CANCELLATION OF MORTGAGE OR ENCUMBRANCE

To be valid, a contract of mortgage shall comply with the following

essential requisites: 1) It is constituted to secure the fulfillment of a principal
obligation; 2) The mortgagor is the absolute owner of the thing mortgaged;
and 3) The persons constituting the mortgage has the free disposal of his
property or he is legally authorized for that purpose (Article 2085, Civil
Code of the Philippines [CCP]). In addition to the aforementioned, the law
also requires the parties to have the document evidencing their mortgage
recorded in the Registry of Property (Article 2125, CCP). The registration of
the deed of mortgage in the transfer certificate of title of the land will serve
as a notice to the whole world that the land is subject of a mortgage and that
whoever enters into a transaction involving the said land shall respect the
deed of mortgage (Oswaldo D. Agcaoili, Property Registration Decree and
Related Laws (2006), page 474). If the instrument is not recorded, however,
the mortgage is nevertheless binding between the parties (Article 2125,
CCP).

The mortgage may be registered by presenting the Deed of Mortgage

and the owner’s duplicate certificate of title with the Register of Deeds
where the land is registered. Upon presentation thereof, the Register of
Deeds shall enter upon the original of the certificate of title and also upon
the owner’s duplicate certificate a memorandum thereof, the date and time
of filing and the file number assigned to the deed, and shall sign the
memorandum. He shall also note on the deed the date and time of filing and
a reference to the volume and page of the registration book in which it is
registered (Section 60, Presidential Decree (PD) No. 1529).

The annotation in your transfer certificate of title shall remain unless

you have fully satisfied the obligation guaranteed by your land. In such case,
the mortgage may be discharged or canceled by means of an instrument
releasing you of your obligation executed by the mortgagee, which shall be
filed with the same Register of Deeds. Upon the filing thereof, the Register
of Deeds shall make the appropriate memorandum on the certificate of title
canceling the annotation on the mortgage (Section 62, PD No. 1529).
IN RE: PETITION FOR CANCELLATION OF ENCUMBRANCES
ON TCT NOS. 22120 and 22121, REGISTRY OF DEEDS OF
NUEVA ECIJA. chanrobles virtual law library

NICANOR T. SANTOS,
Petitioner-Appellant.
G. R. No. L-27358

February 20, 1981

RESOLUTION

AQUINO, J.:

This is a summary proceeding under Section 112 of Act No. 496 for the
cancellation of the encumbrances annotated on the back of certain Torrens
Titles. The Petition was filed in the Land Registration Court as Cadastral Case
No. 19, LRC Cadastral Record No. 391. Lots Nos. 1921 and 1956 of the
Cuyapo, Nueva Ecija cadastre with areas of fifteen and sixteen hectares,
respectively, are covered by Transfer Certificates of Title Nos. 22121 and
22120 in the names of the brothers Nicanor T. Santos and Reynaldo T.
Santos as co-owners [Exh. "F" and "G"].

On the back of those titles, the following encumbrances appear:

Entry No. 2167 T-20935; Kind: Adverse Claim; Executed in Favor of

Nicanor T. Santos & Reynaldo T. Santos; Condition & Date of Instrument:
The property described in this title is subject to an adverse claim which has
for an object to acquire ownership of said property [D-100, P. 56, B-I-1 S-
1946, Jose M. Santos].

Entry No. 2177 T-20935; Kind: Lis Pendens Conditions & Date of
Instrument: Feb. 25, 1946. A petition has been filed with the Court of First
Instance of Nueva Ecija for the purpose of securing the presentation of
Owner's Duplicate of T.C.T. Nos. 20935 and 20936, now pending for action
Feb. 25, 1946.

Entry No. 2196 T-20935; Kind: Attachment; Executed in Favor of

Remedios T. Santos; Conditions & Date of Instrument: All rights, interests
and participation of Dionisio C. Bautista in this title has been levied, upon
indication and insistence of Remedios T. Santos, in connection with Civil Case
No. 7608 of the Court of First Instance of Rizal Feb. 26, 1946.

Entry No. 2201 T-20935; Kind: Attachment; Executed in Favor of Manuel

Borja; Conditions & Date of Instrument All the rights, interest and
participation of Dionisio C. Bautista in this title has been levied, upon
indication and insistence of Manuel Borja, in connection with Civil Case No.
7607 of the Court of First Instance of Rizal Feb. 26, 1946.

Entry No. 2202 T-20935; Kind: First Mortgage; Executed in Favor of Rizal
Surety & Insurance Co., Inc.; Conditions & Date of Instrument: For the sum
of P3,000.00 together with T.C.T. No. 20935, subject to the terms and
conditions stipulated in the contract. D-16, B-I, S' 45, Conrado S. Carlos,
Rizal Dec. 19, 1945.
Entry No. 2493, Kind Acknowledgment of Mortgage, Executed in Favor of
Rizal Surety & Insurance Co., Inc.; Conditions & Date of Instrument Nicanor
T. Santos & Reynaldo T. Santos hereby acknowledged and recognized the
mortgage referred to above on the parcels of land on this title and on T.C.T.
No. 22121, Vol. 89, executed by Dionisio C. Bautista in favor of the Rizal
Surety & Insurance Co., Inc., as superior and first lien and encumbrances
thereon, subject to the terms, conditions and covenants agreed upon in said
mortgage March 20, 1946. [pp. 8-10, Record on Appeal].

Mortgagee's copies of the two titles were issued to Rizal Surety Insurance
Co., Inc. [p. 10, Record on Appeal].

On March 2, 1966, Reynaldo sold to his brother Nicanor his proindiviso one-
half share in the two lots which are located at Barrio Patola, Talugtug
[Cuyapo], thus making Nicanor the sole owner thereof. [pp. 11-16, Record
on Appeal]. cralaw

On September 26, 1966, Nicanor T. Santos filed with the Court of First
Instance of Nueva Ecija, Guimba, Branch IV, a petition wherein he prayed
that Rizal Surety & Insurance Co., Inc. be ordered to surrender the
mortgagee's copies of the titles; that, upon failure to do so, the said copies
be cancelled or declared void, and that the Register of Deeds be ordered to
cancel the said encumbrances. cralaw

Attached to the petition was the conformity of Remedios T. Santos, one of

the encumbrancers, certifying that she agreed to the cancellation of Entry
No. 2196 regarding the attachment in her favor. [p. 8, Record on Appeal]. cralaw

The petitioner sent by registered mail, copies of his petition to the

encumbrancers, Manuel Borja and Rizal Surety & Insurance Co., Inc. [p. 8,
Record on Appeal]. The registry return cards, evidencing the receipt by those
encumbrancers of copies of the petition, were presented in evidence [Exhs.
"C" and "D"]. The Register of Deeds at Cabanatuan City was also furnished
with a copy of the petition (Exh. "E"). cralaw

