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VOL.

311, AUGUST 5, 1999 or mortgage, or his sworn statement attesting to the fact of nonredemption;
795 whereupon, the Register of Deeds shall issue a new certificate of title in favor of
Unionbank of the Philippines vs. Court of Appeals the purchaser after the owners duplicate of the certificate has been previously
G.R. No. 133366. August 5, 1999.* delivered and cancelled. Thus, upon failure to redeem foreclosed realty,
UNIONBANK OF THE PHILIPPINES, petitioner, vs. THE COURT OF APPEALS consolidation of title becomes a matter of right on the part of the auction buyer,
and FERMINA S. DARIO and REYNALDO S. DARIO, respondents. and the issuance of a certificate of title in favor of the purchaser becomes
Remedial Law; Foreclosures; It is settled that the buyer in a foreclosure sale ministerial upon the Register of Deeds.
becomes the absolute owner of the property purchased if it is not redeemed Same; Injunction; Even in cases where an appeal is taken from a judgment
during the period of one year after the registration of the sale.We disagree with dismissing an action on the merits, the appeal does not suspend the judgment,
the appellate courts observation that consolidation deprived private respondents hence the general rule applies that a temporary injunction terminates
of their property without due process. It is settled that the buyer in a foreclosure automatically on the dismissal of the action.The motion for reconsideration and
sale becomes the absolute owner of the property purchased if it is not redeemed to amend complaint filed by private respondent on 20 October 1994 was of no
during the period of one year after the registration of the sale. Consolidation took moment, this Court recognizing that a dismissal, discontinuance or non-suit of
place as a matter of right since there was no redemption of the foreclosed an action in which a restraining order or temporary injunction has been granted
property and the TRO expired upon dismissal of the complaint. UNIONBANK operates as a dissolution of the restraining order or temporary injunction,
need not have informed private respondent that it was consolidating its title over regardless of whether the period for filing a motion for reconsideration of the
the property, upon the expiration of the redemption period, without the judgment order dismissing the case or appeal therefrom has expired. The rationale therefor
debtor having made use of his right of redemption, the ownership of the property is that even in cases where an appeal is taken from a judgment dismissing an
sold becomes consolidated in the purchaser. Notice to the mortgagors and with action on the merits, the appeal does not suspend the judgment, hence the
more reason, to private respondents who are not even parties to the mortgage general rule applies that a temporary injunction terminates automatically on the
contract nor to the extrajudicial sale is not necessary. dismissal of the action.
Same; Same; The mortgagor has one year within which to redeem the property Same; Same; When the act sought to be prevented had long been
from and after registration of sale with the Register of Deeds; Upon failure to consummated, the remedy of injunction could no longer be entertained.There
redeem foreclosed realty, consolidation of title becomes a matter of right on the is, moreover, nothing erroneous with the denial of private respondents
part of the auction buyer, and the issuance of a certificate of title in favor of the application for preliminary prohibitory injunction. The acts complained of have
purchaser becomes ministerial upon the Register of Deeds.In a public bidding already been consummated. It is impossible to restrain the performance of
during extrajudicial foreclosure, the creditor-mortgagee, trustee, or other person consummated acts through the issuance of prohibitory injunction. When the act
authorized to act for the creditor may participate and purchase the mortgaged sought to be prevented had long been consummated, the remedy of injunction
property as any other bidder. Thereafter the mortgagor has one year within which could no longer be entertained, hearing the application for preliminary injunction
to redeem the property from and after registration of sale with the Register of would just be an exercise in futility.
