Mandy Commodities Co., Inc. v. The International Commercial Bank of China

State the basic facts of the loan transaction between Mandy Commodities Co., Inc. and The International Commercial Bank of China.

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The essential factual backdrop begins with two loan advances extended by The International Commercial Bank of China (ICBC) to petitioner Mandy Commodities Co., Inc. The loans were dated July 17 and December 17, 1996, and amounted in the aggregate to ₱20,000,000.00. To secure the indebtedness, Mandy executed two deeds of chattel mortgage in favor of ICBC covering twenty-five (25) units of two-storey concrete buildings located in Binondo, Manila. Although the buildings were owned by Mandy, the land was not — it was leased by petitioner from PNB-Management and Development Corporation. Importantly, on the day the first deed was executed the parties also entered into a separate agreement in which they explicitly stipulated that the buildings were to be considered chattels, and thus subject to chattel mortgage treatment under law. The chattel mortgage instruments and the agreement were registered at the Chattel Mortgage Registry of Manila. These factual details set the scene for the later dispute concerning which statutory regime governs foreclosure and the remedies available to the mortgagee.

These facts are fundamental to the subsequent legal questions because the parties’ stated intent — that the buildings be treated as chattels — bears directly on which foreclosure procedures are applicable and which remedies (such as the issuance of a writ of possession pending redemption) may be invoked lawfully. The Court’s decision centers on procedural and remedial avenues taken after petitioner defaulted on the loans and the mortgagee initiated extrajudicial foreclosure.

Describe what action respondent took after petitioner defaulted on the loan.

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After Mandy defaulted on its obligations, ICBC, as mortgagee, proceeded to effect an extrajudicial foreclosure of the chattel mortgages. On February 26, 1999, ICBC applied before a notary public for the notarial sale of the mortgaged buildings, invoking paragraph 18 of the chattel mortgage agreements that conferred upon the mortgagee broad powers — including the authority to seize, take possession and sell the mortgaged properties at public or private sale without demand, advertisement or notice, effectively an irrevocable power of attorney to dispose of the collateral in the event of default.

The notary scheduled the sale for March 26, 1999, and caused a Notice of Extrajudicial Sale to be posted on March 1, 1999 at the Office of the Register of Deeds of Manila, the Office of the Ex Officio Sheriff, and the Regional Trial Court of Manila; the notice was also published in The Philippine Recorder on March 1, 8 and 15, 1999. At the sale, ICBC submitted the highest bid at ₱25,435,716.89. A Certificate of Sale in ICBC’s name was later issued on April 12, 1999 and expressly stated the sale was “subject to petitioner’s right of redemption.” These steps constitute the procedural acts undertaken by respondent to foreclose the chattel mortgage and to convert its security into satisfaction of the debt.

What was paragraph 18 of the chattel mortgage agreements and why was it significant?

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Paragraph 18 of the chattel mortgage agreements was pivotal because it conferred broad powers on the mortgagee (ICBC) upon the mortgagor’s breach. The paragraph expressly appointed the mortgagee as attorney-in-fact for the mortgagor with full power and authority, once a condition of the mortgage was broken, to seize and take actual possession of the mortgaged properties without any order or permission other than that granted in the instrument; and to sell, assign, transfer and deliver the whole of the properties mortgaged, at the mortgagee’s option, “without either demand, advertisement or notice of any kind which are hereby expressly waived, at public or private sale.”

This provision is significant for two reasons. First, it authorized the mortgagee to proceed with extrajudicial sale procedures as agent for the mortgagor, enabling ICBC to secure the collateral and schedule a notarial sale. Second, it became central to petitioner’s challenge because Mandy later argued that despite this contractual waiver, the governing law — Act No. 1508, the Chattel Mortgage Law — imposed a mandatory 10-day personal notice to the mortgagor prior to sale, which ICBC allegedly failed to comply with. The tension between the contractual waiver and the statutory notice requirement under chattel mortgage law became one of the key controversies in the litigation.

Explain how the extrajudicial sale was conducted and the dates and notices involved.

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The extrajudicial sale process unfolded as follows: ICBC applied for a notarial sale on February 26, 1999, and the sale was scheduled for March 26, 1999. On March 1, 1999, the notary public caused the posting of the Notice of Extrajudicial Sale at three official locations: the Office of the Register of Deeds of Manila, the Office of the Ex Officio Sheriff and the Regional Trial Court of Manila. The notice also indicates that ICBC, William Mandy, Mandy Commodities, and PNB-Management and Development Corp. were furnished copies. Additionally, the notice was published in The Philippine Recorder, a national weekly newspaper, in its March 1, 8 and 15, 1999 issues, and an affidavit of publication was executed by the paper’s Chief Editor. The sale occurred as scheduled and ICBC placed the highest bid at ₱25,435,716.89. A Certificate of Sale was executed on April 12, 1999 in favor of ICBC, and it expressly noted that the sale was “subject to petitioner’s right of redemption.”

These procedural steps and dates are critical to the dispute because petitioner later contended that Act No. 1508 required a 10-day personal notice to the mortgagor before sale — a requirement petitioner argued had not been met — thereby rendering the extrajudicial foreclosure void under the chattel mortgage law. The record, however, shows both posting at public offices and publication in a national periodical, and the Certificate of Sale reflecting the scheduled timeline.

