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MODULE 8
74. Marilag v. Martinez, G.R. No. 201892, 22 July 2015 3
75. Bacharach Motor Co., Inc. v. Icarañgal, 68 Phil. 287 (1939) 4
76. Bulatao v. Estonactoc, G.R. No. 235020, December 10, 2019 5
77. Huerta Alba Resort, Inc. v. Court of Appeals, G.R. No. 128567, 1 September 2000 6
78. Cuyco v. Cuyco, G.R. No. 168736, 19 April 2006 7
79. Rehabilitation Finance Corporation v,. Alto Surety & Insurance Co., G.R. No. L- 14303,
24 March 1960 8
80. Baysa v. Plantilla, G.R. No. 159271, 13 July 2015 9
81. Sulit v. Court of Appeals, G.R. No. 119247, 17 February 1997 10
82. Marilag v. Martinez, G.R. No. 201892, 22 July 2015 11
83. Spouses Tumon v. Radiowealth Finance Co., Inc., G.R. No. 243999, March 18, 2021 12
84. Agarrado v. Librando-Agarrado, G.R No. 212413, 6 June 2018 13
85. Heirs of Ernesto Morales v. Agustin, G.R. No. 224849, 6 June 2018 14
86. De Pedro v. Romasan Development Corporation, G.R. No. 194751, 26 November 2014
15
87. Agarrado v. Librando-Agarrado, G.R No. 212413, 6 June 2018 16
88. Ignacio v. Reyes, G.R. No. 213192, 12 July 2017 17
89. Quilatan v. Heirs of Quilatan, G.FR. No. 183059, 28 August 2009 18
90. Heirs of Panfilo F. Abalos v. Bucal, G.R. No. 156224, 19 February 2008 19
91. Maglucot-Aw v. Maglucot, G.R. No. 132518, 28 March 2000 20
92. De Mesa v. Court of Appeals, G.R. No. 109387, 25 April 1994 21
93. Dadizon v. Bernades, G.R. No. 172367, 5 June 2009 22
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74. Marilag v. Martinez, G.R. No. 201892, 22 July 2015
RENDON

TOPIC
Nature of Foreclosure
DOCTRINE
In loan contracts secured by a real estate mortgage, the rule is that the creditor-mortgagee
has a single cause of action against the debtor- mortgagor, i.e. , to recover the debt,
through the filing of a personal action for collection of sum of money or the institution of a
real action to foreclose on the mortgage security. The two remedies are alternative, not
cumulative or successive, and each remedy is complete by itself.
FACTS
Rafael failed to file his answer hence, was declared in default. After an ex parte
presentation of petitioner's evidence, the RTC-Imus issued a Decision declaring the
stipulated 5% monthly interest to be usurious and reducing the same to 12% per annum
(p.a.). Accordingly, it ordered Rafael to pay petitioner the amount of P229,200.00,
consisting of the principal of P160,000.00 and accrued interest of P59,200.00 from July
30, 1992 to September 30, 1995. Records do not show that this Decision had already
attained finality.

Meanwhile, prior to Rafael's notice of the above decision, respondent agreed to pay
Rafael's obligation to petitioner which was pegged at P689,000.00. After making a total
payment of P400,000.00, he executed a promissory note in the amount of P289,000.00,
for the balance. After learning of the January 30, 1998 Decision, respondent refused to
pay the amount covered by the subject PN despite demands, prompting petitioner to file a
complaint for sum of money and damages before the court a quo on July 2, 1998,
docketed as Civil Case No. 98-0156 (collection case).

Respondent prayed for the dismissal of the case and contends that petitioner has no
cause of action against him. He averred that he has fully settled Rafael's obligation and
that he committed a mistake in paying more than the amount due under the loan, i.e., the
amount of P229,200.00 as adjudged by the RTC- Imus in the judicial foreclosure case
which, thus, warranted the return of the excess payment.

ISSUE/S
Whether the collection case should prosper
RULING
No. In loan contracts secured by a real estate mortgage, the rule is that the
creditor-mortgagee has a single cause of action against the debtor- mortgagor, i.e. , to
recover the debt, through the filing of a personal action for collection of sum of money or
the institution of a real action to foreclose on the mortgage security. The two remedies are
alternative, not cumulative or successive, and each remedy is complete by itself. Thus, if
the creditor-mortgagee opts to foreclose the real estate mortgage, he waives the action for
the collection of the unpaid debt, except only for the recovery of whatever deficiency may
remain in the outstanding obligation of the debtor-mortgagor after deducting the bid price
in the public auction sale of the mortgaged properties. Accordingly, a deficiency judgment
shall only issue after it is established that the mortgaged property was sold at public
auction for an amount less than the outstanding obligation.
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In the present case, records show that petitioner, as creditor- mortgagee, instituted an
action for judicial foreclosure pursuant to the provisions of Rule 68 of the Rules of Court in
order to recover on Rafael's debt. In light of the foregoing discussion, the availment of
such remedy thus bars recourse to the subsequent filing of a personal action for collection
of the same debt, in this case, under the principle of litis pendentia, considering that the
foreclosure case only remains pending as it was not shown to have attained finality. In
fine, the dismissal of the collection case is in order. Considering, however, that
respondent's claim for return of excess payment partakes of the nature of a compulsory
counterclaim and, thus, survives the dismissal of petitioner's collection suit, the same
should be resolved based on its own merits and evidentiary support.
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75. Bacharach Motor Co., Inc. v. Icarañgal, 68 Phil. 287 (1939)
REYES

TOPIC
Foreclosure of Real Estate Mortgage (Nature and Definition; Compare with Extrajudicial
Foreclosure – Act No. 3135)
DOCTRINE

In the absence of express statutory provisions, a mortgage creditor may institute against
the mortgage debtor either a personal action for debt or real action to foreclose the
mortgage. In other words, he may pursue either of the two remedies, but not both. By such
election, his cause of action can by no means be impaired, for each of the two remedies is
complete in itself.

FACTS
On June 11 , 1930, defendant herein, Esteban Icarañgal, with one Jacinto Figueroa, for
value received, executed in favor of the plaintiff, Bachrach Motor Co., Inc., a promissory
note for one thousand six hundred fourteen pesos (P1,614), and in security for its
payment, said Esteban Icarañgal executed a real estate mortgage on a parcel of land in
Pañgil, Laguna, which was duly registered on August 5, 1931, in the registry of deeds of
the Province of Laguna. Thereafter, promissors defaulted in the payment of the agreed
monthly installments; wherefore, plaintiff instituted in the Court of First Instance of Manila
an action for the collection of the amount due on the note. Judgment was there rendered
for the plaintiff. A writ of execution was subsequently issued and, in pursuance thereof, the
provincial sheriff of Laguna, at the indication of the plaintiff, levied on the properties of the
defendants, including that which has been mortgaged by Esteban Icarañgal in favor of the
plaintiff. The other defendant herein, Oriental Commercial Co., Inc., interposed a
third-party claim, alleging that by virtue of a writ of execution issued in civil case No. 88253
of the municipal court of the City of Manila, the property which was the subject of the
mortgage and which has been levied upon by the sheriff, had already been acquired by it
at the public auction on May 12, 1933. By reason of this third-party claim, the sheriff
desisted from the sale of the property and, in consequence thereof, the judgment rendered
in favor of the plaintiff remained unsatisfied. Whereupon, plaintiff instituted an action to
foreclose the mortgage.

