Spouses Arquiza v. Court of Appeals
REITERATIONFacts
The Antecedents: Spouses Godofredo and Remedios Arquiza obtained a P2.5 million loan from Equitable PCIBank, secured by a real estate mortgage on their Quezon City property. Upon default, the bank initiated extrajudicial foreclosure proceedings. The property was sold at public auction to the bank as the highest bidder, and a Certificate of Sale was issued. After the redemption period expired without redemption, the bank consolidated its ownership, leading to the issuance of a new Transfer Certificate of Title in its name. Procedural History: The Spouses Arquiza filed a complaint seeking the nullity of the loan, mortgage, and foreclosure sale, along with damages and injunctive relief. Concurrently, Equitable PCIBank filed an ex parte petition for a writ of possession to gain physical control of the foreclosed property. The Regional Trial Court (RTC) initially set the petition for hearing and allowed the Arquizas to file an answer, which they did, raising issues of non-forum shopping and litis pendentia. After a hearing where both parties presented evidence, the RTC granted the writ of possession. The Arquizas appealed to the Court of Appeals (CA), which affirmed the RTC's decision. The CA ruled that the petition for a writ of possession was not an initiatory pleading, thus not requiring a certificate against forum shopping, and that the right to possession is a consequence of ownership after foreclosure. The Petition: The Spouses Arquiza filed a petition for review on certiorari with the Supreme Court, arguing that the lower courts erred in granting the writ of possession. They contended that the ex parte petition should have been dismissed for failure to attach a certification against forum shopping, that the pendency of their nullity case (litis pendentia) should have abated the possession proceedings, and that their right to due process was violated. They also argued that the bank failed to substantiate its claim and that the validity of the mortgage and foreclosure should have been scrutinized. The Supreme Court denied the petition, holding that the writ of possession is a ministerial function, not an initiatory pleading, and that issues regarding the validity of the mortgage and foreclosure are to be resolved in a separate proceeding.
Issue(s)
Whether the RTC erred in giving due course to the ex parte petition for the issuance of a writ of possession and not dismissing it on grounds of lack of due process. Whether the RTC erred in not applying the rule on litis pendentia by not dismissing the petition due to the pendency of Civil Case No. Q-98-34094, and whether the RTC erred in ignoring the rule against forum shopping and the mandatory requirement for a certification of non-forum shopping. Whether the RTC erred in holding that Sections 4 & 5, Rule 7 of the 1997 Rules of Civil Procedure do not apply to the ex parte petition because it is a land registration case. Whether the RTC erred in granting the writ of possession despite the alleged nullity of the mortgage and foreclosure proceedings, thereby circumventing the issues in Civil Case No. Q-98-34094. Whether the RTC erred in granting the writ of possession, affirming the right to possession after consolidation of title in the buyer's name.
Ruling
The petition is denied for lack of merit. The assailed Decision and Resolution of the Court of Appeals are affirmed.
Ratio Decidendi
On due process: The petitioners' contention that they were denied due process was rejected. The Court noted that Section 7 of Act No. 3135, as amended, provides for an ex parte petition, meaning it is taken for the benefit of one party without notice to or contestation by the adverse party. However, in this case, the RTC went beyond the ex parte nature by setting the petition for hearing, allowing the petitioners to file an Answer, and even permitting them to adduce evidence. The fundamental law prohibits only the total absence of an opportunity to be heard, which was not the case here. On litis pendentia and forum shopping, and the requirement of a certificate of non-forum shopping: The Court held that litis pendentia requires the identity of parties, rights asserted, relief prayed for, and the two cases being such that a judgment in one would amount to res judicata in the other. The Court found that the petition for a writ of possession was not an ordinary action and any order or decision therein would not be determinative of the merits of Civil Case No. Q-98-34094. The issuance of a writ of possession is a ministerial function and a summary proceeding, not a judgment on the merits. Therefore, a separate case for annulment of mortgage and foreclosure sale cannot be barred by litis pendentia or res judicata. Consequently, forum shopping, which requires the existence of litis pendentia or res judicata, also does not exist. The Supreme Court reiterated that a certification against forum shopping is required only in a complaint or other initiatory pleading. The ex parte petition for the issuance of a writ of possession, though denominated as a petition, is in substance a motion and an incident in the transfer of title, not an initiatory pleading. Therefore, the requirement for a certification of non-forum shopping was not applicable. The Court cited Ponciano vs. Parentela, Jr., which held that a petitioner need not file a certification of non-forum shopping if his claims are not initiatory in character. Section 7 of Act No. 3135, as amended, specifically allows such a petition to be filed in the form of an ex parte motion. This issue is not addressed in the provided ratio. On the validity of the mortgage and foreclosure: The Court clarified that the judge to whom an application for a writ of possession is filed need not delve into the validity of the mortgage or the manner of its foreclosure. The issuance of the writ is a ministerial function. Any question regarding the validity and regularity of the sale should be determined in a subsequent proceeding as outlined in Section 8 of Act No. 3135. The Court cited Ong vs. Court of Appeals, which states that 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. On the right to possession: The Court affirmed the well-settled rule that after the consolidation of title in the buyer's name for failure of the mortgagor to redeem, the writ of possession becomes a matter of right. Its issuance to a purchaser in an extrajudicial foreclosure is merely a ministerial function. The basis of this right to possession is the purchaser's ownership of the property. The mere filing of an ex parte motion for the issuance of the writ of possession suffices, and no bond is required.
Main Doctrine
The issuance of a writ of possession in extrajudicial foreclosure is a ministerial function of the court, and any question regarding the validity of the mortgage or foreclosure sale should be determined in a subsequent proceeding, and does not bar the issuance of the writ.