G.R. No. L-49576. November 21, 1991
JOSEFINA B. CENAS AND THE PROVINCIAL SHERIFF OF RIZAL, PETITIONERS, VS. SPS. ANTONIO P. SANTOS AND DRA. ROSARIO M. SANTOS AND HON. PEDRO C. NAVARRO, PRESIDING JUDGE, CFI-RIZAL, …
BIDIN, J.:
This is a petition for review on certiorari seeking to
annul and set aside the August 28, 1978 decision* of the
then Court of First Instance of Rizal in Civil Case
No. 20435 enjoining the Provincial Sheriff of Rizal
and any other person in his behalf from proceeding with the auction sale
predicated upon the petition for extra-judicial foreclosure prayed for by
petitioner Josefina B. Cenas; and the December 4,
1978 Order of the same court denying the motion for reconsideration.
On May 3, 1976, the spouses Jose Pulido
and Iluminada M. Pulido
mortgaged to Pasay City Savings and Loan Association,
Inc. their land covered by TCT No. 471634, subject of this case, to secure a
loan of P10,000.00. The said mortgage
was registered with the Registry of Deeds on the same date and was duly
annotated in the title of the property.
On May 18, 1976, the said mortgaged land was levied upon by the
City Sheriff of Quezon City pursuant to a writ of
execution issued by the then Court of First Instance of Quezon
City in Civil Case No. Q-2029 entitled, “Milagros C. Punzalan
vs. Iluminada Manuel-Pulido”, and eventually, on July 19, 1976, the same was sold to
herein petitioner Josefina B. Cenas who was the
highest bidder in the execution sale.
On January 18, 1977, Pasay City Savings
and Loan Association, Inc. assigned to petitioner Cenas
all its rights, interests, and participation to the said mortgage, for the sum
of P8,110.00, representing the unpaid principal obligation of the Pulidos as of October 6, 1976, including interest due and
legal expenses. Thus, petitioner became
the purchaser at the public auction sale of the subject property as well as the
assignee of the mortgage constituted thereon.
On July 19, 1977,
herein private respondent Dra. Rosario M. Santos redeemed the said property,
paying the total sum of P15,718.00, and was accordingly issued by the City
Sheriff of Quezon City a Certificate of Redemption.
On April 17, 1977,
petitioner Cenas, as the assignee of the mortgage
loan of the Pulidos which remained unpaid, filed with
the Office of the Provincial Sheriff of Rizal, a
verified petition for extra-judicial foreclosure of the mortgage constituted
over the subject property. Accordingly, the subject property was advertised
for sale at public auction on May 15, 1978.
On the other
hand, private respondents, spouses Antonio P. Santos and Dra.
Rosario M. Santos, apprised of the impending auction sale of the said property,
filed an affidavit of adverse claim with the Provincial Sheriff of Rizal, claiming that they had become the absolute owners of
the property by virtue of the Certificate of Redemption,
dated July 20, 1977, issued by the City Sheriff of Quezon
City; and on May 11, 1978, filed with the respondent court
a verified Petition for Prohibition with Preliminary Injunction to enjoin the
Provincial Sheriff of Rizal from proceeding with the
public auction sale of the property in question. To this petition, petitioners filed their
Answer on May 18, 1978.
Private respondents filed
a Motion to Amend Petition
together with the Amended Petition, which was opposed by the petitioners. The trial court, in its Order of July 17,
1978, denied the
motion and ordered the parties to submit simultaneous memoranda.
After the parties have
submitted their respective memoranda, the trial court rendered its judgment
dated August 28, 1978
in favor of private respondents, the dispositive portion
of which reads:
“WHEREFORE, premises considered, the respondent Provincial
Sheriff of Rizal and any other persons acting in his
behalf are hereby enjoined from proceeding with the auction sale predicated
upon the petition for extra?judicial
foreclosure prayed for by respondent Josefina B. Cenas.”
The trial court held that
the redemption of the subject property effected by the herein private
respondents, “wipe out and extinguished the mortgage executed by
the Pulido spouses in favor of the Pasay City Savings and Loan Association, Inc.”
