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VIOLA

CAHILIG
ANTONIO G. SIEL, JR.,
Petitioners,

and

- versus HON.
EUSTAQUIO
G.
TERENCIO,
Regional
Trial
Court of Kalibo, Aklan, Branch 8;
THE PROVINCIAL SHERIFF,
Kalibo,
Aklan;
and
MERCANTILE
CREDIT
RESOURCES CORPORATION,
Respondents.

G.R. No. 164470


Present:
CORONA, C.J.,
Chairperson,
LEONARDO-DE CASTRO,
BERSAMIN,
DEL CASTILLO, and
VILLARAMA, JR., JJ.
Promulgated:
November 28, 2011

It appears that on April 14, 1997 and September 17, 1997, Soterania G. Siel
executed deeds of real estate mortgage covering a portion of Lot 402, consisting
of 2,882 square meters, located at Barangay Balabag, Malay, Aklan, in favor of
Moneytrend Lending Corporation, as security for two promissory notes.
On March 31, 1999, Moneytrend Lending Corporation assigned the
promissory notes and deeds of real estate mortgage to private respondent
Mercantile Credit Resources Corporation.
In view of the non-payment of the loans, private respondent caused the
extrajudicial foreclosure of the mortgages. It then acquired the mortgaged
property as the highest bidder. A certificate of sale was subsequently issued in
favor of private respondent. Soterania Siel failed to redeem the property within
the prescribed period and a final deed of sale was issued by the Sheriff on March
19, 2001 in favor of private respondent.
On May 2, 2001, private respondent filed with the Regional Trial Court,
Branch 8, Kalibo, Aklan an ex-parte motion for the issuance of a writ of
possession over the subject property. In an Order dated June 29, 2001, respondent
Judge granted the motion and directed the Sheriff to place private respondent in
possession of the subject property, ruling thus:
Jhett Tolentino, Corporate Secretary of the petitioner, testified
that from the time the mortgage was constituted and thereafter
assigned to the petitioner, it was the mortgagor who remained in
possession of the mortgaged property. Lately, when he inspected
the property after it was foreclosed, it was Viola Cahilig, the
daughter of Soterania G. Siel, the previous owner, who was in
possession of the same.

In the light of the foregoing, petitioner would want now


that a writ of possession be issued in its favor citing the provisions
of Sec. 7 of R.A. 3135.
After a careful assessment of the evidence, the Court is
convinced that the petitioner has substantiated all its allegations in
the petition that entitles the petitioner to the issuance of the writ.
In IFC v. Nerta (19 SCRA 181) it was held that in
Extrajudicial Foreclosure of Real Estate Mortgage, the possession
of the property sold may be given to the purchaser by the sheriff
after the period of redemption had expired unless a third person is
actually holding the property adverse to the mortgagor. An
ordinary action for the recovery of possession is not necessary.
From the evidence, it was shown that the property sought to
be possessed by the petitioner by virtue of this petition is not in the
possession of any third person. The present possessor is the
immediate successor-in-interest of the mortgagor.
A motion for reconsideration was filed by petitioner Viola Cahilig, for
herself and in behalf of the heirs of Soterania Siel, alleging that private
respondent is guilty of forum shopping in view of the pendency of the appeal in
Civil Case No. 6247 involving the same parties and subject matter. The motion
for reconsideration was denied in an Order dated October 18, 2001.
The writ of possession was implemented by Sheriff Victor B. Beluso on
January 21, 2002 by serving a notice to vacate on petitioner Viola Cahilig, who
manifested that she could turn over only her 1/6 share over the property as the
other shares do not belong to her. On March 11, 2002, the Sheriff received a third
party claimants affidavit executed by petitioner Antonio Siel, Jr., who claimed
that he and his siblings bought the property from their mother, Soterania Siel, on
March 2, 1993, attaching thereto copies of the deeds of sale in their favor.
On November 25, 2002, private respondent filed a motion for the issuance
of an alias writ of possession. Said motion was opposed by petitioners Viola
Cahilig and Antonio G. Siel, Jr. alleging that they and their siblings have been
the owners of the property since 1993, that is, before the mortgage was
constituted. In an Order dated December 20, 2002, respondent Judge granted the
motion for the issuance of an alias writ of possession and directed the Sheriff to
implement the same, with police assistance if necessary.
Petitioners motion for reconsideration, motion for inhibition and motion
to quash the alias writ of possession were denied in an Order dated March 21,
2003, although private respondent was ordered to post an indemnity bond in the