What relief did respondent seek from the Regional Trial Court after the sale, and on what statutory basis?

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Following the extrajudicial sale and the issuance of the Certificate of Sale, on May 17, 1999 ICBC filed an Ex Parte Petition for the Issuance of a Writ of Possession Pending Redemption in the Regional Trial Court (RTC) of Manila, Branch 4. In that petition, ICBC asserted that its entitlement to possession pending redemption derived from Act No. 3135, the Real Estate Mortgage Law, specifically invoking Section 7 of that statute which permits a mortgagee of real property, after an extrajudicial foreclosure sale, to seek possession of the property pending the period of redemption upon approval of a bond.

Thus respondent’s petition asked the trial court to approve a bond and issue a writ of possession so ICBC could be placed in physical possession of the foreclosed buildings pending the expiration of any redemption period. ICBC proceeded under the legal framework of Act No. 3135, which was central to later disputes about whether that statute was applicable given the parties’ agreement treating the buildings as chattels and the fact that the mortgages were chattel mortgages registered accordingly.

What did the trial court do in response to respondent’s petition and when?

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The trial court acted on respondent’s ex parte petition: on September 7, 1999, the Regional Trial Court of Manila, Branch 4 issued an order approving ICBC’s bond in the amount of ₱600,000.00 and granting the petition for a writ of possession pending redemption. The court directed the issuance of the writ of possession, ordering the sheriff to place the petitioner in actual physical possession of the foreclosed property comprised of twenty-five (25) units of two-storey buildings located at Numencia St., Binondo, Manila, and to eject from the premises Mandy Commodities Co., Inc., its agents and other persons claiming rights under it. This order thus effectuated the respondent’s request under the trial court’s view of its authority to issue a writ of possession pursuant to the Real Estate Mortgage Law (Act No. 3135).

The issuance of the writ marked the point where the trial court had exercised its authority to grant the ministerial relief sought by ICBC, notwithstanding subsequent motions for reconsideration and the later litigation on the correctness and propriety of that issuance.

How did petitioner respond to the trial court’s issuance of the writ of possession?

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Petitioner immediately filed a Motion for Reconsideration in which it argued that the buildings were, by agreement of the parties and by the character of the instruments, chattels covered by the Chattel Mortgage Law (Act No. 1508), and therefore the foreclosure and the issuance of any writ of possession should have been governed by Act No. 1508 rather than Act No. 3135. Petitioner contended the foreclosure sale was null and void for failure to comply with Act No. 1508’s mandatory 10-day personal notice requirement to the mortgagor of the date and time of the sale. Consequently, petitioner said, because the foreclosure was void, the RTC lacked jurisdiction to issue the writ of possession it issued under the Real Estate Mortgage Law. While this motion for reconsideration was pending and ultimately denied by the trial court on January 16, 2001, the trial court in the meantime issued the writ of possession (dated December 10, 2001) and the sheriff served a notice to vacate upon petitioner, thereby setting in motion physical displacement activities that petitioner protested as unlawful and procedurally irregular.

Petitioner’s arguments were both substantive — attacking the law applicable to the mortgage and foreclosure — and procedural — contending that the strict notice requirement of Act No. 1508 had been disregarded, producing an invalid sale and thus invalidating any downstream remedies such as the writ of possession.

Outline the procedural avenues petitioner pursued after the trial court’s orders and the outcomes of each.

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Petitioner pursued multiple procedural routes, often unsuccessfully or deemed improper by the tribunals it approached. First, after the trial court’s September 7, 1999 Order and the denial of reconsideration on January 16, 2001, petitioner filed a Rule 45 petition for certiorari (G.R. No. 146929) directly to the Supreme Court seeking to annul the trial court’s orders on the ground that the writ of possession was improperly issued under Act No. 3135 rather than Act No. 1508. That petition was dismissed by the Supreme Court in a March 12, 2001 Resolution for violating the principle of hierarchy of courts, and a subsequent motion for reconsideration was denied in June 18, 2001.

Thereafter, petitioner filed a petition for annulment of order under Rule 47 before the Court of Appeals (CA-G.R. SP No. 68382), asserting the trial court acted without jurisdiction to issue the writ. The Court of Appeals gave due course to the petition, issued a temporary restraining order to enjoin the sheriff, and after hearing rendered a decision on August 30, 2002 denying the Rule 47 petition and affirming the trial court’s September 7, 1999 Order. Reconsideration was denied on September 3, 2004.

Subsequently, petitioner filed the present Rule 65 petition for certiorari before the Supreme Court seeking to annul the Court of Appeals’ decision, but the Supreme Court dismissed this petition on July 3, 2009, holding that the petition was the wrong remedy and that petitioner failed to show grave abuse of discretion amounting to lack or excess of jurisdiction by the Court of Appeals. At each stage, the tribunals focused on the availability of ordinary remedies and the limits of extraordinary relief, concluding that petitioner had other available remedies and had not shown the narrow grounds necessary for annulling final orders or seeking certiorari.

What was petitioner’s central contention regarding which statute governed the foreclosure?

