G.R. No.

77502 January 15, 1988

EMILIA B. SANTIAGO, plaintiff-appellant,
vs.
PIONEER SAVINGS AND LOAN BANK, ET. AL., defendants-appellees.
MELENCIO-HERRERA, J.:

judicially or extrajudicially. The promissory note evidencing the indebtedness was

dated 4 March 1983.
The Special Power of Attorney executed by plaintiff-appellant in CRCP's favor, the
Real Estate Mortgage by CRCP in favor of FINASIA, together with the Board
Resolution dated 28 March 1983 authorizing the CRCP President to sign for and
on its behalf, were duly annotated on the Title on 12 April 1983.

The facts are not controverted.

On 29 July 1983, FINASIA executed in favor of defendant-appellee, Pioneer

Savings & Loan Bank, Inc. (Defendant Bank, for brevity), an "Outright Sale of
Receivables without Recourse" including the receivable of P610,752.59 from
CRCP.

Plaintiff-appellant, Emilia P. Santiago, is the registered owner of a parcel of land

situated at Polo, Valenzuela, Metro Manila, with an area of approximately 39,007
square meters, covered by T.C.T. No. B-41669 (briefly, the Title) of the Register of
Deeds of Caloocan City (hereinafter, simply the Disputed Property).

On 21 May 1984, FINASIA executed a "Supplemental Deed of Assignment" in

favor of Defendant Bank confirming and ratifying the assignment in the latter's
favor of the receivable of P610,752.59 from CRCP and of the mortgage constituted
by CRCP over the disputed property.

On 7 April 1983, plaintiff-appellant executed a Special Power of Attorney in favor of

Construction Resources Corporation of the Philippines (CRCP, for short)
authorizing and empowering CRCP:

On 12 July 1984, the aforesaid Supplemental Deed of Assignment was inscribed

on the Title.

An appeal certified by the Court of Appeals to this Tribunal for determination since
only a question of law is involved.

1. To borrow money and make, execute, sign and deliver

mortgages of real estate now owned by me and standing in my
name and to make, sign, execute and deliver any and all
promissory notes necessary in the premises.
2. For the purpose of these presents, or for the purpose of
securing the payment of any loan, indebtedness or obligation
which my attorney-in-fact may obtain or contract with the bank, its
renewal, extension of payment of the whole or any part thereof,
said attorney-in-fact is hereby authorized and empowered to
transfer and convey by way of mortgage in favor of the bank, ...
(the Disputed Property).
On 8 April 1983, CRCP executed a Real Estate Mortgage over the Disputed
Property in favor of FINASIA Investment and Finance Corporation to secure a loan
of P1 million. The mortgage contract specifically provided that in the event of
default in payment, the mortgagee may immediately foreclose the mortgage

CRCP failed to settle its obligation and Defendant Bank opted for extrajudicial
foreclosure of the mortgage. The notice of auction sale was scheduled on 16 May
1985.
On 13 May 1985, on learning of the intended sale, plaintiff-appellant filed before
the Regional Trial Court of Valenzuela, Metro Manila, Branch CLXXII, an action for
declaration of nullity of the real estate mortgage with an application for a Writ of
Preliminary Injunction (Civil Case No. 2231-V-55).
On 14 May 1985, the Trial Court 1 issued a Temporary Restraining Order enjoining
the sale at public auction of the Disputed Property.
Basically, plaintiff-appellant claimed in her Complaint that she was not aware of
any real estate mortgage she had executed in favor of Defendant Bank; that she
had not authorized anyone to execute any document for the extrajudicial
foreclosure of the real estate mortgage constituted on the Disputed Property and
that since the notice of Sheriffs sale did not include her as a party to the
foreclosure proceedings, it is not binding on her nor on her property.

Defendant Bank opposed the application for Preliminary Injunction and asserted its
right to extrajudicially foreclose the mortgage on the Disputed Property based on
recorded public documents.

II. The Lower Court erred in relying on the case of Wenceslao

Vinzons Tan vs. Director of Forestry which it qualifies as "on all
fours with the case at bar."

