1. Rosales v. Suba Contention of Petitioner (sps.
Rosales):
GR No. 137792, August 12, 2003 – CORNELIO
Petitioner: SPOUSES RICARDO ROSALES and ERLINDA SIBUG
Respondent (s): SPOUSES ALFONSO and LOURDES SUBA, THE CITY SHERIFF OF MANILA
DOCTRINE: As a general rule, there is no right of redemption in a judicial foreclosure of
mortgage. The only exemption is when the mortgagee is the Philippine National Bank or
a bank or a banking institution
FACTS:
 Regional Trial Court Manila rendered a Decision as follows:
(1) Declaring the Deed of Sale of Exhibit D, G and I, affecting the property in
question, as an equitable mortgage;
(2) Declaring the parties Erlinda Sibug and Ricardo Rosales, within 90 days from
finality of this Decision, to deposit with the Clerk of Court, for payment to the
parties Felicisimo Macaspac and Elena Jiao, the sum of P65,000.00, with
interest at nine (9) percent per annum from September 30, 1982 until payment
is made, plus the sum of P219.76 as reimbursement for real estate taxes;
(3) Directing the parties Felicisimo Macaspac and Elena Jiao, upon the deposit on
their behalf of the amounts specified in the foregoing paragraph, to execute a
deed of reconveyance of the property in question to Erlinda Sibug, married to
Ricardo Rosales, and the Register of Deeds of Manila shall cancel Transfer
Certificate of Title No. 150540 in the name of the Macaspacs (Exh. E) and issue
new title in the name of Sibug;
(4) For non-compliance by Sibug and Rosales of the directive in paragraph (2) of
this dispositive portion, let the property be sold in accordance with the Rules of
Court for the release of the mortgage debt and the issuance of title to the
purchaser.
 Spouses Rosales, judgment debtors and herein petitioners, failed to comply with
paragraph 2 quoted above. This prompted Macaspac, as judgment creditor, to file
with the trial court a motion for execution.
 Petitioners failed to pay the amount.
 The RTC issued a writ of execution ordering the sale of the property subject of
litigation for the satisfaction of the judgment.
 An auction sale of the property was held wherein petitioners participated.
However, the property was sold for P285,000.00 to spouses Suba, herein
respondents, being the highest bidders.
 Macaspac filed a motion praying for the release to him of the amount of
P176,176.06 from the proceeds of the auction sale, prompting petitioners to file a
motion praying that an independent CPA be appointed to settle the exact amount
due to movant Macaspac.
 Meanwhile, the Register of Deeds of Manila issued a new TCT over the subject
property in the names of respondents.
 Respondents filed with the RTC a motion for a writ of possession, contending that
the confirmation of the sale effectively cut off petitioners equity of redemption.
 Petitioners on the other hand, filed a n MR against the order confirming the sale of
the property to respondents.
 The trial court ruled that petitioners have no right to redeem the property since the
case is for judicial foreclosure of mortgage under Rule 68 of the 1997 Rules of Civil
Procedure, as amended. Hence, respondents, as purchasers of the property, are
entitled to its possession as a matter of right.
 petitioners filed with the Court of Appeals a petition for certiorari. DISMISSED - there
is no right of redemption in case of judicial foreclosure of mortgage.
 Petitioners fault the CA in applying the rules on judicial foreclosure of mortgage.
They contend that their loan with Macaspac is unsecured, hence, its payment
entails an execution of judgment for money under Section 9 in relation to Section
25, Rule 39 of the 1997 Rules of Civil Procedure, as amended, allowing the
judgment debtor one (1) year from the date of registration of the certificate of sale
within which to redeem the foreclosed property.
Contention of Respondents (Sps. Suba):
 Respondents insist that petitioners are actually questioning the decision of the trial
court dated June 13, 1997 which has long become final and executory; and that
the latter have no right to redeem a mortgaged property which has been judicially
foreclosed.
ISSUE: Whether there is a right of redemption in case of judicial foreclosure of mortgage.
– NO.
RULING: In Huerta Alba Resort, Inc. vs. Court of Appeals, we held that the right of
redemption is not recognized in a judicial foreclosure, thus:
The right of redemption in relation to a mortgage understood in the sense
of a prerogative to re-acquire mortgaged property after registration of
the foreclosure sale exists only in the case of the extrajudicial foreclosure
of the mortgage. No such right is recognized in a judicial foreclosure
except only where the mortgagee is the Philippine National bank or a
bank or a banking institution.
Where a mortgage is foreclosed extrajudicially, Act 3135 grants to the mortgagor the
right of redemption within one (1) year from the registration of the sheriffs certificate of
foreclosure sale.
Where the foreclosure is judicially effected, however, no equivalent right of redemption
exists. The law declares that a judicial foreclosure sale, when confirmed by an order of
the court, x x x shall operate to divest the rights of all the parties to the action and to vest
their rights in the purchaser, subject to such rights of redemption as may be allowed by
law. Such rights exceptionally allowed by law (i.e., even after the confirmation by an
order of the court) are those granted by the charter of the Philippine National Bank (Act
Nos. 2747 and 2938), and the General Banking Act (R.A.337). These laws confer on the
mortgagor, his successors in interest or any judgment creditor of the mortgagor, the right
to redeem the property sold on foreclosureafter confirmation by the court of the
foreclosure salewhich right may be exercised within a period of one (1) year, counted
from the date of registration of the certificate of sale in the Registry of Property.
But, to repeat, no such right of redemption exists in case of judicial foreclosure of a
mortgage if the mortgagee is not the PNB or a bank or banking institution. In such a
case, the foreclosure sale, when confirmed by an order of the court, x x x shall operate
to divest the rights of all the parties to the action and to vest their rights in the purchaser.
There then exists only what is known as the equity of redemption. This is simply the right of
the defendant mortgagor to extinguish the mortgage and retain ownership of the
property by paying the secured debt within the 90-day period after the judgment
becomes final, in accordance with Rule 68, or even after the foreclosure sale but prior
to its confirmation.
This is the mortgagors equity (not right) of redemption which, as above stated, may be
exercised by him even beyond the 90-day period from the date of service of the order,
and even after the foreclosure sale itself, provided it be before the order of confirmation
of the sale. After such order of confirmation, no redemption can be effected any
longer.