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Petitioner’s central contention was that the foreclosure should have been governed by Act No. 1508, the Chattel Mortgage Law, rather than Act No. 3135, the Real Estate Mortgage Law. This argument hinged on the written agreement between the parties and the chattel mortgage instruments that treated the buildings as chattels. Petitioner asserted that because the buildings were characterized contractually as chattels and were registered as chattel mortgages, the procedural protections and mandatory requirements under Act No. 1508 — particularly the 10-day personal notice to the mortgagor prior to sale — applied. Petitioner argued that ICBC did not comply with that statutory requirement and thereby rendered the foreclosure sale null and void. If the foreclosure were void, petitioner reasoned, then the trial court lacked jurisdiction to issue the writ of possession that respondent obtained by invoking Act No. 3135.

This contention directly challenges the legal characterization and consequent statutory regime applied to the foreclosure proceeding, and it is the fulcrum of petitioner’s claim that the orders of the trial court and subsequent affirmance by the Court of Appeals should be annulled.

How did the Court of Appeals address the legal characterization of the buildings as chattels versus real property?

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The Court of Appeals acknowledged that the terms of the deeds of chattel mortgage and the parties’ July 17, 1996 agreement clearly evidenced the parties’ intent to treat the buildings as chattels. Consequently, the CA conceded that the governing law on substantive classification pointed toward the Chattel Mortgage Law (Act No. 1508). The CA thus accepted that, on the face of the agreements, the buildings were intended by the parties to be covered by Act No. 1508 rather than by the Real Estate Mortgage Law. However, despite recognizing this fact, the CA did not annul the trial court’s order because it concluded that the remedy of annulment under Rule 47 was not the appropriate procedural remedy for the variety of errors being asserted against the trial court’s actions. In other words, while the CA accepted the characterization, it disposed of the case on procedural grounds — namely, that the petition filed with it was not the proper vehicle to obtain the relief sought because the grounds invoked did not satisfy Rule 47’s narrow and extraordinary standards.

This approach by the CA shows the Court’s willingness to separate substantive classification (which might favor petitioner) from procedural propriety (which did not), and to deny relief on the procedural threshold even where substantive arguments had merit.

What procedural defect in petitioner’s Rule 47 petition did the Court of Appeals find dispositive?

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The Court of Appeals found that the Rule 47 petition was procedurally infirm because it was not the proper remedy to challenge the trial court’s orders under the circumstances. Rule 47 petitions for annulment of judgment, final order or resolution are extraordinary and equitable remedies limited to specific grounds — primarily lack of jurisdiction and extrinsic fraud — and are available only when ordinary remedies (appeal, new trial, petition for relief, etc.) are no longer available through no fault of the petitioner. The CA determined that petitioner’s arguments largely challenged the manner and correctness of the trial court’s exercise of jurisdiction (i.e., alleged errors of judgment or procedure), rather than demonstrating an absolute lack of jurisdictional authority (such as lack of jurisdiction over the person or subject matter) or extrinsic fraud that would justify annulling final orders. Because the asserted errors were correctible by ordinary appeal, the Rule 47 petition was the wrong procedural vehicle and thus was denied. The CA thereby emphasized the limited, exceptional nature of Rule 47 relief and its narrow grounds.

Thus the CA’s dispositive finding was that petitioner failed to show the type of absolute lack of jurisdiction or extrinsic fraud necessary for Rule 47, and ordinary remedies remained available at the time the petition was filed.

Explain the Supreme Court’s primary reasons for dismissing petitioner’s Rule 65 petition.

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The Supreme Court dismissed the Rule 65 petition for two principal reasons. First, it concluded that the petition was the wrong remedy under the Rules of Court. The SC observed that petitioner repeatedly sought extraordinary remedies (a direct Rule 45 petition to the Supreme Court and a Rule 47 petition to the Court of Appeals) instead of pursuing ordinary remedies such as appeal. In the SC’s view, the issues petitioner raised — including alleged procedural defects and errors in the exercise of jurisdiction — were largely matters of legal correctness and not absolute jurisdictional defects that would justify annulment or certiorari. Because ordinary remedies were available to correct such errors, the extraordinary petition was inappropriate.

Second, the Supreme Court held that petitioner failed to demonstrate grave abuse of discretion amounting to lack or excess of jurisdiction on the part of the Court of Appeals. The SC reiterated the high threshold for certiorari under Rule 65: petitioner must show that the tribunal acted capriciously, whimsically or in a manner equivalent to lack or excess of jurisdiction. The SC explained that errors committed in the exercise of jurisdiction do not convert a judgment into a void act; such errors are remedied by appeal, not by certiorari. Moreover, petitioner had an opportunity to appeal the Court of Appeals’ denial (the CA’s denial of reconsideration was received by petitioner on September 21, 2004) but did not file an appeal within the prescribed period, effectively losing that ordinary remedy. The Court therefore found no actionable grave abuse and no justification to depart from the rule that certiorari cannot substitute for a lost appeal. Consequently, the petition was dismissed.

What did the Supreme Court say about the nature and purpose of Rule 47 petitions?

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The Supreme Court described Rule 47 petitions as extraordinary and equitable remedies that are meant to strike at the core of the finality of judgments and orders, and therefore are available only in limited and exceptional cases. The Court emphasized that Rule 47 is to be invoked only where ordinary remedies — such as new trial, appeal, petition for relief, or other appropriate remedies — are no longer available through no fault of the petitioner. The grounds enumerated in Rule 47 (lack of jurisdiction and extrinsic fraud) are specific and narrow, deliberately restricting the availability of the remedy so as to preserve the finality of judgments and prevent litigants from repeatedly reopening settled controversies.