The trial court dismissed the complaint and, from the judgment thus rendered plaintiff took
the present appeal.

ISSUE/S

Whether or not plaintiff-appellant is barred from foreclosing the real estate mortgage after
it has elected to sue and obtain a personal judgment against the defendant-appellee on
the promissory note for the payment of which the mortgage was constituted as a security.

RULING

Yes. The Court ruled in the affirmative.

For non-payment of a note secured by mortgage, the creditor has a single cause of action
against the debtor. This single cause of action consists in the recovery of the credit with
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execution of the security. In other words, the creditor in his action may make two
demands, the payment of the debt and the foreclosure of his mortgage. But both demands
arise from the same cause, the non-payment of the debt, and, for that reason, they
constitute a single cause of action. Though the debt and the mortgage constitute separate
agreements, the latter is subsidiary to the former, and both refer to one and the same
obligation. Consequently, there exists only one cause of action for a single breach of that
obligation. Plaintiff, then, by applying the rule above stated, cannot split up his single
cause of action by filing a complaint for payment of the debt, and thereafter another
complaint for foreclosure of the mortgage. If he does so, the filing of the first complaint will
bar the subsequent complaint. By allowing the creditor to file two separate complaints
simultaneously or successively, one to recover his credit and another to foreclose his
mortgage, we will, in effect, be authorizing him plural redress for a single breach of
contract at so much cost to the courts and with so much vexation and oppression to the
debtor.

In the absence of express statutory provisions, a mortgage creditor may institute against
the mortgage debtor either a personal action for debt or real action to foreclose the
mortgage. In other words, he may pursue either of the two remedies, but not both. By such
election, his cause of action can by no means be impaired, for each of the two remedies is
complete in itself. Thus, an election to bring personal action will leave open to him all the
properties of the debtor for attachment and execution, even including the mortgaged
property itself. And, if he waives such personal action and pursues his remedy against the
mortgaged property, an unsatisfied judgment thereon would still give him the right to sue
for a deficiency judgment, in which case, all the properties of the defendant, other than the
mortgaged property, are again open to him for the satisfaction of the deficiency. In either
case, his remedy is complete, his cause of action undiminished, and any advantages
attendant to the pursuit of one or the other remedy are purely accidental and are all under
his right of election. On the other hand, a rule that would authorize the plaintiff to bring a
personal action against the debtor and simultaneously or successively another action
against the mortgaged property, would result not only in multiplicity of suits so offensive to
justice and obnoxious to law and equity, but also in subjecting the defendant to the
vexation of being sued in the place of his residence of the plaintiff, and then again in the
place where the property lies.

In arriving at the foregoing conclusion, in cases like the one at bar, the creditor can pursue
his remedies against the note and against the security concurrently or successively. The
reason given for the rule seems to be that the causes of action in the two instances are
not the same, one being personal and the other, real. But the creditor's cause of action is
not only single but indivisible, although the agreements of the parties, evidenced by the
note and the deed of mortgage, may give rise to different remedies. The cause of action
should not be confused with the remedy created for its enforcement. And considering that
one of the two remedies available to the creditor is as complete as the other, he cannot be
allowed to pursue both in violation of those principles of procedure intended to secure
simple, speedy and unexpensive administration of justice.
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76. Bulatao v. Estonactoc, G.R. No. 235020, December 10, 2019
SALE

TOPIC
Foreclosure of Mortgage
DOCTRINE

While Article 493 of the Civil Code may not squarely cover the situations
wherein a co-owner, without the consent of the other co-owners, alienate,
assign or mortgage: (1) the entire co-owned property; (2) a specific portion of
the co-owned property; (3) an undivided portion less than the part pertaining
to the disposing co-owner; and (4) an undivided portion more than the part
pertaining to the disposing co-owner, the principle of estoppel bars the
disposing co-owner from disavowing the sale to the full extent of his undivided
or pro-indiviso share or part in the co-ownership, subject to the outcome of
the partition, which, using the terminology of Article 493, limits the effect of
the alienation or mortgage to the portion that may be allotted to him in the
division upon termination of the co-ownership.

FACTS

Zenaida executed a Deed of Mortgage of Real Property [(DMRP)] in favor of

Atty. Bulatao covered a parcel of land as security for a loan in the amount of
P200,000.00. When Zenaida defaulted in her obligation, Atty. Bulatao
foreclosed the mortgage and petitioned the court for the sale of the subject
property in a public auction. The Notice of Sale on Extra Judicial Foreclosure of
Property/ies was issued by the Office of the Clerk of Court of the trial court.

Because of the impending sale of the subject property, Zenaida filed a

Complaint for Injunction, Annulment of Deed of Real Estate Mortgage and
Damages against Atty. Bulatao, Atty. Diosdado L. Doctolero as Clerk of Court
and Ex-Officio Sheriff of the RTC of Agoo, La Union, and Melchor A. Mabutas,
as Sheriff of the Office of the Clerk of Court of the same court seeking to
declare the [DMRP] as illegal, inexistent and null and void, and to make the
contract unenforceable. She asserted that [Atty. Bulatao], in grave abuse of
her rights, took advantage of her financial distress and urgent financial needs
by imposing in the [DMRP] an interest of five percent (5%) per month which is
excessive, iniquitous, unconscionable, exorbitant and contrary to public policy,
rendering the contract null and void.

Likewise raised in the complaint that the agreement is invalid because of the
following: (a) it failed to mention that the subject property is registered under
Transfer Certificate of Title No. T-6288-part as indicated in the Real Property
Field Appraisal and Assessment Sheet and Tax Declaration No. 020-00304; (b)
the mortgage is not registered and therefore not annotated in the title of the
subject property; (c) it falsely indicated that Zenaida is the registered owner of
the subject property despite the fact that it is co-owned by Zenaida with her
late husband, Adolfo T. Estonactoc; and that it has not yet been settled and
transferred in favor of their son, Jose Rafael C. Estonactoc; and (d) Zenaida
did not appear before the notary public who notarized the [DMRP].

ISSUE/S
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1) Whether or not the entire mortgage is void.

2) Whether or not the interest is iniquitous.

RULING

1) No. The invalidity of the 5% per month interest rate does not affect the
obligation of Zenaida to repay her loan of P200,000.00 from Atty.
Bulatao. Based on the recent en banc case of Lara's Gifts & Decors, Inc.
v. Midtown Industrial Sales, Inc., the applicable interest is the
BSP-prescribed rate of 12% per annum from the execution of the DMRP
on June 3, 2008, wherein the parties agreed to the payment of interest,
to June 30, 2013 and at the rate of 6% per annum from July 1, 2013
until full payment. Also, taking into account Article 2212 of the Civil
Code, which provides that "interest due shall earn legal interest from
the time it is judicially demanded, although the obligation may be silent
upon this point," the interest due on the principal amount (computed as
mentioned above) accruing as of judicial demand (the filing of the
counterclaim, in this case) shall separately earn interest at the rate
prescribed by the BSP from time of judicial demand up to full payment.

As to the DMRP, the CA recognized Zenaida as a co-owner of the mortgaged

property and as such, she could validly convey through sale or mortgage the
portion belonging to her. Thus, the CA ruled that "the Real Estate Mortgage in
favor of Atty. Bulatao is not entirely rendered void as its validity is limited only
to the portion belonging to Zenaida."

