G.R. No. 163827, August 17, 2011
DEVELOPMENT BANK OF THE PHILIPPINES, PETITIONER, VS. HON. SILVERIO Q. CASTILLO AND CRISTINA TRINIDAD ZARATE ROMERO, RESPONDENTS.
The antecedents follow:
Corazon
Zarate Romero and his brother Gonzalo Zarate co-owned a property
covered by Transfer Certificate of Title (TCT) No. 10070[2]
of the Register of Deeds of Dagupan City. The subject property, located
in Dagupan City, Province of Pangasinan, is a 1,705-square-meter lot
with a four-storey hotel erected thereon.
It appears that
sometime in 1975, Corazon and Gonzalo obtained a loan from petitioner
Development Bank of the Philippines (DBP). As collateral, they executed
a real estate mortgage[3]
over the subject property in favor of DBP. On the alleged failure of the
two borrowers to pay their amortizations, DBP foreclosed the real
estate mortgage on September 15, 1983. Purportedly, no redemption was
made within one year, and thus, DBP consolidated ownership over the
subject property.
In March 1993, when Corazon passed away, her
sole heir, her daughter respondent Cristina Trinidad Zarate Romero,
asserted ownership over the subject property to the extent of one-half
thereof. However, respondent discovered that the property was already
registered as early as June 13, 1989 in the name of DBP under TCT No.
54142,[4] with TCT No 10070 in the names of her mother and uncle already cancelled.
Respondent filed before the Regional Trial Court (RTC) of Dagupan City a complaint[5]
for reconveyance, quieting of title and damages with prayer for a
temporary restraining order (TRO) and writ of preliminary injunction to
prevent DBP from conducting any auction sale on the subject property
during the pendency of the case. Respondent claimed that her uncle and
DBP conspired in committing fraudulent acts relative to their true
transaction and concealed the same from her mother, thereby depriving
her of her right of redemption.
The RTC, after hearing, issued on November 24, 1998, a TRO[6]
restraining DBP from proceeding with its scheduled auction of the
disputed property on November 25, 1998. The dispositive portion of the
trial court’s order reads:
It appearing that
plaintiff Cristina Trinidad Romero y Zarate is the sole heir of the late
Maria Corazon Zarate Romero[,] co-owner of the ½ pro[-]indiviso of the
property covered by TCT No. 10070 which at present is carried in TCT No.
54142 in the name of DBP[,] and to avoid irreparable damage that may
arise [from] the auction sale (public bidding) scheduled on November 25,
1998[,] this Court hereby issues a Temporary Restraining Order (TRO)
AGAINST DEFENDANT Development Bank of the Philippines, Makati, Metro
Manila from proceeding [with] the scheduled auction sale (public
bidding) on November 25, 1998 at defendant’s head office at SAM BCG for a
period of twenty (20) days from receipt of this order.SO ORDERED.[7]
DBP moved to lift the TRO arguing that it violates Section 2[8] of Presidential Decree (P.D.) No. 385[9]
which prohibits the issuance of a restraining order, temporary or
permanent, against government financing institutions like DBP to enjoin
any action taken pursuant to the mandatory foreclosure clause of the
decree.[10]
On December 14, 1998, the RTC denied DBP’s motion to lift the TRO and granted respondent’s plea for an injunctive writ.[11] The pertinent portions of the trial court’s order reads:
To
the honest evaluation of this Court what is unrestrainable is the right
of government financial institutions to foreclose mandatorily all loans
with arrearages including interest and charges amounting to at least
twenty (20%) percent of the total outstanding obligation.x x x x
To
allay the fears of the plaintiff and to avoid any irreparable damage
that may arise while the issues involved in the above case are still
being resolved and determined by the Court in the light of the evidence
so f[a]r presented, [considering that] there is a tendency on the part
of the Development Bank of the Philippines of continuing the acts
complained of (auction sale/Public bidding) and considering further
[that] there [should] be no advantage … given to one [party] to the
prejudice of the other while this case is still pending in Court, it is
hereby ordered that a WRIT of Preliminary Injunction be issued against
defendant Development Bank of the Philippines from conducting any
auction sale of the property involved in the above case (formerly
covered by TCT No. 10070 and at [present] covered by TCT No. 54142),
upon posting of a BOND by the plaintiff in the amount of P3 Million
within five (5) days from receipt of this Order.[12]
On even date, DBP moved to reconsider[13]
the December 14, 1998 Order and at the same time sought the dismissal
of respondent’s complaint on the sole ground that the same states no
cause of action.[14]
On December 23, 1998, the writ of preliminary injunction[15] was issued in favor of respondent.