The Court further underscored that lack of jurisdiction for purposes of Rule 47 is confined to either a lack of jurisdiction over the person or over the subject matter; it must be an absolute lack of jurisdiction. Errors in the exercise of jurisdiction or mere mistakes in judicial judgment do not amount to the kind of jurisdictional deficit contemplated by Rule 47. The remedy’s extraordinary nature seeks to prevent its use as a vehicle for a dissatisfied litigant to relitigate issues that could, and should, be addressed through ordinary appellate procedures.

Define “lack of jurisdiction” as used by the Supreme Court in this case and explain how it applies here.

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In this decision the Supreme Court clarifies that “lack of jurisdiction” for the purposes of Rule 47 refers to an absolute absence of jurisdiction — specifically, a court’s lack of power over the person of the defending party or over the subject matter of the claim. It is not satisfied by a mere abuse of discretion, an error in judgment, or an incorrect exercise of jurisdiction. The distinction is critical: jurisdiction is the power to hear a case; the exercise of that power may still be erroneous, but an error in exercise does not render the court entirely devoid of jurisdiction.

Applying this standard to the case, the Supreme Court found that the Regional Trial Court had validly acquired jurisdiction when the petition for a writ of possession was filed and over the subject matter of the application — that is, possession pending redemption following an extrajudicial foreclosure proceeding. Petitioner’s complaints were directed at the manner in which the trial court acted (alleged misapplication of Act No. 3135 instead of Act No. 1508 and failure to comply with notice requirements), which are errors in the exercise of jurisdiction, not absolute absence of jurisdiction. Because the trial court had jurisdiction over the subject matter and the parties, petitioner could not validly invoke Rule 47 to annul the orders on the ground of lack of jurisdiction.

What did the Court say about the ministerial nature of the trial court’s duty in issuing a writ of possession under Act No. 3135?

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The Supreme Court pointed out that once the trial court acquired jurisdiction over applications for writs of possession, its duty to act and issue the writ prayed for is essentially ministerial. The Court referenced authority indicating that upon filing of the application the trial court is bound to dispose of it and issue the writ where appropriate — a ministerial act rather than a discretionary refusal to act. Consequently, even if errors were made in incidental aspects of the proceedings, those would still be errors in judgment in the exercise of jurisdiction, not indicators that the court completely lacked jurisdiction to entertain the petition for a writ of possession in the first place.

Thus the SC treated the issuance of the writ as an action within the court’s duty to perform once the statutory triggers are met, reinforcing the position that any complaints about the manner of proceeding should be raised through ordinary appellate remedies rather than through a petition for annulment under Rule 47 or through certiorari when appeal would be appropriate.

Explain why the Supreme Court found petitioner had an available, ordinary remedy and why that matters.

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The Supreme Court found that petitioner had an available ordinary remedy — appeal — against the Court of Appeals’ decision affirming the trial court’s orders. The decision emphasized that an appeal is the conventional avenue for correcting legal errors and mistakes in judicial exercise, and it is the ordinary remedy that should have been invoked to challenge the CA’s resolution. Because the Court of Appeals’ decision denying the Rule 47 petition was a final order, petitioner could have filed an appeal (an ordinary appeal under Rule 45) within the prescribed period but failed to do so — petitioner received the CA’s resolution on September 21, 2004, and did not appeal within fifteen days thereafter.

This availability of an adequate, plain and speedy remedy matters because extraordinary remedies like Rule 47 annulment or Rule 65 certiorari are only proper when ordinary remedies are no longer available through no fault of the litigant. The Court stressed that certiorari cannot be used as a substitute for a lost appeal and that the petitioner’s failure to timely avail itself of appeal was not excused. Therefore, the presence of the ordinary remedy and petitioner’s failure to use it compelled dismissal of the Rule 65 petition, since petitioner could not show that ordinary remedies were inadequate or unavailable.

What is the high standard petitioner needed to meet to succeed in a Rule 65 petition, and did it meet it?

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To succeed in a Rule 65 petition for certiorari, petitioner needed to demonstrate grave abuse of discretion amounting to lack or excess of jurisdiction — a very high standard. The Supreme Court elucidated that grave abuse requires more than mere legal error; it involves capricious or whimsical action tantamount to an evasion of a positive duty or a virtual refusal to act as required by law, including actions motivated by passion, prejudice or personal hostility. In essence, the petitioner had to show that the Court of Appeals acted in such an arbitrary fashion that it effectively had no jurisdiction to act as it did.

In this case, the Supreme Court found that petitioner did not meet this onerous standard. The SC noted that errors in the exercise of jurisdiction do not transform an otherwise validly exercised jurisdiction into an absolute lack of jurisdiction. The CA’s disposition — that the Rule 47 petition was the wrong remedy — did not display the kind of capricious, arbitrary or whimsical conduct that would justify certiorari. Moreover, petitioner had other remedies available and failed to pursue them timely; thus the claimed error was one of legal judgment, correctible by appeal, not a jurisdictional void constituting grave abuse. Consequently, the petition failed to demonstrate the requisite threshold for Rule 65 relief.

