G.R. No. 70987 - Limpin, Jr. vs. Intermediate Appellate Court

Case Summary (G.R. No. 70987)

Factual Background

On February 28, 1973 the spouses Jose and Marcelina Aquino mortgaged four lots covered by TCT Nos. 92836, 92837, 92839 and 92840 to Guillermo Ponce and his wife Adela as security for a loan of P2,200,000.00, and the mortgages were registered on March 1, 1973. The Aquinos sold the two lots covered by TCT Nos. 92836 and 92837 in 1978 to Butuan Bay Wood Export Corporation, which caused an adverse claim to be annotated on those certificates of title on February 24, 1978. In 1979 Gregorio Y. Limpin, Jr. obtained a money judgment against Butuan Bay Wood Export Corporation. To satisfy that judgment the two lots were levied on September 3, 1980 and sold at public auction to Limpin as highest bidder for P517,485.41 on October 6, 1980, whereupon the covering titles were cancelled and new TCTs were issued to Limpin. Limpin thereafter sold the two lots to Rogelio Sarmiento on November 21, 1981; subsequent title transfers in the record reflect registration in Sarmiento’s name.

Trial Court Proceedings in the Foreclosure Action

On September 2, 1980 Guillermo Ponce filed a suit for judicial foreclosure of the mortgage over the four lots in the Court of First Instance of Quezon City, docketed as Civil Case No. Q-30726. The trial court rendered judgment in favor of Ponce on June 8, 1982, and, after the judgment became final, ordered the four mortgaged lots sold at public auction on September 13, 1983. The four lots were sold on October 12, 1983 to Ponce as highest bidder for P5,200,000.00 and the sheriff’s certificate of sale was registered the same day. Ponce moved for confirmation of the sale and for issuance of a writ of possession covering all four lots. The trial court, by order dated October 26, 1983, confirmed only the sale of the lots formerly covered by TCT Nos. 92839 and 92840, and refused to confirm the sale of the lots formerly covered by TCT Nos. 92836 and 92837 on the ground that those titles had been cancelled and new ones had been issued to Limpin by order of the Court of First Instance of Davao in Civil Case No. 10463.

Procedural Response and Petition to the Intermediate Appellate Court

Ponce filed a motion for reconsideration and notified Limpin, who contended that the trial court lacked jurisdiction over his person and asserted that the mortgage had been released by a partial release dated July 20, 1977. After the trial court denied reconsideration, Ponce instituted a special civil action for certiorari and mandamus in the Intermediate Appellate Court, impleading Limpin and Sarmiento as private respondents. The Intermediate Appellate Court heard the parties, received extensive memoranda and documentary evidence, and on February 28, 1985 rendered a decision setting aside the trial court orders insofar as they denied confirmation of the sale of the two lots formerly covered by TCT Nos. 92836 and 92837, and ordered the trial court to confirm the sale and issue a writ of possession to Ponce with respect to those lots, subject to Sarmiento’s equity of redemption.

Issues Presented on Review

The principal issues were whether the Intermediate Appellate Court entertained the proper remedy in granting certiorari and mandamus, whether that court had jurisdiction over the petitioners who were not original parties in the foreclosure, whether the mortgage rights of Ponce were superior to the levy and execution sale in favor of Limpin and to Sarmiento’s subsequent purchase, and whether the asserted partial release of mortgage or an alleged donation to a foundation defeated Ponce’s right to foreclose and to have the foreclosure sale confirmed.

Petitioners’ Contentions

The petitioners argued that the proper remedy from the trial court’s orders denying confirmation was appeal and not a special civil action; that the Intermediate Appellate Court lacked jurisdiction over them because they were not original parties to the foreclosure action; that their levy, execution sale and subsequent registration and sale vested priority rights superior to Ponce’s mortgage; that Ponce had executed a Deed of Partial Release dated July 20, 1977 which had released the mortgage; and that Ponce and his wife had donated the lots to the Dona Josefa Edralin Marcos Foundation on August 18, 1976.

Respondent’s Position and Evidentiary Showing

Ponce maintained that his mortgage was recorded on March 1, 1973 and thus constituted a prior lien and a right in rem that placed the world, including the petitioners, on constructive notice. He asserted that the foreclosure sale should be confirmed and that his purchase at the foreclosure sale prevailed over any subsequent levy or sale. He also produced affidavits and documents, including affidavits dated December 1, 1983, attesting that the purported Deed of Partial Release of July 20, 1977 was void for lack of consideration, lacked required signatures of co-mortgagees, and had not been registered.

