RURAL BANK OF CALOOCAN, INC. and JOSE O. DESIDERIO, JR.
, petitioners, Upon request by Castro and the Valencias and with conformity of the bank, the auction sale
vs.
THE COURT OF APPEALS and MAXIMA CASTRO, respondents.
DE CASTRO, * J.:
This is a petition for review by way of certiorari of the decision 1 of the Court of Appeals in
CA-G.R. No. 39760-R entitled "Maxima Castro, plaintiff-appellee, versus Severino Valencia,
et al., defendants; Rural Bank of Caloocan, Inc., Jose Desiderio, Jr. and Arsenio Reyes,
defendants-appellants," which affirmed in toto the decision of the Court of First Instance of
Manila in favor of plaintiff- appellee, the herein private respondent Maxima Castro.
On December 7, 1959, respondent Maxima Castro, accompanied by Severino Valencia, went
to the Rural Bank of Caloocan to apply for an industrial loan. It was Severino Valencia who
arranged everything about the loan with the bank and who supplied to the latter the
personal data required for Castro's loan application. On December 11, 1959, after the bank
approved the loan for the amount of P3,000.00, Castro, accompanied by the Valencia
spouses, signed a promissory note corresponding to her loan in favor of the bank.
On the same day, December 11, 1959, the Valencia spouses obtained from the bank an
equal amount of loan for P3,000.00. They signed a promissory note (Exhibit "2")
corresponding to their loan in favor of the bank and had Castro affixed thereon her
signature as co-maker.
The two loans were secured by a real-estate mortgage (Exhibit "6") on Castro's house and
lot of 150 square meters, covered by Transfer Certificate of Title No. 7419 of the Office of
the Register of Deeds of Manila.
On February 13, 1961, the sheriff of Manila, thru Acting Chief Deputy Sheriff Basilio
Magsambol, sent a notice of sheriff's sale addressed to Castro, announcing that her property
covered by T.C.T. No. 7419 would be sold at public auction on March 10, 1961 to satisfy the
obligation covering the two promissory notes plus interest and attorney's fees.
that was scheduled for March 10, 1961 was postponed for April 10, 1961. But when April 10,
1961 was subsequently declared a special holiday, the sheriff of Manila sold the property
covered by T.C.T. No. 7419 at a public auction sale that was held on April 11, 1961, which
was the next succeeding business day following the special holiday.
Castro alleged that it was only when she received the letter from the Acting Deputy Sheriff
on February 13, 1961, when she learned for the first time that the mortgage contract
(Exhibit "6") which was an encumbrance on her property was for P6.000.00 and not for
P3,000.00 and that she was made to sign as co-maker of the promissory note (Exhibit "2")
without her being informed of this.
On April 4, 1961, Castro filed a suit denominated "Re: Sum of Money," against petitioners
Bank and Desiderio, the Spouses Valencia, Basilio Magsambol and Arsenio Reyes as
defendants in Civil Case No. 46698 before the Court of First Instance of Manila upon the
charge, amongst others, that thru mistake on her part or fraud on the part of Valencias she
was induced to sign as co-maker of a promissory note (Exhibit "2") and to constitute a
mortgage on her house and lot to secure the questioned note. At the time of filing her
complaint, respondent Castro deposited the amount of P3,383.00 with the court a quo in
full payment of her personal loan plus interest.
In her amended complaint, Castro prayed, amongst other, for the annulment as far as she is
concerned of the promissory note (Exhibit "2") and mortgage (Exhibit "6") insofar as it
exceeds P3,000.00; for the discharge of her personal obligation with the bank by reason of a
deposit of P3,383.00 with the court a quo upon the filing of her complaint; for the
annulment of the foreclosure sale of her property covered by T.C.T. No. 7419 in favor of
Arsenio Reyes; and for the award in her favor of attorney's fees, damages and cost.
In their answers, petitioners interposed counterclaims and prayed for the dismissal of said
complaint, with damages, attorney's fees and costs. 2
The pertinent facts arrived from the stipulation of facts entered into by the parties as stated
by respondent Court of Appeals are as follows:

