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G. R. No. 101632

January 13, 1997



The instant petition for review on certiorari assails the reversal by the Court of Appeals, in a resolution of 14 June 1991, of its earlier 24th May 1990 decision [1] that dismissed for lack of merit the petition for certiorari in CA-G.R. SP No. 20336 of respondent Philippine Village Hotel, Inc. ("PVHI"), challenging the order of the Regional Trial Court ["RTC"] of Pasay City which threw out, for lack of jurisdiction, PVHI's petition to set aside the foreclosure of its properties by the Government Service Insurance System ["GSIS"].cralaw

Private respondent PVHI, then also known as the "Sulo ng Nayon, Inc.," obtained, on 18 September 1972, a loan in the sum of twenty-two million pesos [P22,000,000.00] from the GSIS for the construction of a hotel on a land leased to PVHI by the Nayong Pilipino Foundation. In order to guarantee payment of the loan, PVHI hypothecated the hotel and its contents to the GSIS. [2] On 24 April 1974 and 11 June 1975, the GSIS granted to PVHI two additional loan accommodations in the respective amounts of eight million pesos [P8,000,000.00] and six million five hundred thousand pesos [P6,500,000.00] subject to the same terms and conditions as the initial loan.cralaw

Subsequently, or some time in June of 1980, PVHI and GSIS entered into a lease-purchase agreement over a building annexed to the hotel [then under construction] for sixty-seven million eight hundred thousand pesos [P67,800,000.00]. Under the agreement, PVHI was to pay monthly installments to the GSIS until the cost of the building would have been fully paid for. Meanwhile, PVHI secured from the GSIS debenture bonds totaling seven million pesos [P7,000,000.00].cralaw

Over the period from 15 December 1972 to 30 June 1986, PVHI paid to the GSIS the sum of ninety-eight million nine hundred twenty-four thousand two hundred twenty-seven pesos and eighty centavos [P98,924,227.80] but, when applied to PVHI's various liabilities in favor of GSIS, the loan obligation covered by the mortgage still remained in arrears. The demands for payment made by GSIS having been met instead by PVHI's constant requests for extension of time to pay, the GSIS finally instituted with the Sheriff of Pasay City separate foreclosure proceedings of real estate and chattel mortgages.cralaw

In the interim, or on 06 June 1986, the Presidential Commission on Good Government ["PCGG"] issued a writ of sequestration over "all assets, properties, records and documents" of the PVHI. On 23 July 1987, the Republic of the Philippines commenced in the Sandiganbayan Civil Case No. 0014 [PCGG Case No. 0015] an action against PVHI President Rebecco Panlilio and his wife Erlinda for reconveyance of the encumbered property, plus damages. PVHI, through the Panlilios, thereupon sought to restrain the impending foreclosure proceedings, aforesaid, by filing with the Sandiganbayan an ex-parte motion for the issuance of a temporary restraining order ["TRO"] and preliminary injunction on the ground that the PVHI hotel building, by now a PCGG-sequestered property, was claimed to be beyond the reach of PVHI's creditors.cralaw

The Sandiganbayan issued, on 15 May 1988, the TRO, prompting the GSIS to file, on 01 June 1988, a petition for certiorari with this Court, docketed G. R. No. 83385, questioning the action of the Sandiganbayan. Later, acting on the manifestation of the PCGG that it had no objection to the foreclosure of the hotel by the GSIS, the Sandiganbayan ultimately denied PVHI's motion to enjoin the foreclosure; accordingly, the GSIS scheduled the foreclosure sale on 25 August 1988.cralaw

On 16 August 1988, or before the scheduled foreclosure of the property by the GSIS, PVHI filed with the Manila RTC [Branch 24], docketed Civil Case No. 88-45876, a complaint against the GSIS, the Sheriff and Register of Deeds of Pasay City, for a declaration of the release from mortgage of the property, injunction and damages. Judge Sergio Mabunay of the Manila RTC issued, on 24 August 1988, a TRO thereby constraining the GSIS to so include him as an additional respondent in G. R. No. 83385 for alleged abuse of discretion.cralaw

