G.R. No. L-53466 November 10, 1980 There being no redemption within the one-year period (sec.
There being no redemption within the one-year period (sec. 78, General Banking Law),
RURAL BANK OF OROQUIETA (MIS. OCC.), INC., petitioner,
vs.
COURT OF APPEALS, Eighth Division; JUDGE MELECIO A. GENATO Court of First
Instance of Misamis Occidental, Oroquieta Branch I; PROCOPIO SERRANO and
MARIA CUEME respondents.
AQUINO, J.:
This case is about the mortgagor's equity of redemption in case of judicial foreclosure of
a mortgage in favor of a rural bank.
In Civil Case No. 2988 of the Court of First Instance of Misamis Occidental, Oroquieta
City Branch I, entitled "Rural Bank of Oroquieta (Mis. Occ.), Inc. vs. Procopio Serrano
and Maria Cueme a case of foreclosure of mortgage, Judge Melecio A. Genato on July 3,
1974 rendered a decision, ordering the defendants to pay plaintiff bank within a period of
"not less than ninety (90) days nor more than one hundred (100) days from" the receipt
of the decision the loan of P1,500 with twelve percent interest per annum from January
16, 1972 plus ten percent of the principal as attorney's fees (p. 29, Rollo).
In case of nonpayment within that period, the trial court, in order to satisfy that obligation,
ordered the sheriff to sell at public auction the mortgaged lot, a parcel of coconut land
with an area of 2.8 hectares, covered by TCT No. T-1753, located at Sitio Petugo Barrio
Bato, Plaridel, Misamis Occidental and assessed at P3,433.86 (p. 29, Rollo).
That judgment became final and executory. The Serrano spouses did not pay their
mortgage debt. A writ of execution was issued. On January 13, 1975, the sheriff levied
upon the mortgaged lot and advertised its sale at public auction to satisfy the mortgage
obligation which, together with the sheriff's fees and costs, amounted to P2,223.60 on
January 28, 1975.
At the auction sale held on March 3, 1975, the mortgaged lot was sold to the bank as the
only bidder. The sheriff issued a certificate of sale dated March 4, 1975 (p. 34, Rollo).
the sheriff issued a final certificate of sale dated April 19, 1976 which was registered on
the following day.
On September 20, 1976, the bank sold the lot to Eufemia Mejos. TCT No. 6035 was
issued to her (pp. 47-48, Rollo).
On September 8, 1977, Judge Genato issued an order directing the issuance of a writ of
possession to the bank. The mortgagors or judgment debtors filed a motion for the
reconsideration of that order on the grounds that, because there was no judicial
confirmation of the action sale, they still have an equity of redemption and could still pay
the mortgage debt (alleged to be usurious) and that the auction sale was fraudulent and
irregular. They averred that the bank rejected their offer to redeem the mortgaged lot and
that the issuance of the writ of possession was premature.
Judge Genato granted the motion for reconsideration in his order of October 12,
1977 which contains these inconsistent or contradictory directives: "Let the execution of
judgment in this case be ordered and subsequently the writ of possession be accordingly
issued. The Rural Bank of Oroquieta is hereby ordered to accept payment of the loan
with interests." (p. 36, Record.)
On December 23, 1977, the bank filed a manifestation and motion wherein it revealed
that the land had already been sold to Eufemia Mejos and, therefore, its acceptance of
the redemption price amounting to P2,820.60 would not produce any legal effect (pp. 47-
48, Rollo).
The bank further disclosed that there is pending in the trial court a case for the
annulment of the foreclosure sale of the said lot and the release of the mortgage,
docketed as Civil Case No. 3265, which was instituted by the Serrano spouses, as
mortgagors, against the bank and the Mejos spouses. The bank prayed that it should not
be compelled to accept the proffered redemption price.
The trial court denied the motion. The bank filed a notice of appeal, deposited the appeal
bond of P120 and submitted a record on appeal. It specified in its notice of appeal that it
was appealing to the Court of Appeals from the trial court's order of October 12, 1977,
allowing the redemption.
The Serrano spouses filed a motion to dismiss the appeal on the ground that they had
already deposited with the clerk of court the redemption price of P2,830.
The trial court in its order of February 27, 1978 dismissed the appeal on the ground that
the order sought to be appealed is interlocutory or not appealable. The bank assailed
