as the following:
[A] credit line is "that amount of money or merchandise which a banker, merchant, or supplier agrees to supply to a
person on credit and generally agreed to in advance." It is the fixed limit of credit granted by a bank, retailer, or credit
card issuer to a customer, to the full extent of which the latter may avail himself of his dealings with the former but
which he must not exceed and is usually intended to cover a series of transactions in which case, when the customer’s
line of credit is nearly exhausted, he is expected to reduce his indebtedness by payments before making any further
drawings.50 (Citations omitted and emphasis and underscoring ours)
Thus, contrary to the belief and understanding of Spouses Sia, BPI does not have to require the execution of
promissory note of the entire ₱5.7 Million since a credit line as stated above, is merely a fixed limit of credit.
Furthermore, still applying the above quoted definition, a credit line usually presupposes a series of transactions until
the credit line is nearly exhausted. BPI is not obliged to release the amount of ₱5.7 Million to Spouses Sia all at once,
in a single transaction.
In this case, BPI allowed the release only of ₱800,000.00 out of the ₱5.7 Million credit line and precluded any more
availments since Spouses Sia have not yet satisfied their obligation to pay their loans of ₱4 Million and ₱240,000.00.
Again, Spouses Sia are reminded that the Court is not a trier of facts. As the RTC and the CA both found, the release
of the four collaterals was done to assist Spouses Sia in paying off their loans, not due to payment of ₱5.7 Million by
Spouses Sia or any other person on their behalf. Spouses Sia read much into the Cancellation of the Real Estate
Mortgage contract when in fact, the release was made for their benefit.
In any case, the extrajudicial foreclosure which is the subject of the present case pertains to Spouses Sia’s failure to
pay their ₱240,000.00 and ₱4 Million loans. The Court sees no real issue as regards the ₱5.7 Million credit line since
it is as plain as day that the entire ₱5.7 Million was not availed of by Spouses Sia and that the real estate mortgages
securing such credit line were cancelled in their favor. Spouses Sia thwart the issue towards the ₱5.7 Million credit
line when the real issue is their non-payment of ₱4 Million and ₱240,000.00 loans, which eventually led to the
extrajudicial foreclosure of TCT No. 102434.
It is a settled rule of law that foreclosure is proper when the debtors are in default of the payment of their
obligation.51 As the CA had appositely considered, due to Spouses Sia’s failure to pay their loans covered by
Promissory Notes (PN) Nos. 90/98 and 90/152, the extrajudicial foreclosure of the real estate mortgage is valid and
binding against them:
Finding for the non-payment of obligations covered by PN Nos. 90/98 and 90/152, Sps. Sia’s prayer to declare null
and void the extrajudicial foreclosure of the subject real estate mortgage is now foiled. Therefore, the extrajudicial
foreclosure and the corresponding certificate of sale executed on August 9, 1993 for the subject real estate property
covered by TCT No. 102434 which sought to reach the property and subject it to the payment of Sps. Sia’s
obligations was valid and binding. We further rule that for failure of Sps. Sia to exercise the right of redemption, the
right to consolidate ownership on the foreclosed property was validly exercised by BPI.52
Prayer for Issuance of Writ of
Preliminary Injunction must be denied
In their Extremely Urgent Reiterative Motion For Issuance of Temporary Restraining Order and/or Writ of
Preliminary Injunction filed on October 17, 2013, Spouses Sia referred to the ruling of this Court in Cometa v.
Intermediate Appellate Court53 where it was held that an issue in a separate case wherein the validity of levy and sale
of properties is questioned, is one that requires pre-emptive resolution.54
34
A scrutiny of the above-cited case reveals that it is not applicable to this case. In Cometa, the property which was the
subject of dispute was sold after levy and execution when the judgment award was not satisfied in another case for
damages. Therein petitioner Herco Realty, assailed the validity of the execution sale and contended that the
ownership of the lots had been transferred to it by Cometa before such execution sale. The ownership of the property
sold in the execution sale was put into the very issue.
Whereas in this case, the property owned by Spouses Sia covered by TCT No. 102434 was mortgaged to BPI as
security for their loans. The same property was sold after it was extrajudicially foreclosed. Hence, the facts in Cometa
and this case cannot be any more different. Spouses Sia cannot invoke the application of the Court’s ruling in Cometa
to a case which is poles apart to it.
v. Insular Bank of Asia and America59, that the buyer in a foreclosure sale becomes the absolute owner of the
property purchased if it is not redeemed during the period of one year after the registration of the sale.60
Also, the Court agrees with the RTC and CA that the award of attorney’s fees and litigation expenses is warranted
owing to the fact that BPI was compelled to engage the services of a counsel to protect its rights. It is so stated under
Article 2208 of the Civil Code that attorney’s fees and expenses of litigation may be recovered by a party when an act
or omission has compelled him to litigate with third persons or to incur expenses to protect his interest. However, the
Court deems the award of ₱500,000.00 as attorney’s fees and ₱50,000 for litigation expenses, as excessive,
considering the nature of this case. Award of attorney’s fees, being part of a party’s liquidated damages, may be
equitably reduced.61

The pending suit questioning the validity of the extrajudicial foreclosure of mortgage does not entitle Spouses Sia to a
suspension of the issuance of writ of possession. The Court calls to mind its ruling in Baldueza v. CA55:
The Court upholds the decision of the Court of Appeals as respondent bank is entitled to possession of the subject
property. In several cases56, this Court has held:
WHEREFORE, the instant petition is DENIED. The Decision dated July 25, 2007 and Resolution dated February 8,
2008 of the Court of Appeals are AFFIRMED with MODIFICATIONS. The award of attorney’s fees and litigation
expenses are hereby reduced to ₱50,000.00.
The prayer for the issuance of a Temporary Restraining Order/Writ of Preliminary Injunction is

"It is settled [that] the buyer in a foreclosure sale becomes the absolute owner of the property purchased if it is not DENIED.
redeemed during the period of one year after the registration of the sale. As such, he is entitled to the possession of
the property and can demand it at any time following the consolidation of ownership in his name and the issuance to SO ORDERED.
him of a new transfer certificate of title. The buyer can in fact demand possession of the land even during the
redemption period except that he has to post a bond in accordance with Section 7 of Act 3135 as amended.
BIENVENIDO L. REYES
Associate Justice
No such bond is required after the redemption period if the property is not redeemed. Possession of the land then
becomes an absolute right of the purchaser as confirmed owner. Upon proper application and proof of title, the
issuance of the writ of possession becomes a ministerial duty of the court."

The facts show that petitioner mortgaged the subject property to respondent bank. Upon maturity of the loan,
petitioner failed to pay the loan despite demand. The property was foreclosed and sold in a public auction where
respondent bank was the highest bidder.1âwphi1 Petitioner failed to redeem the property within the one-year
redemption period. Respondent bank consolidated its ownership over the property and a new title was issued in its
favor. Hence, it became the ministerial duty of the court to issue the writ of possession applied for by respondent
bank.