Spawning the present litigation are the facts contained in the following stipulation of facts
submitted by the parties themselves:
1. That the capacity and addresses of all the parties in this case are admitted .
2. That the plaintiff was the registered owner of a residential house and lot located at Nos.
1268-1270 Carola Street, Sampaloc, Manila, containing an area of one hundred fifty (150)
square meters, more or less, covered by T.C.T. No. 7419 of the Office of the Register of
Deeds of Manila;
3. That the signatures of the plaintiff appearing on the following documents are genuine:
a) Application for Industrial Loan with the Rural Bank of Caloocan, dated December 7, 1959
in the amount of P3,000.00 attached as Annex A of this partial stipulation of facts;
b) Promissory Note dated December 11, 1959 signed by the plaintiff in favor of the Rural
Bank of Caloocan for the amount of P3,000.00 as per Annex B of this partial stipulation of
facts;
c) Application for Industrial Loan with the Rural Bank of Caloocan, dated December 11,
1959, signed only by the defendants, Severino Valencia and Catalina Valencia, attached as
Annex C, of this partial stipulation of facts;
d) Promissory note in favor of the Rural Bank of Caloocan, dated December 11, 1959 for the
amount of P3000.00, signed by the spouses Severino Valencia and Catalina Valencia as
borrowers, and plaintiff Maxima Castro, as a co-maker, attached as Annex D of this partial
stipulation of facts;
e) Real estate mortgage dated December 11, 1959 executed by plaintiff Maxima Castro, in
favor of the Rural Bank of Caloocan, to secure the obligation of P6,000.00 attached herein as
Annex E of this partial stipulation of facts;
All the parties herein expressly reserved their right to present any evidence they may desire
on the circumstances regarding the execution of the above-mentioned documents.
4. That the sheriff of Manila, thru Acting Chief Deputy Sheriff, Basilio Magsambol, sent a
notice of sheriff's sale, address to the plaintiff, dated February 13, 1961, announcing that
plaintiff's property covered by TCT No. 7419 of the Register of Deeds of the City of Manila,
would be sold at public auction on March 10, 1961 to satisfy the total obligation of
P5,728.50, plus interest, attorney's fees, etc., as evidenced by the Notice of Sheriff's Sale
and Notice of Extrajudicial Auction Sale of the Mortgaged property, attached herewith as
Annexes F and F-1, respectively, of this stipulation of facts;
5. That upon the request of the plaintiff and defendants-spouses Severino Valencia and
Catalina Valencia, and with the conformity of the Rural Bank of Caloocan, the Sheriff of
Manila postponed the auction sale scheduled for March 10, 1961 for thirty (30) days and the
sheriff re-set the auction sale for April 10, 1961;
6. That April 10, 1961 was declared a special public holiday; (Note: No. 7 is omitted upon
agreement of the parties.)
8. That on April 11, 1961, the Sheriff of Manila, sold at public auction plaintiff's property
covered by T.C.T. No. 7419 and defendant, Arsenio Reyes, was the highest bidder and the
corresponding certificate of sale was issued to him as per Annex G of this partial stipulation
of facts;
9. That on April 16, 1962, the defendant Arsenio Reyes, executed an Affidavit of
Consolidation of Ownership, a copy of which is hereto attached as Annex H of this partial
stipulation of facts;
10. That on May 9, 1962, the Rural Bank of Caloocan Incorporated executed the final deed
of sale in favor of the defendant, Arsenio Reyes, in the amount of P7,000.00, a copy of which
is attached as Annex I of this partial stipulation of facts;
11. That the Register of Deeds of the City of Manila issued the Transfer Certificate of Title
No. 67297 in favor of the defendant, Arsenio Reyes, in lieu of Transfer Certificate of Title No.
7419 which was in the name of plaintiff, Maxima Castro, which was cancelled;
12. That after defendant, Arsenio Reyes, had consolidated his title to the property as per
T.C.T. No. 67299, plaintiff filed a notice of lis pendens with the Register of Deeds of Manila
and the same was annotated in the back of T.C.T. No. 67299 as per Annex J of this partial
stipulation of facts; and
13. That the parties hereby reserved their rights to present additional evidence on matters
not covered by this partial stipulation of facts.
WHEREFORE, it is respectfully prayed that the foregoing partial stipulation of facts be
approved and admitted by this Honorable Court.
As for the evidence presented during the trial, We quote from the decision of the Court of
Appeals the statement thereof, as follows:
In addition to the foregoing stipulation of facts, plaintiff claims she is a 70-year old widow
who cannot read and write the English language; that she can speak the Pampango dialect
only; that she has only finished second grade (t.s.n., p. 4, December 11, 1964); that in
December 1959, she needed money in the amount of P3,000.00 to invest in the business of
the defendant spouses Valencia, who accompanied her to the defendant bank for the
purpose of securing a loan of P3,000.00; that while at the defendant bank, an employee
handed to her several forms already prepared which she was asked to sign on the places
indicated, with no one explaining to her the nature and contents of the documents; that she
did not even receive a copy thereof; that she was given a check in the amount of P2,882.85
which she delivered to defendant spouses; that sometime in February 1961, she received a
letter from the Acting Deputy Sheriff of Manila, regarding the extrajudicial foreclosure sale
of her property; that it was then when she learned for the first time that the mortgage
indebtedness secured by the mortgage on her property was P6,000.00 and not P3,000.00;
that upon investigation of her lawyer, it was found that the papers she was made to sign
were:
(a) Application for a loan of P3,000.00 dated December 7, 1959 (Exh. B-1 and Exh. 1);
(b) Promissory note dated December 11, 1959 for the said loan of P3,000.00 (Exh- B-2);
(c) Promissory note dated December 11, 1959 for P3,000.00 with the defendants Valencia
spouses as borrowers and appellee as co-maker (Exh. B-4 or Exh. 2).
The auction sale set for March 10, 1961 was postponed co April 10, 1961 upon the request
of defendant spouses Valencia who needed more time within which to pay their loan of
P3,000.00 with the defendant bank; plaintiff claims that when she filed the complaint she
deposited with the Clerk of Court the sum of P3,383.00 in full payment of her loan of
P3,000.00 with the defendant bank, plus interest at the rate of 12% per annum up to April 3,
1961 (Exh. D).
As additional evidence for the defendant bank, its manager declared that sometime in
December, 1959, plaintiff was brought to the Office of the Bank by an employee- (t.s.n., p 4,
January 27, 1966). She wept, there to inquire if she could get a loan from the bank. The
claims he asked the amount and the purpose of the loan and the security to he given and
plaintiff said she would need P3.000.00 to be invested in a drugstore in which she was a
partner (t.s.n., p. 811. She offered as security for the loan her lot and house at Carola St.,
Sampaloc, Manila, which was promptly investigated by the defendant bank's inspector.
Then a few days later, plaintiff came back to the bank with the wife of defendant Valencia A
date was allegedly set for plaintiff and the defendant spouses for the processing of their
application, but on the day fixed, plaintiff came without the defendant spouses. She signed
the application and the other papers pertinent to the loan after she was interviewed by the
manager of the defendant. After the application of plaintiff was made, defendant spouses
had their application for a loan also prepared and signed (see Exh. 13). In his interview of
plaintiff and defendant spouses, the manager of the bank was able to gather that plaintiff
was in joint venture with the defendant spouses wherein she agreed to invest P3,000.00 as
additional capital in the laboratory owned by said spouses (t.s.n., pp. 16-17) 3
The Court of Appeals, upon evaluation of the evidence, affirmed in toto the decision of the
Court of First Instance of Manila, the dispositive portion of which reads:
FOR ALL THE FOREGOING CONSIDERATIONS, the Court renders judgment and:
(1) Declares that the promissory note, Exhibit '2', is invalid as against plaintiff herein;
(2) Declares that the contract of mortgage, Exhibit '6', is null and void, in so far as the
amount thereof exceeds the sum of P3,000.00 representing the principal obligation of
plaintiff, plus the interest thereon at 12% per annum;
(3) Annuls the extrajudicial foreclosure sale at public auction of the mortgaged property
held on April 11, 1961, as well as all the process and actuations made in pursuance of or in
implementation thereto;
(4) Holds that the total unpaid obligation of plaintiff to defendant Rural Bank of Caloocan,
Inc., is only the amount of P3,000.00, plus the interest thereon at 12% per annum, as of
April 3, 1961, and orders that plaintiff's deposit of P3,383.00 in the Office of the Clerk of
Court be applied to the payment thereof;
(5) Orders defendant Rural Bank of Caloocan, Inc. to return to defendant Arsenio Reyes the
purchase price the latter paid for the mortgaged property at the public auction, as well as
reimburse him of all the expenses he has incurred relative to the sale thereof;
(6) Orders defendants spouses Severino D. Valencia and Catalina Valencia to pay defendant
Rural Bank of Caloocan, Inc. the amount of P3,000.00 plus the corresponding 12% interest
thereon per annum from December 11, 1960 until fully paid; and
Orders defendants Rural Bank of Caloocan, Inc., Jose Desiderio, Jr. and spouses Severino D.
Valencia and Catalina Valencia to pay plaintiff, jointly and severally, the sum of P600.00 by
way of attorney's fees, as well as costs.
In view of the conclusion that the court has thus reached, the counterclaims of defendant
Rural Bank of Caloocan, Inc., Jose Desiderio, Jr. and Arsenio Reyes are hereby dismissed, as a
corollary
The Court further denies the motion of defendant Arsenio Reyes for an Order requiring
Maxima Castro to deposit rentals filed on November 16, 1963, resolution of which was held
in abeyance pending final determination of the case on the merits, also as a consequence of
the conclusion aforesaid. 4
Petitioners Bank and Jose Desiderio moved for the reconsideration 5 of respondent court's
decision. The motion having been denied, 6 they now come before this Court in the instant
petition, with the following Assignment of Errors, to wit:
I
THE COURT OF APPEALS ERRED IN UPHOLDING THE PARTIAL ANNULMENT OF THE
PROMISSORY NOTE, EXHIBIT 2, AND THE MORTGAGE, EXHIBIT 6, INSOFAR AS THEY AFFECT
RESPONDENT MAXIMA CASTRO VIS-A-VIS PETITIONER BANK DESPITE THE TOTAL ABSENCE
OF EITHER ALLEGATION IN THE COMPLAINT OR COMPETENT PROOF IN THE EVIDENCE OF
ANY FRAUD OR OTHER UNLAWFUL CONDUCT COMMITTED OR PARTICIPATED IN BY
PETITIONERS IN PROCURING THE EXECUTION OF SAID CONTRACTS FROM RESPONDENT
CASTRO.
II
THE COURT OF APPEALS ERRED IN IMPUTING UPON AND CONSIDERING PREJUDICIALLY
AGAINST PETITIONERS, AS BASIS FOR THE PARTIAL ANNULMENT OF THE CONTRACTS
AFORESAID ITS FINDING OF FRAUD PERPETRATED BY THE VALENCIA SPOUSES UPON
RESPONDENT CASTRO IN UTTER VIOLATION OF THE RES INTER ALIOS ACTA RULE.
III
THE COURT OF APPEAL ERRED IN NOT HOLDING THAT, UNDER THE FACTS FOUND BY IT,
RESPONDENT CASTRO IS UNDER ESTOPPEL TO IMPUGN THE REGULARITY AND VALIDITY OF
HER QUESTIONED TRANSACTION WITH PETITIONER BANK.
IV
THE COURT OF APPEALS ERRED IN NOT FINDING THAT, BETWEEN PETITIONERS AND
RESPONDENT CASTRO, THE LATTER SHOULD SUFFER THE CONSEQUENCES OF THE FRAUD
PERPETRATED BY THE VALENCIA SPOUSES, IN AS MUCH AS IT WAS THRU RESPONDENT
CASTRO'S NEGLIGENCE OR ACQUIESCENSE IF NOT ACTUAL CONNIVANCE THAT THE
PERPETRATION OF SAID FRAUD WAS MADE POSSIBLE.
V of fraud perpetrated by the spouses against Castro cannot be taken to operate prejudicially
THE COURT OF APPEALS ERRED IN UPHOLDING THE VALIDITY OF THE DEPOSIT BY
RESPONDENT CASTRO OF P3,383.00 WITH THE COURT BELOW AS A TENDER AND
CONSIGNATION OF PAYMENT SUFFICIENT TO DISCHARGE SAID RESPONDENT FROM HER
OBLIGATION WITH PETITIONER BANK.
VI
THE COURT OF APPEALS ERRED IN NOT DECLARING AS VALID AND BINDING UPON
RESPONDENT CASTRO THE HOLDING OF THE SALE ON FORECLOSURE ON THE BUSINESS DAY
NEXT FOLLOWING THE ORIGINALLY SCHEDULED DATE THEREFOR WHICH WAS DECLARED A
HOLIDAY WITHOUT NECESSITY OF FURTHER NOTICE THEREOF.
The issue raised in the first three (3) assignment of errors is whether or not respondent
court correctly affirmed the lower court in declaring the promissory note (Exhibit 2) invalid
insofar as they affect respondent Castro vis-a-vis petitioner bank, and the mortgage contract
(Exhibit 6) valid up to the amount of P3,000.00 only.
Respondent court declared that the consent of Castro to the promissory note (Exhibit 2)
where she signed as co-maker with the Valencias as principal borrowers and her
acquiescence to the mortgage contract (Exhibit 6) where she encumbered her property to
secure the amount of P6,000.00 was obtained by fraud perpetrated on her by the Valencias
who had abused her confidence, taking advantage of her old age and ignorance of her
financial need. Respondent court added that "the mandate of fair play decrees that she
should be relieved of her obligation under the contract" pursuant to Articles 24 7 and 1332 8
of the Civil Code.
The decision in effect relieved Castro of any liability to the promissory note (Exhibit 2) and
the mortgage contract (Exhibit 6) was deemed valid up to the amount of P3,000.00 only
which was equivalent to her personal loan to the bank.
Petitioners argued that since the Valencias were solely declared in the decision to be
responsible for the fraud against Castro, in the light of the res inter alios acta rule, a finding
against the bank. Petitioners concluded that respondent court erred in not giving effect to
the promissory note (Exhibit 2) insofar as they affect Castro and the bank and in declaring
that the mortgage contract (Exhibit 6) was valid only to the extent of Castro's personal loan
of P3,000.00.
The records of the case reveal that respondent court's findings of fraud against the
Valencias is well supported by evidence. Moreover, the findings of fact by respondent court
in the matter is deemed final. 9 The decision declared the Valencias solely responsible for
the defraudation of Castro. Petitioners' contention that the decision was silent regarding the
participation of the bank in the fraud is, therefore, correct.
We cannot agree with the contention of petitioners that the bank was defrauded by the
Valencias. For one, no claim was made on this in the lower court. For another, petitioners
did not submit proof to support its contention.
At any rate, We observe that while the Valencias defrauded Castro by making her sign the
promissory note (Exhibit 2) and the mortgage contract (Exhibit 6), they also misrepresented
to the bank Castro's personal qualifications in order to secure its consent to the loan. This
must be the reason which prompted the bank to contend that it was defrauded by the
Valencias. But to reiterate, We cannot agree with the contention for reasons above-
mentioned. However, if the contention deserves any consideration at all, it is in indicating
the admission of petitioners that the bank committed mistake in giving its consent to the
contracts.
Thus, as a result of the fraud upon Castro and the misrepresentation to the bank inflicted by
the Valencias both Castro and the bank committed mistake in giving their consents to the
contracts. In other words, substantial mistake vitiated their consents given. For if Castro had
been aware of what she signed and the bank of the true qualifications of the loan
applicants, it is evident that they would not have given their consents to the contracts.
Pursuant to Article 1342 of the Civil Code which provides:
Art. 1342. Misrepresentation by a third person does not vitiate consent, unless such
misrepresentation has created substantial mistake and the same is mutual.
We cannot declare the promissory note (Exhibit 2) valid between the bank and Castro and
the mortgage contract (Exhibit 6) binding on Castro beyond the amount of P3,000.00, for
while the contracts may not be invalidated insofar as they affect the bank and Castro on the
ground of fraud because the bank was not a participant thereto, such may however be
invalidated on the ground of substantial mistake mutually committed by them as a
consequence of the fraud and misrepresentation inflicted by the Valencias. Thus, in the case
of Hill vs. Veloso, 10 this Court declared that a contract may be annulled on the ground of
vitiated consent if deceit by a third person, even without connivance or complicity with one
of the contracting parties, resulted in mutual error on the part of the parties to the contract.
Petitioners argued that the amended complaint fails to contain even a general averment of
fraud or mistake, and its mention in the prayer is definitely not a substantial compliance
with the requirement of Section 5, Rule 8 of the Rules of Court. The records of the case,
however, will show that the amended complaint contained a particular averment of fraud
against the Valencias in full compliance with the provision of the Rules of Court. Although,
the amended complaint made no mention of mistake being incurred in by the bank and
Castro, such mention is not essential in order that the promissory note (Exhibit 2) may be
declared of no binding effect between them and the mortgage (Exhibit 6) valid up to the
amount of P3,000.00 only. The reason is that the mistake they mutually suffered was a mere
consequence of the fraud perpetrated by the Valencias against them. Thus, the fraud
particularly averred in the complaint, having been proven, is deemed sufficient basis for the
declaration of the promissory note (Exhibit 2) invalid insofar as it affects Castro vis-a-vis the
bank, and the mortgage contract (Exhibit 6) valid only up to the amount of P3,000.00.
The second issue raised in the fourth assignment of errors is who between Castro and the
bank should suffer the consequences of the fraud perpetrated by the Valencias.
In attributing to Castro an consequences of the loss, petitioners argue that it was her
negligence or acquiescence if not her actual connivance that made the fraud possible.
Petitioners' argument utterly disregards the findings of respondent Court of Appeals
wherein petitioners' negligence in the contracts has been aptly demonstrated, to wit:
A witness for the defendant bank, Rodolfo Desiderio claims he had subjected the plaintiff-
appellee to several interviews. If this were true why is it that her age was placed at 61
instead of 70; why was she described in the application (Exh. B-1-9) as drug manufacturer
when in fact she was not; why was it placed in the application that she has income of
P20,000.00 when according to plaintiff-appellee, she his not even given such kind of
information -the true fact being that she was being paid P1.20 per picul of the sugarcane
production in her hacienda and 500 cavans on the palay production. 11
From the foregoing, it is evident that the bank was as much , guilty as Castro was, of
negligence in giving its consent to the contracts. It apparently relied on representations
made by the Valencia spouses when it should have directly obtained the needed data from
Castro who was the acknowledged owner of the property offered as collateral. Moreover,
considering Castro's personal circumstances – her lack of education, ignorance and old age –
she cannot be considered utterly neglectful for having been defrauded. On the contrary, it is
demanded of petitioners to exercise the highest order of care and prudence in its business
dealings with the Valencias considering that it is engaged in a banking business –a business
affected with public interest. It should have ascertained Castro's awareness of what she was
signing or made her understand what obligations she was assuming, considering that she
was giving accommodation to, without any consideration from the Valencia spouses.
Petitioners further argue that Castro's act of holding the Valencias as her agent led the bank
to believe that they were authorized to speak and bind her. She cannot now be permitted to
deny the authority of the Valencias to act as her agent for one who clothes another with
apparent authority as her agent is not permitted to deny such authority.
The authority of the Valencias was only to follow-up Castro's loan application with the bank.
They were not authorized to borrow for her. This is apparent from the fact that Castro went
to the Bank to sign the promissory note for her loan of P3,000.00. If her act had been
understood by the Bank to be a grant of an authority to the Valencia to borrow in her
behalf, it should have required a special power of attorney executed by Castro in their favor.
Since the bank did not, We can rightly assume that it did not entertain the notion, that the
Valencia spouses were in any manner acting as an agent of Castro.
When the Valencias borrowed from the Bank a personal loan of P3,000.00 evidenced by a
promissory note (Exhibit 2) and mortgaged (Exhibit 6) Castro's property to secure said loan,
the Valencias acted for their own behalf. Considering however that for the loan in which the
Valencias appeared as principal borrowers, it was the property of Castro that was being
mortgaged to secure said loan, the Bank should have exercised due care and prudence by
making proper inquiry if Castro's consent to the mortgage was without any taint or defect.
The possibility of her not knowing that she signed the promissory note (Exhibit 2) as co-
maker with the Valencias and that her property was mortgaged to secure the two loans
instead of her own personal loan only, in view of her personal circumstances – ignorance,
lack of education and old age – should have placed the Bank on prudent inquiry to protect
its interest and that of the public it serves. With the recent occurrence of events that have
supposedly affected adversely our banking system, attributable to laxity in the conduct of
bank business by its officials, the need of extreme caution and prudence by said officials and
employees in the discharge of their functions cannot be over-emphasized.
Question is, likewise, raised as to the propriety of respondent court's decision which
declared that Castro's consignation in court of the amount of P3,383.00 was validly made. It
is contended that the consignation was made without prior offer or tender of payment to
the Bank, and it therefore, not valid. In holding that there is a substantial compliance with
the provision of Article 1256 of the Civil Code, respondent court considered the fact that the
Bank was holding Castro liable for the sum of P6,000.00 plus 12% interest per annum, while
the amount consigned was only P3,000.00 plus 12% interest; that at the time of
consignation, the Bank had long foreclosed the mortgage extrajudicially and the sale of the
mortgage property had already been scheduled for April 10, 1961 for non-payment of the
obligation, and that despite the fact that the Bank already knew of the deposit made by
Castro because the receipt of the deposit was attached to the record of the case, said Bank
had not made any claim of such deposit, and that therefore, Castro was right in thinking that
it was futile and useless for her to make previous offer and tender of payment directly to the
Bank only in the aforesaid amount of P3,000.00 plus 12% interest. Under the foregoing
circumstances, the consignation made by Castro was valid. if not under the strict provision
of the law, under the more liberal considerations of equity.
The final issue raised is the validity or invalidity of the extrajudicial foreclosure sale at public
auction of the mortgaged property that was held on April 11, 1961.
Petitioners contended that the public auction sale that was held on April 11, 1961 which was
the next business day after the scheduled date of the sale on April 10, 1961, a special public
holiday, was permissible and valid pursuant to the provisions of Section 31 of the Revised
Administrative Code which ordains:
Pretermission of holiday. – Where the day, or the last day, for doing any act required or
permitted by law falls on a holiday, the act may be done on the next succeeding business
day.
Respondent court ruled that the aforesaid sale is null and void, it not having been carried
out in accordance with Section 9 of Act No. 3135, which provides:
Section 9. – Notice shall be given by posting notices of the sale for not less than twenty days
in at least three public places of the municipality or city where the property is situated, and
if such property is worth more than four hundred pesos, such notice shall also be published
once a week for at least three consecutive weeks in a newspaper of general circulation in
the municipality or city.
We agree with respondent court. The pretermission of a holiday applies only "where the
day, or the last day for doing any act required or permitted by law falls on a holiday," or
when the last day of a given period for doing an act falls on a holiday. It does not apply to a
day fixed by an office or officer of the government for an act to be done, as distinguished
from a period of time within which an act should be done, which may be on any day within
that specified period. For example, if a party is required by law to file his answer to a
complaint within fifteen (15) days from receipt of the summons and the last day falls on a
holiday, the last day is deemed moved to the next succeeding business day. But, if the court
fixes the trial of a case on a certain day but the said date is subsequently declared a public
holiday, the trial thereof is not automatically transferred to the next succeeding business
day. Since April 10, 1961 was not the day or the last day set by law for the extrajudicial
foreclosure sale, nor the last day of a given period but a date fixed by the deputy sheriff, the
aforesaid sale cannot legally be made on the next succeeding business day without the
notices of the sale on that day being posted as prescribed in Section 9, Act No. 3135.
WHEREFORE, finding no reversible error in the judgment under review, We affirm the same
in toto. No pronouncement as to cost.
SO ORDERED.
6 Resolution of the Court of Appeals, dated May 25, 1970, Rollo, p. 168.
7 Art. 24. In all contractual property or other relations, when one of the parties is at a
disadvantage on account of his moral dependence, ignorance, indigence, mental weakness,
tender age or other handicap, the courts must be vigilant for his protection.
8 Art. 1332. When one of the parties is unable to read or if the contract is in a language not
understood by him, and mistake or fraud is alleged, the person enforcing the contract must
show that the terms thereof have been fully explained to the former.
9 Guico vs. Mayuga 63 Phil. 328; Velasco vs. Court of Appeals, 90 Phil. 688; Fonacier vs.
Court of Appeals, 96 Phil. 417.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-17072 October 31, 1961
CRISTINA MARCELO VDA. DE BAUTISTA, plaintiff-appellee,
vs.
BRIGIDA MARCOS, ET AL., defendants-appellants.
Aladin B. Bermudez for defendants-appellants.
Cube and Fajardo for plaintiff-appellee.
REYES, J.B.L., J.:
The main question in this appeal is whether or not a mortgagee may foreclose a mortgage
on a piece of land covered by a free patent where the mortgage was executed before the
patent was issued and is sought to be foreclosed within five years from its issuance.
The facts of the case appear to be as follows:
On May 17, 1954, defendant Brigida Marcos obtained a loan in the amount of P2,000 from
plaintiff Cristina Marcel Vda. de Bautista and to secure payment thereof conveyed to the
latter by way of mortgage a two (2)-hectare portion of an unregistered parcel of land
situated in Sta. Ignacia, Tarlac. The deed of mortgage, Exhibit "A", provided that it was to
last for three years, that possession of the land mortgaged was to be turned over to the
mortgagee by way of usufruct, but with no obligation on her part to apply the harvests to
the principal obligation; that said mortgage would be released only upon payment of the
principal loan of P2,000 without any interest; and that the mortgagor promised to defend
and warrant the mortgagee's rights over the land mortgaged.
Subsequently, or in July, 1956, mortgagor Brigida Marcos filed in behalf of the heirs of her
deceased mother Victoriana Cainglet (who are Brigida herself and her three sisters), an
application for the issuance of a free patent over the land in question, on the strength of the
cultivation and occupation of said land by them and their predecessor since July, 1915. As a
result, Free Patent No. V-64358 was issued to the applicants on January 25, 1957, and on
February 22, 1957, it was registered in their names under Original Certificate of Title No. P-
888 of the office of Register of Deeds for the province of Tarlac.
Defendant Brigida Marcos' indebtedness of P2,000 to plaintiff having remained unpaid up to
1959, the latter, on March 4, 1959, filed the present action against Brigida and her husband
(Civil Case No. 3382) in the court below for the payment thereof, or in default of the debtors
to pay, for the foreclosure of her mortgage on the land give as security. Defendants moved
to dismiss the action, pointing out that the land in question is covered by a free patent and
could not, therefore, under the Public Land Law, be taken within five years from the
issuance of the patent for the payment of any debts of the patentees contracted prior to the
expiration of said five-year period; but the lower court denied the motion to dismiss on the
ground that the law cited does not apply because the mortgage sought to be foreclosed was
executed before the patent was issued. Defendants then filed their answer, reiterating the
defense invoked in their motion to dismiss, and alleging as well that the real contract
between the parties was an antichresis and not a mortgage. Pre-trial of the case followed,
after which the lower court rendered judgment finding the mortgage valid to the extent of
the mortgagor's pro-indiviso share of 15,333 square meters in the land in question, on the
theory that the Public Land Law does not apply in this case because the mortgage in
question was executed before a patent was issued over the land in question; that the
agreement of the parties could not be antichresis because the deed Exhibit "A" clearly
shows a mortgage with usufruct in favor of the mortgagee; and ordered the payment of the
mortgage loan of P2,000 to plaintiff or, upon defendant's failure to do so, the foreclosure of
plaintiff's mortgage on defendant Brigida Marcos' undivided share in the land in question.
From this judgment, defendants Brigida Marcos and her husband Osmondo Apolocio
appealed to this Court.
There is merit in the appeal.
The right of plaintiff-appellee to foreclose her mortgage on the land in question depends not
so much on whether she could take said land within the prohibitive period of five years from
the issuance of defendants' patent for the satisfaction of the indebtedness in question, but
on whether the deed of mortgage Exhibit "A" is at all valid and enforceable, since the land
mortgaged was apparently still part of the public domain when the deed of mortgage was
constituted. As it is an essential requisite for the validity of a mortgage that the mortgagor
be the absolute owner of the thing mortgaged (Art. 2085), the mortgage here in question is
void and ineffective because at the time it was constituted, the mortgagor was not yet the
owner of the land mortgaged and could not, for that reason, encumber the same to the
plaintiff-appellee. Nor could the subsequent acquisition by the mortgagor of title over said
land through the issuance of a free patent validate and legalize the deed of mortgage under
the doctrine of estoppel (cf. Art. 1434, New Civil Code,1 since upon the issuance of said
patient, the land in question was thereby brought under the operation of the Public Land
Law that prohibits the taking of said land for the satisfaction of debts contracted prior to the
expiration of five years from the date of the issuance of the patent (sec. 118, C.A. No. 141).
This prohibition should include not only debts contracted during the five-year period
immediately preceding the issuance of the patent but also those contracted before such
issuance, if the purpose and policy of the law, which is "to preserve and keep in the family of
the homesteader that portion of public land which the State has gratuitously given to him"
(Pascua v. Talens, 45 O.G. No. 9 [Supp.] 413; De los Santos v. Roman Catholic Church of
Midsayap, G.R. L-6088, Feb. 24, 1954), is to be upheld.
The invalidity of the mortgage Exhibit "A" does not, however, imply the concomitant
invalidity of the collate agreement in the same deed of mortgage whereby possession of the
land mortgaged was transferred to plaintiff-appellee in usufruct, without any obligation on
her part to account for its harvests or deduct them from defendants' indebtedness of
P2,000. Defendant Brigida Marcos, who, together with her sisters, was in possession of said
land by herself and through her deceased mother before her since 1915, had possessory
rights over the same even before title vested in her as co-owner by the issuance of the free
patent to her and her sisters, and these possessory right she could validly transfer and
convey to plaintiff-appellee, as she did in the deed of mortgage Exhibit "A". The latter, upon
the other hand, believing her mortgagor to be the owner of the land mortgaged and not
being aware of any flaw which invalidated her mode of acquisition, was a possessor in good
faith (Art. 526, N.C.C.), and as such had the right to all the fruits received during the entire
period of her possession in good faith (Art. 544, N.C.C.). She is, therefore, entitled to the full
payment of her credit of P2,000 from defendants, without any obligation to account for the
fruits or benefits obtained by her from the land in question.
[ GR No. L-29388, Dec 28, 1970 ]
WHEREFORE, the judgment appealed from is reversed insofar as it orders the foreclosure of VINCENT P. DAYRIT v. CA +
the mortgage in question, but affirmed in all other respects. Costs again defendants- DECISION
appellants. 146 Phil. 1032

Bengzon, C.J., Padilla, Bautista Angelo, Labrador, Concepcion, Paredes and De Leon, JJ., CASTRO, J.:
concur.
Barrera, J., took no part. Petition for certiorari by way of appeal from the Court of Appeals' minute resolution of June
14, 1968 dismissing the petition for certiorari in CA-G.R. No. 41359-R, as well as its
resolutions of July 9, 1968 and August 5, 1968 denying the first and second motions for
Footnotes reconsideration, respectively, in the same case.