Deeds. In case of non-redemption, the purchaser at foreclosure sale shall file Same; Same; Injunction is resorted to only when there is a pressing necessity to
with the Register of Deeds, either a final deed of sale executed by the person avoid injurious consequences which cannot be remedied under any standard
authorized by virtue of the power of attorney embodied in the deed compensation.To be entitled to the injunctive writ, movant must show that there
___________________ exists a right to be protected which is directly threatened by an act sought to be
* FIRST DIVISION. enjoined. Furthermore, there must be a showing that the invasion of
797
796
VOL. 311, AUGUST 5, 1999
796 797
SUPREME COURT REPORTS ANNOTATED Unionbank of the Philippines vs. Court of Appeals
Unionbank of the Philippines vs. Court of Appeals the right is material and substantial and that there is an urgent and paramount
necessity for the writ to prevent a serious damage. The injunctive remedy
prevents a threatened or continuous irremediable injury to some of the parties Unionbank of the Philippines (hereafter UNIONBANK) appeals, by way of
before their claim can be thoroughly investigated and advisedly adjudicated; it is certiorari, the Decision1 of the Court of Appeals (CA) of 26 June 1997 and its
resorted to only when there is a pressing necessity to avoid injurious Resolution of 7 April 1998.2 The CA nullified the Regional Trial Courts (RTC)
consequences which cannot be remedied under any standard compensation. Order3 of 7 August 1995 denying private respondents application for preliminary
Same; Same; As purchaser at a public auction, UNIONBANK is only substituted injunction as UNIONBANKs consolidation of ownership divested private
to and acquires the right, title, interest and claim of the judgment debtors or respondents of their property without due process of law. It also ordered the
mortgagors to the property at the time of levy.In the case at bar, the register of deeds to cancel UNIONBANKs title and the trial court to hear private
consolidation of ownership over the mortgaged property in favor of UNIONBANK respondents prayer for injunctive relief.
and the issuance of a new title in its name during the pendency of an action for This case stemmed from a real estate mortgage executed on 17 December 1991
annulment and reconveyance will not cause irreparable injury to private by spouses Leopoldo and Jessica Dario (hereafter mortgagors) in favor of
respondents who are plaintiffs in the said action that will merit the protection of UNIONBANK to secure a P3 million loan, including interest and other charges.
the court through the writ of preliminary injunction. This is because as purchaser The mortgage covered a Quezon City property with Transfer Certificate of Title
at a public auction, UNIONBANK is only substituted to and acquires the right, (TCT) No. 41828 in Leopoldo Darios name and was annotated on the title on 18
title, interest and claim of the judgment debtors or mortgagors to the property at December 1991. For nonpayment of the principal obligation, UNIONBANK
the time of levy. Perforce, the judgment in the main action for reconveyance will extrajudicially foreclosed the property mortgaged on 12 August 1993 and sold
not be rendered ineffectual by the consolidation of ownership and the issuance of the same at public auction, with itself posting the highest bid.
title in the name of UNIONBANK. ________________
Same; Lis Pendens; Once a notice of lis pendens has been duly registered, any 1 Per Brawner, R., J. with Tayao-Jaguros, L. and Aquino, H., JJ., concurring.
cancellation or issuance of the title of the land involved as well as any Rollo, 21-29.
subsequent transaction affecting the same, would have to be subject to the 2 Id., 31-32.
outcome of the litigation.More importantly, with the main action for 3 Annex N, Memorandum for Private Respondents, Rollo, 217.
reconveyance pending before the RTC, the notice of lis pendens, which despite 799
consolidation remains annotated on UNIONBANKs transfer certificate of title VOL. 311, AUGUST 5, 1999
subject to the outcome of the litigation, sufficiently protects private respondents 799
interest over the property. A transferee pendente lite stands exactly in the shoes Unionbank of the Philippines vs. Court of Appeals
of the transferor and is bound by any judgment or decree which may be rendered On 4 October 1994, one week before the one-year redemption period expired,
for or against the transferor. Once a notice of lis pendens has been duly private respondents filed a complaint with the RTC of Quezon City against the
registered, any cancellation or issuance of the title of the land involved as well as mortgagors, UNIONBANK, the Register of Deeds and the City Sheriff of Quezon
any subsequent transaction affecting the same, would have to be subject to the City. Docketed as Civil Case No. Q-94-21830, the complaint was for annulment
outcome of the litigation. In other words, upon the termination of the litigation of sale and real estate mortgage with reconveyance and prayer for restraining
there can be no risk of losing the property or any part thereof as a result of any order and prohibitory injunction. A notice of lis pendens was annotated on the
conveyance of the land or any encumbrance that may be made thereon posterior title.