On
March 8, 1999, the RTC denied DBP’s motion for reconsideration of the
denial of its motion for the lifting of the TRO. The RTC likewise denied
in the same order DBP’s motion to dismiss the complaint,[16] and ordered DBP to file an answer.
On March 23, 1999, DBP moved to reconsider the March 8, 1999 denial of its motion to dismiss.[17] But even before the RTC could resolve said motion, DBP filed its Answer[18] on April 5, 1999. A manifestation[19] was later filed by DBP indicating that the answer it filed was a mere cautionary measure or what is known as an answer ad cautelam
and thus without prejudice to any right of action it may take and
without any waiver of any of the grounds for the dismissal of the
complaint and any favorable resolution or order that a superior court
may issue hereinafter.
On April 20, 1999, the RTC issued an order[20]
denying DBP’s motion for reconsideration of its March 8, 1999 Order.
The RTC in the same order emphasized that DBP already filed an answer
thereby rendering the motion to dismiss moot and academic.
On June 23, 1999, DBP filed a petition for certiorari[21] before the CA assailing the following issuances of the RTC:
|
(1)
|
TRO
dated November 24, 1998 (received by DBP on November 24, 1998) issued against DBP enjoining it from proceeding with the scheduled auction sale of the disputed property; |
|
|
(2)
|
Order
dated December 14, 1998 (received by DBP on December 16, 1998) denying its motion to lift the TRO and granting the respondents’ prayer for a writ of preliminary injunction; |
|
|
(3)
|
Order
dated March 8, 1999 (received by DBP on March 18, 1999) denying DBP’s motion to dismiss and motion for reconsideration of the December 14, 1998 Order; and |
|
|
(4)
|
Order
dated April 20, 1999 (received by DBP on April 23, 1999) denying DBP’s motion for reconsideration of the March 8, 1999 order. |
In
its assailed decision, the CA dismissed the petition on procedural
grounds. It held that the petition questioning the first three orders
was filed late as the petition should have been filed within 60 days
from receipt of the assailed orders. The CA noted that as regards the
third order, DBP was notified of the denial of its motion for
reconsideration of the December 14, 1998 Order on March 18, 1999 and
thus only had until May 17, 1999 to question the same. The CA further
stated that DBP’s subsequent filing of its Answer to the complaint
rendered its motion to dismiss moot and academic.
Hence, the present appeal.
DBP raises the following issues for this Court’s consideration:
- WHETHER … THE COURT OF APPEALS GRAVELY ERRED IN AFFIRMING THE ORDER OF THE COURT A QUO … DENYING DBP’S MOTION TO DISMISS….
- WHETHER … THE COURT OF APPEALS GRAVELY ERRED IN AFFIRMING THE ORDER OF THE COURT A QUO … ISSUING THE TEMPORARY RESTRAINING ORDER AND THE PRELIMINARY INJUNCTION AGAINST PETITIONER DBP.
- WHETHER
… THE RULES OF PROCEDURE [SHOULD NOT] BE APPLIED IN A VERY RIGID AND
TECHNICAL SENSE SO AS NOT TO FRUSTRATE THE PROMOTION OF SUBSTANTIAL
JUSTICE.[22]
DBP
insists that it is evident from the face of the complaint that
respondent failed to state a cause of action. DBP contends that
respondent’s allegation of conspiracy between DBP and Gonzalo is bare
and has no factual basis to stand on. Further, DBP claims that
respondent has no legal right over the subject property as she did not
inherit the same in the first place. At the time of death of
respondent’s mother, the property was not anymore owned by the latter
and therefore not part of her estate. Thus, respondent has no legal
right over the property and has no cause of action against DBP. And
because she had no right to the property, the issuance of the TRO and
injunctive writ were likewise improper. DBP also points to the
following provisions of P.D. No. 385 that were allegedly violated with
the issuance of the TRO and injunctive writ:
Section
1. It shall be mandatory for government financial institutions, after
the lapse of sixty (60) days from the issuance of this Decree, to
foreclose the collaterals and/or securities for any loan, credit,
accommodation, and/or guarantees granted by them whenever the arrearages
on such account, including accrued interest and other charges, amount
to at least twenty percent (20%) of the total outstanding obligations,
including interest and other charges, as appearing in the books of
account and/or related records of the financial institution concerned.
This shall be without prejudice to the exercise by the government
financial institutions of such rights and/or remedies available to them
under their respective contracts with their debtors, including the right
to foreclose on loans, credits, accommodations and/or guarantees on
which the arrearages are less than twenty percent (20%).Sec. 2.