How did the Supreme Court treat petitioner’s contention that because the foreclosure sale was void the trial court lacked jurisdiction to issue the writ?

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Petitioner contended that the foreclosure sale was void — because ICBC allegedly failed to comply with the chattel mortgage law’s supposed 10-day personal notice requirement — and therefore the trial court lacked jurisdiction to issue the writ of possession. The Supreme Court rejected this line of reasoning. The Court explained that petitioner’s argument attacked the correctness of the foreclosure procedure and the exercise of judicial power, but did not establish an absolute absence of jurisdiction. The RTC had validly acquired jurisdiction upon the filing of the petition for writ of possession and thereby had the authority to act; any errors in the conduct of the foreclosure or in the trial court’s use of the Real Estate Mortgage Law rather than the Chattel Mortgage Law were errors in exercise, not proof that the court lacked subject matter jurisdiction altogether.

The Supreme Court further emphasized that such errors are matters for appeal and correction by ordinary remedies rather than for annulling orders under Rule 47 or seeking certiorari under Rule 65. Therefore, the existence of alleged procedural defects in the foreclosure did not deprive the trial court of jurisdiction to issue the writ, and petitioner’s attempt to convert those alleged defects into a jurisdictional bar for extraordinary relief failed.

What did the Supreme Court say about the difference between errors in the exercise of jurisdiction and absence of jurisdiction?

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The Supreme Court drew a critical distinction: errors in the exercise of jurisdiction refer to mistakes or faulty applications of law made by a court that nonetheless has the power to hear the case (i.e., it has jurisdiction). These errors are correctible by ordinary appellate remedies. By contrast, absence of jurisdiction (or lack of jurisdiction) means the court never had the power to hear the case in the first place — such as when it lacks territorial jurisdiction, subject matter jurisdiction, or power over the person — and acts taken in that situation are voidable through extraordinary remedies when warranted.

The Court stressed that this distinction is vital because if any erroneous exercise of jurisdiction were equated with lack of jurisdiction, then every judicial error would render judgments void and undermine finality in the judicial process. Consequently, the remedy of annulment (Rule 47) and certiorari (Rule 65) are reserved for the narrow situations where jurisdiction is truly absent or where there has been extrinsic fraud or capricious action, whereas ordinary errors in judgment are to be corrected via appeal.

Discuss how the Court treated petitioner’s failure to appeal the Court of Appeals’ denial of reconsideration.

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The Supreme Court placed significant weight on petitioner’s failure to file an appeal from the Court of Appeals’ denial of reconsideration. The SC noted that petitioner received the CA’s resolution denying reconsideration on September 21, 2004, and an appeal could have been taken within the prescribed fifteen-day period thereafter. Petitioner, however, did not file an appeal. The SC regarded this omission as critical: certiorari under Rule 65 cannot be used as a substitute for a lost appeal. The Court reiterated precedent holding that Rule 65 is a remedy of last resort and is not available when ordinary remedies — such as appeal — are still available but have not been timely pursued by the aggrieved party.

In essence, the SC characterized petitioner’s subsequent Rule 65 petition as a belated attempt to recover the remedy it had lost by its own failure to prosecute the appeal. Because ordinary adequate remedies were available and the petitioner failed to avail itself of them, the SC concluded that extraordinary relief was not justified and dismissed the petition.

What policy reasons did the Court give for restricting Rule 47 and Rule 65 relief?

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The Court explained that Rule 47 and Rule 65 relief are restricted by design to preserve finality in litigation and to prevent the judicial process from being subject to endless attempts to relitigate settled matters. The Court emphasized that the Rules of Court confine the grounds for annulment and certiorari to narrow circumstances — lack of jurisdiction and extrinsic fraud in the case of Rule 47, and grave abuse of discretion amounting to lack or excess of jurisdiction in the case of Rule 65 — to avoid undermining the certainty of judgments. If the doors to extraordinary remedies were left open for ordinary legal errors, finality would be illusory and the administration of justice would be crippled by perpetual challenges.

Moreover, the Court noted the public policy that litigation, despite risks of occasional error, must come to an end so that disputes and their attendant issues may be laid to rest. The restrictive standards ensure that only truly exceptional cases that cannot be remedied through ordinary appellate channels can reopen finalized adjudications, balancing justice for litigants with systemic stability and certainty.

Identify and explain at least two precedents or authorities the Court relied upon to support its decision.

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The Supreme Court relied on multiple authorities to buttress its reasoning. One is Morales v. Subic Shipyard & Engineering, Inc., which the Court cited for the principle that Rule 47 is an extraordinary remedy available only when ordinary remedies are no longer available through no fault of the petitioner, and that the grounds for annulment are limited to lack of jurisdiction and extrinsic fraud. This supports the Court’s insistence on the narrow scope and equitable character of Rule 47 relief.

Another authority cited was San Fernando Rural Bank, Inc. v. Pampanga Omnibus Development Corporation, which articulates the standard for certiorari under Rule 65, emphasizing that for certiorari to lie, there must be a showing that the tribunal capriciously or whimsically exercised its jurisdiction to an extent that it amounts to lack or excess of jurisdiction. That case also establishes the proposition that errors committed in the exercise of jurisdiction do not deprive a court of jurisdiction and thus are insufficient to sustain certiorari. These authorities underpin the SC’s view that the instant petitioners’ complaints were not the type that would warrant extraordinary relief.

