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DEVELOPMENT BANK OF
THE Petitioner, |
G.R. No. 163827
Present: |
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- versus - |
Chairperson, LEONARDO-DE CASTRO, BERSAMIN, VILLARAMA, JR., and SERENO,* JJ.
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HON. SILVERIO Q.
CASTILLO and CRISTINA Respondents. |
Promulgated: August 17, 2011 |
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VILLARAMA, JR., J.:
Before us is a petition for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure, as amended, seeking to set aside the July 21, 2003 Decision[1] of the Court of Appeals (CA) in CA-G.R. SP No. 53825 dismissing petitioners petition for certiorari.
The antecedents follow:
Corazon Zarate Romero and his brother Gonzalo Zarate
co-owned a property covered by Transfer Certificate of Title (TCT) No. 10070[2]
of the Register of Deeds of Dagupan City.
The subject property, located in
It appears that sometime in 1975, Corazon and Gonzalo
obtained a loan from petitioner Development Bank of the Philippines (DBP). As collateral, they executed a real estate
mortgage[3]
over the subject property in favor of DBP.
On the alleged failure of the two borrowers to pay their amortizations,
DBP foreclosed the real estate mortgage on
In March 1993, when Corazon passed away, her sole heir, her
daughter respondent Cristina Trinidad Zarate Romero, asserted ownership over
the subject property to the extent of one-half thereof. However, respondent discovered that the
property was already registered as early as
Respondent filed before the Regional Trial Court (RTC) of
The RTC, after hearing, issued on
It appearing that plaintiff Cristina Trinidad Romero y
Zarate is the sole heir of the late Maria Corazon Zarate Romero[,] co-owner of
the pro[-]indiviso of the property covered by TCT No. 10070 which at present
is carried in TCT No.
SO ORDERED.[7]
DBP moved to lift the TRO arguing that it violates Section 2[8] of Presidential Decree (P.D.) No. 385[9] which prohibits the issuance of a restraining order, temporary or permanent, against government financing institutions like DBP to enjoin any action taken pursuant to the mandatory foreclosure clause of the decree.[10]
On
To the honest evaluation of this Court what is
unrestrainable is the right of 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.
x x x x
To allay the
fears of the plaintiff and to avoid any irreparable damage that may arise while
the issues involved in the above case are still being resolved and determined
by the Court in the light of the evidence so f[a]r presented, [considering
that] there is a tendency on the part of the Development Bank of the
Philippines of continuing the acts complained of (auction sale/Public bidding)
and considering further [that] there [should] be no advantage given to one [party]
to the prejudice of the other while this case is still pending in Court, it is
hereby ordered that a WRIT of Preliminary Injunction be issued against
defendant Development Bank of the Philippines from conducting any auction sale
of the property involved in the above case (formerly covered by TCT No. 10070
and at [present] covered by TCT No. 54142), upon posting of a BOND by the plaintiff in the amount of
P3 Million within five (5) days from receipt of this Order.[12]
On even date, DBP moved to reconsider[13] the December 14, 1998 Order and at the same time sought the dismissal of respondents complaint on the sole ground that the same states no cause of action.[14]
On
On
On
On
On
(1)
TRO dated
(2)
Order dated
(3)
Order dated
(4)
Order dated
In its assailed decision, the CA dismissed the petition on procedural grounds. It held that the petition questioning the first three orders was filed late as the petition should have been filed within 60 days from receipt of the assailed orders. The CA noted that as regards the third order, DBP was notified of the denial of its motion for reconsideration of the December 14, 1998 Order on March 18, 1999 and thus only had until May 17, 1999 to question the same. The CA further stated that DBPs subsequent filing of its Answer to the complaint rendered its motion to dismiss moot and academic.
Hence, the present appeal.
DBP raises the following issues for this Courts consideration:
I. WHETHER
THE COURT OF APPEALS GRAVELY ERRED IN AFFIRMING THE ORDER OF THE COURT A
QUO DENYING DBPS MOTION TO DISMISS.
II. WHETHER
THE COURT OF APPEALS GRAVELY ERRED IN AFFIRMING THE ORDER OF THE COURT A
QUO ISSUING THE TEMPORARY RESTRAINING ORDER AND THE PRELIMINARY
INJUNCTION AGAINST PETITIONER DBP.