Despite the pending suit for annulment of the mortgage and Notice of Sheriff’s Sale, respondent bank is entitled to a
writ of possession, without prejudice to the eventual outcome of the said case.57 (Citation omitted and emphasis and
underscoring ours)

Based on the reasons discussed above, the Court holds that there is no basis for the issuance of a Temporary
Restraining Order/Writ of Preliminary Injunction to enjoin the enforcement of the third notice to vacate dated
October 8, 2013.

Reduction of Attorney’s Fees and

Litigation Expenses is in order

The Court is in consonance with the CA and RTC that BPI is entitled to receive rental fees as the new owner of the
property covered by TCT No. 102434 (Now TCT No. 130468)58, following the Court’s ruling in F. David Enterprises

35

10.) G.R. No. 184045 January 22, 2014
SPOUSES NICASIO C. MARQUEZ AND ANITA J. MARQUEZ, Petitioners,
vs.
SPOUSES CARLITO ALINDOG AND CARMEN ALINDOG, Respondents.
DECISION
PERLAS-BERNABE, J.:
Assailed in this petition for review on certiorari1 are the Decision2 dated February 29, 2008 and Resolution3 dated
August 6, 2008 of the Court of Appeals (CA) in CA-G.R. SP No. 97744 finding no grave abuse of discretion on the
part of the Regional Trial Court of Tagaytay City, Branch 18 (RTC) in issuing the Orders dated November 14, 20054
and January 17, 2007[[5 ]] in SCA No. TG-05-2521. Based on these orders, a writ of preliminary injunction was
issued against petitioners-spouses Nicasio C. Marquez and Anita J. Marquez (Sps. Marquez), enjoining them from
taking possession of the property subject of this case despite the consolidation of their title over the same.
The Facts
Records show that sometime in June 1998, petitioner Anita J. Marquez (Anita) extended a loan in the amount of
₱500,000.00 to a certain Benjamin Gutierrez (Gutierrez). As security therefor, Gutierrez executed a Deed of Real
Estate Mortgage6 dated June 16, 1998 over a parcel of land located in Tagaytay City with an area of 660 square
meters, more or less, covered by Transfer Certificate of Title (TCT) No. T-134437 (subject property), registered under
the name of Benjamin A. Gutierrez, married to Liwanag Camerin (Sps. Gutiererez). The mortgage was duly annotated
on the dorsal portion of TCT No. T-13443, which Sps. Marquez had verified as clean prior to the mortgage.8
Since Gutierrez defaulted in the payment of his loan obligation, Anita sought the extra-judicial foreclosure of the
subject property. At the public auction sale held on January 19, 2000, Anita emerged as the highest bidder for the
amount of ₱1,171,000.00.9 Upon Gutierrez’s failure to redeem the same property within the prescribed period
therefor, title was consolidated under TCT No. T-4193910 on November 5, 2001 (in the name of Anita J. Marquez,
married to Nicasio C. Marquez) which, however, bore an annotation of adverse claim11 dated March 2, 2000 in the
names of respondents-spouses Carlito and Carmen Alindog (Sps. Alindog). Said annotation was copied from an
earlier annotation on TCT No. T-13443 made only after the subject property’s mortgage to Sps. Marquez.
Subsequently, or on March 21, 2000, Sps. Alindog filed a civil case for annulment of real estate mortgage and
certificate of sale with prayer for damages against Sps. Marquez and a certain Agripina Gonzales (Gonzales) before
the RTC, docketed as Civil Case No. TG-1966 (annulment case). In their complaint,12 Sps. Alindog alleged that they
purchased13 the subject property from Gutierrez way back in September 1989, but were unable to secure a certificate
of title in their names because Gonzales – to whom they have entrusted said task – had deceived them in that they
were assured that the said certificate was already being processed when such was not the case.14 Eventually, they
found out that the property had already been mortgaged to Sps. Marquez, and that when they tried to contact
Gonzales for an explanation, she could no longer be found. Separately, Sps. Alindog averred that when the mortgage
was executed in favor of Sps. Marquez, Gutierrez was already dead.15
In their defense,16 Sps. Marquez disputed Sps. Alindog’s ownership over the subject property, arguing that the
purported sale in the latter’s favor was never registered and therefore, not binding upon them. Further, they insisted
that their certificate of title, TCT No. T-41939, was already indefeasible, and cannot be attacked collaterally.
Meanwhile, on March 16, 2005, Anita filed an ex-parte petition for the issuance of a writ of possession17 (ex-parte
petition) before the RTC, docketed as LRC Case No. TG-05-1068, claiming that the same is ministerial on the court’s
part following the consolidation of her and her husband’s title over the subject property. Impleaded in said petition are
Sps. Gutierrez, including all persons claiming rights under them.
The RTC Rulings and Subsequent Proceedings
In an Order18 dated August 1, 2005, the RTC granted Anita’s ex-parte petition and thereby directed the issuance of a
writ of possession in her favor. Consequently, a notice to vacate19 dated September 23, 2005 was issued by Acting
Sheriff Teodorico V. Cosare (Sheriff Cosare) against Sps. Gutierrez and all persons claiming rights under them. Sps.
Alindog were served with a copy of the said notice to vacate on September 27, 2005.20
Claiming that they would suffer irreparable injury if the implementation of the writ of possession in favor of Sps.
Marquez would be left unrestrained, Sps. Alindog sought the issuance of a temporary restraining order (TRO) and/or
writ of preliminary injunction with prayer for damages,21 in a separate case docketed as SCA No. TG-05-252122
(injunction case) which was raffled to the same court.
While it appears that the RTC issued a 72-hour TRO on September 29, 2005 in Sps. Alindog’s favor, records
nonetheless show that said order was not extended to a full 20-day TRO.23 To this end, the Sheriff’s Return24 dated
November 14, 2005 shows that Sheriff Cosare was able to implement the writ of possession on November 11, 2005,
turning over the possession of the subject property to Sps. Marquez.
After further proceedings on the injunction case, the RTC, through an Order25 dated November 14, 2005, issued a
writ of preliminary injunction enjoining Sps. Marquez from taking possession of the subject property until after the
controversy has been fully resolved on the merits. The said issuance was based on the RTC’s appreciation of the
initial evidence adduced by Sps. Alindog, concluding that they appear to have a right to be protected. Thus,
notwithstanding the consolidation of Sps. Marquez’s title over the subject property, the RTC granted Sps. Alindog’s
prayer for injunctive relief, holding that any further dispossession on their part would cause them irreparable
injury.26
Aggrieved, Sps. Marquez moved for reconsideration,27 essentially pointing out that, as the confirmed and registered
owners of the subject property, they are entitled to its possession as a matter of right. They argued that pursuant to
Sections 728 and 829 of Act No. 3135,30 as amended by Act No. 4118,31 the RTC was legally bound to place them
in possession of the subject property pending resolution of the annulment case. Further, it is their position that the
purpose for the issuance of the injunctive writ – i.e., to restrain the implementation of the writ of possession – had
already been rendered moot and academic by its actual enforcement in the interim.
For their part, Sps. Alindog filed a Motion for Approval of Cash Bond and to Regain Possession32 of the subject
property.
In an Order33 dated January 17, 2007, the RTC denied the motion of Sps. Marquez, while granted that of Sps.
Alindog. Unperturbed, Sps. Marquez elevated the case to the CA on certiorari.34
36
 The CA Ruling
In a Decision35 dated February 29, 2008, the CA denied Sps. Marquez’s petition as it found no grave abuse of
discretion on the RTC’s part when it issued the injunctive writ that enjoined Sps. Marquez from taking possession of
the subject property. It observed that Sps. Alindog had indeed "adduced prima facie proof of their right to possess the
subject property"36 while the annulment case was pending, adding that the latter’s "right to remain in possession"37
proceeds from the fact of the subject property’s earlier sale to them. Thus, while Sps. Marquez concededly had a right
to possess the subject property on account of the consolidation of the title in their names, the CA nonetheless found
no fault on the part of the RTC for "proceeding with caution"38 in weighing the conflicting claims of the parties and
subsequently issuing the writ of preliminary injunction in Sps. Alindog’s favor.
Dissatisfied, Sps. Marquez moved for reconsideration39 which was, however, denied in a Resolution40 dated August
6, 2008, hence, this petition.
The Issue Before the Court
The essential issue in this case is whether or not the CA erred in finding no grave abuse of discretion on the part of
the RTC when it issued the injunctive writ which enjoined Sps. Marquez from taking possession of the subject
property.
The Court’s Ruling
The petition is meritorious.
It is an established rule that the purchaser in an extra-judicial foreclosure sale is entitled to the possession of the
property and can demand that he be placed in possession of the same either during (with bond) or after the expiration