On 11 October 1989, Judge Mabunay issued a writ of preliminary injunction against the foreclosure sale. On even date, however, this Court, in G. R. No. 83385, issued a TRO "ordering the respondent Judge Sergio D. Mabunay, xxx to CEASE and DESIST from further proceeding with Civil Case No. 88-45876, xxx more particularly from issuing any injunction against the foreclosure sale by petitioner GSIS of the Philippine Village [Hotel] and its contents, xxx rescheduled for October 13, 1988." [3] On 12 October 1988, this Court also set aside the 11th October 1988 order of Judge Mabunay. PVHI and the Panlilios sought, albeit unsuccessfully, a reconsideration of this Court's twin orders. On 13 and 14 of October 1988, the hotel was finally sold at public auction with the GSIS ultimately being declared the winning bidder.cralaw

In a move to obtain possession of the hotel, on 11 May 1989, the GSIS filed with the RTC of Pasay City an ex-parte petition, entitled "Philippine Village Hotel, Inc. vs. Government Service Insurance System, Sheriff of Pasay City and Register of Deeds of Pasay City," for a writ of possession in LRC Case No. 3079. PVHI, in turn, filed a motion to dismiss or suspend the proceedings before said court pending the final resolution of G. R. No. 83385 and Civil Case No. 88-45876 with the RTC of Manila. PVHI averred that the newly filed petition by the GSIS was premature since other issues had yet to be resolved, i.e., in Civil Case No. 88-45876, whether or not PVHI had fully paid its mortgage obligation to the GSIS and, in G. R. No. 83385, whether it was the RTC of Manila or the Sandiganbayan which had the proper jurisdiction over the sequestered property.cralaw

Judge Sofronio G. Sayo, Presiding Judge of RTC Pasay City, directed, on 16 August 1989, the issuance of a writ of possession in LRC Case No. 3079 upon the posting of a bond of two million pesos [P2,000,000.00] by the GSIS. PVHI filed a motion for reconsideration and a supplemental motion for reconsideration of the order but both motions were, on 14 September 1989, denied by the court. On even date of 14 September 1989, PVHI filed with the same Pasay City RTC a petition to set aside the foreclosure sale with an application for the issuance of a temporary restraining order and preliminary injunction, asserting that the foreclosure sale was illegal not only because PVHI had supposedly paid in full its mortgage indebtedness to the GSIS but also because of alleged procedural infirmities that had attended the foreclosure.cralaw

In time, PVHI and the GSIS executed a Memorandum of Agreement ["MOA"] providing, among other matters, that, until 01 March 1990 ["completion date"], GSIS should not consolidate ownership over the hotel nor enforce or implement the writ of possession issued in LRC No. 3079. The MOA, however, failed to get the approval of the President and the Commission on Audit before 01 March 1990 [a condition under the MOA]. The GSIS thereupon requested the city sheriff of Pasay City to serve the writ of possession on PVHI. Upon receipt of the writ, PVHI filed a motion to hold in abeyance its implementation. The GSIS opposed the motion.cralaw

On 05 March 1990, PVHI and the Panlilios filed another complaint against the GSIS, docketed Civil Case No. 90-52276, before the RTC of Manila, Branch 2, presided over by Judge Napoleon Flojo, for the enforcement of the MOA.cralaw

In LRC Case No. 3079, Judge Sofronio G. Sayo, dismissed, on 14 March 1990, PVHI's petition to set aside the foreclosure sale on the ground of lack of jurisdiction as the court was said to be acting under a limited capacity as a land registration or cadastral court. On 22 March 1990, PVHI filed with the Court of Appeals a petition for certiorari, docketed CA-G. R. SP No. 20336, contending that Judge Sayo gravely abused his discretion in dismissing the petition to have the foreclosure sale set aside. In its comment, the GSIS prayed for the dismissal of the petition on various grounds, i.e., that PVHI engaged in forum-shopping, that the petition for certiorari could not be so used as a substitute for appeal which was the proper remedy available to PVHI, and that PVHI was barred by estoppel since it itself sought relief in Civil Case No. 90-52272.cralaw

In Civil Case No. 90-52272, Judge Flojo of RTC Manila, on 26 March 1990 following a hearing, issued a writ of preliminary injunction, subject to the filing by PVHI of a bond for two million pesos [P2,000,000.00], to restrain the enforcement of the writ of possession issued by Judge Sayo of the Pasay City RTC.cralaw

