Veloso v. Intermediate Appellate Court
REITERATIONFacts
The Antecedents: The petitioners, spouses Romeo and Delia Veloso, and Globe Engineering Corporation, mortgaged a house and lot to State Investment House, Inc. (SIHI) as security for a P200,000.00 loan. After Globe Engineering Corporation's request for an additional loan was denied and no payment was made on the original loan, SIHI initiated extrajudicial foreclosure proceedings. The property was sold at public auction on December 4, 1980, with SIHI emerging as the highest bidder. The redemption period expired without any redemption being made by the petitioners. Procedural History: Following the foreclosure and expiration of the redemption period, SIHI filed an ex parte petition for a writ of possession with the Regional Trial Court (RTC) of Quezon City. The RTC required SIHI to serve notice on the petitioners, who then filed an opposition and a motion for reconsideration, asserting claims related to the loan contracts, an alleged fire that damaged the property, and insurance proceeds. The RTC denied these motions and issued an alias writ of possession. The petitioners appealed, but the RTC denied due course to the appeal and allowed SIHI to break open the property's locks. The petitioners were subsequently ejected from the property. They then filed a petition for certiorari and mandamus with the Intermediate Appellate Court (IAC), which initially issued a temporary restraining order but ultimately dismissed their petition. The petitioners appealed to the Supreme Court. The Petition: The petitioners seek review of the IAC's decision, arguing they were denied due process by not being allowed to present evidence, that the Quezon City RTC was not the proper venue for the writ of possession proceedings, and that a pending civil case for annulment of the mortgage constituted a prejudicial question. They also contend that insurance proceeds from a fire that damaged the property should have been applied to their mortgage obligation. The Supreme Court is asked to determine if the Quezon City RTC had the authority to issue the writ of possession and if the petitioners' arguments warrant overturning the lower courts' decisions.
Issue(s)
Whether the petitioners were denied due process and whether the Regional Trial Court of Quezon City had the correct venue to issue the writ of possession. Whether the pendency of Civil Case No. 136559 in the Regional Trial Court of Manila constituted a prejudicial question. Whether the insurance proceeds from the fire damage should have been applied to extinguish the mortgage obligation. Whether the mortgagee is entitled to a writ of possession.
Ruling
The petition is DENIED. The restraining order issued on February 17, 1986, is LIFTED AND SET ASIDE.
Ratio Decidendi
On the denial of due process and venue: The Court held that the petitioners were not denied due process as the Quezon City RTC gave them a chance to be heard despite the petition being ex parte. The Court affirmed that Section 7 of Act 3135 clearly states that the petition for a writ of possession should be filed in the court of the province or place where the property is situated, making the Quezon City RTC the proper venue. The Court reiterated that it is the ministerial duty of the court to issue the writ of possession upon application by the purchaser in a foreclosure sale, especially after the redemption period has expired and ownership has been consolidated. On the issue of prejudicial question: The Court ruled that the pendency of Civil Case No. 136559, which sought the annulment of the auction sale and reformation of the mortgage contract, was of no moment and did not bar the issuance of the writ of possession. The Court emphasized that the petitioners did not impugn the validity of the mortgage at its inception, but rather events occurring after its execution. The tenability of their challenge could be determined in the civil action, but it did not prevent the issuance of a writ of possession to the mortgagee who had foreclosed the property. On the application of insurance proceeds: The Court found that the petitioners failed to demonstrate how the insurance proceeds should have been applied to extinguish the mortgage obligation, especially since they did not impugn the validity of the mortgage itself. The Court noted that the issue of the mortgage's validity was being litigated in the Manila RTC case, and the issuance of the writ of possession was a separate matter based on the foreclosure proceedings. On the right to a writ of possession: The Court reiterated the axiom that a mortgagee who effects extrajudicial foreclosure is entitled to a writ of possession. It is a ministerial duty of the court to issue this writ upon the mortgagee's ex parte application, even before the expiration of the redemption period. After the redemption period lapses without redemption, the writ must issue to place the purchaser in possession. The conveyance of the property to the respondent vested it with the right to possession, making it the sheriff's inescapable duty to place the respondent in possession.
Main Doctrine
A mortgagee who effects the extrajudicial foreclosure of a mortgage is entitled to a writ of possession over the property foreclosed, and it is the ministerial duty of the Regional Trial Court to issue said writ upon the mortgagee's ex parte application, even before the expiration of the period of redemption. The pendency of an action for annulment of the mortgage or foreclosure sale does not bar the issuance of a writ of possession.