(without bond) of the redemption period therefor. To this end, the Court, in China Banking Corp. v. Sps. Lozada41
(China Banking Corp.), citing several cases on the matter, explained that a writ of possession duly applied for by said
purchaser should issue as a matter of course, and thus, merely constitutes a ministerial duty on the part of the court,
viz.:42
The procedure for extrajudicial foreclosure of real estate mortgage is governed by Act No. 3135, as amended. The
purchaser at the public auction sale of an extrajudicially foreclosed real property may seek possession thereof in
accordance with Section 7 of Act No. 3135, as amended, which provides:
SEC. 7. In any sale made under the provisions of this Act, the purchaser may petition the Court of First Instance of
the province or place where the property or any part thereof is situated, to give him possession thereof during the
redemption period, furnishing bond in an amount equivalent to the use of the property for a period of twelve months,
to indemnify the debtor in case it be shown that the sale was made without violating the mortgage or without
complying with the requirements of this Act. Such petition shall be made under oath and filed in form or an ex parte
motion in the registration or cadastral proceedings if the property is registered, or in special proceedings in the case of
property registered under the Mortgage Law or under section one hundred and ninety-four of the Administrative
Code, or of any other real property encumbered with a mortgage duly registered in the office of any register of deeds
in accordance with any existing law, and in each case the clerk of court shall, upon the filing of such petition, collect
the fees specified in paragraph eleven of section one hundred and fourteen of Act Numbered Four hundred and ninety
six as amended by Act Numbered Twenty-eight hundred and sixty-six, and the court shall, upon approval of the bond,
order that a writ of possession issue addressed to the sheriff of the province in which the property is situated, who
shall execute said order immediately.
The Court expounded on the application of the foregoing provision in De Gracia v. San Jose, thus:
As may be seen, the law expressly authorizes the purchaser to petition for a writ of possession during the redemption
period by filing an ex parte motion under oath for that purpose in the corresponding registration or cadastral
proceeding in the case of property with Torrens title; and upon the filing of such motion and the approval of the
corresponding bond, the law also in express terms directs the court to issue the order for a writ of possession. Under
the legal provisions above copied, the order for a writ of possession issues as a matter of course upon the filing of the
proper motion and the approval of the corresponding bond. No discretion is left to the court. And any question
regarding the regularity and validity of the sale (and the consequent cancellation of the writ) is left to be determined
in a subsequent proceeding as outlined in section 8. Such question is not to be raised as a justification for opposing
the issuance of the writ of possession, since, under the Act, the proceeding for this is ex parte.
Strictly, Section 7 of Act No. 3135, as amended, refers to a situation wherein the purchaser seeks possession of the
foreclosed property during the 12-month period for redemption. Upon the purchaser’s filing of the ex parte petition
and posting of the appropriate bond, the RTC shall, as a matter of course, order the issuance of the writ of possession
in the purchaser’s favor.
In IFC Service Leasing and Acceptance Corporation v. Nera, the Court reasoned that if under Section 7 of Act No.
3135, as amended, the RTC has the power during the period of redemption to issue a writ of possession on the ex
parte application of the purchaser, there is no reason why it should not also have the same power after the expiration
of the redemption period, especially where a new title has already been issued in the name of the purchaser. Hence,
the procedure under Section 7 of Act No. 3135, as amended, may be availed of by a purchaser seeking possession of
the foreclosed property he bought at the public auction sale after the redemption period has expired without
redemption having been made.
xxxx
It is thus settled that the buyer in a foreclosure sale becomes the absolute owner of the property purchased if it is not
redeemed during the period of one year after the registration of the sale. As such, he is entitled to the possession of
the said property and can demand it at any time following the consolidation of ownership in his name and the
issuance to him of a new transfer certificate of title. The buyer can in fact demand possession of the land even during
the redemption period except that he has to post a bond in accordance with Section 7 of Act No. 3135, as amended.
No such bond is required after the redemption period if the property is not redeemed. Possession of the land then
becomes an absolute right of the purchaser as confirmed owner. Upon proper application and proof of title, the
issuance of the writ of possession becomes a ministerial duty of the court. (Emphases and underscoring supplied;
citations and emphases in the original omitted)
In the case of Spouses Espiridion v. CA,43 the Court expounded on the ministerial nature of the foregoing issuance as
follows:44
The issuance of a writ of possession to a purchaser in a public auction is a ministerial act.1âwphi1 After the
consolidation of title in the buyer’s name for failure of the mortgagor to redeem the property, the writ of possession
becomes a matter of right. Its issuance to a purchaser in an extrajudicial foreclosure sale is merely a ministerial
function. The trial court has no discretion on this matter. Hence, any talk of discretion in connection with such
issuance is misplaced.
A clear line demarcates a discretionary act from a ministerial one. Thus:
37
The distinction between a ministerial and discretionary act is well delineated. A purely ministerial act or duty is one
which an officer or tribunal performs in a given state of facts, in a prescribed manner, in obedience to the mandate of
a legal authority, without regard to or the exercise of his own judgment upon the propriety or impropriety of the act
done. If the law imposes a duty upon a public officer and gives him the right to decide how or when the duty shall be
performed, such duty is discretionary and not ministerial. The duty is ministerial only when the discharge of the same
requires neither the exercise of official discretion or judgment.
Clearly, the use of discretion and the performance of a ministerial act are mutually exclusive. (Emphases and
underscoring supplied; citations omitted)
The ministerial issuance of a writ of possession in favor of the purchaser in an extra-judicial foreclosure sale,
however, admits of an exception. Section 33,45 Rule 39 of the Rules of Court (Rules) pertinently provides that the
possession of the mortgaged property may be awarded to a purchaser in an extra-judicial foreclosure unless a third
party is actually holding the property by adverse title or right. In the recent case of Rural Bank of Sta. Barbara
(Iloilo), Inc. v. Centeno,46 citing the case of China Banking Corp., the Court illumined that "the phrase ‘a third party
who is actually holding the property adversely to the judgment obligor’ contemplates a situation in which a third
party holds the property by adverse title or right, such as that of a co-owner, tenant or usufructuary. The co-owner,
agricultural tenant, and usufructuary possess the property in their own right, and they are not merely the successor or
transferee of the right of possession of another co-owner or the owner of the property. Notably, the property should
not only be possessed by a third party, but also held by the third party adversely to the judgment obligor."47 In other
words, as mentioned in Villanueva v. Cherdan Lending Investors Corporation,48 the third person must therefore
claim a right superior to that of the original mortgagor.
All told, by acting averse to well-settled jurisprudential rules and resultantly depriving Sps. Marquez of their right of
possession over the subject property, the Court therefore concludes that the RTC gravely abused its discretion in this
case. In effect, the CA's contrary ruling thereto is hereby reversed and set aside, which consequentially leads to the
nullification of the writ of preliminary injunction issued by the RTC in favor of Sps. Alindog, and the reinstatement of
the writ of possession issued by the same court in favor of Sps. Marquez. It must, however, be noted that these
pronouncements are without prejudice to any separate action which Sps. Alindog may file in order to recover
ownership of the subject property.
WHEREFORE, the petition is GRANTED. The Decision dated February 29, 2008 and Resolution dated August 6,
2008 of the Court of Appeals in CA-G.R. SP No. 97744, as well as the Orders dated November 14, 2005 and January
17, 2007 of the Regional Trial Court of Tagaytay City, Branch 18 in SCA No. TG-05-2521 are hereby REVERSED
and SET ASIDE. Accordingly, the writ of preliminary injunction in SCA No. TG-05-2521 is NULLIFIED, while the
Writ of Possession in LRC Case No. TG-05-1068 is REINSTATED.
SO ORDERED.
ESTELA M. PERLAS-BERNABE
Associate Justice

