PLANTERS DEVELOPMENT BANK, PETITIONER-APPELLEE, VS. TITAN IKEDA CONSTRUCTION AND DEVELOPMENT CORPORATION, OPPOSITOR-APPELLANT.
SORONGON, J.:
Culled from the records are the following factual backdrop:
On November 21, 1996, oppositor-appellant Titan Ikeda Construction and Development Corporation (Titan for brevity) executed in favor of petitioner-appellee Planters Development Bank (Bank for brevity) two deeds of real estate mortgage over several condominium units to secure its loan obligations with the latter in the following amounts: 1) Php66,000,000.00[2] secured by CCT Nos. 4107[3], 4108[4], 4109[5], 4110[6], and 4111[7]; and 2) Php11,500,000.00[8] secured by CCT Nos. 3492[9] and 3493.[10]
Titan allegedly failed to pay its outstanding loan obligations amounting to Php43,470,081.17 which resulted in the filing of a petition for extra-judicial foreclosure of real estate mortgages by the Bank before the Regional Trial Court of Parañaque on September 11, 2009. At the public auction sale held on October 22, 2009 the Bank emerged as the highest bidder and to whose favor a Certificate of Sale[11] dated November 6, 2009 was consequently issued. On November 26, 2009, the Bank caused the registration and annotation of the certificate of sale at the back of the CCTs of the mortgaged properties.
The three-month redemption period prescribed under the General Banking Act expired without Titan redeeming the mortgaged condominium units. Thus, the Bank executed an affidavit of consolidation of ownership which was registered in the Registry of Deeds of Parañaque City on January 29, 2010. Pursuant thereto, said property registry cancelled CCT Nos. 4108, 4109, 4111, 3492, and 3493 registered in the name of Titan and issued in their stead CCT Nos. 010-2010001817[12], 010-2010001818[13], 010-2010001820[14], 010-2010001821[15], 010-2010001822[16] in the name of the Bank.
The Bank thereafter filed on March 3, 2010 the Ex-Parte Petition for Issuance of a Writ of Possession before the court a quo.
Previously, however, on February 3, 2010, Titan filed a Complaint for Breach of Contract and Damages with Prayer for a Temporary Restraining Order and Preliminary Injunction against the Bank, the Ex-Officio Sheriff of the RTC of Parañaque City and the Register of Deeds of Parañaque City[17] before the RTC of Paranaque, Branch 196 and docketed as Civil Case No. 10-0037. In the said complaint, Titan asked for the nullification of the auction sale of the subject properties and cancellation of annotations in the CCT’s based on the following grounds: 1) The Bank violated the mortgage agreement when it sold the two condominiums subject of the mortgage with CCT Nos. 4107 and 4110 to Philippine Chemstel Industries, Inc.; and 2) the conduct of the foreclosure proceedings and public auction sale was illegal because Titan was not in default of its obligation; no demand to pay was made upon Titan; and the filing of the extrajudicial foreclosure was unauthorized due to the absence of a secretary’s certificate.
Titan moved for the consolidation of Civil Case No. 10-0037 and
LRC Case Nos. 10-0029-10-0033, but its motion was denied by Order[18] of the trial court dated November 26, 2010.
The court a quo granted the Bank’s petition for issuance of writ of possession by Order[19] dated May 27, 2011, rationalizing as follows:
After evaluating petitioner’s oral and documentary evidence, this court is convinced that petitioner is entitled to a writ of possession. It appearing that all conditions for it had already been complied with. “The rule is that after the redemption period has expired, the purchaser of the foreclosed property has the right to be placed on possession thereof. “Possession then becomes an absolute right of the purchaser as owner, and upon proper application and proof of the title the issuance of writ of possession becomes a ministerial duty of the court” (Spouses Edmundo and Lourdes Sarrosa vs. Willy O. Dizon, G.R. No. 183027, July 26, 2010 citing United Coconut Planters Bank vs. Reyes, 193 SCRA 756 and F. David Enterprise vs. Insular Bank of Asia and America, 191 SCRA 516).
