LA PREVISORA FILIPINA, MUTUAL BUILDING AND LOAN ASSOCIATION, PETITIONER AND APPELLEE, VS. FELIX Z. LEDDA, RESPONDENT AND APPELLANT

On
July 21, 1928 the respondent executed in favor of the petitioner a
mortgage deed securing his indebtedness with the land described in
certificate of title No. 22133 issued by the register of deeds for the
City of Manila. On January 23, 1929 said respondent executed in favor
of the petitioner another deed of loan wherein he acknowledged another
additional indebtedness. In the mortgage deed it was stipulated, among
others, that the respondent authorized the petitioner to sell at public
auction the mortgaged land in accordance with the provisions of Act No.
3135, in case the respondent should fail to pay his indebtedness within
the period agreed upon, or to comply with the other conditions
stipulated therein. As the respondent was unable to pay his
indebtedness or the interest thereon and violated the stipulated
conditions, the petitioner availed of his right and asked the sheriff
to sell publicly and extrajudicially the mortgaged real property. The
sheriff, after proper proceedings, sold said property on May 24, 1935,
awarded the same to the petitioner for P5,336.05, as the highest
bidder, and delivered to the latter the corresponding deed of transfer.
On June 28, 1935 the petitioner filed a motion praying that possession
of said real property purchased by him be delivered to him although the
period of one year fixed by law for redemption had not yet elapsed. On
July 12th of the same year the trial court granted ex parte the
said motion and ordered that possession of the real property in
question be delivered to the petitioner upon the filing of a bond in
the sum of P600. The respondent was notified of this order when he was
required by the sheriff to deliver possession of said land to the
petitioner, whereupon, he immediately filed a motion for
reconsideration praying, upon the grounds therein alleged, that the
sale be set aside and the possession applied for be denied. After trial
the court, in its order of September 10, 1935, denied the motion for
reconsideration. The respondent excepted thereto, interposed this
appeal and still later filed his bill of exceptions which was approved
and certified.

The second, third, fourth and fifth
assignments of error, in synthesis, raise the following questions of
law: First, whether Act No. 3135, under which the deeds of mortgage and
additional loan were executed, authorize possession by the petitioner
of the mortgaged property during the period fixed for redemption;
second, whether Act No. 4118 amending Act No. 3135 and authorizing
possession during the period for redemption is applicable, in spite of
the fact that it went into effect after said contracts had been
executed; and, third, whether Act No. 4118, in so far as it permits
possession through summary proceeding and upon motion ex parte, and not through an ordinary action, is valid and constitutional.

1. Portions of the two acts read as follows:

   Act No. 3135

   “Sec. 6. In all cases in which an extrajudicial sale is made under the
   special power hereinbefore referred to, the debtor, his successors in
   interest or any judicial creditor or judgment creditor of said debtor,
   or any person having a lien on the property subsequent to the mortgage
   or deed of trust under which the property is sold, may redeem the same
   at any time within the term of one year from and after the date of the
   sale; and such redemption shall be governed by the provisions of
   sections four hundred and sixty-four to four hundred and sixty-six,
   inclusive, of the Code of Civil Procedure, in so far as these are not
   inconsistent with the provisions of this Act.”

   
   Act No. 4118

   “Sec. 1. Section six of Act Numbered Thirty-one hundred and
   thirty-five, entitled ‘An Act to regulate the sale of property under
   special powers inserted in or annexed to real estate mortgages’, is
   hereby amended to read as follows:

   ” ‘Sec. 6. In all cases in which an
   extrajudicial sale is made under the special power hereinbefore
   referred to, the debtor, his successors in interest or any judicial
   creditor or judgment creditor of said debtor, or any person having a
   lien on the property subsequent to the mortgage or deed of trust under
   which the property is sold, may redeem the same at any time within the
   term of one year from and after the date of the sale; and such
   redemption shall be governed by the provisions of sections four hundred
   and sixty-four to four hundred and sixty-six, inclusive, of the Code of
   Civil Procedure, in so far as these are not inconsistent with the
   provisions of this Act.’