In this case, it is clear that the issuance of a writ of possession in favor of Sps. Marquez, who had already
consolidated their title over the extra-judicially foreclosed property, is merely ministerial in nature. The general rule
as herein stated – and not the exception found under Section 33, Rule 39 of the Rules – should apply since Sps.
Alindog hinged their claim over the subject property on their purported purchase of the same from its previous owner,
i.e., Sps. Gutierrez (with Gutierrez being the original mortgagor). Accordingly, it cannot be seriously doubted that
Sps. Alindog are only the latter’s (Sps. Gutierrez) successors-in-interest who do not have a right superior to them.

That said, the RTC therefore gravely abused its discretion when it issued the injunctive writ which enjoined Sps.
Marquez from taking possession of the subject property. To be sure, grave abuse of discretion arises when a lower
court or tribunal patently violates the Constitution, the law or existing jurisprudence.49 Here, while the RTC had
initially issued a writ of possession in favor of Sps. Marquez, it defied existing jurisprudence when it effectively
rescinded the said writ by subsequently granting Sps. Alindog's prayer for injunctive relief. The RTC's finding anent
the initial evidence adduced by Sps. Alindog constitutes improper basis to justify the issuance of the writ of
preliminary injunction in their favor since, in the first place, it had no authority to exercise any discretion in this
respect. Jurisprudence is clear on the matter: without the exception under Section 33, Rule 39 of the Rules availing,
the issuance of a writ of possession in favor of the purchaser of an extra-judicially foreclosed property - such as Sps.

Marquez in this case - should come as a matter of course, and, in such regard, constitutes only a ministerial duty on
the part of the court. Besides, it was improper for the RTC to have issued a writ of preliminary injunction since the
act sought to be enjoined, i.e., the implementation of the writ of possession, had already been accomplished in the
interim and thus, rendered the matter moot. Case law instructs that injunction would not lie where the acts sought to
be enjoined had already become fait accompli (meaning, an accomplished or consummated act).50 Hence, since the
consummation of the act sought to be restrained had rendered Sps. Alindog's injunction petition moot, the issuance of
the said injunctive writ was altogether improper.

