Bukidnon Doctors' Hospital v. Metropolitan Bank & Trust
REITERATIONFacts
The Antecedents: Petitioner Bukidnon Doctors’ Hospital, Inc. (BDHI) obtained a loan from respondent Metropolitan Bank & Trust Company (MBTC) secured by a mortgage on six parcels of land. Upon BDHI's default, the mortgage was extrajudicially foreclosed, and MBTC emerged as the sole highest bidder. BDHI failed to redeem the properties, and MBTC consolidated ownership and obtained new certificates of title. Subsequently, BDHI expressed a desire to continue occupying the hospital premises and proposed to pay rent. MBTC agreed to lease the properties under certain terms, eventually agreeing on a monthly rental of ₱150,000 effective November 2001. Approximately a year and eight months later, MBTC demanded BDHI vacate the premises, which BDHI refused, invoking the lease agreement. Procedural History: MBTC filed an Ex Parte Motion for a Writ of Possession with the Regional Trial Court (RTC). The RTC granted the motion, issuing an order stating that the writ of possession could be demanded as a matter of right after the redemption period. BDHI's motion for reconsideration was denied. BDHI filed a Notice of Appeal to the Court of Appeals, but later withdrew it to file a petition for review on certiorari with the Supreme Court. BDHI also filed a separate action for specific performance, injunction, and damages, and a petition for rehabilitation. The Petition: BDHI filed a petition for review on certiorari with the Supreme Court, questioning the RTC's ruling that MBTC was entitled to a writ of possession despite the subsisting lease agreement.
Issue(s)
Whether the petition is tainted with forum shopping and violation of the hierarchy of courts. Whether the RTC correctly ruled that respondent, a former mortgagee-buyer, was still entitled to a writ of possession as a matter of right despite a lease agreement between itself and the former mortgagor-seller executed after respondent became the absolute owner of the foreclosed properties. Whether the issuance of a writ of possession was the proper remedy to oust the petitioner from the subject premises.
Ruling
The Supreme Court GRANTED the petition, REVERSED and SET ASIDE the Orders of the Regional Trial Court of Malaybalay City, Bukidnon, Branch 9, dated 17 November 2003 and 23 January 2004.
Ratio Decidendi
On the procedural issues (forum shopping and hierarchy of courts): The Court found that the petitioner was not guilty of forum shopping because the other cases filed involved different causes of action and subject matters. The Court also held that direct resort to the Supreme Court was proper as the sole issue raised was a question of law, as provided under Section 2(c), Rule 41 of the Rules of Court. The petitioner's withdrawal of its notice of appeal to the Court of Appeals and subsequent filing of a motion for extension to file a petition for review on certiorari with the Supreme Court was timely and in accordance with the rules. On the propriety of the writ of possession: The Court ruled that a writ of possession issues as a matter of course after the expiration of the redemption period in extrajudicial foreclosure proceedings. However, in this specific case, a writ of possession was not the correct remedy to oust the petitioner. The Court explained that possession can be exercised in one's own name or in the name of another, and that by entering into a lease agreement after consolidation of title, a new contractual relation was created between the parties. The petitioner, as a lessee, was a legitimate possessor under Article 525 of the Civil Code and could not be deprived of its lawful possession by a mere ex parte motion for a writ of possession. The Court cited Banco de Oro Savings and Mortgage Bank v. Court of Appeals to support the principle that when a lease agreement is subsequently entered into, the proper remedy to evict the mortgagor-turned-lessee is an action for ejectment or unlawful detainer, not a writ of possession, because the law on lease, not the law on extrajudicial foreclosure, then applies. On the proper remedy: The Court clarified that while a writ of possession is generally the remedy for a foreclosure buyer to gain possession, this rule changes when a subsequent lease agreement is established. The existence of an express or implied lease agreement transforms the relationship between the parties. In such a scenario, the mortgagor-lessee's continued occupation is no longer based on ownership rights being contested via a writ of possession, but on contractual rights as a lessee. Therefore, any dispute regarding the lessee's right to continue occupying the premises must be resolved through an ejectment suit (unlawful detainer) under Rule 70 of the Rules of Court, as this action is designed to settle issues pertaining to landlord-tenant relationships, the right to possess, and the reasonableness of rentals.
Main Doctrine
Where a lease agreement, whether express or implied, is subsequently entered into by the mortgagor and the mortgagee after the expiration of the redemption period and the consolidation of title in the name of the latter, an action for ejectment or unlawful detainer, not a motion for a writ of possession, is the proper remedy to evict the mortgagor-turned-lessee.