that order in the Court of Appeals by means of certiorari which was really a mandamus
action to compel the trial court to give due course to its appeal.
The Court of Appeals dismissed the petition. It sustained the trial court's position that the
order sought to be appealed is interlocutory because the trial court had not yet confirmed
the foreclosure sale (Rural Bank of Oroquieta [Mis. Occ.], Inc. vs. Judge Genato, CA-G.
R. No. SP-07756, October 26, 1979).
The bank appealed to this Court. The issue is whether the trial court and the Court of
Appeals erred in not giving due course to the bank's appeal.
We hold that the trial court and the Court of Appeals acted correctly in refusing to give
due course to the bank's appeal not only because the order sought to be appealed is in
interlocutory but also because in the present posture of the case it is imperative that the
trial court should consolidate the foreclosure case, Civil Case No. 2988, with the other
case, Civil Case No. 3265 filed by the Serrano spouses for the annulment of the
foreclosure sale and the subsequent sale of the mortgaged lot to the Mejos spouses.
Note that the latter case is also pending in the sala of respondent Judge.
The trial court erred in unreservedly allowing the Serrano spouses to redeem the
mortgaged lot without taking into account the supervening fact that the lot is now
registered in the name of Eufemia Mejos who is not a party in the foreclosure proceeding
and who is entitled to be heard. That complication cannot be summarily ignored.
At this stage, a decision cannot be rendered outright on the conflicting rights of the
Serrano spouses, the bank and the Mejos spouses with respect to the mortgaged lot.
The trial court should first try and resolve the issues arising out of the lack of judicial
confirmation of the foreclosure sale and the subsequent sale of the mortgaged lot to a
third person after the expiration of the one-year period for exercising the right of
redemption. We can only state some guidelines in resolving those issues.
After the execution of a real estate mortgage, the mortgagor has an equity of redemption
exercisable within the period stipulated in the mortgage deed. In case of judicial
foreclosure, that equity of redemption subsists after the sale and before it is confirmed by
the court (Raymundo vs. Sunico, 25 Phil. 365; Benedicto vs. Yulo, 26 Phil. 160; Grimalt
vs. Velasquez and Sy Quio 36 Phil. 936; Sun Life Assurance Co. vs. Gonzales Diez, 52
Phil. 271; La Urbana vs. Belando 54 Phil. 930; Villar vs. Javier de Paderanga 97 Phil.
604; Piano vs. Cayanong 117 Phil. 415).
However, in case of a judicial foreclosure of a mortgage in favor of a banking institution,
section 78 of the General Banking Law grants the mortgagor a right of redemption which
may be exercised within one year from the sale.
Under section 3, Rule 68 of the Rules of Court, it is the confirmation by the court of the
auction sale that would divest the Serrano spouses of their rights to the mortgaged lot
and that would vest such rights in the bank as purchaser at the auction sale.
The clause "subject to such rights of redemption as may be allowed by law," found in the
last part of section 3, has no application to this case because the mortgagor did not
exercise his right of redemption under section 78 of the General BanKing Law.
What applies to this case is the settled rule that "a foreclosure sale is not
complete until it is confirmed, and before said confirmation, the court retains control of
the proceedings by exercising a sound discretion in regard to it, either granting or
withholding confirmation as the rights and interests of the parties and the ends of justice
may require." (Salazar vs. Tor res, 108 Phil. 209, 214-5).
"In order that a foreclosure sale may be validly confirmed by the court, it is necessary
that a hearing be given the interested parties, at which they may have an opportunity to
show cause why the sale should not be confirmed." (Raymundo vs. Sunico, 25 Phil.
365).
"The acceptance of a bid at the foreclosure sale confers no title on the purchaser. Until
the sale has been validly confirmed by the court, he is nothing more than a preferred
bidder. Title vests only when the sale has been validly confirmed by the court."
(Raymundo vs. Sunico, 25 Phil. 365).
The confirmation retroacts to the date of the sale (Villar vs. Javier de Paderanga 97 Phil.
604, citing Binalbagan Estate, Inc. vs. Gatuslao, 74 Phil. 128).
A hearing should be held for the confirmation of the sale. The mortgagor should be
