GR 147074

Spouses RODRIGO PADERES and SONIA PADERES , Petitioners,

G. R. No. 147075
Spouses ISABELO BERGARDO and JUANA HERMINIA BERGARDO, Petitioners,
Vs.
The Hon. COURT OF APPEALS, Hon. CARLOTA P. VALENZUELA

Facts: On September 14, 1982, Manila International Construction Corporation (MICC) executed
a real estate mortgage over 21 registered parcels of land including the improvements thereon in
favor of Banco Filipino Savings and Mortgage Bank (Banco Filipino) in order to secure a loan of
P1,885,000.00. The mortgage was registered with the Registry of Deeds of Pasay City and
annotated on the corresponding transfer certificates of title (TCTs) covering the properties. These
includes two lots, one with an area of 264 square meters, and the other with an area of 263
covered by TCT Nos. 61062 and 61078, respectively.
Subsequently or in August 1983, MICC sold the lot covered by TCT No. 61078, together
with the house to the petitioners in the first case, the Paderes spouses. And on January 9, 1984,
MICC sold the house built on the lot covered by TCT No. 61062 to the petitioners in the second
case, the Bergado spouses. Neither sale was registered.
MICC failed to settle its obligations. Banco Filipino filed a verified Petition for the
extrajudicial foreclosure of MICCs mortgage. Banco Filipino was declared as the highest bidder.
A Certificate of Sale was issued in its favor which was registered with the Registry of Deeds and
annotated on the corresponding TCTs covering the mortgaged properties on July 29, 1985.
No redemption of the foreclosed mortgage having been made within the reglementary
period, Carlota P. Valenzuela, the then Liquidator of Banco Filipino, filed on October 16, 1987
an ex parte Petition for the issuance of a Writ of Possession of the foreclosed properties with the
Regional Trial Court (RTC) of Makati. The petition was granted. Copies of Writ of Possession
together with a notice addressed to MICC ad/or all persons claiming rights under them to
voluntarily vacate the premises within 7 days from receipt were served on petitioners.
Instead of vacating the two lots, petitioners filed separate petitions before the Court of
Appeals assailing the validity of the Writ of Possession. CA dismissed the consolidated petitions
for lack of merit and upholding the validity of Writ of Possession. Motion for reconsideration
was filed but was denied. Hence, this petition.

Issue:
1. Whether or not the right of the petitioners is superior to the right of the Bank.
2. Whether or not petitioners are entitled to redeem the properties.
3. Whether or not the properties should be included in the auction sale of the mortgaged
properties.
4. Whether or not the writ of possession is null and void.
Held:
1. That petitioners purchased their properties from MICC in good faith is of no moment.
The purchases took place after MICCs mortgage to Banco Filipino had been registered in
accordance with Article 2125 of the Civil Code and the provisions of P.D. 1529 (PROPERTY
REGISTRY DECREE). As such, under Articles 1312 and 2126 of the Civil Code, a real right or
lien in favor of Banco Filipino had already been established, subsisting over the properties until
the discharge of the principal obligation, whoever the possessor(s) of the land might be.
Article 2126: Sale or transfer cannot affect or release the mortgage. A purchaser is
necessarily bound to acknowledge and respect the encumbrance to which is subjected the
purchased thing and which is at the disposal of the creditor in order that he, under the
terms of the contract, may recover the amount of his credit therefrom. For, a recorded real
estate mortgage is a right in rem, a lien on the property whoever its owner may be . Because
the personality of the owner is disregarded; the mortgage subsists notwithstanding changes
of ownership; the last transferee is just as much of a debtor as the first one; and this,
independent of whether the transferee knows or not the person of the mortgagee. So it is,
that a mortgage lien is inseperable from the property mortgaged. All subsequent
purchasers thereof must respect the mortgage, whether the transfer to them be with or
without the consent of the mortgagee. For, the mortgage, until discharge, follows the
property.
As transferees of mortgagor MICC, petitioners merely stepped into its shoes and are
necessarily bound to acknowledge and respect the mortgage it had earlier executed in favor of
Banco Filipino.

