Facts:

This case involves the petitioner, Banco Filipino Savings and Mortgage Bank (Banco Filipino), and respondents Miguel Cano, Nonata Lizares, Louisa Lizares, Congregacion de las Hijas de la Caridad, and Daughters of Charity. On June 25, 1981, Banco Filipino initiated a complaint for foreclosure of a real estate mortgage against Philippine Underwriter Finance Corporation (Philfinance) and City Bank, N.A. This complaint was filed before the Court of First Instance of Rizal, which has since become the Regional Trial Court (RTC) of Makati. The trial court delivered a favorable judgment for Banco Filipino on February 6, 1985, which was subsequently affirmed by the Court of Appeals and the Supreme Court of the Philippines.

Following this, on March 28, 1988, Banco Filipino filed a motion for execution, which was granted by the court on April 14, 1988. A foreclosure sale was scheduled for November 21, 1988 but was suspended due to a temporary restraining order (TRO) requested by Philfinanc

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Facts:

Procedural History and Initiation of Foreclosure

• On June 25, 1981, petitioner Banco Filipino Savings and Mortgage Bank filed a complaint with the then Court of First Instance of Rizal to foreclose a real estate mortgage constituted in its favor by Philippine Underwriter Finance Corporation (Philfinance) in the latter part of 1970.
• The trial court (now RTC of Makati, Branch 141) rendered judgment in favor of petitioner on February 6, 1985, which was subsequently affirmed by the Court of Appeals and the Supreme Court.
• On remand, petitioner filed a motion for execution on March 28, 1988, which was granted on April 14, 1988, leading to a scheduled foreclosure sale on November 21, 1988.

Interruptions and Challenges in the Foreclosure Process

• The initial foreclosure sale scheduled for November 21, 1988, was suspended by a temporary restraining order issued by RTC Makati, Branch 61, where Philfinance had filed Civil Case No. 88-2425.
• A subsequent Notice of Sheriff’s Sale was issued on December 11, 1991, scheduling another foreclosure sale for January 13, 1992; this sale was again suspended by a temporary restraining order from the Court of Appeals.
• Philfinance had filed a petition for prohibition, injunction, and annulment of judgment on January 8, 1992.
• The petition was later dismissed by the Court of Appeals on August 22, 1992, ruling that executing the judgment was a matter of the prevailing party’s right.
• A further foreclosure sale was scheduled for March 15, 1993 but was halted due to Philfinance’s motion for the cancellation of the Sheriff's sale and the quashing of the writ of execution, which Branch 141 eventually denied.
• A fourth foreclosure sale set for May 6, 1994 was obstructed by a temporary restraining order from RTC Makati, Branch 66, in connection with Civil Case No. 94-1688 filed by Manuel Cano et al. on April 27, 1994.
• In Civil Case No. 94-1688, private respondents (creditors of Philfinance) sought damages and prayed for a writ of preliminary injunction to restrain the foreclosure sale, claiming:
• On December 19, 1983, Philfinance was placed under receivership.
• They, as unpaid creditors, argued that Banco Filipino, as a co-creditor, could not be allowed to gain preferential treatment through execution.
• Petitioner attempted to dismiss Civil Case No. 94-1688 on May 10, 1994, arguing that the complaint did not state a proper cause of action; however, subsequent motions by both sides (including petitions for reconsideration and motions to resolve the motion to dismiss) were denied.

The Shift in Circumstances and Claim of Mootness

• Prior to the submission of memoranda in the appellate proceedings, petitioner filed a Manifestation and Motion on July 17, 2000, asserting that the property in question had already been titled in its name as a result of an auction sale conducted by the City Government of Makati for realty tax delinquencies.
• Private respondents, in their subsequent comments, contended that:
• They had not been notified about the tax delinquency sale.
• There might be an implied trust in their favor and an entitlement to share the proceeds from the sale.
• Ultimately, the petitioner’s action seeking the lifting of the writ of preliminary injunction (so that the judgment execution and foreclosure could proceed) became moot and academic because:
• The property had already been acquired by petitioner via the auction sale.
• Any dispute regarding the proceeds or the rights of creditors could properly be litigated in an appropriate forum unrelated to the foreclosure proceedings.

Issue:

Whether the foreclosure sale should be halted or allowed to proceed given the multiple temporary restraining orders and the competing claims of creditors.

• Was the enforceable judgment rendering a foreclosure sale appropriate or, conversely, subject to suspension due to intervening receivership and insolvency issues of Philfinance?

Whether the subsequent titling of the property to petitioner following the auction sale for realty tax delinquencies rendered the petition for enforcement moot and academic.

• Does the acquisition of the property by petitioner nullify the necessity to dispute the writ of preliminary injunction and the foreclosure process?

Whether the lower court’s denial of the motion to dismiss and related motions was proper in the context of the evolving factual matrix and the rights of unpaid creditors of Philfinance.

• Are the issues raised by private respondents regarding the sharing of proceeds from the dissolved corporation’s remaining asset within the proper jurisdiction of the present action?

Ruling:

• (Subscriber-Only)

Ratio:

• (Subscriber-Only)

Doctrine:

• (Subscriber-Only)