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Clearly, as a general rule, there is no right of redemption in a judicial foreclosure of
mortgage. The only exemption is when the mortgagee is the Philippine National Bank or
a bank or a banking institution. Since the mortgagee in this case is not one of those
mentioned, no right of redemption exists in favor of petitioners. They merely have an
equity of redemption, which, to reiterate, is simply their right, as mortgagor, to extinguish
the mortgage and retain ownership of the property by paying the secured debt prior to
the confirmation of the foreclosure sale. However, instead of exercising this equity of
redemption, petitioners chose to delay the proceedings by filing several manifestations
with the trial court. Thus, they only have themselves to blame for the consequent loss of
their property.
2. Union Bank of the Philippines vs. Court of Appeal
G.R. No. 134068. June 25, 2001- Daguinod, Ericka
Petitioner/s : UNION BANK OF THE PHILIPPINES
Respondent/s : COURT OF APPEALS, APOLONIA DE JESUS GREGORIO, LUCIANA DE JESUS
GREGORIO, GONZALO VINCOY, married to TRINIDAD GREGORIO VINCOY
DOCTRINE: Section 78 of the General Banking Act had the effect of amending Section 6
of Act No. 3135 insofar as the redemption price is concerned when the mortgagee is a
bank or a banking or credit institution.
DE LEON, JR., J.:
FACTS
 Respondents-spouses Gonzalo and Trinidad Vincoy mortgaged their residence in
favor of petitioner to secure the payment of a loan to Delco Industries (Phils.),
Incorporated in the amount of Two Million Pesos (P2,000,000.00).
 For failure of the respondents to pay the loan at its date of maturity, petitioner
extrajudicially foreclosed the mortgage and scheduled the foreclosure sale on April
10, 1991.
 The petitioner submitted the highest bid of Three Million Two Hundred Ninety
Thousand Pesos (P3,290,000.00) at the foreclosure sale.
 Accordingly, a certificate of sale was issued to petitioner and duly annotated at
the back of the Transfer Certificate of Title covering the property on May 8, 1991.
 Prior to the expiration of the redemption period on May 8, 1992, the respondents
filed a complaint for annulment of mortgage with the lower court.
Respondents’ Contentions
 Subject property mortgaged to petitioner had in fact been constituted as a family
home as early as October 27, 1989. Assailed the validity of the mortgage on the
ground that Article 158 of the Family Code prohibits the execution, forced sale,
attachment or any other encumbrance of a family home without the written
consent of majority of the beneficiaries thereof of legal age.
 The period of redemption is interrupted by the filing of an action assailing the
validity of the mortgage
Petitioners’ Contentions
 Mortgaged property of respondents could not be legally constituted as a family
home because its actual value exceeded Three Hundred Thousand Pesos
(P300,000.00), the maximum value for a family home in urban areas as stipulated in
Article 157 of the Family Code
 Petitioner claims that it is not Section 30, Rule 39 of the Rules of Court that applies in
determining the amount sufficient for redemption but Section 78 of the General
Banking Act
 Petitioner also contends that the respondents had already lost their right to redeem
the foreclosed property when they failed to exercise their right of redemption by
paying the redemption price within the period provided for by law
Ruling of the RTC: Declaring the constitution of the family home void and the mortgage
executed in favor of the petitioner valid. It also ordered respondent Gonzalo Vincoy
and/or Delco Industries (Phils.), Inc. to pay petitioner his and/or its outstanding obligation
as of February 15, 1993 in the amount of Four Million Eight Hundred Sixteen Thousand
One Hundred Ninety-Four Pesos and Forty-Four Centavos (P4,816,194.44) including such
sums that may accrue by way of interests and penalties.
Ruling of the CA: Sustained the finding of the lower court that the alleged family home
of the respondents did not fall within the purview of Article 157 of the Family Code as its
value at the time of its constitution was more than the maximum value of Three Hundred
Thousand Pesos (P300,000.00). Hence, the Court of Appeals upheld the validity of the
mortgage executed over the said property in favor of the petitioner. It found that the
amount sufficient for the redemption of the foreclosed property is Three Million Two
Hundred Ninety Thousand Pesos (P3,290,000.00) equivalent to the purchase price at the
foreclosure sale plus one percent (1%) monthly interest from April 19, 1991 up to the date
of redemption pursuant to Section 30, Rule 39 of the Rules of Court.
Issue/s:
Whether the respondents may still redeem the property – NO
Whether the General Banking Act applies in the determination of the amount in
redeeming the property? - YES
RULING + RATIO:
 It is settled jurisprudence that an issue which was neither averred in the complaint
nor raised during the trial in the court below cannot be raised for the first time on
appeal as it would be offensive to the basic rules of fair play, justice and due
process. On this ground alone, the Court of Appeals should have completely
ignored the issue of respondents’ right to redeem the subject foreclosed property.
 Pursuant to Section 78 of the General Banking Act, a mortgagor whose real
property has been sold at a public auction, judicially or extrajudicially, for the full or
partial payment of an obligation to any bank, shall have the right, within one year
after the sale of the real estate to redeem the property. The one-year period is
actually to be reckoned from the date of the registration of the sale. Clearly
therefore, respondents had only until May 8, 1992 to redeem the subject foreclosed
property. Their failure to exercise that right of redemption by paying the
redemption price within the period prescribed by law effectively divested them of
said right.
 Also, in the more recent case of Vaca v. Court of Appeals, we declared that the
pendency of an action questioning the validity of a mortgage cannot bar the
issuance of the writ of possession after title to the property has been consolidated in
the mortgagee. The implication is clear: the period of redemption is not interrupted
by the filing of an action assailing the validity of the mortgage, so that at the
expiration thereof, the mortgagee who acquires the property at the foreclosure
sale can proceed to have the title consolidated in his name and a writ of
possession issued in his favor. To rule otherwise, and allow the institution of an action
questioning the validity of a mortgage to suspend the running of the one year
period of redemption would constitute a dangerous precedent. A likely offshoot of
such a ruling is the institution of frivolous suits for annulment of mortgage intended
merely to give the mortgagor more time to redeem the mortgaged property.
 Petitioner’s contention that Section 78 of the General Banking Act governs the
determination of the redemption price of the subject property is meritorious. In
Ponce de Leon v. Rehabilitation Finance Corporation, this Court had occasion to
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 rule that Section 78 of the General Banking Act had the effect of amending Section
6 of Act No. 3135 insofar as the redemption price is concerned when the
mortgagee is a bank, as in this case, or a banking or credit institution. The apparent
conflict between the provisions of Act No. 3135 and the General Banking Act was,
therefore, resolved in favor of the latter, being a special and subsequent legislation.
