G.R. No. L-13333 - People vs Razon

The Mandaluyong City property was originally covered by Transfer Certificate of Title (TCT) No. (450666)-1702 in the name of Linda Mendoza, married to Tomas Mendoza.
On April 22, 1977, private respondents, Alberto Looyuko and Juan O. Uy, filed a complaint for sum of money (Civil Case No. R-82-5792) against Tomas Mendoza in the Regional Trial Court (RTC) of Manila, Branch 22.
A writ of preliminary attachment was issued over the property and annotated on TCT No. (450666)-1702.
While the RTC case was pending, petitioner Antonia J. Gutang initiated her own complaint for sum of money (Civil Case No. 13122) against Tomas Mendoza in the Court of First Instance, Branch 4, Iloilo City, which was decided in her favor on December 24, 1980, resulting in the issuance of a writ of execution.

The writ of execution was enforced on the Mandaluyong property on July 9, 1981, leading to its levy and subsequent sale at public auction on October 4, 1984, in favor of petitioner as the highest bidder.
With no redemption made, petitioner consolidated her interest by securing the final certificate of sale issued on November 15, 1985.
Consequently, TCT No. (450666)-1702 was cancelled, and a new certificate, TCT No. 242, was issued in petitioner’s name, even though it retained liens annotated in the original title.
Notably, TCT No. 242 carried a mortgage in favor of FGU Insurance Corporation (executed on December 3, 1976) and the annotation of the writ of preliminary attachment related to Civil Case No. R-82-5792.

On March 4, 1986, the Manila RTC decided Civil Case No. R-82-5792 in favor of private respondents, leading to the issuance of a writ of execution in their favor.
In satisfaction of the Mendozas’ judgment obligation, the Mandaluyong property was again levied upon, and a public auction was held on May 8, 1986, where private respondents emerged as the winning bidders.
The certificate of sale for the private respondents was issued on December 20, 1990, and subsequently annotated on TCT No. 242.
On January 3, 1992, private respondents filed a motion in Civil Case No. R-82-5792 requesting the issuance of a final deed of sale, cancellation of TCT No. 242, and the issuance of a new title in their names. The Manila RTC granted this motion, and on February 6, 1992, the Register of Deeds of Mandaluyong City cancelled TCT No. 242/T-2 and issued TCT No. 10107 in favor of the private respondents, still reflecting the pre-existing liens.

FGU Insurance Corporation, as secured by the mortgage annotated on December 3, 1976 on TCT No. (450666)-1702, initiated foreclosure proceedings due to the Mendozas’ default.
FGU’s foreclosure case was decided in its favor on January 22, 1988, followed by a public auction where FGU acquired the property.
The trial court later ordered the cancellation of TCT No. 242 and the issuance of a new title in FGU’s name.
Despite these proceedings, both petitioner and the private respondents, who had acquired the property in separate public auctions via execution sales, were deemed to have only acquired the equity of redemption, subject to the seniority of FGU’s mortgage.

Petitioner later contended that the Manila RTC lacked jurisdiction to cancel her title and issue a new title in favor of the private respondents.
In related consolidated petitions (including Looyuko et al. v. Court of Appeals), both petitioner and private respondents challenged the foreclosure proceedings initiated by FGU, arguing that FGU’s failure to implead them nullified the foreclosure of the mortgage.
The Court ultimately upheld the foreclosure proceedings and confirmed that FGU’s mortgage, annotated in 1976, was superior to the interests of petitioner and private respondents, whose rights were limited to the equity of redemption.

Whether the Manila RTC had the jurisdiction to order the cancellation of petitioner’s title and the issuance of a new title in the names of private respondents.

Whether the foreclosure sale, which resulted in the acquisition of only the equity of redemption by petitioner and private respondents, was conducted in accordance with the law.
Whether FGU Insurance Corporation’s failure to implead the subordinate lien holders (petitioner and private respondents) in its foreclosure action invalidated the foreclosure process.

Whether the registration of the title in favor of FGU Insurance Corporation, despite the prior acquisition of the equity of redemption by judgment creditors, could be sustained subject to those subordinate interests.