1 Art. 1434, N.C.C. provides that "When a person who is not the owner of a thing sells or On July 21, 1965, the defendants Vincent Dayrit, Leonila T. Sumbillo and, Reynaldo Angeles
alienates and delivers it, and later the seller or grantor acquires title thereto, such title entered into a contract with the Mobil Oil Philippines, Inc., entitled "LOAN & MORTGAGE
passes by operation of law to the buyer or grantee." AGREEMENT," providing, among others, that:

"(a) For and in consideration of Sales Agreement dated July 21, 1965, among the parties
The Lawphil Project - Arellano Law Foundation herein, Mobil grants a loan of P150,000 to borrowers.
"(b) Defendants-Borrowers shall repay Mobil the whole amount of P150,000 plus 10%
interest per annum on the diminishing balance for 48 months.
"(c) To secure the prompt repayment of such loan by defendants-borrowers to Mobil and
the faithful performance by Borrowers of that Sales Agreement, Defendants-Borrowers
hereby transfer in favor of Mobil by way of first mortgage lands covered by TCT No. 45169
and TCT No. 45170, together with the improvements existing in said two (2) parcels of land.
"(d) In case of default of Defendants-Borrowers in payment of any of the installments
and/or their failure to purchase the quantity of products stated therein Mobil shall have the
right to foreclose this mortgage.
"(e) Mobil, in case of default and foreclosure shall be entitled to attorney's fees and cost of
collection equivalent to not less than 25% of total indebtedness remaining unpaid.
"(f) All expenses in connection with the preparation and registration of this mortgage as well
as cancellation of same shall be for the account of Defendants-Borrowers.
"(g) If Defendants-Borrowers shall perform the full obligation above stated according to the
terms thereof, then this obligation shall be null and void, otherwise, it shall remain in full
force and effect."
The defendants violated the Loan & Mortgage Agreement, they having paid but one
installment in the amount of P 3,816, of which P1,250 was applied to interest, and the
remaining P2,566 to the principal obligation. The defendants likewise failed to buy the
quantities of products as required in the Sales Agreement (exh. D). The plaintiff made due
demand (exh. I), which the defendant Dayrit answered, acknowledging his liability in his
letter exh. I-1.
On November 17, 1967, after trial and after the parties had submitted their memoranda,[1]
the trial court rendered its decision, the dispositive portion of which reads:
"WHEREFORE, judgment is hereby rendered in favor of the plaintiff and against the
defendants Vincent Dayrit, Leonila T. Sunbillo and Reynaldo Angeles, ordering them to pay
to the plaintiff one-third each of the sum of P147,434.00 with interest of 10% per annum
from the time it fell due according to agreement, and in default of such payment, the
properties put up in collateral shall be sold in foreclosure sale in accordance with law, the
proceeds to be applied in payment of the amount due to the plaintiff from the defendants
as claimed in the complaint, provided that, as to Dayrit, his liability shall in no case
exceed 1/3 of the total obligation.
"The defendants are likewise ordered to pay to the plaintiff, in the same proportion of 1/3
each, 25% of the obligation as attorney's fees as provided in the contract; and P300.60 for
the registration of the contract.
* * * On April 10, 1968 the court a quo ordered all pending incidents set for hearing on. April 19,
"Each of the three said defendants shall also pay 1/3 of the costs."
No appeal having been interposed by the defendants, the above decision became final and
executory.
An undated Mobil's motion for execution of the decision and for the appointment of Eladio
Ylagan as special sheriff (annex D) was received by the herein petitioner Dayrit on February
8, 1968. Whereupon, he filed his opposition and motion to stay execution, alleging that
before the finality of the aforesaid judgment, he and the plaintiff had agreed not to appeal
and/or file any motion for reconsideration, the petitioner offering to pay his one-third share
with a reasonable discount, if possible, in so far as the interests and the award for attorney's
fees were concerned, with the corresponding release of the mortgage on all his properties,
and praying, in view thereof, for a 30-day grace period within which to pay the plaintiff. The
30-day grace period was granted by the court in its order of February 24, 1968.
On March 25, 1968 the petitioner filed another motion for 20 days' extension within which
to pay his one-third share of the judgment obligation and to submit the corresponding
compromise agreement for the satisfaction of the judgment. The said motion was granted
on April 1, 1968.
Thereafter, the respondent Mobil filed an "Urgent Reply to Opposition and Motion to Stay
Execution dated Feb. 21, 1968 and Motion dated March 25, 1968," alleging therein that the
respondent agreed to release the mortgage or collateral for the entire judgment obligation
only if "the whole principal mortgaged debt plus the whole accrued interest" were fully
paid. Mobil further prayed for a writ of execution to be issued against the petitioner after
the lapse of 20 days from March 25, 1968, if by then the parties shall not have submitted a
compromise agreement for the satisfaction of the judgment; Mobil also reiterated its prayer
for the appointment of respondent Eladio Ylagan as special sheriff.
On April 3, 1968 the petitioner filed a manifestation and motion, praying that he be allowed
to deposit with the Clerk of Court the amount corresponding to his one-third share of the
obligation under the decision of November 17, 1967, and that thereupon the collateral or
mortgage over petitioner's properties or lands be ordered released or cancelled.
1968, "so that the Court may have the opportunity to confer with the parties to thresh out
the settlement of this case." At this hearing Mobil did not appear; the court reset the
hearing for May 23, 1968.
Under date of May 8, 1968, Mobil filed an addendum to its reply dated April 1, 1968 and
opposition to petitioner's motion dated April 3, 1968, praying that the motion of petitioner
Dayrit that the entire mortgaged collateral be released upon his payment of mere 1/3 of the
loan obligation, be denied and instead a writ of execution against him in accordance with
the dispositive portion of the decision and sections 2 and 3 of Rule 68 of the Revised Rules
of Court be issued.
On May 18, 1968 the petitioner filed his rejoinder to respondent Mobil's aforesaid
addendum and opposition.
On May 23, 1968; after hearing oral argument, the court denied the manifestation and
motion of Dayrit filed thru counsel and dated April 3, 1968; the court further ruled that
"There is no further need to issue an order for the issuance of a writ of execution and
appointment of special sheriff ... considering that the Court, in its order of February 24,
1968, has already ordered the issuance of a writ of execution for the satisfaction of the judg-
ment."
The petitioner then filed his petition for certiorari with the Court of Appeals, dated May 30,
1968, alleging that "respondent Judge Arca acted without or in excess of his jurisdiction
and/or with grave abuse of discretion, in denying petitioner's motion to allow him to pay or
deposit his one-third share of the judgment obligation" as well as the consequent release or
cancellation of the mortgage on his properties.
The Court of Appeals, however, in its minute resolution of June 14, 1968, dismissed the
petition for certiorari, in the following words:
"Upon consideration of the petition for certiorari filed in this case, the Court RESOLVED TO
DISMISS the petition, there being no abuse of discretion in ordering the execution of a final
judgment. Details of execution for satisfaction of Vincent Dayrit's liability will be worked out
in connection with the sale of the collateral for mortgaged debt, and the judgment in Civil
Case No. 64138 of the CFI-Manila will control the disposition and application of the
collateral."
The petitioner filed a motion for reconsideration dated June 9, 1968 which the Court of
Appeals denied in its resolution of July 9, 1968, as follows:
"Both the petition and the motion for reconsideration are based on a misapprehension of
the terms of the judgment. The Mortgage obligation is one and indivisible. It was executed
to assure payment of the total indebtedness of the three defendants in Civil Case No. 64138,
and not merely one-third (1/3) thereof corresponding to petitioner Vincent P. Dayrit's
liability."
The petitioner's second motion for reconsideration of July 25, 1968 was summarily
dismissed on August 5, 1968, for lack of merit.
The petitioner, in his present petition, tenders the following issues for resolution:
"1) Whether or not respondent Judge [CFI-Manila] acted without or in excess of his
jurisdiction, and/ or with grave abuse of discretion in denying petitioner's motion to allow
him to exercise his clearly legal right to pay or deposit his one-third share of the judgment;
"2) The next issue was that brought about by the Court of Appeals resolution dismissing the
petition for certiorari, and which was raised in petitioner's motion dated June 19, 1968 for
reconsideration of said resolution, contending that the ground for dismissal did not jibe with
the issue raised in the petition for certiorari;
"3) And lastly, the Court of Appeals' resolution of July 9, 1968 denying said motion for
reconsideration apprehension on the part of petitioner of the terms of the respondent
judge."
1. The question raised by the respondent Mobil that the present petition for certiorari was
filed way beyond the reglementary period of 15 days from appellant's receipt of notice of
judgment or of the denial of his motion for reconsideration pursuant to section 1, Rule 45 of
the Revised Rules of Court,[2] needs to be resolved before consideration of this case on the
merits. Admittedly, the ex parte first motion for reconsideration filed by the herein
petitioner was denied, and copy of such denial was received by the petitioner on July 15,
1968. Still not satisfied, petitioner filed another ex parte motion for reconsideration on July
26, 1968, notice of the denial of which, under CA resolution dated August 5, 1968, was
received by said petitioner on August 9, 1968.
Respondent Mobil contends that the second motion for reconsideration filed by the
petitioner was a mere scrap of paper and pro forma since it was filed ex parte and without
express leave of court, contrary to the mandate of section 1, Rule 52 of the Rules of Court.
[3]
The rule appears to be inflexible in the sense that no more than one motion for
reconsideration shall be filed without express leave of court. The requirement that the
second motion for reconsideration must be presented, with leave of court, within fifteen
days from notice of the order or judgment, deducting the time during which the first motion
was pending, is to afford the court sufficient time to evaluate whether there is prima facie
merit therein, so that, "if the court finds merit prima facie in the motion for rehearing or
reconsideration, the adverse party shall be given time to answer, after which the court, in its
discretion, may set the case for oral argument."[4] And only upon compliance with the
above stated requirements may the second motion for reconsideration stay the final order
or judgment sought to be re-examined.[5]
The Court of Appeals gave due course to the second motion for reconsideration of the
herein petitioner, but nevertheless, dismissed the same summarily for lack of merit.
However, even assuming, that the ex parte second motion for reconsideration was properly
filed so as to toll the reglementary period within which to appeal, it appears that the
petition for certiorari filed with this Court on August 20, 1968 was time barred. From the
date of denial of the petitioner's ex parte first motion for reconsideration received by him
on July 15, 1968 assuming that the period was interrupted by the ex parte second motion
for reconsideration from July 26, 1968 to August 9, 1968 (15 days) - to the elevation of the
said case to this Court on August 20, 1968, 36 days had elapsed. Deducting the 15 days
during which the ex parte second motion for reconsideration was pending from the total
period of 36 days leaves 21 days. This means that the present petition was filed with this
Court six days late, contrary to and in violation of section 1, Rule 45, which specifically
provides that a petition for certiorari under such Rule should be filed within 15 days from
notice of judgment or denial of motion for reconsideration. Hence, the present petition may
be dismissed on the aforestated ground.
But we opt, nevertheless, to consider the merits of this case, if only to demonstrate to the
petitioner his error.
2. The decision of the lower court, let it not be forgotten, has admittedly become final and
executory. The controverted judgment ordered the defendants (Dayrit, Sumbillo and
Angeles) "to pay the plaintiff one-third each of the sum of P147,434.00 with interest of 10%
per annum from the time it fell due according to agreement, and in default of such
payment, the properties put up in collateral shall be sold in foreclosure sale in accordance
with law, the proceeds to be applied due to the plaintiff from the defendants as claimed in
the complaint, provided that, as to Dayrit, his liability shall in no case exceed 1/3 of the total
obligation."
In sum, the issue that must be resolved in the instant case is, whether or not the Court of
First Instance of Manila erred in ordering the sale at public auction of the mortgaged
properties to answer for the entire P147,434 principal obligation after the defendants
(Dayrit Sumbillo and Angeles) had failed to pay their respective one-third shares of the
obligation to the respondent Mobil; otherwise stated, whether or not the respondents
Court of First Instance and the Court of Appeals erred in refusing to allow the alleged
proposed deposit of a sum equivalent to 1/3 of the loan agreed upon and in refusing to
release forever the collaterals owned by Dayrit, although the other 2/3 portion of the loan
obligation had not been satisfied due to insolvency of the other two co-defendants.
To begin with, the prayer of the complaint filed with the respondent Court of First Instance
recites as follows:
"WHEREFORE, it is respectfully prayed that judgment be rendered
"a) Ordering the defendants to pay the sum of P147,484 with 10% interest per annum from
the time, it fell due as agreed upon and that in default of such payment, the above
described properties be sold and the proceeds of sale be applied to the payment of the
amount due to the plaintiff from the defendants under this complaint."
The complaint, in effect, is acollection suit with damages and foreclosure of mortgage
against the three defendants, Leonila Sumbillo, Reynaldo Angeles and Vincent Dayrit.
Although the Loan and Mortgage Agreement was signed by the three defendants as
mortgagors, the properties being foreclosed belong solely to, and are registered solely in the
name of, the petitioner Vincent Dayrit.
The pertinent dispositive portion of the decision rendered by the lower court reads:
"WHEREFORE, judgment is hereby rendered in favor of the plaintiff and against the
defendants"' Vincent Dayrit; Leonila T. Sumbillo and Reynaldo Angeles, ordering them to
pay to the plaintiff one?third each of the sum of P147,434 with interest of 10% per annum
from the time it fell due according to agreement, and in default of such payment, the
properties put in collateral shall, be sold in foreclosure sale in accordance with law, the
proceeds to be applied in payment of the amount due to the plaintiff from the defendants
as claimed in the complaint, provided that, as to Dayrit, his liability shall in no case exceed
1/3 of the total obligation."
The petitioner contends that the said judgment is a simple money judgment and not a
foreclosure judgment, and that because the respondent Mobil resorted to the remedy of
enforcing his right by a complaint against the defendant-petitioner for collection of a sum of
money, with the consequent simple money judgment, the satisfaction of his 1/3 share of the
joint obligation would release all the mortgaged properties put up as collateral to secure the
payment of the whole obligation. The reason advanced by the petitioner is that the decision
rendered being a simple money judgment and not a mortgage-foreclosure judgment, the
distinction in its execution is decisive, that is, whereas in mortgage foreclosure the judgment
should conform to the requirement, embodied in section 2, Rule 68 of the Rules of Court,
that the order of payment be made into the court "within a period not less than ninety (90)
days x x x and in default of such payment, the property mortgaged be sold to realize" the
indebtedness, in a simple money judgment, upon satisfaction of part (in the instant case his
1/3 share) of the joint obligation, the mortgaged properties should be released from such
mortgage contract.
This contention of the petitioner is clearly devoid of merit.
The decision which the petitioner describes as a simple money judgment orders the
defendants Vincent Dayrit, Leonila T. Sumbillo and Reynaldo Angeles to pay the plaintiff the
sum of P147,434, and in default of such payment, the properties put up in collateral shall be
sold in foreclosure sale in accordance with law, the proceeds to be applied in payment of
the amount due to the plaintiff from the defendants as claimed in the complaint. While it is
true that the obligation is merely joint and each of the defendants is obliged to pay only
his/her 1/3 share of the joint obligation, the undisputed fact remains that the intent and
purpose of the Loan and Mortgage Agreement was to secure, inter alia, the entire loan of
P150,000 that the respondent Mobil extended to the defendants. The court below found
that the defendants had violated the Loan and Mortgage Agreement, they having paid but
one installment. The undisputed fact also remains that the petitioner alone benefited from
the proceeds of the loan of P150,000, the said amount having been paid directly to the Bank
of the Philippines to bail out the same properties from a mortgage that was about to be
foreclosed. In effect, Mobil merely stepped into the shares of the Bank of the Philippines.
The petitioner insists that the dispositive portion of the judgment declaring the obligation
merely joint with the proviso that "as to Dayrit, his liability shall in no case exceed 1/3 of the
total obligation, should be construed in the light of the opinion of the lower court that "said
collateral must answer in full but only to the extent of Dayrits liability which as above deter-
mined, is 1/3 of the obligation, thereby entitling him to pay or deposit in court his
corresponding share of the joint obligation in satisfaction thereof, with the automatic
release of all the mortgaged properties.
A judgment must be distinguished from an opinion. The latter is the informal expression of
the views of the court and cannot prevail against its final order or decision. "While the two
may be combined in one instrument, the opinion forms no part of the judgment. There is a
distinction between the findings and conclusion of a court and its judgment. While they
may constitute its decision and amount to a rendition of a judgment they are not the
judgment itself. They amount to nothing more than an order for judgment which must be
distinguished from the judgment. Only the dispositive portion may be executed."[6]
Besides, well-entrenched in law is the rule that a mortgage directly and immediately
subjects the property upon which it is imposed,[7] the same being indivisible even though
the debt may be divided,[8] and such indivisibility likewise being unaffected by the fact that
the debtors are not solidarily liable.[9] As Tolentino, in his Commentaries and Jurisprudence
on the Civil Code of the Philippines,[10] puts it -
"When several things are pledged or mortgaged, each thing for a determinate portion of the
debt, the pledges or mortgages are considered separate from each other. But when the
several things are given to secure the same debt in its entirety, all of them are liable for the
debt, and the creditor does not have to divide his action by distributing the debt among the
various things pledged or mortgaged. Even when only a part of the debt remains unpaid, all
the things are still liable for such balance. Hence, a mortgage voluntarily constituted by the
debtor on two or more parcels of land is one and indivisible, and the mortgagee has the
right to have either or both parcels, jointly or singly, sold to satisfy his claim. In case the
mortgaged properties are a house and lot, it can not be claimed that the lot and the house
should be sold separately and not together."
But then there is this other seeming posture of the petitioner: that the judgment which has
become final and executory either modified or superseded the Loan and Mortgage Agree-
ment between the parties, and since the obligation is merely joint, upon payment thereof,
as in attachment, the properties mortgaged are released from liability. The decision under
consideration, however, did nothing of the sort. The petitioner conveniently refused to
recognize the true import of the dispositive portion of the judgment. The said portion
unequivocally states that "in default of such payment, the properties put up in collateral
shall be sold in foreclosure sale in accordance with law, the proceeds to be applied in
payment of the amount due to the plaintiff as claims d in the complaint." And the claim in
the complaint was the full satisfaction of the total indebtedness of P147,434; therefore, the
release of all the mortgaged properties may be authorized only upon the full payment of the
above-stated amount secured by the said mortgage.
[2] "Filing of petition with Supreme Court. - A party may appeal by certiorari, from a
judgment of the Court of Appeals, by filing with the Supreme Court a petition for certiorari,
within fifteen (15) days from notice of judgment or of the denial of his motion for
reconsideration filed in due time, and paying tat the same time, to the clerk of said court the
corresponding docketing fee. The petition shall not be acted upon without proof of service
of a copy thereof to the Court of Appeals."
[3] "Motion for re-hearing. - A motion for a re-hearing or reconsideration shall be made ex
parte and filed within fifteen (15) days from notice of the final order or judgment. No more
than one motion for re-hearing or reconsideration shall be filed without express leave of
court. A second motion for reconsideration may be presented within fifteen (15) days from
notice of the order or judgment deducting the time in which the first motion has been pend-
ing."