During the hearing on the petition for Preliminary Injunction, plaintiff-appellant,

through counsel, admitted the due execution of plaintiff-appellant's Special Power
of Attorney in favor of CRCP, the Real Estate Mortgage by CRCP to FINASIA, the
Outright Sale of Receivables by FINASIA to Defendant Bank, as well the
Supplemental Deed of Assignment by FINASIA to Defendant Bank.

III. The Lower Court erred in ignoring the pertinent doctrines in the
Supreme Court cases cited by the plaintiff-appellant in her
Opposition to Motion to Dismiss.

On 30 May 1985, the Trial Court granted the Petition for Preliminary Injunction
enjoining the public auction sale of the mortgaged property upon plaintiffappellant's posting of a bond in the amount of P100,000.00.
On 7 June 1985, Defendant Bank filed a Motion to Dismiss the main case on the
ground that the complaint did not state a cause of action followed on 24 June 1985
with a Motion for Reconsideration of the Order granting the Writ of Preliminary
Injunction, both of which Motions plaintiff-appellant opposed.
On 30 August 1985, the Trial Court reconsidered its Order of 30 May 1985,
dissolved the Writ of Preliminary Injunction, and ordered the dismissal of the case
for lack of cause of action.
Plaintiff-appellant appealed to the Court of Appeals, which, as stated at the outset,
certified the case to us on a pure question of law.
In the meantime, with the dissolution of the Preliminary Injunction, it appears that
defendant Bank completed its extrajudicial foreclosure and the Disputed Property
was sold at public auction on January 1986, after a re-publication of the notice of
sale, since the first scheduled sale was enjoined by the Trial Court.
Plaintiff-appellant maintains that:
I. The Lower Court erred in dismissing the complaint and lifting the
Preliminary Injunction by relying solely on the admission of the
counsel of the plaintiff-appellant of certain documentary exhibits
presented by the counsel of the defendant-appellee.

IV. The Lower Court erred in holding that notice of the scheduled
sale of the land sent to the agent (CRCP) is also Notice to the
principal (Plaintiff Appellant), the land owner.
and prays that she be given "a real day in Court" so that she may testify and give
her side of the case.
Upon the factual and legal context, the errors assigned are without merit.
It is true that the determination of the sufficiency of a cause of action must be
limited to the facts alleged in the Complaint and no other should be considered. 2
In this case, however, a hearing was held and documentary evidence was
presented, not on the Motion to Dismiss but on the question of granting or denying
plaintiff-appellant's application for a Writ of Preliminary Injunction, Counsel for
plaintiff-appellant admitted an the evidence presented. That being so, the Trial
Court committed no reversible error in considering said evidence in the resolution
of the Motion to Dismiss.
Furthermore, "even if the complaint stated a valid cause of action,
a motion to dismiss for insufficiency of cause of action will be
granted if documentary evidence admitted by stipulation disclosing
facts sufficient to defeat the claim enabled the court to go beyond
disclosure in the complaint" (LOCALS No. 1470, No. 1469, and
No. 1512 of the International Longshoremen's Association vs.
Southern Pacific Co., 6 Fed. Rules Service, p. 107; U.S. Circuit
Court of Appeals, Fifth Circuit, Dec. 7, 1952; 131 F. 2d 605). Thus,
although the evidence of the parties were presented on the
question of granting or denying petitioner-appellant's application
for a writ of preliminary injunction, the trial court correctly applied
said evidence in the resolution of the motion to dismiss. ... 3

While, as contended by plaintiff-appellant, some aspects of this case differ from

those in Tan, the doctrinal ruling therein, as quoted above, is squarely applicable to
the case at bar. The cases which plaintiff-appellant cites express the general rule
when there is no "documentary evidence admitted by stipulation disclosing facts
sufficient to defeat the claim." Where, however, such evidence is before the Court
and has been stipulated upon, a Court can go "beyond the disclosure in the
complaint." 4

Plaintiff-appellant's recourse is against CRCP, specially considering her allegation

that the latter had failed to observe their agreement.
WHEREFORE, the Order appealed from is hereby AFFIRMED, with costs against
plaintiff-appellant.
SO ORDERED.