Intermediate Appellate Court’s Legal Analysis

The Intermediate Appellate Court held that the remedy by special civil action was appropriate because the orders denying confirmation implicated the rights of a third party who was not before the foreclosure court, and only a separate proceeding could determine those rights. The court applied the settled principle that courts retain plenary control over execution of final and executory judgments and that execution, including confirmation of a foreclosure sale, is a ministerial function once properly invoked. The court recognized, however, that exceptional circumstances exist in which execution may be reviewed by a superior tribunal, and it listed situations when relief by certiorari, prohibition or mandamus is warranted. The court found that petitioners, having voluntarily appeared and litigated in the Intermediate Appellate Court, could not thereafter challenge that court’s jurisdiction and were estopped from so doing. The court further found that the recorded mortgage created a right in rem and that under Rule 39, Section 16, Revised Rules of Court the mortgagee’s lien is superior to a subsequent judgment creditor’s lien created by levy, and that the effects of the foreclosure sale retroacted to the date of registration of the mortgage. The court therefore concluded that Ponce’s rights were superior and that the trial court erred in refusing to confirm the sale as to the two lots in question.

Supreme Court’s Disposition and Reasoning

The Su

Case Syllabus (G.R. No. 70987)

Parties and Procedural Posture

Gregorio Y. Limpin, Jr. and Rogelio Sarmiento filed a petition for review assailing the decision of the Intermediate Appellate Court in A.C. - G.R. No. 02516.
Guillermo Ponce was the private respondent and successful bidder at the foreclosure sale whose confirmation the trial court partly denied.
The Court of First Instance of Quezon City conducted the judicial foreclosure proceeding initiated by Ponce against the spouses Aquino.
The Intermediate Appellate Court set aside the trial court orders insofar as they denied confirmation of sale and ordered confirmation subject to Sarmiento's equity of redemption.
The Supreme Court reviewed the IAC decision upon the petition of Limpin and Sarmiento and denied the petition with costs against petitioners.

Key Factual Allegations

The spouses Jose and Marcelina Aquino mortgaged four lots to Guillermo Ponce and his wife on February 28, 1973, and the mortgages were registered on March 1, 1973.
Two of the mortgaged lots were sold in 1978 to Butuan Bay Wood Export Corporation and an adverse claim was annotated on the original certificates of title on February 24, 1978.
Gregorio Y. Limpin, Jr. obtained a money judgment against Butuan Bay Wood Export Corporation in 1979 and levied on the two lots on September 3, 1980, and purchased them at public auction as highest bidder for P517,485.41 on October 6, 1980.
The covering titles were cancelled and replaced by TCT Nos. 285450 and 285451 in Limpin's name, and Limpin sold the two lots to Rogelio M. Sarmiento on November 21, 1981.
Ponce filed a complaint for judicial foreclosure on September 2, 1980, obtained judgment on June 8, 1982, and the trial court ordered sale of the four mortgaged lots on September 13, 1983.
The four lots were sold at foreclosure on October 12, 1983, to Ponce for P5,200,000.00 and the sheriff's certificate of sale was registered the same day.
The trial court confirmed only two of the lots and refused to confirm the sale of the two lots formerly covered by TCT Nos. 92836 and 92837 because those titles had been cancelled and reissued in favor of Limpin (and later Sarmiento).
The Intermediate Appellate Court set aside the trial court's refusal to confirm and ordered confirmation and issuance of a writ of possession to Ponce, subject to Sarmiento's equity of redemption.

Issues Presented

Whether the Intermediate Appellate Court had jurisdiction to entertain the special civil actions of certiorari and mandamus filed by Ponce.
Whether the proper remedy to challenge the trial court's orders denying confirmation of the foreclosure sale was appeal or a special civil action.
Whether Ponce's mortgage and foreclosure sale had priority over the levy and execution sale in favor of Limpin and the subsequent sale to Sarmiento.
Whether the asserted Partial Release of Real Estate Mortgage dated July 20, 1977, effectively extinguished Ponce's mortgage.
Whether Ponce retained standing to foreclose in view of the asserted donation of the lots to the Dona Josefa Edralin Marcos Foundation.

Parties' Contentions

The petitioners contended that the proper remedy was appeal from the trial court's orders and that the Intermediate Appellate Court therefore lacked jurisdiction over Ponce's special actions.
The petitioners maintained that their levy and execution sale and the subsequent registration of titles in Limpin and Sarmiento gave them superior rights over the mortgagor's property.
The petitioners asserted that Ponce executed a Partial Release of Real Estate Mortgage on July 20, 1977, thereby extinguishing his lien on the two lots.
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