With respect to the provisions of section 2 of Rule 68 of the Rules of Court giving the
petitioner a period of 90 days within which he might voluntarily pay the debt before the sale
of the collateral at public auction was ordered, we agree that the trial court failed to provide
such period. However, this failure can be regarded as having resulted in mere damnum
absque injuria. From November 17, 1967 when the decision was rendered to May 23, 1968
when the final order to sell the mortgaged properties was issued, a period of more than six
months had passed, which is considerably much more than the 90-day period of grace al-
lowed the petitioner to validly tender the proper payment.

ACCORDINGLY, the petition is denied, at petitioner's cost.

Concepcion, C.J., Reyes, Dizon, Makalintal, Zaldivar, Teehankee, Barredo, Villamor, and
Makasiar, JJ., concur.
Fernando, J., no part.

[1] Defendants Leonila T. Sumbillo and Reynaldo Angeles, by motion of the plaintiff Mobil,
were declared in default for failure to answer the complaint. Only Vincent P. Dayrit filed an
answer to the Mobil complaint.

Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-19227 February 17, 1968
DIOSDADO YULIONGSIU, plaintiff-appellant,
vs.
PHILIPPINE NATIONAL BANK (Cebu Branch), defendant-appellee.
Vicente Jaime, Regino Hermosisima & E. Lumontad, Sr. for plaintiff-appellant.
Tomas Besa, R. B. de los Reyes and C. E. Medina for defendant-appellee.
BENGZON, J.P., J.:
Plaintiff-appellant Diosdado Yuliongsiu 1 was the owner of two (2) vessels, namely: The
M/S Surigao, valued at P109,925.78 and the M/S Don Dino, valued at P63,000.00, and
operated the FS-203, valued at P210,672.24, which was purchased by him from the
Philippine Shipping Commission, by installment or on account. As of January or February,
1943, plaintiff had paid to the Philippine Shipping Commission only the sum of P76,500 and
the balance of the purchase price was payable at P50,000 a year, due on or before the end
of the current year. 2
On June 30, 1947, plaintiff obtained a loan of P50,000 from the defendant Philippine
National Bank, Cebu Branch. To guarantee its payment, plaintiff pledged the M/S Surigao,
M/S Don Dino and its equity in the FS-203 to the defendant bank, as evidenced by the
pledge contract, Exhibit "A" & "1-Bank", executed on the same day and duly registered with
the office of the Collector of Customs for the Port of Cebu. 3
Subsequently, plaintiff effected partial payment of the loan in the sum of P20,000. The
remaining balance was renewed by the execution of two (2) promissory notes in the bank's
favor. The first note, dated December 18, 1947, for P20,000, was due on April 16, 1948
while the second, dated February 26, 1948, for P10,000, was due on June 25, 1948. These
two notes were never paid at all by plaintiff on their respective due dates. 4
On April 6, 1948, the bank filed criminal charges against plaintiff and two other
accused for estafa thru falsification of commercial documents, because plaintiff had, as last
indorsee, deposited with defendant bank, from March 11 to March 31, 1948, seven Bank of
the Philippine Islands checks totalling P184,000. The drawer thereof — one of the co-
accused — had no funds in the drawee bank. However, in connivance with one employee of
defendant bank, plaintiff was able to withdraw the amount credited to him before the
discovery of the defraudation on April 2, 1948. Plaintiff and his co-accused were convicted
by the trial court and sentenced to indemnify the defendant bank in the sum of P184,000.
On appeal, the conviction was affirmed by the Court of Appeals on October 31, 1950. The
corresponding writ of execution issued to implement the order for indemnification was
returned unsatisfied as plaintiff was totally insolvent. 5
Meanwhile, together with the institution of the criminal action, defendant bank took
physical possession of three pledged vessels while they were at the Port of Cebu, and on
April 29, 1948, after the first note fell due and was not paid, the Cebu Branch Manager of
defendant bank, acting as attorney-in-fact of plaintiff pursuant to the terms of the pledge
contract, executed a document of sale, Exhibit "4", transferring the two pledged vessels and
plaintiff's equity in FS-203, to defendant bank for P30,042.72. 6
The FS-203 was subsequently surrendered by the defendant bank to the Philippine
Shipping Commission which rescinded the sale to plaintiff on September 8, 1948, for failure
to pay the remaining installments on the purchase price thereof. 7 The other two boats, the
M/S Surigao and the M/S Don Dino were sold by defendant bank to third parties on March
15, 1951.
On July 19, 1948, plaintiff commenced action in the Court of First Instance of Cebu to
recover the three vessels or their value and damages from defendant bank. The latter filed
its answer, with a counterclaim for P202,000 plus P5,000 damages. After issues were joined,
a pretrial was held resulting in a partial stipulation of facts dated October 2, 1958, reciting
most of the facts above-narrated. During the course of the trial, defendant amended its
answer reducing its claim from P202,000 to P8,846.01, 8 but increasing its alleged damages
to P35,000.
The lower court rendered its decision on February 13, 1960 ruling: (a) that the bank's
taking of physical possession of the vessels on April 6, 1948 was justified by the pledge
contract, Exhibit "A" & "1-Bank" and the law; (b) that the private sale of the pledged vessels
by defendant bank to itself without notice to the plaintiff-pledgor as stipulated in the pledge
contract was likewise valid; and (c) that the defendant bank should pay to plaintiff the sums
of P1,153.99 and P8,000, as his remaining account balance, or set-off these sums against the
indemnity which plaintiff was ordered to pay to it in the criminal cases.
When his motion for reconsideration and new trial was denied, plaintiff brought the
appeal to Us, the amount involved being more than P200,000.00.
In support of the first assignment of error, plaintiff-appellant would have this Court
hold that Exhibit "A" & "1-Bank" is a chattel mortgage contract so that the creditor
defendant could not take possession of the chattels object thereof until after there has been
default. The submission is without merit. The parties stipulated as a fact that Exhibit "A" &
"1-Bank" is a pledge contract —
3. That a credit line of P50,000.00 was extended to the plaintiff by the defendant Bank,
and the plaintiff obtained and received from the said Bank the sum of P50,000.00, and in
order to guarantee the payment of this loan, the pledge contract, Exhibit "A" & Exhibit "1-
Bank", was executed and duly registered with the Office of the Collector of Customs for the
Port of Cebu on the date appearing therein; (Emphasis supplied)1äwphï1.ñët
Necessarily, this judicial admission binds the plaintiff. Without any showing that this
was made thru palpable mistake, no amount of rationalization can offset it. 9
The defendant bank as pledgee was therefore entitled to the actual possession of the
vessels. While it is true that plaintiff continued operating the vessels after the pledge
contract was entered into, his possession was expressly made "subject to the order of the
pledgee." 10 The provision of Art. 2110 of the present Civil Code 11 being new — cannot
apply to the pledge contract here which was entered into on June 30, 1947. On the other
hand, there is an authority supporting the proposition that the pledgee can temporarily
entrust the physical possession of the chattels pledged to the pledgor without invalidating
the pledge. In such a case, the pledgor is regarded as holding the pledged property merely
as trustee for the pledgee. 12
Plaintiff-appellant would also urge Us to rule that constructive delivery is insufficient to
make pledge effective. He points to Betita v. Ganzon, 49 Phil. 87 which ruled that there has
to be actual delivery of the chattels pledged. But then there is also Banco Español-Filipino v.
Peterson, 7 Phil. 409 ruling that symbolic delivery would suffice. An examination of the
peculiar nature of the things pledged in the two cases will readily dispel the apparent
contradiction between the two rulings. In Betita v. Ganzon, the objects pledged — carabaos
— were easily capable of actual, manual delivery unto the pledgee. In Banco Español-Filipino
v. Peterson, the objects pledged — goods contained in a warehouse — were hardly capable
of actual, manual delivery in the sense that it was impractical as a whole for the particular
transaction and would have been an unreasonable requirement. Thus, for purposes of
showing the transfer of control to the pledgee, delivery to him of the keys to the warehouse
sufficed. In other words, the type of delivery will depend upon the nature and the peculiar
circumstances of each case. The parties here agreed that the vessels be delivered by the
"pledgor to the pledgor who shall hold said property subject to the order of the pledgee."
Considering the circumstances of this case and the nature of the objects pledged, i.e.,
vessels used in maritime business, such delivery is sufficient.
Since the defendant bank was, pursuant to the terms of pledge contract, in full control
of the vessels thru the plaintiff, the former could take actual possession at any time during
the life of the pledge to make more effective its security. Its taking of the vessels therefore
on April 6, 1948, was not unlawful. Nor was it unjustified considering that plaintiff had just
defrauded the defendant bank in the huge sum of P184,000.
The stand We have taken is not without precedent. The Supreme Court of Spain, in a
similar case involving Art. 1863 of the old Civil Code, 13 has ruled: 14
Que si bien la naturaleza del contrato de prenda consiste en pasar las cosas a poder
del acreedor o de un tercero y no quedar en la del deudor, como ha sucedido en el caso de
autos, es lo cierto que todas las partes interesadas, o sean acreedor, deudor y Sociedad,
convinieron que continuaran los coches en poder del deudor para no suspender el trafico, y
el derecho de no uso de la prenda pertenence al deudor, y el de dejar la cosa bajo su
responsabilidad al acreedor, y ambos convinieron por creerlo util para las partes
contratantes, y estas no reclaman perjuicios no se infringio, entre otros este articulo.
In the second assignment of error imputed to the lower court plaintiff-appellant
attacks the validity of the private sale of the pledged vessels in favor of the defendant bank
itself. It is contended first, that the cases holding that the statutory requirements as to
public sales with prior notice in connection with foreclosure proceedings are waivable, are
no longer authoritative in view of the passage of Act 3135, as amended; second, that the
charter of defendant bank does not allow it to buy the property object of foreclosure in case
of private sales; and third, that the price obtained at the sale is unconscionable.
There is no merit in the claims. The rulings in Philippine National Bank v. De Poli, 44
Phil. 763 and El Hogar Filipino v. Paredes, 45 Phil. 178 are still authoritative despite the
passage of Act 3135. This law refers only, and is limited, to foreclosure of real estate
mortgages. 15 So, whatever formalities there are in Act 3135 do not apply to pledge.
Regarding the bank's authority to be the purchaser in the foreclosure sale, Sec. 33 of Act
2612, as amended by Acts 2747 and 2938 only states that if the sale is public, the bank could
purchase the whole or part of the property sold " free from any right of redemption on the
part of the mortgagor or pledgor." This even argues against plaintiff's case since the import
thereof is this if the sale were private and the bank became the purchaser, the mortgagor or
pledgor could redeem the property. Hence, plaintiff could have recovered the vessels by
exercising this right of redemption. He is the only one to blame for not doing so.
Regarding the third contention, on the assumption that the purchase price was
unconscionable, plaintiff's remedy was to have set aside the sale. He did not avail of this.
Moreover, as pointed out by the lower court, plaintiff had at the time an obligation to return
the P184,000 fraudulently taken by him from defendant bank.
The last assignment of error has to do with the damages allegedly suffered by plaintiff-
appellant by virtue of the taking of the vessels. But in view of the results reached above,
there is no more need to discuss the same.
On the whole, We cannot say the lower court erred in disposing of the case as it did.
Plaintiff-appellant was not all-too-innocent as he would have Us believe. He did defraud the
defendant bank first. If the latter countered with the seizure and sale of the pledged vessels
pursuant to the pledge contract, it was only to protect its interests after plaintiff had
defaulted in the payment of the first promissory note. Plaintiff-appellant did not come to
court with clean hands.
WHEREFORE, the appealed judgment is, as it is hereby, affirmed. Costs against
plaintiff-appellant. So ordered.
Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Zaldivar, Sanchez, Castro, Angeles and
Fernando, JJ., concur.1äwphï1.ñët
7Par. 5, Pre-Trial Order of Oct. 2, 1958; Record on Appeal, pp. 43-44.
8There was an 8th check, for P18,000, deposited by plaintiff and for which the drawer had
no funds. This amount less plaintiff's actual balance of P9,153.99 in his account gives the
bank an P8,846.01 credit.
9Sec. 2, Rule 129, Rules of Court.
10Exh. "A" & "1-Bank" recites in part: ". . . the Pledgor . . . hereby gives Possession of such
property for the purpose of this pledge to the Pledgor who shall hold said property subject
to the order of the Pledge." (Emphasis supplied)
11Providing that if after the perfection of the pledge, the thing is found in the pledgor's
possession, it is presumed that the same was returned by the pledgee, thereby
extinguishing the pledge.
1272 C.J.S. 40 - 41.
13Which provides: "In addition to the requisites mentioned in Article 1857, it shall be
necessary, in order to constitute the contract of pledge, that the pledged be placed in the
possession of the creditor or of a third person appointed by common consent."
 as the highest bidder for the amount of EIGHTEEN THOUSAND NINE HUNDRED AND
SEVENTY FIVE (P18,975.00) PESOS.
Republic of the Philippines
SUPREME COURT The certificate of sale dated March 7, 1977 issued by the Provincial Sheriff to Tioseco was
Manila registered in the Office of the Register of Deeds of Tarlac on March 8, 1977. Tioseco's
ownership over the properties was consolidated, the title of the spouses Villanueva was
SECOND DIVISION cancelled and TCT No. 141194 was issued to Tioseco by the Register of Deeds on March 7,
1978.
G.R. No. L-66597 August 29, 1986
It is claimed by Tioseco that sometime before March 9, 1978 respondents Villanueva visited
LEONARDO TIOSECO, petitioner, him in his house and offered to pay the amount he had paid for the three lots auctioned off
vs. on March 7, 1977. Tioseco told them that they could redeem the three lots by paying to him
HONORABLE COURT OF APPEALS JOSE P. VILLANUEVA and TIMOTEA P. VILLANUEVA, the amount he paid at the auction sale plus interest. The respondents promised to return,
respondents. but never did.