 This pronouncement was reiterated in the case of Sy v. Court of Appeals where we
held that the amount at which the foreclosed property is redeemable is the
amount due under the mortgage deed, or the outstanding obligation of the
mortgagor plus interest and expenses in accordance with Section 78 of the
General Banking Act. It was therefore manifest error on the part of the Court of
Appeals to apply in the case
 at bar the provisions of Section 30 Rule 39 of the Rules of Court in fixing the
redemption price of the subject foreclosed property.
Disposition: WHEREFORE, the motion for reconsideration is hereby GRANTED. This Court’s
Resolution dated July 12, 1999 is MODIFIED insofar as respondents are found to have lost
their right to redeem the subject foreclosed property.
3. Serrano v. CA
GR No. 133883, December 10, 2003 - GUTIERREZ
4. Mallari v, GSIS
GR No. 157659, January 25, 2010 – HORARIO
Doctrine:
The mortgagor or his successor-in-interest must redeem the foreclosed property within
one year from the registration of the sale with the Register of Deeds in order to avoid the
title from consolidating in the purchaser. By failing to redeem thuswise, the mortgagor
loses all interest over the foreclosed property. The purchaser, who has a right to
possession that extends beyond the expiration of the redemption period, becomes the
absolute owner of the property when no redemption is made, that it is no longer
necessary for the purchaser to file the bond required under Section 7 of Act No. 3135, as
amended, considering that the possession of the land becomes his absolute right as the
land’s confirmed owner.
Article Applicable: Act No 3135
Fact:
1. In 1968, the petitioner obtained two loans totaling ₱34,000.00 from respondent
Government Service Insurance System (GSIS). To secure the performance of his
obligations, he mortgaged two parcels of land registered under his and his wife
Marcelina Mallari’s names. However, he paid GSIS about ten years after
contracting the obligations only ₱10,000.00 on May 22, 1978 and ₱20,000.00 on
August 11, 1978.
2. Despite repetitive demand for the payment of the said debt Mallari failed to
comply its obligation. Despite of his request foe final accounting of his account he
still failed to pay.
3. On July 21, 1986, it finally commenced extrajudicial foreclosure proceedings
against him because he had meanwhile made no further payments.
4. Mallari then filed before the RTC to enjoin them from proceeding against him for
injunction (with an application for preliminary injunction). RTC affirmed but CA
reversed and SC affirmed the decision of CA.
5. GSIS thus filed an ex parte motion for execution and for a writ of possession on
September 2, 1999. Granting the ex parte motion on October 8, 1999, the RTC
issued a writ of execution cum writ of possession on October 21, 1999, ordering the
sheriff to place GSIS in possession of the properties.
6. There is delay for the execution due to the efforts of Mallari. Instead to vacate the
property he filed for MR on the motion of the execution.
7. Also, the petitioner commenced a second case against GSIS and the provincial
sheriff in the RTC in San Fernando, Pampanga (Civil Case No. 12053), ostensibly for
consignation (coupled with a prayer for a writ of preliminary injunction or
temporary restraining order). However, the RTC dismissed Civil Case No. 12053 on
November 10, 2000 on the ground of res judicata, impelling him to appeal the
dismissal to the CA (C.A.-G.R. CV No. 70300).
8. He also file for contempt for GSIS for painting his property. There was a change of
sala from RTC 44 to 48 for being partial.
9. Branch 48 denied the motions for contempt of court on July 30, 2001, and directed
the Branch Clerk of Court to cause the re-implementation of the writ of execution
cum writ of possession dated October 21, 1999.
10. CA demised the petition.
Issue: Whether there is an error for grating the issuance and implementation of the writ
of execution of possession in favor of GSIS? NO
Ruling + Ratio:
A writ of possession, which commands the sheriff to place a person in possession of
real property, may be issued in: (1) land registration proceedings under Section 17 of
Act No. 496; (2) judicial foreclosure, provided the debtor is in possession of the
mortgaged property, and no third person, not a party to the foreclosure suit, had
intervened; (3) extrajudicial foreclosure of a real estate mortgage, pending redemption
under Section 7 of Act No. 3135, as amended by Act No. 4118; and (4) execution sales,
pursuant to the last paragraph of Section 33, Rule 39 of the Rules of Court.
Anent the redemption of property sold in an extrajudicial foreclosure sale made
pursuant to the special power referred to in Section 1 of Act No. 3135, as amended, the
debtor, his successor-in-interest, or any judicial creditor or judgment creditor of said
debtor, or any person having a lien on the property subsequent to the mortgage or
deed of trust under which the property is sold has the right to redeem the property at
anytime within the term of one year from and after the date of the sale, such redemption
to be governed by the provisions of Section 464 to Section 466 of the Code of Civil
Procedure, to the extent that said provisions were not inconsistent with the provisions of
Act 3135.
In this regard, we clarify that the redemption period envisioned under Act 3135 is
reckoned from the date of the registration of the sale, not from and after the date of the
sale, as the text of Act 3135 shows. Although the original Rules of Court (effective on July
1, 1940) incorporated Section 464 to Section 466 of the Code of Civil Procedure as its
Section 25 (Section 464); Section 26 (Section 465); and Section 27 (Section 466) of Rule
39, with Section 27 still expressly reckoning the redemption period to be "at any time
within twelve months after the sale;" and although the Revised Rules of Court (effective
on January 1, 1964) continued to provide in Section 30 of Rule 39 that the redemption
be made from the purchaser "at any time within twelve (12) months after the sale," the
12-month period of redemption came to be held as beginning "to run not from the date
of the sale but from the time of registration of the sale in the Office of the Register of
Deeds." This construction was due to the fact that the sheriff’s sale of registered (and
unregistered) lands did not take effect as a conveyance, or did not bind the land, until
the sale was registered in the Register of Deeds.