WHEREFORE, let a writ of possession issue in favor of petitioner Planters Development Bank and against Titan Ikeda Construction and Development Corporation, ordering all occupants, tenants and any and all persons claiming rights under it, to vacate the premises covered by CCT Nos. 4108, 4109, 4111, 3492 and 3493 (now CCT Nos. 010-2010001817, 010-2010001818, 010-2010001820, 010-2010001821 and 010-2010001822 in the name of petitioner). To serve this purpose, the Sheriff of this Court is hereby ordered to place petitioner, in possession thereof, with the assistance of the barangay tanods or local police if necessary.
SO ORDERED.[20]
Displeased, Titan then filed a Notice of Appeal[21] on June 14, 2011.
Thereafter, in accordance with the assailed Order, the sought Writ of Possession[22] was issued on July 4, 2011 commanding the Sheriff to place the Bank in possession of the subject condominium units and eject all its present occupants. The Sheriff, in turn, on July 5, 2011, issued Notices to Vacate[23] and served, together with the writ of possesstion, to Titan and all adverse occupants, tenants and persons claiming rights over the subject condominium units.
A day after the service of the writ of possession and notices to vacate or on July 6, 2011, Titan filed a Very Urgent Motion for Lifting and Setting Aside the Writ of Possession and Quashal of Notice to Vacate[24] alleging that there are third persons in adverse possession of the condominium units subject of the writ of possession and notices to vacate. Hence, the issuance by the court a quo of a writ of possession in favor of the Bank ceases to be ministerial and may no longer be done ex-parte. Titan asked for the deferment of the implementation of the writ of possession and the notice to vacate pending determination by the court a quo of the nature of the possession of these third persons.
On July 11, 2011, a certain Renato Austria Muyot (Muyot) filed an Urgent Motion for Special Order[25] also asking the court a quo to hold in abeyance the enforcement of the writ of possession. He claimed that he has been in possession of the three condominium units, covered by the writ of possession, namely: Unit 2-A of the Cleveland Tower and Units 30-D and 15-D of the Washington Tower, pursuant to a Contract of Lease with Option to Buy[26] executed between him and Titan on September 19, 2003. By virtue thereof, he had introduced necessary improvements in the said condominium units. He also lamented that the five day grace period for him to vacate and remove all these improvements is surely insufficient.
On July 19, 2011, Functional Desk Supplies (Functional for brevity) filed with this Court a Petition for Prohibition with Very Urgent Application for Issuance of a Writ of Preliminary Injunction and/or Temporary Restraining Order[27] against the Presiding Judge of the court a quo, Judge Aida Estrella Macapagal, Branch Clerk of Court Atty. Maria Corazon R. Millares, Branch Sheriff Alejandro P. Abrematea and herein petitioner-appellee Bank, docketed as CA-G.R. SP No. 120353. Functional questioned the issuance of the writ of possession and implementation of the notice to vacate based on the foregoing grounds: first, the issuance of the writ of possession was improper because there are third parties, including Functional, who are in adverse possession of the subject condominium units; and second, the Branch Sheriff was guilty of grave abuse of discretion when it issued a notice to vacate to an occupant, whose condominium unit is not among those covered by the writ of possession. In Resolutions dated August 1, 2011 and November 4, 2011, the Former Special Eleventh Division of the Court of Appeals granted[28] Functional’s prayer for a TRO and enjoined the respondents therein from implementing the writ of possession and notice to vacate.
On July 26, 2011, the court a quo issued an Order[29] denying Titans’ motion to lift and set aside the writ of possession and quashal of notice to vacate for failure of Titan’s counsel or any of its authorized representative to appear on the date of hearing despite due notice which according to the trial court constitutes abandonment or lack of interest to pursue its motions.
As mentioned earlier, Titan appealed to this Court the May 27, 2011 Order of the trial court granting the writ of possession based on two (2) issues, thus:
- WHETHER OR NOT PLANTERS DEVELOPMENT BANK IS ENTITLED TO THE POSSESSION OF THE AUCTIONED CONDOMINIUM UNITS CONSIDERING THAT THERE WAS DELIBERATE VIOLATION OF THE MORTGAGE CONTRACTS AND THE FORECLOSURE PROCEEDINGS AND SALE AT PUBLIC AUCTION WERE SADDLED WITH FATAL IRREGULARITIES; AND
- WHETHER OR NOT THERE WERE INNOCENT THIRD PARTIES WITH SUPERIOR RIGHTS AFFECTED BY THE IMPLEMENTATION OF THE WRIT OF POSSESSION.