amount of P100,000.00 to answer for whatever damages petitioners may suffer in


the event that they would be able to vindicate their claim in the civil cases they
filed against private respondent. An indemnity supersedeas bond was then filed by
private respondent and approved by respondent Judge

The Court of Appeals pointed out that the principal issue to be resolved in the case
being appealed by the petitioners is whether or not petitioners are third parties
holding the subject property adversely to the judgment debtor which was the late
Soterania Siel. The Court of Appeals ruled in the negative and dismissed the
petition for certiorari for lack of merit.
Issue: whether

or not the issuance of the writ of possession over the property subject
of the foreclosure of the real estate mortgage is proper.
In a number of cases, we have held that the obligation of the court to issue
an ex parte writ of possession in favor of the purchaser in an extrajudicial
foreclosure sale ceases to be ministerial once it appears that there is a third party in
possession of the property who is claiming a right adverse to that of the
debtor/mortgagor.[16]
However, unlike in those cases, the third-party claim in the instant case was
not presented at the onset of litigation. In fact, it was not the original theory
propounded by petitioners when they filed a motion for reconsideration of the
Order[17] dated June 29, 2001 issued by the trial court which first granted the writ
of possession in private respondents favor. More importantly, the judicial
admissions made by petitioners in their motion were wholly incompatible with
their belated claim that they are actually vendees of Soterania Siels property
In the case at bar, petitioners admitted in their Urgent Motion for
Reconsideration[20] dated July 23, 2001 that they opposed the issuance of the writ
of possession over the subject property because of the pendency of Civil Case No.
6247 filed before the RTC of Kalibo, Aklan, Branch 6. In the said civil case,
petitioners, along with their other siblings, sought the annulment of the real estate
mortgage and the foreclosure proceedings affecting the subject property in their
capacity as heirs of the now deceased Soterania Siel and not as vendees to an
alleged sale of the land in dispute. It must be stressed that petitioners raised for the
first time their theory that they are third parties (vendees) holding the property
adversely to the mortgagor only in their Opposition to the Motion for Issuance of
Alias Writ of Possession, after the trial court had already issued the first order
granting a writ of possession to private respondent and after the above-mentioned

Urgent Motion for Reconsideration (of the original order issuing a writ of
possession) had been denied.
In light of this written admission in their pleading, petitioners cannot be
allowed to subsequently claim in the same proceedings that they oppose the
issuance of the writ of possession because they already owned the subject property
prior to the constitution of the mortgage without first showing that the
contradictory admission was made through palpable mistake or that no such
admission was made. This petitioners failed to do and, worse, they offer no
explanation as to why they failed to adduce evidence of the purported sale of the
property in their favor at the earliest opportunity. As a consequence thereof, they
must be bound by their original admission that they are merely successors in
interest of the mortgagor, rather than adverse claimants.
Moreover, it is not disputed that the subject property is unregistered land and
is covered by a tax declaration in the name of Soterania Siel when the same was
mortgaged by her in 1997 in favor of private respondents predecessor-in-interest,
Moneytrend Lending Corporation. As correctly pointed out by the Court of
Appeals, Section 113 of Presidential Decree No. 1529 or the Property Registration
Decree is applicable and the same provides that (n)o deed, conveyance,
mortgage, lease, or other voluntary instrument affecting land not registered under
the Torrens system shall be valid, except as between the parties thereto, unless
such instrument shall have been recorded in the manner herein prescribed in the
office of the Register of Deeds for the province or city where the land lies. x x x.
In the present case, petitioners failed to adduce evidence showing that the
deeds of sale in their favor were recorded in the office of the Register of Deeds or
that they were annotated on the tax declaration of Soterania Siel in order to affect
the subject property insofar as third persons are concerned, specially private
respondent and its predecessor-in-interest. Petitioners likewise failed to prove that
private respondent and its predecessor-in-interest had actual or constructive
knowledge of the alleged sale of the subject property in their favor prior to the
filing of the third-party claim. Lastly, petitioners did not dispute the testimony of
private respondents Corporate Secretary, Jhett Tolentino, who stated that it was
Soterania Siel who was in possession of the subject property when the mortgage
was constituted, which was later assigned to private respondent, and that it was
only after the subject property was foreclosed that the same was possessed by
petitioner Viola Cahilig. Thus, in light of the foregoing, the alleged sale of the
land in dispute, even if true, does not bind private respondent.