Desiring to avoid any confusion arising from the conflict between the texts of the
Rules of Court (1940 and 1964) and Act No. 3135, on one hand, and the jurisprudence
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clarifying the reckoning of the redemption period in judicial sales of real property, on
the other hand, the Court has incorporated in Section 28 of Rule 39 of the current Rules
of Court (effective on July 1, 1997) the foregoing judicial construction of reckoning the
redemption period from the date of the registration of the certificate of sale, to wit:
Sec. 28. Time and manner of, and amounts payable on,
successive redemptions; notice to be given and filed. — The
judgment obligor, or redemptioner, may redeem the property from
the purchaser, at any time within one (1) year from the date of the
registration of the certificate of sale, by paying the purchaser the
amount of his purchase, with one per centum per month interest
thereon in addition, up to the time of redemption, together with the
amount of any assessments or taxes which the purchaser may have
paid thereon after purchase, and interest on such last named
amount at the same rate; and if the purchaser be also a creditor
having a prior lien to that of the redemptioner, other than the
judgment under which such purchase was made, the amount of
such other lien, with interest.
Property so redeemed may again be redeemed within sixty (60)
days after the last redemption upon payment of the sum paid on the
last redemption, with two per centum thereon in addition, and the
amount of any assessments or taxes which the last redemptioner may
have paid thereon after redemption by him, with interest on such
last-named amount, and in addition, the amount of any liens held by
said last redemptioner prior to his own, with interest. The property may
be again, and as often as a redemptioner is so disposed, redeemed
from any previous redemptioner within sixty (60) days after the last
redemption, on paying the sum paid on the last previous redemption,
with two per centum thereon in addition, and the amounts of any
assessments or taxes which the last previous redemptioner paid after
the redemption thereon, with interest thereon, and the amount of
any liens held by the last redemptioner prior to his own, with interest.
Written notice of any redemption must be given to the officer
who made the sale and a duplicate filed with the registry of deeds of
the place, and if any assessments or taxes are paid by the
redemptioner or if he has or acquires any lien other than that upon
which the redemption was made, notice thereof must in like manner
be given to the officer and filed with the registry of deeds; if such
notice be not filed, the property may be redeemed without paying
such assessments, taxes, or liens. (30a)
Accordingly, the mortgagor or his successor-in-interest must redeem the
foreclosed property within one year from the registration of the sale with the Register of
Deeds in order to avoid the title from consolidating in the purchaser. By failing to
redeem thuswise, the mortgagor loses all interest over the foreclosed property. The
purchaser, who has a right to possession that extends beyond the expiration of the
redemption period, becomes the absolute owner of the property when no redemption
is made, that it is no longer necessary for the purchaser to file the bond required under
Section 7 of Act No. 3135, as amended, considering that the possession of the land
becomes his absolute right as the land’s confirmed owner. The consolidation of
ownership in the purchaser’s name and the issuance to him of a new TCT then entitles
him to demand possession of the property at any time, and the issuance of a writ of
possession to him becomes a matter of right upon the consolidation of title in his name.
The court can neither halt nor hesitate to issue the writ of possession. It cannot
exercise any discretion to determine whether or not to issue the writ, for the issuance of
the writ to the purchaser in an extrajudicial foreclosure sale becomes a ministerial
function. Verily, a marked distinction exists between a discretionary act and a ministerial
one. A purely ministerial act or duty is one that an officer or tribunal performs in a given
state of facts, in a prescribed manner, in obedience to the mandate of a legal
authority, without regard to or the exercise of his own judgment upon the propriety or
impropriety of the act done. If the law imposes a duty upon a public officer and gives
him the right to decide how or when the duty shall be performed, such duty is
discretionary, not ministerial. The duty is ministerial only when its discharge requires
neither the exercise of official discretion nor the exercise of judgment.
The proceeding upon an application for a writ of possession is ex parte and
summary in nature, brought for the benefit of one party only and without notice being
sent by the court to any person adverse in interest. The relief is granted even without
giving an opportunity to be heard to the person against whom the relief is sought. Its
nature as an ex parte petition under Act No. 3135, as amended, renders the application
for the issuance of a writ of possession a non-litigious proceeding.
It is clear from the foregoing that a non-redeeming mortgagor like the petitioner
had no more right to challenge the issuance of the writ of execution cum writ of
possession upon the ex parte application of GSIS. He could not also impugn anymore
the extrajudicial foreclosure, and could not undo the consolidation in GSIS of the
ownership of the properties covered by TCT No. 284272-R and TCT No. 284273-R, which
consolidation was already irreversible. Hence, his moves against the writ of execution
cum writ of possession were tainted by bad faith, for he was only too aware, being his
own lawyer, of the dire consequences of his non-redemption within the period provided
by law for that purpose.
5. Cuñada v. Drilon
G.R. No. 159118 June 28, 2004
Petitioner: VICTOR B. CUÑADA and HEDY V. CUÑADA
Respondents: HON. RAY ALAN T. DRILON as Presiding Judge of the RTC, Br. 41, Bacolod
City, and PLANTERS PRODUCTS, INC.
Doctrine: Creditor is allowed to recover the deficiency from the sale of the property.
Where the proceeds of the sale are insufficient to cover the debt in an extrajudicial
foreclosure of mortgage, the mortgagee is entitled to claim the deficiency from the
debtor.
Facts:
 Private respondent Planters Products, Inc. filed an action before the Regional Trial
Court for the recovery of the deficiency on the proceeds of the extrajudicial
foreclosure of the mortgage executed by the petitioners in favor of private
respondent. Petitioner Victor Cuñada represented himself and his wife in the
case. In their defense, petitioner Victor Cuñada testified on direct examination.
With his testimony on direct examination not yet concluded, no further hearing was
held. Petitioner Victor Cuñada’s secretary refused to receive the notice of
hearing, informing the process server that petitioners were out of the country and
their return was uncertain. The subsequent notices of hearing were likewise not
served as petitioners had not yet returned from the United States.
 The trial court issued an Order to strike out from the record the testimony of
petitioner Victor Cuñada because he never completed his testimony. The trial
court considered petitioner spouses to have waived further presentation of
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 evidence and the case was deemed submitted for decision. By then, several
judges had presided over the case.
 The trial court rendered judgment in favor of respondent Planters Products.
Petitioners moved for new trial or reconsideration but this was denied.
Issue: Whether there was a denial of due process when the trial court issued the order
striking off petitioner Victor Cuñada’s testimony and rendering the assailed decision
because it allegedly did so despite absence of valid service of the notices of hearing
and other processes upon petitioners. - No.