38

11.) G.R. No. 173820 April 16, 2012
PRODUCERS BANK OF THE PHILIPPINES, Petitioner,
vs.
EXCELSA INDUSTRIES, INC., Respondent.
DECISION
PERALTA, J.:
This is a petition for review on certiorari under Rule 45 of the Rules of Court filed by petitioner Producers Bank of
the Philippines against respondent Excelsa Industries, Inc. assailing the Court of Appeals (CA) Decision1 dated April
4, 2006 and Resolution2 dated July 19, 2006 in CA-G.R. SP No. 46514. The assailed decision reversed the Regional
Trial Court (RTC)3 Decision4 dated December 16, 1997 in the consolidated cases docketed as LR Case No. 90-787
and Civil Case No. 1587-A, while the assailed resolution denied petitioner’s motion for reconsideration for lack of
merit.
The present case stemmed from the same set of facts as in G.R. No. 1520715 entitled "Producers Bank of the
Philippines v. Excelsa Industries, Inc.," which the Court promulgated on May 8, 2009. The relevant facts, as found by
the Court in said case, are as follows:
Respondent obtained a loan from petitioner in the form of a bill discounted and secured credit accommodation in the
amount of ₱200,000.00, secured by a real estate mortgage over real estate properties registered in its name.6 The
mortgage secured also loans that might be extended in the future by petitioner in favor of respondent.7 Respondent
thereafter applied for a packing credit line or a credit export advance with petitioner supported by a letter of credit
issued by Kwang Ju Bank, Ltd. of Seoul, Korea, through Bank of the Philippine Islands. The application was
approved.8 When respondent presented for negotiation to petitioner drafts drawn under the letter of credit and the
corresponding export documents in consideration for its drawings in the amount of US$5,739.76 and US$4,585.79,
petitioner purchased the drafts and export documents by paying respondent the peso equivalent of the drawings.9 The
Korean buyer, however, refused to pay the export documents prompting petitioner to demand from respondent the
payment of the peso equivalent of said export documents together with its due and unpaid loans.10 For failure of
respondent to heed the demand, petitioner moved for the extrajudicial foreclosure of the real estate mortgage.11 At
the public auction, petitioner emerged as the highest bidder.12 The corresponding certificate of sale was later issued
and eventually registered. For failure of respondent to redeem the properties, the titles were consolidated in favor of
petitioner and new certificates of title were issued in its name.13
On November 17, 1989, respondent instituted an action for the annulment of extrajudicial foreclosure with prayer for
preliminary injunction and damages against petitioner and the Register of Deeds of Marikina. The case was docketed
as Civil Case No. 1587-A which was raffled to Branch 73 of the RTC of Antipolo, Rizal.14 On April 5, 1990,
petitioner filed a petition for the issuance of a writ of possession, docketed as LR Case No. 90-787 before the same
court. The RTC thereafter ordered the consolidation of the two cases, Civil Case No. 1587-A and LR Case No. 90-
787.
On December 18, 1997, the RTC rendered a decision upholding the validity of the extrajudicial foreclosure and
ordering the issuance of a writ of possession in favor of petitioner.15
Aggrieved, respondent availed of two modes of appeal. Respondent appealed Civil Case No. 1587-A via ordinary
appeal16 to the CA which was docketed as CA-G.R. CV No. 59931 and raffled to the First Division. Respondent
likewise filed a special civil action for certiorari under Rule 65 of the Rules of Court as to LR Case No. 90-78717
also before the CA which was docketed as CA-G.R. SP. No. 46514 and was raffled to the Tenth Division. In both
cases, respondent assailed the December 18, 1997 Decision of the RTC which is actually a joint decision on the two
consolidated cases subject of the separate actions.
On May 30, 2001, the CA (First Division) rendered a decision in CA-G.R. CV No. 59931 reversing and setting aside
the RTC decision thereby declaring the foreclosure of mortgage invalid and annulling the issuance of the writ of
possession in favor of petitioner.18 Petitioner elevated the case to this Court and was docketed as G.R. No. 152071.
On April 4, 2006, the CA (Tenth Division) also rendered the assailed decision in CA-G.R. SP No. 46514, the
dispositive portion of which reads:
WHEREFORE, premises considered, the instant petition is hereby GRANTED. ACCORDINGLY, the Decision dated
December 18, 1997 of the Regional Trial Court of Antipolo, Rizal, Branch 73, is hereby REVERSED.
SO ORDERED.19
While declaring that the case had become moot and academic in view of the May 30, 2001 decision of the CA (First
Division), the CA (Tenth Division) decided on the merits of the case and resolved two issues, namely: (1) whether or
not petitioner was the agent of respondent; and (2) whether or not the foreclosure of mortgage was valid.20 The
decision substantially echoed the ruling of the CA (First Division) in CA-G.R. CV No. 59931.
Aggrieved, petitioner comes before the Court with the following arguments:
I.
The Petition for Certiorari should have been immediately dismissed by the Court of Appeals on the
ground of FORUM SHOPPING.
II.
The Petition for Certiorari should have been immediately dismissed as there was a remedy (i.e., Motion
for Reconsideration and Appeal) available to the Respondent.
III.
The respondent’s Petition, purportedly a Petition for Certiorari under Rule 65 of the Rules of Court, did
not allege that any tribunal, board or officer exercising judicial or quasi-judicial functions has acted
without or in excess of jurisdiction or with grave abuse of discretion amounting to lack or excess of
jurisdiction.
IV.
39
 Even if the respondent’s Petition is decided on the issues enumerated by the Court of Appeals in its
questioned Decision, the Petition for Certiorari must be dismissed for utter lack of merit and for not being
supported by the evidence on record.21
The petition is meritorious.
The case stemmed from two separate cases – one for annulment of foreclosure in Civil Case No. 1587-A and another
case for issuance of the writ of possession in LR Case No. 90-787. The cases were consolidated by the RTC and were
eventually disposed of in one judgment embodied in the December 18, 1997 RTC decision. This notwithstanding,
respondent treated the cases separately and availed of two remedies, an appeal in Civil Case No. 1587-A and a
petition for certiorari under Rule 65 in LR Case No. 90-787. The appeal was decided by the CA (First Division) then
eventually settled by the Court in G.R. No. 152071 on May 8, 2009. The petition for certiorari, on the other hand,
was later decided by the CA (Tenth Division), which decision is now the subject of this present petition.
Respondent herein committed a procedural blunder when it filed a separate petition for certiorari before the CA,
because when the two cases were consolidated and a joint decision was rendered, the cases lost their identities; and a
petition for certiorari is not the proper remedy to assail a decision granting the issuance of a writ of possession.
Consolidation is a procedural device granted to the court as an aid in deciding how cases in its docket are to be tried
so that the business of the court may be dispatched expeditiously and with economy while providing justice to the
parties.22 It is governed by Rule 31 of the old Rules of Court23 which states:
Section 1. Consolidation. – When actions involving a common question of law or fact are pending before the court, it
may order a joint hearing or trial of any or all the matters in issue in the actions; it may order all the actions
consolidated; and it may make such orders concerning proceedings therein as may tend to avoid unnecessary costs or
delay.24
As aptly observed by the Court in Republic of the Philippines v. Sandiganbayan, et al.,25 Rule 31 is completely silent
on the effect/s of consolidation on the cases consolidated; on the parties and the causes of action involved; and on the
evidence presented in the consolidated cases.26 In the same case, the Court declared that the effect of consolidation
would greatly depend on the sense in which the consolidation is made. Consolidation of cases may take place in any
of the following ways:
(1) Where all except one of several actions are stayed until one is tried, in which case the judgment in the
one trial is conclusive as to the others. This is not actually consolidation but is referred to as such. (quasi-
consolidation)
(2) Where several actions are combined into one, lose their separate identity, and become a single action in
which a single judgment is rendered. This is illustrated by a situation where several actions are pending
between the same parties stating claims which might have been set out originally in one complaint.
(actual consolidation)
(3) Where several actions are ordered to be tried together but each retains its separate character and
requires the entry of a separate judgment. This type of consolidation does not merge the suits into a single
action, or cause the parties to one action to be parties to the other. (consolidation for trial)27
In this case, there was a joint hearing and the RTC eventually rendered a Joint Decision disposing of the cases both as
to the validity of the foreclosure (subject of Civil Case No. 1587-A) and the propriety of the issuance of a writ of
possession (subject of LR Case No. 90-787). This being so, the two cases ceased to be separate and the parties are left
with a single remedy to elevate the issues to the appellate court. This is bolstered by the fact that when the appeal in
CA-G.R. CV No. 59931 was disposed of by the CA (First Division) by reversing the RTC decision, the appellate
court not only declared the foreclosure of mortgage invalid but likewise annulled the issuance of the writ of
possession. Again, when the Court finally settled the issues in G.R. No. 152071, it reversed and set aside the CA
decision and reinstated that of the RTC thereby disposing of the said two issues.
Assuming that respondent could still treat the original cases separately and could avail of separate remedies, the
petition for certiorari under Rule 65 was incorrectly availed of to assail the issuance of the writ of possession.
A special civil action for certiorari could be availed of only if a tribunal, board, or officer exercising judicial or quasi-
judicial functions has acted without or in excess of its or his jurisdiction, or with grave abuse of discretion amounting
to lack or excess of jurisdiction; and if there is no appeal or any other plain, speedy, and adequate remedy in the
ordinary course of law.28 It has been repeatedly held in a number of cases29 that the remedy of a party from the trial
court’s order granting the issuance of a writ of possession is to file a petition to set aside the sale and cancel the writ
of possession, and the aggrieved party may then appeal from the order denying or granting said petition.30 When a
writ of possession had already been issued as in this case,31 the proper remedy is an appeal and not a petition for
certiorari.32 To be sure, the trial court’s order granting the writ of possession is final.33 The soundness of the order
granting the writ of possession is a matter of judgment, with respect to which the remedy of the party aggrieved is
ordinary appeal.34 As respondent availed of the wrong remedy, the appellate court erred in not dismissing outright
the petition for certiorari.
We would like to stress at this point that when respondent received the unfavorable decision of the RTC dated
December 18, 1997, it appealed the decision to the CA assailing the validity of the foreclosure. The CA (First
Division) reversed and set aside the RTC decision, declared the foreclosure invalid, and annulled the issuance of the
writ of possession.35 When it rendered the assailed decision, the CA (Tenth Division) addressed the issues raised by
respondent which were the very same issues raised by it in its appeal. In short, the assailed decision was a mere
reiteration of the findings and conclusions of the CA (First Division). This emphasizes the error committed by the CA
(Tenth Division) in rendering the assailed decision.1âwphi1
On May 8, 2009, in G.R. No. 152071, we reversed and set aside the CA (First Division) decision in CA-G.R. CV No.
59931 and reinstated that of the RTC. In other words, we settled once and for all the validity of the foreclosure and
the propriety of the issuance of the writ of possession. This should have put to rest the petitioner’s claim over the
properties subject of the foreclosure sale if not for respondent’s erroneous resort to the court. The rights of the parties
should, therefore, be governed by the Court’s decision in G.R. No. 152071.
WHEREFORE, premises considered, the petition is hereby GRANTED. The Court of Appeals Decision dated April
4, 2006 and Resolution dated July 19, 2006 in CA-G.R. SP No. 46514 are SET ASIDE. The parties are bound by the
decision of the Court in G.R. No. 152071 entitled "Producers Bank of the Philippines v. Excelsa Industries, Inc."
promulgated on May 8, 2009.
SO ORDERED.
DIOSDADO M. PERALTA
Chief Justice
Associate Justice
40

