RCBC SAVINGS BANK, PETITIONER-APPELLEE, VS. FE B. ZULUETA AND DENNIS B. VILLACORTA, RESPONDENTS-APPELLANTS.

RCBC Savings Bank versus Zulueta

The Case

This is an appeal by Fe B. Zulueta and Dennis B. Villacorta against the decision of the Regional Trial Court of Las Piñas City granting an ex parte petition for a writ of possession filed by RCBC Savings Bank. The bank had foreclosed a real estate mortgage extrajudicially, bought the property at the public auction, and after the redemption period lapsed without redemption, asked the court to place it in possession. The case matters because it gathers in one decision the whole law of the writ of possession after extrajudicial foreclosure: when the writ is a ministerial duty, when a third party in possession can block it, how the redemption period is reckoned, and what procedural objections cannot defeat the writ.

Procedural History

The bank filed an ex parte petition for a writ of possession before the Regional Trial Court of Las Piñas City. Atty. Jose R. Zulueta, claiming to be the husband of Fe B. Zulueta, moved to intervene and opposed the writ, but the trial court denied his motions, holding that under Act Number 3135 the issuance of the writ is a ministerial duty. The trial court then received the bank's evidence and, on 30 July 2008, granted the petition and directed the issuance of a writ of possession. The trial court later denied the intervenor's second motion for intervention. The respondents filed a motion for reconsideration, which the trial court denied on the ground that its decision had already become final and executory. The respondents then filed a notice of appeal and a record on appeal, and the case reached the Supreme Court by appeal.

Facts

On 14 April 2000, Fe B. Zulueta and Dennis B. Villacorta obtained a loan of one million three hundred fifty thousand pesos from RCBC Savings Bank and executed a real estate mortgage over a parcel of land covered by Transfer Certificate of Title Number T-75101. The parties agreed that upon breach, the bank could foreclose the mortgage extrajudicially.

The borrowers defaulted, and the bank instituted extrajudicial foreclosure proceedings. The property was sold at public auction on 15 September 2003, with the bank as the highest bidder, and a Certificate of Sale was issued to it. The Certificate of Sale was registered with the Register of Deeds of Las Piñas City on 07 September 2005.

On 21 February 2007, the bank filed its ex parte petition for a writ of possession, alleging that the redemption period had lapsed, that it had obtained title in its own name under Transfer Certificate of Title Number T-103774, and that the respondents ignored its notice to vacate. Atty. Zulueta intervened, claiming the property is conjugal and that he possesses it, and pointing to a pending civil case over the property. The trial court granted the writ, and the respondents appealed.

Issues

• Whether or not the decision of the trial court had already become final and executory when the respondents filed their motion for reconsideration within the fifteen day reglementary period.
• Whether or not the petition should be dismissed for failure to implead the third party buyer to whom the bank sold the property.
• Whether or not the bank proved by competent evidence that the redemption period had expired and that it is entitled to possession.
• Whether or not the claim of a third person holding the property adversely to the debtor defeats the issuance of the writ of possession.

Applicable Provisions

Section 1 of Rule 37 of the Rules of Court provides:

Within fifteen (15) days from notice of the judgment or final order, the aggrieved party may file a motion for reconsideration thereof.

This fixes the period the respondents had to move for reconsideration, and their timely filing kept the decision from becoming final.

Section 6 of Act Number 3135 provides:

In all cases in which an extrajudicial sale is made under the special power hereinbefore referred to, the debtor, his successors in interest or any judicial creditor or judgment creditor of said debtor, or any person having a lien on the property subsequent to the mortgage or deed of trust under which the property is sold, may redeem the same at any time within the term of one year from and after the date of the sale; and such redemption shall be governed by the provisions of sections four hundred and sixty-four to four hundred and sixty-six, inclusive, of the Code of Civil Procedure, in so far as these are not inconsistent with the provisions of this Act.

This is the redemption period whose expiry gave the bank its absolute right to possession.

Section 7 of Act Number 3135 provides:

The purchaser or his assigns may file a petition in the Court of First Instance of the province where the sale was made, for the issuance of a writ of possession, upon motion and after notice given to the person or persons claiming possession of the property, and the court shall grant the same if it appears that the property has not been redeemed within the period specified in the preceding section.

This is the procedural basis for the bank's ex parte petition and for the ministerial duty of the court to grant it.

Section 34 of Rule 132 of the Rules of Court provides:

The court shall consider no evidence which has not been formally offered.

This governs the objection that the registration stamp on the Certificate of Sale was not separately marked.

Ruling

On the first issue, the Court held that the decision had not become final. The respondents received the decision on 01 September 2008 and had fifteen days, or until 16 September 2008, to move for reconsideration; they filed on 16 September 2008, within the period. The trial court therefore erred in ruling that its decision had attained finality.

On the second issue, the Court held that the non joinder of the alleged indispensable party does not ipso facto merit dismissal. Parties may be added by order of the court at any stage, and it is only when the plaintiff refuses to implead an indispensable party despite such an order that dismissal may follow. No such order was issued, so the trial court correctly refused to dismiss.

On the third issue, the Court held that the bank proved the expiry of the redemption period. The Certificate of Sale was formally offered, marked, and admitted, and the registration stamp appearing on its face formed part of the admitted document; the Rules do not require each item on the face of a document to be separately marked.

On the fourth issue, the Court held that the exception for a third person holding the property adversely to the debtor did not apply. The intervenor's claim rested on bare allegations and on an unauthenticated machine copy of a Hong Kong marriage certificate, which is inadmissible, while a credit agreement listed Fe B. Zulueta as single. The Court quoted its earlier ruling:

In an extrajudicial foreclosure of real property, when the foreclosed property is in the possession of a third-party holding the same adversely to the defaulting debtor/mortgagor, the issuance by the RTC of a writ of possession in favor of the purchaser of the said real property ceases to be ministerial and may no longer be done ex parte. For the exception to apply, however, the property need not only be possessed by a third-party, but also held by the third-party adversely to the debtor/mortgagor.

Since the redemption period lapsed on 08 September 2006 and the bank held title in its own name when it applied on 21 February 2007, its right to possession had become absolute and the writ was a ministerial duty.

Doctrine

After the one year redemption period under Section 6 of Act Number 3135 expires without redemption, the purchaser's right to possession becomes absolute, founded on ownership, and the issuance of the writ of possession under Section 7 becomes a ministerial duty of the court upon proper application and proof of title. The exception, that the writ may not issue ex parte against a third person in possession, requires that the third person hold the property adversely to the debtor or mortgagor, by adverse title or right such as that of a co owner, tenant, or usufructuary, and the exception must be proved, not merely alleged. Non joinder of an indispensable party is not a ground for dismissal absent an order to implead. A timely motion for reconsideration filed within fifteen days from notice prevents finality.

Disposition

The appeal was denied and the decision of the trial court granting the writ of possession in favor of RCBC Savings Bank was affirmed.

Remember This

Memorize the line: after the redemption period lapses, the writ of possession is a ministerial duty because possession flows from ownership. Examiners use this case on the third party exception to the ex parte writ and on the reckoning of the redemption period from registration of the Certificate of Sale.