This ruling was reiterated in Paulmitan v. Court of Appeals, where the Court
therein ruled that the sale of the property owned in common by one co-owner
without the consent of the others did not give to the buyer ownership over the
entire land but merely transferred to the buyer the undivided share of the
seller, making the buyer the co-owner of the land in question.

The Court's reliance on Article 493 of the Civil Code to justify the validity of the
sale of the property owned in common by a co-owner without the consent of
the other co-owners insofar as the undivided share of the co­-owner seller is
concerned has to be reconciled with the ruling of the Court en banc through
Justice J.B.L. Reyes the case of Estoque v. Pajimula.

Estoque characterizes the contract entered into by the disposing co­-owner as

"ineffective, for lack of power in the vendor to sell the specific portion
described in the deed" and makes room for a subsequent ratification of the
contract by the other co-owners or validation in case the disposing co-­owner
subsequently acquires the undivided or pro-indiviso interests of the other
co-owners. Thus, the subsequent ratification or acquisition will validate and
make the contract fully effective as of the date the contract was entered into
pursuant to Article 1396 of the Civil Code.

While Article 493 of the Civil Code may not squarely cover the situations
wherein a co-owner, without the consent of the other co-owners, alienate,
assign or mortgage: (1) the entire co-owned property; (2) a specific portion of
the co-owned property; (3) an undivided portion less than the part pertaining
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to the disposing co-owner; and (4) an undivided portion more than the part
pertaining to the disposing co-owner, the principle of estoppel bars the
disposing co-owner from disavowing the sale to the full extent of his undivided
or pro-indiviso share or part in the co-ownership, subject to the outcome of
the partition, which, using the terminology of Article 493, limits the effect of
the alienation or mortgage to the portion that may be allotted to him in the
division upon termination of the co-ownership.

Given the foregoing, the CA was correct when it limited the validity of the
DMRP only to the portion belonging to Zenaida. Unfortunately, the dispositive
portion reflected differently: "The Deed of Mortgage of Real Property dated
June 4, 2008 is DECLARED as VOID only with respect to the share of deceased
Adolfo T. Estonactoc." Accordingly, a modification thereof is warranted to
reflect that it is valid only to the share pertaining to Zenaida.

2) Yes. Atty. Bulatao's argument of voluntariness in his and Zenaida's

agreement on the 5% monthly interest cannot be sustained.

As emphasized in Castro v. Tan, the willingness of the parties to enter into a

relation involving an unconscionable interest rate is inconsequential to the
validity of the stipulated rate

Given that the agreement on the 5% monthly interest is void for being
unconscionable, the interest rate prescribed by the Bangko Sentral ng Pilipinas
(BSP) for loans or forbearances of money, credits or goods will be the
surrogate or substitute rate not only for the one-year interest period agreed
upon but for the entire period that the loan of Zenaida remains unpaid.
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77. Huerta Alba Resort, Inc. v. Court of Appeals, G.R. No. 128567, 1 September 2000
SANTOS

TOPIC
Foreclosure of Real Estate Mortgage: Stages/Phases
DOCTRINE
Where a party failed to assert a right to redeem under the Section 78 of R.A. 337 in
several crucial stages of the proceedings invoke, it is too late in the day for it to
subsequently invoke such right in opposition to a motion for issuance of a writ of
possession after confirmation by the court of the foreclosure sale and the registration of
the certificate of sale.

The failure of petitioner to seasonably assert its alleged right under Section 78 of R.A. No.
337 precludes it from so doing at this late stage of the case. Estoppel may be successfully
invoked if the party fails to raise the question in the early stages of the proceedings. Thus,
a party to a case who failed to invoke his claim in the main case, while having the
opportunity to do so, will be precluded, subsequently, from invoking his claim, even if it
were true, after the decision has become final, otherwise the judgment may be reduced to
a mockery and the administration of justice may be placed in disrepute.

FACTS
Private respondent instituted Civil Case No. 89-5424 as mortgagee-assignee of a loan
amounting to P8.5 million obtained by petitioner from Intercon, in whose favor petitioner
mortgaged the aforesaid parcels of land as security for the said loan.The trial court came
out with its decision granting herein private respondent Syndicated Management Group
Inc’s (SMGI) complaint for judicial foreclosure of mortgage.

Petitioner appealed the decision of the trial court to the Court of Appeals which dismissed
the case on the ground of late payment of docket fees. Dissatisfied with the dismissal,
petitioner came to the Court via a petition for certiorari, which the Court resolved to
dismiss on the finding that the Court of Appeals erred not in dismissing the appeal of
petitioner.

On July 4, 1994, private respondent filed with the trial court of origin a motion for execution
of the Decision in Civil Case No. 89-5424. The said motion was granted. Accordingly, a
writ of execution was issued and, a Notice of Levy and Execution was issued by the
Sheriff concerned, who issued on August 1, 1994 a Notice of Sheriff’s Sale for the auction
of subject properties on September 6, 1994.

On August 23, 1994, petitioner filed with the same trial court an Urgent Motion to Quash
and Set Aside Writ of Execution ascribing to it grave abuse of discretion in issuing the
questioned Writ of Execution which was denied opining that subject judgment had become
final and executory. Challenging the said order granting execution, petitioner filed once
more with the Court of Appeals another petition for certiorari and prohibition with
preliminary injunction.

On September 6, 1994, the scheduled auction sale of subject pieces of properties

proceeded and the private respondent was declared the highest bidder. Thus, private
respondent was awarded subject bidded pieces of property. The covering Certificate of
Sale issued in its favor was registered with the Registry of Deeds on October 21, 1994.

On September 7, 1994, petitioner presented an Ex-Parte Motion for Clarification asking

the trial court to “clarify” whether or not the twelve (12) month period of redemption for
ordinary execution applied in the case.
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Meanwhile, the Court of Appeals resolved the issue raised by Huerta Alba holding that the
150-day period within which petitioner may redeem subject properties should be computed
from the date petitioner was notified of the Entry of Judgment and that the same has
already expired.

On May 2, 1995, in opposition to private respondent’s Motion for Issuance of Writ of

Possession, petitioner filed a “Motion to Compel Private Respondent to Accept
Redemption.” It was the first time petitioner ever asserted the right to redeem subject
properties under Section 78 of R.A. No. 337, the General Banking Act; theorizing that the
original mortgagee, being a credit institution, its assignment of the mortgage credit to
petitioner did not remove petitioner from the coverage of Section 78 of R.A.No. 337.
Therefore, it should have the right to redeem subject properties within one year from
registration of the auction sale, theorized the petitioner, which concluded that in view of its
“right of redemption,” the issuance of the titles over subject parcels of land to the private
respondent was irregular and premature.

The trial court then denied the private respondent’s motion for a writ of possession,
opining that Section 78 of the General Banking Act was applicable but this was reversed
on appeal. Hence, the present petition.

ISSUE/S
Whether or not the petitioner seasonably invoked its asserted right under Section 78 of R.A. No.
337 to redeem subject properties
RULING

No. Petitioner failed to seasonably invoke its purported right under Section 78 of R.A. No.
337.