to the filing of the notice of lis pendens. On 10 October 1994, RTC, Branch 81, through Presiding Judge (later CA
798 Justice) Celia Lipana-Reyes, issued a temporary restraining order (TRO)
798 enjoining the redemption of property within the statutory period and its
SUPREME COURT REPORTS ANNOTATED consolidation under UNIONBANKs name. At a hearing four days later,
Unionbank of the Philippines vs. Court of Appeals UNIONBANKs counsel orally moved for dismissal of the complaint alleging that
PETITION for review on certiorari of a decision of the Court of Appeals. a certification of non-forum shopping as prescribed by SC Circular 4-944 was not
The facts are stated in the opinion of the Court. attached thereto. Judge Lipana-Reyes settled the motion in favor of
Macalino & Associates for petitioner. UNIONBANK and dismissed5 the complaint on 17 October 1994.
Menla, Malanyaon, Atienza Law Office for private respondents. Aggrieved, private respondents filed a motion for reconsideration6 of the
DAVIDE, JR., C.J.: dismissal on 20 October 1994 and prayed that they be permitted to amend their
verified complaint to comply with the requisites of Circular 4-94. Upon the moved to declare UNIONBANKs counsel in indirect contempt attacking his
appointment of Judge Lipana-Reyes to the CA, pairing Judge Agustin S. Dizon disobedience to the TRO. On 19 May 1995, private respondents moved to
took over the case and on 15 November 1994 allowed private respondents to declare the other defendants in default for their non-filing of responsive
incorporate the mandatory formal requirements of SC Administrative Circular _________________
4-94 to their complaint. 7 Rollo, 33-49.
In the meantime, without notifying private respondents, UNIONBANK 801
consolidated its title over the foreclosed property on 24 October 1994. TCT No. VOL. 311, AUGUST 5, 1999
41828 was cancelled and TCT No. 120929 in UNIONBANKs name was issued 801
in its stead. Unionbank of the Philippines vs. Court of Appeals
____________________ pleadings within the mandatory period and to set the application for preliminary
4 Circular 4-94 is now Rule 7 Section 5 of the 1997 Rules of Civil Procedure. injunction and indirect contempt for pretrial and trial.
5 Rollo, 179-180. On 14 June 1995 the second division of this Court denied the petition for
6 Id., 181-189. certiorari, which it considered as a petition for review under Rule 45, for failure
800 to show that the CA had committed any reversible error in judgment.
800 In its 19 August 1995 Order, the RTC held the mortgagors and the City Sheriff of
SUPREME COURT REPORTS ANNOTATED Quezon City in default and sustained UNIONBANKs contention that the act
Unionbank of the Philippines vs. Court of Appeals sought to be enjoined had been enforced, negating the need of hearing the
Private respondents filed an amended complaint7 on 9 December 1994, alleging application for preliminary injunction. Private respondents filed a lengthy motion
that they, not the mortgagors, are the true owners of the property mortgaged and for reconsideration to this Order.
insisting on the invalidity of both the mortgage and its subsequent extrajudicial The annulment case was re-raffled to Branch 227 under Presiding Judge Vicente
foreclosure. They claimed that the original title, TCT No. 61571, was entrusted to Q. Roxas upon the creation of new salas. Judge Roxas, on 25 March 1996,
a certain Atty. Reynaldo Singson preparatory to its administrative reconstitution denied the motion to reconsider the 19 August 1995 Order but suggested that
after a fire gutted the Quezon City Hall building. Mortgagor Leopoldo, private private respondents amend their application from prohibitory to mandatory
respondent Ferminas son, obtained the property from Atty. Singson, had the title injunction.
reconstituted under his name without private respondents knowledge, executed As private respondents were unable to amend their application, the RTC denied
an antedated deed of sale in his favor and mortgaged the property to the motion for reconsideration and their motion for indirect contempt, in the
UNIONBANK. interest of free speech and tolerance on 9 July 1996. Asserting grave abuse of
On 19 December 1994, Judge Ignacio M. Capulong to whom this case was discretion, private respondents brought the denial of their motion for
assigned admitted the aforementioned amended complaint and set the reconsideration with the Court of Appeals on 6 September 1996.