No restraining order, temporary or permanent injunction shall be issued
by the court against any government financial institution in any action
taken by such institution in compliance with the mandatory foreclosure
provided in Section 1 hereof, whether such restraining order, temporary
or permanent injunction is sought by the borrower(s) or any third party
or parties, except after due hearing in which it is established by the
borrower and admitted by the government financial institution concerned
that twenty percent (20%) of the outstanding arrearages has been paid
after the filing of foreclosure proceedings.x x x x
Respondent,
for her part, counters that the CA was correct in dismissing the
petition for certiorari for having been filed beyond the sixty (60)-day
reglementary period. Also, respondent contends that the provisions of
P.D. No. 385 relating to the proscription against the issuance of
injunctive writs enjoining foreclosure sales are not applicable in the
instant case. She points out that what the RTC enjoined is not an
auction sale arising from the foreclosure of mortgage as the subject
property had long been foreclosed and title thereto consolidated in the
name of DBP. Rather, what the RTC enjoined was DBP’s sale of the
subject property through ordinary public bidding which is not within the
ambit of P.D. No. 385.
The petition should be denied.
As
correctly ruled by the CA, the petition for certiorari assailing the
orders pertaining to the grant of the TRO and the writ of injunction
were filed out of time. Notice of the issuance of the TRO was received
by DBP on the same day it was granted, November 24, 1998; thus, the
petition for certiorari should have been filed not later than January
23, 1999. The denial of the motion for reconsideration of the order
granting the writ of injunction, on the other hand, was received by DBP
on March 18, 1999 and thus, it had only until May 17, 1999 to file the
petition for certiorari. DBP, however, filed its petition only on June
23, 1999.
As to DBP’s motion to dismiss the complaint, we agree
with the RTC and CA that the same should be denied, but not for the
reason cited by said courts that it has been rendered moot and academic
by DBP’s filing of its answer but because the same lacks merit. Contrary
to DBP’s submission, a perusal of the allegations of the complaint
clearly reveals respondent’s cause of action against DBP. The complaint
states,
x x x x1.1
Plaintiff is the sole heir and successor-in-interest of the late Ma.
Corazon Zarate-Romero, who died intestate on 6 March 1993.x x x x3. During her lifetime, plaintiff’s predecessor-in-interest was the erstwhile owner pro-indiviso
of that parcel of land, together with improvements, located in Dagupan
City, which property used to be covered by Transfer Certificate of Title
(TCT) No. 10070 of the Registry of Deeds of Dagupan City….4.
In or about the year 1975, defendant Zarate, who was co-owner of the
subject property, secured various personal loan obligations from the
defendant DBP in the aggregate amount of P2,000,000.00.4.1
To secure such putative loan obligations of the defendant Zarate, the
latter, who wielded moral ascendancy over his younger sister and herein
plaintiff’s predecessor-in-interest — Ma. Corazon Zarate-Romero,
cajoled and prevailed upon the latter to mortgage the entirety of the
subject property in favor of defendant DBP, including her one-half (1/2)
pro-indiviso share in the same.4.2 Accordingly,
defendant Zarate assured the plaintiff’s predecessor-in-interest that
the mortgage would be for a brief period only and that he (defendant
Zarate) would forthwith pay and settle in full all his personal loan
obligations with the defendant DBP to ensure that said mortgage is
cancelled in the soonest time possible.5. At some
point in time during the effectivity of the mortgage, however, defendant
Zarate apparently saw an opportunity to claim the entirety of the
subject property for himself, to the exclusion of plaintiff’s
predecessor-in-interest.5.1 Emboldened by, and
taking advantage of, the complete trust and confidence reposed upon him
by the plaintiff’s predecessor-in-interest anent the subject property,
defendant Zarate conspired with the defendant DBP for the ostensible
foreclosure of the subject property, with the end in view, however, of
subsequently reacquiring the same for himself as sole owner.6.
Pursuant to such sinister plot hatched by defendants, defendant DBP
foreclosed the subject property in September of 1983 and, thereafter,
bought the same for itself in the sum of P2,253,101.00 during the
auction sale conducted by the Deputy Sheriff of Pangasinan….7.