In CA-G. R. SP No. 20336, the Court of Appeals meanwhile rendered, on 24 May 1990, its decision upholding the GSIS and dismissing PVHI's petition against the order of RTC of Pasay City dismissing for lack of jurisdiction PVHI's petition to set aside the foreclosure by the GSIS. The motion for reconsideration and a supplemental motion for reconsideration were denied in the resolution of 21 November 1990. The appellate court (a) cited PNB vs.Adil [4] to say that possession of a foreclosed property by a government institution was mandatory under Presidential Decree No. 385; (b) held that under Section 8 of Act No. 3135, an appeal was the proper remedy available to PVHI; and (c) ruled that there was no urgent need for the issuance of a writ of certiorari since PVHI itself was able to obtain a writ of preliminary injunction in Civil Case No. 90-52272. On the issue of forum-shopping, the Court of Appeals, after noting that there were altogether eight (8) cases then pending between the parties of which two (2) were instituted by the GSIS (G. R. No. 83385 and LRC Case No. 3079), said:

Let it be observed that common to all of these cases involving the petitioner PVHI and respondent GSIS is the attempt of the GSIS to foreclose the mortgage executed over the Philippine Village Hotel by petitioner and GSIS's subsequent attempt to take possession thereof, and on the part of PVHI, its repeated attempts to stop the foreclosure and take over of the possession thereof. Furthermore, although the reliefs prayed for in all these cases filed by PVHI's counsel are ostensibly different, the essence of all of them is the same  the ultimate objective of preventing GSIS from foreclosing the mortgage and thereafter from taking possession of theHotel. [5]

Barely five days after the promulgation of the appellate court's resolution, or on 26 November 1990, this Court, en banc, rendered its decision [6] in G. R. No. 83385. The decretal portion read:

    "WHEREFORE, the Court renders judgment as follows:

    "1. The proceedings in Civil Case No. 88-45876 [RTC, Manila, Sergio Mabunay, Presiding Judge] are moot and academic, foreclosure having been implemented and now a fait accompli;

    "2. Neither PVHI, Rebecco Panlilio, nor their counsel are guilty of forum-shopping in connection with the said Civil Case No. 88-45876, or CA-G. R. SP No. 20336 [Court of Appeals];

    "3. The Temporary Restraining Order issued in the Resolution dated October 11, 1989, enjoining Judge Sergio Mabunay from further proceedings in Civil Case No. 88-45876 is made permanent; and

    "4. The prayer for contempt is DENIED.

    "SO ORDERED." [7]

A motion for clarification/modification of the decision by GSIS was, in its 26th February 1991 resolution, treated by this Court as one for reconsideration and so then denied with finality. Entry of judgment was made on 26 December 1990. On 11 February 1991, the records of the case were remanded to the Sandiganbayan. A motion to quash/set aside the entry of judgment filed by the GSIS was denied on 18 April 1991.

With this Court's decision in G. R. No. 83385, PVHI, on 13 December 1990, filed in CA-G. R. SP No. 20336 a manifestation and motion to rectify the appellate court's resolution of 21 November 1990, asseverating that the decision in G. R. No. 83385 "completely overhauls and virtually reverses this Court's (the Court of Appeals) subject Resolution as regards the propriety of PVHI's filing of its Petition to Set Aside Foreclosure Sale dated 13 September 1989 in LRC Case No. 3079 with the court a quo, as well as the issue of forum-shopping." [8] Filing a counter-manifestation and opposition, the GSIS questioned PVHI's position which, allegedly, was in reality a second or substituted motion for reconsideration proscribed by Batas Pambansa Blg. 129 and the Internal Rules of the Court of Appeals.cralaw

On 14 June 1991, the Court of Appeals issued the now assailed resolution ordering Judge Sayo to take cognizance of the petition to set aside the foreclosure sale and thereby reversing, in effect, its decision of 24 May 1990 and resolution of 21 November 1990. The appellate court said:

