Limpin vs. Intermediate Appellate Court

The Court held that a prior registered mortgage creates a real right that is superior to the lien of a subsequent judgment creditor or purchaser. Consequently, a foreclosure sale conducted to satisfy the mortgage debt is valid and must be confirmed, subject to the equity of redemption of parties who acquired the property after the mortgage was registered. The Court further ruled that an order denying confirmation of a foreclosure sale, when based on the assertion of rights by a third party not privy to the foreclosure suit, is a final order properly assailable via a special civil action for certiorari and mandamus, not by ordinary appeal.

Spouses Jose and Marcelina Aquino mortgaged four lots to Guillermo Ponce and his wife in 1973. The mortgages were registered. In 1978, the Aquinos sold two of the mortgaged lots to Butuan Bay Wood Export Corporation. In 1979, petitioner Gregorio Y. Limpin, Jr. obtained a money judgment against Butuan Bay Wood Export Corporation. To satisfy this judgment, the two lots were levied upon and sold at public auction to Limpin in 1980. Limpin subsequently sold these lots to petitioner Rogelio M. Sarmiento in 1981. In 1980, Ponce filed a judicial foreclosure case against the Aquino spouses. After judgment in his favor, the four mortgaged lots were sold at a foreclosure sale to Ponce himself in 1983. The trial court confirmed the sale for two lots but refused to confirm the sale or issue a writ of possession for the two lots previously sold to Limpin and Sarmiento, citing the cancellation of the original titles.

• On February 28, 1973, spouses Jose and Marcelina Aquino mortgaged four lots to Guillermo Ponce and his wife Adela as security for a loan. The mortgages were registered on March 1, 1973.
• In 1978, the Aquinos sold two of the mortgaged lots (covered by TCT Nos. 92836 and 92837) to Butuan Bay Wood Export Corporation, which annotated an adverse claim on the titles.
• In 1979, Gregorio Y. Limpin, Jr. obtained a money judgment against Butuan Bay Wood Export Corporation in Civil Case No. 10463 (CFI Davao).
• On September 3, 1980, to satisfy the judgment, the two lots were levied upon. They were sold at public auction to Limpin as the highest bidder on October 6, 1980. New titles were issued in Limpin's name.
• On November 21, 1981, Limpin sold the two lots to Rogelio M. Sarmiento. New titles were issued in Sarmiento's name in 1983.
• On September 2, 1980, Ponce filed a judicial foreclosure case (Civil Case No. Q-30726, CFI Quezon City) against the Aquino spouses over the four mortgaged lots.
• On June 8, 1982, judgment was rendered in favor of Ponce. After finality, the trial court ordered the sale of the four lots at public auction.
• On October 12, 1983, the four lots were sold at a foreclosure sale to Ponce as the highest bidder. The sheriff's certificate of sale was registered the same day.
• Ponce moved for confirmation of the sale and issuance of a writ of possession for all four lots. The trial court, by order dated October 26, 1983, confirmed the sale only for the two lots not involved in the dispute with Limpin/Sarmiento, refusing confirmation for the lots formerly covered by TCT Nos. 92836 and 92837.
• Ponce's motion for reconsideration was denied, leading him to file the certiorari and mandamus petition before the IAC.

• Petitioners argued that the special civil action for certiorari and mandamus was not the proper remedy; Ponce's remedy was to appeal the trial court's orders denying confirmation, which they characterized as final orders.
• Petitioners questioned the IAC's jurisdiction over their persons, claiming they were not original parties to the foreclosure suit.
• Petitioners contended the IAC erred in subordinating their rights (as execution purchaser and subsequent transferee) to Ponce's mortgage rights.
• Petitioners asserted that Ponce had executed a "Partial Release of Real Estate Mortgage" in 1977, effectively releasing the mortgage on the disputed lots.
• Petitioners claimed Ponce had no right of action for foreclosure because he and his wife had donated the lots to a foundation in 1976.

• Respondent Ponce countered that the orders denying confirmation were not ordinary final orders but were issued in a context where a third party's rights were asserted, making a separate proceeding like certiorari and mandamus the proper remedy.
• Ponce argued that his prior registered mortgage constituted a superior lien over the petitioners' subsequent judgment lien and purchase.
• Ponce contended the alleged partial release of mortgage was void for want of consideration and lack of necessary signatures, and was never registered.
• Ponce argued the alleged donation was never registered and was being raised for the first time on appeal, and in any case, could not improve the petitioners' position.