Jose T. Sumat for petitioner.
Amado F. Nera for respondents.
PARAS, J.:
A petition for review by certiorari of the decision of the respondent Intermediate Appellate
Court in AC-G.R. CV No. 68888 promulgated on December 27, 1983, as well as of the
Resolution of said appellate court promulgated on February 13, 1984 denying the Motion
for Reconsideration of the aforesaid decision.
The facts of this case are as follows: The respondent spouses Jose P. Villanueva and Timotea
P. Villanueva mortgaged to the Tarlac Branch of the Philippine National Bank three lots
described in OCT No. C-542 issued by the Register of Deeds of Tarlac to secure payment of a
loan of EIGHT THOUSAND SIX HUNDRED (P8,600.00) PESOS. When they failed to comply
with the mortgage contract, the Philippine National Bank petitioned the Provincial Sheriff of
Tarlac to foreclose upon the properties extrajudicially. The Provincial Sheriff in the public
auction he conducted on March 7, 1977 sold the lots to Leonardo Tioseco, herein petitioner,
Upon the other hand, it is claimed by the respondents that they offered to redeem the three
lots within the period of redemption but Tioseco allegedly demanded TWENTY TWO
THOUSAND SIX HUNDRED FORTY ONE PESOS AND EIGHT CENTAVOS (P22,641.08) as
redemption price. Finding the amount demanded excessive, the respondents Villanueva
filed a suit on March 7, 1978 to annul the sale in favor of Tioseco on the ground that it was
irregular and to require both the Philippine National Bank and Tioseco to determine the
amount they should pay to be able to redeem the three lots.
The Philippine National Bank stated in its answer that at the time of the auction sale of the
three lots on March 7, 1977 the amount of EIGHTEEN THOUSAND NINE HUNDRED SEVENTY
FIVE (P18,975.00) PESOS was due from the respondents. The amount included the principal
of the loan, accrued interest, service charges, expenses of foreclosure, and attorney's fees.
The answer also stated that the auction sale conducted by the Provincial Sheriff was in
accordance with the formalities and other requirements prescribed by law.
In his answer, Tioseco denied having demanded the sum of TWENTY TWO THOUSAND SIX
HUNDRED FORTY ONE PESOS AND EIGHT CENTAVOS (P22,641-08) from the respondents.
After trial the lower court rendered its decision, the dispositive portion of which reads-
WHEREFORE, the plaintiffs are allowed to redeem the properties covered by TCT No. 141194
of the Register of Deeds of Tarlac by the payment to the defendant Tioseco of the amount
of EIGHTEEN THOUSAND NINE HUNDRED SEVENTY FIVE (P 18,975.00) PESOS plus 1% per
month interest thereon in addition from the time of the sale on March 7, 1977 to the time
of redemption, plus any assessment for taxation which defendant Tioseco may have paid
thereon and the interest on such amount at the same rate and all other expenses specified
in Sec. 30, Rule 39 of the Rules of Court within 30 days from the finality of this judgment,
without pronouncement as to costs,
On appeal by petitioner, the Intermediate Appellate Court affirmed in toto the decision of
the lower court. With the denial of his motion for reconsideration, the petitioner filed this
petition for review of the decision of the appellate court.
Petitioner made the following assignment of errors:
I When the respondents chose to enforce their right of redemption thru a court action on
THE TRIAL COURT ERRED IN HOLDING THAT DEFENDANT LEONARDO TIOSECO PUT UP AN
AMOUNT BIGGER THAN WHAT WAS PROPER TO PREVENT THE PLAINTIFFS FROM
EXERCISING THEIR RIGHTS OF REDEMPTION.
II
THE TRIAL COURT ERRED IN HOLDING THAT THE FAILURE OF THE PLAINTIFFS TO MAKE A
VALID TENDER AND TO CONSIGN THE AMOUNT IN COURT ASSUMES SUBORDINATE
IMPORTANCE AND THE PLAINTIFFS DESPITE SUCH FAILURE TO COMPLY BY THE STATUTORY
REQUIREMENTS FOR LEGAL REDEMPTION, ARE STILL ENTITLED TO MAKE THE REDEMPTION.
III
THE TRIAL COURT ERRED IN ALLOWING THE PLAINTIFFS TO REDEEM THE PROPERTIES
COVERED BY TCT NO. 141194 OF THE REGISTER OF DEEDS OF TARLAC AFTER TIOSECO'S
OWNERSHIP TO THE PROPERTIES WAS CONSOLIDATED. (pp. 9-10, Rollo).
We prescind from the assignment of errors raised and proceed directly to the question
presented before this Court: Have the respondents exercised their right of redemption
effectively? We answer in the affirmative.
There is no question that the respondents have the right to redeem the subject property in
view of the provision of Section 25, P.D. No. 694 (Revised Charter of PNB):
SEC. 25. Right of redemption of property-Right of possession during redemption period.—
Within one year from the registration of the foreclosure sale of real estate, the mortgagor
shall have the right to redeem the property by paying all claims of the Bank against him on
the date of the sale including all the costs and other expenses incurred by reason of the
foreclosure sale and custody of the property, as well as charges and accrued interests.
xxx xxx xxx
March 7, 1978 they were well within their right as the action was filed within one year from
the registration of the foreclosure sale of the real estate on March 9, 1977. P.D. No. 694 is
silent as to any formal tender of repurchase price as a pre-condition to a valid exercise of
the right of redemption. It does not even require any previous notice to the vendee, nor a
meeting between him and the redemptioner, much less a previous formal tender before any
action is begun in court to enforce the right of redemption. In any case, the lack of funds
which may render the right inefficacious cannot affect the existence of the right. In fact, the
filing of the action itself, within the period of redemption, is equivalent to a formal offer to
redeem (see Reoveros v. Abel and Sandoval, 48 O.G. 5318). And in this connection, a formal
offer to redeem, accompanied by a bona fide tender of the redemption price, altho proper,
is not even essential where, as in the instant case, the right to redeem is exercised thru the
filing of judicial action.
In the instant case, the ends of justice would be better served by affording the respondents
the opportunity to redeem the subject property. This ruling is in obedience to the policy of
the law to aid rather than to defeat the right of redemption. (Javellana v. Mirasol and
Nunez, 40 Phil. 761).
 Republic of the Philippines
WHEREFORE, the petition for certiorari is DENIED and the judgment appealed from is SUPREME COURT
AFFIRMED. Costs against the petitioner. Manila

SO ORDERED. SECOND DIVISION

Feria (Chairman), Fernan, Alampay and Gutierrez, Jr., JJ., concur. G.R. No. L-52831 July 29, 1983

MANUEL R. DULAY, petitioner,

vs.
HON. JUDGE GLICERIO V. CARRIAGA, Judge of the Court of First Instance of Cotabato, and
EUSEBIO C. TANGHAL, respondents.

Fructuoso S, Villarin for petitioner.

Miguel B. Albar for private respondent.

CONCEPCION JR., J.:

Petition for certiorari, with preliminary injunction, to annul and set aside the order of the
respondent judge which annulled the redemption of several parcels of land levied upon and
sold at an execution sale.

In Civil Case No. 2152 of the Court of First Instance of Cotabato, an action for the recovery of
a sum of money, the trial court rendered a decision ordering the defendant, Manuel R.
Dulay, the petitioner herein, to pay the plaintiff, Eusebio C. Tanghal, the herein private
respondent, the sum of P143,980.00. Seventeen (17) parcels of land belonging to the
defendant were, consequently, levied upon then sold at a public auction sale to the plaintiff,
as the highest bidder thereof, at prices profferred and fixed for each parcel, for the sum of
P82,598.00. 1 Within the reglementary period for redemption, the defendant redeemed
eight (8) of the levied properties by paying the prices at which they were actually sold in the
auction sale, for the sum of P17,017.00, and was issued a Certificate of Redemption. 2 Upon
motion of the plaintiff, however, the trial court citing the case of Development Bank of the
Philippines vs. Dionisio Mirang, 3 declared the redemption as null and void on the ground
that piece-meal redemption is not allowed by law and that for redemption to be valid, the
judgment debtor should pay the entire judgment debt and not the purchase price. 4 Hence,
this petition for certiorari with preliminary injunction, to annul and set aside the order of the
respondent judge. As prayed for, the Court issued a temporary restraining order, restraining
the respondents from enforcing the questioned order. 5
There is merit in the petition. In the redemption of properties sold at an execution sale, the
amount payable is no longer the judgment debt, but the purchase price. In the case of
Castillo vs. Nagtalon, 6 the Court said:
The procedure for the redemption of properties sold at execution sale is prescribed in Sec.
26, Rule 39 of the Rules of Court. Thereunder, the judgment debtor or redemptioner may
redeem the property from the purchaser within 12 months after the sale, by paying the
purchaser the amount of his purchase, with I % per month interest thereon up to the time of
redemption, together with the taxes paid by the purchaser after the purchase, if any. In
other words, in the redemption of properties sold at an execution sale, the amount payable
is no longer the judgment debt but the purchase price. Considering that appellee tendered
payment only of the sum of P317.44, whereas the 3 parcels of land she was seeking to
redeem were sold for the sums of P1,240.00, P24.00 and P30.00, respectively, the
aforementioned amount of P317.44 is insufficient to effectively release the properties.
However, as the tender of payment was timely made and in good faith, in the interest of
justice We incline to give the appellee opportunity to complete the redemption purchase of
the 3 parcels as provided in Sec. 26, Rule 39 of the Rules of Court, within 15 days from the
time this decision becomes final and executory.
Should appellee fail to complete the redemption price, the sheriff may either release to
appellee the 2 smaller lots and return the entire deposit without releasing any of the 3 lots,
as the appellee may elect.
The case of DBP vs. Mirang, relied upon by the respondent judge, wherein the Court ruled
that the mortgagor whose property has been sold at public auction, either judicially or
extrajudicially, shall have the right to redeem the property by paying an the amounts owed
to the mortgage on the date of the sale, with interest thereon at the rate specified in the
contract and not the amount for which the property was acquired at the foreclosure sale is
not controlling because of different factual settings. The Mirang case involves the
redemption of mortgaged property sold at a foreclosure sale and the mortgagor was
ordered to pay his entire indebtedness to the mortgagee, plus the agreed interests thereon,
before redemption can be effected, because the charter of the mortgagee (DBP) required
the payment of such amount. The Court said:
The third issue has likewise been resolved by this Court in a similar case. The issue posed
there involved the price at which the mortgagor should redeem his property after the same
had been sold at public auction — whether the amount for which the property was sold, as
contended by the mortgagor, or the balance of the loan obtained from the banking
institution, as contended by the mortgagee RFC. Cited in that case was Section 31 of Com.
Act No. 459, which was the special law applicable exclusively to properties mortgaged with
the RFC, as follows:
The mortgagor or debtor to the Agricultural and Industrial Bank whose real property has
been sold at public auction, judicially or extra-judicially, for the full or partial payment of an
obligation to said Bank, shall, within one year from the date of the auction sale, have the
right to redeem the real property by paying to the Bank an the amount he owed the latter
on the date of the sale, with interest on the total indebtedness at the rate agreed upon in
the obligation from said date, unless the bidder has taken material possession of the
property or unless this has been delivered to him, in which case the proceeds of the
property shall compensate the interest. ...
The same provision applies in the instant case. The unavoidable conclusion is that the
appellant, in redeeming the foreclosed property, should pay the entire amount he owed to
the Bank on the date of the sale, with interest thereon at the rate agreed upon.
The instant case, on the other hand, involves the redemption of property levied upon and
sold at public auction to satisfy a judgment and, unlike the Mirang case, there is no charter
that requires the payment of sums of money other than those provided for in Section 30 of
Rule 39, Revised Rules of Court.
Redemption of properties mortgaged with the Philippine National Bank and the
Development Bank of the Philippines and foreclosed either judicially or extrajudicially are
governed by special laws which provide for the payment of all the amounts owed by the
debtor. This special protection given to government lending institutions is not accorded to
judgment creditors in ordinary civil actions,
WHEREFORE, the writ prayed for is GRANTED and the order issued on January 11, 1978
should be, as it is hereby, ANNULLED and SET ASIDE. The temporary restraining order
heretofore issued is hereby. made permanent. With costs against the private respondent
Eusebio C. Tanghal.
SOORDERED.
Makasiar (Chairman), Aquino, Guerrero, Abad Santos and Escolin, JJ., concur.
De Castro, J., is on leave.
[ GR No. L-26274, Jul 31, 1981 ]
ALPHA INSURANCE v. ESPERANZA C. REYES +
DECISION
193 Phil. 457
BARREDO, J.:
An appeal from the decision of the Court of First Instance of Manila in Civil Case No. 49980,
Alpha Insurance and Surety Co., Inc. vs. Esperanza C. Reyes, et al., certified by the Court of
Appeals to this Court for the reason that the sole assignment of error of appellant raises
purely a legal question.
The following facts are undisputed:
The spouses Esperanza C. Reyes and Arturo R. Reyes executed on November 15, 1958 in
favor of Alpha Insurance and Surety Co., Inc. a second mortgage over their two parcels of
land (with a total area of 540 square meters) and the buildings thereon, located at Makati,
Rizal, in consideration of Alpha Insurance's undertaking to act as surety of the said spouses
in certain loans (not to exceed P10,000.00) to be obtained from banks or financial
institutions. The two lots were previously mortgaged to the Development Bank of the
Philippines as security for a loan of P17,000.00.
In 1958, Esperanza C. Reyes borrowed P5,000.00 from the Prudential Bank and Trust
Company. In 1959, she borrowed also P5,000.00 from the Philippine Banking Corporation.
Alpha Insurance was her surety and co-maker in the two promissory notes covering the said
loans. She and her husband executed indemnity agreements in favor of Alpha Insurance in
addition to the second mortgage.
Due to the default of Esperanza C. Reyes, Alpha Insurance, as solidary debtor, was
constrained to pay the two loans total balance of which as of November 21, 1961 was
P7,575.00, plus 12% interest per annum.
As the Reyes spouses did not make any reimbursement to Alpha Insurance, the latter filed
on March 27, 1962 in the Court of First Instance of Manila the foreclosure action above-
mentioned against the spouses and the DBP.
The DBP in its answer alleged that it had a first mortgage on the two lots which was superior
to Alpha Insurance's mortgage. It prayed that, in case of foreclosure, the proceeds of the
sale be first applied to its credit. The Reyes spouses did not file an answer. They were
declared in default.
Judge Jose L. Moya in his decision dated February 1, 1963, simply ordered the Reyes spouses
to pay Alpha Insurance the sum of P7,575.00 with 12% interest a year from November 22,
1961.
Because the judge had ignored the prayer in Alpha Insurance's complaint for the foreclosure
of its second mortgage, it filed a motion for reconsideration, praying that the foreclosure of
the second mortgage be ordered and that the Reyes spouses be required to pay attorney's
fees.
Judge Moya in his order of February 19, 1963 awarded P757.50 as attorney's fees, but he
held that the second mortgage could not be recognized as an encumbrance because the
DBP did not consent to its execution.
Judge Moya relied on the ruling in Associated Insurance & Surety Co., Inc. vs. Register of
Deeds of Pampanga, 105 Phil. 123, which construed the following provisions of
Commonwealth Act No. 459, the law creating the Agricultural and Industrial Bank:
"SEC. 26. Securities on loans granted by the Agricultural and Industrial Bank shall not be
subject to attachment nor can they be included in the property of insolvent persons or
institutions, unless all debts and obligations of the debtor to the Agricultural and Industrial
Bank have been previously paid, including accrued interest, collection expenses, and other
charges."[1]
This Court held therein that this section embraces "levy on execution or any other
encumbrance, unless the same is created with the consent" of the bank and that "(A)
different interpretation would defeat the very purpose of the law which is to maintain
unhampered the value of the property until the encumbrance shall have been released."
Alpha Insurance filed a motion for reconsideration wherein it alleged that the second
mortgage was approved by DBP Governor Roberto S. Benedicto (Exh. A-2) and that the
second mortgage was registered because of that approval and because the DBP delivered
the owner's duplicate of the title to Alpha Insurance in order to effect the registration.
Nevertheless, Judge Moya denied the motion. Alpha Insurance appealed to this Court.
Controversies of this nature should not even be litigated, much less reach this Supreme
Court, adding to its already almost unmanageable docket. The issue between the parties is
so insubstantial that a little more effort on the part of respective counsels of the parties and
the trial court to get together as to what should be done would have cleared up matters in a
manner We are certain would have been satisfactory to all concerned. To think that a
litigation like this should last since March 27, 1962 or more than almost two decades ago
when plaintiff-appellee filed its action of foreclosure is a black spot in the administration of
justice in this country. This situation is intolerable and the members of the Bar and the trial
judges ought to change their attitudes and direct their efforts towards more important and
substantial legal matters, thereby serving public interest to the utmost within their expected
capabilities.
Deciding the legal question before Us, even if the DBP were just an ordinary first mortgagee
without any preferential liens under Republic Act No. 85 or Commonwealth Act 459, the
statutes mentioned in the Associated Insurance case relied upon by the trial court, it would
be unquestionable that nothing may be done to favor plaintiff-appellant, a mere second
mortgagee, until after the obligations of the debtors-appellees with the first mortgagee
have been fully satisfied and settled. In law, strictly speaking, what was mortgaged by the
Reyeses to Alpha was no more than their equity of redemption.
Thus, what We perceive to be most appropriate to do at this late stage is to see to it that the
obligations in question are paid soonest. However, to insist now, after so many wasted
years, on following in this case the ordinary foreclosure procedure provided by law would
only cause further unnecessary delay in the termination of the insubstantial controversy
among the parties herein.