    "A perusal of the body of the Supreme Court's decision indicates that the issue of forum shopping was raised only as to petitioner PVHI's twin actions in the Sandiganbayan (Civil Case No. 1114 [sic]) and before Judge Mabunay, Branch 24, of the Regional Trial Court of Manila in Civil Case No. 88-45876. Nonetheless, since the Supreme Court, in its final judgment included the case pending before this Court [CA-G.R. SP No. 20336], the latter is left without any alternative but to submit to the Supreme Court's ruling, for the orderly administration of justice and to give deferance to [the] highest judicial organ, the Supreme Court. The Supreme Court having spoken, this Court's duty is to obey

    "xxx   xxx   xxx

    "The Regional Trial Court of Pasay, in LRC Case No. 3079 denied petitioner PVHI's petition to set aside Foreclosure sale on the ground that it had no jurisdiction. The Supreme Court held otherwise, ruling that there is nothing objectionable with petitioner PVHI's remedy. This Court denied the petition for Certiorari filed by petitioner PVHI directed against the Regional Trial Court's denial on the ground that Certiorari is not the proper remedy.

    In the light of the Supreme Court's ruling that Regional Trial Court of Pasay had jurisdiction, the respondent judge gravely abused his discretion in dismissing the case. Indeed, he acted whimsically and capriciously when he ignored the explicit mandate of Section 8 of Act 3138 (sic) ." [9]

The motion for reconsideration filed by the GSIS having been denied on 21 August 1991, [10] the instant petition for review on certiorari which, in the main, assails the Court of Appeals' resolution of 14 June 1991 has been here instituted. Petitioner GSIS contends that
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The second paragraph of Section 11 of Batas Pambansa Blg. 129, as amended by Executive Order No. 33, dated 28 July 1986, provides:

A motion for reconsideration of its decision or final resolution shall be resolved by the Court within ninety (90) days from the time it is submitted for resolution, and no second motion for reconsideration from the same party shall be entertained

A similar proscription is reflected in the Interim Rules and Guidelines for the implementation of B.P. Blg. 129; hence:

    "4. Motions for reconsideration. No party shall be allowed a second motion for reconsideration of a final order or judgment."

The Revised Internal Rules of the Court of Appeals echoes a like rule in Rule 9 thereof; thus

    "Sec. 3. Second Motion for Reconsideration.  No second or subsequent motion for reconsideration from the same party shall be entertained. However, if the decision or resolution is reconsidered or substantially modified, the party adversely affected thereby, may in turn file a motion for reconsideration of the amended decision within fifteen (15) days from notice."

The prohibition against the filing of a second motion for reconsideration is justified by public policy which demands that at the risk of occasional errors, judgments of courts must become final at some definitive date fixed by law.
[12] The rule, however, is certainly not inflexible. Procedural laws are technicalities which are adopted not as ends in themselves but as means conducive to the realization of law and justice. [13] The rules of procedure are not to be applied with severity and rigidity when such application would clearly defeat the very rationale for their conception and existence. [14] In Mauna vs. Civil Service Commission, [15] the Court said:
    "xxx  (I)t is within the power of this Court to temper rigid rules in favor of substantial justice. While it is desirable that the Rules of Court be faithfully and even meticulously observed, courts should not be so strict about procedural lapses that do not really impair the proper administration of justice. If the rules are intended to ensure the orderly conduct of litigation, it is because of the higher objective they seek which is the protection of substantive rights of the parties." [16]

The relaxation of procedural rules, or saving a particular case from the operation of technicalities when substantial justice requires it, should no longer be subject to cavil.

The circumstances surrounding the controversy between the parties, not to mention the various cases pending before the courts heretofore recited, justified the acceptance and due consideration, by the Court of Appeals, in the same CA-G. R. SP No. 20336, of PVHI's manifestation and motion. The appellate court, it should be stressed, still had full jurisdiction over the case. [18] Certainly, the appellate court was hardly in any position to disregard the decision in G. R. No. 83385. In Ang Ping vs. Regional Trial Court of Manila, Br. 40, [19] the Court, quoting from the ruling in Tugade vs. Court of Appeals, [20] said:

    "Respondent Court of Appeals really was devoid of any choice at all. It could not have ruled in any other way on the legal question raised. This Tribunal having spoken, its duty was to obey. It is as simple as that. There is relevance to this excerpt from Barrera vs. Barrera (L-31589, July 31, 1970, 34 SCRA 98). "The delicate task of ascertaining the significance that attaches to a constitutional or statutory provision, an executive order, a procedural norm or a municipal ordinance is committed to the judiciary. It thus discharges a role no less crucial than that appertaining to the other two departments in the maintenance of the rule of law. To assure stability in legal relations and avoid confusion, it has to speak with one voice. It does so with finality, logically and rightly, through the highest judicial organ, this Court. What it says then should be definitive and authoritative, binding on those occupying the lower ranks in the judicial hierarchy. They have to defer and to submit (Ibid., 107. The opinion of Justice Laurel in People vs. Vera, 65 Phil. 56 [1937] was cited.) The ensuing paragraph of the opinion in Barrera further emphasizes the point: Such a thought was reiterated in an opinion of Justice J.B.L. Reyes and further emphasized in these words: "Judge Gaudencio Cloribel need not be reminded that the Supreme Court, by tradition and in our system of judicial administration, has the last word on what the law is; it is the final arbiter of any justifiable controversy. There is only one Supreme Court from whose decisions all other courts should take their bearings." (Justice J.B.L. Reyes spoke thus in Albert vs. Court of First Instance of Manila [Br. VI], L-26364, May 29, 1968, 23 SCRA 948, 961.) " [21]

Precisely, the decision in G. R. No. 83385 by this Court was aimed at putting the proceedings in good order which were messed up by the filing of several cases by the parties with various courts on initially not too complex a matter affecting the same property.

As regards the issue of forum-shopping, the Court, in rejecting the move to have private respondent and the Panlilios held in contempt of court, recognized that in the Sandiganbayan case, the action of private respondent had been predicated, albeit erroneously, that sequestered assets in the custody of the Sandiganbayan were beyond the reach of petitioner whereas its action at the RTC Manila had been aimed at having the loan obligation itself declared extinguished by payment.cralaw

Relevantly, the Court en banc in G. R. No. 83385 said:

    "Anent PVHI's motion to annul the foreclosure sale, filed in LRC Case No. 3079 (in which the GSIS asked for a writ of possession), the Court finds nothing objectionable in such a recourse. Under Section 8, of Art. No. 3135, the remedy of a party aggrieved by foreclosure is indeed, to have the sale set aside " [22]

Considering that the foreclosure was a fait accompli, private respondent's remedy was to nullify the sale in LRC No. 3079, where petitioner had sought an issuance of a writ of possession of the property. Private respondent's recourse conformed with Section 8 of Act No. 3135; viz:

    "Sec. 8. The debtor may, in the proceedings in which possession was requested, but not later than thirty days after the purchaser was given possession, petition that the sale be set aside and the writ of possession canceled, specifying the damages suffered by him, because the mortgage was not violated or the sale was not made in accordance with the provisions hereof, and the court shall take cognizance of this petition in accordance with the summary procedure provided for in section one hundred and twelve of Act Numbered Four hundred and ninety-six; and if it finds the complaint of the debtor justified, it shall dispose in his favor of all or part of the bond furnished by the person who obtained possession. Either of the parties may appeal from the order of the judge in accordance with section fourteen of Act Numbered Four hundred and ninety-six; but the order of possession shall continue in effect during the pendency of the appeal." (Emphasis supplied.)

Private respondent, however, wrongly elevated the order of Judge Sayo dismissing the petition (to nullify the foreclosure sale) via a petition for certiorari instead of an ordinary appeal. Nevertheless, certiorari may in meritorious cases be allowed
[23] particularly when the petition is filed while the period for appeal has not yet expired. Judge Sayo dismissed private respondent's petition to set aside the foreclosure sale on 14 March 1990, and private respondent filed CA-G. R. SP No. 20336 on 22 March 1990 well within the reglementary period for appeal. Most importantly, the dismissal was founded not on the merits of the petition to annul the foreclosure sale but on a jurisdictional issue. It was petitioner, in fact, which filed the ex-parte petition for a writ of possession in LRC Case No. 3079. [24] The court did not dismiss the ex-parte petition, sought by private respondent, but ordered the issuance of the writ of possession prayed for by petitioner. The denial of the motion for the reconsideration of that order left the private respondent with the remaining alternative of filing a petition to set aside the foreclosure sale in accordance with Section 8 of Act No. 3135. Under these circumstances, certiorari could be justified in order to prevent any possible irreparable damage to private respondent as against an ordinary appeal which may prove to be tedious and inadequate. [25]