application for writ of preliminary injunction for hearing. After UNIONBANKs After considering the arguments presented by the parties, the CA ruled that
motion for reconsideration of said Order was denied on 17 January 1995, it filed despite its knowledge that the ownership of the property was being questioned,
a petition for certiorari with the CA questioning the admission of the amended UNIONBANK took advantage of private respondents procedural error by
complaint. The CA upheld Judge Capulongs order admitting the amended consolidating title to the property, which smack[ed] of bad faith and evince[d] a
complaint on 24 April 1995, UNIONBANK thereafter elevated its cause to this reprobate disposition of the part of its counsel to advance his clients cause by
Court. fair means or foul. As a result thereof the transfer of title was vitiated by non-
Meanwhile, on 9 February 1995 UNIONBANK filed its answer ad cautelam adherence to procedural due process.8
asserting its status as an innocent mortgagee for value whose right or lien upon ___________________
the property mortgaged must be respected even if the mortgagor obtained his 8 Rollo, 26.
title through fraud. It also averred that the action had become moot and 802
academic by the consolidation of the foreclosed property on 24 October 1994 in 802
its name, resulting to the issuance of TCT No. 120929 by the Register of Deeds SUPREME COURT REPORTS ANNOTATED
of Quezon City. In reaction to UNIONBANKs revelation, private respondents Unionbank of the Philippines vs. Court of Appeals
On 26 June 1997, CA nullified the consolidation of ownership, ordered the October 1994 for failure to append a certification of non-forum shopping, the
Register of Deeds to cancel the certificate of title in UNIONBANKs name and to TRO, as an ancillary order that cannot stand independent of the main
reinstate TCT No. 41828 with the notice of lis pendens annotated at the back. proceeding, became functus officio. Thus the tolling of the 12-month redemption
The CA also set aside the portion of the assailed RTC Orders that declared period, interrupted by the filing of the complaint and the TRO, recommenced and
private respondents prayer for writ of preliminary injunction as moot and eventually expired 7 days thereafter or on 24 October 1994, the date of the
academic. UNIONBANKs motion for reconsideration of the above-mentioned disputed consolidation.
decision was likewise rejected for lack of merit on 7 April 1998. The motion for reconsideration and to amend complaint filed by private
Hence, UNIONBANK came to this Court claiming to be a mortgagee in good faith respondent on 20 October 1994 was of no moment, this Court recognizing that a
and for value with a right to consolidate ownership over the foreclosed property dismissal, discontinuance or non-suit of an action in which a restraining order or
with the redemption period having expired and there having been no temporary injunction has been granted operates as a dissolution of the
redemptioners. UNIONBANK contends that the TRO which provisionally enjoined restraining order or temporary injunction,9 regardless of whether the period for
the tolling of the redemption period was automatically dissolved upon dismissal filing a motion for reconsideration of the order dismissing the case or appeal
of the complaint on 17 October 1994. Conformably, consolidation of title in its therefrom has expired.10 The rationale therefor is that even in cases where an
name and the issuance of TCT No. 120929 rendered further proceedings on the appeal is taken from a judgment dismissing an action on the merits, the appeal
application for injunction academic. Moreover, the alleged fraudulent mortgage does not suspend the judgment, hence the general rule applies that a temporary
was facilitated through private respondents negligence so they must bear the injunction terminates automatically on the dismissal of the action.11
loss. It also contends that since private respondents had filed several pleadings, __________________
due process, being an opportunity to be heard either through pleadings or oral 9 Santiago v. Vasquez, 217 SCRA 633, 645-646 (1993).
arguments, was observed. 10 Golez v. Leonidas, 107 SCRA 187, 189 (1981).
