UNION BANK OF THE PHILIPPINES, PETITIONER, VS. HON. ENCARNACION JAJA G. MOYA, IN HER CAPACITY AS PRESIDING JUDGE OF BRANCH 146 OF THE REGIONAL TRIAL COURT OF MAKATI CITY, TERESI…

Union Bank of the Philippines versus Moya

The Case

This is a special civil action for certiorari under Rule 65 of the Rules of Court, brought by Union Bank of the Philippines against Judge Encarnacion Jaja G. Moya, in her capacity as Presiding Judge of Branch 146 of the Regional Trial Court of Makati City, and against Teresita S. Terencio and Virgilio R. Valdez. Union Bank asks the Supreme Court to annul two orders of the trial court that allowed Valdez, a stranger to the foreclosure, to intervene in an ex parte petition for a writ of possession. The case matters because it draws a bright line: an ex parte proceeding for a writ of possession after an extrajudicial foreclosure is not a proper forum for intervention, and the writ is a ministerial duty of the court.

Procedural History

Union Bank filed an ex parte petition for the issuance of a writ of possession before the Regional Trial Court of Makati City, Branch 146. Before the court could rule, Valdez filed a motion for leave to intervene. The trial court granted the motion in its order dated October 19, 2012, and set the presentation of the intervenor's evidence. Union Bank moved for reconsideration, but the trial court denied it in its order dated May 28, 2013. Union Bank then went directly to the Supreme Court by petition for certiorari under Rule 65, imputing grave abuse of discretion amounting to lack or excess of jurisdiction to the trial court.

Facts

On March 20, 2007, Teresita S. Terencio executed a real estate mortgage in favor of Union Bank over a parcel of land in Bangkal, Makati, covered by a transfer certificate of title, to secure a loan with a principal amount of 5,000,000 pesos. Terencio defaulted. On September 12, 2008, Union Bank filed a petition for extrajudicial foreclosure under Act Number 3135, as amended. After notice and publication, the property was sold at public auction to Union Bank as the highest bidder. Upon the expiration of the one-year redemption period, Union Bank consolidated its ownership, the old title was cancelled, and a new title was issued in its name.

Terencio refused to vacate despite demands, so on March 7, 2012, Union Bank filed an ex parte petition for a writ of possession. It presented its witnesses and documentary evidence at an ex parte hearing.

On June 22, 2012, before the trial court could decide, Virgilio R. Valdez filed a motion for leave to intervene. He claimed to be the former registered owner and said he had transferred the title to Terencio by an absolute deed of sale without full payment, on her plea that she needed the title to secure a loan. He annotated an adverse claim, and he asked that the foreclosure sale be declared void and the writ of possession denied. Union Bank opposed the motion on three grounds: the motion violated the three-day notice rule, intervention is improper in an ex parte proceeding, and Valdez had not shown that he was in possession of the property under an adverse title.

Issues

• Whether or not the trial court committed grave abuse of discretion in granting the motion to intervene despite its non-compliance with the three-day notice rule.
• Whether or not intervention is proper in an ex parte proceeding for the issuance of a writ of possession after an extrajudicial foreclosure.
• Whether or not Valdez established a legal interest and the requisites for a valid intervention.

Applicable Provisions

Section 1, Rule 19 of the Rules of Court defines who may intervene:

SECTION 1. Who may intervene. – A person who has a legal interest in the matter in litigation, or in the success of either of the parties, or an interest against both, or is so situated as to be adversely affected by a distribution or other disposition of property in the custody of the court or an officer thereof may, with leave of court, be allowed to intervene in the action. The court shall consider whether or not the intervention will unduly delay or prejudice the adjudication of the rights of the original parties, and whether or not the intervenor's rights may be fully protected in a separate proceeding.

This provision supplies the three factors the Court applies: a direct legal interest, no undue delay or prejudice to the original parties, and the availability of a separate proceeding to protect the intervenor's rights.

Ruling

On the first issue, the Court held that any defect from non-compliance with the three-day notice rule was cured, because Union Bank was able to file a timely opposition that the trial court duly considered. The rule, the Court said, is not a hard and fast rule, and a liberal construction is proper where the lapse has not prejudiced the adverse party.

On the second and third issues, the Court ruled for Union Bank. Intervention is not a matter of right but is left to the sound discretion of the trial court, and the requisites must concur. The Court held that allowing Valdez to intervene would unduly delay the adjudication of Union Bank's rights, because it would entail a full-blown trial, which is directly opposed to the very nature of an ex parte proceeding that requires no notice to adverse parties and no hearing. The purchaser in an extrajudicial foreclosure sale is entitled to possession, and the issuance of the writ is a ministerial duty of the court. The Court quoted its earlier ruling that an ex parte proceeding is not a proper forum for a motion for intervention.

The Court also found that Valdez failed to establish a legal right or interest. The obligation to issue the writ is ministerial unless a third party is actually holding the property by adverse title or right, and Valdez did not sufficiently establish his possession with prima facie evidence. He admitted the absolute deed of sale and the new title in Terencio's name, and the records showed that Terencio's address was the subject property and that she, not Valdez, received the demand letters. Possession and adverse title had to be shown in the motion itself, not later at trial. Finally, the trial court's jurisdiction in the ex parte proceeding was limited to issuing the writ; it had no jurisdiction to determine who was the rightful owner. The proper remedy was an accion reivindicatoria, an action to recover ownership, and not a motion for intervention.

Doctrine

An ex parte proceeding for the issuance of a writ of possession under Act Number 3135 is not a proper forum for a motion for intervention. The issuance of the writ in favor of the purchaser in an extrajudicial foreclosure sale is a ministerial duty of the court, and the proceeding requires no notice to adverse parties and no hearing. Intervention under Section 1, Rule 19 of the Rules of Court is not a matter of right but is subject to the sound discretion of the court, and three factors must concur: a direct legal interest, no undue delay or prejudice to the original parties, and the availability of a separate proceeding to protect the intervenor's rights. A third party claiming ownership must establish possession under an adverse title in the motion itself, and the proper remedy to nullify the foreclosure and the new title is an accion reivindicatoria.

Disposition

The petition was granted; the two orders of the trial court were reversed and set aside, and Valdez's motion for leave to intervene was denied.

Remember This

Memorize this line: an ex parte petition for a writ of possession is not a proper forum for intervention, and the writ is a ministerial duty. Examiners use this case to test the requisites of intervention under Rule 19 and the ministerial nature of the writ of possession in extrajudicial foreclosure.