Petitioners filed a Motion for Reconsideration but the trial
court, in its Order of December 4,
1978, denied the same.
Hence, the instant petition.
The First Division of this Court, in the Resolution of March 2, 1979, gave due course to the
petition. Petitioners filed their brief
on June 9, 1979 while
respondents failed to file their brief within the required period. Consequently, this case was considered
submitted for decision without respondent’s brief in the resolution of November 26, 1979.
Petitioners raised two (2) assignment of errors, to wit:
I
THE TRIAL COURT ERRED IN HOLDING THAT THE PRE-EXISTING MORTGAGE
OBLIGATION OF THE JUDGMENT DEBTOR CONSTITUTED ON HER PROPERTY WAS WIPED OUT
AND EXTINGUISHED UPON THE PAYMENT OF THE REDEMPTION PRICE WITH THE SHERIFF REPRESENTING
THE PURCHASE PRICE PLUS INTEREST DUE THEREON WITHIN THE REDEMPTION PERIOD OF
ONE (1) YEAR FROM THE DATE OF THE EXECUTION SALE OF THE SAID PROPERTY TO
SATISFY THE JUDGMENT DEBT OF THE SAID JUDGMENT DEBTOR.
II
THE TRIAL COURT ERRED IN NOT DISMISSING THE INSTANT ACTION FILED BY THE HEREIN PRIVATE RESPONDENTS FOR NOT
BEING PROSECUTED IN THE NAME OF THE REAL PARTY IN INTEREST AS PROVIDED BY
SECTION 2, RULE 3 OF THE REVISED RULES OF COURT.
The instant petition is impressed with merit.
There appears to be no question that respondents Santos
spouses are the real parties in interest in this case.
Under Section 29, Rule 39 of the Rules of Court, a real property
sold by virtue of a writ of execution, may be redeemed by –
“(a) The judgment debtor, or his successor in
interest in the whole or any part of the property;
(b) A creditor having a lien by attachment,
judgment or mortgage on the property sold, or on some part thereof, subsequent
to the judgment under which the property was sold. Such redeeming creditor is termed redemptioner.” (Underscoring supplied)
The judgment debtor,
whose property was levied on execution, may transfer his right of redemption to
anyone whom he may desire. The term
“successor in interest” includes, among others, one to whom the
debtor has conveyed his interest in the property for the purpose of redemption
(Magno v. Viola de Soto, 61 Phil. 80). It is not disputed that Dra.
Rosario M. Santos as an assignee of her sister Iluminada
M. Pulido’s right of redemption, redeemed the
questioned property as “successor in interest” of said judgment
debtor. The latter interposed no
objection thereto while petitioner
Josefina Cenas acceded unconditionally to the
redemption of the property sold on execution.
However, the main issue
in this case is whether or not the redemption of the questioned property by
herein private respondents wiped out and extinguished the pre-existing mortgage
obligation of the judgment debtor, Iluminada M. Pulido for the security of which (mortgage debt) the
subject property had been encumbered.
The answer is in the
negative.
Section 30, Rule 39 of
the Rules of Court, provides for the time, manner and the amount to be paid to
redeem a property sold by virtue of
a writ of execution. Pertinent portion reads:
“SEC. 30. Time and
manner of, and amounts payable on, successive redemptions. Notice to be given and filed. – The judgment debtor, or redemptioner,
may redeem the property from the purchaser, at any time within twelve (12)
months after the sale, on paying the purchaser the amount of his purchase, with
one per centum per month interest thereon in addition, up to the time of
redemption, together with the amount of any assessments or taxes which the purchaser
may have paid thereon after purchase, and interest on such last-named amount at
the same rate; and if the purchaser be also a creditor having a prior lien
to that of the redemptioner, other than the judgment
under which such purchase was made, the amount of such other lien, with
interest. x x
x.” (Underscoring supplied)
Under the above-quoted provision, if the purchaser is also a
creditor having a prior lien to that of the redemptioner,
other than the judgment under which such purchase was made, the redemptioner has to pay, in addition to the prescribed
amounts, such other prior lien of the creditor-purchaser with interest.