A reversal of the resolution of 14 June 1991 proposed by petitioner and the eventual dismissal of the petition in CA-G. R. SP No. 20336 would not necessarily end the "bickerings" between the parties. In fact, it may spawn yet another controversy. The value of the property at stake is such that private respondent may not be expected to just let go of any opportunity to resolve, once and for all, the legality of the foreclosure sale. The pendency in the Manila RTC of Civil Case No. 90-52272 wherein, according to the petitioner, private respondent takes a view opposite to that of the nullification of the foreclosure sale notwithstanding, a resolution of the petition to set aside the foreclosure sale in itself appears to be a separate key to the full and final settlement of the controversy between the parties.cralaw

WHEREFORE, the instant petition for review on certiorari is DENIED. The Regional Trial Court of Pasay City shall resolve with dispatch the petition to have the foreclosure sale in LRC No. 3079 set aside. No costs.cralaw


Padilla, Bellosillo, Kapunan and Hermosisima, Jr., JJ., concur.


[1] Penned by Associate Justice Gloria C. Paras and concurred in by Associate Justices Bonifacio A. Cacdac, Jr. and Serafin V.C. Guingona.
[2] CA-G.R. No. 20336 Records, p. 49. The facts herein stated, until the filing of the petition in G.R. No. 83385, "GSIS vs. Sandiganbayan," are also narrated in the November 26, 1990 Decision in said case which is published in 191 SCRA 655.
[3] GSIS vs. Sandiganbayan, 191 SCRA 544, at p. 658.
[4] 118 SCRA 110.
[5] Rollo, p. 142.
[6] Per Sarmiento, J., GSIS vs. Sandiganbayan, supra.
[7] At p. 662.
[8] Rollo, p. 149.
[9] Ibid., pp. 193-195.
[10] Ibid., p. 214.
[11] Ibid., p. 19.
[12] Calalang vs. Register of Deeds of Quezon City, 231 SCRA 88, citing Legarda vs. Savellano, 158 SCRA 194.
[13] Blanco vs. Bernabe, 63 Phil. 124.
[14] McEntee vs. Manotok, 113 Phil. 249.
[15] 232 SCRA 388, citing Rinconada Telephone Company, Inc. vs. Buenviaje, 184 SCRA 701; Seriña vs. Court of Appeals, 170 SCRA 421 and Leyte vs. Cusi, Jr., 152 SCRA 496.
[16] At page 398.
[17] See Aguilar vs. Court of Appeals, 250 SCRA 371.
[18] Private respondent received a copy of the Resolution denying its motion for the reconsideration of the appellate court's Decision on November 29, 1990. The fifteen-day period for filing an appeal with this Court would have expired on December 14, 1990. Hence, when private respondent filed the manifestation and motion on December 13, 1990, the appellate court still had jurisdiction over the case simply because private respondent did not interpose an appeal within the fifteen-day reglementary period to do so. Finality of a judgment or order becomes a fact upon the lapse of the reglementary period to appeal if no appeal is perfected. The order dismissing the petition to annul the foreclosure sale was by no means a final order in LRC No. 3079. The main case was a land registration or cadastral case and therefore the said petition was merely an incidental matter.
[19] 154 SCRA 77.
[20] 85 SCRA 226.
[21] At page 86.
[22] GSIS vs. Sandiganbayan, 191 SCRA 655, 662.
[23] See Oriental Media, Inc. vs. Court of Appeals, 250 SCRA 647; citing Presidential Commission on Good Government vs. Sandiganbayan, 210 SCRA 136.
[24] Sec. 7 of Act. No. 3135 allows the filing of a petition for possession over the property sold in the "form of an ex parte motion in the registration or cadastral proceedings if the property is registered."
[25] Rodriguez vs. Court of Appeals, 245 SCRA 150.