FIRST DIVISION
[G.R. No. 233189. May 14, 2021.]
SPOUSES ESTEBAN and MIRIAM GAYADOS, petitioners,vs. FERMINA BERNAL, respondent.
NOTICE
Sirs/Mesdames :
Please take notice that the Court, First Division, issued a Resolution dated May 14, 2021 which reads as follows:
"G.R. No. 233189 (Spouses Esteban and Miriam Gayados v. Fermina Bernal). — This Petition for Review on Certiorari1 under Rule 45 of the Rules of Court assails the Decision 2 dated November 29, 2016 of the Court of Appeals (CA) in CA-G.R. SP No. 141658, which reversed and set aside the Order 3 dated May 13, 2015 of the Regional Trial Court (RTC) of La Trinidad, Benguet, Branch 8, and remanded the case to the court a quo, which was directed to proceed with the trial of the case and to resolve it with dispatch. Likewise assailed is the Resolution 4 dated June 21, 2017 denying Spouses Esteban and Miriam Gayados' (petitioners) motion for reconsideration for lack of merit.
Facts of the Case
On August 14, 1995, respondent Fermina Bernal (respondent) executed a Promissory Note 5 and a Deed of Real Estate Mortgage 6 in favor of petitioners covering three of her properties 7 located in La Trinidad, Benguet for the loan of P500,000.00. When the debt became due and demandable on February 14, 1996, respondent failed to pay the obligation. Petitioners then filed a petition for Extrajudicial Foreclosure of Real Estate Mortgage under Act No. 3135. 8
Upon compliance by petitioners with the requirements, a Sheriff's Notice of Public Auction Sale was issued. At the public auction on March 14, 2007, petitioners emerged as the highest bidder with a bid price of P3,968,000.00. A Certificate of Sale was issued in their favor. A Sheriff's Final Certificate of Sale was subsequently issued. 9
The period of redemption lapsed without any action on the part of respondent. A Certificate of Non-Redemption was issued by the Clerk of Court of the Provincial Sheriff. 10
Petitioners were able to consolidate the title of the properties. The title of respondent was cancelled and a new one, Transfer Certificate of Title (TCT) No. T-69767, was issued in the name of petitioners. 11 CAIHTE
On May 31, 2010, petitioners filed a petition for Issuance of Writ of Possession, which was granted by the RTC of La Trinidad, Benguet, Branch 62. 12 Respondent's motion for reconsideration was denied in the Order dated February 15, 2011 of the RTC. 13 On March 26, 2011, respondent turned over the possession of the land and the family home erected thereon to petitioners. 14
On April 5, 2011, respondent filed a complaint for Annulment of Foreclosure Sale and Cancellation of Writ of Possession, 15 docketed as Civil Case No. 11-CV-2721, raffled before RTC of La Trinidad, Benguet, Branch 63. Respondent alleged that there was no republication and reposting of the new notice of the new date of sale. The Notice of Public Auction Sale set the auction sale on February 26, 2007. The postponement of the auction sale to March 14, 2007 required a republication and reposting of a new notice of sale necessary for the validity of the foreclosure sale. Respondent further claimed that petitioners' foreclosure of the mortgage was already barred by prescription. She argued that the cause of action accrued on February 14, 1996, while petitioners filed the petition for extrajudicial foreclosure on January 24, 2007, beyond the ten-year prescriptive period within which to enforce a mortgage deed. Lastly, respondent averred that she never knew, met, nor transacted with petitioners in any manner and for whatever matter. She had not appeared before any notary public to acknowledge the Promissory Note and the Deed of Real Estate Mortgage. She did not receive the proceeds of any loan. Respondent avowed that the said documents were fraudulently utilized by petitioners and respondent's son, Jose Bernal, Jr., to document a transaction which only them knew and were privies thereto. 16
In their Answer with Counterclaim, 17 petitioners countered that respondent merely raised the same issues which had already been adjudicated by the trial court in Civil Case No. 09-70 when it issued a writ of possession. As to the issue of republication and reposting, petitioners argued that during the scheduled auction on February 26, 2007, the "parties agreed to come up with a settlement up to March 14, 2007." Hence, the parties agreed to set the public auction sale on March 14, 2007, without need of republication. 18 As to prescription, petitioners averred that the running of the prescriptive period was interrupted when they made repeated demands for payment. Lastly, petitioners denied the allegation of forgery. They claimed that respondent knew of the existence of the documents as respondent and her family even voluntarily vacated the premises. 19
Respondent moved for summary judgment.