Moreover, the rule is explicit that "rules of procedure are not to be applied in a very
rigid, technical sense; rules of procedure are used only to help secure substantial
justice." 5
The evidence on record sufficiently defeats plaintiff-appellant's claim for relief from
extrajudicial foreclosure. Her Special Power of Attorney in favor of CRCP
specifically included the authority to mortgage the Disputed Property. The Real
Estate Mortgage in favor of FINASIA explicitly authorized foreclosure in the event
of default. Indeed, foreclosure is but a necessary consequence of non-payment of
a mortgage indebtedness. Plaintiff-appellant, therefore, cannot rightfully claim that
FINASIA, as the assignee of the mortgagee, cannot extrajudicially foreclose the
mortgaged property. A mortgage directly and immediately subjects the property
upon which it is imposed to the fulfillment of the obligation for whose security it was
constituted. 6
The assignment of receivables made by the original mortgagee, FINASIA, to
Defendant Bank was valid, since a mortgage credit may be alienated or assigned
to a third person, in whole or in part, with the formalities required by law. 7 Said
formalities were complied with in this case. The assignment was made in a public
instrument and proper recording in the Registry of Property was made. 8 While
notice may not have been given to plaintiff-appellant personally, the publication of
the Notice of Sheriff's Sale, as required by law, is notice to the whole world.
The full-dress hearing that plaintiff-appellant prays for wherein she intends to prove
that she tried to contact the President of CRCP to urge him to pay the mortgage
loan, that she had failed to do so despite several attempts; that she did not know
that FINASIA had sold its receivables including that of CRCP to Defendant Bank;
and that she was not informed by CRCP of the scheduled foreclosure sale will not
tilt the scales of justice in her favor in the face of incontrovertible documentary
evidence before the Court.

Art. 77. The marriage settlements and any modification thereof shall be in writing,
signed by the parties and executed before the celebration of the marriage. They
shall not prejudice third persons unless they are registered in the local civil registry
where the marriage contract is recorded as well as in the proper registries of
properties.
RULE 70
Forcible Entry and Unlawful Detainer
Section 1. Who may institute proceedings, and when. Subject to the provisions
of the next succeeding section, a person deprived of the possession of any land or
building by force, intimidation, threat, strategy, or stealth, or a lessor, vendor,
vendee, or other person against whom the possession of any land or building is
unlawfully withheld after the expiration or termination of the right to hold
possession, by virtue of any contract, express or implied, or the legal
representatives or assigns of any such lessor, vendor, vendee, or other person,
may, at any time within one (1) year after such unlawful deprivation or withholding
of possession, bring an action in the proper Municipal Trial Court against the
person or persons unlawfully withholding or depriving of possession, or any person
or persons claiming under them, for the restitution of such possession, together
with damages and costs. (1a)
Section 2. Lessor to proceed against lessee only after demand. Unless
otherwise stipulated, such action by the lesser shall be commenced only after
demand to pay or comply with the conditions of the lease and to vacate is made
upon the lessee, or by serving written notice of such demand upon the person

found on the premises if no person be found thereon, and the lessee fails to
comply therewith after fifteen (15) days in the case of land or five (5) days in the
case of buildings. (2a)
Section 3. Summary procedure. Except in cases covered by the agricultural
tenancy laws or when the law otherwise expressly provides, all actions for forcible
entry and unlawful detainer, irrespective of the amount of damages or unpaid
rentals sought to be recovered, shall be governed by the summary procedure
hereunder provided. (n)
Section 4. Pleadings allowed. The only pleadings allowed to be filed are the
complaint, compulsory counterclaim and cross-claim pleaded in the answer, and
the answers thereto. All pleadings shall be verified. (3a, RSP)
Section 5. Action on complaint. The court may, from an examination of the
allegations in the complaint and such evidence as may be attached thereto,
dismiss the case outright on any of the grounds for the dismissal of a civil action
which are apparent therein. If no ground for dismissal is found, it shall forthwith
issue summons. (n)
Section 6. Answers. Within ten (10) days from service of summons, the
defendant shall file his answer to the complaint and serve a copy thereof on the
plaintiff. Affirmative and negative defenses not pleaded therein shall be deemed
waived, except lack of jurisdiction over the subject matter. Cross-claims and
compulsory counterclaims not asserted in the answer shall be considered barred.
The answer to counterclaims or cross-claims shall be served and filed within ten
(10) days from service of the answer in which they are pleaded. (5 RSP)
Section 7. Effect of failure to answer. Should the defendant fail to answer the
complaint within the period above provided, the court, motu proprio or on motion of
the plaintiff, shall render judgment as may be warranted by the facts alleged in the
complaint and limited to what is prayed for therein. The court may in its discretion
reduce the amount of damages and attorney's fees claimed for being excessive or
otherwise unconscionable, without prejudice to the applicability of section 3 (c),
Rule
9
if
there
are
two
or
more
defendants.
(6, RSP)
Section 8. Preliminary conference; appearance of parties. Not later than thirty
(30) days after the last answer is filed, a preliminary conference shall be held. The