Petitioner avers in its petition that the Intercon, predecessor in interest of the private
respondent, is a credit institution, such that Section 78 of Republic Act No. 337 should
apply in this case. Stated differently, it is the submission of petitioner that it should be
allowed to redeem subject properties within one year from the date of sale as a result of
the foreclosure of the mortgage constituted thereon.

Petitioner theorizes that it invoked its right in “timely fashion” that is, after confirmation by
the court of the foreclosure sale, and within one (1) year from the date of registration of the
certificate of sale. Indeed, the facts show that it was only on May 2, 1995 when, in
opposition to the Motion for Issuance of Writ of Possession, did petitioner file a Motion to
Compel Private Respondent to Accept Redemption, invoking for the very first time its
alleged right to redeem subject properties under to Section 78 of R.A. No. 337.

In light of the aforestated facts, it was too late in the day for petitioner to invoke a right to
redeem under Section 78 of R.A. No. 337. Petitioner failed to assert a right to redeem
in several crucial stages of the proceedings.

For instance, on September 7, 1994, when it filed with the trial court an Ex-parte Motion
for Clarification, petitioner failed to allege and prove that private respondent’s predecessor
in interest was a credit institution and therefore, Section 78 of R.A. No. 337 was
applicable. Petitioner merely asked the trial court to clarify whether the sale of subject
properties was execution sale or judicial foreclosure sale.

So also, when it presented before the trial court an Exception to the Order and Motion to
Set Aside Said Order dated October 13, 1994, petitioner again was silent on its alleged
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right under Section 78 of R.A. No. 337, even as it failed to show that private respondent’s
predecessor in interest is a credit institution. Petitioner just argued that the aforementioned
Order materially altered the trial court’s Decision of April 30, 1992.

Then, too, nothing was heard from petitioner on its alleged right under Section 78 of R.A.
No. 337 and of the predecessor in interest of private respondent as a credit institution,
when the trial court came out with an order on February 10, 1995, confirming the sale of
subject properties in favor of private respondent and declaring that all pending incidents
with respect to the Order dated September 26, 1994 had become moot and academic.

Similarly, when petitioner filed on February 27, 1995 a Motion for Clarification with the
Court of Appeals, seeking “clarification” of the date of commencement of the one (1) year
redemption period for the subject properties, petitioner never intimated any alleged right
under Section 78 of R.A. No. 337 nor did it invite attention to its present stance that private
respondent’s predecessor-in-interest was a credit institution.

Indeed, if petitioner did really act in good faith, it would have ventilated before the Court of
Appeals its pretended right under Section 78 of R.A. No. 337 but it never did so.

At the earliest opportunity, when it filed its answer to the complaint for judicial foreclosure,
petitioner should have averred in its pleading that it was entitled to the beneficial
provisions of Section 78 of R.A. No. 337; but again, petitioner did not make any such
allegation in its answer.

The claim that petitioner is entitled to the beneficial provisions of Section 78 of R.A. No.
337·since private respondent’s predecessor-ininterest is a credit institution·is in the nature
of a compulsory counterclaim which should have been averred in petitioner’s answer to
the complaint for judicial foreclosure. The failure of petitioner to seasonably assert its
alleged right under Section 78 of R.A. No. 337 precludes it from so doing at this late stage
of the case. Estoppel may be successfully invoked if the party fails to raise the question in
the early stages of the proceedings. Thus, a party to a case who failed to invoke his claim
in the main case, while having the opportunity to do so, will be precluded, subsequently,
from invoking his claim, even if it were true, after the decision has become final, otherwise
the judgment may be reduced to a mockery and the administration of justice may be
placed in disrepute.
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78. Cuyco v. Cuyco, G.R. No. 168736, 19 April 2006
VERTULFO

TOPIC

Foreclosure of REM - Stages/Phases

DOCTRINE

According to Section 2, Rule 68 of the Rules of Court, the mortgaged property may be
charged not only for the mortgage debt or obligation but also for the interest, other
charges and costs approved by the court.

FACTS

Petitioners Spouses Adelina and Feliciano Cuyco, obtained a loan in the amount of
P1,500,000.00 from respondent Spouses Renato and Filipina Cuyco, payable within one
year at 18% interest per annum, and secured by a Real Estate Mortgage over a parcel of
land. Subsequently, petitioners obtained additional loans from the respondents in the
aggregate amount of P1,250,000.00. Petitioners made payments amounting to
P291,700.00 but failed to settle their outstanding loan obligations. Thus, on September 10,
1997, respondents filed a complaint for foreclosure of mortgage with the RTC of Quezon
City. They alleged that petitioners’ loans were secured by the real estate mortgage and
that as of August 31, 1997, their indebtedness amounted to P6,967,241.14 (inclusive of
interests).

In their answer, petitioners admitted their loan obligations but argued that only the original
loan of P1,500,000.00 was secured by the real estate mortgage at 18% per annum and
that there was no agreement that the same will be compounded monthly. On January 27,
1999, the RTC rendered judgment in favor of the respondents. Petitioners appealed to the
CA reiterating their previous claim that only the amount of P1,500,000.00 was secured by
the real estate mortgage. On November 5, 2003, the CA partially granted the petition and
modified the RTC decision insofar as the amount of the loan obligations secured by the
real estate mortgage. It held that by express intention of the parties, the real estate
mortgage secured the original P1,500,000.00 loan and the subsequent loans of
P150,000.00 and P500,000.00 obtained on July 1, 1992 and September 5, 1992,
respectively.

Further, the CA held that to discharge the real estate mortgage, payment only of the
principal and the stipulated interest of 18% per annum is sufficient as the mortgage
document does not contain a stipulation that the legal interest on the stipulated interest
due, attorney's fees, and costs of suit must be paid first before the same may be
discharged.

ISSUE/S

Whether or not the CA is correct in holding that payment only of the principal and
stipulated interest is sufficient to discharge the REM

RULING
The Court ruled in the negative

Section 2, Rule 68 of the Rules of Court provides:

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SEC. 2. Judgment on foreclosure for payment or sale. - If upon the trial in such action the
court shall find the facts set forth in the complaint to be true, it shall ascertain the amount
due to the plaintiff upon the mortgage debt or obligation, including interest and other
charges as approved by the court, and costs, and shall render judgment for the sum so
found due and order that the same be paid to the court or to the judgment obligee within a
period of not less than ninety (90) days nor more than one hundred twenty (120) days
from the entry of judgment, and that in default of such payment the property shall be sold
at public auction to satisfy the judgment.

Indeed, the above provision of the Rules of Court provides that the mortgaged property
may be charged not only for the mortgage debt or obligation but also for the interest, other
charges and costs approved by the court. Thus, to discharge the real estate mortgage,
petitioners must pay the respondents (1) the total amount due, as computed in
accordance with the formula indicated above, that is, the principal loan of P1,500,000.00,
the stipulated interest of 18%, the interest on the stipulated interest due of 12% computed
from the filing of the complaint until finality of the decision less partial payments made, (2)
the 12% legal interest on the total amount due from finality until fully satisfied, (3) the
reasonable attorney's fees of P25,000.00 and (4) the costs of suit, within the period
specified by the Rules. Should the petitioners default in the payment thereof, the property
shall be sold at public auction to satisfy the judgment.
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79. Rehabilitation Finance Corporation v,. Alto Surety & Insurance Co., G.R. No. L- 14303,
24 March 1960
ABASTA

TOPIC
Foreclosure of Real Estate Mortgage: Stages/Phases
DOCTRINE

An interest in the mortgaged property acquired subsequent to the first mortgage may be
divested or barred only by making the holder thereof a party to the proceedings to
foreclose. While as a general rule, the junior encumbrancer is not a necessary party to a
suit to foreclose by a senior mortgagee, it is always proper and prudent to join him as a
defendant, both to give an opportunity to defend and to extinguish his right of redemption.