In De la Riva vs. Reynoso, 61 Phil. 734, Antonio de la Riva, the second mortgagee, filed an
action against the mortgagor Marceliano Reynoso to foreclose the second realty mortgage.
La Urbana Mutual Building and Loan Association, the first mortgagee, was joined as a co- Republic of the Philippines
defendant. SUPREME COURT
Manila
This Court held that La Urbana was properly joined as a co-defendant and affirmed the
lower court's judgment ordering Reynoso to pay within ninety days the amounts due to La SECOND DIVISION
Urbana and De la Riva, and, in case of failure to do so, ordering the sale at public auction of
the mortgaged property and the application of the proceeds of the sale to the two mortgage
debts.
G.R. Nos. L-34317 and L-34335 November 28, 1973
With this precedent, the Court is of the considered opinion and so holds that to avoid
further delay in writing finis to the instant case which started way back in 1962, without any MARCELO STEEL CORPORATION, HON. WALFRIDO DE LOS ANGELES, in his capacity as Judge,
more ado, all that has to be done here is to have the property herein involved ordered by Court of First Instance of Rizal, Branch IV, Quezon City, and THE SHERIFF OF QUEZON CITY,
the trial court sold at public auction immediately, the proceeds thereof to be used to pay petitioners,
the outstanding obligation, if still there be any, of the defendants-appellees Esperanza Reyes vs.
and Arturo Reyes to the Development Bank of the Philippines; if there be any excess COURT OF APPEALS, PETRA R. FARIN and BENJAMIN FARIN, respondents.
thereafter, the same be used to pay their obligation to the plaintiff-appellant, and should
there still be any further excess, the same should be given to the said defendants-appellees. Florentino I. Capco for petitioners.

ACCORDINGLY, judgment is hereby rendered modifying the decision of the trial court to Ramon M. de Claro for respondents.
conform with the procedure herein outlined. No costs.

Aquino, Concepcion, Jr., Abad Santos, and De Castro, JJ., concur. BARREDO, J.:

[1] See, in this connection, Section 19 of Republic Act No. 85.
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Petitions for review of the decision of the Court of Appeals in CA-G. R. No. 47519-R, entitled
Petra Farin, et al., vs. Hon. Walfrido de los Angeles, etc. et al., granting a petition for
certiorari of herein private respondents, the spouses Benjamin and Petra Farin, and
annulling and setting aside the orders separately issued by the Court of First Instance of
Quezon City in its Civil Case No. Q-9384 and in L. R. C. Record No. 7681, the first being an
order dated December 9, 1970 denying private respondents' motion to stop the Sheriff of
Quezon City from proceeding with the extrajudicial foreclosure sale of the properties herein
involved which said private respondents had mortgaged to herein petitioner Marcelo Steel
Corporation, after the said court had already rendered judgment dismissing the complaint
for prohibition to enjoin said foreclosure, but pending the appeal thereof, and the second
being the order dated February 4, 1971 granting the same petitioner's motion for a writ of
possession of the said properties which it had acquired in the foreclosure sale which the
court had refused to restrain in the other case.
The background facts are stated in the decision of the Court of Appeals thus:
This is a petition for certiorari to annul the order dated December 9, 1970, issued in Civil
Case No. Q-9384 of the Court of First Instance of Quezon City, Branch IV, and the writ of
possession issued in L.R.C. Rec. No. 7681 of said court.
It appears that on October 30, 1964, the petitioner spouses executed a deed of real estate
mortgage, in favor of respondent Marcelo Steel Corporation, hereinafter referred to as
respondent corporation over a parcel of land covered by T.C.T. No. 42689 of the Register of
Deeds of Quezon City, as security for the payment of a promissory note in the sum of
P600,000.00.
On July 24, 1965, the respondent corporation filed with the Sheriff of Quezon City a verified
letter-petition for the extra-judicial foreclosure of the afore-mentioned real estate
mortgage. Accordingly, the respondent Sheriff of Quezon City advertised and scheduled the
extra-judicial foreclosure sale of the mortgaged property for August 26, 1965.
On August 21, 1965, the petitioners filed against the respondent corporation and the
respondent Sheriff of Quezon City a petition captioned "Prohibition with Injunction and
Damages" docketed as Civil Case No. Q-9384 of the Court of First Instance of Rizal, wherein
they prayed that the respondent sheriff be permanently enjoined from proceeding with the
scheduled sale at public auction of the mortgaged property, and that the respondent
corporation be condemned to pay the petitioners P200,000.00 as actual and moral damages
and P50,000.00 as penal and compensatory damage and P30,000.00 as attorney's fees, on
the ground that they have not been in default in the payment of their obligation.
On August 21, 1965, the respondent judge issued an order commanding the respondent
Sheriff and the respondent corporation to desist from proceeding with the public auction
sale of the mortgage property scheduled on August 26, 1965.
After trial, the respondent judge rendered a decision on October 3, 1970, the dispositive
portion of which reads as follows:
"WHEREFORE, judgment is hereby rendered as follows:
1. The above-entitled case is hereby ordered DISMISSED, for lack of sufficient basis;
2. Ordering the petitioners, jointly and severally, to pay the sum equivalent to 15% of the
total obligation due, as reasonable attorney's fees;
3. Ordering petitioners to pay respondent Marcelo Steel Corporation, jointly and severally,
the sum of P50,000.00 as actual exemplary damages;
4. Ordering the petitioners, jointly and severally, to pay the costs of the suit.
The order of status quo issued by the Court under date of August 21, 1965 is hereby LIFTED
and SET ASIDE, and the Sheriff of Quezon City may now proceed with the extrajudicial
foreclosure of the mortgage."
Petitioners received a copy of the decision on October 15, 1970.
On October 19, 1970, respondent corporation filed with respondent Sheriff another verified
letter-petition informing the latter of the decision rendered in Civil Case No. Q-9384 and
praying for the extra-judicial foreclosure of the real estate mortgage. Acting on said letter-
petition, the respondent Sheriff issued the necessary notices setting the public auction sale
of the mortgaged property on December 9, 1970.
On October 30, 1970, petitioners filed their notice of appeal, appeal bond and record on
appeal.
On December 4, 1970, petitioners riled an "Urgent Motion to Require Respondents to Desist
From Proceeding With The Public Auction Sale of Petitioners' Properties."
After respondent corporation filed its opposition to said motion, the respondent judge
issued on December 9, 1970, an order denying petitioners' aforementioned motion to stop
respondent Sheriff from proceeding with the scheduled auction sale of petitioners'
mortgaged property. On the same date, the respondent Sheriff proceeded with the auction
sale of the mortgaged property, respondent corporation being the successful bidder, and
issued the correspondent certificate of sale dated December 9, 1970.
On the same date, December 9, 1970, the respondent Judge issued an order approving
petitioners record on appeal.
On January 12, 1971, the respondent corporation filed in L.R.C. Rec. No. 7681 an
independent petition for the issuance of a writ of possession entitled "In the Matter of the
Petition For Issuance of Writ of Possession Over a Parcel of Land Covered By Transfer
Certificate of Title No. 42589 of The Office of The Register Of Deeds of Quezon City In The
Name Of Mortgagor Petra R. Farin Married To Benjamin Farin; Marcelo Steel Corporation
(Mortgage) Petitioner". This petition was also assigned to the respondent Judge. Petitioners
did not file an opposition to said petition.
On January 18, 1971, the respondent Judge issued an order directing the presentation and
submission of evidence before the Branch Clerk of Court. After the respondent corporation
had submitted its evidence in support of its petition, the respondent Judge issued an order
on February 4, 1971, granting the petition for the issuance of a writ of possession.
Thereupon, the petitioners filed the present petition.
Upon these facts, the Court of Appeals held the trial court exceeded its jurisdiction when it
denied the motion of the Farins seeking to enjoin the foreclosure sale of their mortgaged
properties inasmuch as they had already perfected their appeal from the decision dismissing
their petition for prohibition against said sale. According to the appellate court, since the
remedy pursued by the Farins was not an ordinary action of injunction within the
contemplation of Section 4 of Rule 39 nor one for the annulment of mortgage, but a special
civil action of prohibition, the decision therein is not immediately executory as a matter of
right but only of sound judicial discretion under Section 2 of the same rule, and considering
that the prevailing party had not even moved for immediate execution, the trial court could
not have availed of its powers under this last mentioned provision.
It is quite obvious that the Court of Appeals has missed the point. As a matter of fact, it is
plain that the trial court did not issue any order of execution. The sheriff's act of proceeding
with the foreclosure sale was not done by virtue of any such order of execution, but
pursuant to his authority and duty under Act 3135 as amended by Act 4118 governing the
extrajudicial foreclosure of mortgages, which is simply to sell the mortgaged properties at
public auction to the highest bidder, upon verified petition of the mortgagee and without
the need of any judicial order. In other words, the sheriff went ahead not because he was so
ordered by the court, but precisely because the court refused to restrain him by dismissing
respondents' petition for prohibition and lifting the status quo order it had preliminarily
issued upon the filing of the complaint. Under these circumstances, the perfection of
respondents' appeal could not by itself have had the effect of restoring the status quo order,
without an express order in that sense, which, of course, the court had the power to issue.
The Court has so held as early as November 13, 1902 in Watson & Co. vs. Enriquez, found in
Volume I of the Philippine Reports at pages 480 to 484. The ruling therein made which is
very illuminating applies four-square to the case at bar.
The plaintiff, at the commencement of this action obtained a preliminary injunction as
prayed for in its complaint. The case was afterwards tried, and in September, 1902, a final
judgment therein was entered in favor of the defendants and the temporary injunction was
dissolved.
On the 20th of September a bill of exceptions was perfected and signed by the judge, and a
certified copy thereof was then transmitted to this court. In this court the plaintiff has
presented a motion asking that the preliminary injunction be continued.
Before discussing the power of this court to grant a preliminary injunction, under these
circumstances, it seems necessary to determine whether or not the preliminary injunction
granted below was continued in force by the filing of the bill of exceptions. Article 144 of the
Law of Civil Procedure, now in force, says: "But the filing of a bill of exceptions shall of itself
stay execution until the final determination of the action, unless," etc. Article 1007 of the
Revised Statutes of the United States states the manner of obtaining a supersedeas in cases
pending in the Federal courts. The meaning of the word "supersedeas" as used in that
section has been defined as follows: "A supersedeas, properly so called, is a suspension of
the power of the court below to issue an execution on the judgment or decree appealed
from; or, if a writ of execution has issued, it is a prohibition emanating from the court of
appeals against the execution of the writ. (Hovey vs. McDonald, 109 U.S. 150.)
As so construed, article 1007 of the Revised Statutes of the United States is substantially the
equivalent of our article 144. This question as to whether a supersedeas has, in the Federal
courts, the effect of continuing in force an injunction dissolved by the lower court has
frequently been passed upon by the Supreme Court. That court has said: "The general ruling
is well settled that an appeal from a decree granting, refusing, or dissolving an injunction
does not disturb its operative effect. (Hovey vs. McDonald, 109 U.S. 150-161;
Slaughterhouse Cases, 10 Wall., 273-297; Leonard vs. Ozark Land Company, 115 U.S., 465-
468.) When an injunction has been dissolved it can not be revived except by a new exercise
of judicial power, and no appeal by a dissatisfied party can of itself revive it. (Knox Co. vs.
Harshman, 132 U.S., 14.)
The truth is that the case is not governed by the ordinary rules that relate to a supersedeas
of execution, but by those principles and rules which relate to chancery proceedings
exclusively. ... In this country the matter is usually regulated by statutes or rules of court,
and, generally speaking, an appeal, upon giving the security required law, when security is
required, suspends further proceedings and operates as a supersedeas of execution. ... But
the decree itself may have an intrinsic effect which can only be suspended by an affirmative
order either of the court which makes the decree or of the appellate tribunal. This court, in
the Slaughterhouse Cases, 10 Wall., 273, decided that an appeal from a decree granting,
refusing, or dissolving an injunction does not disturb its operative effect. Mr. Justice Clifford,
delivering the opinion of the court, says: "It is quite certain that neither an injunction nor a
decree dissolving an injunction passed in circuit court is reversed or nullified by an appeal or
writ of error before the cause is heard in this court." It was decided that neither a decree for
an injunction nor a decree dissolving an injunction was suspended in its effect by the writ of
error, though all the requisites for supersedeas were complied with. It was not decided that
the court below had no power, if the purpose of justice required it, to order a continuance
of the status quo until a decision should be made by the appellate court, or until that court
should order the contrary. This power undoubtedly exists, and should always be exercised
when any irremediable injury may result from the decree as rendered. ( Hovey vs.
McDonald, 109, U.S., 159.)
In Minnesota the supersedeas statute provided that the appeal from the order of judgment
should "stay all proceedings thereon and save all rights affected thereby." The court of this
State, relying upon the last of the two clauses quoted, held that an appeal from an order
dissolving an injunction continued the injunction in force. The evils which would result from
such a holding are forcibly pointed out by Judge Mitchell in a dissenting opinion. He said:
"Although a plaintiffs papers are so insufficient on their face or so false in their allegations
that if he should apply on notice for an injunction, any court would, on a hearing, promptly
refuse to grant one, yet, if he can find anywhere in the State a judge or court commissioner
who will improvidently grant one ex parte, which the court on the first and only hearing ever
had dissolves, he can, by appealing and filing bond, make the ex parte injunction impervious
to all judicial interference until the appeal is determined in this court. ... Such result is so
unjust and so utterly inconsistent with all known rules equity practice that no court should
adopt such a construction unless absolutely shut up to it by the clear and unequivocal
language of the statute. (State vs. Duluth St. Ry. Co., 47 Minn., 369.)
The supreme court of that State afterwards, although adhering to that decision on the
ground of stare decisis, stated that in their opinion it was unsound. (State ex rel. Leary vs.
District Court, 78 Minn., 464.)
We have in these Islands no appeal from orders granting or dissolving preliminary
injunctions, yet what was said by Justice Mitchell applies to a case where, upon a full trial in
a court below, the judge has decided that neither upon the facts nor the law is the plaintiff
entitled to any relief. To allow a plaintiff in such a case, by taking an appeal and giving a
supersedeas bond, to continue an injunction in force would be manifestly unjust.
We adopt the rule announced by the Supreme Court of the United States and hold that the
filing of the bill of exceptions in the case at bar did not operate to revive the preliminary
injunction which was dissolved in and by the final judgment.
We also adopt the other conclusion of that court to the effect that the judge below has the
power, if the purposes of justice require it, to order a continuance of the status quo until a
decision should be made by the appellate court or until that court should order to the
contrary. We have already in effect declared that principle in the case of Maximo Cortes vs.
Palanca Yutivo, decided August 6, 1902.
This doctrine was reiterated a few days later in Sitia Teco vs. Ventura, 1 Phil. 497 thus:
During the pendency of the suit the plaintiff applied for a preliminary injunction on the
ground, as stated in the oral argument of counsel, that the house placed by the plaintiff
upon the lot having been destroyed by order of the municipality the defendants
repossessed themselves of the premises and were preparing to build a house thereon.
Upon a trial of the case judgment was rendered against the plaintiff on the merits of the
suit, and the injunction was dissolved. The plaintiff has appealed the case by a bill of
exceptions and has made application to this court to restore the injunction on the ground
that the operative effect of the judgment by which the injunction was dissolved has, by
virtue of the appeal taken and the giving of a supersedeas bond, been lost, and that the
judgment in the case should not have the effect of disturbing the interlocutory injunction. In
the case of Watson & Co. vs. Enriquez, decided by this court October 26, 1902, it is held that
an appeal from an order dissolving an injunction does not suspend the operation of the
decision so as to revive the interlocutory injunction.
We had occasion to reaffirm the same ruling in Aguilar vs. Tan, G. R. No. L-23600, rendered
in January 30, 1970 31 SCRA 205-214.
Now, in connection with the issuance by the trial court, upon motion of petitioner and
without objection of the Farins, of the writ of possession in the L.R.C. case, the appellate
court ruled that the same amounted to an execution of the decision in the civil case, and
such being the case, the trial court should have desisted from doing it in view of the
respondents' appeal. We do not agree. It is Our considered opinion that the writ of
possession was properly issued, since, as already discussed above, the foreclosure
proceeding conducted by the sheriff was not predicated on any judicial order. Again, the
erroneous pose of the Court of Appeals runs counter to standing jurisprudence on the
matter. In De Gracia vs. San Jose, 94 Phil. 623, which is likewise on all fours with the
situation presently before Us, the Court held:
Petitioner is the registered owner of the real property described in Transfer Certificate of
Title No. 3731 of the Land Records of the city of Manila, which, by way of extrajudicial
foreclosure of a mortgage constituted upon the same in favor of the Rehabilitation Finance
Corporation, was on November 14, 1952, sold to the Republic Surety & insurance Co., Inc.,
as the highest bidder at a public auction conducted by the sheriff of said city under a special
power of attorney attached to the mortgage deed and pursuant Act. No. 3135, as amended
by Act No. 4118. Three days after the sale, the purchaser filed an ex parte motion, duly
verified, in the four branch of the Court of First Instance of Manila as authorized section 7 of
the same Act, as amended, praying that it be given possession of the property during the
redemption period and offering to furnish the corresponding bond. But before the motion
could acted upon, herein petitioner filed an opposition thereto and followed it with a
complaint for the annulment of the sale and a motion dismiss the petition for a writ of
possession or to postpone consideration thereof until the complaint for annulment could be
decided. Being specifically empowered by the Act to grant such writ on an ex parte motion
by the purchaser, the court refused to be side tracked and authorized the issuance of the
writ upon the filing of a bond without prejudice to the right of the oppositor to question the
validity of the sale in the manner provided by law.
Contending that the lower court acted without jurisdiction and with grave abuse of
discretion in authorizing the issuance of the writ, petitioner has come to this Court for a writ
of certiorari and prohibition.
The petition is without merit.
Sections 7 and 8 of Act No. 3L35, as amended, provide:
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.
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 Numbered Four hundred
and ninety-six; and if it finds the complaint of the debtor justified, it shall dispose in his favor
of all or part of the bond furnished by the person who obtained possession. Either of the
parties may appeal from the order of the judge in accordance with section fourteen of Act
Numbered Four hundred and ninety-six; but the order of possession shall continue in effect
during the pendency of the appeal.
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.
It thus appear that the respondent Judge, in ordering the issuance of a writ of possession in
this case, merely obeyed an express mandate of the law in the manner and upon the terms
therein provided, and petitioner may not complain that he has been deprived of a
substantial right without due process, because the order states that it is to be "without
prejudice to the rights of the oppositor to question the validity of the above mentioned sale
in the manner provided by law.
Having merely followed an express provision of the law, whose validity is not questioned,
the Judge cannot be charged with having acted without jurisdiction or with grave abuse of
discretion. The rule that the purchaser at a judicial public auction is not entitled to
possession during the period of redemption is not applicable to a sale under Act No. 3135
where the granting of said possession expressly authorized. ...
As may be gleaned from the foregoing dissertation of Justice Alex Reyes for the Court, even
the main remedy of prohibition sought by the Farins was uncalled for. The plain, speedy and
adequate and even more expeditious remedy available to them was that specifically
provided for in Section 8 of Act 3135, as amended, quoted in the opinion, which is by the
summary petition under Section 112 of Act 496, the Land Registration Act. We surmise that
the issue of alleged usury raised by respondents must have been considered by the trial
judge who also decided the civil case in which said defense was raised as not substantial
enough to warrant its being taken up in an ordinary action outside of the land court.
PREMISES CONSIDERED, the decision of the Court of Appeals under review is reversed and
the petition for certiorari filed by the respondent Farins therein is dismissed, with costs
against said respondents.
Zaldivar (Chairman), Fernando, Antonio, Fernandez and Aquino, JJ., concur.
FIRST DIVISION
G.R. No. 104223 July 12, 2001