Ruling:
 It is not disputed that trial commenced with the full participation of petitioners and
they were given the opportunity to present evidence in their defense. Far from
being denied the right to be heard, petitioners were given the opportunity to
present their evidence but they squandered the opportunity as they failed to
complete their evidence. Moreover, the case had been pending before the same
trial court for 10 years, during which time it was presided by several judges. As
petitioners themselves eviscerated their right to present evidence, their invocation
of due process appears to be nothing but a desperate maneuver to postpone the
execution of the judgment which is in favor of the private respondent, as it should
be, under the facts on record and the applicable law.
 Indeed, even if petitioners were to complete their evidence, still they could not
legitimately expect a change in the decision of the trial court. Petitioners’ only
defense is that the law does not allow deficiency judgment in extrajudicial
foreclosure of mortgage. This argument must fail, as the lower court correctly held,
since it is now well-settled that the creditor is allowed to recover the deficiency
from the sale of the property. In a number of cases, this Court held that where the
proceeds of the sale are insufficient to cover the debt in an extrajudicial
foreclosure of mortgage, the mortgagee is entitled to claim the deficiency from the
debtor. While Act No. 3135, as amended, does not discuss the mortgagee’s right to
recover the deficiency, neither does it contain any provision expressly or impliedly
prohibiting recovery. If the legislature had intended to deny the creditor the right to
sue for any deficiency resulting from the foreclosure of a security given to
guarantee an obligation, the law would expressly so provide. Absent such a
provision in Act. No. 3135, as amended, the creditor is not precluded from taking
action to recover any unpaid balance on the principal obligation simply because
he chose to extrajudicially foreclose the real estate mortgage.
WHEREFORE, in view of the foregoing, the Entry of Judgment on November 12, 2003 is
RECALLED. However, the Motion for Reconsideration is DENIED with FINALITY, no
compelling reason and no substantial argument having been adduced to warrant the
reconsideration sought. Accordingly, the Amended Petition is NOTED WITHOUT ACTION.
EQUITABLE PCI BANK v DNG
G.R. No. 168672 August 8, 2010 Author: Santiago, Arnel
Ponente: PERALTA
Doctrine:
- After the redemption period expired without respondent redeeming the foreclosed
property, petitioner becomes the absolute owner of the property and it was within its
right to ask for the consolidation of title and the issuance of new title in its name as a
consequence of ownership; thus, it is entitled to the possession and enjoyment of the
property.
Petitioner: EQUITABLE PCI BANK
Respondent: DNG
Facts:
 (DNG) obtained a loan of ₱20M from x x x Equitable PCI Bank (EPCIB) secured by a
real estate mortgage over the 63,380 sq. meter land of the former situated in
Cabanatuan City. Due to the Asian Economic Crisis, DNG experienced liquidity
problems disenabling DNG from paying its loan on time.
 EPCIB sought the extrajudicial foreclosure of the said mortgage by filing a petition
for sale on 30 June 2003 before the Office of the Ex-Officio Sheriff. On 4 September
2003, the mortgage property was sold at public auction, which was eventually
awarded to EPCIB as the highest bidder. That same day, the Sheriff executed a
Certificate of Sale in favor of EPCIB.
 DNG filed a petition for rehabilitation under Rule 4 of the Interim Rules of Procedure
on Corporate Rehabilitation before the Regional Trial Court.
 EPCIB caused the recording of the Sheriff's Certificate of Sale on 3 December 2003
with the Registry of Deeds of Cabanatuan City.
 EPCIB on 17 March 2004 filed an Ex-Parte Petition for Issuance of Writ of Possession
docketed as Cadastral Case No. 2414-AF before RTC Br. 23 in Cabanatuan City.
 RTC issued the Writ of Possession. Consequently, the Office of the Ex-Officio Sheriff
issued the Notice to Vacate dated 6 October 2004.
 DNG filed an issue petition for Certiorari with TRO. Granted by CA.
CONTENTION of EQUITABLE:
Petitioner contends that upon failure to redeem the foreclosed property, consolidation
of title becomes a matter of right on the part of the auction buyer, and the issuance of
a certificate of title in favor of the purchaser becomes ministerial upon the Register of
Deeds
ISSUE: Who has now the right the right to the mortgaged property – EPCIB
RULING:
 DNG failed to redeem the foreclosed property within the reglementary period; thus,
petitioner EPCIB consolidated its ownership over the property in its favor and
annotated the same in respondent's title. Thus, respondent DNG's title was
cancelled and a new title was issued in petitioner EPCIB's name. The RTC's issuance
of a writ of possession in favor of petitioner EPCIB as the new registered owner of
the subject property was in compliance with the express provisions of Act 3135 as
amended. It cannot, therefore, be charged with grave abuse of discretion as there
is no showing that, in the exercise of its judgment, it acted in a capricious,
whimsical, arbitrary or despotic manner tantamount to lack of jurisdiction.
 The right of the petitioner to the possession of the property is clearly unassailable. It
is founded on its right of ownership. As the purchaser of the properties in the
foreclosure sale, and to which the respective titles thereto have already been
issued, petitioner’s right over the property has become absolute, vesting upon him
the right of possession over an enjoyment of the property which the Court must aid
in effecting its delivery. After such delivery, the purchaser becomes the absolute
owner of the property. As We said in Tan Soo Huat vs. Ongwico, the deed of
conveyance entitled the purchaser to have and to hold the purchased property.
This means, that the purchaser is entitled to go immediately upon the real property,
and that it is the Sheriff’s inescapable duty to place him in such possession.
 REMEDY - DNG had the right to file a petition to set aside the sale and writ of
possession issued by the RTC and to file an appeal in case of an adverse ruling.
However, respondent DNG did not file such petition and, instead, filed the petition
for certiorari, prohibition and mandamus with the CA. Hence, they were barred
from filing such petition from the RTC Order and the writ of possession issued by
5
 it.Respondent's recourse to the CA via Rule 65 was inappropriate even though the
Sheriff had demanded that they vacate the property. Section 8 of Act No. 3135
mandates that even if an appeal is interposed from an order granting a petition for
a writ of possession, such order shall continue to be in effect during the pendency
of an appeal.
Second issue of whether the CA correctly held that after the issuance of the Stay Order
by the rehabilitation court, all subsequent actions in this case pertaining to respondent's
Cabanatuan property should have been held in abeyance is devoid of merit.