On February 28, 2012, the RTC issued a Resolution 20 denying the Motion for Summary Judgment and dismissing the case without prejudice to the filing of the case in its proper forum as provided for by Section 8 of Act 3135 as amended. The RTC held that respondent's complaint should have been filed before the RTC of La Trinidad, Benguet, Branch 62, the court which issued the writ of possession pursuant to Section 8 of Act 3135. 21
The said Resolution became final and executory on March 26, 2012 and an Entry of Final Judgment was issued on October 3, 2012. 22
Respondent filed anew a complaint for Annulment of Foreclosure Sale, Sheriff's Certificates of Sale and Certificate of Title, 23 docketed as Civil Case No. 13-CV-2959 reiterating her allegations in the first complaint. 24 The case was raffled to RTC of La Trinidad, Benguet, Branch 8.
Petitioners filed an Answer with Counterclaim Coupled with Motion to Dismiss 25 raising res judicata as ground for the dismissal of the case. Petitioners pointed out the earlier Resolution dated March 26, 2012 dismissing respondent's complaint for annulment of foreclosure sale and cancellation of writ of possession which had already attained finality. Petitioners also submitted a supplemental motion to dismiss. 26 aScITE
Ruling of the Regional Trial Court
On January 30, 2015, the RTC issued a Resolution, 27 the dispositive portion reads:
WHEREFORE, based on the foregoing premises, the court grants the Motion to Dismiss filed by the defendants. The Complaint is hereby DISMISSED on the ground of res judicata.
As defendants' Answer contains a counterclaim, the defendants are given fifteen (15) days from receipt of a copy of this Resolution to manifest whether they will pursue their Counterclaim in this action or in a separate action (Section 6, Rule 16, Rules of Civil Procedure).
SO ORDERED. 28
The RTC ruled that Civil Case No. 11-CV-2721 which was likewise an action for annulment of foreclosure sale and cancellation of writ of possession filed by respondent and dismissed by the RTC of La Trinidad, Benguet, Branch 63, barred the filing of another complaint for the same cause of action. It also held that the allegations in the complaint in Civil Case No. 11-CV-2721 are similar to the allegations in Civil Case No. 13-CV-2959 as they involve the same property subject of the mortgage and foreclosure sale. Likewise, the parties and reliefs sought in both cases are identical. 29
The RTC further explained that while the dismissal of Civil Case No. 11-CV-2721 is without prejudice, the complaint should have been filed in the court that issued the writ of possession in accordance with Section 8 of Act 3135. According to the RTC, if it will take cognizance of the present case, then it would have to reiterate the same resolution rendered by Branch 63 in Civil Case No. 11-CV-2721.
Respondent moved for reconsideration but it was denied in the Order dated May 13, 2015. 30
Respondent filed a petition for certiorari under Rule 65 to the CA.
Ruling of the Court of Appeals
The CA granted the petition in the Decision 31 dated November 29, 2016, the decretal portion states:
WHEREFORE, the Resolution dated January 30, 2015 and the Order dated May 13, 2015 issued by Branch 8 of the Regional Trial Court of La Trinidad, Benguet, First Judicial Region, in Civil Case No. 13-CV-2959 are hereby REVERSED and SET ASIDE. Let this case be REMANDED to the court a quo which is DIRECTED to proceed with the trial of the case, and to resolved it with dispatch.
SO ORDERED.
The CA held that there is no res judicata in this case since the dismissal of the earlier Civil Case No. 11-CV-2721 was without prejudice; the dismissal did not have the effect of an adjudication upon the merits. Regarding the propriety of filing a petition for certiorari instead of an appeal, the CA found that the application of Section 8 of Act No. 3135 was misplaced. Act No. 3135 finds no application after the lapse of the redemption period and the consolidation of title had already taken place. The filing by respondent of the complaint for annulment of sale and cancellation of writ of possession is no longer covered by Section 8 of Act No. 3135. Hence, the trial court erred in justifying the dismissal of the complaint on the basis of Section 8 of Act No. 3135. 32
Petitioners sought reconsideration but it was denied in the Resolution dated June 21, 2017.
Hence, this Petition for Review on Certiorari under Rule 45 filed by petitioners.
Issues
The issues for resolution are: (1) whether the CA correctly ruled that there is no res judicata between Civil Case No. 11-CV-2721 and Civil Case No. 13-CV-2959; and (2) whether respondent's resort to certiorari under Rule 65 to the CA from the dismissal of the complaint was properly given due course.