notified of that hearing. Lack of notice vitiates the confirmation of the sale. The mortgagor
may still redeem the mortgaged lot after the rendition of the order confirming the sale
which is void for lack of hearing and notice to the mortgagor. Grimalt vs. Velasquez and
Sy Quio 36 Phil. 936; Raymundo vs. Sunico, 25 Phil. 365).
Notice and hearing of a motion for confirmation of sale are essential to the validity of the
order of confirmation, not only to enable the interested parties to resist the motion but
also to inform them of the time when their right of redemption is cut off (Tiglao vs.
Botones, 90 Phil. 275, 279).
An order of confirmation, void for lack of notice and hearing, may be set aside anytime
(Tiglao vs. Botones, supra).
It is equally settled that after the foreclosure sale but before its confirmation, the court
may grant the judgment debtor or mortgagor an opportunity to pay the proceeds of the
sale and thus refrain from confirming it (Anderson and De Mesa vs. Reyes and Gutierrez
Saenz 54 Phil. 944, citing Grit vs. Velasquez and Sy Quio 36 Phil. 936 and La Urbana vs.
Belan do, 54 Phil. 930).
If after the foreclosure sale and before the confirmation thereof, the mortgagee, as
purchaser at the auction sale, sold the mortgaged property to another person, that
subsequent sale does not render the foreclosure sale more effective. That subsequent
sale does not prevent the trial court from granting the mortgagor a period within which to
redeem the mortgaged lot by paying the judgment debt and the expenses of the sale and
costs (Anderson and De Mesa vs. Reyes and Gutierrez Saenz, 54 Phil. 944).
"Whatever may have been the old rule by all of the modern authorities, it is the policy of
the courts to assist rather than to defeat the right of redemption" (De Castro vs. Olondriz
and Escudero 50 Phil. 725, 732).
After the confirmation of the sale, made after hearing and with due notice to the
mortgagor, the latter cannot redeem anymore the mortgaged lot (unless the mortgagee is
a banking institution) (Piano vs. Cayanong 117 Phil. 415).
It is after the confirmation of the sale that the mortgagor loses all interest in the
mortgaged property (Clemente vs. H. E. Heacock Co., 106 Phil. 1163; Clemente vs.
Court of Appeals, 109 Phil. 798; Clemente vs. H.E. Heacock Co., L-23212, May 18,
1967, 20 SCRA 115).
In the instant case, where the foreclosure sale has not yet been confirmed but the
statutory one-year period for redemption tion expired and the mortgaged lot was sold by
the mortgagee (as the only bidder at the auction sale) to a third person, the trial court
should give the purchaser a chance to be heard before requiring the mortgagee-bank to
accept the redemption price tendered by the mortgagors.
WHEREFORE, while we affirm the decision of the Court of Appeals in not giving due
course to petitioner's appeal from the trial court's aforementioned order of October 12,
1977, at the same time the said order is reversed and set aside for being premature.
The trial court is directed to consolidate the foreclosure case, Civil Case No. 2988, with
Civil Case No. 3265 for the annulment of the foreclosure sale and the sale of the
mortgaged lot to Eufemia Mejos and to proceed in accordance with the guidelines laid
down in this decision. No cos `ts.
SO ORDERED.
G.R. No. 149750 June 16, 2003
AURORA ALCANTARA-DAUS, Petitioner,
vs.
Spouses HERMOSO and SOCORRO DE LEON, Respondents.
DECISION
PANGANIBAN, J.:
While a contract of sale is perfected by mere consent, ownership of the thing sold is
acquired only upon its delivery to the buyer. Upon the perfection of the sale, the seller
assumes the obligation to transfer ownership and to deliver the thing sold, but the real
right of ownership is transferred only "by tradition" or delivery thereof to the buyer.
The Case
Before us is a Petition for Review under Rule 45 of the Rules of Court, seeking to set
1
aside the February 9, 2001 Decision and the August 31, 2001 Resolution of the Court of
Appeals (CA) in CA-GR CV No. 47587. The dispositive portion of the assailed Decision
2
reads as follows:
"WHEREFORE, premises considered, the decision of the trial court is hereby
REVERSED, and judgment rendered:
1. Declaring null and void and of no effect, the [D]eed of [A]bsolute [S]ale dated
December 6, 1975, the [D]eed of [E]xtra-judicial [P]artition and [Q]uitclaim dated July 1,
1985, and T.C.T. No. T-31262;
2. Declaring T.C.T. No. 42238 as valid and binding;