 In RCBC v. IAC, BF Homes filed a petition for rehabilitation and for suspension of
payments with the SEC on September 28, 1984. On October 26, 1984, RCBC
requested the Provincial Sheriff to extrajudicially foreclose its real estate mortgage
on some of BF Homes' properties; thus, notices were sent to the parties. BF Homes
filed a motion with the SEC for the issuance of a TRO to enjoin RCBC and the sheriff
from proceeding with the auction sale, which the SEC granted by issuing a TRO for
twenty days. The sale was rescheduled to January 29, 1985. On January 25, 1985,
the SEC ordered the issuance of a writ of preliminary injunction conditioned upon
BF Homes' filing of a bond which the latter failed to do not until January 29, the day
of the auction sale. As the sheriff was not aware of the filing of the bond, he
proceeded with the auction on January 29, wherein RCBC emerged as the highest
bidder.
 In RCBC, we upheld the extrajudicial foreclosure sale of the mortgage properties of
BF Homes wherein RCBC emerged as the highest bidder as it was done before the
appointment of the management committee. Noteworthy to mention was the fact
that the issuance of the certificate of sale in RCBC's favor, the consolidation of title,
and the issuance of the new titles in RCBC's name had also been upheld
notwithstanding that the same were all done after the management committee
had already been appointed and there was already a suspension of claims. Thus,
applying RCBC v. IAC in this case, since the foreclosure of respondent DNG's
mortgage and the issuance of the certificate of sale in petitioner EPCIB's favor were
done prior to the appointment of a Rehabilitation Receiver and the Stay Order, all
the actions taken with respect to the foreclosed mortgage property which were
subsequent to the issuance of the Stay Order were not affected by the Stay Order.
Thus, after the redemption period expired without respondent redeeming the
foreclosed property, petitioner becomes the absolute owner of the property and it
was within its right to ask for the consolidation of title and the issuance of new title in
its name as a consequence of ownership; thus, it is entitled to the possession and
enjoyment of the property.
WHEREFORE, the petition is GRANTED. The Decision dated June 23, 2005 of the Court of
Appeals in CA-G.R. SP No. 86950 is hereby REVERSED and SET ASIDE.
Register of Deeds of Manila vs. China Banking Corp
No. L-11964. April 28, 1962. Digest Author : Suarez, not orginal
Petitioner/s : PREGISTER OF DEEDS OF MANILA
Respondent/s : CHINA BANKING CORPORATION
DOCTRINE:
 Banks; Acquisition of real estate in satisfaction of debts; Meaning of "debts" in
Section 25, Republic Act 337.—Paragraph (c), Section 25 of Republic Act 337 allows
a commercial bank to purchase and hold such real estate as shall be conveyed to
it in satisfaction of debts previously contracted in the course of its dealings. The
"debts" referred to in this provision are only those resulting from previous loans and
other similar transactions made or entered into by a commercial bank in the
ordinary course of its business as such.
 Constitutional law; Acquisition of private agricultural land by aliens; Section 4, Title
XIII of the Constitution absolute terms.—The prohibition contained in Section 5, Title
XIII of the Constitution, which provides that "Save in cases of hereditary succession,
no private agricultural land shall be transferred or assigned except to individuals,
corporations or associations qualified to acquire or hold lands of the public domain
in the Philippines", is absolute in terms and has for its purpose the preservation of the
patrimony of the nation. It cannot be limited to the permanent acquisition of real
estate by aliens—whether natural or juridical persons.
FACTS :
Parties :
1. Alfonso Pangilinan (« Pangilinan »)(anGuillermo Chua) – Employee of China
Banking Corporation
2. China Banking Corporation (« CBC ») – Foreign owned commercial bank
3. Register of Deeds
 For the satisfaction of the civil liability(P275,000) from the crime of qualfied theft
against Pangilinan, Pangilinan executed a DEED OF TRANSFER, in favor of CBC, a
parcel of land located in the City of Manila.
 When CBC presented the DEED before the Register of Deed, the Registrar refused
to registration of the said parcel of land in favor of CBC. Basis used : Art XIII, Sec 5 of
the Constitution, which prohibits alien from acquiring the land.
CBC Contention:
 Temporary holding the land is not within the contemplation made by the framers of
constitution.
 The prohibition does not preclude enjoyment of temporary rights.
 Under Sec 25 General Banking Act, alien banks may temporarily own land subject
to disposition within 4 years.
RD Contention:
 General Banking Act cannot annul the Constitutional provision.
 It is the character and nature of the possession—whether in strict ownership or
otherwise—and not the length of possession that is material, the result being that, if
real property is to be held in ownership, an alien may not legally do so even for a
single day.
ISSUE: Whether CBC is allowed to own the parcel of land - NO
RULING + RATIO:
The constitutional prohibition in question is absolute. The reason for this is manifestly the
desire and purpose of the Constitution to place and keep in the hands of the people
the ownership over private lands in order not to endanger the integrity of the nation.
Inasmuch as when an alien buys land he acquires and will naturally exercise ownership
over the same, either permanently or temporarily, to that extent his acquisition
jeopardizes the purpose of the Constitution.
Obiter: Even assuming that alien Banks can own land, the case does
not fall under Section 25 of RA 337.
"SEC. 25. Any commercial bank may purchase, hold, and convey real
estate for the following purposes:
"(c) Such shall be conveyed to it in satisfaction of debts previously
contracted in the course of its dealings;
6
 "(d) Such as it shall purchase at sales under judgments, decrees,
mortgages, or trust deeds held by it and such as it shall purchase to
secure debts due to it.
"But no such bank shall hold the possession of any real estate under
mortgage or trust deed, or the title and possession of any real estate
purchased to secure any debt due to it, for a longer period than five
years."
Paragraph (c), Section 25 of Republic Act 337 allows a commercial bank to purchase
and hold such real estate as shall be conveyed to it in satisfaction of debts previously
contracted in the course of its dealings, We deem it quite clear and free from doubt
that the "debts" referred to in this provision are only those resulting from previous loans
and other similar transactions made or entered into by a commercial bank in the
ordinary course of its business as such. Obviously, whatever "civil liability"—arising from
the criminal offense of qualified theft—was admitted in favor of appellant bank by its
former employee, Alfonso Pangilinan, was not a debt resulting from a loan or a similar
transaction had between the two parties in the ordinary course of banking business.