• Procedural Issues:
  • Whether the special civil action for certiorari and mandamus was the proper remedy to assail the trial court's orders denying confirmation of the foreclosure sale.
  • Whether the IAC acquired jurisdiction over the persons of the petitioners.
• Substantive Issues:
  • Whether the rights of petitioners Limpin and Sarmiento (derived from an execution sale and subsequent transfer) are superior to the prior registered mortgage rights of respondent Ponce.
  • Whether the alleged partial release of mortgage and donation of the property defeated Ponce's right to foreclose.

• Procedural:
  • The Court affirmed the IAC's ruling that certiorari and mandamus were proper remedies. Because the trial court's denial of confirmation was based on the assertion of rights by a third party (Limpin) not privy to the foreclosure suit, the orders were not the ordinary final orders appealable under the rules. The supervisory authority of the court over the execution of its judgments, and the exceptional circumstances present, justified the use of a special civil action.
  • The Court held that the petitioners were estopped from questioning the IAC's jurisdiction. Despite being aware of the potential defect, they fully participated without objection in the proceedings before the IAC. A party cannot invoke a court's jurisdiction to secure affirmative relief and later repudiate that same jurisdiction after an adverse judgment.
• Substantive:
  • The Court ruled that Ponce's prior registered mortgage constituted a real right superior to the subsequent judgment lien in favor of Limpin and the transfer to Sarmiento. The foreclosure sale in favor of Ponce was valid, subject only to the equity of redemption of the petitioners. The registration of the mortgage put the whole world on constructive notice.
  • The Court found the alleged partial release of mortgage was void and, crucially, was never registered. The mortgage remained subsisting. The alleged donation was also never registered and was raised belatedly; it could not prejudice Ponce's established rights.

• Superiority of a Prior Registered Mortgage — A registered mortgage is a right in rem, a lien on the property binding against third parties. The lien of a prior registered mortgage is superior to the lien of a subsequent judgment creditor or purchaser. The effects of a foreclosure sale retroact to the date of the registration of the mortgage.
• Estoppel by Jurisdiction — A party cannot invoke the jurisdiction of a court to secure affirmative relief against an opponent and, after obtaining or failing to obtain such relief, repudiate or question that same jurisdiction. Sound public policy bars a challenge to jurisdiction after a party has voluntarily submitted to it and participated in the proceedings.
• Remedy for Errors in Execution — While execution of a final judgment is generally ministerial, exceptional circumstances (e.g., the writ varies the judgment, there has been a change in the parties' situation making execution inequitable, or the writ was improvidently issued) permit correction via a special civil action of certiorari, prohibition, or mandamus.

• "The recordation of the mortgage in this case put the whole world, petitioners included, on constructive notice of its existence and warned everyone who thereafter dealt with the property on which it was constituted that he would have to reckon with that encumbrance." — This passage underscores the foundational principle of constructive notice in registered land transactions, which is central to the Court's ruling on lien priority.
• "A party cannot invoke the jurisdiction of a court to secure affirmative relief against his opponent and, after obtaining or failing to obtain such relief, repudiate or question that same jurisdiction." — This quote encapsulates the doctrine of estoppel by jurisdiction, which the Court applied to bar the petitioners' belated jurisdictional challenge.

• Santiago v. Dionisio, 92 Phil. 495 (1935) — Cited as controlling precedent. The Court applied its ruling that where a subordinate lienholder or subsequent purchaser is not impleaded in a foreclosure suit, the foreclosure is ineffective as against them, leaving in their favor an "unforeclosed equity of redemption," but the foreclosure remains valid as between the parties to the suit.
• Domalante vs. Martinez, 20 SCRA 1136 (1967) — Distinguished. The Court noted that Domalante dealt with an order confirming a foreclosure sale as between the parties, not an order denying confirmation due to a third party's claim, which requires a separate proceeding.
• Rivero de Ortega v. Natividad, 71 Phil. 340 (1941) — Cited for the proposition that a separate proceeding is needed to determine the rights of a third party asserting a claim to property subject to a foreclosure sale.
• Crisostomo vs. Court of Appeals, 32 SCRA 54 — Cited for the doctrine of estoppel regarding jurisdiction.
• Bank of Philippine Islands vs. Noblejas, 106 Phil. 418 — Cited for the principle that the foreclosure sale retroacts to the date of the mortgage registration.

• Rule 39, Section 16 of the Revised Rules of Court — Cited to illustrate that a levy on execution creates a lien subject to existing liens or encumbrances, thereby confirming the superiority of Ponce's prior mortgage lien over Limpin's subsequent judgment lien.