All in all, we find that the Court of Appeals committed no reversible error
when it affirmed the trial courts issuance of a writ of possession in the present
case, despite the pendency of civil proceedings to annul the mortgage and the
foreclosure sale and in light of petitioners own failure to prove (a) their status as
third parties to the mortgage, and (b) notice to the mortgagee of the supposed sale
of the subject property in their favor. As discussed above, these actions on the part
of the lower courts were in keeping with prevailing jurisprudence.

PHILIPPINE NATIONAL BANK vs. CIRIACO JUMAMOY and HEIRS OF


ANTONIO GO PACE represented by ROSALIA PACE
On December 27, 1989, the RTC, Branch 19, of Digos City, Davao del Sur,
rendered a Decision[5] in Civil Case No. 2514 (a case for Reconveyance and Damages),
ordering the exclusion of 2.5002 hectares from Lot 13521. The trial court found that said
2.5002 hectares which is part of Lot 13521, a 13,752-square meter parcel of land covered
by Original Certificate of Title (OCT) No. P-4952[6] registered in the name of Antonio
Go Pace (Antonio) on July 19, 1971 actually pertains to Sesinando Jumamoy
(Sesinando), Ciriacos predecessor-in-interest. The RTC found that said 2.5002-hectare
lot was erroneously included in Antonios free patent application which became the basis
for the issuance of his OCT. It then ordered the heirs of Antonio (the Paces [represented
by Rosalia Pace (Rosalia)]) to reconvey said portion to Ciriaco. In so ruling, the RTC
acknowledged Ciriacos actual and exclusive possession, cultivation, and claim of
ownership over the subject lot which he acquired from his father Sesinando, who
occupied and improved the lot way back in the early 1950s.[7]
The December 27, 1989 RTC Decision became final and executory but the Deed
of Conveyance[8] issued in favor of Ciriaco could not be annotated on OCT No. P-4952
since said title was already cancelled. Apparently, Antonio and his wife Rosalia
mortgaged Lot 13521 to PNB as security for a series of loans dated February 25, 1971,
April 26, 1972, and May 11, 1973.[9] After Antonio and Rosalia failed to pay their
obligation, PNB foreclosed the mortgage on July 14, 1986[10] and title to Lot 13521 was
transferred to PNB under Transfer Certificate of Title (TCT) No.T-23063. Moreover, the
Deed of Conveyance could not be annotated at the back of OCT No. P-4952 because
PNB was not impleaded as a defendant in Civil Case No. 2514.
Thus, in February 1996, Ciriaco filed the instant complaint against PNB and the
Paces for Declaration of Nullity of Mortgage, Foreclosure Sale, Reconveyance and
Damages,[11] docketed as Civil Case No. 3313 and raffled to Branch 18 of
RTC, Digos City, Davao del Sur.