Neither do the provisions of paragraph (d) of the same section apply to the present
case because the deed of transfer in question can in no sense be considered as a sale
made by virtue of a judgment, decree, mortgage, or trust deed held by appellant
bank. In the same manner it cannot be said that the real property in question was
purchased by appellant "to secure debts due to it", considering that, as stated
heretofore, the term debt employed in the pertinent legal provision can logically refer
only to such debts as may become payable to appellant bank as a result of a banking
transaction.
That the constitutional prohibition under consideration has for its purpose the
preservation of the patrimony of the nation cannot be denied, but appellant and the
amici curiae claim that it should be liberally construed so that the prohibition be limited
to the permanent acquisition of real estate by aliens—whether natural or juridical
persons. This, of course, would make legal the ownership acquired by appellant bank by
virtue of the deed of transfer mentioned heretofore, subject to its obligation to dispose
of it in accordance with law, within 4 years from date of its acquisition.
Philippine Commercial International Bank (formerly Insular Bank of Asia and America) v.
CA
GR 121413, January 29, 2001 - KING
Doctrine:
A bank is liable for the negligent or tortuous act of its employees within the course and
apparent scope of their employment or authority. It a bank would be liable for the
fraudulent act of its employee who set up the savings account under a fictitious name.
Facts:
 These are three cases consolidated: G.R. No. 121413 (PCIB vs CA and Ford and
Citibank), G.R. No. 121479 (Ford vs CA and Citibank and PCIB), and G.R. No. 128604
(Ford vs Citibank and PCIB and CA).
 In October 1977, Ford Philippines drew a Citibank check in the amount of
P4,746,114.41 in favor of the Commissioner of the Internal Revenue (CIR). The check
represents Ford’s tax payment for the third quarter of 1977. On the face of the
check was written “Payee’s account only” which means that the check cannot be
encashed and can only be deposited with the CIR’s savings account (which is with
Metrobank). The said check was however presented to PCIB and PCIB accepted
the same. PCIB then indorsed the check for clearing to Citibank. Citibank cleared
the check and paid PCIB P4,746,114.41. CIR later informed Ford that it never
received the tax payment.
 An investigation ensued and it was discovered that Ford’s accountant Godofredo
Rivera, when the check was deposited with PCIB, recalled the check since there
was allegedly an error in the computation of the tax to be paid. PCIB, as instructed
by Rivera, replaced the check with two of its manager’s checks.
 It was further discovered that Rivera was actually a member of a syndicate and the
manager’s checks were subsequently deposited with the Pacific Banking
Corporation by other members of the syndicate. Thereafter, Rivera and the other
members became fugitives of justice.
 On July 1978 and in April 1979, Ford drew two checks in the amounts of
P5,851,706.37 and P6,311,591.73 respectively. Both checks are again for tax
payments. Both checks are for “Payee’s account only” or for the CIR’s bank savings
account only with Metrobank. Again, these checks never reached the CIR.
 In an investigation, it was found that these checks were embezzled by the same
syndicate to which Rivera was a member. It was established that an employee of
PCIB, also a member of the syndicate, created a PCIB account under a fictitious
name upon which the two checks, through high end manipulation, were
deposited. PCIB unwittingly endorsed the checks to Citibank which the latter
cleared. Upon clearing, the amount was withdrawn from the fictitious account by
syndicate members.
Issue: What is the liability of PCIB, Citibank, and Ford if any.
Decision:
PCIB is liable for the amount of the check (P4,746,114.41).
 PCIB, as a collecting bank has been negligent in verifying the authority of Rivera to
negotiate the check. It failed to ascertain whether or not Rivera can validly recall
the check and have them be replaced with PCIB’s manager’s checks as in fact,
Ford has no knowledge and did not authorize such. A bank (in this case PCIB)
which cashes a check drawn upon another bank (in this case Citibank), without
requiring proof as to the identity of persons presenting it, or making inquiries with
regard to them, cannot hold the proceeds against the drawee when the proceeds
of the checks were afterwards diverted to the hands of a third party. Hence, PCIB is
liable for the amount of the embezzled check.
 Citibank is likewise liable because it was negligent in the performance of its
obligations with respect to its agreement with Ford. The checks which were drawn
against Ford’s account with Citibank clearly states that they are payable to the CIR
only yet Citibank delivered said payments to PCIB. Citibank however argues that
the checks were indorsed by PCIB to Citibank and that the latter has nothing to do
but to pay it. The Supreme Court cited Section 62 of the Negotiable Instruments
Law which mandates the Citibank, as an acceptor of the checks, to engage in
paying the checks according to the tenor of the acceptance which is to deliver
the payment to the “payee’s account only”.
 But the Supreme Court ruled that in the consolidated cases, that PCIB and Citibank
are not the only negligent parties. Ford is also negligent for failing to examine its
passbook in a timely manner which could have avoided further loss. But this
negligence is not the proximate cause of the loss but is merely contributory.
Nevertheless, this mitigates the liability of PCIB and Citibank hence the rate of
interest, with which PCIB and Citibank is to pay Ford, is lowered from 12% to 6% per
annum.
Bangko Sentral v. Hon, Valenzuela
GR No. 184778, October 2, 2009. - KING
“Close Now, Hear Later” Doctrine:
7
the closure of bank may be considered as an exercise of police power. The action of
MB on this matter is final and executory, but may be subject to judicial inquiry and can
be set aside if found to be in excess of jurisdiction or w grave abuse of discretion
amounting to lack or excess of jurisdiction.
Facts:
 The Supervision and Examination Dept. (SED) of BSP conducted examinations of the
books of respondent banks. Deficiencies were discovered during examinations.
These banks were then required undertake the remedial measures stated in the List
of Findings/Exceptions, including the infusion of additional capital.
 The banks claimed they made the necessary capital infusion, but Petitioner Chuchi
Fonacier (OIC of SED) sent separate letter to the BOD of each bank, informing them
that the banks failed to carry out the required remedial measures and requested
that they be given time to obtain BSP approval to amend their Articles of
Incorporation, to seek new investors, and that the basis for the capital infusion be
disclosed.
 They also noted that none of them had received the Report of Examination (ROE)
which finalizes the audit findings. Thus, Respondent banks filed a complaint for
nullification of ROE against petitioners, w TRO and WPI (Writ of Preliminary Injunction)
enjoining BSP from submitting the ROE to the Monetary Board (MB) contending that
the failure to furnish the bank w the ROE violated their right to due process.