Significantly enough, and even before the lapse of the mortgagors’
right of redemption over the subject property, the herein defendants
entered into a Deed of Conditional Sale over the same, with the
defendant DBP as seller, and the defendant Zarate as buyer….7.1
Needless to state, all the aforedescribed dealings, transactions and
proceedings concerning the subject property — from its fraudulent
foreclosure up to the highly anomalous execution of the Deed of
Conditional Sale over the same — were concealed from plaintiff’s
predecessor-in-interest and even from the plaintiff herself after the
death of her mother.x x x x[23]
A cause of action is the act or omission by which a party violates a right of another.[24]
A complaint states a cause of action when it contains three essential
elements: (1) a right in favor of the plaintiff by whatever means and
whatever law it arises; (2) the correlative obligation of the defendant
to respect such right; and (3) the act or omission of the defendant
violates the right of the plaintiff. If any of these elements is absent,
the complaint becomes vulnerable to a motion to dismiss on the ground
of failure to state a cause of action.[25]
Evidently,
all the above elements of a cause of action are alleged in the
complaint: (1) the legal right of the respondent over the subject
property foreclosed premised on the fact that she is the sole heir of
one of the owners who is entitled to the right of redemption; (2) the
correlative obligation of defendant DBP, as the foreclosing entity, to
respect such right of redemption; and (3) the act or omission of the
defendant in violation of the legal right, i.e., the act of DBP
and its co-defendant Zarate to cause the ostensible foreclosure of the
subject property and the subsequent execution of a deed of conditional
sale between the defendants even prior to the lapse of redemption period
to deprive respondent’s mother of her right over the property.
WHEREFORE, the petition is DENIED for lack of merit. The Decision dated July 21, 2003 of the Court of Appeals in CA-G.R. SP No. 53825 is AFFIRMED.
No costs.
SO ORDERED.
Corona, C.J., (Chairperson), Leonardo-De Castro, Bersamin, and Sereno,* JJ., concur.
*
Designated additional member per Raffle dated August 8, 2011 in lieu of
Associate Justice Mariano C. Del Castillo who recused himself due to
prior action in the Court of Appeals.
[1] Rollo,
pp. 36-46. Penned by Presiding Justice Cancio C. Garcia (now a retired
member of this Court) with Associate Justices Eloy R. Bello, Jr. and
Mariano C. Del Castillo (now a member of this Court) concurring.
[2] CA rollo, pp. 69-72.
[3] Id. at 105-117.
[4] Id. at 118-119.
[5] Id. at 57-68.
[6] Id. at 38-41.
[7] Id. at 41.
[8]
Sec. 2. No restraining order, temporary or permanent injunction shall
be issued by the court against any government financial institution in
any action taken by such institution in compliance with the mandatory
foreclosure provided in Section 1 hereof, whether such restraining
order, temporary or permanent injunction is sought by the borrower(s) or
any third party or parties, except after due hearing in which it is
established by the borrower and admitted by the government financial
institution concerned that twenty percent (20%) of the outstanding
arrearages has been paid after the filing of foreclosure proceedings.
In
case a restraining order or injunction is issued, the borrower shall
nevertheless be legally obligated to liquidate the remaining balance of
the arrearages, paying ten percent (10%) of the arrearages outstanding
as of the time of foreclosure, plus interest and other charges, on every
succeeding thirtieth (30th) day after the issuance of such
restraining order or injunction until the entire arrearages have been
liquidated. These shall be in addition to the payment of amortizations
currently maturing. The restraining order or injunction shall
automatically be dissolved should the borrower fail to make any of the
above-mentioned payments on due dates, and no restraining order or
injunction shall be issued thereafter. This shall be without prejudice
to the exercise by the government financial institutions of such rights
and/or remedies available to them under their respective charters and
their respective contracts with their debtors, nor should this provision
be construed as restricting the government financial institutions
concerned from approving, solely at its own discretion, any
restructuring, recapitalization, or any other arrangement that would
place the entire account on a current basis, provided, however, that at
least twenty percent (20%) of the arrearages outstanding at the time of
the foreclosure is paid.
All restraining orders and injunctions
existing as of the date of this Decree on foreclosure proceedings filed
by said government financial institutions shall be considered lifted
unless finally resolved by the court within sixty (60) days from date
hereof.
[9] Requiring
Government Financial Institutions to Foreclose Mandatorily All Loans
with Arrearages, Including Interest and Charges, Amounting to at least
Twenty Percent (20%) of the Total Outstanding Obligation.
[10] CA rollo, pp. 93-104.
[11] Id. at 42-53.
[12] Id. at 49, 53.
[13] Id. at 139-150.
[14] Id. at 130-136.
[15] Id. at 137-138.
[16] Id. at 54-55.
[17] Id. at 169-176.
[18] Id. at 177-182.
[19] Id. at 183-184.
[20] Id. at 56.
[21] Id. at 12-37.
[22] Rollo, p. 286.
[23] CA rollo, pp. 57-60.
[24] Section 2, Rule 2, 1997 Rules of Civil Procedure, as amended.
[25] See Heirs of Loreto C. Maramag v. Maramag, G.R. No. 181132, June 5, 2009, 588 SCRA 774, 784 and Bank of America NT & SA v. Court of Appeals, G.R. No. 120135, March 31, 2003, 400 SCRA 156, 167.