G.R. No. L-47213. April 25, 1941.
EL BANCO NACIONAL FILIPINO, Petitioner, vs. THE JUDGE OF THE COURT OF FIRST INSTANCE OF MASBATE, and VENANCIO NERA, Respondents.

FACTS

On October 1, 1936, Benigno Titong obtained a loan of P450 from El Banco Nacional Filipino (the Bank), due on January 28, 1937, guaranteed by a surety bond from Felipe Zaragoza and Ventura Cabug. Upon the maturity of this first loan, which remained unpaid, Titong obtained another loan of P450 from the same Bank on the same date (January 28, 1937). This second loan was secured by a mortgage on the land in question.
For the unpaid first loan, the Bank filed a collection case in the Justice of the Peace Court of Masbate. A favorable judgment was rendered, and in the execution of that judgment, the subject property was sold at public auction on May 21, 1938, and adjudicated to Venancio Nera as the highest bidder. After the one-year period for the debtor’s right of redemption expired without being exercised, the provincial sheriff issued a final certificate of sale in favor of Nera.
Subsequently, the second loan also matured and remained unpaid by Titong. Since the property was mortgaged to secure this loan, the Bank, pursuant to Act No. 3135, petitioned for its sale. The property was sold at auction on May 15, 1939, and adjudicated to the Bank itself as the highest bidder. In this sale, Venancio Nera, who had already purchased the same property from the execution of the first loan, filed a third-party claim. However, the sale proceeded because the Bank posted the corresponding bond.
Following this sale to the Bank, it invoked Section 7 of Act No. 3135, as amended by Section 2 of Act No. 4118, and petitioned the Court of First Instance (CFI) to be placed in possession of the property upon posting a bond. Venancio Nera, who was in possession of the property by virtue of the prior sale to him, opposed this petition. The CFI sustained Nera’s opposition and denied the Bank’s petition for possession. The Bank now files this original petition for certiorari against the CFI Judge and Venancio Nera.

ISSUE

Whether the Court of First Instance acted without jurisdiction or with grave abuse of discretion in issuing the order denying the Bank’s petition for possession of the property.

RULING

The Supreme Court denied the petition for certiorari.
The Court held that the Bank’s act of petitioning the CFI for possession implied recognition of that court’s jurisdiction over the matter. The function of the CFI in exercising this jurisdiction under Act No. 3135 is not merely ministerial; the court may grant or deny the petition based on the circumstances. Nothing in the law indicates this function is ministerial; on the contrary, other provisions imply it is not, as the court may even set aside an order of possession after granting it.
The Court found no grave abuse of discretion in the CFI’s denial. It noted that possession of the property was not held by the Bank’s debtor (Titong) but by Venancio Nera, a third party who had acquired it apparently in a legal manner. It was significant that Nera purchased the property at a public auction in the execution of a judgment rendered in favor of the Bank itself. The Bank was presumed to know the proceedings of the case it initiated against its debtor for the first loan and, therefore, was presumed to know about the sale of the property to Nera to satisfy the Bank’s own judgment. Under these circumstances, the CFI did not act with grave abuse of discretion in denying the Bank’s petition for possession.