3. Eliminating the award of ₱5,000.00 each to be paid to defendants-appellees." 3
The assailed Resolution denied petitioner’s Motion for Reconsideration.
4 Decision in favor of herein petitioner. It ruled that respondents’ claim was barred by
The Facts
The antecedents of the case were summarized by the Regional Trial Court (RTC) and
adopted by the CA as follows:
"This is a [C]omplaint for annulment of documents and title, ownership, possession,
injunction, preliminary injunction, restraining order and damages.
"[Respondents] alleged in their [C]omplaint that they are the owners of a parcel of land
hereunder described as follows, to wit:
‘A parcel of land (Lot No. 4786 of the Cadastral Survey of San Manuel) situated in the
Municipality of San Manuel, Bounded on the NW., by Lot No. 4785; and on the SE., by
Lot Nos. 11094 & 11096; containing an area of Four Thousand Two Hundred Twelve
(4,212) sq. m., more or less. Covered by Original Certificate of Title No. 22134 of the
Land Records of Pangasinan.’
which [Respondent] Hermoso de Leon inherited from his father Marcelino de Leon by
virtue of a [D]eed of [E]xtra-judicial [P]artition. Sometime in the early 1960s,
[respondents] engaged the services of the late Atty. Florencio Juan to take care of the
documents of the properties of his parents. Atty. Juan let them sign voluminous
documents. After the death of Atty. Juan, some documents surfaced and most revealed
that their properties had been conveyed by sale or quitclaim to [Respondent] Hermoso’s
brothers and sisters, to Atty. Juan and his sisters, when in truth and in fact, no such
conveyances were ever intended by them. His signature in the [D]eed of [E]xtra-judicial
[P]artition with [Q]uitclaim made in favor of x x x Rodolfo de Leon was forged. They
discovered that the land in question was sold by x x x Rodolfo de Leon to [Petitioner]
Aurora Alcantara. They demanded annulment of the document and reconveyance but
defendants refused x x x.
xxx xxx xxx
"[Petitioner] Aurora Alcantara-Daus [averred] that she bought the land in question in good
faith and for value on December 6, 1975. [She] has been in continuous, public, peaceful,
open possession over the same and has been appropriating the produce thereof without
objection from anyone." 5
On August 23, 1994, the RTC (Branch 48) of Urdaneta, Pangasinan rendered its6
7
laches, because more than 18 years had passed since the land was sold. It further ruled
that since it was a notarial document, the Deed of Extrajudicial Partition in favor of
Rodolfo de Leon was presumptively authentic.
Ruling of the Court of Appeals
In reversing the RTC, the CA held that laches did not bar respondents from pursuing
their claim. Notwithstanding the delay, laches is a doctrine in equity and may not be
1âwphi1
invoked to resist the enforcement of a legal right.
The appellate court also held that since Rodolfo de Leon was not the owner of the land
at the time of the sale, he could not transfer any land rights to petitioner. It further
declared that the signature of Hermoso de Leon on the Deed of Extrajudicial Partition
and Quitclaim -- upon which petitioner bases her claim -- was a forgery. It added that
under the above circumstances, petitioner could not be said to be a buyer in good faith.
1âwphi1
Hence, this Petition. 8
The Issues
Petitioner raises the following issues for our consideration:
"1. Whether or not the Deed of Absolute Sale dated December 6, 1975 executed
by Rodolfo de Leon (deceased) over the land in question in favor of petitioner
was perfected and binding upon the parties therein?
"2. Whether or not the evidentiary weight of the Deed of Extrajudicial Partition
with Quitclaim, executed by [R]espondent Hermoso de Leon, Perlita de Leon and
Carlota de Leon in favor of Rodolfo de Leon was overcome by more than [a]
preponderance of evidence of respondents?
 "3. Whether or not the possession of petitioner including her predecessor-in-
interest Rodolfo de Leon over the land in question was in good faith?
"4. And whether or not the instant case initiated and filed by respondents on
February 24, 1993 before the trial court has prescribed and respondents are
guilty of laches?"
9
The Court’s Ruling
Second Issue:
Authenticity of the Extrajudicial Partition
Petitioner contends that the Extrajudicial Partition and Quitclaim is authentic, because it
was notarized and executed in accordance with law. She claims that there is no clear
and convincing evidence to set aside the presumption of regularity in the issuance of
such public document. We disagree.

