G.R. No. 149121 - National Housing Authority vs. Basa, Jr.

Case Summary (G.R. No. 149121)

Chronology of Material Events

On April 19, 1983, spouses Augusto and Luz Basa obtained a loan from NHA. When they failed to pay the loan despite repeated demands, NHA filed, on August 9, 1990, a verified petition for extrajudicial foreclosure of the mortgage before the Sheriff’s Office in Quezon City pursuant to Act No. 3135, as amended. After notice and publication, NHA emerged as the highest bidder at the public auction.

On April 16, 1991, the sheriff’s certificate of sale was registered and annotated only on the owner’s duplicate titles in the respondents’ possession. The titles in the custody of the Register of Deeds were among those burned when the City Hall of Quezon City was gutted by fire on June 11, 1988. On April 16, 1992, the redemption period expired without the respondents redeeming the properties. On April 24, 1992, NHA executed an Affidavit of Consolidation of Ownership, which was then inscribed by the Register of Deeds on the certificates of title in NHA’s possession.

On June 18, 1992, NHA filed a petition for the issuance of a Writ of Possession, which the Regional Trial Court (RTC) granted on August 4, 1992. A writ of possession was then issued on March 9, 1993, ordering the spouses to vacate. The writ remained unserved, prompting NHA to move for an alias writ of possession on April 28, 1993.

Respondents’ Intervention and Their Theory of Invalid Foreclosure and Unexpired Redemption

While the RTC had not yet resolved NHA’s motion for an alias writ, the respondents filed on June 2, 1993 a Motion for Leave to Intervene and Petition in Intervention with a prayer for a temporary restraining order and/or writ of preliminary injunction. They anchored the intervention on Section 8 of Act No. 3135, as amended, which they understood to allow the mortgagor to seek that the sale be set aside and the writ of possession cancelled in the proceedings where possession was requested.

In their petition in intervention, the respondents alleged that the extrajudicial foreclosure was a nullity because notices were allegedly not properly posted and published, written notices of foreclosure were not allegedly given to them, and notices of sale were allegedly not tendered to the occupants, allegedly depriving them of the opportunity to ventilate their rights. They also claimed that redemption had not prescribed because the one-year redemption period had to be reckoned from the proper registration of the sheriff’s certificate of sale. They relied on Bernardez v. Reyes and Bass v. De la Rama, arguing that the instrument was deemed registered only upon actual inscription on the certificate of title in the custody of the Register of Deeds, not merely upon annotation on the owner’s duplicate titles. Since the sheriff’s certificate had been inscribed only on the respondents’ owner’s duplicates and not on the certificates kept by the Register of Deeds (which were supposedly unavailable due to the fire), they argued that no effective registration occurred and the redemption period had not commenced.

They therefore asked the RTC to declare the foreclosure sale null and void, to allow redemption in the amount of P21,160.00, and to cancel the writ of possession dated March 9, 1993. NHA opposed the intervention.

NHA’s Opposition: Valid Foreclosure and Expired Right of Redemption

NHA countered that the extrajudicial foreclosure sale was conducted in accordance with Act No. 3135, as shown by the publication of the Notice of Sheriff’s Sale in the Manila Times on July 14, 21 and 28, 1990, and by the alleged furnishing of a copy of the notice to the respondents. On the redemption issue, NHA maintained that the respondents’ right of redemption had long expired on April 15, 1992, because the sheriff’s certificate of sale had been registered and annotated on the respondents’ TCTs on April 16, 1991. NHA added that the RTC, via its Order dated August 4, 1992, had already ruled that the right of redemption was already gone, and that such ruling had become final.

RTC Orders of January 2, 1995 and September 4, 1995

On January 2, 1995, the RTC issued an order granting NHA’s request for an alias writ of possession and admitting the respondents’ petition in intervention, which the RTC treated as a petition to set aside sale under Section 8 of Act No. 3135. The RTC also issued a writ of preliminary injunction in favor of respondents, upon a bond of P20,000.00, restraining NHA and those acting for it from selling or disposing of the disputed properties pending termination of the proceeding and/or a contrary order by the court. It set the hearing for the petition on March 17, 1995.

NHA moved for reconsideration, challenging the admission of the intervention and the grant of preliminary injunction. NHA argued that the respondents should have attacked the foreclosure during the hearing on the petition for writ of possession, not during the hearing related to the motion for an alias writ, because the “petition” in Section 8 referred to the original possession proceedings. NHA further invoked the finality of the August 4, 1992 order allegedly barring redemption by prescription. Finally, NHA stressed that the writ of possession should have been issued as a matter of course upon the proper motion and bond, leaving the RTC without discretion.

In an order dated September 4, 1995, the RTC denied reconsideration. It reasoned that admitting the intervention was sanctioned by Section 8 of Act No. 3135. As to the preliminary injunction, it explained that if NHA were not restrained, the relief sought by the intervenors might become ineffective by the time final judgment would be rendered in their favor.