Petitioner Santos alleged in his petition that the said six entries should be
cancelled because [a] as to the first two entries, he and his brother are the
interested parties; [b] as to the third entry, the interested party, his sister,
consented to its cancellation; and [c] as to the 1945 and 1946 entries in
favor of Borja and the surety company, the same had already prescribed.
[pp. 4-5, Record on Appeal]. Treating his petition as if it were a motion, the
petitioner directed the clerk of court to set it for hearing on any convenient
date. cralaw

At the hearing on December 6, 1966, Judge Placido C. Ramos denied the

petition in open court on the ground that the said encumbrances could not be
cancelled by means of a "mere petition" in the land registration case. [pp.
16-17, Record on Appeal]. cralaw

In a letter dated December 19, 1966, the petitioner asked the Register of
Deeds to cancel the annotation of the attachment in favor of Borja and of the
mortgage in favor of the surety company on the ground of prescription [Exh.
"B"].
cralaw

The Register of Deeds replied that, as an official with ministerial duties, he

has no power to cancel those annotations without a court order [Exh.
"A"]. The petitioner appealed Judge Ramos' order to this Court. He reiterates
his contention that the encumbrances in favor of Borja and the surety
company should be cancelled without the need of "taking" to them [as
suggested by the lower court] because the enforcement of those liens had
already prescribed and because those lienholders were served by registered
mail with copies of his petition and they did not register any opposition. cralaw

We hold that the appeal is devoid of merit. Petitioner's remedy is to file an

ordinary action against Borja, the surety company as mortgagee and the
Register of Deeds so that they may be duly summoned and the lower court
can acquire jurisdiction over them. Service of copies of the petition by
registered mail is not the means for acquiring jurisdiction over their persons. cralaw

It may be true that due to the long lapse of time, the attachment lien held by
Borja and the mortgage lien of the surety company might have already
prescribed but this is not a justification for resorting to a shortcut in
cancelling the liens or for dispensing with the requirements of due process. cralaw

An adversary proceeding, even if it would turn out to be a mere formality or

simply ceremonial and ritualistic in character, is the proper procedure. A
court, to avoid injustice or interminable litigations, should act with caution
and circumspection in cancelling liens on real property or, for that matter, in
passing upon property rights. cralaw

The remedy provided for in Section 112 of Act No. 496 is summary in nature
and is not adequate for the litigation of issues pertaining to an ordinary civil
action [Abella vs. Rodriguez, 116 Phil. 1277; Cabangcala vs. Domingo, 96
Phil. 124]. cralaw

The continuing, special and limited jurisdiction of the Court of First Instance,
as a land registration court under Section 112, does not empower it to
adjudicate issues properly pertaining to ordinary civil actions such as
questions relating to the validity or cancellation or discharge of a mortgage.
That issue should be ventilated in an ordinary civil action [Rehabilitation
Finance Corporation vs, Alto Surety & Insurance Co., Inc., 107 Phil. 386,
390]

In Gov't. of the Republic of the Phils. vs. Laperal, 108 Phil. 860, it was held
that the issue of whether the annotation on a Torrens title of 1937 mortgages
executed by a Japanese subject can be cancelled in 1953 by the Court of
First Instance, sitting as a land registration court, on the ground that the
mortgage had already prescribed, should be ventilated in an ordinary civil
action.cralaw

A Court of First Instance, as a land registration court, cannot cancel the

annotation of a mortgage on a Torrens title without the mortgagee's consent
even if the mortgagor is willing to post a bond in lieu of the mortgage
obligation [Magdalena Estate, Inc. vs. Yuchengco, 108 Phil. 340]. cralaw

But where, in a prior case, the foreclosure of certain mortgages was

adjudged to have already prescribed [Enriquez vs. Perez, 93 Phil. 246], the
Court of First Instance, acting as a land registration court, has jurisdiction to
order the Register of Deeds to cancel the annotation of the said mortgages
on the Torrens titles covering the mortgaged lots [Director of Lands vs.
Enriquez, 93 Phil. 584]. cralaw

That ruling implies that the issue of whether the foreclosure of the mortgage
has already prescribed should first be determined in a separate action before
the annotation of the mortgage encumbrance can be cancelled by the Court
of First Instance under Section 112 of Act No. 496 [See Abustan vs. Ferrer
and Golez, 120 Phil. 1281]. cralaw

In the instant case, the petitioner has not presented any release or
cancellation of the mortgage in favor of the surety company and yet, he
wants that mortgage to be cancelled. He has to sue the surety company in
order that the prescription of the mortgage, as claimed by him, might be
resolved. The mortgagee should be heard or given a chance to be heard. cralaw

WHEREFORE, the lower court's Order of dismissal is affirmed. No costs.

Barredo, Concepcion Jr., Abad Santos, and De Castro, JJ.,

concur.

FIRST DIVISION

PHILIPPINE NATIONAL BANK,

Petitioner,
G.R. No. 126908
January 16, 2003
-versus-

COURT OF APPEALS, SPOUSES ANTONIO SO HU AND

SOLEDAD DEL ROSARIO and SPOUSES MATEO CRUZ
AND CARLITA RONQUILLO,
Respondents.

chanroblesvirtualawlibrary

DECISION
CARPIO, J.:

The Case
This is a petition for review on certiorari [1] to set aside the Decision [2] of
the Court of Appeals which affirmed in substance the Decision [3] of the
Regional Trial Court, Branch 27, Cabanatuan City. The Court of Appeals
sustained the trial court’s ruling that the questioned extrajudicial foreclosure
was void. The courts a quo declared the sheriff’s certificate of sale void,
directed the return of the owner’s duplicate title to the Registry of Deeds for
Cabanatuan City, and cancelled the mortgage inscribed on the title to the
property.

The Facts

Private respondents Spouses Mateo Cruz and Carlita Ronquillo ("Spouses

Cruz" for brevity) were the registered owners of a parcel of land ("Property"
for brevity) situated in Cabanatuan City and covered by Transfer Certificate
of Title No. T-4699.

In 1957, Spouses Cruz obtained a loan from petitioner Philippine National

Bank ("PNB" for brevity), Cabanatuan Branch, for P70,000.00 ("First Loan"
for brevity). A real estate mortgage on the Property secured the First Loan
under Entry No. 10433/NT-9679 annotated on TCT No. T-4699 on November
7, 1957.
On October 16, 1964, San Nicolas Agricultural Project, Inc. ("SNAPI" for
brevity), where Mateo Cruz was then Vice-President, obtained an agricultural
crop loan from PNB, Santiago Branch, for P156,000.00 ("Second Loan" for
brevity). Mateo Cruz also signed the loan in his personal capacity. A real
estate mortgage on the Property secured the Second Loan under Entry No.
1003/T-4699 annotated on TCT No. T-4699 on October 16, 1964. The
Spouses Cruz also mortgaged several other agricultural lands to secure the
Second Loan. PNB, Cabanatuan Branch, took custody of all the titles to the
mortgaged properties.

