Limpin v IAC

Facts:Four lots were mortgaged by the spouses Jose and MarcelinaAquino to Guillermo Ponce
and his wife Adela (sincedeceased) as security for a loan of P2,200,000.00. Themortgages
were registered. Two of the lots, those covered byTCTs Nos. 92836 and 92837, were
afterwards sold by theAquinos to the Butuan Bay Wood Export Corporation, whichcaused an
adverse claim to be annotated on the certificatesof title.Gregorio Y. Limpin, Jr. obtained a
money judgment againstButuan Bay Wood Export Corporation in Court of FirstInstance of
Davao. To satisfy the judgment, the lots coveredby TCTs Nos. 92836 and 92837 were levied
upon on and soldat public auction to Limpin as the highest bidder for the sumof P517,485.41.On
order of the trial court, the covering titles were cancelledand issued to Limpin. Limpin sold the
two lots to Rogelio M.Sarmiento. By virtue of said sale, TCTs Nos. 285450 and285451 were
cancelled on No
vember 4, 1983, and TCT’S were
replaced in Sarmiento's name.Ponce filed suit against the Aquino spouses for
judicialforeclosure of the mortgage over the Aquinos' four lots.Judgment was rendered in favor
of Ponce. After the judgmentbecame final, the Trial Court, directed the sale at publicauction of
the 4 mortgaged lots to satisfy the judgment.The 4 lots, including those formerly covered by
TCTs Nos.92836 and 92837, were sold to Ponce himself whose bid wasthe highest and exactly
correspond to the judgment debt. Onthe same day, the sheriff's certificate of sale was
registered.Ponce then moved for the confirmation of the sale and theissuance of a writ of
possession in his favor covering the fourlots. But the Trial Court confirmed only the sale of the
lotscovered by TCTs Nos. 02839 and 92840, refusing to confirmthe sale or issue a writ of
possession in regard to the lotscovered by TCTs Nos. 92836 and 92837 on the ground
thatthose titles had already been cancelled and new ones issuedto Gregorio F. Limpin.Limpin
refused to participate in the hearings contending thatthe Court had no jurisdiction over his
person; but he didcomment that the mortgage over the lots covered by TCTsNos. 92836 and
92837 had been released by Ponce by virtueof a "Partial Release of Real Estate Mortgage".
The Trial Courtdenied Ponce's motion for reconsideration, whereupon hesought corrective relief
by filing a special civil action forcertiorari and mandamus in the Intermediate AppellateCourt,
impleading Limpin and Sarmiento, as privaterespondents.IAC set aside the judgment of the Trial
Court and issue a writof possession to Ponce with respect thereto, subject toSarmiento's equity
of redemption.Issue:Whether or not IAC erred in according superiority to themortgage rights of
Ponce over the levy and sale in favor of Limpin and the subsequent sale to Sarmiento.Held:NO.
The superiority of the mortgagee's lien over that of asubsequent judgment creditor is now
expressly provided inRule 39, Section 16 of the Revised Rules of Court, whichstates with regard
to the effect of levy on execution that itshall create a lien in favor of a judgment creditor over
theright title and interest of the judgment debtor in suchproperty at the time of the levy, subject
to the liens orencumbrances then existing.Using jurisprudence in Santiago v Dionisio, the Court
in thatcase held that:... [T]he effect of the failure to implead a subordinatelienholder or
subsequent purchaser or both is to render theforeclosure ineffective as against them, with the
result that