Why did the Court mention the “principle of hierarchy of courts” in relation to petitioner’s earlier Rule 45 petition?

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The Court mentioned the "principle of hierarchy of courts" to explain why the petitioner’s earlier Rule 45 certiorari petition (G.R. No. 146929) was dismissed. Filing a Rule 45 petition directly to the Supreme Court without first pursuing remedies in the intermediate appellate court (Court of Appeals), when such remedies were available, violates the hierarchical order of judicial review. The Supreme Court indicated that the Rule 45 petition was not the proper initial recourse and hence was dismissed for this procedural defect. The principle preserves an orderly progression through the judicial system and prevents parties from bypassing intermediate tribunals without justification, ensuring opportunities for review at progressively higher levels.

By invoking the hierarchy principle, the Court underscored petitioner’s repeated resort to extraordinary remedies instead of appealing to the appropriate levels in due course, reinforcing the view that petitioner should have used ordinary appellate procedures to challenge the orders rather than repeatedly attempting to obtain extraordinary relief.

What role did the assignment of rights to ROP Investments, Limited — Philippine Branch play in the case?

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The assignment of ICBC’s rights to ROP Investments, Limited — Philippine Branch (ROP Philippines) in September 2003 resulted in ROP Philippines being substituted as the respondent in the petition before the Supreme Court. ROP Philippines moved for substitution and the Court allowed it. ROP Philippines then filed a pleading asserting that petitioner’s current Rule 65 petition was a belated tactic to cure an earlier wrong choice of remedies and that the Court of Appeals did not abuse its discretion in denying the Rule 47 petition. ROP Philippines further contended that the statute invoked by respondent (Act No. 3135) imposes a ministerial duty on the trial court to issue a writ of possession and that since petitioner had failed to pursue proper remedies earlier, the writ should be enforced against it.

Substitution therefore did not change the legal landscape or the Court’s analysis — the SC disposed of the matter based on procedural propriety and the absence of grave abuse of discretion by the CA rather than on any substantive rights unique to ROP Philippines. The assignment of rights simply changed the party in interest who opposed the petition.

Can you summarize the disposition orders of the trial court, Court of Appeals and Supreme Court, with dates?

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Yes. The pertinent dispositions and dates are as follows: On September 7, 1999, the Regional Trial Court (Acting Presiding Judge Antonio I. De Castro) issued an order approving the mortgagee’s bond of ₱600,000.00 and granting the Ex Parte Petition for the Issuance of a Writ of Possession Pending Redemption, directing issuance of the writ and ordering the sheriff to place the mortgagee in possession of the subject buildings. The trial court later issued a writ of possession dated December 10, 2001, directing the sheriff to execute the order and eject the mortgagor.

The Court of Appeals (CA), on August 30, 2002, rendered a decision in CA-G.R. SP No. 68382 denying the Rule 47 petition and affirming the trial court’s September 7, 1999 Order; the CA denied petitioner’s motion for reconsideration on September 3, 2004. Finally, the Supreme Court, in a Decision penned by Associate Justice Del Castillo dated July 3, 2009, dismissed petitioner’s Rule 65 petition for certiorari, holding that it was the wrong remedy and that petitioner failed to show grave abuse of discretion by the CA. Thus, the final outcome was dismissal of the petition and affirmation, in effect, of the prior rulings.

If a party believes a trial court committed errors in issuing a writ of possession, what remedy did the Supreme Court indicate is appropriate?

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The Supreme Court indicated that where a party alleges errors in the trial court’s issuance of a writ of possession (for example, misapplication of law or failure to comply with procedural requisites), the appropriate remedy is an ordinary appeal rather than extraordinary relief such as annulment under Rule 47 or certiorari under Rule 65. The SC emphasized that errors in the exercise of jurisdiction are correctible by appeal. The CA’s denial of the Rule 47 petition should have been challenged by appeal if the petitioner sought to question the legal correctness of the CA’s disposition. Certiorari is unavailable to correct mere errors of judgment by a court; it lies only where there is grave abuse of discretion amounting to lack or excess of jurisdiction, which was not shown here.

Therefore, the path to redress for alleged trial court errors in such circumstances is the appeal process, made within the time frames prescribed by the Rules of Court and in the proper sequence through the court hierarchy.

How did the Supreme Court treat the contractual waiver (paragraph 18) that allowed sale without notice in light of statutory requirements under Act No. 1508?

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The Supreme Court did not explicitly invalidate or validate the contractual waiver in paragraph 18. Rather, the Court emphasized procedural propriety and remedial avenues: it recognized that the parties’ agreements treated the buildings as chattels and that petitioner had substantive arguments about the applicability of Act No. 1508 and its mandatory notice requirement. However, the SC resolved the case on procedural grounds — concluding that even if the mortgagee failed to comply with some procedural requirements under Act No. 1508, such defects constituted errors in the exercise of jurisdiction or procedure that should be remedied through ordinary appellate processes. The SC therefore refrained from making a substantive ruling that would invalidate the contractual waiver or the foreclosure sale, instead holding that annulment and certiorari were not the proper remedies for whatever contractual-statutory conflict existed.