Petitioners' Arguments
Petitioners maintain that the second case, Civil Case No. 13-CV-2959, is barred by res judicata as whatever judgment in this second case would be inconsistent with the judgment in the first case, Civil Case No. 11-CV-2721. Both cases involve the same parties, subject matter, and causes of action. Petitioners further point out that respondent did not comply with the condition set forth in the Resolution in the first case. Respondent should have refiled the case before the RTC of La Trinidad, Benguet, Branch 62, which issued the writ of possession pursuant to Section 8 of Act 3135. Considering that the Resolution in the first case had become final and executory, it can no longer be modified in any respect. 33
Further, petitioners claim that appeal is the proper remedy to assail the decision of the RTC and a petition for certiorari is not a substitute thereto. 34
The same arguments were reiterated in petitioners' Reply 35 and Memorandum. 36
Respondent's Comment
Respondent claims that the filing of the second complaint is not barred by the judgment in the first case. The dismissal of the first case was a dismissal without prejudice; hence, said dismissal did not bar the filing of the second complaint in Civil Case No. 13-CV-2959. Respondent also contends that the condition imposed in the Resolution in the first case is an impossible condition since she cannot choose which branch to file her complaint. All initiatory pleadings are never filed directly with any branch of the RTC. 37 Respondent likewise avers that the grant of the writ of certiorari in the broader interest of justice was justified by the undisputed fact that the extra-judicial foreclosure sale sought to be annulled is already barred by prescription; thus, the trial court had no more power to issue the writ of possession. 38
The above arguments were reiterated in respondent's Memorandum. 39
Ruling of the Court
The petition is denied finding no reversible error on the part of the CA in issuing the Decision 40 dated November 29, 2016 and the Resolution 41 dated June 21, 2017 which reversed and set aside the RTC rulings.
As correctly ruled by the CA, the principle of res judicata finds no application in this case. The dismissal of respondent' s first complaint, Civil Case No. 11-CV-2721, was a dismissal without prejudice. It is settled that the dismissal of a case without prejudice does not have the effect of an adjudication on the merits. 42 For res judicata to apply, it is required that decision must be on the merits. The dismissal of the case without prejudice indicates the absence of a decision on the merits and leaves the parties free to litigate the matter in a subsequent action as though the dismissed action had not been commenced. 43 Therefore, the prior dismissal of respondent's first complaint (Civil Case No. 11-CV-2721) is not res judicata and will not bar the filing of the second complaint (Civil Case No. 13-CV-2959) based on the same causes of action. HEITAD
While appeal is the proper remedy to assail the dismissal of the complaint on the ground of res judicata as provided under Section 5, Rule 16 of the Rules of Court, the CA properly gave due course to respondent's petition for certiorari under Rule 65.
A special civil action for certiorari can only be entertained when there is no appeal or any plain, speedy and adequate remedy in the ordinary course of law. The rule that certiorari will not lie as a substitute for appeal, however, admits of exceptions. Certiorari may be considered a proper remedy despite the availability of appeal or other remedy in the ordinary course of law in the following instances: "(a) when it is necessary to prevent irreparable damages and injury to a party; (b) where the trial judge capriciously and whimsically exercised his judgment; ( c) where there may be danger of a failure of justice; (d) where an appeal would be slow, inadequate, and insufficient; (e) where the issue raised is one purely of law; (f) where public interest is involved; and (g) in case of urgency." 44
The CA's ruling on the motion for reconsideration cited the second and third exceptions in giving due course to respondent's certiorari, viz.:
In this case, while petitioner [respondent herein] had other legal remedies against the trial court's order and resolution, these remedies would be inadequate and insufficient in light of the capricious and whimsical exercise of judgment by the trial court in dismissing Civil Case No. 13-CV-2959 on the ground of res judicata, when the dismissal of Civil Case No. 11-CV-2721 was clearly without prejudice. It is clear that the present controversy must be resolved on its merits, lest for a technical oversight the petitioner should be deprived of what is justly due her. In dismissing petitioner's cause of action on the ground of res judicata, petitioner would be deprived of the opportunity to question the validity of the foreclosure sale which involved their family home, and there may be danger of failure of justice. x x x 45 (Emphasis supplied)
In addition, the Court notes that the RTC committed grave abuse of discretion when it insisted on applying Section 8 of Act 3135, declaring that the second complaint should have been filed in court which issued the writ of possession.