Private respondents maintain that UNIONBANKs consolidation of the title in its 11 Santiago v. Vasquez, supra, note 16 at 645. See Paras v. Roura, 163 SCRA 1
name was in bad faith, vitiated a standing court order, is against the law, thus (1988).
void ab initio. The application for preliminary injunction was not rendered moot 804
and academic by consolidation, which took place during the lifetime of the TRO, 804
and did not follow the proper legal procedure due to the surreptitious manner it SUPREME COURT REPORTS ANNOTATED
was accomplished. By treating the application for preliminary injunction as moot Unionbank of the Philippines vs. Court of Appeals
and academic and denying the motion for indirect contempt without hearing, the We disagree with the appellate courts observation that consolidation deprived
RTC order ran afoul with the requirements of due process. Two main issues can private respondents of their property without due process. It is settled that the
be gleaned from the posturing and claims of the parties, to wit, was the buyer in a foreclosure sale becomes the absolute owner of the property
consolidation of title in purchased if it is not redeemed during the period of one year after the
803 registration of the sale.12 Consolidation took place as a matter of right since there
VOL. 311, AUGUST 5, 1999 was no redemption of the foreclosed property and the TRO expired upon
803 dismissal of the complaint. UNIONBANK need not have informed private
Unionbank of the Philippines vs. Court of Appeals respondent that it was consolidating its title over the property, upon the expiration
UNIONBANKs name proper, and was the dismissal of the application for of the redemption period, without the judgment debtor having made use of his
preliminary prohibitory injunction valid. right of redemption, the ownership of the property sold becomes consolidated in
The issues must be answered in the affirmative. the purchaser.13 Notice to the mortgagors and with more reason, to private
UNIONBANKs consolidation of title over the property on 24 October 1994 was respondents who are not even parties to the mortgage contract nor to the
proper, though precipitate. Contrary to private respondents allegation extrajudicial sale is not necessary.
UNIONBANK violated no standing court order. The only bar to consolidation was In real estate mortgage, when the principal obligation is not paid when due, the
the temporary restraining order issued by Justice Lipana-Reyes on 10 October mortgage has the right to foreclose the mortgage and to have the property
1994 which effectively halted the tolling of the redemption period 7 days short of seized and sold with a view to applying the proceeds to the payment of the
its expiration. When private respondents original complaint was dismissed on 17
principal obligation.14 Foreclosure may be effected either judicially or __________________
extrajudicially. 16 Section 63 (b), paragraph 3, P.D. 1529.
In a public bidding during extra-judicial foreclosure, the creditor-mortgagee, 17 Spouses Tarnate v. CA, 241 SCRA 254, 260 (1995).
trustee, or other person authorized to act for the creditor may participate and 18 Africa v. Sandiganbayan, 287 SCRA 408 (1998); See Manila Railroad
purchase the mortgaged property as any other bidder. Thereafter the mortgagor Company v. Yatco, 23 SCRA 735 (1968).
has one year within which to redeem the property from and after registration of 19 Medina, et al. v. City Sheriff, Manila, et al., 276 SCRA 133, 139 (1997).
sale with the Register of Deeds.15 In case of 806
___________________ 806
12 F. David Enterprises v. Insular Bank of Asia and America, 191 SCRA 516, 523 SUPREME COURT REPORTS ANNOTATED
(1990). Unionbank of the Philippines vs. Court of Appeals
13 Medida et al. v. Court of Appeals, et al., May 8, 1992, 208 SCRA 887, citing to avoid injurious consequences which cannot be remedied under any standard
Mateo v. Court of Appeals, et al., 99 Phil. 1042 (1956). compensation.20
14 Commodity Financing Co., Inc. v. Jimenez, 91 SCRA 57 (1979). In the case at bar, the consolidation of ownership over the mortgaged property in
15 Secs. 1, 4-6 Act No. 3135; Section 78, General Banking Act. favor of UNIONBANK and the issuance of a new title in its name during the
805 pendency of an action for annulment and reconveyance will not cause
VOL. 311, AUGUST 5, 1999 irreparable injury to private respondents who are plaintiffs in the said action that
805 will merit the protection of the court through the writ of preliminary injunction. This
Unionbank of the Philippines vs. Court of Appeals is because as purchaser at a public auction, UNIONBANK is only substituted to
non-redemption, the purchaser at foreclosure sale shall file with the Register of and acquires the right, title, interest and claim of the judgment debtors or
Deeds, either a final deed of sale executed by the person authorized by virtue of mortgagors to the property at the time of levy.21 Perforce, the judgment in the
the power of attorney embodied in the deed or mortgage, or his sworn statement main action for reconveyance will not be rendered ineffectual by the
attesting to the fact of non-redemption; whereupon, the Register of Deeds shall consolidation of ownership and the issuance of title in the name of UNIONBANK.