2. The debtor in extra-judicial foreclosures under Act No. 3135, or his successor-in-interest,
has, one year from the date of registration of the Certificate of Sale with the Registry of Deeds, a
right to redeem the foreclosed mortgage.
The letters dated October 17, 1996 and November 4, 1996, signed by petitioners counsel,
while ostensibly proposing to redeem the foreclosed properties and requesting Banco Filipino to
suggest a price for their repurchase, made it clear that any proposal by the bank would be subject
to further action on the part of petitioners.
The letter dated October 25, 1996 signed by Luz Dacasin, Assistant Vice-President of
Banco Filipino, merely invited petitioners to engage in further negotiations and does not contain
a recognition of petitioners claimed right of redemption or a definite offer to sell the subject
properties back to them.
Petitioners emphasize that in item no. 3 of their letter dated November 8, 1996 they
committed to subject the properties (house and lot) to a real-estate mortgage with the bank so
that the amount to be loaned will be used as payment of the properties to be redeemed. It is clear
from item no. 1 of the same letter, however, that petitioners did not accept Banco Filipinos
valuation of the properties at P7,500.00 per square meter and intended to have the amount.
Moreover, while purporting to be a memorandum of the matters taken up in the
conference between petitioners and Banco Filipino Vice-President Dacasin, petitioners letter of
November 8, 1996 does not contain the concurrence of Ms. Dacasin or any other authorized
agent of Banco Filipino. Where the alleged contract document was signed by only one party and
the record shows that the other party did not execute or sign the same, there is no perfected
contract.
Therefore there is no meeting of the minds. There is no redemption that happened.
3. The provision of Article 448 of the Civil Code, cited by petitioners, which pertain to
those who, in good faith, mistakenly build, plant or sow on the land of another, has no
application to the case at bar.
Being improvements on the subject properties constructed by mortgagor MICC, there is
no question that they were also covered by MICCs real estate mortgage following the terms of its
contract with Banco Filipino and Article 2127 of the Civil Code:
Art. 2127. The mortgage extends to the natural accessions, to the
improvements, growing fruits, and the rents or income not yet received when the obligation
becomes due, and to the amount of the indemnity granted or owing to the proprietor from the
insurers of the property mortgaged, or in virtue of expropriation for public use, with the
declarations, amplifications and limitations established by law, whether the estate remains in
the possession of the mortgagor, or it passes into the hands of a third person.
The early case of Cu Unjieng e Hijos v. Mabalacat Sugar Co. is illustrative. In that case,
this Court held:
. . . (1) That a mortgage constituted on a sugar central includes not only the land on
which it is built but also the buildings, machinery, and accessories installed at the time the
mortgage was constituted as well as all the buildings, machinery and accessories belonging to
the mortgagor, installed after the constitution thereof.

4. The Court also ruled that the provision in the Rules of Court to the effect that
judgment may be enforced within five years by motion, and after five years but within ten
years by an action (Section 6, Rule 39) refers to civil actions and is not applicable to special
proceedings, such as land registration cases. 
In Manlapas and Tolentino vs. Lorente,The Court ruled that the right of the applicant
or a subsequent purchaser to ask for the issuance of a writ of possession of the land never
prescribes.
The established doctrine that the issuance of a writ of possession is a ministerial function
whereby the issuing court exercises neither discretion nor judgment bears reiterating. The writ
issues as a matter of course upon the filing of the proper motion and, if filed before the lapse of
the redemption period, the approval of the corresponding bond.
Petitioners, however, are not without remedy. As reflected in the challenged Court of
Appeals decision, under Section 8 of Act No. 3135, as amended, petitioners, as successors-in-
interest of mortgagor MICC, have 30 days from the time Banco Filipino is given possession of
the subject properties to question the validity of the auction sale under any of the two grounds
therein stated by filing a petition to set aside the same and cancel the writ of possession.
The petition is hereby DENIED.