III. WHETHER
THE RULES OF PROCEDURE [SHOULD NOT] BE APPLIED IN A VERY RIGID AND TECHNICAL
SENSE SO AS NOT TO FRUSTRATE THE PROMOTION OF SUBSTANTIAL JUSTICE.[22]
DBP insists that it is evident from the face of the complaint that respondent failed to state a cause of action. DBP contends that respondents allegation of conspiracy between DBP and Gonzalo is bare and has no factual basis to stand on. Further, DBP claims that respondent has no legal right over the subject property as she did not inherit the same in the first place. At the time of death of respondents mother, the property was not anymore owned by the latter and therefore not part of her estate. Thus, respondent has no legal right over the property and has no cause of action against DBP. And because she had no right to the property, the issuance of the TRO and injunctive writ were likewise improper. DBP also points to the following provisions of P.D. No. 385 that were allegedly violated with the issuance of the TRO and injunctive writ:
Section
1. It shall be mandatory for government
financial institutions, after the lapse of sixty (60) days from the issuance of
this Decree, to foreclose the collaterals and/or securities for any loan,
credit, accommodation, and/or guarantees granted by them whenever the
arrearages on such account, including accrued interest and other charges,
amount to at least twenty percent (20%) of the total outstanding obligations, including
interest and other charges, as appearing in the books of account and/or related
records of the financial institution concerned.
This shall be without prejudice to the exercise by the government
financial institutions of such rights and/or remedies available to them under
their respective contracts with their debtors, including the right to foreclose
on loans, credits, accommodations and/or guarantees on which the arrearages are
less than twenty percent (20%).
Sec. 2. No restraining order, temporary or permanent
injunction shall be issued by the court against any government financial
institution in any action taken by such institution in compliance with the
mandatory foreclosure provided in Section 1 hereof, whether such restraining
order, temporary or permanent injunction is sought by the borrower(s) or any
third party or parties, except after due hearing in which it is established by
the borrower and admitted by the government financial institution concerned
that twenty percent (20%) of the outstanding arrearages has been paid after the
filing of foreclosure proceedings.
x x x x
Respondent, for her part, counters that the CA was correct in dismissing the petition for certiorari for having been filed beyond the sixty (60)-day reglementary period. Also, respondent contends that the provisions of P.D. No. 385 relating to the proscription against the issuance of injunctive writs enjoining foreclosure sales are not applicable in the instant case. She points out that what the RTC enjoined is not an auction sale arising from the foreclosure of mortgage as the subject property had long been foreclosed and title thereto consolidated in the name of DBP. Rather, what the RTC enjoined was DBPs sale of the subject property through ordinary public bidding which is not within the ambit of P.D. No. 385.
The petition should be denied.
As correctly ruled by the CA, the petition for certiorari
assailing the orders pertaining to the grant of the TRO and the writ of
injunction were filed out of time.
Notice of the issuance of the TRO was received by DBP on the same day it
was granted,
As to DBPs motion to dismiss the complaint, we agree with the RTC and CA that the same should be denied, but not for the reason cited by said courts that it has been rendered moot and academic by DBPs filing of its answer but because the same lacks merit. Contrary to DBPs submission, a perusal of the allegations of the complaint clearly reveals respondents cause of action against DBP. The complaint states,
x x x x
1.1
Plaintiff is the sole heir and successor-in-interest of the late Ma.
Corazon Zarate-Romero, who died intestate on
x x x x
3. During her
lifetime, plaintiffs predecessor-in-interest was the erstwhile owner pro-indiviso
of that parcel of land, together with improvements, located in Dagupan City,
which property used to be covered by Transfer Certificate of Title (TCT) No.
10070 of the Registry of Deeds of Dagupan City.
4. In or about
the year 1975, defendant Zarate, who was co-owner of the subject property,
secured various personal loan obligations from the defendant DBP in the
aggregate amount of P2,000,000.00.
4.1
To secure such putative loan obligations of the defendant Zarate, the
latter, who wielded moral ascendancy over his younger sister and herein
plaintiffs predecessor-in-interest -- Ma. Corazon Zarate-Romero, cajoled and
prevailed upon the latter to mortgage the entirety of the subject property in
favor of defendant DBP, including her one-half (1/2) pro-indiviso share
in the same.
4.2
Accordingly, defendant Zarate assured the plaintiffs
predecessor-in-interest that the mortgage would be for a brief period only and
that he (defendant Zarate) would forthwith pay and settle in full all his
personal loan obligations with the defendant DBP to ensure that said mortgage
is cancelled in the soonest time possible.
5. At some
point in time during the effectivity of the mortgage, however, defendant Zarate
apparently saw an opportunity to claim the entirety of the subject property for
himself, to the exclusion of plaintiffs predecessor-in-interest.
5.1
Emboldened by, and taking advantage of, the complete trust and
confidence reposed upon him by the plaintiffs predecessor-in-interest anent
the subject property, defendant Zarate conspired with the defendant DBP for the
ostensible foreclosure of the subject property, with the end in view, however,
of subsequently reacquiring the same for himself as sole owner.
6. Pursuant to
such sinister plot hatched by defendants, defendant DBP foreclosed the subject
property in September of 1983 and, thereafter, bought the same for itself in
the sum of P2,253,101.00 during the auction sale conducted by the Deputy
Sheriff of Pangasinan.
7.