FACTS

Eustaquio Palma is an owner of a parcel of land in Camarines Sur. He used such land in
executing a first mortgage to secure a loan of P20, 000.00, in favor of the Rehabilitation
Finance Corporation (RFC), and subsequently, with the consent of the RFC, a second
mortgage over the same property, in favor of Alto Surety & Insurance Company, Inc. (Alto).
Both mortgages were duly registered in the Office of the Register of Deeds and annotated.

Upon failure of the mortgagor to settle the P20, 000.00 loan on its maturity, RFC
foreclosed the mortgage extrajudicially under Act 3135 as authorized in the deed of
mortgage and the property was sold in public auction under the direction of the Provincial
Sheriff in favor of mortgagee RFC as the highest bidder.

Six months later, mortgagor Palma, transferred and conveyed all his rights, title and
interest in the mortgaged property to the spouses Anacleto Trinidad and Rosa S. de
Trinidad, the assignees assuming the obligation of paying the repurchase price of the
auctioned property. Within the year of redemption, the assignee-spouses and the RFC
executed a "Deed of Resale" whereby the mortgaged property was resold and reconveyed
in favor of the "redemptioners, their heirs, assignees and successors in interest". However,
instead of paying the whole redemption price, only P5,500 was paid on hand and the sum
of P21,505.11, balance of the total indebtedness including 6% interest was agreed to be
paid in ten annual amortizations.

Alto, as junior encumbrancer, wrote the RFC inquiring as to the actual status of the
property subject to redemption. RFC advised Alto that the auctioned property had already
been sold to the Trinidad spouses "under a deed of redemption on the installment plan".

This notwithstanding, the RFC executed an affidavit consolidating ownership on the

purchased property, stating therein that the period of redemption had expired without the
debtor or any lien-holder thereon exercising said right of redemption or repurchase. This
affidavit, together with the deed of sale evidencing its (RFC's) purchase of the property at
public auction which RFC was able to secure the cancellation of Palma’s TCT, and the
issuance of a new title in its name (T.C.T. No. 1155). The second mortgage in favor of Alto,
however, was carried and annotated at the back of the new title.

RFC sought to cancel the annotation alleging that with the consolidation and transfer to it
as the first mortgagee of the mortgagee's rights on the property, the junior encumbrancer's
lien on the same property had ceased.
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Alto opposed the petition contending that with the execution of the Deed of Resale
between RFC and the spouses Anacleto Trinidad and Rosa S. de Trinidad, assignees of
the mortgagor, the mortgaged property

had been completely released from the first mortgage and the second mortgage had been
automatically transformed into a first lien on the property.

RTC denied the petition for cancellation. RFC appealed to the Court of Appeals. The case
reached to SC via certiorari and pure questions of law are raised.

ISSUE/S

Whether the annotation of the second mortgage in favor of the oppositor on the back of
TTCT No. 1155 was made in accordance with law.

RULING

YES. The court a quo acted correctly in denying the petition to cancel the annotation of the
second mortgage at the back of the title.

SC held that the relief afforded by Section 112 of the Land Registration Act may only be
allowed if "there is a unanimity among the parties, or there is no adverse claim or serious
objection on the part of any party in interest; otherwise, the case becomes controversial
and should be threshed out in an ordinary case. Section 112 authorizes only alterations
which do not impair rights recorded in the decree, or alterations which, if they do prejudice
such rights, are consented to by all parties concerned or alterations to correct obvious
mistakes. The proceedings provided in the Land Registration Act being summary in
nature, they are inadequate for the litigation of issues properly pertaining to ordinary civil
actions, thus, questions involving ownership of or title to a real property, or relating to the
validity or cancellation or discharge of a mortgage should properly be ventilated in an
ordinary proceeding."

Granting arguendo that the extrajudicial foreclosure proceeding instituted by the RFC is
proper and justified, since the junior encumbrancer was admittedly not notified thereof, the
foreclosure of the first mortgage cannot be considered to have terminated or extinguished
the rights of said junior encumbrancer over the property.

An interest in the mortgaged property acquired subsequent to the (first) mortgage may be
divested or barred only by making the holder thereof a party to the proceedings to
foreclose.

While as a general rule, the junior encumbrancer is not a necessary party to a suit to
foreclose by a senior mortgagee, it is always proper and prudent to join him as a
defendant, both to give an opportunity to defend and to extinguish his right of redemption.

When a senior mortgagee forecloses and becomes the purchaser at his own foreclosure
sale, but the holder of a subsequent mortgage or other subordinate interest has not been
joined or has been eliminated from the proceeding, equity will keep the senior mortgage
alive against the subsequent encumbrance and the senior mortgagee will be entitled to an
action de novo to reforeclose the mortgage as to the omitted persons.

In view of the foregoing, the decision appealed from denying the first mortgagee's petition
to cancel the annotation of the second mortgage at the back of Transfer Certificate of Title
No. 1155, is hereby affirmed, without prejudice to the proper adjudication, in an
appropriate ordinary action, of the respective rights of the parties herein as a result of the
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execution of the Deed of Resale, Exhibit J. The petitioner-appellant shall pay the costs. It
is so ordered.
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80. Baysa v. Plantilla, G.R. No. 159271, 13 July 2015
ALLADA

TOPIC

DOCTRINE

FACTS

ISSUE/S

RULING
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81. Sulit v. Court of Appeals, G.R. No. 119247, 17 February 1997
ANGELES

TOPIC
Foreclosure of Real Estate Mortgage : Stages/Phases
DOCTRINE

Act 3135 thus explicitly authorizes the purchaser in a foreclosure sale to apply for a writ of
possession during the redemption period by filing an ex parte motion under oath for
that purpose in the corresponding registration or cadastral proceeding in the case of
property with Torrens Title. Upon filing of the motion and approval of corresponding bond,
the law also directs the court to issue the order for a writ of possession.

FACTS

On June 1992, respondent (Iluminada) executed a REM over Lot 2630 located in
Caloocan City in favor of petitioner Sulit, to secure a loan of P4M. Upon petitioner’s failure
to pay said loan within the stipulated period, respondent resorted to extrajudicial
foreclosure of the mortgage as authorized in the contract. Hence, in a public auction, the
land was sold to the mortgagee (herein private respondent). The mortgaged property was
sold at the public auction to satisfy the mortgage indebtedness of P4M.

On Dec 1993, respondent petitioned the RTC of Caloocan City for the issuance of writ of
possession in his favor. The RTC judge denied such motion. Hence, respondent Iluminada
filed petition for certiorari with preliminary injunction and temporary restraining order
before the CA.

Iluminada argues that it is the ministerial duty upon the Court to issue a writ of possession
after the foreclosure sale and during the period of redemption, invoking S. 7 and 8 of Act
3135.