In November 1977, on the instance of the Spouses Cruz, Land Bank of the
Philippines ("Land Bank" for brevity) remitted to PNB, Cabanatuan Branch,
P359,500.00 in bonds and P174.43 in cash and transferred to PNB, Santiago
Branch, P25,500.00 in bonds. [4]

On December 2, 1977, PNB issued in favor of the Spouses Cruz a Deed of

Release of Real Estate Mortgage which cancelled the two mortgages on the
Property. The cancellation of these mortgages was annotated on TCT No. T-
4699. Thus, PNB released all the titles to the Spouses Cruz.

On March 20, 1980, the Spouses Cruz obtained a new loan from PNB,
Cabanatuan Branch, for P50,000.00, later increased to P200,000.00 ("Third
Loan" for brevity). A real estate mortgage on the Property also secured the
Third Loan under Entry No. 47974/T-4699 annotated on TCT No. T-4699 on
March 24, 1980.

Private respondents Spouses Antonio So Hu and Soledad del Rosario

("Spouses So Hu" for brevity) became interested in buying the Property.
They consulted their counsel, Atty. Rodolfo Domingo, to examine TCT No. T-
4699. Finding an existing mortgage annotated on TCT No. T-4699, Atty.
Domingo advised the Spouses So Hu to pay PNB the full amount of the Third
Loan before signing the deed of sale. [5]

On March 18, 1983, the Spouses So Hu, on behalf of the Spouses Cruz, paid
PNB P200,000.00 representing the Third Loan. [6] Subsequently, on March
21, 1983, the Spouses Cruz and the Spouses So Hu signed a Deed of
Absolute Sale covering the Property. [7] Thus, the Spouses So Hu demanded
from PNB the release of TCT No. T-4699 on the ground that the Spouses
Cruz had already paid all their loans secured by real estate mortgages on the
Property. [8] PNB, however, refused.

For the Spouses Cruz’s alleged failure to pay their Second Loan, PNB filed a
Petition for Sale under Act No. 3135, [9] as amended, and Presidential
Decree No. 385. [10] On August 27, 1985, Sheriff Ex-Officio Numeriano Y.
Galang sold the Property in a public auction sale. PNB was the highest and
sole bidder of the Property for P514,105.36. A sheriff’s certificate of
sale [11] was issued in PNB’s favor and annotated on TCT No. T-4699 as
Entry No. 2565.

In October 1986, PNB found the Spouses So Hu occupying the Property.

Through its Assistant Manager Vicente Sales of its Cabanatuan Branch, PNB
demanded that Spouses So Hu vacate the Property, as PNB did not authorize
them to occupy the Property. [12]
On November 17, 1986, the Spouses So Hu filed an action for Annulment of
Public Auction Sale and Certificate of Sale with Petition for a Writ of
Preliminary Injunction. The defendants were PNB, Jose S. Miranda as
Manager of PNB, Cabanatuan Branch, the Spouses Cruz, Numeriano Y.
Galang, as Sheriff Ex-Officio, and the Register of Deeds for Cabanatuan
City.

In their complaint, the Spouses So Hu alleged that they were the owners of
the foreclosed Property under a Deed of Absolute Sale executed by the
Spouses Cruz in their favor. They stressed that PNB had already cancelled
and released the prior mortgages on the Property and that they had paid the
Third Loan before the foreclosure. Thus, the Spouses So Hu sought to declare
the foreclosure and certificate of sale void. They also prayed for the
cancellation of the mortgage on the Property, delivery of the owner’s
duplicate copy of TCT No. T-4699, and award of damages and attorney’s
fees.

In its answer, [13] PNB argued that the foreclosure was valid since the "all-
inclusive clause" in the third mortgage deed embraces the Spouses Cruz’s
Second Loan which, according to PNB, was still unpaid. PNB asserted that the
cancellation and release of the second mortgage were due purely to
inadvertence and mistake. PNB interposed a cross-claim [14] against the
Spouses Cruz that should the trial court grant the relief prayed for by the
Spouses So Hu, the Spouses Cruz be ordered to pay PNB P514,105.36. This
amount represented the Spouses Cruz’s alleged outstanding obligation under
the Second Loan.

During the pendency of this case, the one-year period of redemption expired
without redemption being made. On April 10, 1987, PNB executed an
Affidavit of Consolidation of Ownership. Therefore, the Registry of Deeds for
Cabanatuan City issued TCT No. 51022 in favor of PNB on June 25,
1987. [15]

On March 2, 1990, the Spouses Cruz filed their answer [16] to PNB’s cross-
claim whereby the Spouses Cruz admitted that SNAPI obtained the Second
Loan from PNB with a real estate mortgage on the Property. However, the
Spouses Cruz contended that they had already fully paid the Second Loan on
December 2, 1977, as shown by the release of the mortgage annotated on
TCT No. T-4699. The Spouses Cruz further alleged that the "all-inclusive
clause" is illegal and improper for this clause is too general. The Spouses
Cruz added that assuming that the Second Loan is still unpaid, extinctive
prescription and laches had already set in and barred the cross-claim.

Subsequently, PNB filed a reply. PNB claimed that the release of the second
mortgage was a mistake, and that the right to foreclose has not prescribed
because the prescriptive period was suspended by a demand to pay. PNB
further claimed that what it foreclosed was the third mortgage which
purportedly also secured the Second Loan. [17]

On April 29, 1993, after trial on the merits, the trial court rendered a decision
declaring null and void the certificate of sale in favor of PNB, and ordered the
cancellation of TCT No. 51022, including the mortgage entries on TCT No. T-
4699. The trial court also awarded moral and exemplary damages, attorney’s
fees and litigation expenses in favor of the Spouses So Hu and the Spouses
Cruz. [18]
On May 11, 1993, PNB appealed the adverse decision. [19] The Court of
Appeals modified the decision of the trial court, deleting the award of moral
and exemplary damages in favor of the Spouses So Hu. The Court of Appeals
also remanded the case to the trial court for further proceedings on PNB’s
cross-claim against the Spouses Cruz. The Court of Appeals affirmed the trial
court’s ruling in all other respects.

Hence, this petition.

