Paderes v. Court of Appeals
REITERATIONFacts
The Antecedents: Manila International Construction Corporation (MICC) executed a real estate mortgage in favor of Banco Filipino Savings and Mortgage Bank (Banco Filipino) to secure a loan. Subsequently, MICC sold two of the mortgaged lots to the petitioners, the Spouses Paderes and the Spouses Bergado, without registering these sales. Due to MICC's failure to settle its obligations, Banco Filipino foreclosed the mortgage and was the highest bidder at the auction sale. After the redemption period expired without redemption, Banco Filipino, through its liquidator, sought and obtained a writ of possession from the Regional Trial Court (RTC). Procedural History: Following the issuance of the writ of possession by the RTC, notices were served on the petitioners to vacate the premises. Instead of vacating, the petitioners filed separate petitions before the Court of Appeals (CA), which were later consolidated. The CA dismissed these petitions, upholding the validity of the writ of possession. The petitioners then filed a motion for reconsideration, which was denied by the CA. This led to the present petition before the Supreme Court. The Petition: The petitioners, Spouses Paderes and Spouses Bergado, seek reversal of the CA's decision and resolution through a petition for review on certiorari under Rule 45 of the Rules of Court. They argue that as good faith purchasers, their rights are superior to Banco Filipino's, that they are entitled to redeem the properties, that their houses should not have been included in the auction sale, that they are entitled to benefits under Article 448 of the Civil Code as builders in good faith, and that the writ of possession had lost its validity and efficacy due to the delay in its execution. They also contend that a binding agreement for repurchase was reached with the bank.
Issue(s)
Whether petitioners, as purchasers of the mortgaged properties after registration of the mortgage, have rights superior to the mortgagee. Whether a binding agreement for repurchase was reached between petitioners and Banco Filipino. Whether the houses constructed on the mortgaged lots should have been excluded from the auction sale. Whether the writ of possession issued by the RTC had lost its validity and efficacy due to the lapse of time.
Ruling
The petition is denied. The Court of Appeals did not err in dismissing the consolidated petitions and upholding the validity of the Writ of Possession.
Ratio Decidendi
On the issue of whether petitioners, as purchasers of the mortgaged properties after registration of the mortgage, have rights superior to the mortgagee: The Court held that the petitioners' good faith in purchasing the properties from MICC is of no moment. The mortgage was registered prior to their purchase, establishing a real right or lien in favor of Banco Filipino under Articles 1312 and 2126 of the Civil Code. This lien subsisted over the properties regardless of the possessor until the obligation was discharged. As transferees of the mortgagor, petitioners merely stepped into its shoes and were bound by the mortgage. The Court cited Philippine National Bank v. Mallorca and Roxas v. Buan to emphasize that a recorded real estate mortgage is a right in rem that follows the property, and subsequent purchasers are necessarily bound to acknowledge and respect the encumbrance. Therefore, their claim of superior rights was rejected. On the issue of whether a binding agreement for repurchase was reached between petitioners and Banco Filipino: The Court found no perfected contract. Under Article 1318 of the Civil Code, a contract requires consent, object, and cause. Consent is manifested by the meeting of offer and acceptance. The correspondence between petitioners and Banco Filipino did not demonstrate a definite offer and an absolute acceptance. Petitioners' letters indicated a desire to redeem and requested a valuation, but also stated that any appraised value would not be construed as a committed liability, implying a need for further negotiation. Banco Filipino's response was merely an invitation to discuss. Crucially, the letter of November 8, 1996, purportedly summarizing a conference, was signed only by petitioners and did not show concurrence from Banco Filipino, thus lacking mutual consent. The Court of Appeals' conclusion that "nothing concrete came out of the meeting" was upheld. On the issue of whether the houses constructed on the mortgaged lots should have been excluded from the auction sale: The Court ruled that Article 448 of the Civil Code, concerning builders in good faith on another's land, is inapplicable. The houses were constructed by the mortgagor, MICC, and were therefore improvements on the mortgaged properties. Under Article 2127 of the Civil Code, a mortgage extends to improvements. The Court cited Cu Unjieng e Hijos v. Mabalacat Sugar Co., which held that a mortgage on a sugar central includes buildings and accessories installed, even those acquired after the mortgage's constitution. Thus, the houses were validly covered by the real estate mortgage and the subsequent foreclosure sale. On the issue of whether the writ of possession issued by the RTC had lost its validity and efficacy due to the lapse of time: The Court held that the petitioners' argument based on Section 6, Rule 39 of the Rules of Court (execution by motion within five years) is inapplicable to special proceedings like the issuance of a writ of possession in extrajudicial foreclosures. Citing Rodil v. Benedicto and Sta. Ana v. Menla, the Court reiterated the doctrine that the right of an applicant or subsequent purchaser to ask for the issuance of a writ of possession never prescribes. The issuance of a writ of possession is a ministerial duty of the court, and it does not lose its validity due to the passage of time. The Court noted that petitioners still had a remedy under Section 8 of Act No. 3135 to question the validity of the auction sale within 30 days from the time Banco Filipino is given possession.
Main Doctrine
Purchasers of mortgaged property after the mortgage has been registered are successors-in-interest bound by the mortgage and subsequent foreclosure, and their right to redeem is limited to the period prescribed by law. A writ of possession following a valid extrajudicial foreclosure sale is a ministerial duty of the court and does not prescribe.