TIBURCIO SAMONTE, petitioner,
vs.
COURT OF APPEALS, EUGENIA DANGO GADIANO, TEOFILO GADIANO, PETRONILO DANGO
FELICIANA DANGO, NONILO MARAVE and GERONIMO DANGO, respondents.
KAPUNAN, J.:
Tiburcio Samonte (petitioner) filed this petition for review on certiorari seeking to reverse
and set aside the Decision, dated November 29, 1991, of the Court of Appeals (CA) in CA-G.R
CV No. 16645. He likewise seeks the reversal of CA Resolution, dated February 21, 1992,
which denied his motion for reconsideration.
The parcel of land (Lot No.216) subject of this dispute is situated in Nasipit, Agusan del
Norte, and originally covered by Original Certificate of Title No. RO-238(555) issue in the
names Apolonia Abao and her daughter Irenea Tolero, pro indiviso. It contained an area of
12,753 square meters. Two cases were separately filed in the Regional Trial Court, Branch II
of Nasipit, Agusan del Norte involving the entire lot. Both cases were filed by the surviving
heirs of Apolonia Abao and Irenea Tolero.1 These heirs, children of Irenea Tolero and grand
children of Apolonia Abao, are the respondents in this case.1âwphi1.nêt
The first case, Civil Case No.1672, was an action for quieting of title and recovery of
possession of a parcel of land which originally formed part of the entire property. Said
parcel of land was denominated as Lot 216-B-2-G and covered by Transfer Certificate of Title
(TCT) No. RT-899 in the name of Irenea Tolero. The defendants named therein were spouses
Andres and Amanda Lacho.
The second case, Civil Case No.1816, is similarly an action for quieting of title and recovery
of possession. Unlike the first case, however, Civil Case No.1816 involve the entire Lot 216.
The complaint therein sought the annulment of several certificates of title covering portions
of Lot 216 and the reinstatement of OCT No. RO-238 (555). The defendants in the second
wase were Nicolas Jadol, Beatriz Jadol, Jacobo Tagorda, Henry Jadol, Aurelio Rotor and
herein petitioner.
The present case stems only from the latter case (Civil Case No. 1816) and, as culled from
the CA decision, the facts relevant herein are as follows:
Civil Case No.1816
(CA-G.R CV No. 16645)
From the pleadings and the evidence adduced by the parties the following are not disputed
or deemed admitted: that Lot 216 of the Cadastral survey of Nasipit, containing an area of
12,753 square meters, more or less, situated at Anislagan, Nasipit, Agusan (now del Norte) is
covered by Original Certificate of Title (OCT) No. R0-238 issue in 1927 in the name of
Apolonia Abao and Irenea Tolero in equal undivided shares (Exhibit E); that OCT No. RO-238
was administratively reconstituted on August 8, 1957 and the assigned number of the
reconstituted title is OCT No. RO-238 (555) (Exhibit D identical to Exhibit-Samonte); that on
August 8, 1957, based on an affidavit of Extra-judicial Settlement and Confirmation of Sale
(Exhibit D-1), OCT No. RO-238 (555) was cancelled and lieu thereof Transfer Certificate of
Title (TCT) No. RT-476 was issued in the name of Irenea Tolero, 1/2 share and Nicolas Jadol,
1/2 share (Exhibit C identical to Exhibit 3-Samonte); that on February 13, 1959, based on
subdivision plan, subdividing Lot 216 into Lot 216-A and Lot 216-B, the Register of Deeds of
Agusan (now del Norte) cancelled TCT No. RT-476 and issued in its place TCT No. RT-553 in
the name of Tiburcio Samonte for Lot 216-A (Exhibit 2-Samonte) and TCT No. RT-554, Irenea
Tolero and Nicolas Jadol for Lot 216-B (Exhibit B); that on February 13, 1959 based on a
subdivision plan subdividing Lot 216-B to 216-B-1 and 216-B-2, TCT No. RT-554 was
cancelled and in its place TCT No. RT-555 was issued in the name of Jacob B. Tagorda for Lot
216-B-1 and TCT No. 556 in the name of Irenea Tolero and Nicolas Jadol for Lot 216- B-2.
Plaintiffs in their evidence claim ownership over the entire lot, Lot 216, as one-half(1/2) of
the area of 12, 753 square meters was registered in the name of their mother Irenea Tolero
(Exhibit E) the other half was registered in the name of their and grandmother, Apolonia
Abao. After Apolonia Abao died during the Japanese occupation and Irenea Tolero died in
1945, they inherited and became owners of Lot 216. Plaintiffs questioned the series of
cancellation of the certificate of title starting from OCT No. RO-238 (555) and the Deed of
Extrajudicial Settlement and Confirmation of Sale executed by Ignacio Atupan on August 7,
1957 (Exhibit D-1) adjudicating one-half(1/2) of the area of Lot 216. Plaintiffs maintain that
Ignacio Atupan is not a son of Apolonia Abao but he only grew up while living with Apolonia
Abao. That when Lot 216 was subdivided into two (2) lots, Lot 216-A and Lot 216-A (sic)
which was made as one of the basis in the cancellation of TCT No. 476 and issuance of TCT
No. 553 and TCT No. 554 on February 13, 1959, the plaintiffs or their predecessors-in-
interest have not signed any document agreeing as to the manner how Lot 216 was to be
divided, nor have they consented to the partition of the same.
Defendant Samonte in his evidence claim that he bought portions of the Lot 216 in good
faith as he was made to believe that all the papers in possession of his vendors were all in
order. One of the documents presented by him is a Deed of Absolute Sale executed in 1939
(Exhibit 8-Samonte ). He has been in open, continuous, adverse and exclusive possession of
the portions of Lot 216 he bought for more than 20 years and have declared the land for
taxation purposes (Exhibits 5 and 7-Samonte) and have paid the real estate taxes thereon
(Exhibit 6 to 6-K, inclusive Samonte). The portions he bought is now covered by TCT No. RT-
553 (Exhibit 2-Samonte) and TCT No. RT-1658 (Exhibit 4-Samonte).
Defendant Jadols claim that they became owners of one-half(1/2) portion of Lot 216 by
purchase from Ignacio Atupan and Apolonia Abao on September 15, 1939 as shown by a
document notarized by Jacobo Bello (Exhibit 1-Jadol) and signed by lrenea Tolero (Exhibit 1-
D Jadol) as a witness. They were in possession since they bought the land. The land is
covered by Tax Declaration No. 1630 (Exhibit 2-Jadol) and Tax Declaration No. 1676 (Exhibit
3-Jadol) in their name (Decision, pp. 36-39).2
Initially, the two cases were heard independently of each other. It was discovered, however,
that they were intimately related. Accordingly, the court a quo jointly tried the two cases.
After due trial, the trial court rendered separate decisions, both in favor of the plaintiffs
therein. The dispositive portion particularly of the decision in Civil Case No. 1816 reads:
Civil Case No. 1816
IN VIEW OF THE FOREGOING, judgment is hereby rendered in favor of the plaintiffs and
against the defendants:
a) declaring plaintiffs co-owners of the entire of (sic ) Lot 216 being the surviving heirs of
Apolonia Abao and Irenea Tolero;
b) directing the reinstatement of Original Certificate of Title No. RO-238(555);
c) directing the cancellation of Transfer Certificate of Title No. RT - 476 and all subsequent
certificates of title derived therefrom which are all declared null and void;
d) declaring the subdivision survey of Lot 216 null and void and ineffectual;
e) directing the defendants to vacate the premises of Lot 216 and to remove all their
improvements therefrom as they are builders in bad faith;
f) directing defendants Jadol and Samonte to pay jointly and severally the plaintiffs the sum
of P20,000.00 for the use and occupation of the land;
g) directing defendants Jadol and Samonte to pay P5,000.00 as attorney's fees;
h) ordering the dismissal of the counterclaims of defendants; and
i) directing the defendants Jadol and Samonte to pay the costs.
SO ORDERED.3
Plaintiffs were likewise declared the lawful owners of Lot 216-B-2-G in Civil Case No. 1672.
Defendants therein were ordered to, among others, vacate the premises and remove the
improvements made thereon.4
The defendants in the two cases respectively appealed the aforesaid decisions to the CA.
The CA ordered the consolidation of the two appeals. Thereafter, the CA rendered the
decision of November 29, 1991 affirming the decisions of the trial court and dismissing the
appeals. Petitioner then filed the instant petition assailing particularly the decision in CA-
G.R. CV No. 16645. He alleges that:
I
THE HONORABLE COURT OF APPEALS ERRED AS A MATTER OF LAW IN DEPARTING FROM
THE PREVAILING DOCTRINE SUPPORTED BY THE WEIGHT OF AUTHORITIES THAT "THE
DISCOVERY OF THE FRAUD IS DEEMED TO HAVE TAKEN PLACE AT THE TIME OF THE
REGISTRATION" (CARANTES VS. COURT OF APPEALS, 76 SCRA 514);5
II
THE COURT OF APPEALS ERRED AS A MATTER OF LAW AND JURISPRUDENCE IN NOT
HOLDING THAT HEREIN PETITIONER WAS A BUYER IN GOOD FAITH FOR VALUE, HENCE HE IS
PROTECTED BY LAW.6
The petition is bereft of merit.
It is not disputed that Ignacio Atupan caused the fraudulent cancellation of OCT No. RO-238
(555). The trial court found that Atupan, on the basis of his Affidavit of Extrajudicial
Settlement and Confirmation Sale," adjudicated unto himself one-half of Lot 216 by
misrepresenting himself as the sole, heir of Apolonia Abao. Atupan, in said affidavit, likewise
confirmed the two deeds of sale allegedly executed by him and Abao on September 15 and
16, 1939, covering the latter's one-half lot in favor of Nicolas Jadol. The trial court found
Atupan's affidavit, dated August 7, 1957, to be tainted with fraud because he falsely claimed
therein that he was the sole heir of Abao when in fact, he merely lived and grew up with
her. Jadol and his wife, Beatriz, knew about this fact. Despite this knowledge, however, the
Jadol spouses still presented the affidavit of Atupan before the Register of Deeds of the
Province of Agusan when they caused the cancellation of OCT No. RO-238 (555) and
issuance of TCT No. RT-476 in their names covering that portion owned by Abao.
The trial court concluded that the incorporation of the statement in Atupan's affidavit
confirming the alleged execution of the aforesaid deeds of sale was intended solely to
facilitate the issuance of the certificate of title in favor of the Jadol spouses. It was noted
that the documents evidencing the alleged transactions were not presented in the Register
of Deeds. It was further pointed out that the Jadol spouses only sought the registration of
these transactions in 1957, eighteen (18) years supposedly took place or twelve (12) years
after Abao died.
Based on the foregoing facts, the CA, on appeal, ruled that the cancellation of OCT No. RO-
238(555) and the consequent issuance of TCT No. RT-476 in its place in the name of the
Jadol spouses were effected through fraudulent means and that they (spouses Jadol) not
only had actual knowledge of the fraud but were also guilty of bad faith.7
Nonetheless, petitioner contends that respondent's action in the court a quo had already
prescribed. Generally, an action for reconveyance of real property based on the fraud may
be barred by the statute of limitations which require that the action must be commenced
within four (4) years from the discovery of fraud, and in case of registered land, such
discovery is deemed to have taken place from the date of the registration of title.8
Article 1456 of the Civil Code, however, provides:
Art. 1456. If property is acquired through mistake or fraud, the person obtaining it is, by
force of law, considered a trustee of an implied trust for the benefit of the person from
whom the property comes.
As it had been indubitably established that fraud attended the registration of a portion of
the subject property, it can be said that the Jadol spouses were trustees thereof on behalf of
the surviving heirs of Abao. An action based on implied or constructive trust prescribes in
ten (10) years from the time of its creation or upon the alleged fraudulent registration of the
property.9
Petitioner, as successor-in-interest of the Jadol Spouses, now argues that the respondents'
action for reconveyance, filed only in 1975, had long prescribed considering that the Jadol
spouses caused the registration of a portion of the subject lot in their names way back in
August 8, 1957. It is petitioner's contention that since eighteen years had already lapsed
from the issuance of TCT No. RT-476 until the time when respondents filed the action in the
court a quo in 1975, the same was time-barred.
Petitioner's defense of prescription is untenable. The general rule that the discovery of fraud
is deemed to have taken place upon the registration of real property because it is
considered a constructive notice to all persons"10 does not apply in this case. Instead, the
CA correctly applied the ruling in Adille vs. Court of Appeals11 which is substantially on all
fours with the present case.
In Adille, petitioner therein executed a deed of extrajudicial partition misrepresenting
himself to be the sole heir of his mother when in fact she had other children. As a
consequence, petitioner therein was able to secure title to the land in his name alone. His
siblings then filed a case for partition on the ground that said petitioner was only a trustee
on an implied trust of the property. Among the issues resolved by the Court in that case was
prescription. Said petitioner registered the property in 1955 and the claim of private
respondents therein was presented in 1974.
The Court's resolution of whether prescription had set in therein is quite apropos to the
instant case:
It is true that registration under the Torrens system is constructive notice of title, but it has
likewise been our holding that the Torrens title does not furnish a shield for fraud. It is
therefore no argument to say that the act of registration is equivalent to notice of
repudiation, assuming there was one, notwithstanding the long-standing rule that
registration operates as a universal notice of title.
For the same reason, we cannot dismiss private respondents' claims commenced in 1974
over the estate registered in 1955. While actions to enforce a constructive trust prescribes
in ten years, reckoned from the date of the registration of the property, we, as we said, are
not prepared to count the period from such a date in this case. We note the petitioner's sub
rosa efforts to get hold of the property exclusively for himself beginning with his fraudulent
misrepresentation in his unilateral affidavit of extrajudicial settlement that he is "the only
heir and child of his mother Feliza with the consequence that he was able to secure title in
his name [alone]." Accordingly, we hold that the right of the private respondents
commenced from the time they actually discovered the petitioner's act of defraudation.
According to the respondent Court of Appeals, they "came to know [of it] apparently only
during the progress of the litigation." Hence, prescription is not a bar. 12
In this case, the CA reckoned the prescriptive period from the time respondents had actually
discovered the fraudulent act of Atupan which was, as borne out by the records, only during
the trial of Civil Case No. 1672.13 Citing Adille, the CA rightfully ruled that respondents'
action for reconveyance had not yet prescribed.
On the issue of whether petitioner is a buyer in bad faith as he claims, the Court likewise
holds in the negative: It was established during the trial by the court a quo that he knew
that respondents were the only surviving heirs of Irenea Tolero. Despite this knowledge,
petitioner still bought a portion of the subject lot from the Jadol spouses on July 20, 1957,
when the same was still registered under OCT No. RO-238(555) in the name of Abao and
Tolero.
With respect to this particular lot therefore, petitioner cannot pretend to be a purchaser in
good faith. It is axiomatic that one who buys from a person who is not a registered owner is
not a purchaser in good faith. 14
Moreover, With respect to the other portion which petitioner bought from Jacobo Tagorda,
the trial court held that he was, as in the first case, a buyer in bad faith. The general rule is
that a person dealing with registered land has a right to rely on the Torrens certificate of
title and to dispense with the need of making further inquiries.15
This rule, however, admits of exceptions; when the party has actual knowledge of facts and
circumstances that would impel a reasonably cautious man to make such inquiry or when
the purchaser has knowledge of a defect or the lack of title in his vendor or of sufficient
facts to induce a reasonably prudent man to inquire into the status of the title of the
property in litigation. 16 One who falls within the exception can neither be denominated an
innocent purchaser for value nor a purchaser in good faith; and hence does not merit the
protection of the law. 17
The CA established that petitioner is not a purchaser in good faith with respect to this
portion of the subject property, thus:
xxx While it may be true that the second portion was purchased by Samonte from Tagorda
in whose name the same was then registered under TCT No. RT -555, Samonte was
previously charged with the fact that Jadol lacked the capacity to transmit title over any part
of the subject property including that portion which the latter sold to Tagorda. Thus,
Samonte was clearly in bad faith when he sought the registration of the deed of sale of July
10, 1972 which effected the cancellation of TCT No. RT-555 and the issuance of TCT No.
1658 in his favor. xxx 18
Petitioner cannot now claim that he already acquired valid title to the property. The
inscription in the registry, to be effective, must be made in good faith. The defense of
indefeasibility of a Torrens Title does not extend to a transferee who takes the certificate of
title with notice of a flaw. A holder in bad faith of a certificate of title is not entitled to the
protection of the law, for the law cannot be used as a shield for, frauds. 19
In fine, there is no compelling reason to deviate from the salutary rule that findings and
conclusions of the trial court, especially if affirmed by the appellate court, are accorded
utmost respect by this Court.1âwphi1.nêt
WHEREFORE, the instant petition is DENIED for lack of merit. The Decision, dated November
29, 1991 of the Court of Appeals and its Resolution, dated February 21, 1992, in CA-G.R. CV
No. 16645 are AFFIRMED in toto.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 93833 September 28, 1995
SOCORRO D. RAMIREZ, petitioner,
vs.
HONORABLE COURT OF APPEALS, and ESTER S. GARCIA, respondents.
KAPUNAN, J.:
A civil case damages was filed by petitioner Socorro D. Ramirez in the Regional Trial Court of
Quezon City alleging that the private respondent, Ester S. Garcia, in a confrontation in the
latter's office, allegedly vexed, insulted and humiliated her in a "hostile and furious mood"
and in a manner offensive to petitioner's dignity and personality," contrary to morals, good
customs and public policy."1
In support of her claim, petitioner produced a verbatim transcript of the event and sought
moral damages, attorney's fees and other expenses of litigation in the amount of
P610,000.00, in addition to costs, interests and other reliefs awardable at the trial court's
discretion. The transcript on which the civil case was based was culled from a tape recording
of the confrontation made by petitioner.2 The transcript reads as follows:
Plaintiff Soccoro D. Ramirez (Chuchi) — Good Afternoon M'am.
Defendant Ester S. Garcia (ESG) — Ano ba ang nangyari sa 'yo, nakalimot ka na kung paano
ka napunta rito, porke member ka na, magsumbong ka kung ano ang gagawin ko sa 'yo.
CHUCHI — Kasi, naka duty ako noon.
ESG — Tapos iniwan no. (Sic)
CHUCHI — Hindi m'am, pero ilan beses na nila akong binalikan, sabing ganoon —
ESG — Ito and (sic) masasabi ko sa 'yo, ayaw kung (sic) mag explain ka, kasi hanggang 10:00
p.m., kinabukasan hindi ka na pumasok. Ngayon ako ang babalik sa 'yo, nag-aaply ka sa
States, nag-aaply ka sa review mo, kung kakailanganin ang certification mo, kalimutan mo na ESG — Huwag na, hindi ako mag-papa-explain sa 'yo, makaalala ka kung paano ka puma-rito.
kasi hindi ka sa akin makakahingi. "Putang-ina" sasabi-sabihin mo kamag-anak ng nanay at tatay mo ang mga magulang ko.