The Ruling of the Court of Appeals

The Court of Appeals declared the extrajudicial foreclosure void based on the
following findings of facts:

First, at the time of sale to spouses Antonio So Hu and Soledad del Rosario,
the Property was already free from any liens and encumbrances, as prior
registered mortgages on the Property were already cancelled and such
cancellation was duly annotated at the back of the TCT (except the third
which was then yet to be released). Conformably, plaintiff had the right to
rely on the correctness of such annotation and on what appears on the face
of the title. They cannot be charged with knowledge of the "all-inclusive
clause" in the third mortgage since, they were not privy to the said contract
between PNB and the Cruz spouses. Hence, the validity or invalidity of the
all-inclusive clause is of no consequence.

xxx

This conclusively makes Antonio So Hu and Soledad del Rosario buyers in

good faith.cralaw

Second, PNB knew that Spouses Mateo Cruz and Carlita Ronquillo, appellee
spouses So Hu sent appellant bank a letter through its PNB-Cabanatuan
Branch Manager, Jose Miranda dated 31 July 2984 (Exhs. D and D-1,
Records, p. 126) requesting for the release of the mortgage and the owner’s
duplicate title in view of the sale of the Property to them. This
notwithstanding, PNB foreclosed the Property in an auction sale on 27 August
1985.

It need not be stressed that a mortgagee can only foreclose Property given
as a security for an unpaid obligation. In the case at bar, at least insofar as
the plaintiffs are concerned, the obligation secured by the Property had
already been paid and they had the right to expect that the Property is
released from mortgage. Although PNB is not privy to the contract of sale
between spouses Cruz and So Hu, it cannot raise the issue that the Property
still stood as security for a previous loan because by releasing the Property
from the two previous mortgages, it is obviously estopped from claiming
otherwise. The rule is embodied in the following provision of the Rules of
Court:
x x x [20]

The dispositive portion of the assailed decision reads:

"WHEREFORE, judgment is hereby rendered as follows:

1. The certificate of sale dated August 27, 1985 issued by the Provincial
Sheriff Office in favor of PNB is hereby declared null and void and Entry No.
2565 is hereby ordered cancelled. Defendant PNB is directed to return the
owner’s duplicate copy of TCT No. T-51022 to the Registry of Deeds for the
City of Cabanatuan for its cancellation and TCT No. T-4699 is hereby ordered
revived. Defendant PNB is likewise ordered to issue a cancellation and
discharge of mortgage inscribed as Entry Nos. 47103 and 47974 annotated in
the memorandum of encumbrances of TCT No. T-4699;

2. Appellant Philippine National Bank is ordered to pay Spouses Antonio So

Hu and Soledad del Rosario attorney’s fees and litigation expenses in the
amount of P25,000.00 and P15,000.00, respectively, as awarded by the trial
court.

3. Further, the case is remanded to the trial court for further

proceedings/trial for the purpose of resolving the issue on PNB’s cross-claim
against Spouses Mateo Cruz and Soledad del Rosario. chan robles virtual law library

SO ORDERED." [21]

The Issues

The petition is anchored on the following assigned errors:

"I

THE COURT OF APPEALS ERRED IN HOLDING THAT SPOUSES ANTONIO SO

HU AND SOLEDAD DEL ROSARIO CANNOT BE CHARGED WITH KNOWLEDGE
OF THE "ALL-INCLUSIVE CLAUSE" IN THE THIRD MORTGAGE, SINCE THEY
WERE NOT PRIVY TO THE SAID CONTRACT BETWEEN PNB AND THE CRUZ
SPOUSES DESPITE THAT THE SAID ANNOTATION WAS CLEARLY INSCRIBED
ON TCT NO. T-4699 UNDER ENTRY NO. 47974/T-4699 GIVING NOTICE TO
THE WHOLE WORLD THAT - AMENDMENT OF THE MORTGAGE IN FAVOR OF
PNB, INSCRIBED UNDER ENTRY NO. 47103 IN THE SENSE THAT THE
CONSIDERATION THEREOF HAS BEEN INCREASED TO PHILIPPINE PESOS:
TWO HUNDRED THOUSAND PESOS: (P200,000.00) AND TO SECURE ANY
AND ALL OBLIGATIONS WITH PNB, WHETHER CONTRACTED BEFORE,
DURING OR AFTER THE DATE OF THIS INSTRUMENT.

II

THE COURT OF APPEALS ERRED IN NOT HOLDING THAT THE SALE OF THE
MORTGAGED PROPERTY BETWEEN SPOUSES CRUZ AND SPOUSES SO HU
DID NOT BIND PNB.

III

THE COURT OF APPEALS ERRED IN NOT HOLDING THAT PNB’S MORTGAGE

LIEN AND THE PROPERTY MORTGAGED ARE INSEPARABLE, SO MUCH SO
THAT WHOEVER MAY SUBSEQUENTLY ACQUIRE TITLE TO THE MORTGAGED
PROPERTY IS BOUND BY THE TERMS OF THE MORTGAGE WHETHER THE
TRANSFER BE WITH OR WITHOUT THE CONSENT OF PNB.

IV
THE COURT OF APPEALS ERRED IN AWARDING SPOUSES SO HU P25,000
ATTORNEY’S FEES AND P15,000.00 LITIGATION EXPENSES WITHOUT
FACTUAL AND LEGAL BASES." [22]

The main issue to resolve is the validity of the extrajudicial foreclosure of the
third mortgage deed which secured the allegedly unpaid Second Loan. The
validity of the extrajudicial foreclosure in turn hinges on two important
questions. First, whether the Spouses Cruz indeed failed to pay the Second
Loan. Second, if the Second Loan is still unpaid, whether the parties to the
third mortgage deed intended to include the Second Loan in the third
mortgage deed.

The Ruling of the Court

We deny the petition. We affirm the finding of the courts a quo that the
foreclosure of the mortgage on the Property was void.

Records show that PNB’s application for foreclosure, filed on July 15, 1985,
was based on the Spouses Cruz’s third mortgage deed. [23] However, the
Spouses So Hu had already paid on March 18, 1983 the principal obligation
secured by the third mortgage. [24] A mortgage is but an accessory contract,
the consideration of which is the same consideration of the principal contract
without which it cannot exist as an independent contract. [25] Since the full
amount of the Third Loan was paid as early as March 18, 1983, extinguishing
the loan obligation under the principal contract, the mortgage obligation
under the accessory contract has likewise been extinguished. cralaw

Foreclosure is valid where the debtor is in default in the payment of his

obligation. In the instant case, PNB foreclosed the third mortgage even when
the obligation, the Third Loan, secured by the mortgage has been completely
paid prior to the foreclosure. Obviously, the Property could no longer be
foreclosed to satisfy an extinguished obligation.cralaw

PNB, on the other hand, mainly argues that the third mortgage deed also
covered the Second Loan which remained unpaid. The consideration,
allegedly, of the third mortgage deed also includes the Spouses Cruz’s
Second Loan that was supposedly still outstanding then. The issue then turns
on whether the Spouses Cruz paid the Second Loan, for if they did, the
foreclosure was without any legal basis

The Spouses Cruz’s Second Loan

PNB’s defense is anchored on the Spouses Cruz’s alleged failure to pay the
Second Loan. Under the so-called "all-inclusive clause" in the third mortgage
deed, PNB maintains that the Spouses Cruz intended to secure all obligations
contracted before, during or after the date of the third mortgage deed,
including the supposedly unpaid Second Loan. We must first resolve whether
the Spouses Cruz defaulted in paying their Second Loan. If the Second Loan
had in fact been paid, it would be immaterial whether the "all-inclusive
clause" covered the Second Loan or not since the payment of the Second
Loan would have extinguished the mortgage obligation.