In short, while the contractual waiver was central to petitioner’s substantive argument, the Court confined itself to the procedural-bar rationale and did not resolve the interplay between the waiver and the statutory notice requirement as a basis for extraordinary relief.

What lessons about litigation strategy and choice of remedies can a law student extract from this case?

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This case teaches several crucial lessons for litigants and law students. First, the choice of remedy matters: extraordinary remedies such as Rule 47 annulment and Rule 65 certiorari are narrow and should not be used as substitutes for ordinary remedies like appeal. A litigant must carefully choose the proper procedural vehicle and follow the hierarchy of courts. Second, timeliness is critical — the failure to appeal timely can foreclose ordinary avenues and jeopardize rights; certiorari will not rescue a lost appeal in the absence of grave abuse. Third, when confronting allegations that a tribunal committed errors in applying law or procedure, one should ordinarily seek appellate review rather than attempting to frame those errors as jurisdictional defects unless there is truly an absolute absence of jurisdiction or extrinsic fraud. Finally, contractual stipulations (such as waivers of notice) may present complex intersections with statutory mandates; even plausible substantive claims must be pursued through proper procedures lest they be dismissed on procedural grounds.

These lessons emphasize both the substantive-skill requirement in applying legal doctrines and the strategic acumen necessary to navigate procedural rules effectively in litigation.

Did the Supreme Court order the eviction of petitioner or provide any relief to respondent? Explain.

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The Supreme Court’s decision dismissed the Rule 65 petition and did not itself issue a new writ of eviction or make a fresh order directing eviction. The effect of the dismissal, however, was to leave undisturbed the prior orders of the trial court and the Court of Appeals that had directed the issuance and enforcement of the writ of possession. In practical terms, the dismissal meant that petitioner’s challenge to those orders was denied and the orders permitting respondent (and its assignee ROP Philippines) to be placed in possession remained in force. The Supreme Court’s action therefore indirectly favored respondent by leaving the lower courts’ orders intact, but it did not itself enter a separate eviction order in the decision under review.

Thus, while the SC did not explicitly direct eviction in its opinion, the consequence of denying extraordinary relief was to uphold the status quo established by the lower courts’ writ and related enforcement actions.

Analyze why the Court found it important that the Certificate of Sale indicated the sale was “subject to petitioner’s right of redemption.”

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The Certificate of Sale’s notation that the sale was “subject to petitioner’s right of redemption” is important because it evidences that the sale — though executed — was not intended to extinguish the mortgagor’s statutory right to redeem within applicable periods. This expresses recognition that even after an extrajudicial sale, the mortgagor may have a redemption period during which title and possession can be recovered by satisfying the necessary conditions or payments. The existence of a redemption right is what made the writ of possession sought by respondent to be one “pending redemption,” and thus the trial court’s authority and respondent’s petition were framed in the context of possession during the redemption interval rather than absolute transfer of ownership without recourse.

By highlighting that the sale was subject to redemption, the record frames the relief as a request for interim possession under applicable law (as respondent argued under Act No. 3135) rather than an uncompensated dispossession. The notation thus plays into the legal characterization of the proceedings and the remedies sought; it also underscores that petitioner retained procedural and substantive avenues for contesting the sale and exercising redemption rights, which the Court regarded as matters to be litigated through ordinary remedies rather than by extraordinary annulment of orders.

What is the significance of the Court’s discussion that a petition for annulment is “equitable in character”?

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The Court’s remark that a petition for annulment is “equitable in character” signifies that Rule 47 relief is discretionary and founded on principles of equity. Because it upends the normal finality of judgments and orders, the remedy is available only when the circumstances make it equitable to do so — for instance, when a petitioner truly has no other adequate remedy and when the grounds (lack of jurisdiction or extrinsic fraud) are present. This equity character implies that courts will weigh considerations of fairness and finality — they will not lightly reopen concluded litigation simply because a party is dissatisfied with an adverse result.

In practical terms, the equitable nature of annulment supports strict gatekeeping by the courts: a petitioner must convincingly demonstrate that equity demands relief because ordinary remedies are unavailable or inadequate, and that extraordinary reasons exist to disturb finality. The Court used this principle to justify denying petitioner’s requests where the ordinary appeal remedy remained available or where petitioner had failed to pursue it, thereby preserving stability and predictability in adjudication.

How did the Court use prior decisions to justify that certiorari cannot substitute for an appeal?

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The Court invoked precedents such as Alba v. Court of Appeals and Linzag v. Court of Appeals to support the principle that a party aggrieved by a decision of the Court of Appeals is not entitled to pursue a petition for certiorari under Rule 65 in lieu of an ordinary appeal. The SC reiterated that certiorari is an extraordinary remedy of last resort and should only be invoked when ordinary remedies are no longer available, and not as a substitute for a lost appeal. The Court relied on these prior rulings to reinforce that procedural regularity and the hierarchy of remedies must be observed: parties must avail themselves of appeals and other ordinary channels when they can, and only in exceptional circumstances should certiorari be entertained.

By citing precedent, the Court placed petitioner’s current action within an established jurisprudential framework that discourages using certiorari as a belated attempt to undo what an appeal should have addressed. This alignment with precedent underscores the Court’s insistence on the disciplined use of extraordinary relief.

