January 2006 - Philippine Supreme Court Decisions/Resolutions
G.R. No. 155698 - PHILIPPINE NATIONAL OIL COMPANY v. NATIONAL COLLEGE OF BUSINESS AND ARTS
[G.R. NO. 155698 - January 31, 2006]
PHILIPPINE NATIONAL OIL COMPANY, Petitioner, v. NATIONAL COLLEGE OF BUSINESS AND ARTS, Respondent.
D E C I S I O N
Before us is an appeal by certiorari seeking to annul the Decision1 dated June 21, 2002 of the Court of Appeals in CA-G.R. CV No. 53466, affirming in toto the Decision of the Regional Trial Court of Manila, Branch 30, in Civil Case No. 83-16617 which, among others, declared the respondent as the owner in fee simple of the contested property.
This case is related to the decisions of this Court in G.R. NOS. 112282 and 107909.
G.R. No. 112282
In G.R. No. 112282, Felipe and Enrique Monserrat were owners of seven parcels of land at V. Mapa St., Manila (V. Mapa properties).2 On September 12, 1969, Felipe and Enrique mortgaged the V. Mapa properties to the Development Bank of the Philippines (DBP) as part of the security for the loan incurred by their companies, Manila Yellow Taxicab Co., Inc. (MYTC) and Monserrat Enterprises Co. (MEC). The Deed of Mortgage was registered on September 25, 1969.3
On April 30, 1972, Enrique, Felipe and Rosario Vda. de Monserrat jointly and severally executed two promissory notes to cover the obligation of MYTC to Filoil Marketing Corporation (Filoil). For failure to pay the notes, Filoil filed before the Court of First Instance (CFI) of Manila, a complaint for collection of sum of money, docketed as Civil Case No. 89462, against MYTC, Felipe and Rosario. On May 22, 1974, the CFI decided in favor of Filoil.4
Filoil moved for the execution of the judgment pending appeal. Filoil's motion was granted and upon posting of the required bond, the sheriff levied on certain properties of the defendants, including the V. Mapa properties.
DBP filed a third-party claim stating that the V. Mapa properties were mortgaged to them and thus could not be subjected to attachment or levy pursuant to Commonwealth Act No. 459 (An Act Creating the Agricultural and Industrial Bank) and Republic Act No. 85 (An Act Creating the Rehabilitation Finance Corporation). However, upon motion of Filoil, the CFI quashed the claim. DBP's subsequent motion for reconsideration was also denied as the CFI found no provision in Rep. Act No. 85, or in other laws that transferred the powers and duties of the Rehabilitation Finance Corporation (RFC) to DBP, expressly stating that property mortgaged to or subject to a lien in favor of RFC or DBP shall not be subjected to levy or attachment. DBP did not assail this order.5
In the meantime, Felipe and Rosario filed their appeal. On May 12, 1977, the Court of Appeals affirmed in toto the CFI Manila decision. The decision became final and executory on May 30, 1977.6
On April 29, 1985, the one-half undivided interest of Felipe in the V. Mapa properties which was levied on by Filoil was sold to Petrophil Corporation (Petrophil) in a public auction. Upon the expiration of the period of redemption, a new Transfer Certificate of Title (TCT) and writ of possession were granted despite opposition of the National College of Business and Arts (NCBA), claiming that it was the new owner of the properties.
On appeal by NCBA, the Court of Appeals ruled that the Deed of Final Sale to Petrophil takes precedence and priority over the Deed of Absolute Sale to NCBA.7 It however, limited the sale to Petrophil only to the one-half undivided interest of Felipe. The Supreme Court denied NCBA's petition in G.R. No. 112282 and entry of judgment was made on March 28, 1994.8
G.R. No. 107909
The pertinent facts in G.R. No. 107909 are as follows:
On May 21, 1984, Petrophil, the successor-in-interest of Filoil, filed a collection suit against Enrique docketed as Civil Case No. 7285 at the Regional Trial Court of Makati (RTC Makati). The action was based on the unpaid balance of promissory notes jointly and severally executed by Enrique, Felipe and Rosario Vda. de Monserrat to Filoil, Petrophil's predecessor-in-interest. The trial court rendered a decision in favor of Petrophil. By virtue of a writ of execution, Petrophil levied on the one-half undivided interest of Enrique in the V. Mapa properties.9 On February 28, 1985, the levy in execution was inscribed in the TCTs.
