Spouses Yulienco v. Court of Appeals
REITERATIONFacts
1. The Antecedents: Spouses Felipe and Flora Yulienco obtained a P20,000,000 loan from Advance Capital Corporation (ACC), secured by real estate mortgages on properties in Makati City, Benguet, and Quezon City. The Yuliencos failed to fully repay the loan, prompting ACC to initiate extrajudicial foreclosure proceedings on July 2, 1993, with an auction sale scheduled for July 30, 1993. 2. Procedural History: The Yuliencos filed a petition for injunction in the Makati RTC to stop the foreclosure, obtaining a temporary restraining order on July 28, 1993, which led to the cancellation of the initial auction. After the TRO expired, ACC requested a new auction, which was held on September 27, 1993, resulting in the sale of the Quezon City property to ACC. The Yuliencos' subsequent attempts to obtain a preliminary injunction against the consolidation of ownership were denied by the Makati RTC. ACC consolidated ownership, obtained a new title, and began paying property taxes. When the Yuliencos remained in possession, ACC filed a petition for a writ of possession with the Quezon City RTC, which was granted. The Court of Appeals affirmed the RTC's decision and lifted its own temporary restraining order. 3. The Petition: The Yuliencos filed the instant petition under Rule 45 of the Rules of Court, seeking to annul the Court of Appeals' decision. They argue that the CA erred by disregarding alleged fraud committed by ACC, violating their due process rights and leading to unjust enrichment. They also contend that the CA decided questions of substance not previously determined by the Supreme Court or decided them contrary to law and existing jurisprudence. The core of their argument is that the Quezon City RTC lacked jurisdiction due to a pending case in the Makati RTC challenging the validity of the loan and mortgage, and that the issuance of the writ of possession constitutes a deprivation of property without due process.
Issue(s)
Whether the Court of Appeals committed reversible error in affirming the RTC decision granting the writ of possession to respondent corporation; and whether the pendency of the Makati RTC case constitutes a prejudicial question. Whether prohibition lies to enjoin the Regional Trial Court of Quezon City from issuing to ACC the writ of possession over the property covered by TCT No. 119740; and the mortgagor's right to possession after foreclosure and failure to redeem.
Ruling
The petition is denied for lack of merit. The challenged decision of the Court of Appeals dated December 20, 1999, is affirmed.
Ratio Decidendi
On the jurisdiction of the Quezon City RTC and the propriety of the writ of possession; and on the pendency of the Makati RTC case as a prejudicial question: The Court reiterated that Act 3135 mandates that jurisdiction over a petition for a writ of possession lies in the court of the province, city, or municipality where the property is situated. Since the property in question is located in Quezon City, the RTC of Quezon City correctly took cognizance of the case. Furthermore, the Court emphasized that after the consolidation of title in the buyer's name due to the mortgagor's failure to redeem within the one-year period, the writ of possession becomes a matter of right. Its issuance to a purchaser in an extrajudicial foreclosure is a ministerial function, requiring no exercise of discretion by the judge. Therefore, the RTC granting the writ could not be charged with acting without jurisdiction or with grave abuse of discretion. The Court held that the pendency of Special Civil Case No. 93-2521 before the Makati RTC for injunction, reformation, and damages does not constitute a prejudicial question in relation to the present case. The Court clarified that a prejudicial question typically arises when a civil action and a criminal action are pending, and the resolution of the civil case is determinative of the guilt or innocence in the criminal case. In this instance, both cases are civil in nature, and the issues raised in the Makati case (validity of the promissory note and mortgage) are not determinative of the issue in the Quezon City case (entitlement to a writ of possession based on a consolidated title). The two cases can proceed independently. On the propriety of prohibition to enjoin the RTC; and on the mortgagor's right to possession after foreclosure and failure to redeem; and on the applicability of cited jurisprudence: The Court underscored that a mortgagor has only one year after the registration of the sale with the Register of Deeds to redeem the foreclosed property. After this period, the mortgagor loses all interest over it, as provided by Section 78 of the General Banking Act and Section 6 of Act 3135. Consequently, once title is consolidated in the buyer's name, the writ of possession becomes a ministerial duty of the court to issue. The petitioners, having failed to redeem the property within the statutory period, were stripped of their rights and could not prevent the issuance of the writ. The Court distinguished the present case from Cometa vs. IAC, where a writ of possession was denied due to a pending action directly putting in issue the validity of the levy and sale. In Cometa, the pending action was directly related to the foreclosure sale itself. Here, the Makati case for reformation of instrument did not directly put the sale and levy in issue, nor was it filed in the proper venue for challenging the foreclosure of the Quezon City property. The Court also cited Arcega vs. CA to reinforce the purchaser's right to possession based on their title, emphasizing that this right is clear and based on ownership. The issuance of a writ of possession may not be stayed by a pending action for annulment of mortgage or the foreclosure itself, until the foreclosure sale is annulled by a competent court.
Main Doctrine
The issuance of a writ of possession to a purchaser in an extrajudicial foreclosure is a ministerial function and a matter of right after the consolidation of title in the buyer's name due to the mortgagor's failure to redeem within the one-year period. A pending action questioning the validity of the mortgage or foreclosure does not constitute a prejudicial question that would stay the issuance of the writ, especially if such action is not filed in the proper venue.