Court of Appeals Decision: Reversal of Intervention and Preliminary Injunction, But Affirmation of Alias Writ

NHA then filed a special civil action for certiorari and prohibition in the Court of Appeals on November 24, 1995. The Court of Appeals rendered a decision on February 24, 2000 in NHA’s favor. It declared null and void the RTC’s January 2, 1995 and September 4, 1995 orders insofar as they admitted the petition in intervention and granted a preliminary injunction. It nevertheless upheld the RTC’s grant of the alias writ of possession, stating that it was the necessary consequence of the earlier writ being left unserved, and that NHA was entitled to possession as a matter of course after the lapse of the redemption period.

On the intervention issue, the Court of Appeals concluded that the RTC had erred in admitting respondents’ petition in intervention. It held that the proper recourse in a foreclosure sale was to question the validity of the sale through a petition to set aside the sale and cancel the writ of possession under Section 8, using the summary procedure under Section 112 of the Land Registration Act. The Court of Appeals also viewed the RTC’s preliminary injunction as uncalled for because NHA had the right to possession by virtue of the grant of the alias writ of possession.

Court of Appeals Amended Decision: Redemption Held Not to Have Expired

Respondents moved for reconsideration. In an Amended Decision dated November 27, 2000, the Court of Appeals reversed its prior stance. It held that the period of redemption had not expired because the sheriff’s certificate of sale had not been registered or annotated on the original certificates of title kept with the Register of Deeds, the relevant titles having been burned. Relying on Bass v. De la Rama, the Court of Appeals reasoned that entry and annotation on the owner’s duplicate titles could not serve as effective notice and registration against the whole world, especially because anyone who would check with the Register of Deeds would not see any annotation there. Thus, the Court of Appeals declared the registration insufficient to start the redemption period.

With redemption allegedly unexpired, the Court of Appeals deemed it proper to allow respondents to intervene. It set aside the February 24, 2000 decision, and dismissed NHA’s petition.

Denial of NHA’s Motion for Reconsideration and Elevation to the Supreme Court

NHA moved for reconsideration, which the Court of Appeals denied in its Resolution dated July 19, 2001 for lack of merit. NHA then filed the present petition for review on certiorari under Rule 45.

Issues Raised in the Supreme Court

NHA presented two main issues: first, whether annotation of the sheriff’s certificate of sale on the primary entry book of the Register of Deeds and on the owner’s duplicate title was sufficient compliance with the law on registration; second, whether Bass v. De la Rama had been superseded.

Respondents raised procedural and substantive objections. Procedurally, they alleged non-compliance with Section 4, Rule 45 because NHA supposedly failed to attach material portions of the RTC and Court of Appeals records, and they challenged the verification as defective because it allegedly relied on a statement “to the best of his knowledge” rather than personal knowledge and authenticated records as required. On the merits, respondents maintained that annotation on the owner’s duplicate was inadequate to propel the redemption period and insisted that the inscription must be made on reconstituted titles. They further argued that issues on redemption and effectiveness of registration required adjudication on the merits, and that the issuance of a writ of possession was not ministerial once redemption’s validity was contested.

Supreme Court’s Treatment of Procedural Objections: Substantial Compliance and Proper Verification

The Court first addressed the procedural objections. It held that NHA substantially complied with the requirements of Section 4, Rule 45. The Court noted that NHA attached the decisions and resolution of the Court of Appeals, the relevant transfer certificates of title, and the RTC order directing reconstitution of the titles. It also invoked Development Bank of the Philippines v. Family Foods Manufacturing Co., Ltd., which had emphasized that st

Case Syllabus (G.R. No. 149121)

National Housing Authority (NHA) sought review on certiorari under Rule 45 to annul the Court of Appeals Amended Decision dated November 27, 2000 and its Resolution dated July 19, 2001.
The controversy centered on whether a sheriff’s certificate of sale that was annotated only on the owner’s duplicate titles produced effective registration for purposes of the mortgagors’ one-year right of redemption under Act No. 3135, as amended.
The case further implicated whether the issuance of a writ of possession under Act No. 3135 remained a ministerial consequence after redemption lapsed.
The Court of Appeals reversed course on reconsideration and dismissed NHA’s position, while the Supreme Court reinstated NHA’s entitlement to writ of possession by rejecting the appellate court’s registration and redemption rulings.

Parties and Procedural Posture

Spouses Augusto and Luz Basa and Eduardo S. Basa acted as respondents and intervenors in the foreclosure-related proceedings.
NHA acted as petitioner and sought to preserve its rights as the purchaser at an extrajudicial foreclosure sale.
NHA’s petition for review sought to set aside the Court of Appeals orders that nullified the RTC’s earlier admission of intervention and issuance of preliminary injunction, and that ruled respondents’ redemption period had not yet expired.
The Court of Appeals initially ruled in favor of NHA in a decision dated February 24, 2000, but later granted respondents’ motion for reconsideration through its Amended Decision dated November 27, 2000.
The Supreme Court resolved NHA’s present petition by granting it, thereby setting aside the Amended Decision and disposing of the issue in NHA’s favor.