Enrique's interest was auctioned and sold to Petrophil as the highest bidder. After the lapse of the period of redemption, the RTC Makati issued a writ of possession on February 29, 1988. Petron Corporation (Petron), as successor-in-interest of Petrophil acquired actual possession of the V. Mapa properties on April 22, 1992.
NCBA filed a third-party claim and filed a motion to quash the writ of possession. The motion was denied.
On appeal by NCBA, the appellate court declared that the issue of ownership over the one-half undivided interest of Felipe in the property had been ruled with finality in CA-G.R. CV No. 31349 (now SC G.R. No. 112282).10 The Court of Appeals also voided the sale by Felipe of the one-half undivided interest of Enrique to NCBA. The Court of Appeals observed that the Special Power of Attorney upon which Felipe based his alleged authority to sell Enrique's share was a falsified and forged document.11 Thus, the petition was dismissed.12 NCBA appealed before this Court. We denied said appeal, in G.R. No. 107909, on December 16, 1992 and the motion for reconsideration was also denied on May 5, 1993. The denial became final on June 17, 1993.
G.R. No. 155698
The pertinent facts of the instant case, G.R. No. 155698, are as follows:
To settle its obligation with DBP, MYTC executed, on June 18, 1981, a Deed of Cession of Real Properties in Payment of Debt (Dacion en Pago) which covered four parcels of land located at Arlegui, Quiapo, Manila (Arlegui Properties).13 The deed was registered only on August 12, 1982.
Meantime, on May 21, 1982, Felipe and Enrique Monserrat sold the V. Mapa properties to National College of Business and Arts (NCBA) despite partial levy by Filoil. Enrique, who was then in Australia, was allegedly represented by Felipe in the transaction by virtue of a Special Power of Attorney.14 The Deed of Absolute Sale provided that the Monserrats shall deliver the property, with all its improvements, free from any lien or encumbrance. The period for the discharge of the "liens" expired without the Monserrats fulfilling their undertaking. Thus, on February 3, 1983, NCBA caused the annotation of an adverse claim on the TCT of the V. Mapa properties. On March 29, 1983, it filed an action for specific performance or rescission and damages docketed as Civil Case No. 83-16617, against the Monserrats with the Regional Trial Court of Manila (RTC Manila).
Felipe admitted the sale to NCBA. Enrique, on the other hand, denied that he authorized Felipe to sell his share, claiming that his signature in the Special Power of Attorney was a forgery.
NCBA was initially unaware of the dacion en pago agreement between DBP and the Monserrats. Upon learning about it, NCBA made several demands on DBP to release the mortgage. Since DBP did not, NCBA amended its complaint and impleaded DBP. NCBA prayed that the mortgage be extinguished through the dacion en pago agreement so that the properties may be released.
Petron intervened claiming a right over the V. Mapa properties as the successor-in-interest of Petrophil, the buyer in the execution sales. NCBA countered that Filoil's levy in execution, to which Petron based its right, is void ab initio as the properties were then mortgaged to DBP and therefore exempt from execution. It also argued that Petron was a buyer in bad faith and not for value, because it did not pay for its bid. As to Enrique's interest in the properties, NCBA maintained that Enrique was no longer the owner at the time of the levy in execution since it has already been sold to NCBA.
DBP, for its part, asserted that the mortgage was not extinguished by the dacion en pago because the Monserrats committed fraud and did not fulfill certain conditions stipulated in the mortgages. It also asserted that the levies in execution were inoperative as the properties were exempt from execution having been mortgaged to it.
On October 2, 1995, summons and copy of the Second Amended Complaint were served on Philippine National Oil Company (PNOC) as successor-in-interest of Petron. PNOC filed a motion to dismiss on the ground of res judicata. NCBA opposed and argued that the pronouncement of the Court of Appeals in CA-G.R. CV No. 31349 was obiter dictum as the trial court's decision in Civil Case No. 89462 made no mention of ownership over the subject property.