In the first issue, Titan assails the issuance of the writ of possession on the ground that the foreclosure proceeding was illegally conducted. First, the Bank hastily foreclosed the subject condominium units without giving notice to Titan that it was already in default in the payment of its loan obligations; second, Titan was never informed of the foreclosure proceeding, the auction sale and issuance of the certificates of sale in favor of the Bank; third, the Bank sold two condominium units to Chemstel Industries, Inc. prior to the foreclosure proceeding; fourth, the redemption period should be one (1) year and not three-months as applied by the RTC; and fifth, Jose Acetre is not an authorized representative of the Bank. Considering the foregoing fatal infirmities surrounding the foreclosure proceedings, Titan submits that the issuance of the writ of possession ceases to be ministerial on the part of the court a quo.
Titan further argues that the court a quo should have never granted the application for the writ of possession because there are still pending cases involving the subject condominium units which should be settled ahead of it. Thus, it asserts the issuance of the writ of possession in favor of the Bank is tantamount to confiscation of its properties without due process of law.
We reject Titan’s contentions.
Section 7[30] of Act No. 3135[31], as amended by Act No. 4118[32], provides that a writ of possession may be issued to the purchaser in a foreclosure sale either (1) within the one (1) year redemption period upon the filing of a bond, or (2) after the lapse of the redemption period, without need of a bond.[33]
During the one-year redemption period, the purchaser may apply for a writ of possession by filing a petition in the form of an ex parte motion under oath, in the registration or cadastral proceedings of the registered property. The law requires only that the proper motion be filed, the bond approved and no third person is involved.[34] On the other hand, after the lapse of the redemption period, the purchaser, upon proper application and proof of title, has the right to be entitled to a writ of possession. It is at this point that the right of possession of the purchaser can be considered to have ripened into the absolute right of a confirmed owner. The issuance of the writ, upon proper application, is a ministerial function that effectively forbids the exercise by the court of any discretion.[35]
Notably in the present case, the Bank, being proclaimed as the highest and winning bidder in the foreclosure sale, has an absolute right to take possession of the foreclosed condominium units because Titan failed to redeem the same upon the expiration of the redemption period. Moreso, ownership of the said properties had already been consolidated and new CCT’s were in fact issued under the name of the Bank, hence, the issuance of the writ of possession in its favor does not involve exercise of discretion but becomes a mere ministerial duty of the trial court.
Contrary to the claim of Titan, we cannot recall the issuance of the writ of possession on the ground that the foreclosure proceeding was illegally and unlawfully conducted. It has been a long-established doctrine that any question regarding the validity of the mortgage or its foreclosure cannot be a legal ground for the refusal to issue a writ of possession. Regardless of whether Titan was indeed in default of his obligations; or whether there was lack of notice of the scheduled dates for foreclosure sale and public auction; or whether the subject condominiums units were sold to third-parties prior to the foreclosure sale; or whether the redemption period of Titan is three months or one year; or whether Jose Acetre is an authorized representative of the Bank; or whether there were pending cases involving the same subject condominium units, the purchaser is still entitled to a writ of possession without prejudice, of course, to the resolution of these issues in a separate and appropriate proceeding.[36] The ruling of the Supreme Court in Hon. Fernandez, RTC of Pasig City, Br. 158 and United Overseas Bank Phils. vs. Spouses Espinoza,[37] is fitting to the case at bar:
Consequently, the RTC under which the application for the issuance of a writ of possession over the subject property is pending cannot defer the issuance of the said writ in view of the pendency of an action for annulment of mortgage and foreclosure sale. The judge with whom an application for a writ of possession is filed need not look into the validity of the mortgage or the manner of its foreclosure.
Any question regarding the validity of the mortgage or its foreclosure cannot be a legal ground for the refusal to issue a writ of possession. Regardless of whether or not there is a pending suit for the annulment of the mortgage or the foreclosure itself, the purchaser is entitled to a writ of possession, without prejudice, of course, to the eventual outcome of the pending annulment case.
The spouses Espinoza’s position that the issuance of the writ of possession must be deferred pending resolution of Civil Case No. 66256 is therefore unavailing. As we have recounted above, this Court has long settled that a pending action for annulment of mortgage or foreclosure sale does not stay the issuance of the writ of possession.