provisions of Rule 18 on pre-trial shall be applicable to the preliminary conference

unless inconsistent with the provisions of this Rule.
The failure of the plaintiff to appear in the preliminary conference shall be cause for
the dismissal of his complaint. The defendant who appears in the absence of the
plaintiff shall be entitled to judgment on his counterclaim in accordance with the
next preceding section. All cross-claims shall be dismissed. (7, RSP)
If a sole defendant shall fail to appear, the plaintiff shall likewise be entitled to
judgment in accordance with the next preceding section. This procedure shall not
apply where one of two or more defendants sued under a common cause of action
defense shall appear at the preliminary conference.
No postponement of the preliminary conference shall be granted except for highly
meritorious grounds and without prejudice to such sanctions as the court in the
exercise of sound discretion may impose on the movant. (n)
Section 9. Record of preliminary conference. Within five (5) days after the
termination of the preliminary conference, the court shall issue an order stating the
matters taken up therein, including but not limited to:
1. Whether the parties have arrived at an amicable settlement, and if so,
the terms thereof;
2. The stipulations or admissions entered into by the parties;
3. Whether, on the basis of the pleadings and the stipulations and
admission made by the parties, judgment may be rendered without the
need of further proceedings, in which event the judgment shall be
rendered within thirty (30) days from issuance of the order;
4. A clear specification of material facts which remain converted; and
5. Such other matters intended to expedite the disposition of the case. (8,
RSP)
Section 10. Submission of affidavits and position papers. Within ten (10) days
from receipt of the order mentioned in the next preceding section, the parties shall
submit the affidavits of their witnesses and other evidence on the factual issues

defined in the order, together with their position papers setting forth the law and the
facts relied upon by them. (9, RSP)

7. Petition for certiorari, mandamus, or prohibition against any interlocutory

order issued by the court;

Section 11. Period for rendition of judgment. Within thirty (30) days after receipt
of the affidavits and position papers, or the expiration of the period for filing the
same, the court shall render judgment.

8. Motion to declare the defendant in default;

However, should the court find it necessary to clarify certain material facts, during
the said period, issue an order specifying the matters to be clarified, and require
the parties to submit affidavits or other evidence on the said matters within ten (10)
days from receipt of said order. Judgment shall be rendered within fifteen (15) days
after the receipt of the last affidavit or the expiration of the period for filing the
same.

10. Reply;

The court shall not resort to the foregoing procedure just to gain time for the
rendition of the judgment. (n)
Section 12. Referral for conciliation. Cases requiring referral for conciliation,
where there is no showing of compliance with such requirement, shall be
dismissed without prejudice, and may be revived only after that requirement shall
have been complied with. (18a, RSP)
Section 13. Prohibited pleadings and motions. The following petitions, motions,
or pleadings shall not be allowed:
1. Motion to dismiss the complaint except on the ground of lack of
jurisdiction over the subject matter, or failure to comply with section 12;
2. Motion for a bill of particulars;
3. Motion for new trial, or for reconsideration of a judgment, or for
reopening of trial;
4. Petition for relief from judgment;
5. Motion for extension of time to file pleadings, affidavits or any other
paper;
6. Memoranda;

