An extrajudicial foreclosure of real estate mortgage is initiated by filing a petition not with any court of justice but with the office of the sheriff of the province where the sale is to be made.

Petitioners insist that it was error for the CA to rule that the stipulated exclusive venue of Makati City is binding only on petitioners’ complaint for Annulment of Foreclosure, Sale, and Damages filed before the Regional Trial Court of Parañaque City, but not on respondent bank’s Petition for Extrajudicial Foreclosure of Mortgage, which was filed with the same court.

          We disagree.

         The extrajudicial foreclosure sale of a real estate mortgage is governed by Act No. 3135, as amended by Act No. 4118, otherwise known as “An Act to Regulate the Sale of Property Under Special Powers Inserted In or Annexed to Real-Estate Mortgages.” Sections 1 and 2 thereof clearly state:

Section 1. When a sale is made under a special power inserted in or attached to any real-estate mortgage hereafter made as security for the payment of money or the fulfillment of any other obligation, the provisions of the following sections shall govern as to the manner in which the sale and redemption shall be effected, whether or not provision for the same is made in the power.

Sec. 2. Said sale cannot be made legally outside of the province in which the property sold is situated; and in case the place within said province in which the sale is to be made is the subject of stipulation, such sale shall be made in said place or in the municipal building of the municipality in which the property or part thereof is situated.[5] 

The case at bar involves petitioners’ mortgaged real property located inParañaqueCityover which respondent bank was granted a special power to foreclose extra-judicially. Thus, by express provision of Section 2, the sale can only be made inParañaqueCity.

          The exclusive venue of MakatiCity, as stipulated by the parties[6] and sanctioned by Section 4, Rule 4 of the Rules of Court,[7] cannot be made to apply to the Petition for Extrajudicial Foreclosure filed by respondent bank because the provisions of Rule 4 pertain to venue of actions, which an extrajudicial foreclosure is not.

Pertinent are the following disquisitions in Supena v. De la Rosa:[8]

Section 1, Rule 2 [of the Rules of Court] defines an action in this wise:

“Action means an ordinary suit in a court of justice, by which one party prosecutes another for the enforcement or protection of a right, or the prevention or redress of a wrong.”

Hagans v. Wislizenus does not depart from this definition when it states that “[A]n action is a formal demand of one’s legal rights in a court of justice in the manner prescribed by the court or by the law. x x x.” It is clear that the determinative or operative fact which converts a claim into an “action or suit” is the filing of the same with a “court of justice.” Filed elsewhere, as with some other body or office not a court of justice, the claim may not be categorized under either term. Unlike an action, an extrajudicial foreclosure of real estate mortgage is initiated by filing a petition not with any court of justice but with the office of the sheriff of the province where the sale is to be made. By no stretch of the imagination can the office of the sheriff come under the category of a court of justice. And as aptly observed by the complainant, if ever the executive judge comes into the picture, it is only because he exercises administrative supervision over the sheriff. But this administrative supervision, however, does not change the fact that extrajudicial foreclosures are not judicial proceedings, actions or suits.[9]

These pronouncements were confirmed on August 7, 2001 through A.M. No. 99-10-05-0, entitled “Procedure in Extra-Judicial Foreclosure of Mortgage,” the significant portions of which provide:

In line with the responsibility of an Executive Judge under Administrative Order No. 6, date[d] June 30, 1975, for the management of courts within his administrative area, included in which is the task of supervising directly the work of the Clerk of Court, who is also the Ex-Office Sheriff, and his staff, and the issuance of commissions to notaries public and enforcement of their duties under the law, the following procedures are hereby prescribed in extra-judicial foreclosure of mortgages:

1. All applications for extrajudicial foreclosure of mortgage whether under the direction of the sheriff or a notary public, pursuant to Act 3135, as amended by Act 4118, and Act 1508, as amended, shall be filed with the Executive Judge, through the Clerk of Court who is also the Ex-Officio Sheriff.

Verily then, with respect to the venue of extrajudicial foreclosure sales, Act No. 3135, as amended, applies, it being a special law dealing particularly with extrajudicial foreclosure sales of real estate mortgages, and not the general provisions of the Rules of Court on Venue of Actions.

Consequently, the stipulated exclusive venue of MakatiCityis relevant only to actions arising from or related to the mortgage, such as petitioners’ complaint for Annulment of Foreclosure, Sale, and Damages.

The other arguments raised in the motion are a mere reiteration of those already raised in the petition for review. As declared in this Court’s Resolution on January 17, 2011, the same failed to show any sufficient ground to warrant the exercise of our appellate jurisdiction.

http://sc.judiciary.gov.ph/jurisprudence/2011/march2011/192877.htm

Solidary liabilities may at times be incurred by the directors and officers of the corporation but only when exceptional circumstances warrant

Lastly, we deem it imperative to resolve the question of whether Grandteq’s officers, who are co-petitioners herein, are solidarily liable with the company.

