Case Summary (G.R. No. L-8531)
Background of the Case
EPCIB extended a loan of ₱20 million to DNG, secured by a mortgage on a three-hectare property in Cabanatuan City. Due to financial difficulties following the Asian Economic Crisis, DNG defaulted on the loan, prompting EPCIB to initiate extrajudicial foreclosure proceedings. Following the public auction, the property was awarded to EPCIB, leading to the execution of a Certificate of Sale. Shortly afterward, DNG filed for rehabilitation under Republic Act No. 8799. The Rehabilitation Court issued a Stay Order, preventing any enforcement actions against DNG.
Legal Proceedings and Issues
DNG filed a petition in the Court of Appeals (CA), challenging several actions by EPCIB relating to the foreclosure and issuance of a writ of possession. The CA ruled in favor of DNG, declaring actions taken after the Stay Order as premature, including the issuance of the writ of possession and the consolidation of title in EPCIB's name.
CA's Reasoning for the Decision
The CA justified its decision by citing A.M. No. 00-8-10-SC, which mandates that a Stay Order issued in rehabilitation cases suspends enforcement of claims against the debtor. The CA emphasized that subsequent actions by EPCIB, including consolidating ownership and obtaining a writ of possession, violated the effect of the Stay Order. The CA acknowledged DNG's legal actions as not constituting forum shopping, as the objectives of the actions taken were to stay the foreclosures rather than challenge the validity of any specific actions directly.
Petitioner’s Arguments
EPCIB argued that the CA erred in its decision. It claimed that once the foreclosure sale was concluded prior to the Stay Order, it was a fait accompli, and all further actions related to title consolidation became a matter of right. EPCIB contended that mandamus and prohibition were improper remedies for DNG as the writ's issuance is a ministerial act following a completed foreclosure.
Resolution of the Supreme Court
The Supreme Court ultimately reversed the CA decision. It emphasized that based on the jurisprudential precedent set by RCBC v. IAC, actions taken before the issuance of a Stay Order remain valid and enforceable despite later proceedings in the rehabilitati
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Case Background
- The case arises from a petition for review on certiorari filed by Equitable PCI Bank, Inc. (EPCIB) against DNG Realty and Development Corporation (DNG).
- EPCIB sought to overturn the June 23, 2005 decision of the Court of Appeals (CA) in CA-G.R. SP No. 86950.
- DNG secured a loan of P20 million from EPCIB, collateralized by a real estate mortgage over a 63,380 sq. meter land located in Cabanatuan City.
- Due to financial difficulties stemming from the Asian Economic Crisis, DNG defaulted on its loan, prompting EPCIB to initiate extrajudicial foreclosure proceedings.
Foreclosure Proceedings
- EPCIB filed a petition for sale on June 30, 2003, which led to the property being sold at public auction on September 4, 2003, with EPCIB as the highest bidder.
- Following the auction, a Certificate of Sale was executed by the Sheriff in favor of EPCIB on the same day.
- On October 21, 2003, DNG filed a petition for rehabilitation under Rule 4 of the Interim Rules of Procedure on Corporate Rehabilitation, which resulted in a Stay Order issued by the Regional Trial Court (RTC) on October 27, 2003.
Actions Post-Foreclosure
- EPCIB recorded the Sheriff’s Certificate of Sale with the Registry of Deeds on December 3, 2003, and subsequently executed an Affidavit of Consolidation of Ownership.
- The title of DNG was cancelled, and a new title (TCT No. T-109482) was issued in the name of EPCIB on December 10, 2003.
- DNG then filed Civil Case No. 4631 for annulment of the foreclosure proceedings, which was dismissed for failure to prosecute.