12.) G.R. No. 171206 September 23, 2013
HEIRS OF THE LATE SPOUSES FLA VIANO MAGLASANG and SALUD ADAZA-MAGLASANG,
namely, OSCAR A. MAGLASANG, EDGAR A. MAGLASANG, CONCEPCION CHONA A. MAGLASANG,
GLENDA A. MAGLASANG-ARNAIZ, LERMA A. MAGLASANG, FELMA A. · MAGLASANG, FE DORIS
A. MAGLASANG, LEOLINO A. MAGLASANG, MARGIE LEILA A. MAGLASANG,MA. MILALIE A.
MAGLASANG, SALUD A. MAGLASANG, and MA. FLASALIE A. MAGLASANG, REPRESENTING THE
ESTATES OF THEIR AFORE-NAMEDDECEASED PARENTS, Petitioners,
vs.
MANILA BANKING CORPORATION, now substituted by FIRST SOVEREIGN ASSET MANAGEMENT
SPV-AMC, INC. FSAMI, Respondent.
DECISION
PERLAS-BERNABE, J.:
Assailed in this petition for review on certiorari1 are the Decision2 dated July 20, 2005 and Resolution3 dated January
4, 2006 of the Court of Appeals (CA) in CA-G.R. CV No. 50410 which dismissed petitioners’ appeal and affirmed the
Decision4 dated April 6, 1987 of the Regional Trial Court of Ormoc City, Branch 12 (RTC) directing petitioners to
jointly and severally pay respondent Manila Banking Corporation the amount of ₱434,742.36, with applicable
interests, representing the deficiency of the former’s total loan obligation to the latter after the extra-judicial
foreclosure of the real estate mortgage subject of this case, including attorney’s fees and costs of suit.
The Facts
On June 16, 1975, spouses Flaviano and Salud Maglasang (Sps.Maglasang) obtained a credit line from respondent5 in
the amount of ₱350,000.00 which was secured by a real estate mortgage6 executed over seven of their properties7
located in Ormoc City and the Municipality of Kananga, Province of Leyte.8 They availed of their credit line by
securing loans in the amounts of ₱209,790.50 and ₱139,805.83 on October 24, 1975and March 15, 1976,
respectively,9 both of which becoming due and demandable within a period of one year. Further, the parties agreed
that the said loans would earn interest at 12% per annum (p.a.) and an additional 4% penalty would be charged upon
default.10
After Flaviano Maglasang (Flaviano) died intestate on February 14,1977, his widow Salud Maglasang (Salud) and
their surviving children, herein petitioners Oscar (Oscar), Concepcion Chona, Lerma, Felma, FeDoris, Leolino,
Margie Leila, Ma. Milalie, Salud and Ma. Flasalie, all surnamed Maglasang, and Glenda Maglasang-Arnaiz,
appointed11 their brother petitioner Edgar Maglasang (Edgar) as their attorney-in-fact.12 Thus, on March 30, 1977,
Edgar filed a verified petition for letters of administration of the intestate estate of Flaviano before the then Court of
First Instance of Leyte, Ormoc City, Branch 5 (probate court), docketed as Sp. Proc. No. 1604-0. 13 On August 9,
1977, the probate court issued an Order14 granting the petition, thereby appointing Edgar as the administrator15 of
Flaviano’s estate.
In view of the issuance of letters of administration, the probate court, on August 30, 1977, issued a Notice to
Creditors16 for the filing of money claims against Flaviano’s estate. Accordingly, as one of the creditors of Flaviano,
respondent notified17 the probate court of its claim in the amount of ₱382,753.19 as of October 11, 1978, exclusive of
interests and charges.
During the pendency of the intestate proceedings, Edgar and Oscar were able to obtain several loans from respondent,
secured by promissory notes18 which they signed.
In an Order19 dated December 14, 1978 (December 14, 1978 Order),the probate court terminated the proceedings with
the surviving heirs executing an extra-judicial partition of the properties of Flaviano’s estate. The loan obligations
owed by the estate to respondent, however, remained unsatisfied due to respondent’s certification that Flaviano’s
account was undergoing a restructuring. Nonetheless, the probate court expressly recognized the rights of respondent
under the mortgage and promissory notes executed by the Sps. Maglasang, specifically, its "right to foreclose the
same within the statutory period."20
In this light, respondent proceeded to extra-judicially foreclose the mortgage covering the Sps. Maglasang’s
properties and emerged as the highest bidder at the public auction for the amount of ₱350,000.00.21 There, however,
remained a deficiency on Sps. Maglasang’s obligation to respondent. Thus, on June 24, 1981, respondent filed a suit
to recover the deficiency amount of ₱250,601.05 as of May 31, 1981 against the estate of Flaviano, his widow Salud
and petitioners, docketed as Civil Case No. 1998-0.22
The RTC Ruling and Subsequent Proceedings
After trial on the merits, the RTC (formerly, the probate court)23 rendered a Decision24 on April 6, 1987 directing the
petitioners to pay respondent, jointly and severally, the amount of ₱434,742.36 with interest at the rate of 12% p.a.,
plus a 4% penalty charge, reckoned from September 5,1984 until fully paid. 25 The RTC found that it was shown, by a
preponderance of evidence, that petitioners, after the extra-judicial foreclosure of all the properties mortgaged, still
have an outstanding obligation in the amount and as of the date as above-stated. The RTC also found in order the
payment of interests and penalty charges as above-mentioned as well as attorney’s fees equivalent to 10% of the
outstanding obligation.26
Dissatisfied, petitioners elevated the case to the CA on appeal, contending,27 inter alia, that the remedies available to
respondent under Section 7, Rule 86 of the Rules of Court (Rules) are alternative and exclusive, such that the election
of one operates as a waiver or abandonment of the others. Thus, when respondent filed its claim against the estate of
Flaviano in the proceedings before the probate court, it effectively abandoned its right to foreclose on the mortgage.
Moreover, even on the assumption that it has not so waived its right to foreclose, it is nonetheless barred from filing
any claim for any deficiency amount.
During the pendency of the appeal, Flaviano’s widow, Salud, passed away on July 25, 1997.28
The CA Ruling
In a Decision29 dated July 20, 2005, the CA denied the petitioners’ appeal and affirmed the RTC’s Decision. At the
outset, it pointed out that the probate court erred when it, through the December 14, 1978 Order, closed and
terminated the proceedings in Sp. Proc. No. 1604-0 without first satisfying the claims of the creditors of the estate –
in particular, respondent – in violation of Section 1, Rule 90 of the Rules.30 As a consequence, respondent was not
able to collect from the petitioners and thereby was left with the option of foreclosing the real estate mortgage. 31
Further, the CA held that Section 7, Rule 86 of the Rules does not apply to the present case since the same does not
involve a mortgage made by the administrator over any property belonging to the estate of the decedent.32 According
to the CA, what should apply is Act No. 313533 which entitles respondent to claim the deficiency amount after the
extra-judicial foreclosure of the real estate mortgage of Sps. Maglasang’s properties.34
41
Petitioners’ motion for reconsideration was subsequently denied in a Resolution 35 dated January 4, 2006. Hence, the
present recourse.
The Issue Before the Court
The essential issue in this case is whether or not the CA erred in affirming the RTC’s award of the deficiency amount
in favor of respondent.
Petitioners assert36 that it is not Act No. 3135 but Section 7, Rule 86of the Rules which applies in this case. The latter
provision provides alternative and exclusive remedies for the satisfaction of respondent’s claim against the estate of
Flaviano.37 Corollarily, having filed its claim against the estate during the intestate proceedings, petitioners argue that
respondent had effectively waived the remedy of foreclosure and, even assuming that it still had the right to do so, it
was precluded from filing a suit for the recovery of the deficiency obligation.38
Likewise, petitioners maintain that the extra-judicial foreclosure of the subject properties was null and void, not
having been conducted in the capital of the Province of Leyte in violation of the stipulations in the real estate
mortgage contract.39 They likewise deny any personal liability for the loans taken by their deceased parents. 40
The Court’s Ruling
The petition is partly meritorious.
Claims against deceased persons should be filed during the settlement proceedings of their estate. 41 Such proceedings
are primarily governed by special rules found under Rules 73 to 90 of the Rules, although rules governing ordinary
actions may, as far as practicable, apply suppletorily.42 Among these special rules, Section 7, Rule 86 of the Rules
(Section 7, Rule86) provides the rule in dealing with secured claims against the estate:
SEC. 7. Mortgage debt due from estate. – A creditor holding a claim against the deceased secured by a mortgage or
other collateral security, may abandon the security and prosecute his claim in the manner provided in this rule, and
share in the general distribution of the assets of the estate; or he may foreclose his mortgage or realize upon his
security, by action in court, making the executor or administrator a party defendant, and if there is a judgment for a
deficiency, after the sale of the mortgaged premises, or the property pledged, in the foreclosure or other proceeding to
realize upon the security, he may claim his deficiency judgment in the manner provided in the preceding section; or
he may rely upon his mortgage or other security alone, and foreclose the same at any time within the period of the
statute of limitations, and in that event he shall not be admitted as a creditor, and shall receive no share in the
distribution of the other assets of the estate; but nothing herein contained shall prohibit the executor or administrator
from redeeming the property mortgaged or pledged, by paying the debt for which it is held as security, under the
direction of the court, if the court shall adjudged it to be for the best interest of the estate that such redemption shall
be made. (Emphasis and underscoring supplied)
As the foregoing generally speaks of "a creditor holding a claim against the deceased secured by a mortgage or other
collateral security" as above-highlighted, it may be reasonably concluded that the aforementioned section covers all
secured claims, whether by mortgage or any other form of collateral, which a creditor may enforce against the estate
of the deceased debtor. On the contrary, nowhere from its language can it be fairly deducible that the said section
would – as the CA interpreted – narrowly apply only to mortgages made by the administrator over any property
belonging to the estate of the decedent. To note, mortgages of estate property executed by the administrator, are also
governed by Rule 89 of the Rules, captioned as "Sales, Mortgages, and Other Encumbrances of Property of
Decedent."
In this accord, it bears to stress that the CA’s reliance on Philippine National Bank v. CA43 (PNB) was misplaced as
the said case did not, in any manner, limit the scope of Section 7, Rule 86. It only stated that the aforesaid section
equally applies to cases where the administrator mortgages the property of the estate to secure the loan he obtained. 44
Clearly, the pronouncement was a ruling of inclusion and not one which created a distinction. It cannot, therefore, be
doubted that it is Section 7, Rule 86which remains applicable in dealing with a creditor’s claim against the mortgaged
property of the deceased debtor, as in this case, as well as mortgages made by the administrator, as that in the PNB
case.
Jurisprudence breaks down the rule under Section 7, Rule 86 and explains that the secured creditor has three
remedies/options that he may alternatively adopt for the satisfaction of his indebtedness. In particular, he may choose
to: (a) waive the mortgage and claim the entire debt from the estate of the mortgagor as an ordinary claim; (b)
foreclose the mortgage judicially and prove the deficiency as an ordinary claim; and (c) rely on the mortgage
exclusively, or other security and foreclose the same before it is barred by prescription, without the right to file a
claim for any deficiency.45 It must, however, be emphasized that these remedies are distinct, independent and
mutually exclusive from each other; thus, the election of one effectively bars the exercise of the others. With respect
to real properties, the Court in Bank of America v. American Realty Corporation46 pronounced:
In our jurisdiction, the remedies available to the mortgage creditor are deemed alternative and not cumulative.
Notably, an election of one remedy operates as a waiver of the other. For this purpose, a remedy is deemed chosen
upon the filing of the suit for collection or upon the filing of the complaint in an action for foreclosure of mortgage,
pursuant to the provision of Rule 68 of the 1997 Rules of Civil Procedure. As to extrajudicial foreclosure, such
remedy is deemed elected by the mortgage creditor upon filing of the petition not with any court of justice but with
the Office of the Sheriff of the province where the sale is to be made, in accordance with the provisions of Act No.
3135, as amended by Act No.4118.47 (Emphasis supplied)
Anent the third remedy, it must be mentioned that the same includes the option of extra-judicially foreclosing the
mortgage under Act No. 3135,as availed of by respondent in this case. However, the plain result of adopting the last
mode of foreclosure is that the creditor waives his right to recover any deficiency from the estate.48 These precepts
were discussed in the PNB case, citing Perez v. Philippine National Bank49 which overturned the earlier Pasno v.
Ravina ruling:50
Case law now holds that this rule grants to the mortgagee three distinct, independent and mutually exclusive remedies
that can be alternatively pursued by the mortgage creditor for the satisfaction of his credit in case the mortgagor dies,
among them:
(1) to waive the mortgage and claim the entire debt from the estate of the mortgagor as an ordinary claim;
(2) to foreclose the mortgage judicially and prove any deficiency as an ordinary claim; and
(3) to rely on the mortgage exclusively, foreclosing the same at anytime before it is barred by prescription
without right to file a claim for any deficiency
In Perez v. Philippine National Bank, reversing Pasno vs. Ravina, we held:
The ruling in Pasno v. Ravina not having been reiterated in any other case, we have carefully reexamined the same,
and after mature deliberation have reached the conclusion that the dissenting opinion is more in conformity with
reason and law. Of the three alternative courses that section 7, Rule 87 (now Rule 86), offers the mortgage creditor, to
wit, (1) to waive the mortgage and claim the entire debt from the estate of the mortgagor as an ordinary claim; (2)
42
foreclose the mortgage judicially and prove any deficiency as an ordinary claim; and (3) to rely on the mortgage
exclusively, foreclosing the same at any time before it is barred by prescription, without right to file a claim for any
deficiency, the majority opinion in Pasno v. Ravina, in requiring a judicial foreclosure, virtually wipes out the third
alternative conceded by the Rules to the mortgage creditor, and which would precisely include extra-judicial
foreclosures by contrast with the second alternative.
The plain result of adopting the last mode of foreclosure is that the creditor waives his right to recover any deficiency
from the estate. Following the Perez ruling that the third mode includes
extrajudicial foreclosure sales, the result of extrajudicial foreclosure is that the creditor waives any further deficiency
claim. x x x.51 (Emphases and underscoring supplied; italics in the original)
Case law states that absent such qualifying or restrictive words to indicate the exclusivity of the agreed forum, the
stipulated place should only be as an additional, not a limiting venue.56 As a consequence, the stipulated venue and
that provided under Act No. 3135 can be applied alternatively.
In particular, Section 2 of Act No. 3135 allows the foreclosure sale to be done within the province where the property
to be sold is situated, viz.:
SEC. 2. Said sale cannot be made legally outside of the province which the property sold is situated; and in case the
place within said province in which the sale is to be made is subject to stipulation, such sale shall be made in said
place or in the municipal building of the municipality in which the property or part thereof is situated. (Italics
supplied) ..