Indeed, the proceeding in a petition for a writ of possession is ex parte and summary in nature. It is a judicial proceeding brought for the benefit of one party only and without notice by the court to any person adverse of interest. It is a proceeding wherein relief is granted without affording the person against whom the relief is sought the opportunity to be heard. Hence, the RTC may grant the petition in the absence of the mortgagors, who are, in this case, the spouses Espinoza.
The RTC, Branch 158, which issued the writ of possession cannot be adjudged to have committed grave abuse of discretion, nor can its order directing the issuance of said writ be considered patently illegal for, a fortiori, there is no discretion involved in its issuance of such an order, it being the ministerial duty of the trial court under the circumstances.
Anent the second issue, Titan insists that the ministerial duty of the court to issue a writ of possession when the mortgagor failed to redeem the property and ownership is already consolidated and titled under the name of the purchaser is not without any exception. Citing Section 33, Rule 39 of the Rules of Court, Titan pointed out that an exception to the ministerial nature of the issuance of a writ of possession is, if there is a third party holding the property adversely to the judgment debtor. In the instant case, Titan claimed that the subject condominium units have the following occupants: 1) Condominium Unit 15C (CCT No. 4108 Washington Tower – Functional Desk Supplies; 2) Condominium Unit 3D (CCT No. 4110) Washington Tower – Titan Ikeda Construction and Development Corporation; 3) Condominium Unit 15D (CCT No. 4111) Washington Tower – Titan Ikeda Construction and Development Corporation; 4) Condominium Unit 2A (CCT No. 3492) Cleveland Tower – Col. Renato Muyot; and 5) Condominium Unit 2D (CCT No. 3493) Cleveland Tower – Tony Yao. Ergo, the presence of third parties in adverse possession of the subject condominiums should have restrained the court a quo from exercising its ministerial duty of issuing the writ of possession.
Such a stance fails too to convince.
There is no dispute that Section 33, Rule 39 of the Rules of Court provides for an exception to the rule on the ministerial duty of the court to issue a writ of possession, thus:
Upon the expiration of the right of redemption, the purchaser or redemptioner shall be substituted to and acquire all the rights, title, interest and claim of the judgment obligor to the property as of the time of the levy. The possession of the property shall be given to the purchaser or last redemptioner by the same officer unless a third party is actually holding the property adversely to the judgment obligor.
Clear from the foregoing rule that the duty of a court to issue an ex parte writ of possession in favor of the purchaser in an extrajudicial foreclosure sale ceases to be ministerial when it appears that there is a third party in possession of the property who is claiming a right adverse to that of the debtor/mortgagor. But then, mere possession of the foreclosed property by a third person is not sufficient. Jurisprudence emphasized that the third party must possessed the property foreclosed adversely to that of the judgment debtor. In China Banking vs. Lozada,[38] the Supreme Court interpreted the meaning of “a third party who is actually holding the property adversely to the judgment obligor” thuswise:
The exception provided under Section 33 of Rule 39 of the Revised Rules of Court contemplates a situation in which a third party holds the property by adverse title or right, such as that of a co-owner, tenant or usufructuary. The co-owner, agricultural tenant, and usufructuary possess the property in their own right, and they are not merely the successor or transferee of the right of possession of another co-owner or the owner of the property.
In this case, Titan alleged that three out of the five condominium units foreclosed are in the possession of third parties, namely: Condominium Unit 15C in Washington Tower occupied by Functional with CCT Nos. 4108, Condominium Unit 2A in Cleveland Tower occupied by Col. Renato Muyot (Col. Muyot) with CCT No. 3492, and Condominium Unit 2D in Cleveland Tower occupied by Tony Yao (Yao) with CCT No. 3493. After a careful examination of the records of the case, we find that Functional, Col. Muyot and Yao cannot be considered as third parties claiming rights adverse to that of the judgment debtor. First, there is no evidence presented with respect to the nature of possession of Functional on Condominium Unit 15C with CCT Nos. 4108. In its Petition for Prohibition with Very Urgent Application for Issuance of a Writ of Preliminary Injunction and/or Temporary Restraining Order[39], Functional merely alleged that it is the actual occupant and possessor of Unit 15C in Washington Tower. Similarly, aside from the averment in the appellant’s brief that Yao possessed Condominium Unit 2D with CCT No. 3493, no proof was submitted that he is actually holding the said condominium unit adversely to Titan. Thus, in the absence of proof showing that Functional and Yao’s possession is adverse to that of Titan as the judgment debtor, this Court cannot apply the exception provided in Section 33, Rule 39 of the Rules of Court. Basic is the rule in civil cases that the party making the allegations has the burden of proving them by a preponderance of evidence. Mere averments will not suffice. More importantly, plain possession or occupation of the foreclosed property is not enough. In order for the exemption to operate, possession of a third-party must be adverse to that of the judgment debtor.