In light of this decision, how should a mortgagor challenge an extrajudicial foreclosure sale conducted under a possibly inapplicable statutory scheme?

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Based on the Court’s reasoning in this decision, a mortgagor who believes an extrajudicial foreclosure sale was conducted under a statutory scheme that is inapplicable or that failed to comply with mandatory requirements should challenge the sale through the ordinary appellate and procedural channels available — for example, by filing timely motions in the appropriate trial court, pursuing appeals to the intermediate court (Court of Appeals), and then seeking Supreme Court review by appeal if necessary. The mortgagor should not first resort to extraordinary remedies like Rule 47 annulment or Rule 65 certiorari unless it can show that ordinary remedies have become unavailable through no fault of the mortgagor or that truly extraordinary circumstances (such as extrinsic fraud or complete absence of jurisdiction) exist.

In practice, the mortgagor must ensure compliance with procedural timelines, seek interlocutory relief if necessary to prevent irreparable harm, and prepare to argue both substantive issues (such as the applicable statute) and procedural irregularities at each appellate level, rather than attempting to bypass the regular hierarchy of remedies.

Discuss whether the Supreme Court decided on the substantive question of whether Act No. 1508 or Act No. 3135 applied to the foreclosure.

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The Supreme Court did not render a definitive substantive ruling resolving whether Act No. 1508 (Chattel Mortgage Law) or Act No. 3135 (Real Estate Mortgage Law) ultimately governed the foreclosure. While the Court of Appeals had conceded that the parties’ documents and agreement evidenced an intent to treat the buildings as chattels and thus that Act No. 1508 was the governing law, the Supreme Court decided the case on procedural grounds, primarily dismissing the petition for being the wrong remedy and for petitioner’s failure to demonstrate grave abuse by the Court of Appeals. Consequently, the SC’s disposition left unresolved any final substantive adjudication on which statutory framework applied; instead, it focused on the propriety of the remedial avenues petitioner pursued and the availability of ordinary remedies for correcting alleged substantive errors.

Thus, the SC abstained from deciding the substantive statutory conflict and allowed the procedural outcome — dismissal — to stand, effectively leaving the lower courts’ operating determinations in place without a final pronouncement on that particular substantive issue.

What does this decision teach about the interplay between contractual waivers and statutory protections?

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The decision highlights that contractual waivers (for instance, a contractual statement permitting sale without notice) can raise complex issues when they interact with statutory protections that appear mandatory. However, the Court’s disposition emphasizes that even where such substantive conflicts exist, the proper avenue to contest whether a waiver can override statutory mandates is through ordinary litigation channels and appeals rather than through extraordinary petitions. The Court implicitly underscores that contractual stipulations do not automatically enable a party to circumvent statutory requirements; but at the same time, it refused to adjudicate the conflict substantively because the petition before it was procedurally inappropriate.

Therefore, while contractual provisions and statutory protections may collide in practice, litigants must pursue structured appellate review to have these substantive tensions resolved. The decision teaches students that substantive disagreements over the force of contractual waivers vis-à-vis statutory norms must be litigated and appealed through the proper procedural steps to obtain a conclusive judicial determination.

Formulate three deeper recitation questions that probe policy, procedural strategy, and statutory interpretation based only on this case.

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1) Policy question: Considering the Court’s emphasis on finality and judicial economy, discuss whether strict procedural bars (like refusing to entertain certiorari for a lost appeal) adequately protect litigants’ due process rights when they face potentially irreversible dispossessions such as evictions, and explain how the Court balanced these concerns in this case.

2) Procedural strategy question: If you represent a mortgagor in Mandy’s position immediately after an extrajudicial sale that you believe was void under Act No. 1508, what precise sequence of motions, interlocutory relief requests, and appeals would you pursue to preserve both the property and the avenue for full judicial review, given the precedents and procedural warnings in this case?

3) Statutory interpretation question: Given the parties’ written agreement to treat the buildings as chattels and the Certificate of Sale’s notice of redemption, analyze how a court could reconcile a contractual waiver of personal notice with an alleged mandatory personal notice requirement under Act No. 1508, while still respecting public policy and statute supremacy; what substantive tests or factors would you expect a court to consider based on the background of this case?

Each of these questions asks the student to synthesize procedural doctrine, policy considerations, and statutory interpretation grounded in the facts and holdings of the Mandy Commodities case, and to develop reasoned advocacy or judicial analysis in response.

Conclude: What is the final rule or holding a student should remember from this case?

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The essential holding to remember is twofold: (1) extraordinary remedies such as Rule 47 annulment and Rule 65 certiorari are limited in scope and are not substitutes for ordinary remedies — particularly appeals — which remain the proper vehicles to correct errors in the exercise of jurisdiction or legal mistakes by lower courts; and (2) to sustain a petition for annulment or certiorari, a petitioner must show either an absolute lack of jurisdiction or extrinsic fraud (for Rule 47), or grave abuse of discretion amounting to lack or excess of jurisdiction (for Rule 65). Mere errors of judgment or procedural missteps do not meet that threshold. Practically, this case warns litigants to choose the correct remedies in sequence and to act promptly to protect appellate rights.

That distilled principle — that finality and the orderly hierarchy of remedies constrain the availability of extraordinary writs — is the central teaching of Mandy Commodities Co., Inc. v. The International Commercial Bank of China.