ISSUE/S

WON the mortgagee or purchaser in an extrajudicial foreclosure sale is entitled to the

issuance of a writ of possession over the mortgaged property, despite his failure to pay
the surplus proceeds of the sale to the mortgagor (person entitled thereto)?

RULING

YES.

As provided for in Act 3135, S.7 and 8 thereof:

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
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oath and filed in form of an ex parte motion in the registration or cadastral proceedings if
the property is registered, or in special proceedings in the case of property registered
under the Mortgage Law or under section one hundred and ninety-four of the
Administrative Code, or of any other real property encumbered with a mortgage duly
registered in the office of any register of deeds in accordance with any existing law, and in
each case the clerk of the court shall, upon the filing of such petition, collect the fees
specified in paragraph eleven of section one hundred and fourteen of Act Numbered
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

Sec. 8. The debtor may, in the proceedings in which possession was requested, but not later
than thirty days after the purchaser was given possession, petition that the sale be set aside
and the writ of possession 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 governing law thus explicitly authorizes the purchaser in a foreclosure sale to apply
for a writ of possession during the redemption period by filing an ex parte motion under
oath for that purpose in the corresponding registration or cadastral proceeding in the
case of property with Torrens Title. Upon filing of the motion and approval of
corresponding bond, the law also directs the court to issue the order for a writ of
possession.

No discretion appears to be left to the court. 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 S.8, and it cannot 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. Such recourse is available to a mortgagee, who effects the extrajudicial
foreclosure of the mortgage, even before the expiration of the period of redemption
provided by law and the Rules of Court.

The rule is, however, not without exception. Under Section 35, Rule 39 of the Rules of Court,
which is made applicable to the extrajudicial foreclosure of real estate mortgages by Section 6
of Act 3135, the possession of the mortgaged property may be awarded to a purchaser in the
extrajudicial foreclosure "unless a third party is actually holding the property adversely to the
judgment debtor."

Thus, in the case of Barican, et al. vs. Intermediate Appellate Court,

et al., this Court took into account the circumstances that long before the mortgagee bank had
sold the disputed property to the respondent therein, it was no longer the judgment debtor who
was in possession but the petitioner spouses who had assumed the mortgage, and that there
was a pending civil case involving the rights of third parties. Hence, it was ruled therein that
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under the circumstances, the obligation of a court to issue a writ of possession in favor of the
purchaser in a foreclosure of mortgage case ceases to be ministerial.

Moreover, S.4 of Rule 64 merely provides that, where there is a balance or residue after
payment of the mortgage, the same shall be paid to the mortgagor. While the expedient
course desired by respondent is commendable, there is nothing in the cited provision from
which it can be inferred that a violation thereof will have the effect of nullifying the sale.
The better rule is 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.
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82. Marilag v. Martinez, G.R. No. 201892, 22 July 2015
BATLE

TOPIC
Foreclosure of Real Estate Mortgage
DOCTRINE
In loan contracts secured by a real estate mortgage, the rule is that the creditor-mortgagee
has a single cause of action against the debtor-mortgagor, i.e. , to recover the debt,
through the filing of a personal action for collection of sum of money or the institution of a
real action to foreclose on the mortgage security. The two remedies are alternative, not
cumulative or successive, and each remedy is complete by itself. ​
FACTS
Rafael Martinez, respondent's father, obtained from petitioner a loan in the amount of
P160,000.00, with a stipulated monthly interest of 5%, payable within a period of 6
months. The loan was secured by a real estate mortgage over a parcel of land. Rafael
failed to settle his obligation upon maturity despite repeated demands, prompting
petitioner to file a Complaint for Judicial Foreclosure of Real Estate Mortgage before the
RTC of Imus, Cavite. Rafael failed to file his answer and, upon petitioner's motion, was
declared in default. After an ex parte presentation of petitioner's evidence, the RTC Imus
issued a Decision in the foreclosure case, declaring the stipulated 5% monthly interest to
be usurious and reducing the same to 12% per annum. Records do not show that this
Decision had already attained finality.

Prior to Rafael's notice of the decision, respondent agreed to pay Rafael's obligation to
petitioner. After making a partial payment, he executed a promissory note, binding himself
to pay the balance. After learning of the Decision, respondent refused to pay the amount
covered by the subject PN despite demands, prompting petitioner to file a complaint for
sum of money and damages before the court a quo.

Respondent filed his answer, contending that petitioner has no cause of action against
him. He averred that he has fully settled Rafael's obligation and that he committed a
mistake in paying more than the amount due under the loan. He prayed for the dismissal
of the complaint, and interposed a compulsory counterclaim for the release of the
mortgage, the return of the excess payment, and the payment of moral and exemplary
damages, attorney's fees and litigation expenses.
ISSUE/S
Whether or not the collection case is proper.
RULING
No. In loan contracts secured by a real estate mortgage, the rule is that the
creditor-mortgagee has a single cause of action against the debtor-mortgagor, i.e. , to
recover the debt, through the filing of a personal action for collection of sum of
money or the institution of a real action to foreclose on the mortgage security. The
two remedies are alternative, not cumulative or successive, and each remedy is complete
by itself. Thus, if the creditor-mortgagee opts to foreclose the real estate mortgage, he
waives the action for the collection of the unpaid debt, except only for the recovery of
whatever deficiency may remain in the outstanding obligation of the debtor-mortgagor
after deducting the bid price in the public auction sale of the mortgaged properties.
Accordingly, a deficiency judgment shall only issue after it is established that the
mortgaged property was sold at public auction for an amount less than the outstanding
obligation.

In the present case, records show that petitioner, as creditor- mortgagee, instituted an
action for judicial foreclosure pursuant to the provisions of Rule 68 of the Rules of Court in
order to recover on Rafael's debt. In light of the foregoing discussion, the availment of
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such remedy thus bars recourse to the subsequent filing of a personal action for collection
of the same debt, in this case, under the principle of litis pendentia, considering that the
foreclosure case only remains pending as it was not shown to have attained finality.

As petitioner had already instituted judicial foreclosure proceedings over the

mortgaged property, she is now barred from availing herself of an ordinary action
for collection, regardless of whether or not the decision in the foreclosure case had
attained finality. In fine, the dismissal of the collection case is in order. Considering,
however, that respondent's claim for return of excess payment partakes of the nature of a
compulsory counterclaim and, thus, survives the dismissal of petitioner's collection suit,
the same should be resolved based on its own merits and evidentiary support.
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83. Spouses Tumon v. Radiowealth Finance Co., Inc., G.R. No. 243999, March 18, 2021
CABELTES

TOPIC

DOCTRINE

FACTS

ISSUE/S

RULING
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84. Agarrado v. Librando-Agarrado, G.R No. 212413, 6 June 2018
CARAAN

TOPIC
Partition - Jurisdiction
DOCTRINE
For actions on partition, the subject matter is two-phased. In Bagayas vs. Bagayas, the
Court ruled that partition is at once an action (1) for declaration of co-ownership and (2) for
segregation and conveyance of a determinate portion of the properties involved. Thus, in a
complaint for partition, the plaintiff seeks, first, a declaration that he/she is a co-owner of
the subject properties, and second, the conveyance of his/her lawful share.