There is solidary liability when the obligation expressly so states, when the law so provides, or when the nature of the obligation so requires.[44]  In  MAM Realty Development Corporation v. NLRC,[45] the solidary liability of corporate officers in labor disputes was discussed in this wise:

A corporation, being a juridical entity, may act only through its directors, officers and employees.  Obligations incurred by them, acting as such corporate agents, are not theirs but the direct accountabilities of the corporation they represent.  True, solidary liabilities may at times be incurred but only when exceptional circumstances warrant such as, generally, in the following cases:

1.   When directors and trustees or, in appropriate cases, the officers of a corporation−

(a) vote for or assent to patently unlawful acts of the   corporation;

(b)   act in bad faith or with gross negligence in directing the corporate affairs;

x x x x

In labor cases, for instance, the Court has held corporate directors and officers solidarily liable with the corporation for the termination of employment of employees done with malice or in bad faith.

From the decisions of the LA, the NLRC, and the CA, there is no indication that Estrella’s dismissal was effected with malice or bad faith on the part of Grandteq’s officers. Their liability for Estrella’s illegal dismissal, the consequential monetary award arising from such dismissal and the other money claims awarded in the LA’s decision, as correctly affirmed by the CA, could thus only be joint, not solidary. This pronouncement does not

extend to Estrella’s claims for commissions, allowances, and incentives, as the same are still subject to the LA’s scrutiny.

http://sc.judiciary.gov.ph/jurisprudence/2011/march2011/192416.htm

Without a formal offer of evidence, courts are constrained to take no notice of the evidence even if it has been marked and identified. Exception, provided that the evidence has been identified by testimony duly recorded and that it has been incorporated in the records of the case.

Indeed, courts cannot consider evidence which has not been formally offered because parties are required to inform the courts of the purpose of introducing their respective exhibits to assist the latter in ruling on their admissibility in case an objection thereto is made. Without a formal offer of evidence, courts are constrained to take no notice of the evidence even if it has been marked and identified.[21]

This rule, however, admits of an exception, provided that the evidence has been identified by testimony duly recorded and that it has been incorporated in the records of the case.[22]

In this case, the subject pieces of evidence were presented in support of respondents’ motion for reconsideration of the denial of their motion to dismiss. A hearing was set for the reception of their evidence, but petitioner failed to attend the same. The pieces of evidence were thus identified, marked in evidence, and incorporated in the records of the case. Clearly, the trial court correctly admitted and considered the evidence of respondents warranting the dismissal of their case.

http://sc.judiciary.gov.ph/jurisprudence/2011/march2011/185454.htm

The doctrine of primary jurisdiction does not allow a court to arrogate unto itself authority to resolve a controversy, the jurisdiction over which is initially lodged with an administrative body of special competence.[

Petitioners Cesar Caguin, Cleofas Vitor, Teresita Vitor, Jose Levitico Dalay, Marcelo Dalay, Esperanza Mario, Celestina Cosico, Ma. Ruth Pacurib, and Raquel San Juan, through the Legal Assistance Division of the DAR, claim that findings of fact of the DARAB should have been respected by the CA; that the CLOAs covering the subject properties were registered in 1994 and 1995 but respondents only assailed the validity of the same in 2000; and that the said CLOAs are already incontestable and indefeasible. Moreover, petitioners highlight the fact that the parties in this case are not partners to any tenancy venture. Invoking this Court’s ruling in Heirs of Julian dela Cruz v. Heirs of Alberto Cruz,[14] petitioners submit that the DAR Secretary has jurisdiction in this case, not the DARAB.[15]

          On the other hand, respondents prefatorily manifest that out of the 44 respondents before the CA, only 9 signed the petition filed before this Court, and that petitioners’ counsel failed to indicate the full names of petitioners in the petition. Respondents argue that the errors assigned by petitioners are matters not pertaining to questions of law but rather to the CA’s factual findings. Respondents rely on the CA’s findings that their constitutional right to due process was violated because no notice of coverage was sent to them and that they were deprived of payment of just compensation. Moreover, respondents claim that they are not barred by prescription and petitioners cannot raise this issue for the first time on appeal; that they have been paying the real property taxes and are actually in possession of the subject properties; and that documents, which petitioners failed to refute, show that the said properties are private lands owned by respondents and their predecessors-in-interest. Respondents stress that the action initially filed before the PARAD was not a protest considered as an Agrarian Law Implementation (ALI) case, but for quieting and cancellation of title, reconveyance, and damages; that the 2003 DARAB Rules of Procedure clearly states that the DARAB has jurisdiction to cancel CLOAs registered with the LRA; and that the assailed CLOAs were already registered with the RD of Laguna.[16]

          The petition is impressed with merit.