The trial court expressly stated that the Spouses Cruz or SNAPI had already
paid the Second Loan as early as December 2, 1977, as shown by the release
of the titles to the Spouses Cruz and the cancellation of the mortgages on
TCT No. T-4699. In addition, the trial court found that the Spouses Cruz
remitted to PNB various Land Bank bonds and cash in payment of their first
two loans with PNB. The pertinent portion of the trial court’s decision reads:

"The PNB called to the witness stand Severina Rarela, Chief of the Securities
and Documentation Specialist, Bond Servicing Department of the Land Bank
of the Philippines who testified that as of November 3, 1977, they have
released in favor of PNB at the instance of Spouses Cruz Land Bank bonds in
the amount of P25,500.00 and P359,500.00 and cash of P174.43. It would
appear therefore that the execution of the release of mortgage registered as
Entry No. 31968 was not a mistake. The obligation of SNAPI or Mateo Cruz
has been fully paid and that is the actual reason why the PNB executed a
release of mortgage and returned the owner’s duplicate copy of TCT No. T-
4699 and other titles to said defendant Spouses Cruz." [26]

This Court is not a trier of facts. It is not this Court’s function to analyze or
weigh all over again the evidence already considered in the proceedings
below.[27] Since the issue of the payment of the Second Loan is factual,
resolving the same is beyond this Court’s jurisdiction. Moreover, we respect
the trial court’s factual findings in the absence of exceptional circumstances
to warrant a reversal, [28] and there is none in the instant case.

To prove that he had already settled the Second Loan, Mateo Cruz testified,
among others, that the Department of Agrarian Reform paid his outstanding
loans (First and Second Loans) with PNB through the issuance of Land Bank
bonds and cash. In his cross-examination, he stated in part:

"ATTY. INCISO
Q How did you pay the loan?

A It was paid by the Land Bank because those properties together with my
other agricultural lands consisting of 100 hectares were mortgaged to the
PNB and the Land Bank was the one who bought it because it was under
agrarian reform and the Land Bank paid those accounts that I have in that
bank, otherwise TCT No. T-4699 should have not given to me by the Land
Bank if it was not paid, sir." [29]

What is telling is that Land Bank indeed paid PNB, Cabanatuan Branch, bonds
and cash in the total amount of P359,674.43. PNB, however, refused to
acknowledge such payment for the Second Loan and insisted that this
amount was used to pay the Spouses Cruz’s other loans with PNB,
Cabanatuan Branch. Yet, other than its bare allegation, PNB failed to show
what these other alleged loans were.

On the other hand, PNB failed to prove clearly and convincingly that the
Spouses Cruz have not yet paid their Second Loan. PNB’s evidence consisted,
among others, of SNAPI’s statements of account, [30] a letter from Manuel
Ornedo, former PNB, Cabanatuan Branch Assistant Manager, [31] and
testimony of a Land Bank officer. [32]

While the statements of account showed that SNAPI has an unpaid obligation
of P514,105.36, as of August 1985, the same failed to show the correct
computation of the loan. On the request of the Spouses Cruz, Land Bank
transferred P25,500.00 worth of bonds to PNB, Santiago Branch [33] but PNB
never reflected this amount in the statements of account. PNB simply stated
that the Second Loan was not yet fully paid according to its statements of
account.
PNB’s rebuttal witness, Severina Rarela, testified that Land Bank paid PNB in
cash and in bonds. This witness competently testified that, on the instance of
the Spouses Cruz, Land Bank transferred P25,500.00 worth of bonds to PNB,
Escolta Branch (where the account of SNAPI and Mateo Cruz were allegedly
transferred). This witness further testified that Land Bank paid directly to
PNB, Cabanatuan Branch, P359,673.43 in bonds and in cash on the instance
of the Spouses Cruz.

PNB further stressed that instead of paying PNB, Santiago Branch, where
Mateo Cruz obtained the Second Loan, Land Bank issued bonds and cash to
PNB, Cabanatuan Branch. PNB then concluded that this payment was not
intended to pay the Second Loan. PNB overlooked the fact that the Spouses
Cruz obtained the Second Loan from PNB, Santiago Branch, though the titles
to the mortgaged properties were with PNB, Cabanatuan Branch. Why was
the second mortgage, securing a loan obtained from the PNB, Santiago
Branch, annotated on TCT No. T-4699 when this title, like the rest of the
titles to the mortgaged properties, was in the possession of PNB, Cabanatuan
Branch? It clearly appears that these PNB branches have coordinated with
each other to accommodate the Spouses Cruz’s loan applications. However,
when it came to the payment of the loans, PNB now claims that these
branches acted separately and independently from each other. It is unfair to
compel the Spouses Cruz to show how PNB applied the Land Bank bonds and
cash. Having indisputably received the payments, it was PNB’s burden to
show how it applied these payments.

A review of the trial court’s findings convinces us that the Spouses Cruz,
through Land Bank, were able to pay not only the First Loan but more
importantly the Second Loan. The trial court also took note of the more
significant fact of cancellation of the mortgages on TCT No. T-4699 and the
release of the titles of the Spouses Cruz’s lands, which fact bolstered the
Spouses Cruz’s stand.

We find that the Spouses Cruz had paid the Second Loan in 1977 resulting in
the cancellation of the second mortgage and release of TCT No. T-4699 and
other titles to the Spouses Cruz. With this, the questioned foreclosure is
undoubtedly without any legal basis, as the Third Loan was fully paid in 1983
and the Second Loan was completely settled in 1977. This being the case,
the issue of whether the "all-inclusive clause" in the third mortgage deed
includes the Second Loan is now moot and academic.