The Petition has no merit. As a general rule, the due execution and authenticity of a document must be reasonably
established before it may be admitted in evidence. Notarial documents, however, may
18

First Issue: be presented in evidence without further proof of their authenticity, since the certificate of
acknowledgment is prima facie evidence of the execution of the instrument or document
Validity of the Deed of Absolute Sale involved. To contradict facts in a notarial document and the presumption of regularity in
19

its favor, the evidence must be clear, convincing and more than merely preponderant. 20

Petitioner argues that, having been perfected, the Contract of Sale executed on
December 6, 1975 was thus binding upon the parties thereto.
The CA ruled that the signature of Hermoso de Leon on the Extrajudicial Partition and
Quitclaim was forged. However, this factual finding is in conflict with that of the RTC.
While normally this Court does not review factual issues, this rule does not apply when
21

A contract of sale is consensual. It is perfected by mere consent, upon a meeting of the

10

there is a conflict between the holdings of the CA and those of the trial court, as in the
22

minds on the offer and the acceptance thereof based on subject matter, price and terms
11

present case.
of payment. At this stage, the seller’s ownership of the thing sold is not an element in the
12

perfection of the contract of sale.

After poring over the records, we find no reason to reverse the factual finding of the
appellate court. A comparison of the genuine signatures of Hermoso de Leon with his 23

The contract, however, creates an obligation on the part of the seller to transfer
purported signature on the Deed of Extrajudicial Partition with Quitclaim will readily
24

ownership and to deliver the subject matter of the contract. It is during the delivery that
13

reveal that the latter is a forgery. As aptly held by the CA, such variance cannot be
the law requires the seller to have the right to transfer ownership of the thing sold. In
14

attributed to the age or the mechanical acts of the person signing. 25

general, a perfected contract of sale cannot be challenged on the ground of the seller’s
non-ownership of the thing sold at the time of the perfection of the contract. 15

Without the corroborative testimony of the attesting witnesses, the lone account of the
notary regarding the due execution of the Deed is insufficient to sustain the authenticity
Further, even after the contract of sale has been perfected between the parties, its
of this document. He can hardly be expected to dispute the authenticity of the very Deed
consummation by delivery is yet another matter. It is through tradition or delivery that the
he notarized. For this reason, his testimony was -- as it should be --minutely scrutinized
26

buyer acquires the real right of ownership over the thing sold. 16

by the appellate court, and was found wanting.

Undisputed is the fact that at the time of the sale, Rodolfo de Leon was not the owner of
Third Issue:
the land he delivered to petitioner. Thus, the consummation of the contract and the
consequent transfer of ownership would depend on whether he subsequently acquired
ownership of the land in accordance with Article 1434 of the Civil Code. Therefore, we
17 Possession in Good Faith
need to resolve the issue of the authenticity and the due execution of the Extrajudicial
Partition and Quitclaim in his favor. Petitioner claims that her possession of the land is in good faith and that, consequently,
she has acquired ownership thereof by virtue of prescription. We are not persuaded.
It is well-settled that no title to registered land in derogation of that of the registered
owner shall be acquired by prescription or adverse possession. Neither can prescription
27

be allowed against the hereditary successors of the registered owner, because they
merely step into the shoes of the decedent and are merely the continuation of the
personality of their predecessor in interest. Consequently, since a certificate of
28

registration covers it, the disputed land cannot be acquired by prescription regardless of
29

petitioner’s good faith.

Fourth Issue:

Prescription of Action and Laches

Petitioner also argues that the right to recover ownership has prescribed, and that
respondents are guilty of laches. Again, we disagree.

Article 1141 of the New Civil Code provides that real actions over immovable properties
prescribe after thirty years. This period for filing an action is interrupted when a complaint
is filed in court. Rodolfo de Leon alleged that the land had been allocated to him by his
30

brother Hermoso de Leon in March 1963, but that the Deed of Extrajudicial Partition
31

assigning the contested land to the latter was executed only on September 16, 1963. In 32

any case, the Complaint to recover the land from petitioner was filed on February 24,
1993, which was within the 30-year prescriptive period.
33

On the claim of laches, we find no reason to reverse the ruling of the CA. Laches is
based upon equity and the public policy of discouraging stale claims. Since laches is an
34

equitable doctrine, its application is controlled by equitable considerations. It cannot be

35

used to defeat justice or to perpetuate fraud and injustice. Thus, the assertion of laches
36

to thwart the claim of respondents is foreclosed, because the Deed upon which petitioner
bases her claim is a forgery.

WHEREFORE, the Petition is DENIED and the assailed Decision AFFIRMED. Costs
against petitioner.

SO ORDERED.