The RTC lost sight of the fact that Section 8 of Act No. 3135 finds no application when the redemption period has expired without the debtor exercising his right, and the purchaser in the foreclosure sale has already consolidated his ownership over the property and moved for the issuance of the writ of possession. 46 In this case, the redemption period had lapsed, and petitioners had already consolidated their ownership over the property. In fact, a writ of possession was issued. Thus, respondent properly pursued a separate case for annulment of foreclosure sale and cancellation of writ of possession to nullify the sale and the TCT issued in petitioners' names, among others.
As explained by the Court in the case of 680 Homes Appliances v. Court of Appeals: 47
Act No. 3135 governs only the manner of the sale and redemption of the mortgaged real property in an extrajudicial foreclosure; proceedings beyond these, i.e., upon the lapse of the redemption period and the consolidation of the purchaser's title, are no longer within its scope. x x x
As pointed out, the remedy provided under Section 8 of Act No. 3135 to the debtor becomes available only after the purchaser acquires actual possession of the property. This is required because until then the debtor, as the owner of the property, does not lose his right to possess. However, upon the lapse of the redemption period without the debtor exercising his right of redemption and the purchaser consolidates his title, it becomes unnecessary to require the purchaser to assume actual possession thereof before the debtor may contest it. Possession of the land becomes an absolute right of the purchaser, as this is merely an incident of his ownership. In fact, the issuance of the writ of possession at this point becomes ministerial for the court. The debtor contesting the purchaser's possession may no longer avail of the remedy under Section 8 of Act No. 3135, but should pursue a separate action, e.g., action for recovery of ownership, for annulment of mortgage and/or annulment of foreclosure. FSAMI's consolidation of ownership therefore makes the remedy under Section 8 of Act No. 3135 unavailable for 680 Home. x x x 48
Further, the Court finds that appeal would not be a speedy remedy considering that respondent had already turned over the possession of her land and family home to petitioners.
WHEREFORE, premises considered, the instant petition is DENIED. The Decision dated November 29, 2016 and the Resolution dated June 21, 2017 of the Court of Appeals in CA-G.R. SP No. 141658 are hereby AFFIRMED. The Regional Trial Court of La Trinidad, Benguet, Branch 8 is DIRECTED to hear and resolve Civil Case No. 13-CV-2959 with reasonable dispatch.
SO ORDERED." ATICcS
By authority of the Court:
(SGD.) LIBRADA C. BUENADivision Clerk of Court
By:
MARIA TERESA B. SIBULODeputy Division Clerk of Court
Footnotes
1.Rollo, pp. 3-13.
2. Penned by Associate Justice Henri Jean Paul B. Inting (now a Member of this Court), with the concurrence of Associate Justices Marlene B. Gonzales-Sison and Ramon A. Cruz; id. at 17-26.
3.Id. at 37.
4.Id. at 27-31.
5.Id. at 41.
6.Id. at 38-40.
7. (1) Transfer Certificate of Title (TCT) No. T-325558 containing an area of 114 square meters; (2) Tax Declaration No. 94-001-00121 containing an area of 138 square meters; and (3) Tax Declaration No. 94-001-00108 — a residential building.
8.Rollo, pp. 42-43.
9.Id. at 78.
10.Id.
11.Id.
12.Id. at 47-48.
13.Id. at 18.
14.Id. at 78.
15.Id. at 49-57.
16.Id. at 53-55.
17.Id. at 58-67.
18.Id. at 62.
19.Id. at 63-64.
20.Id. at 68-73.
21.Id. at 72-73.
22.Id. at 74.
23.Id. at 75-84.
24.Id. at 79-82.
25.Id. at 85-89.
26.Id. at 87-89.
27.Id. at 96-101.
28.Id. at 99-100.
29.Id. at 98-99.
30.Id. at 37.
31.Supra note 2.
32.Rollo, pp. 22-25.
33.Id. at 7-10.
34.Id. at 11-12.
35.Id. at 134-138.
36.Id. at 145-155.
37.Id. at 120-122.
38.Id. at 123-125.
39.Id. at 164-184.
40.Supra note 2.
41.Supra note 3.
42.Sps. Meliton v. Court of Appeals, 290-A Phil. 257 (1992).
43.Id.
44.Martinez v. Buen, 808 Phil. 424, 436 (2017).
45.Rollo, p. 30.
46.680 Home Appliances v. Court of Appeals, 744 Phil. 481, 491 (2014).
47.Id.
48.Id. at 492, 495; See also Bank of the Philippine Islands vs. Spouses Co, 772 Phil. 291, 307-308 (2015).