With respect to the case of Col. Muyot, Titan alleged that his possession over Condominium Unit 2A with CCT No. 3492 is by virtue of a Contract of Lease with Option to Buy[40]. Apparently a contract of lease does not make Col. Muyot’s possession adverse to that of Titan. Col. Muyot’s right to possess the subject condominium unit was derived from Titan under the terms and conditions of the Contract of Lease. In other words, Col. Muyot is merely a transferee or successor-in-interest of Titan. Hence, it cannot be said that Col. Muyot’s possession of the premises is independent of Titan’s possession. As lessee of Titan against whom the writ of possession could be unquestionably enforced, the said writs could as well be enforced against Col. Muyot.[41] In BPI Family Savings Bank, Inc. vs. Golden Power Diesel Sales Center, Inc.[42], citing Roxas vs. Buan[43], the Supreme Court ruled that the court cannot order for the suspension of the implementation of the writ of possession because respondents were mere successors-in-interest or transferees of the judgment debtor, hence, their possession over the subject properties cannot be considered as adverse. The pertinent rationalization of the High Court is hereunder quoted:
In this case, BPI Family invokes the general rule that they are entitled to a writ of possession because respondents are mere successors-in-interest of CEDEC and do not possess the properties adversely to CEDEC. Respondents, on the other hand, assert the exception and insist that they hold the properties adversely to CEDEC and that their possession is a sufficient obstacle to the ex parte issuance of a writ of possession in favor of BPI Family.
Respondents’ argument fails to persuade the Court. It is clear that respondents acquired possession over the properties pursuant to the Deed of Sale which provides that for P15,000,000 CEDEC will “sell, transfer and convey” to respondents the properties “free from all liens and encumbrances excepting the mortgage as may be subsisting in favor of the BPI FAMILY SAVINGS BANK.” Moreover, the Deed of Sale provides that respondents bind themselves to assume “the payment of the unpaid balance of the mortgage indebtedness of the VENDOR (CEDEC) amounting to P7,889,472.48, as of July 31, 1998, in favor of the aforementioned mortgagee (BPI Family) by the mortgage instruments and does hereby further agree to be bound by the precise terms and conditions therein contained.”
In Roxas v. Buan, we ruled:
It will be recalled that Roxas’ possession of the property was premised on its alleged sale to him by Valentin for the amount of P100,000.00. Assuming this to be true, it is readily apparent that Roxas holds title to and possesses the property as Valentin’s transferee. Any right he has to the property is necessarily derived from that of Valentin. As transferee, he steps into the latter’s shoes. Thus, in the instant case, considering that the property had already been sold at public auction pursuant to an extrajudicial foreclosure, the only interest that may be transferred by Valentin to Roxas is the right to redeem it within the period prescribed by law. Roxas is therefore the successor-in-interest of Valentin, to whom the latter had conveyed his interest in the property for the purpose of redemption. Consequently, Roxas’ occupancy of the property cannot be considered adverse to Valentin.
In this case, respondents’ possession of the properties was premised on the sale to them by CEDEC for the amount of P15,000,000. Therefore, respondents hold title to and possess the properties as CEDEC’s transferees and any right they have over the properties is derived from CEDEC. As transferees of CEDEC, respondents merely stepped into CEDEC’s shoes and are necessarily bound to acknowledge and respect the mortgage CEDEC had earlier executed in favor of BPI Family. Respondents are the successors-in-interest of CEDEC and thus, respondents’ occupancy over the properties cannot be considered adverse to CEDEC.
xxx xxx xxx
In this case, respondents cannot claim that their right to possession over the properties is analogous to any of these. Respondents cannot assert that their right of possession is adverse to that of CEDEC when they have no independent right of possession other than what they acquired from CEDEC. Since respondents are not holding the properties adversely to CEDEC, being the latter’s successors-in-interest, there was no reason for the trial court to order the suspension of the implementation of the writ of possession.