The case of Russel, the very same case cited by the Court of Appeals, determined that
while actions for partition are incapable of pecuniary estimation owing to its two-phased
subject matter, the determination of the court which will acquire jurisdiction over the same
must still conform to Sec. 33(3) of B.P. 129, as amended. Russel said:

While actions under Sec. 33(3) of B.P. 129 are also incapable of pecuniary estimation, the
law specifically mandates that they are cognizable by the MTC, METC, or MCTC where
the assessed value of the real property involved does exceed P20,000.00 in Metro Manila,
or P50,000.00, if located elsewhere. If the value exceeds P20,000.00 or P50,000.00 as
the case may be, it is the Regional Trial Courts which have jurisdiction under Sec. 19(2).
FACTS
Petitioners Ma. Rosario Agarrado (Ma. Rosario), Ruth Librada Agarrado (Ruth), and Roy Agarrado
(Roy) are children of the late spouses Rodrigo (Rodrigo) and Emilia (Emilia) Agarrado, who, during
their lifetime, acquired a 287-square meter land (subject property) in Bacolod City, Negros
Occidental. Spouses Rodrigo and Emilia registered the land in their name. Emilia would die
intestate, leaving Rodrigo and her children as compulsory heirs. Meanwhile, unknown to the
petitioners, Rodrigo was involved in an illicit affair with respondent Cristita Librando-Agarrado
(Cristita), with whom Rodrigo begot respondent Ana Lou Agarrado-King (Ana Lou). Ana Lou was
born one month after the death of Emilia. Afterwards, Rodrigo would marry Cristita. Upon
Rodrigo’s death, he left his wife Cristita, his children by Emilia and Ana Lou.

On January 23, 2003, Cristita and Ana Lou filed a complaint before the Regional Trial Court (RTC),
Branch 44, of Bacolod City for the partition of the subject property, with Ma. Rosario, Ruth, Roy,
"and other heirs of Rodrigo Agarrado" as defendants. The RTC of Bacolod City directed the parties
to partition the subject property by way of proper instruments of conveyance or any other means or
methods. An appeal would be taken by the petitioners to the Court of Appeals. The CA affirmed
with modification the trial court ruling:

“We declare plaintiffs-appellees Cristita Librando Agarrado and Ana Lou Agarrado-King as well as
defendants- appellants as co-owners of the subject property;
We grant judicial partition in the following manner:
(a) Plaintiff-appellee Cristita Librando Agarrado is entitled to 2/9;
(b) Ma. Rosario, Ruth and Roy Agarrado are entitled to 6/9 plus 1⁄4 to be divided equally among
them unless they agree otherwise; and
(c) Ana Lou Agarrado-King is entitled to 1/9 of the property.
The partition and segregation of the subject property is hereby ordered as outlined in Rule 69 of the
Revised Rules of Court, as amended.”
Hence, the present petition
ISSUE/S
Whether or not the CA erred in upholding the jurisdiction of the RTC - YES
RULING
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YES, The Supreme Court ruled that YES. The CA erred in upholding the jurisdiction of the RTC.
It is argued by the CA that an action for partition is incapable of pecuniary estimation which falls
within the jurisdiction of the RTC. The Supreme Court ruled that this is a reversible error. In Singson
V. Isabella Sawmill, it was held that:

In determining whether an action is one the subject matter of which is not capable of pecuniary
estimation this Court has adopted the criterion of first ascertaining the nature of the principal
action or remedy sought. If it is primarily for the recovery of a sum of money, the claim is
considered capable of pecuniary estimation, and whether jurisdiction is in the municipal courts or in
the Courts of First Instance would depend on the amount of the claim. However, where the basic
issue is something other than the right to recover a sum of money, where the money claim is purely
incidental to, or a consequence of, the principal relief sought, this Court has considered such
actions as cases where the subject of the litigation may not be estimated in terms of money,
and are cognizable exclusively by Courts of First Instance (now Regional Trial Courts)

In regards to actions for partition, such actions have two phases: partition is at once an action (1)
for declaration of co-ownership and (2) for segregation and conveyance of a determinate portion of
the properties involved. Thus, in a complaint for partition, the plaintiff seeks, first, a
declaration that he/she is a co-owner of the subject properties, and second, the conveyance
of his/her lawful share. In the case of Russel V. Vestil, it was held that while actions for partition is
incapable of pecuniary estimation, the determination of the court which will acquire jurisdiction over
the same must still conform to Sec. 33(3) of B.P. 129, as amended. Under the aforementioned
provision, it provides that actions incapable of pecuniary estimation are cognizable by the MTC,
METC, or MCTC where the assessed value of the real property involved does exceed P20,000.00
in Metro Manila, or P50,000.00, if located elsewhere. If the value exceeds P20,000.00 or
P50,000.00 as the case may be, it is the Regional Trial Courts which have jurisdiction under Sec.
19(2).

Jurisdiction over cases for partition of real properties therefore, like all others, is determined by law.
Particularly, the same is identified by Sections 19(2) and 33(3) of the Judiciary Reorganization Act
of 1980, as amended by Republic Act 7691. The provisions state that in all civil actions which
involve title to, or possession of, real property, or any interest therein, the RTC shall exercise
exclusive original jurisdiction where the assessed value of the property exceeds P20,000.00 or, for
civil actions in Metro Manila, where such value exceeds P50,000.00.[24] For those below the
foregoing threshold amounts, exclusive jurisdiction lies with the Metropolitan Trial Courts (MeTC),
Municipal Trial Courts (MTC), or Municipal Circuit Trial Courts (MCTC). Thus, the determination
of the assessed value of the property, which is the subject matter of the partition, is
essential. In line with this rule, the failure to allege the assessed value of a real property in the
complaint would result to a dismissal of the case.

In the case at bar, the partition complaint filed by the respondents failed to indicate the assessed
value of the property. Furthermore, none of the documents annexed to the complaint and as
attached in the records of this case indicate the assessed value of the property. Thus, the
petitioners are correct in restating their argument against the RTC's jurisdiction, for it has
none to exercise. Hence, the CA erred in upholding the RTC’s jurisdiction.
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85. Heirs of Ernesto Morales v. Agustin, G.R. No. 224849, 6 June 2018
DE GUZMAN

TOPIC

DOCTRINE

FACTS

ISSUE/S

RULING
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86. De Pedro v. Romasan Development Corporation, G.R. No. 194751, 26 November 2014
DIÑO

TOPIC

DOCTRINE

FACTS

ISSUE/S

RULING
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87. Agarrado v. Librando-Agarrado, G.R No. 212413, 6 June 2018
ENRIQUEZ

TOPIC

DOCTRINE

FACTS

ISSUE/S

RULING
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88. Ignacio v. Reyes, G.R. No. 213192, 12 July 2017
ESPENIDA

TOPIC

DOCTRINE

FACTS

ISSUE/S

RULING
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89. Quilatan v. Heirs of Quilatan, G.FR. No. 183059, 28 August 2009
FABIAN

TOPIC
Partition

DOCTRINE
In an action for partition of real estate, it is the plaintiff who is mandated by the Rules to
implead all the indispensable parties, considering that the absence of one such party
renders all subsequent actions of the court null and void for want of authority to act, not
only as to the absent parties but even as to those present.