To obviate any confusion, the Court observes that the operation of Act No. 3135 does not entirely discount the
application of Section 7, Rule 86, or vice-versa. Rather, the two complement each other within their respective
spheres of operation. On the one hand, Section 7, Rule 86 lays down the options for the secured creditor to claim
against the estate and, according to jurisprudence, the availment of the third option bars him from claiming any
deficiency amount. On the other hand, after the third option is chosen, the procedure governing the manner in which
the extra-judicial foreclosure should proceed would still be governed by the provisions of Act No. 3135.Simply put,
Section 7, Rule 86 governs the parameters and the extent to which a claim may be advanced against the estate,
whereas Act No. 3135sets out the specific procedure to be followed when the creditor subsequently chooses the third
option – specifically, that of extra-judicially foreclosing real property belonging to the estate. The application of the
procedure under Act No. 3135 must be concordant with Section 7, Rule 86 as the latter is a special rule applicable to
claims against the estate, and at the same time, since Section 7, Rule 86 does not detail the procedure for extra-
judicial foreclosures, the formalities governing the manner of availing of the third option – such as the place where
the application for extra-judicial foreclosure is filed, the requirements of publication and posting and the place of sale
– must be governed by Act No. 3135.
In this regard, since the auction sale was conducted in Ormoc City, which is within the territorial jurisdiction of the
Province of Leyte, then the Court finds sufficient compliance with the above-cited requirement.
All told, finding that the extra-judicial foreclosure subject of this case was properly conducted in accordance with the
formalities of Act No. 3135,the Court upholds the same as a valid exercise of respondent's third option under Section
7, Rule 86. To reiterate, respondent cannot, however, file any suit to recover any deficiency amount since it
effectively waived its right thereto when it chose to avail of extra-judicial foreclosure as jurisprudence instructs.
WHEREFORE, the petition is PARTLY GRANTED. The complaint for the recovery of the deficiency amount after
extra-judicial foreclosure filed by respondent Manila Banking Corporation is hereby DISMISSED. The extra-judicial
foreclosure of the mortgaged properties, however, stands.
SO ORDERED.