Key Factual Allegations

Spouses Augusto and Luz Basa obtained an NHA loan amounting to P556,827.10 on April 19, 1983, secured by a real estate mortgage over properties covered by TCTs Nos. 287008 and 285413.
The mortgagors failed to pay despite repeated demands, prompting NHA to initiate extrajudicial foreclosure.
NHA filed a verified petition for extrajudicial foreclosure on August 9, 1990 pursuant to Act No. 3135, as amended.
After notice and publication, the properties were sold at public auction, and NHA emerged as the highest bidder.
The sheriff’s certificate of sale was registered on April 16, 1991, but annotation was made only on the owner’s duplicate copies because the titles in the custody of the Register of Deeds were burned when the City Hall of Quezon City was gutted by fire on June 11, 1988.
The redemption period expired on April 16, 1992 without respondents redeeming the properties.
On April 24, 1992, NHA executed an Affidavit of Consolidation of Ownership, and the Register of Deeds inscribed it on NHA’s titles.
NHA filed a petition for a writ of possession on June 18, 1992, which the RTC granted on August 4, 1992; a writ of possession was issued on March 9, 1993 but remained unserved.
NHA moved for an alias writ of possession on April 28, 1993; before the RTC could act, respondents filed a Motion for Leave to Intervene and Petition in Intervention with prayers for a temporary restraining order and/or writ of preliminary injunction on June 2, 1993.
Respondents grounded their intervention on Section 8 of Act No. 3135, as amended, alleging that the extrajudicial foreclosure was void for failure of notice posting and publication, failure to give written notice, and failure to tender notices of sale to occupants.
Respondents also contended that redemption had not prescribed, invoking registration principles from Bernardez v. Reyes and Bass v. De la Rama, claiming the redemption period did not begin because registration was allegedly ineffective absent annotation on the Register of Deeds copy.
NHA opposed intervention and asserted the sale was valid and properly published in the Manila Times, and it insisted respondents’ redemption right had expired on April 15, 1992 due to the earlier inscription on the respondents’ TCTs.
The RTC later granted an alias writ of possession and admitted the intervention while issuing a writ of preliminary injunction, but the Court of Appeals initially nullified those portions and later, in its amended ruling, reversed the outcome by dismissing the intervention-based relief.

Issues Before the Supreme Court

The Supreme Court had to determine whether annotation of the sheriff’s certificate of sale solely on the owner’s duplicate titles and in the primary entry book was sufficient registration when the original certificates in the Register of Deeds files had been destroyed by fire.
The Supreme Court had to resolve whether Bass v. De la Rama controlled the effect of such registration, or whether later doctrines such as those in Development Bank of the Philippines v. Acting Register of Deeds of Nueva Ecija superseded or abandoned the earlier restrictive view.
The Supreme Court also addressed procedural objections to the petition for review under Rule 45, including alleged non-compliance with Section 4, Rule 45 and an alleged defect in NHA’s verification under Section 4, Rule 7.
The Supreme Court had to determine the legal consequences of the registration ruling on the one-year redemption period and, in turn, on whether issuance of the writ of possession remained a matter of right and a ministerial function under Act No. 3135.

Procedural Issues and Compliance

Respondents moved to dismiss based on NHA’s alleged failure to attach material portions of the record as required by Section 4, Rule 45, particularly pleadings filed in the RTC and in the Court of Appeals.
The Supreme Court found that NHA substantially complied because NHA attached the relevant Court of Appeals decisions and resolutions, the disputed transfer certificates of title, and the RTC Order for reconstitution.
The Court relied on Development Bank of the Philippines v. Family Foods Manufacturing Co., Ltd., emphasizing that strict technical compliance was unwarranted where the Court already possessed adequate records and the case could be resolved on the merits.
Respondents further challenged NHA’s verification, asserting it merely stated that the affiant read the allegations and swore to their truth only “to the best of his knowledge.”
The Supreme Court held that verification met the requirements because it affirmed that the affiant had read the allegations and that they were true and correct based on the affiant’s personal knowledge, and the use of “to the best” did not negate the personal-knowledge basis.

Statutory and Doctrinal Framework

The extrajudicial foreclosure proceeded under Act No. 3135, as amended, which included debtor/mortgagor remedies and purchaser rights tied to redemption and possession.
Section 8 of Act No. 3135, as amended allowed the debtor to petition within the proceedings where possession was requested, but not later than thirty days after the purchaser was given possession, to set aside the sale and cancel the writ of possession using the summary procedure referenced in Section 112 of Act No. 496.
Section 7 of Act No. 3135 authorized the purchaser to petition ex parte, under oath, for a writ of possession during the redemption period, upon filing of bond for use of the property for twelve months and indemnity for wrongful foreclosure or noncompliance with the Act.
Section 7 also directe