FACTS
● Pedro Quilatan died intestate and was survived by his three children, Ciriaco,
Francisco, and Lorenzo, all of whom are now deceased.
● Ciriaco was survived by his children namely Purita Santos, Rosita Reyes, Renato
Quilatan, Danilo Quilatan, and Carlito Quilatan
● Francisco was survived by herein petitioners, and Solita Trapsi and Rolando
Quilatan
● Lorenzo was survived by his children, herein respondents

Petitioners Ely Quilatan and Rosvida Quilatan-Elias filed Civil Case No. 67367 for
nullification of Tax Declaration Nos. D-014-00330 and D-014-00204 and Partition of the
Estate of the late Pedro Quilatan with damages against respondent heirs of Lorenzo
Quilata, claiming that during the lifetime of Pedro Quilatan, he owned two parcels of land
located in Taguig covered by Tax Declaration Nos. 1680 and 2301. And in 1998, they
discovered that the said tax declarations were cancelled without their knowledge and the
new ones were issued, to wit: Tax Declaration Nos. D-014-00204 and D-012-00330 under
the names of Spouses Lorenzo Quilatan and Anita Lizertiquez (predecessors of
respondent) as owners thereof.

Trial Court declared as void the cancellation of Tax Declaration Nos. 1680 and 2301, and
ordered the partition of the subject properties into three equal shares among the heirs of
Francisco, Ciriaco and Lorenzo, all surnamed Quilatan.

CA reversed without prejudice the decision of the trial court on the ground that the
petitioners failed to implead other co-heirs who are indispensable parties to the case.
Thus, the trial court judgement was null and void for want of jurisdiction.

Petitioners filed a motion for reconsideration but it was denied. Hence, this petition for
review alleging that there is failure to implead indispensable parties was a mere
afterthought because respondents did not raise the same in their Answer, but only the first
time in their MR of the trial court’s decision. Moreover, the order of dismissal without
prejudice to re-filing in order to implead the Heirs of Ciriaco only invite multiplicity of suits
since the second action would be a repetition to the first action, where the judgement
therein rightly partitioned the subject properties into three equal shares, apportioning each
share to the heirs of the children of Pedro Quilatan.
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ISSUE/S
Whether the CA correctly in reversed the decision of the trial court on the ground of
petitioner’s failure to implead the other co-heirs.

RULING
YES. The CA correctly applies Sec. 1 Rule 69 and Sec. 7 Rule 3 which provides:

SECTION 1. Complaint in action for partition of real estate. - A person having the right
to compel the partition of real estate may do so as in this rule prescribed, setting
forth in his complaint the nature and extent of his title and an adequate description
of the real estate of which partition is demanded and joining as defendants all the
other persons interested in the property.

SECTION 7. Compulsory joinder of indispensable parties. - Parties in interest without

whom no final determination can be had of an action shall be joined either as plaintiffs or
defendants.

An indispensable party is one who has such an interest in the controversy or subject
matter that a final adjudication cannot be made, in his absence, without injuring or
affecting that interest. A party who has not only an interest in the subject matter of the
controversy, but also has an interest of such nature that a final decree cannot be made
without affecting his interest or leaving the controversy in such a condition that its final
determination may be wholly inconsistent with equity and good conscience. He is a person
in whose absence there cannot be a determination between the parties already before the
court which is effective, complete, or equitable.

Joinder of indispensable parties is mandatory. Without the presence of

indispensable parties to the suit, the judgment of the court cannot attain real
finality. Strangers to a case are not bound by the judgment rendered by the court. The
absence of an indispensable party renders all subsequent actions of the court null and
void, with no authority to act not only as to the absent party but also as to those present.

Here, in the complaint filed by petitioners before the trial court, they failed to
implead their two siblings, Solita and Rolanda, and all heirs of Ciriaco, as
co-plaintiffs or as defendants. The thrust of their complaint was to revert the subject
properties back to the estate of Pedro Quilatan, thereby making all his heirs pro indiviso
co-owners thereof, and to partition them equally among themselves; and that all the
co-heirs and persons having an interest in the subject properties are indispensable
parties to an action for partition, which will not lie without joinder of said parties.

Respondents could not be blamed if they did not raise this issue in their Answer because
in an action for partition of real estate, it is the plaintiff who is mandated by the
Rules to implead all the indispensable parties, considering that the absence of one
such party renders all subsequent actions of the court null and void for want of
authority to act, not only as to the absent parties but even as to those present.

Hence, the CA correctly reversed the decision of the trial court on the ground of
petitioner’s failure to implead the other co-heirs.
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90. Heirs of Panfilo F. Abalos v. Bucal, G.R. No. 156224, 19 February 2008
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91. Maglucot-Aw v. Maglucot, G.R. No. 132518, 28 March 2000
JAMERO

TOPIC
Phases/Stages of Partition
DOCTRINE
A co-owner, who, though not a party to a partition accepts the partition allotted to
him, and holds and conveys the same in severalty, will not be subsequently
permitted to avoid partition. Parties to a partition proceeding, who elected to take
under partition, and who took possession of the portion allotted to them, are
estopped to question title to portion allotted to another party.

FACTS
Tomas Maglucot, one of the owners and respondent’s predecessor-in-interest, filed a
petition to subdivide Lot No. 1639. Guillermo, Leopoldo and Severo Maglucot also rented
portions of the lot 1639-D where they built houses and paid the rental amount per annum
to Ruperta Salma, who represented the heirs of Roberto Maglucot, the owner of Lot No.
1639-D and petitioners’ predecessor-in-interest. Later, the respondents stopped paying
rentals claiming ownership over the lot, resulting to the petitioners to file a complaint for
recovery of possession and damages. The trial court rendered the judgment in favor of the
petitioners as Tomas Maglucot took active part in the partition as it was he who
commenced the action for partition. While there was no court order showing that Lot No.
1639 was partitioned, its absence could not be used by Tomas or respondents
successors-in-interest, to deny the existence of an approved partition. The CA reversed
the decision of the RTC, stating that there was no partition of Lot No. 1639.
ISSUE/S
Whether there was a valid partition
RULING
Yes; the records of the case show that sometime in 1946 there was a prior oral agreement
to tentatively partition, and by virtue of this, the original co-owners occupied specific
portions of Lot No. 1639. It was only in 1952 when the petition to subdivide Lot No. 1639
was filed because two of the co-owners, namely Hermogenes Olis and heirs of Pascual
Olis, refused to have said lot subdivided and have separate certificates of title.
Significantly, after the 1952 proceedings, the parties in this case by themselves and/or
through their predecessors-in-interest occupied specific portions of Lot No. 1639 in
accordance with the sketch plan. Such possession remained so until this case arose, or
about forty (40) years later. There is no showing that respondents by themselves or
through their predecessors-in-interest raised any objections. It has been previously held
that a co-owner, who, though not a party to a partition accepts the partition allotted to him,
and holds and conveys the same in severalty, will not be subsequently permitted to avoid
partition. Parties to a partition proceeding, who elected to take under partition, and who
took possession of the portion allotted to them, are estopped to question title to portion
allotted to another party. In this case, respondents, by themselves and/or through their
predecessors-in-interest, already occupied of the lots in accordance with the sketch plan.
This occupation continued until this action was filed. They cannot now be heard to
question the possession and ownership of the other co-owners who took exclusive
possession of Lot 1639-D also in accordance with the sketch plan.
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92. De Mesa v. Court of Appeals, G.R. No. 109387, 25 April 1994
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93. Dadizon v. Bernades, G.R. No. 172367, 5 June 2009
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