   “Sec. 2. The following
   three sections are hereby inserted after section six of said Act
   Numbered Thirty-one hundred and thirty-five:

   ” ‘Sec. 7. In any sale made under the
   provisions of this Act, the purchaser may petition the Court of First
   Instance of the province or place where the property or any part
   thereof is situated, to give him possession thereof during the
   redemption period, furnishing bond in an amount equivalent to the use
   of the property for a period of twelve months, to indemnify the debtor
   in case it be shown that the sale was made without violating the
   mortgage or without complying with the requirements of this Act. Such
   petition shall be made under oath and filed in form of an ex parte
   motion in the registration or cadastral proceedings if the property is
   registered, or in special proceedings in the case of property
   registered under the Mortgage Law or under section one hundred and
   ninety-four of the Administrative Code, or of any other real property
   encumbered with a mortgage duly registered in the office of any
   register of deeds in accordance with any existing law, and in each case
   the clerk of the court shall, upon the filing of such petition, collect
   the fees specified in paragraph eleven of section one hundred and
   fourteen of Act Numbered Four hundred ninety-six, as amended by Act
   Numbered Twenty-eight hundred and sixty-six, and the court shall, upon
   approval of the bond, order that a writ of possession issue, addressed
   to the sheriff of the province in which the property is situated, who
   shall execute said order immediately.

   ” ‘Sec. 8. The
   debtor may, in the proceedings in which possession was requested, but
   not later than thirty days after the purchaser was given possession,
   petition that the sale be set aside and the writ of possession
   cancelled, specifying the damages suffered by him, because the mortgage
   was not violated or the sale was not made in accordance with the
   provisions hereof, and the court shall take cognizance of this petition
   in accordance with the summary procedure provided for in section one
   hundred and twelve of Act Numbered Four hundred and ninety-six; and if
   it finds the complaint of the debtor justified, it shall dispose in his
   favor of all or part of the bond furnished by the person who obtained
   possession. Either of the parties may appeal from the order of the
   judge in accordance with section fourteen of Act Numbered Four hundred
   and ninety-six; but the order of possession shall continue in effect
   during the pendency of the appeal.

   ” ‘Sec. 9. When the
   property is redeemed after the purchaser has been given possession, the
   redeemer shall be entitled to deduct from the price of redemption any
   rentals that said purchaser may have collected in case the property or
   any part thereof was rented; if the purchaser occupied the property as
   his own dwelling, it being town property, or used it gainfully, it
   being rural property, the redeemer may deduct from the price the
   interest of one per centum per month provided for in section four
   hundred and sixty-five of the Code of Civil Procedure.’ “

   An examination of both laws show that Act No. 3135 did not allow
   possession of the property mortgaged and sold at public auction during
   the period of one year fixed for redemption. The only thing that it
   sanctioned was the extrajudicial public sale of the property in case
   this is stipulated by the parties in the mortgage deed. It is clear,
   therefore, that under said law the trial court could not issue the writ
   of possession in favor of the petitioner.

2. The mortgage contract was executed on July 21, 1928 and
   the contract for additional loan on January 23, 1929. On said dates
   only Act No. 3135 was in force, inasmuch as Act No. 4113 was approved
   and went into effect only on December 7, 1933. It is a principle
   generally recognized that civil laws have no retroactive effect unless
   it is otherwise provided therein (article 3, Civil Code; Manila Trading
   & Supply Co. vs. Santos, G. R. No. 43861). Act No. 4118
   does not state that its provisions shall have retroactive effect,
   wherefore, it follows, as it is hereby declared, that it is not
   applicable to the contracts entered into by the parties and, hence, the
   trial court erred in granting possession to the petitioner.

   The petitioner contends that said law is applicable because when the
   property in question was sold at public auction said law was already in
   force. This contention is in our opinion untenable. The date which
   should be taken into account in order to determine the applicability of
   the law is the date when the contracts were entered into by the parties
   and not the date of the public sale, because the latter is a mere
   incident of the former and may only exist if so stipulated by the
   parties.

3. The constitutionality and validity of Act No. 4118 need not be decided
   after it has been found inapplicable to the present case.

4. In the first assignment of error the respondent impugns the granting ex parte
   of the motion praying for writ of possession and alleges that the law
   which authorizes issuance of the same is likewise void and
   unconstitutional. Having ruled that Act No. 4118 is not herein
   applicable, it is needless to discuss this assignment of error.

5. In the sixth and last assignment of error, the respondent claims that
   the trial court erred in not awarding him the indemnity of P1,000
   prayed for in his opposition. In his brief he did not adduce any ground
   upon which he should be given such indemnity. It is admitted that he
   never lost possession of the real property because he timely filed
   reconsideration of the order directing that the petitioner be placed in
   possession of the same. If the respondent did not lose such possession
   he is doubtless not entitled to be indemnified.

In
view of the foregoing considerations the order appealed from is hereby
reversed and it is held that the petitioner is not entitled to take
possession of the mortgaged real property during the period for
redemption, with the costs of this instance against the said
petitioner-appellee. So ordered.

Avanceña, C. J., Villa-Real, Diaz, and Laurel, JJ., concur.