          Verily, our ruling in Heirs of Julian dela Cruz v. Heirs of Alberto Cruz[17] is instructive:

          The Court agrees with the petitioners’ contention that, under Section 2(f), Rule II of the DARAB Rules of Procedure, the DARAB has jurisdiction over cases involving the issuance, correction and cancellation of CLOAs which were registered with the LRA. However, for the DARAB to have jurisdiction in such cases, they must relate to an agrarian dispute between landowner and tenants to whom CLOAs have been issued by the DAR Secretary. The cases involving the issuance, correction and cancellation of the CLOAs by the DAR in the administrative implementation of agrarian reform laws, rules and regulations to parties who are not agricultural tenants or lessees are within the jurisdiction of the DAR and not of the DARAB.[18]

          It is established and uncontroverted that the parties herein do not have any tenancy relationship. In one case, this Court held that even if the parties therein did not have tenancy relations, the DARAB still has jurisdiction. However, the said case must be viewed with particularity because, based on the material allegations of the complaint therein, the incident involved the implementation of the CARP, as it was founded on the question of who was the actual tenant and eventual beneficiary of the subject land. Hence, this Court held therein that jurisdiction should remain with the DARAB and not with the regular courts.[19]

However, this case is different. Respondents’ complaint was bereft of any allegation of tenancy and/or any matter that would place it within the ambit of DARAB’s jurisdiction.

         While it is true that the PARAD and the DARAB lack jurisdiction in this case due to the absence of any tenancy relations between the parties, lingering essential issues are yet to be resolved as to the alleged lack of notice of coverage to respondents as landowners and their deprivation of just compensation. Let it be stressed that while these issues were discussed by the PARAD in his decision, the latter was precisely bereft of any jurisdiction to rule particularly in the absence of any notice of coverage for being an ALI case.[20] Let it also be stressed that these issues were not met head-on by petitioners. At this juncture, the issues should not be left hanging at the expense and to the prejudice of respondents.

However, this Court refuses to rule on the validity of the CARP coverage of the subject properties and the issuance of the assailed CLOAs. The doctrine of primary jurisdiction precludes the courts from resolving a controversy over which jurisdiction was initially lodged with an administrative body of special competence.[21] The doctrine of primary jurisdiction does not allow a court to arrogate unto itself authority to resolve a controversy, the jurisdiction over which is initially lodged with an administrative body of special competence.[22] The Office of the DAR Secretary is in a better position to resolve the particular issue of non-issuance of a notice of coverage – an ALI case – being primarily the agency possessing the necessary expertise on the matter.[23] The power to determine such issue lies with the DAR, not with this Court.

          A final note.

          It must be borne in mind that this Court is not merely a Court of law but of equity as well. Justice dictates that the DAR Secretary must determine with deliberate dispatch whether indeed no notice of coverage was furnished to respondents and payment of just compensation was unduly withheld from them despite the fact that the assailed CLOAs were already registered, on the premise that respondents were unaware of the CARP coverage of their properties; hence, their right to protest the same under the law was defeated. Respondents’ right to due process must be equally respected. Apropos is our ruling in Heir of Nicolas Jugalbot v. Court of Appeals:[24]

[I]t may not be amiss to stress that laws which have for their object the preservation and maintenance of social justice are not only meant to favor the poor and underprivileged. They apply with equal force to those who, notwithstanding their more comfortable position in life, are equally deserving of protection from the courts. Social justice is not a license to trample on the rights of the rich in the guise of defending the poor, where no act of injustice or abuse is being committed against them.

As the court of last resort, our bounden duty to protect the less privileged should not be carried out to such an extent as to deny justice to landowners whenever truth and justice happen to be on their side. For in the eyes of the Constitution and the statutes, EQUAL JUSTICE UNDER THE LAW remains the bedrock principle by which our Republic abides.

 http://sc.judiciary.gov.ph/jurisprudence/2011/march2011/179844.htm

The DARAB has jurisdiction over cases involving the issuance, correction and cancellation of CLOAs which were registered with the LRA. However, for the DARAB to have jurisdiction in such cases, they must relate to an agrarian dispute between landowner and tenants to whom CLOAs have been issued by the DAR Secretary

Verily, our ruling in Heirs of Julian dela Cruz v. Heirs of Alberto Cruz[17]is instructive:

 

The Court agrees with the petitioners’ contention that, under Section 2(f), Rule II of the DARAB Rules of Procedure, the DARAB has jurisdiction over cases involving the issuance, correction and cancellation of CLOAs which were registered with the LRA. However, for the DARAB to have jurisdiction in such cases, they must relate to an agrarian dispute between landowner and tenants to whom CLOAs have been issued by the DAR Secretary. The cases involving the issuance, correction and cancellation of the CLOAs by the DAR in the administrative implementation of agrarian reform laws, rules and regulations to parties who are not agricultural tenants or lessees are within the jurisdiction of the DAR and not of the DARAB.[18]

http://sc.judiciary.gov.ph/jurisprudence/2011/march2011/179844.htm