CHUCHI — Hindi M'am. Kasi ang ano ko talaga noon i-cocontinue ko up to 10:00 p.m.
ESG — Bastos ka, nakalimutan mo na kung paano ka pumasok dito sa hotel. Magsumbong ka
sa Union kung gusto mo. Nakalimutan mo na kung paano ka nakapasok dito "Do you think
that on your own makakapasok ka kung hindi ako. Panunumbyoyan na kita (Sinusumbatan
na kita).
CHUCHI — Itutuloy ko na M'am sana ang duty ko.
ESG — Kaso ilang beses na akong binabalikan doon ng mga no (sic) ko.
ESG — Nakalimutan mo na ba kung paano ka pumasok sa hotel, kung on your own merit
alam ko naman kung gaano ka "ka bobo" mo. Marami ang nag-aaply alam kong hindi ka
papasa.
CHUCHI — Kumuha kami ng exam noon.
ESG — Wala na akong pakialam, dahil nandito ka sa loob, nasa labas ka puwede ka ng hindi
pumasok, okey yan nasaloob ka umalis ka doon.
CHUCHI — Kasi M'am, binbalikan ako ng mga taga Union.
ESG — Nandiyan na rin ako, pero huwag mong kalimutan na hindi ka makakapasok kung
hindi ako. Kung hindi mo kinikilala yan okey lang sa akin, dahil tapos ka na.
CHUCHI — Ina-ano ko m'am na utang na loob.
ESG — Huwag na lang, hindi mo utang na loob, kasi kung baga sa no, nilapastangan mo ako.
CHUCHI — Paano kita nilapastanganan?
ESG — Mabuti pa lumabas ka na. Hindi na ako makikipagusap sa 'yo. Lumabas ka na.
Magsumbong ka.3

ESG — Oo, pero hindi ka papasa. As a result of petitioner's recording of the event and alleging that the said act of secretly
taping the confrontation was illegal, private respondent filed a criminal case before the
CHUCHI — Eh, bakit ako ang nakuha ni Dr. Tamayo Regional Trial Court of Pasay City for violation of Republic Act 4200, entitled "An Act to
prohibit and penalize wire tapping and other related violations of private communication,
ESG — Kukunin ka kasi ako. and other purposes." An information charging petitioner of violation of the said Act, dated
October 6, 1988 is quoted herewith:
CHUCHI — Eh, di sana —
INFORMATION
ESG — Huwag mong ipagmalaki na may utak ka kasi wala kang utak. Akala mo ba makukuha
ka dito kung hindi ako. The Undersigned Assistant City Fiscal Accusses Socorro D. Ramirez of Violation of Republic
Act No. 4200, committed as follows:
CHUCHI — Mag-eexplain ako.
That on or about the 22nd day of February, 1988, in Pasay City Metro Manila, Philippines,
and within the jurisdiction of this honorable court, the above-named accused, Socorro D.
Ramirez not being authorized by Ester S. Garcia to record the latter's conversation with said
accused, did then and there willfully, unlawfully and feloniously, with the use of a tape
recorder secretly record the said conversation and thereafter communicate in writing the
contents of the said recording to other person.
Contrary to law.
Pasay City, Metro Manila, September 16, 1988.
MARIANO M. CUNETA
Asst. City Fiscal
Upon arraignment, in lieu of a plea, petitioner filed a Motion to Quash the Information on
the ground that the facts charged do not constitute an offense, particularly a violation of
R.A. 4200. In an order May 3, 1989, the trial court granted the Motion to Quash, agreeing
with petitioner that 1) the facts charged do not constitute an offense under R.A. 4200; and
that 2) the violation punished by R.A. 4200 refers to a the taping of a communication by a
person other than a participant to the communication.4
From the trial court's Order, the private respondent filed a Petition for Review on Certiorari
with this Court, which forthwith referred the case to the Court of Appeals in a Resolution (by
the First Division) of June 19, 1989.
On February 9, 1990, respondent Court of Appeals promulgated its assailed Decision
declaring the trial court's order of May 3, 1989 null and void, and holding that:
[T]he allegations sufficiently constitute an offense punishable under Section 1 of R.A. 4200.
In thus quashing the information based on the ground that the facts alleged do not
constitute an offense, the respondent judge acted in grave abuse of discretion correctible by
certiorari.5
Consequently, on February 21, 1990, petitioner filed a Motion for Reconsideration which
respondent Court of Appeals denied in its Resolution6 dated June 19, 1990. Hence, the
instant petition.
Petitioner vigorously argues, as her "main and principal issue"7 that the applicable provision
of Republic Act 4200 does not apply to the taping of a private conversation by one of the
parties to the conversation. She contends that the provision merely refers to the
unauthorized taping of a private conversation by a party other than those involved in the
communication.8 In relation to this, petitioner avers that the substance or content of the
conversation must be alleged in the Information, otherwise the facts charged would not
constitute a violation of R.A. 4200.9 Finally, petitioner agues that R.A. 4200 penalizes the
taping of a "private communication," not a "private conversation" and that consequently,
her act of secretly taping her conversation with private respondent was not illegal under the
said act. 10
We disagree.
First, legislative intent is determined principally from the language of a statute. Where the
language of a statute is clear and unambiguous, the law is applied according to its express
terms, and interpretation would be resorted to only where a literal interpretation would be
either impossible 11 or absurb or would lead to an injustice. 12
Section 1 of R.A. 4200 entitled, " An Act to Prohibit and Penalized Wire Tapping and Other
Related Violations of Private Communication and Other Purposes," provides:
Sec. 1. It shall be unlawfull for any person, not being authorized by all the parties to any
private communication or spoken word, to tap any wire or cable, or by using any other
device or arrangement, to secretly overhear, intercept, or record such communication or
spoken word by using a device commonly known as a dictaphone or dictagraph or
detectaphone or walkie-talkie or tape recorder, or however otherwise described.
The aforestated provision clearly and unequivocally makes it illegal for any person, not
authorized by all the parties to any private communication to secretly record such
communication by means of a tape recorder. The law makes no distinction as to whether
the party sought to be penalized by the statute ought to be a party other than or different
from those involved in the private communication. The statute's intent to penalize all
persons unauthorized to make such recording is underscored by the use of the qualifier
"any". Consequently, as respondent Court of Appeals correctly concluded, "even a (person)
privy to a communication who records his private conversation with another without the
knowledge of the latter (will) qualify as a violator" 13 under this provision of R.A. 4200.
A perusal of the Senate Congressional Records, moreover, supports the respondent court's
conclusion that in enacting R.A. 4200 our lawmakers indeed contemplated to make illegal,
unauthorized tape recording of private conversations or communications taken either by
the parties themselves or by third persons. Thus:
xxx xxx xxx
Senator Tañada: That qualified only "overhear".
Senator Padilla: So that when it is intercepted or recorded, the element of secrecy would
not appear to be material. Now, suppose, Your Honor, the recording is not made by all the
parties but by some parties and involved not criminal cases that would be mentioned under
section 3 but would cover, for example civil cases or special proceedings whereby a
recording is made not necessarily by all the parties but perhaps by some in an effort to show
the intent of the parties because the actuation of the parties prior, simultaneous even
subsequent to the contract or the act may be indicative of their intention. Suppose there is
such a recording, would you say, Your Honor, that the intention is to cover it within the
purview of this bill or outside?
Senator Tañada: That is covered by the purview of this bill, Your Honor.
Senator Padilla: Even if the record should be used not in the prosecution of offense but as
evidence to be used in Civil Cases or special proceedings?
Senator Tañada: That is right. This is a complete ban on tape recorded conversations taken
without the authorization of all the parties.
Senator Padilla: Now, would that be reasonable, your Honor?
Senator Tañada: I believe it is reasonable because it is not sporting to record the
observation of one without his knowing it and then using it against him. It is not fair, it is not
sportsmanlike. If the purpose; Your honor, is to record the intention of the parties. I believe
that all the parties should know that the observations are being recorded.
Senator Padilla: This might reduce the utility of recorders.
Senator Tañada: Well no. For example, I was to say that in meetings of the board of
directors where a tape recording is taken, there is no objection to this if all the parties know.
It is but fair that the people whose remarks and observations are being made should know
that the observations are being recorded.
Senator Padilla: Now, I can understand.
Senator Tañada: That is why when we take statements of persons, we say: "Please be
informed that whatever you say here may be used against you." That is fairness and that is
what we demand. Now, in spite of that warning, he makes damaging statements against his
own interest, well, he cannot complain any more. But if you are going to take a recording of
the observations and remarks of a person without him knowing that it is being taped or
recorded, without him knowing that what is being recorded may be used against him, I think
it is unfair.
xxx xxx xxx
(Congression Record, Vol. III, No. 31, p. 584, March 12, 1964)
Senator Diokno: Do you understand, Mr. Senator, that under Section 1 of the bill as now
worded, if a party secretly records a public speech, he would be penalized under Section 1?
Because the speech is public, but the recording is done secretly.
Senator Tañada: Well, that particular aspect is not contemplated by the bill. It is the
communication between one person and another person — not between a speaker and a
public.
xxx xxx xxx

(Congressional Record, Vol. III, No. 33, p. 626, March 12, 1964)
xxx xxx xxx
The unambiguity of the express words of the provision, taken together with the above-
quoted deliberations from the Congressional Record, therefore plainly supports the view
held by the respondent court that the provision seeks to penalize even those privy to the
private communications. Where the law makes no distinctions, one does not distinguish.
Second, the nature of the conversations is immaterial to a violation of the statute. The
substance of the same need not be specifically alleged in the information. What R.A. 4200
penalizes are the acts of secretly overhearing, intercepting or recording private
communications by means of the devices enumerated therein. The mere allegation that an
individual made a secret recording of a private communication by means of a tape recorder
would suffice to constitute an offense under Section 1 of R.A. 4200. As the Solicitor General
pointed out in his COMMENT before the respondent court: "Nowhere (in the said law) is it
required that before one can be regarded as a violator, the nature of the conversation, as
well as its communication to a third person should be professed." 14
Finally, petitioner's contention that the phrase "private communication" in Section 1 of R.A.
4200 does not include "private conversations" narrows the ordinary meaning of the word
"communication" to a point of absurdity. The word communicate comes from the latin word
communicare, meaning "to share or to impart." In its ordinary signification, communication
connotes the act of sharing or imparting signification, communication connotes the act of
sharing or imparting, as in a conversation, 15 or signifies the "process by which meanings or
thoughts are shared between individuals through a common system of symbols (as language
signs or gestures)" 16 These definitions are broad enough to include verbal or non-verbal,
written or expressive communications of "meanings or thoughts" which are likely to include
the emotionally-charged exchange, on February 22, 1988, between petitioner and private
respondent, in the privacy of the latter's office. Any doubts about the legislative body's
meaning of the phrase "private communication" are, furthermore, put to rest by the fact
that the terms "conversation" and "communication" were interchangeably used by Senator
Tañada in his Explanatory Note to the bill quoted below:
It has been said that innocent people have nothing to fear from their conversations being
overheard. But this statement ignores the usual nature of conversations as well the
undeniable fact that most, if not all, civilized people have some aspects of their lives they do
not wish to expose. Free conversations are often characterized by exaggerations, obscenity,
agreeable falsehoods, and the expression of anti-social desires of views not intended to be
taken seriously. The right to the privacy of communication, among others, has expressly
been assured by our Constitution. Needless to state here, the framers of our Constitution
must have recognized the nature of conversations between individuals and the significance
of man's spiritual nature, of his feelings and of his intellect. They must have known that part
of the pleasures and satisfactions of life are to be found in the unaudited, and free exchange
of communication between individuals — free from every unjustifiable intrusion by
whatever means.17
In Gaanan vs. Intermediate Appellate Court, 18 a case which dealt with the issue of
telephone wiretapping, we held that the use of a telephone extension for the purpose of
overhearing a private conversation without authorization did not violate R.A. 4200 because
a telephone extension devise was neither among those "device(s) or arrangement(s)"
enumerated therein, 19 following the principle that "penal statutes must be construed
strictly in favor of the accused."20 The instant case turns on a different note, because the
applicable facts and circumstances pointing to a violation of R.A. 4200 suffer from no
ambiguity, and the statute itself explicitly mentions the unauthorized "recording" of private
communications with the use of tape-recorders as among the acts punishable.
WHEREFORE, because the law, as applied to the case at bench is clear and unambiguous and
leaves us with no discretion, the instant petition is hereby DENIED. The decision appealed
from is AFFIRMED. Costs against petitioner.
SO ORDERED.