In the instant case, it will be recalled that on May 3, 1976, the Pulidos
mortgaged the subject property to Pasay City Savings
and Loan Association, Inc. who, in turn, on
January 8, 1977,
assigned the same to petitioner Cenas. Meanwhile, on July 19, 1976, pursuant to the writ of execution issued in
Civil Case No. Q-2029 (Petitioner Cenas is not a
party in this case No. Q-2029), the subject property was sold to petitioner Cenas, being the highest bidder in the execution
sale. On July 19, 1977; private respondent Dra.
Rosario M. Santos redeemed the subject property. Therefore, there is no question that
petitioner Cenas as assignee of the mortgage
constituted over the subject property, is also a creditor having a priof (mortgage) lien to that of Dra.
Rosario M. Santos. Accordingly, the
acceptance of the redemption amount by petitioner Cenas,
without demanding payment of her prior lien – the mortgage obligation of the Pulidos – cannot wipe out and extinguish said mortgage
obligation. The mortgage directly and
immediately subjects the property upon which it is imposed, whoever the
possessor may be, to the fulfillment of the obligation for whose security it
was constituted (Art. 2126, Civil Code).
Otherwise stated, a mortgage creates a real right which is enforceable
against the whole world. Hence, even if
the mortgaged property is sold (Art. 2128) or its possession transferred to
another (Art. 2129), the property remains subject to the fulfillment of the
obligation for whose security it was constituted (Padilla, Civil Code
annotated, Vol. VII. p. 207, 1975 ed.).
It will be noted that Rule 39 of the Rules of Court is silent as
to the effect of the acceptance by the purchaser, who is also a creditor,
having a prior lien to that of the redemptioner, of
the redemption amount, without demanding payment of her prior lien. Neither does it provide whether or not the
redemption of the property sold in execution sale freed the redeemed property
from prior liens. However, where the
prior lien consists of a mortgage constituted on the property redeemed, as in
the case at bar, such redemption does
not extinguish the mortgage (Art. 2126).
Furthermore, a mortgage previously registered, like in the instant case,
cannot be prejudiced by any subsequent lien or encumbrance annotated at
the back of the certificate of title (Gonzales v. Intermediate Appellate Court,
157 SCRA 587 [1988]).
Moreover, it must be stressed that private respondents redeemed
the property in question as “successor in interest” of the judgment
debtor, and as such are deemed subrogated to the rights and obligations of the
judgment debtor and are bound by exactly the same condition relative to the
redemption of the subject property that bound the latter as debtor and
mortgagor (Sy vs. Court of Appeals, 172 SCRA 125
[1989]; citing the case of Gorospe vs. Santos, G.R.
No. L-30079, January 30, 1976,
69 SCRA 191). Private respondents, by
stepping in the judgment debtor’s shoes, had the obligation to pay the mortgage
debt, otherwise, the debt would and could be enforced against the property
mortgaged (Tambunting vs. Rehabilitation Finance
Corporation, 176 SCRA 493 [1989]).
Nevertheless, considering the lapse of time that the parties have
been in status quo and the fact that private respondents erroneously believed
that the questioned property was freed from any lien after the redemption,
equity dictates that the foreclosure be allowed only after the private
respondents shall have been afforded the chance to settle the mortgage
obligation but failed to do so.
WHEREFORE, the questioned August 28, 1978 judgment of the trial court is
Reversed and Set Aside. Petitioner
Josefina B. Cenas may proceed with the foreclosure of
the mortgaged property after the private respondents shall have failed to
settle the mortgage debt plus interest and legal expenses, within thirty (30)
days from finality of this decision.
SO ORDERED.
Fernan, C.J., (Chairman), Gutierrez,
Jr., Davide, Jr., and
Romero, JJ., concur.
*
Penned by Judge Pedro C. Navarro