 RTC, ruled in favour of the banks. It had been the practice of SED to provide ROEs
to the banks before submission to MB. As banks are subject of examinations, they
are entitled to copies of the ROEs. The denial by petitioners of the banks’ requests
for copies of ROEs was held to be a denial of the banks’ right to due process.
Issues
W/N Injunction issued by RTC violated Sec. 25 of New Central Bank Act and effectively
handcuffed the BSP from discharging its functions to the great and irreparable damage
of the country’s banking system [YES]
W/N Respondent banks are entitled to be furnished copies of the respective ROEs
before the same is submitted to MB [NO]
Decision:
 Respondent banks have failed to show that they are entitled to copies of the ROEs.
No provision of law, nor a section in the procedures of the BSP shows that BSP is
required to give them copies of the ROEs.
 Sec. 28 of the New Central Bank Act, which governs the examinations of banking
institutions, provides that the ROE shall be submitted to the MB; the bank examined
is not mentioned as recipient of the ROE.
 The contents of the ROEs are essentially the same as those of the List of
Findings/Exceptions provided to said banks, wc were furnished to the them, hence
they cannot claim that their right to due process was violated. The ROEs would be
superfluities.
 The issuance by RTC of WPI is an unwarranted interference w the powers of MB. The
actions of MB under Sec. 29 and 30 of New Central Bank Act “may not be
restrained or set aside by the court except on petition of certiorari on the ground
that the action taken was in excess of jurisdiction or w such grave abuse of
discretion as to amount to lack or excess of jurisdiction.”
 As to the 3rd requirement, the serious damage contemplated by RTC is the sanction
of closure of the banks. Under the law, the sanction of closure could be imposed
upon a bank by BSP even w/o notice and hearing, to prevent unwarranted
dissipation of bank’s assets and valid exercise of police power to protect the
stakeholders of the banks.
 “Close Now, Hear Later” Doctrine: the closure of bank may be considered as an
exercise of police power. The action of MB on this matter is final and executory, but
may be subject to judicial inquiry and can be set aside if found to be in excess of
jurisdiction or w grave abuse of discretion amounting to lack or excess of
jurisdiction.
 The issuance of WPI would violate this doctrine.
Spouses Rodolfo and Marcelina Guevarra v. The Commoner Lending Corp.,
G.R. No. 204672. February 18, 2015. - KING
Doctrine:
SEC. 47. Foreclosure of Real Estate Mortgage.- In the event of foreclosure, whether
judicially or extra-judicially, of any [mortgage] on real estate which is security for any
loan or other credit accommodation granted, the mortgagor or debtor whose real
property [had] been sold for the full or partial payment of his obligation shall have the
right within one year after the sale of the real estate, to redeem the property by paying
the amount due under the mortgage deed, with interest thereon at the rate specified in
the mortgage, and all the costs and expenses incurred by the bank or institution from
the sale and custody of said property less the income derived therefrom. However, the
purchaser at the auction sale concerned whether in a judicial or extrajudicial
foreclosure shall have the right to enter upon and take possession of such property
immediately after the date of the confirmation of the auction sale and administer the
same in accordance with law. Any petition in court to enjoin or restrain the conduct of
foreclosure proceedings instituted pursuant to this provision shall be given due course
only upon the filing by the petitioner of a bond in an amount fixed by the court
conditioned that he will pay all the damages which the bank may suffer by the
enjoining or the restraint of the foreclosure proceeding.
Facts:
 On December 16, 1996, Sps. Guevarra obtained a 320,000.00 loan from TCLC,
which was secured by a real estate mortgage over a 5,532- square meter parcel of
land situated in Guimbal, Iloilo, covered by Original Certificate of Title (OCT) No. F-
31900 (subject property), emanating from a free patent granted to Sps. Guevarra
on February 25, 1986.
 Sps. Guevarra, however, defaulted in the payment of their loan, prompting TCLC to
extra-judicially foreclose the mortgage on the subject property in accordance with
Act No. 3135, as amended. In the process, TCLC emerged as the highest bidder at
the public auction sale held on June 15, 2000 for the bid amount of 150,000.00, and
on August 25, 2000, the certificate of sale was registered with the Registry of Deeds
of Iloilo.
 Eventually, Sps. Guevarra failed to redeem the subject property within the one-year
reglementary period, which led to the cancellation of OCT No. F-31900 and the
issuance of Transfer Certificate of Title No. T-1618 in the name of TCLC. Thereafter,
TCLC demanded that Sps. Guevarra vacate the property, but to no avail.
 RTC recognized Sps. Guevarra's right to repurchase the subject property, pointing
out that they were able to file their petition within the five-year period provided
under Section 119 of Commonwealth Act No. 141, otherwise known as the Public
Land Act (Public Land Act).
 CA affirm.
Issue: W/N repurchase price for the subject property should be fixed by TCLC.
Decision:
 Sec. 30 of Rule 39 of the RoC, the petitioners should reimburse the private
respondent the amount of the purchase price at the public auction plus interest at
the rate of one per centum per month up to November 17, 1983, together with the
8
 amounts of assessments and taxes on the property that the private respondent
might have paid after purchase and interest on the last named amount at the
same rate as that on the purchase price.
 The Court has, however, ruled that redemptions from lending or credit institutions,
like TCLC, are governed by Section 78 of the General Banking Act (now Section 47
of the General Banking Law of 2000), which amended Section 6 of Act No. 3135 in
relation to the proper redemption price when the mortgagee is a bank, or a
banking or credit institution. The Court cannot subscribe to TCLC's contention that it
is entitled to its total claims under the promissory note and the mortgage contract in
view of the settled rule that an action to foreclose must be limited to the amount
mentioned in the mortgage. Hence, amounts not stated therein must be excluded,
like the penalty charges of three percent (3%) per month included in TCLC's claim.
A penalty charge is likened to a compensation for damages in case of breach of
the obligation. Being penal in nature, it must be specific and fixed by the
contracting parties.
 Moreover, the Court notes that the stipulated three percent (3%) monthly interest is
excessive and unconscionable. In a plethora of cases, the Court has affirmed that
stipulated interest rates of three percent (3%) per month and higher are excessive,
iniquitous, unconscionable, and exorbitant, hence, illegal and void for being
contrary to morals.