Instead of allowing the trial court to rule on PNOC's motion to dismiss, NCBA moved to drop PNOC as a defendant, which the trial court did. On March 11, 1996, the trial court rendered judgment as follows:
WHEREFORE, judgment is rendered in favor of plaintiff NCBA and against defendants and intervenor, as follows:
1. Declaring plaintiff NCBA the owner in fee simple of the properties in question, now covered by TCT Nos. 199394 to 199400 of the Registry of Deeds of Manila in the name of intervenor Petrophil Corporation (now PETRON);
2. Declaring fully extinguished the mortgage of the property in question in favor of defendant Development Bank of the Philippines (DBP);
3. Ordering the Register of Deeds of Manila to cancel Transfer Certificates of Title Nos. 199394 to 199400 of said Registry and/or all transfer certificates of title derived or issued subsequent thereto and to issue, in lieu thereof, new transfer certificates of title in the name of plaintiff NCBA free from the mortgage in favor of defendant Development Bank of the Philippines [DBP];
4. Declaring the owner's duplicate copies of Transfer Certificates of Title No. 199394 to 199400 of the Registry of Deeds of Manila and all certificates of title issued subsequent thereto null and void;
5. Ordering defendants Felipe [M]onserrat, Enrique Monserrat and Development Bank of the Philippines and intervenor and third-party plaintiff Petrophil (now known as PETRON) jointly and severally to pay to plaintiff NCBA the amounts of
P100,000.00 as exemplary damages and P150,000.00 as attorney's fees, in addition to the costs of suit.
6. Dismissing the defendants' counterclaims and cross-claims, and the intervention and third party complaint of Petrophil (now PETRON).
PNOC, as intervenor-appellant, Petron, DBP, and Enrique elevated the matter to the Court of Appeals. On June 21, 2002, the Court of Appeals declared that res judicata did not apply since a judgment issuing a writ of possession is not a judgment on the merits.16 It upheld the validity of sale of Enrique's one-half undivided interest in the properties to NCBA since the petitioners therein failed to overcome the presumption of regularity of the notarized Special Power of Attorney.17 The appellate court also ruled that the Monserrats' obligation to DBP was fully extinguished by the dacion en pago.18 The dispositive portion of the decision reads:
WHEREFORE, the decision of the Regional Trial Court of Manila, Branch 30, in Civil Case No. 83-16617 is hereby AFFIRMED in toto.
PNOC now comes before us in this Petition for Review asserting that the Court of Appeals erred in:
'ruling that the principles of res judicata and/or conclusiveness of judgment are inapplicable to uphold Petrophil (now Petron) Corporation's title to the subject V. Mapa Properties.
'holding that the levy [i]n execution on the V. Mapa properties is void ab initio.
'not holding that even if the levy is void, NCBA acted in bad faith, as it had actual or constructive notice of the mortgage priorly constituted on the subject properties.
'ruling that its holding in CA-G.R. SP No. 28453 that the signature of Enrique Monserrat, Jr. in the Special Power of Attorney [is] a forgery was a mere obiter dictum not binding in Civil Case No. 83-16617.
'finding that there was no sufficient evidence proving that the signature of Enrique Monserrat, Jr. in the Special Power of Attorney was a forgery.
'not holding that the trial court was bereft of authority and jurisdiction to order the cancellation of TCT Nos. 199394 to 199400 of the Registry of Deeds of Manila, in the name of Petrophil (now Petron) Corporation.20
Here, this Court is asked to determine the rightful ownership of the V. Mapa properties. Prejudicial to determining the rightful owner are the following questions: (1) Was the Special Power of Attorney a forgery? (2) Can the properties mortgaged to DBP be subject to levy in execution? To begin with, however, we must resolve the threshold issue, does res judicata apply in this case?cralawlibrary
Res judicata applies if the following requisites concur: (1) the former judgment or order must be final; (2) the judgment or order must be on the merits; (3) it must have been rendered by a court having jurisdiction over the subject matter and parties; and (4) there must be as between the first and second actions, identity of parties, of subject matter, and of causes of action.21
In the present case, the presence of the second requisite that the judgment must be on the merits is the only one disputed.
There is a judgment on the merits when there is an unequivocal determination of the rights and obligations of the parties with respect to the causes of action and the subject matter of the case.22 Note, however, that the root cause of G.R. NOS. 112282 and 107909 concerned a motion for issuance of a writ of possession.
An order issuing a writ of possession is an order where the sheriff is commanded to place a person in possession of a real or personal property. To a purchaser in an auction sale, be it foreclosure or execution, a writ of possession is merely a ministerial function.23 In it the Court neither exercises its official discretion nor judgment. Being a ministerial function and summary in nature, it is not a judgment on the merits, but simply an incident in the transfer of title. Hence, under such circumstances, a separate case for annulment of the sale cannot be barred by res judicata.24
Now, the question is whether the signature of Enrique Monserrat in the Special Power of Attorney a forgery. This question involves the truth or falsehood of an alleged fact, which is a matter not for this Court to resolve. As well recognized, this Court accords great weight and respect to findings of fact of trial courts, especially when affirmed by the CA.25 Since in CA-G.R. SP No. 28453, now G.R. No. 107909, the appellate court concluded that the Special Power of Attorney was a falsified and forged instrument, the sale of Enrique's one-half undivided interest in the properties to NCBA is null and void. Accordingly, since the property still belongs to Enrique, it is alleged that it can be levied on execution to satisfy his obligation.
