GREEN ASIA CONSTRUCTION AND DEVELOPMENT CORPORATION AND SPS. RENATO AND DELIA LEGASPI, PETITIONERS, VS. THE HONORABLE COURT OF APPEALS AND PCI LEASING AND FINANCE, INC., RESPOND…

Green Asia Construction and Development Corporation versus PCI Leasing and Finance

The Case

This is a special civil action for certiorari brought by Green Asia Construction and Development Corporation and the spouses Renato and Delia Legaspi against PCI Leasing and Finance, Inc., assailing the decision and resolution of the Court of Appeals which affirmed the orders of the Regional Trial Court of Angeles City, Branch 57, in a proceeding for the issuance of a writ of possession following an extrajudicial foreclosure of real estate mortgage. The case matters because it settles two practical questions every practitioner meets in foreclosure work: whether a petition for a writ of possession needs a verification and certification against forum shopping at all, and what the debtor's remedy is under Section 8 of Act Number 3135 when he claims that the mortgage itself is void.

Procedural History

On April 12, 2000, PCI Leasing and Finance filed with the Regional Trial Court of Angeles City, Branch 57, a petition for the issuance of a writ of possession. The trial court granted the petition and directed the sheriff to eject Green Asia Construction and Development Corporation and all persons staying on the premises and to place PCI Leasing in possession. Green Asia then filed an urgent omnibus motion and a supplement to it, praying that the certificate of sale be set aside, the writ of possession cancelled, and its implementation suspended. The trial court denied the motion for lack of merit, and denied reconsideration as well. Green Asia elevated the matter to the Court of Appeals, which affirmed the assailed orders. Hence the present petition for certiorari before the Supreme Court, raising grave abuse of discretion amounting to lack or excess of jurisdiction.

Facts

On June 8, 1995, Green Asia Construction and Development Corporation, represented by its president Renato Legaspi, obtained a loan of 2,600,000 pesos from PCI Leasing and Finance, Inc. As security, the corporation, represented by the spouses Renato and Delia Legaspi, executed a real estate mortgage for 450,000 pesos in favor of PCI Leasing. The mortgage covered three parcels of land in Barrio Balibago, Angeles City, covered by three transfer certificates of title.

When Green Asia failed to pay the loan on maturity, the mortgage was foreclosed extrajudicially. PCI Leasing was the highest bidder at the foreclosure sale, and a certificate of sale dated February 3, 1998 was issued to it and registered with the Registry of Deeds of Angeles City.

On April 12, 2000, PCI Leasing filed its petition for a writ of possession. The trial court issued the writ. Green Asia then moved to set aside the sale and cancel the writ, alleging that there was no basis for the extrajudicial foreclosure because the mortgage was void. That claim of nullity is the heart of the controversy.

Issues

• Whether or not the petition for the issuance of a writ of possession is proper in form and substance, considering that the verification and certification against forum shopping was signed by a person not shown to be duly authorized by PCI Leasing.
• Whether or not appeal is the appropriate remedy from the orders of the trial court in a proceeding for the issuance of a writ of possession under Act Number 3135.

Applicable Provisions

Section 8 of Act Number 3135 provides:

Section 8. The debtor may, in the proceedings in which possession was requested, but not later than thirty days after the purchaser was given possession, petition that the sale be set aside and the writ of possession cancelled, specifying the damages suffered by him, because the mortgage was not violated or the sale was not made in accordance with the provisions hereof, and the court shall take cognizance of this petition in accordance with the summary procedure provided for in section one hundred and twelve of Act Numbered Four hundred and ninety-six; and if it finds the complaint of the debtor justified, it shall dispose in his favor of all or part of the bond furnished by the person who obtained possession. Either of the parties may appeal from the order of the judge in accordance with section fourteen of Act Numbered Four hundred and ninety-six; but the order of possession shall continue in effect during the pendency of the appeal.

This provision defines the debtor's remedy, the exclusive grounds for setting aside the sale, and the remedy of appeal, and it is the measure of whether Green Asia took the right path.

Ruling

On the first issue, the Court held that the petition was proper. A certification against forum shopping is required only in a complaint or a petition that is an initiatory pleading. The petition for a writ of possession is not initiatory. Although PCI Leasing called its pleading a petition, it is more properly a motion, because what distinguishes a motion from a petition is not its form or title but its purpose. The purpose of a motion is not to initiate litigation but to bring up a matter arising in the progress of the case. The Court stressed that an original action is not necessary to acquire possession in favor of the purchaser at an extrajudicial foreclosure, since the right to possession is based simply on the purchaser's ownership. A mere ex parte motion for the writ would suffice, and no verification and certification need be attached at all. It was therefore immaterial that the certification was signed by the lawyer of PCI Leasing.

On the second issue, the Court held that the remedy of the debtor is a petition to set aside the sale and cancel the writ of possession under Section 8 of Act Number 3135, and from any disposition on that matter, an appeal. But the Court noted that the grounds Green Asia raised, namely that the mortgage was void, are not covered by that remedy. The provision lists only two exclusive grounds: that the mortgage was not violated, and that the sale was not made in accordance with the provisions of the Act. Any question regarding the validity of the mortgage or its foreclosure cannot be a legal ground for refusing the issuance of a writ of possession. Regardless of any pending suit for annulment of the mortgage or the foreclosure, the purchaser is entitled to the writ. Green Asia should have filed a separate and independent action for annulment. The trial court therefore correctly denied the motions, and the Court of Appeals committed no grave abuse of discretion.

Doctrine

A certification against forum shopping is required only for initiatory pleadings; a petition for a writ of possession is in substance a motion, so no such certification is needed, and the purchaser's right to possession rests simply on ownership acquired at the foreclosure sale. Under Section 8 of Act Number 3135, the debtor's petition to set aside the sale and cancel the writ lies only on two exclusive grounds, that the mortgage was not violated or that the sale was not made in accordance with the Act; the validity of the mortgage or of the foreclosure is not among them and must be raised in a separate and independent action. The order of possession continues in effect during the pendency of an appeal.

Disposition

The petition was dismissed, the decision and resolution of the Court of Appeals were affirmed, and costs were taxed against the petitioners, so PCI Leasing and Finance, Inc. prevailed and retained possession.

Remember This

Memorize this line: a writ of possession issues on the purchaser's ownership alone, and the only grounds to resist it under Section 8 are that the mortgage was not violated or that the sale did not follow the Act. Examiners use this case to test the distinction between a motion and an initiatory pleading, and to ask where a claim of a void mortgage belongs, which is a separate action, not the possession proceedings.