Award of Damages and Attorney’s Fees

The records do not support any award for moral and exemplary damages to
private respondents. As found by the Court of Appeals, the Spouses So Hu
have not sufficiently proved that PNB acted maliciously and in bad faith when
it foreclosed the Property. On the contrary, PNB believed, although
mistakenly, that it still had an unpaid claim for which the Property stood as a
security. [34]As we ruled in Expertravel & Tours, Inc. vs. Court of Appeals –

"Moral damages are not punitive in nature but are designed to compensate
and alleviate in some way the physical suffering, mental anguish, fright,
serious anxiety, besmirched reputation, wounded feelings, moral shock,
social humiliation, and similar injury unjustly caused to a person. Although
incapable of pecuniary computation, moral damages, nevertheless, must
somehow be proportional to and in approximation of the suffering inflicted.
Such damages, to be recoverable, must be the proximate result of a wrongful
act or omission the factual basis for which is satisfactorily established by the
aggrieved party."[35]

Since the record is bereft of any evidence to prove the moral damages
allegedly suffered by the Spouses So Hu and the Spouses Cruz, this Court
cannot award exemplary damages. [36] We also disallow the award of
attorney’s fees for lack of factual and legal basis in the text of the decisions
of the courts a quo. We ruled in Pimentel vs. Court of Appeals that –

"With respect to petitioner's contention that the respondent court erred in

affirming the trial court's decision awarding P10,000.00 attorney's fees to
private respondent, we rule in favor of petitioner. The text of the trial court's
decision does not mention the reason for the award of attorney's fees and
the award was simply contained in the dispositive portion of the trial court's
decision. It is now settled that the reasons or grounds for an award must be
set forth in the decision of the court." [37]

WHEREFORE, the Decision of the Court of Appeals dated October 23, 1996 is
AFFIRMED with modification. The award of attorney’s fees and litigation
expenses to the Spouses Antonio and Soledad So Hu is deleted and the
cross-claim of Philippine National Bank against the Spouses Mateo and Carlita
Cruz is dismissed for lack of merit. Costs against petitioner.

SO ORDERED.

Davide, Jr., C.J., (Chairman), Vitug, Ynares-Santiago, and Azcuna, JJ.,

concur.

____________________________
Endnotes

[1] Under Rule 45 of the Rules of Court.

[2] Penned by Justice Conrado M. Vasquez, Jr. and concurred in by Justices Arturo B.
Buena and Angelina Sandoval-Gutierrez.
[3] Penned by Judge Ricardo G. Bernardo, Jr.
[4] Records of Civil Case No. 70-AF (8723-R), p. 297.
[5] TSN, January 26, 1988, p. 5; TSN, July 4, 1988, pp. 3-5.
[6] TSN, January 26, 1988, pp. 6-7.
[7] Records of Civil Case No. 70-AF (8723-R), Exhibit B, p. 124.
[8] Records of Civil Case No. 70-AF (8723-R), Exhibit D, p. 126.
[9] "An Act to Regulate the Sale of Property Under Special Powers Inserted in or
Annexed to Real Estate Mortgages"
[10] "Requiring 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".
[11] Records of Civil Case No. 70-AF (8723-R), Exhibit 2, p. 208.
[12] CA Decision dated October 23, 1996 (hereinafter CA Decision), Rollo, p. 34.
[13] Records of Civil Case No. 70-AF (8723-R), pp. 32-39.
[14] Ibid., p. 38.
[15] Records of Civil Case No. 70-AF (8723-R), Exhibit 3, p. 210.
[16] Records of Civil Case No. 70-AF (8723-R), p. 176.
[17] Ibid., pp. 181-183.
[18] Rollo, pp. 66 -77.
[19] Records of Civil Case No. 70-AF (87323-R), p. 318.
[20] CA Decision, Rollo, pp. 35-38.
[21] Ibid., p. 38.
[22] Petition for Review dated Dec. 17, 1996 (hereinafter Petition), Rollo, p. 17.
[23] Records of Civil Case No. 70-AF (8723-R), Exhibit H, p. 130.
[24] Ibid., Exhibit C, p. 125.
[25] Ganzon, et al. vs. Hon. Inserto, et al., 208 Phil. 630 (1983).
[26] Rollo, p. 76.
[27] Philippine National Bank vs. Court of Appeals, 324 SCRA 714 (2000).
[28] Dee vs. Court of Appeals, 325 SCRA 466 (2000).
[29] TSN, August 14, 1991, pp. 6-7.
[30] Records of Civil Case No. 70-AF (8723-R), Exhibits 11 and 12, pp. 221, 222.
[31] Records of Civil Case No. 70-AF (8723-R), Exhibit 10, pp. 218-220.
[32] TSN, February 3, 1992.
[33] Records of Civil Case No. 70-AF (8723-R), p. 297; Exhibits 3-A and 4-A, pp.
300-304.
[34] CA Decision, Rollo, p. 37, citing MHP Garments, Inc. vs. Court of Appeals, 236
SCRA 227 (1994) and Tan vs. Court of Appeals, 239 SCRA 310 (1994).
[35] 309 SCRA 141 (1999).
[36] Articles 2229 and 2234 of the Civil Code.
[37] 307 SCRA 38 (1999).

THIRD DIVISION

GASPAR CALACALA, BALTAZAR G.R. No. 154415

CALACALA, MELCHOR CALACALA,
SOLOMON CALACALA, FELICIDAD Present:
CALACALA, PETRONILA
CALACALA and SALOME PANGANIBAN, J.,
CALACALA, Chairman
Petitioners, SANDOVAL-GUTIERREZ,
CORONA,
CARPIO MORALES, and
- versus - GARCIA, JJ.

Promulgated:
REPUBLIC OF THE PHILIPPINES,
represented by the Solicitor
July 28, 2005
General, and SHERIFF JUAN C.
MARQUEZ,
Respondents.

x----------------------------------------------------------------------------------------x

DECISION

GARCIA, J.:
 In this appeal by way of a petition for review on certiorari under
Rule 45 of the Rules of Court, petitioners urge us to annul and set
aside the resolution dated 31 October 2001 and the order dated 2
July 2002 of the Regional Trial Court at Rosales, Pangasinan which
respectively dismissed petitioners’ complaint in Civil Case No. 1239-R
and denied their motion for reconsideration.

The material facts are not at all disputed:

The spouses Camilo Calacala and Conchita Calacala,

predecessors-in-interest of the herein petitioners, are the registered
owners of a parcel of land situated at Barangay Balincanaway,
Rosales, Pangasinan and covered by Transfer Certificate of Title No.
T-21204 of the Registry of Deeds of Pangasinan.

To secure the provisional release of an accused in a criminal

case then pending before the then Court of First Instance (CFI) of
Pangasinan, the spouses offered their aforementioned parcel of land
as a property bond in said case. For failure of the accused to appear
at his scheduled arraignment on 4 November 1981, the CFI ordered
the bond forfeited in favor of the government, and, following the
bondman’s failure to produce in court the body of the accused,
rendered judgment against the bond in the amount of P3,500.00.
Thereafter, the court issued a Writ of Execution [1] directing the
provincial sheriff to effect a levy on the subject parcel of land and to
sell the same at a public auction to satisfy the amount of the bond. In
compliance with the writ, the deputy provincial sheriff issued on 26
July 1982 a Notice of Levy[2] addressed to the Register of Deeds of
Pangasinan who, on 19 August 1982, caused the annotation thereof
on TCT No. T-21204 as Entry No. 83188.

Not long thereafter, a public auction of the subject parcel of land

was held on 24 September 1982, at which respondent Republic
submitted its bid for P3,500, which is the amount of the judgment on
the bond. Hence, on that same day, a Sheriff’s Certificate of Sale [3]
was issued in favor of the Republic as the winning bidder.