Verily, the present case is not in the category of the exception contemplated by law and jurisprudence, thus, we maintain the ministerial and ex parte nature of the issuance by the trial court of the writ of possession.
WHEREFORE, the appeal is DENIED for lack of merit. The Order of the Regional Trial Court (RTC) of Parañaque City, Branch 195 dated May 27, 2011 in LRC Case No. 10-0029 to 10-0033 is hereby AFFIRMED.
SO ORDERED.
Carandang, (Chairman), and Gonzales-Sison, JJ., concur.
[1] Rollo, pp. 46-48.
[2] Rollo, pp. 65-66.
[3] Rollo, pp. 51-52.
[4] Rollo, pp. 53-54.
[5] Rollo, pp. 55-56.
[6] Rollo, pp. 57-58.
[7] Rollo, pp. 59-60.
[8] Rollo, pp. 67-68.
[9] Rollo, pp. 61-62.
[10] Rollo, pp. 63-64.
[11] Records (238), pp. 12-13.
[12] Records (238), pp. 237-239.
[13] Records (238), pp. 240-242.
[14] Records (238), pp. 243-245.
[15] Records (238), pp. 246-248.
[16] Records (238), pp. 249-250.
[17] Rollo, pp. 69-74.
[18] Records (238), pp. 261-262.
[19] Supra at note no. 1
[20] Rollo, p. 48.
[21] Rollo, pp. 75-76.
[22] Rollo, p. 77.
[23] Records (242), pp. 1044-1048.
[24] Records (242), pp. 1013-1021.
[25] Records (242), pp. 1049-1053.
[26] Records (242), pp. 1054-1056.
[27] Rollo, pp. 79-118.
[28] Rollo, pp. 119-120.
[29] Records (242), p.1100.
[30] SEC. 7. In any sale made under the provisions of this Act, the purchaser may petition the Court of First Instance of the province or place where the property or any part thereof is situated, to give him possession thereof during the redemption period, furnishing bond in an amount equivalent to the use of the property for a period of twelve months, to indemnify the debtor in case it be shown that the sale was made without violating the mortgage or without complying with the requirements of this Act. Such petition shall be made under oath and filed in form of an ex parte motion in the registration or cadastral proceedings if the property is registered, or in special proceedings in the case of property registered under the Mortgage Law or under section one hundred and ninety-four of the Administrative Code, or of any other real property encumbered with a mortgage duly registered in the office of any register of deeds in accordance with any existing law, and in each case the clerk of the court shall, upon the filing of such petition, collect the fees specified in paragraph eleven of section one hundred and fourteen of Act Number Four hundred and ninety-six, as amended by Act Numbered Twenty-eight hundred and sixty-six, and the court shall, upon approval of the bond, order that a writ of possession issue, addressed to the sheriff of the province in which the property is situated, who shall execute said order immediately.
[31] An Act to Regulate the Sale of Property under Special Powers Inserted in or Annexed to Real-Estate Mortgages.
[32] An Act to Amend Act Numbered Thirty-One Hundred and Thirty-Five, Entitled “An Act to Regulate the Sale of Property Under Special Powers Inserted in or Annexed to Real-Estate Mortgages.”
[33] Metropolitan Bank and Trust Company vs. Hon. Abad Santos, G.R. No. 157867, December 15, 2009.
[34] Spouses Tolosa vs. UCPB, G.R. No. 183058, April 3, 2013.
[35] Nagtalon vs. UCPB, G.R. No. 172504, July 31, 2013.
[36] Hon. Fernandez vs. Spouses Espinoza, G.R. No. 156421, April 14, 2008.
[37] Ibid.
[38] G.R. No. 164919, July 4, 2008.
[39] Rollo, pp. 79-118.
[40] Rollo, pp. 135-137.
[41] Pagurayan vs. Reyes, G.R. No. 154577, July 23, 2008.
[42] G.R. No. 176019, January 12, 2011.
[43] G.R. No. L-53798, November 8, 1988.