issue a new certificate of title in favor of the purchaser after the owners duplicate More importantly, with the main action for reconveyance pending before the
of the certificate has been previously delivered and cancelled.16 Thus, upon RTC, the notice of lis pendens, which despite consolidation remains annotated
failure to redeem foreclosed realty, consolidation of title becomes a matter of on UNIONBANKs transfer certificate of title subject to the outcome of the
right on the part of the auction buyer,17 and the issuance of a certificate of title in litigation, sufficiently protects private respondents interest over the property. A
favor of the purchaser becomes ministerial upon the Register of Deeds. transferee pendente lite stands exactly in the shoes of the transferor and is
There is, moreover, nothing erroneous with the denial of private respondents bound by any judgment or decree which may be rendered for or against the
application for preliminary prohibitory injunction. The acts complained of have transferor. Once a notice of lis pendens has been duly registered, any
already been consummated. It is impossible to restrain the performance of cancellation or issuance of the title of the land involved as well as any
consummated acts through the issuance of prohibitory injunction. When the act subsequent transaction affecting the same, would have to be subject to the
sought to be prevented had long been consummated, the remedy of injunction outcome of the litigation. In other words, upon the termination of the litigation
could no longer be entertained,18 hearing the application for preliminary there can be no risk of losing the property or any part thereof as a result of any
injunction would just be an exercise in futility. conveyance of the land or any encumbrance that may be
In addition, to be entitled to the injunctive writ, movant must show that there ___________________
exists a right to be protected which is directly threatened by an act sought to be 20 Wenceslao G. Laureta, Commentaries and Jurisprudence on Injunction 3,
enjoined. Furthermore, there must be a showing that the invasion of the right is citing American Smelting & Ref. Co. v. Godfrey [OCA 8th] 158 F 225, 14 Am.
material and substantial and that there is an urgent and paramount necessity for Cas. 8.
the writ to prevent a serious damage.19 The injunctive remedy prevents a 21 See PNB v. Court of Appeals, 275 SCRA 70 (1997).
threatened or continuous irremediable injury to some of the parties before their 807
claim can be thoroughly investigated and advisedly adjudicated; it is resorted to VOL. 311, AUGUST 5, 1999
only when there is a pressing necessity 807
Unionbank of the Philippines vs. Court of Appeals
made thereon posterior to the filing of the notice of lis pendens.22
Finally, as to the issue of who between private respondents and UNIONBANK is
negligent and hence must bear the loss, the same is not the proper subject of the
present petition and can only be resolved by the trial court after the trial on the
merit of the main case.
WHEREFORE, the assailed Decision of the Court of Appeals of 26 June
1997 nullifying the consolidation of ownership and ordering the Register of
Deeds of Quezon City to cancel TCT No. 120929 and reinstate TCT No. 41828 is
hereby REVERSED and SET ASIDE. The order of the trial court dated 7 August
1999, declaring UNIONBANKs prayer for writ of preliminary injunction moot and
academic, is hereby REINSTATED. Let this case be remanded to the Regional
Trial Court for trial on the merits.
No pronouncement as to costs.
SO ORDERED.
Puno, Kapunan, Pardo and Ynares-Santiago, JJ., concur.
Assailed decision reversed and set aside.
Note.Under Section 7 of Act No. 3135 and Section 35 of Rule 39, the
purchaser in a foreclosure sale is entitled to possession of the property. (Arcega
vs. Court of Appeals, 275 SCRA 176 [1997])
o0o
______________________
22 J.P. Pellicer & Co., Inc. v. Phil. Realty Corp., 87 Phil. 302, 307 (1950).
808
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