Could the properties mortgaged to DBP be levied on execution?cralawlibrary
Although our ruling in G.R. NOS. 112282 and 107909 does not amount to res judicata, recall that DBP already filed a third-party claim during the levy in execution in the collection case docketed as Civil Case No. 89462. This was a proceeding different from the hearing on the issuance of the writ of possession earlier discussed wherein the trial court had already ruled that properties mortgaged to DBP were not exempt from levy or attachment. The said ruling had already attained finality because of
DBP's failure to appeal the quashal of its claim, barring this present case by reason of prior judgment. Under these circumstances, we are constrained to uphold the validity of the levy in execution of the one-half undivided interest of Felipe in the V. Mapa properties.
Moreover, Petrophil has in its favor the presumption of regularity of public transactions.26 Petrophil, as the highest bidder in the execution sale, has the right to own and possess the one-half undivided interest of Felipe in the properties after the lapse of the period of redemption. NCBA now assails Petrophil's rights over the properties alleging that the latter did not pay for its bid. Considering, however, that the sale was confirmed and a certificate of sale was issued by the trial court, it appears that NCBA failed to overcome this presumption of regularity.
In sum, we find that the one-half interest of Felipe and the one-half-interest of Enrique in the V. Mapa properties properly belong to Petrophil. As the legal owner of the properties, Petrophil has not prejudiced NCBA by virtue of its possession over the properties. Hence, it is not liable to pay exemplary damages and attorney's fees to NCBA.
WHEREFORE, the petition is GRANTED. The Decision dated June 21, 2002 of the Court of Appeals in CA-G.R. CV No. 53466 and the Decision dated March 11, 1996 of the Regional Trial Court of Manila, Branch 30 in Civil Case No. 83-16617 are hereby MODIFIED. Petrophil Corporation (now Petron Corporation) is DECLARED owner in fee simple of the seven parcels of land in V. Mapa St., Manila, now covered by Transfer Certificates of Title Nos. 199394 to 199400 of the Registry of Deeds of Manila. The order requiring Petron to pay exemplary damages, attorney's fees and costs to National College of Business and Arts is REVOKED.
No pronouncement as to costs.
1 Rollo, pp. 65-77. Penned by Associate Justice Romeo A. Brawner, with Associate Justices Jose L. Sabio, Jr., and Mario L. Guariña III concurring.
2 The lands were covered by Transfer Certificate of Title Nos. 83621, 83622, 83623, 83624, 83625, 83626 and 83627.
3 Rollo, p. 66.
4 Id. at 87-88.
5 Id. at 89-91.
6 Id. at 91.
7 Id. at 99.
8 Id. at 104.
9 Id. at 109.
10 Id. at 110.
11 Id. at 111.
12 Id. at 113.
13 Id. at 66-67.
14 Id. at 67.
15 Records (Vol. IV), pp. 1737-1738.
16 Rollo, pp. 72-73.
17 Id. at 71-72.
18 Id. at 74.
19 Id. at 76.
20 Id. at 36-37.
21 Oropeza Marketing Corporation v. Allied Banking Corporation, G.R. No. 129788, 3 December 2002, 393 SCRA 278, 287.
22 Sta. Lucia Realty and Development, Inc. v. Cabrigas, G.R. No. 134895, 19 June 2001, 358 SCRA 715, 733.
23 A.G. Development Corporation v. Court of Appeals, G.R. No. 111662, 23 October 1997, 281 SCRA 155, 159.
24 Ong v. Court of Appeals, G.R. No. 121494, 8 June 2000, 333 SCRA 189, 199.
25 Jimenez v. Commission on Ecumenical Mission and Relations of the United Presbyterian Church in the USA, G.R. No. 140472, 10 June 2002, 383 SCRA 326, 334.
26 See Equatorial Realty Development, Inc. v. Mayfair Theater, Inc., G.R. No. 136221, 25 June 2001, 359 SCRA 491, 493.