In this case, respondent sought to extra-judicially foreclose the mortgage of the properties previously belonging to ESTELA M. PERLAS-BERNABE
Sps. Maglasang (and now, their estates) and, therefore, availed of the third option. Lest it be misunderstood, it did not Associate Justice
exercise the first option of directly filing a claim against the estate, as petitioners assert, since it merely notified 52 the
probate court of the outstanding amount of its claim against the estate of Flaviano and that it was currently
restructuring the account.53 Thus, having unequivocally opted to exercise the third option of extra-judicial foreclosure
under Section 7, Rule 86, respondent is now precluded from filing a suit to recover any deficiency amount as earlier
discussed.

As a final point, petitioners maintain that the extra-judicial foreclosure of the subject properties was null and void
since the same was conducted in violation of the stipulation in the real estate mortgage contract stating that the
auction sale should be held in the capital of the province where the properties are located, i.e., the Province of Leyte.

The Court disagrees.

As may be gleaned from the records, the stipulation under the real estate mortgage 54 executed by Sps. Maglasang
which fixed the place of the foreclosure sale at Tacloban City lacks words of exclusivity which would bar any other
acceptable for a wherein the said sale may be conducted, to wit:

It is hereby agreed that in case of foreclosure of this mortgage under Act 3135, the auction sale shall be held at the
capital of the province if the property is within the territorial jurisdiction of the province concerned, or shall be held
in the city if the property is within the territorial jurisdiction of the city concerned; x x x.55

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