On 5 October 1982, the same Certificate of Sale was registered

and annotated on TCT No. T-21204 as Entry No. 83793, thereby
giving the spouses Calacala a period of one (1) year therefrom
within which to redeem their property. Unfortunately, they never did
up to the time of their respective deaths on 13 January 1988 and 8
January 1994.

Claiming ownership of the same land as legal heirs of the

deceased spouses, petitioners filed with the Regional Trial Court at
Rosales, Pangasinan a complaint [4] for Quieting of Title and
Cancellation of Encumbrance on TCT No. T-21204 against
respondents Republic and Sheriff Juan C. Marquez. In their
complaint, docketed as Civil Case No. 1239-R and raffled to Branch
53 of the court, petitioners prayed, inter alia, for the cancellation of
Entries No. 83188 and 83793 on TCT No. T-21204 or the declaration
of said entries as null and void.

To the complaint, respondent Republic interposed a Motion to

Dismiss[5] grounded on the (1) complaint’s failure to state a cause of
action and (2) prescription of petitioners’ right to redeem.

In their Opposition,[6] petitioners contend that when respondent

Republic moved to dismiss the complaint for failure to state a cause
of action, it thereby hypothetically admitted all the allegations therein,
specifically the averment that despite the lapse of nineteen (19)
years, respondent did not secure the necessary Certificate of Final
Sale and Writ of Possession and failed to execute an Affidavit of
Consolidation of Ownership. Petitioners thus submit that the
Republic’s rights over the land in question had either prescribed,
been abandoned or waived. They add that by filing a motion to
dismiss, respondent Republic likewise admitted the allegation in the
same complaint that petitioners and their predecessors-in-interest
have been in continuous possession of the subject land and paying
the realty taxes thereon.

In the herein assailed resolution [7] dated 31 October

2001, the trial court granted the Republic’s motion to dismiss and
accordingly dismissed petitioners’ complaint. Petitioners moved for a
reconsideration but their motion was denied by the same court in its
equally challenged order[8] of 2 July 2002.

Hence, petitioners’ present recourse, it being their contentions

that -

I.

THE INSTANT COMPLAINT FOR QUIETING OF TITLE AND

CANCELLATION OF ENCUMBRANCE ON TCT NO. T-21204, FILED
BEFORE THE TRIAL COURT, RGIONAL [sic] TRIAL COURT,
BRANCH 53, ROSALES, PANGASINAN WAS THE PROPER
REMEDY.

II.

THE COMPLAINT STATES SUFFICIENT CAUSE OF ACTION.

III.

THE CASE FOR QUIETING OF TITLE HAS NOT PRESCRIBED.

IV.
AND THE RESPONDENT REPUBLIC OF THE PHILIPPINES HAS
NOT PERFECTED ITS TITLE TO THE LAND IN QUESTION.

In the main, it is petitioners’ submission that their complaint a

quo sufficiently states a cause of action because they are still the
owners of the subject parcel of land despite their failure to redeem it
within the 1-year redemption period. They premise their argument on
the Republic’s failure to secure the Certificate of Final Sale, execute
an Affidavit of Consolidation of Ownership and obtain a writ of
possession over the same property within ten (10) years from the
registration of the Certificate of Sale on 5 October 1982. Prescinding
therefrom, they thus argue that the Republic’s right over the property
in question has already prescribed or has been abandoned and
waived, citing, in support thereof, Article 1142 of the Civil Code. In
short, it is petitioners’ thesis that respondent Republic failed to perfect
its title.

On the other hand, it is respondent’s posture that its rights and

title as owner of the same property are already perfected by the
mere failure of petitioners and/or their predecessors-in-interest to
redeem the same within one (1) year from the registration/annotation
of the Sheriff’s Certificate of Sale on TCT No. T-21204, in accordance
with Section 33, Rule 39 of the 1997 Rules of Civil Procedure.

As we see it, the only question which commends itself for our
resolution is whether the trial court’s dismissal of petitioners’
complaint for Quieting of Title was proper. It thus behooves us to
determine if, in the first place, petitioners have a cause of action in
their complaint.

We rule for respondent Republic.

To begin with, it bears emphasis that an action for quieting of

title is essentially a common law remedy grounded on equity. As we
held in Baricuatro, Jr. vs. CA:[9]

Regarding the nature of the action filed before the trial court,
quieting of title is a common law remedy for the removal of any cloud
upon or doubt or uncertainty with respect to title to real property.
Originating in equity jurisprudence, its purpose is to secure ‘x x x an
adjudication that a claim of title to or an interest in property, adverse to
that of the complainant, is invalid, so that the complainant and those
claiming under him may be forever afterward free from any danger of
hostile claim.’ In an action for quieting of title, the competent court is
tasked to determine the respective rights of the complainant and other
claimants, ‘x x x not only to place things in their proper place, to make the
 one who has no rights to said immovable respect and not disturb the other,
but also for the benefit of both, so that he who has the right would see
every cloud of doubt over the property dissipated, and he could afterwards
without fear introduce the improvements he may desire, to use, and even to
abuse the property as he deems best xxx (Italics supplied).

Under Article 476 of the New Civil Code, the remedy may be
availed of only when, by reason of any instrument, record, claim,
encumbrance or proceeding, which appears valid but is, in fact,
invalid, ineffective, voidable or unenforceable, a cloud is thereby
casts on the complainant’s title to real property or any interest
therein. The codal provision reads:

Article 476. Whenever there is a cloud on title to real property or

any interest therein, by reason of any instrument, record, claim,
encumbrance or proceeding which is apparently valid or effective but is in
truth and in fact invalid, ineffective, voidable, or unenforceable, and may
be prejudicial to said title, an action may be brought to remove such cloud
or to quiet the title.

An action may also be brought to prevent a cloud from being cast

upon title to real property or any interest therein.

In turn, Article 477 of the same Code identifies the party who
may bring an action to quiet title, thus:

Article 477. The plaintiff must have legal or equitable title to, or
interest in the real property which is the subject-matter of the action. He
need not be in possession of said property.

It can thus be seen that for an action for quieting of title to

prosper, the plaintiff must first have a legal, or, at least, an equitable
title on the real property subject of the action and that the alleged
cloud on his title must be shown to be in fact invalid. So it is that in
Robles, et al. vs. CA,[10] we ruled:

It is essential for the plaintiff or complainant to have a legal title or an

equitable title to or interest in the real property which is the subject matter
of the action. Also, the deed, claim, encumbrance or proceeding that is
being alleged as a cloud on plaintiff’s title must be shown to be in fact
invalid or inoperative despite its prima facie appearance of validity or
legal efficacy.
 Verily, for an action to quiet title to prosper, two (2)
indispensable requisites must concur, namely: (1) the plaintiff or
complainant has a legal or an equitable title to or interest in the real
property subject of the action; and (2) the deed, claim, encumbrance
or proceeding claimed to be casting cloud on his title must be shown
to be in fact invalid or inoperative despite its prima facie appearance
of validity or legal efficacy.