In his complaint, Ciriaco averred that Antonio could not validly mortgage the
entire Lot 13521 to PNB as a portion thereof consisting of 2.5002 hectares belongs to
him (Ciriaco), as already held in Civil Case No. 2514. He claimed that PNB is not an
innocent mortgagee/purchaser for value because prior to the execution and registration of
PNBs deed of sale with the Register of Deeds, the bank had prior notice that the disputed
lot is subject of a litigation. It would appear that during the pendency of Civil Case No.
2514, a notice of lis pendens was annotated at the back of OCT No. P-4952 as Entry No.
165547[12] on November 28, 1988.
The Paces did not file any answer and were declared in default.[13] Meanwhile
PNB filed its Amended Answer[14] denying for lack of knowledge and information
Ciriacos claim of ownership and reliance on the judgment in Civil Case No. 2514. It
argued that it is a mortgagee and a buyer in good faith since at the time of the mortgage,
Antonios certificate of title was clean and devoid of any adverse annotations. PNB
also filed a cross-claim against the Paces.
Instead of having a full-blown trial, Ciriaco and PNB opted to submit the case for
decision based on their respective memoranda.

RTC- Denied the petition


CA- AFFIRMED the petition
Issue: W/N PNB is purchaser in GOOD FAITH?

PNB is not an innocent purchaser/


mortgagee for value.
Held:

Undoubtedly, our land registration statute extends its protection to an innocent


purchaser for value, defined as one who buys the property of another, without notice that
some other person has a right or interest in such property and pays the full price for the
same, at the time of such purchase or before he has notice of the claims or interest of
some other person in the property.[25] An innocent purchaser for value includes an
innocent lessee, mortgagee, or other encumbrancer for value .[26]

Here, we agree with the disposition of the RTC and the CA that PNB is not an
innocent purchaser for value. As we have already declared:
A banking institution is expected to exercise due diligence before
entering into a mortgage contract. The ascertainment of the status or
condition of a property offered to it as security for a loan must be a
standard and indispensable part of its operations.[27] (Emphasis ours.)

PNBs contention that Ciriaco failed to allege in his complaint that PNB failed to
take the necessary precautions before accepting the mortgage is of no moment. It is
undisputed that the 2.5002-hectare portion of the mortgaged property has been adjudged
in favor of Ciriacos predecessor-in-interest in Civil Case No. 2514. Hence, PNB has the
burden of evidence that it acted in good faith from the time the land was offered as
collateral. However, PNB miserably failed to overcome this burden. There was no
showing at all that it conducted an investigation; that it observed due diligence and
prudence by checking for flaws in the title; that it verified the identity of the true owner
and possessor of the land; and, that it visited subject premises to determine its actual
condition before accepting the same as collateral.
Both the CA and the trial court correctly observed that PNB could not validly raise
the defense that it relied on Antonios clean title. The land, when it was first mortgaged,
was then unregistered under our Torrens system. The first mortgage was on February 25,
1971[28] while OCT No. P-4952 was issued on July 19, 1971. Since the Paces offered as
collateral an unregistered land, with more reason PNB should have proven before the
RTC that it had verified the status of the property by conducting an ocular inspection
before granting Antonio his first loan. Good faith which is a question of fact could have
been proven in the proceedings before the RTC, but PNB dispensed with the trial proper
and let its opportunity to dispute factual allegations pass. Had PNB really taken the
necessary precautions, it would have discovered that a large portion of Lot 13521 is
occupied by Ciriaco.
Ciriacos action for reconveyance is
inprescriptible.
If property is acquired through mistake or fraud, the person obtaining it is, by force of
law, considered a trustee of an implied trust for the benefit of the person from whom

the property comes.[30] An action for reconveyance based on implied trust prescribes
in 10 years as it is an obligation created by law,[31] to be counted from the date of
issuance of the Torrens title over the property.[32] This rule, however, applies only when
the plaintiff or the person enforcing the trust is not in possession of the property.

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