Significantly enough, and even before the lapse of the mortgagors right
of redemption over the subject property, the herein defendants entered into a
Deed of Conditional Sale over the same, with the defendant DBP as seller, and
the defendant Zarate as buyer.
7.1
Needless to state, all the aforedescribed dealings, transactions and
proceedings concerning the subject property -- from its fraudulent foreclosure
up to the highly anomalous execution of the Deed of Conditional Sale over the
same -- were concealed from plaintiffs predecessor-in-interest and even from
the plaintiff herself after the death of her mother.
x x x x[23]
A cause of action is the act or omission by which a party violates a right of another.[24] A complaint states a cause of action when it contains three essential elements: (1) a right in favor of the plaintiff by whatever means and whatever law it arises; (2) the correlative obligation of the defendant to respect such right; and (3) the act or omission of the defendant violates the right of the plaintiff. If any of these elements is absent, the complaint becomes vulnerable to a motion to dismiss on the ground of failure to state a cause of action.[25]
Evidently, all the above elements of a cause of action are alleged in the complaint: (1) the legal right of the respondent over the subject property foreclosed premised on the fact that she is the sole heir of one of the owners who is entitled to the right of redemption; (2) the correlative obligation of defendant DBP, as the foreclosing entity, to respect such right of redemption; and (3) the act or omission of the defendant in violation of the legal right, i.e., the act of DBP and its co-defendant Zarate to cause the ostensible foreclosure of the subject property and the subsequent execution of a deed of conditional sale between the defendants even prior to the lapse of redemption period to deprive respondents mother of her right over the property.
WHEREFORE, the petition is DENIED for lack of
merit. The Decision dated
No costs.
SO ORDERED.
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MARTIN S.
VILLARAMA, JR. Associate Justice |
WE CONCUR: RENATO
C. CORONA Chief Justice Chairperson |
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TERESITA
J. LEONARDO-DE CASTRO Associate Justice |
LUCAS
P. BERSAMIN Associate Justice |
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MARIA
LOURDES P. A. SERENO Associate Justice |
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C E R T I F I C A T I O N
Pursuant to
Section 13, Article VIII of the 1987 Constitution, I certify that the
conclusions in the above Resolution had been reached in consultation before the
case was assigned to the writer of the opinion of the Courts Division.
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RENATO C. CORONA Chief Justice |
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* Designated additional member per Raffle
dated
[1] Rollo, pp.
36-46. Penned by Presiding Justice
Cancio C. Garcia (now a retired member of this Court) with Associate Justices
Eloy R. Bello, Jr. and Mariano C. Del Castillo (now a member of this Court)
concurring.
[2] CA rollo, pp. 69-72.
[3]
[4]
[5]
[6]
[7]
[8] Sec. 2. No restraining order, temporary or permanent injunction shall be issued by the court against any government financial institution in any action taken by such institution in compliance with the mandatory foreclosure provided in Section 1 hereof, whether such restraining order, temporary or permanent injunction is sought by the borrower(s) or any third party or parties, except after due hearing in which it is established by the borrower and admitted by the government financial institution concerned that twenty percent (20%) of the outstanding arrearages has been paid after the filing of foreclosure proceedings.
In case a restraining order or injunction is issued, the borrower shall nevertheless be legally obligated to liquidate the remaining balance of the arrearages, paying ten percent (10%) of the arrearages outstanding as of the time of foreclosure, plus interest and other charges, on every succeeding thirtieth (30th) day after the issuance of such restraining order or injunction until the entire arrearages have been liquidated. These shall be in addition to the payment of amortizations currently maturing. The restraining order or injunction shall automatically be dissolved should the borrower fail to make any of the above-mentioned payments on due dates, and no restraining order or injunction shall be issued thereafter. This shall be without prejudice to the exercise by the government financial institutions of such rights and/or remedies available to them under their respective charters and their respective contracts with their debtors, nor should this provision be construed as restricting the government financial institutions concerned from approving, solely at its own discretion, any restructuring, recapitalization, or any other arrangement that would place the entire account on a current basis, provided, however, that at least twenty percent (20%) of the arrearages outstanding at the time of the foreclosure is paid.
All
restraining orders and injunctions existing as of the date of this Decree on
foreclosure proceedings filed by said government financial institutions shall
be considered lifted unless finally resolved by the court within sixty (60)
days from date hereof.
[9] Requiring
Government Financial Institutions to Foreclose Mandatorily All Loans with
Arrearages, Including Interest and Charges, Amounting to at least Twenty
Percent (20%) of the Total Outstanding Obligation.
[10] CA rollo, pp. 93-104.
[11]
[12]
[13]
[14]
[15]
[16]
[17]
[18]
[19]
[20]
[21]
[22] Rollo, p.
286.
[23] CA
rollo, pp. 57-60.
[24] Section 2, Rule 2, 1997 Rules of Civil Procedure, as amended.
[25] See Heirs of Loreto C. Maramag v. Maramag, G.R. No. 181132,