Unfortunately, the foregoing requisites are wanting in this case.

To start with, petitioners base their claim of legal title not on the
strength of any independent writing in their favor but simply and
solely on respondent Republic’s failure to secure the Certificate of
Final Sale, execute an Affidavit of Consolidation of Ownership and
obtain a writ of possession over the property in dispute within ten (10)
years from the registration of the Certificate of Sale.

Petitioners’ reliance on the foregoing shortcomings or inactions

of respondent Republic cannot stand.

For one, it bears stressing that petitioners’ predecessors-in-

interest lost whatever right they had over land in question from the
very moment they failed to redeem it during the 1-year period of
redemption. Certainly, the Republic’s failure to execute the acts
referred to by the petitioners within ten (10) years from the
registration of the Certificate of Sale cannot, in any way, operate to
restore whatever rights petitioners’ predecessors-in-interest had over
the same. For sure, petitioners have yet to cite any provision of law
or rule of jurisprudence, and we are not aware of any, to the effect
that the failure of a buyer in a foreclosure sale to secure a Certificate
of Final Sale, execute an Affidavit of Consolidation of Ownership and
obtain a writ of possession over the property thus acquired, within ten
(10) years from the registration of the Certificate of Sale will operate
to bring ownership back to him whose property has been previously
foreclosed and sold. As correctly observed by the trial court, the
Republic’s failure to do anything within ten (10) years or more
following the registration of the Sheriff’s Certificate of Sale cannot
give rise to a presumption that it has thereby waived or abandoned its
right of ownership or that it has prescribed, “for prescription does not
lie against the government”, nor could it “be bound or estopped by the
negligence or mistakes of its officials and employees”.

Quite the contrary, Section 33,[11] Rule 39 of the 1997 Rules of

Civil Procedure explicitly provides that “[u]pon the expiration of the
right of redemption, the purchaser or redemptioner shall be
substituted to and acquire all the rights, title, interest and claim of the
judgment obligor to the property as of the time of the levy”.

Concededly, the 1997 Rules of Civil Procedure was yet

inexistent when the facts of this case transpired. Even then, the
application thereof to this case is justified by our pronouncement in
Lascano vs. Universal Steel Smelting Co., Inc., et al., [12] to wit:

Procedural laws are construed to be applicable to actions pending and

undetermined at the time of their passage, and are deemed retroactive in
that sense and to that extent. As a general rule, the retroactive application
of procedural laws cannot be considered violative of any personal rights
because no vested right may attach to nor arise therefrom.

Moreover, with the rule that the expiration of the 1-year

redemption period forecloses the obligor’s right to redeem and that
the sale thereby becomes absolute, the issuance thereafter of a final
deed of sale is at best a mere formality and mere confirmation of the
title that is already vested in the purchaser. As this Court has said in
Manuel vs. Philippine National Bank, et al.:[13]

Note must be taken of the fact that under the Rules of Court the expiration
of that one-year period forecloses the owner’s right to redeem, thus
making the sheriff’s sale absolute. The issuance thereafter of a final
deed of sale becomes a mere formality, an act merely confirmatory of
 the title that is already in the purchaser and constituting official
evidence of that fact. (Emphasis supplied)

With the reality that petitioners are not holders of any legal
title over the property subject of this case and are bereft of any
equitable claim thereon, the very first requisite of an action to quiet
title, i.e., that the plaintiff or complainant has a legal or an
equitable title to or interest in the real property subject matter of
the action, is miserably wanting in this case.

For another, and worse, petitioners never put in issue, as in fact

they admit in their pleadings, the validity of the Sheriff’s Certificate of
Sale duly registered on 5 October 1982. On this score, the second
requisite of an action to quiet title, namely, that the deed, claim,
encumbrance or proceeding alleged to cast cloud on a plaintiff's title
is in fact invalid or inoperative despite its prima facie appearance of
validity or legal efficacy, is likewise absent herein.

WHEREFORE, the instant petition is DENIED and the assailed

resolution and order of the trial court AFFIRMED.

Costs against petitioners.

SO ORDERED.

CANCIO C. GARCIA
Associate Justice

WE CONCUR:

ARTEMIO V. PANGANIBAN
Associate Justice
 Chairman

ANGELINA SANDOVAL-GUTIERREZ RENATO C. CORONA

Associate Justice Associate Justice

CONCHITA CARPIO MORALES

Associate Justice

ATTESTATION

I attest that the conclusions in the above decision were

reached in consultation before the case was assigned to the writer of
the opinion of the Court’s Division.

ARTEMIO V. PANGANIBAN
Associate Justice
Chairman, Third Division

CERTIFICATION

Pursuant to Article VIII, Section 13 of the Constitution, and the

Division Chairman's Attestation, it is hereby certified that the
conclusions in the above decision were reached in consultation
before the case was assigned to the writer of the opinion of the Court.

HILARIO G. DAVIDE, JR.

Chief Justice

[1]
Rollo, p. 46.
[2]
Rollo, p. 47.
[3]
Rollo, p. 51.
[4]
Rollo, pp. 26, et seq.
[5]
Rollo, pp. 34, et seq.
[6]
Rollo, pp. 56, et seq.
[7]
Rollo, pp. 58-65.
[8]
Rollo, pp. 70-71.
[9]
382 Phils. 15, 25 [2000].
[10]
384 Phils. 635, 647 [2000].
[11]
“SECTION 33. Deed and possession to be given at expiration of redemption period;
by whom executed or given. – If no redemption be made within one (1) year from the date of the
registration of the certificate of sale, the purchaser is entitled to a conveyance and possession of
the property; or, if so redeemed whenever sixty (60) days have elapsed and no other redemption
has been made, and notice thereof given, and the time for redemption has expired, the last
redemptioner is entitled to the conveyance and possession; but in all cases the judgment obligor
shall have the entire period of one (1) year from the date of the registration of sale to redeem the
property. The deed shall be executed by the officer making the sale or by his successor in office,
and in the latter case shall have the same validity as though the officer making the sale had
continued in office and executed it.
Upon the expiration of the right of redemption, the purchaser or redemptioner
shall be substituted to and acquire all the rights, title, interest and claim of the judgment
obligor to the property as of the time of the levy. The possession of the property shall be given
to the purchaser or last redemptioner by the same officer unless a third party is actually holding
the property adversely to the judgment obligor.” (Emphasis supplied).
[12]
431 SCRA 248, 253 [2004] citing San Luis vs. Court of Appeals, 365 SCRA 279, 285 [2001].
[13]
101 Phils. 968, 971 [1957].