A.G. Development Corporation v. Court of Appeals
REITERATIONFacts
The Antecedents: Petitioner A.G. Development Corporation (AGDC) and the National Housing Authority (NHA) entered into a Memorandum of Agreement for the construction of a dormitory-apartment-commercial building. AGDC executed a promissory note and a real estate mortgage over its lot as security. NHA made an initial payment. NHA later rescinded the agreement due to AGDC's failure to complete the project on time and demanded the return of the initial payment, which AGDC refused. Consequently, the real estate mortgage was extra-judicially foreclosed, and the property was sold to NHA as the highest bidder. A new Transfer Certificate of Title was issued in favor of NHA after the redemption period expired. Procedural History: AGDC filed a complaint before the Regional Trial Court (RTC) of Makati for breach of contract, declaration of nullity of the promissory note and real estate mortgage, and annulment of the foreclosure sale and reversion of possession and title. NHA's motion to dismiss on the ground of litis pendentia was denied. Private respondent A. Francisco Realty and Development Corp. (AFRDC), claiming to be an innocent purchaser for value from NHA, filed a motion to intervene and subsequently a motion to dismiss, arguing that the Makati RTC lacked jurisdiction to annul a writ issued by the Quezon City RTC due to the principle of co-equal courts. The Makati RTC granted AFRDC's motion and dismissed AGDC's complaint. The Court of Appeals affirmed the dismissal. The Petition: AGDC challenged the Court of Appeals' decision before the Supreme Court, primarily questioning whether the issuance of a writ of possession by the Quezon City RTC constituted res judicata and barred its complaint.
Issue(s)
Whether the issuance of a writ of possession by the Quezon City RTC constitutes res judicata as to bar the complaint filed by AGDC. Whether the Makati RTC has jurisdiction to entertain the complaint and annul the writ issued by the Quezon City RTC.
Ruling
The Supreme Court granted the petition, reversed the decision of the Court of Appeals, and reinstated Civil Case No. 15495 before the Makati RTC. The Court held that the issuance of a writ of possession is not a judgment on the merits and thus cannot give rise to res judicata.
Ratio Decidendi
On the issue of res judicata and the effect of a writ of possession: The Court held that for res judicata to apply, several requisites must concur, including that the former judgment must be final, rendered by a court with jurisdiction, be on the merits, and involve identity of parties, subject matter, and causes of action. The Court clarified that the issuance of a writ of possession is not a judgment on the merits. A writ of possession is merely an order for the sheriff to place a person in possession of property, and its issuance in cases of extra-judicial foreclosure is a ministerial function where the court does not exercise official discretion or judgment. It is summary in nature and cannot be considered a judgment on the merits, which requires a determination of which party is right. Furthermore, the doctrine of res judicata applies only to judicial or quasi-judicial proceedings and not to the exercise of administrative powers or ministerial determinations. Cases disposed of on technical grounds do not fall within the doctrine of res judicata. Therefore, the issuance of the writ of possession by the Quezon City RTC was not a judgment on the merits but merely an incident in the transfer of title, and thus could not bar AGDC's subsequent action to annul the mortgage and foreclosure sale. The Court further noted that the proceeding for the issuance of a writ of possession under Act 3135 is not an "action" as defined by law, which requires the filing of a complaint. Instead, it is initiated by an ex parte motion. The term "action" does not include non-judicial proceedings, even if they are before a court, when the court does not act in a judicial capacity. The Court also cited jurisprudence holding that a proceeding to foreclose a mortgage by advertisement is not an action. Consequently, since the proceeding for the issuance of a writ of possession is not an action and not a judgment on the merits, the doctrine of res judicata cannot be applied. On the issue of jurisdiction: [The provided text does not contain a ratio regarding the Makati RTC's jurisdiction. More information is needed to complete this section.]
Main Doctrine
The issuance of a writ of possession in an extra-judicial foreclosure proceeding is a ministerial function and not a judgment on the merits, therefore, it cannot serve as a basis for the application of the doctrine of res judicata to bar a subsequent action to annul the real estate mortgage and the foreclosure sale.