9. Dilatory motions for postponement;

11. Third-party complaints;

12. Interventions. (19a, RSP)
Section 14. Affidavits. The affidavits required to be submitted under this Rule
shall state only facts of direct personal knowledge of the affiants which are
admissible in evidence, and shall show their competence to testify to the matters
stated therein.
A violation of this requirement may subject the party or the counsel who submits
the same to disciplinary action, and shall be cause to expunge the inadmissible
affidavit or portion thereof from the record. (20, RSP)
Section 15. Preliminary injunction. The court may grant preliminary injunction,
in accordance with the provisions of Rule 58 hereof, to prevent the defendant from
committing further acts of dispossession against the plaintiff.
A possessor deprived of his possession through forcible from the filing of the
complaint, present a motion in the action for forcible entry or unlawful detainer for
the issuance of a writ of preliminary mandatory injunction to restore him in his
possession. The court shall decide the motion within thirty (30) days from the filing
thereof. (3a)
Section 16. Resolving defense of ownership. When the defendant raises the
defense of ownership in his pleadings and the question of possession cannot be
resolved without deciding the issue of ownership, the issue of ownership shall be
resolved only to determine the issue of possession. (4a)
Section 17. Judgment. If after trial court finds that the allegations of the
complaint are true, it shall render judgment in favor of the plaintiff for the restitution

of the premises, the sum justly due as arrears of rent or as reasonable

compensation for the use and occupation of the premises, attorney's fees and
costs. If a counterclaim is established, the court shall render judgment for the sum
found in arrears from either party and award costs as justice requires. (6a)
Section 18. Judgment conclusive only on possession; not conclusive in actions
involving title or ownership. The judgment rendered in an action for forcible
entry or detainer shall be conclusive with respect to the possession only and shall
in no wise bind the title or affect the ownership of the land or building. Such
judgment shall not bar an action between the same parties respecting title to the
land or building.
The judgment or final order shall be appealable to the appropriate Regional Trial
Court which shall decide the same on the basis of the entire record of the
proceedings had in the court of origin and such memoranda and/or briefs as may
be submitted by the parties or required by the Regional Trial Court. (7a)
Section 19. Immediate execution of judgment; how to stay same. If judgment is
rendered against the defendant, execution shall issue immediately upon motion
unless an appeal has been perfected and the defendant to stay execution files a
sufficient supersedeas bond, approved by the Municipal Trial Court and executed
in favor of the plaintiff to pay the rents, damages, and costs accruing down to the
time of the judgment appealed from, and unless, during the pendency of the
appeal, he deposits with the appellate court the amount of rent due from time to
time under the contract, if any, as determined by the judgment of the Municipal
Trial Court. In the absence of a contract, he shall deposit with the Regional Trial
Court the reasonable value of the use and occupation of the premises for the
preceding month or period at the rate determined by the judgment of the lower
court on or before the tenth day of each succeeding month or period. The
supersedeas bond shall be transmitted by the Municipal Trial Court, with the
papers, to the clerk of the Regional Trial Court to which the action is appealed.

All amounts so paid to the appellate court shall be deposited with said court or
authorized government depositary bank, and shall be held there until the final
disposition of the appeal, unless the court, by agreement of the interested parties,
or in the absence of reasonable grounds of opposition to a motion to withdraw, or
for justifiable reasons, shall decree otherwise. Should the defendant fail to make
the payments above prescribed from time to time during the pendency of the
appeal, the appellate court, upon motion of the plaintiff, and upon proof of such
failure, shall order the execution of the judgment appealed from with respect to the
restoration of possession, but such execution shall not be a bar to the appeal
taking its course until the final disposition thereof on the merits.
After the case is decided by the Regional Trial Court, any money paid to the court
by the defendant for purposes of the stay of execution shall be disposed of in
accordance with the provisions of the judgment of the Regional Trial Court. In any
case wherein it appears that the defendant has been deprived of the lawful
possession of land or building pending the appeal by virtue of the execution of the
judgment of the Municipal Trial Court, damages for such deprivation of possession
and restoration of possession and restoration of possession may be allowed the
defendant in the judgment of the Regional Trial Court disposing of the appeal. (8a)
Section 20. Preliminary mandatory injunction in case of appeal. Upon motion of
the plaintiff, within ten (10) days from the perfection of the appeal to the Regional
Trial Court, the latter may issue a writ of preliminary mandatory injunction to
restore the plaintiff in possession if the court is satisfied that the defendant's
appeal is frivolous or dilatory or that the appeal of the plaintiff is prima facie
meritorious. (9a)
Section 21. Immediate execution on appeal to Court of Appeals or Supreme
Court. The judgment of the Regional Trial Court against the defendant shall be
immediately executory, without prejudice to a further appeal that may be taken
therefrom. (10a)