LZK Holdings and Development Corp. v. Planters Development Bank
REITERATIONFacts
The Antecedents: Petitioner LZK Holdings and Development Corporation (LZK) obtained a loan from respondent Planters Development Bank (Planters Bank), secured by a mortgage. Upon LZK's failure to pay, Planters Bank initiated extrajudicial foreclosure proceedings, becoming the highest bidder at the auction sale. LZK filed several complaints for annulment of the foreclosure and related documents, and sought injunctive relief. A Temporary Restraining Order (TRO) and later a Writ of Preliminary Injunction were issued by the RTC of Makati City, enjoining Planters Bank from consolidating title over the property, which LZK failed to post the required bond for initially. Planters Bank executed a final deed of sale and affidavit of consolidation of ownership. The San Fernando RTC initially held in abeyance the resolution of Planters Bank's ex parte petition for a writ of possession, citing the Makati RTC's order suspending consolidation of title. Procedural History: The Court of Appeals reversed the San Fernando RTC's order, holding that the writ of possession issues as a matter of course upon motion and approval of the bond, and that the Makati RTC's order merely enjoined consolidation of title, not the possession proceedings. The Court of Appeals also ruled that the order of the Makati RTC was not directed to the San Fernando RTC. The Petition: LZK Holdings and Development Corporation filed a petition for review assailing the Court of Appeals' decision, arguing that the appellate court erred in disregarding the writ of preliminary injunction issued by the Makati RTC, misapplied the doctrine of non-interference with courts of concurrent jurisdiction, failed to consider the bank's previous stance on venue, overlooked a prior ruling declaring the bank's consolidated title void, and that the bank engaged in forum shopping.
Issue(s)
Whether the Court of Appeals erred in disregarding the writ of preliminary injunction issued by the RTC of Makati City, specifically regarding its effect on the writ of possession. Whether the Court of Appeals misapplied the doctrine of non-interference with the orders of courts of coordinate and concurrent jurisdiction, considering the specific injunction order issued. Whether the respondent bank is entitled to the possession of the foreclosed property, addressing the ministerial duty of the court and the timing of the application for the writ of possession.
Ruling
The petition is denied for lack of merit. The Decision of the Court of Appeals is affirmed.
Ratio Decidendi
On the effect of the injunction order and entitlement to a writ of possession: The Court clarified that the injunction granted by the Makati RTC mainly enjoined the respondent bank from consolidating its title over the foreclosed property, not from taking possession. Therefore, it was incorrect to assume the injunction prohibited the respondent from taking possession. The injunction order stayed the consolidation of title, not the proceedings for the writ of possession. The Court reiterated that a writ of possession is a writ of execution to enforce a judgment for recovery of land. In cases of extrajudicial foreclosure, the writ may be issued to the purchaser within the one-year redemption period upon filing of a bond, or after the lapse of the redemption period without need of a bond. Any question regarding the regularity and validity of the sale is to be determined in a subsequent proceeding and cannot be raised to oppose the issuance of the writ, as the proceeding is ex parte. Injunctions are not allowed to prohibit the issuance of a writ of possession, nor does a pending action for annulment of the foreclosure sale stay the issuance of said writ. On the doctrine of non-interference: (This point is implicitly addressed in the discussion of the injunction's effect, as the Court of Appeals correctly interpreted the scope of the Makati RTC's order and did not interfere with it by allowing the writ of possession). The injunction order should be understood to have merely stayed the consolidation of title, not the proceedings for the writ of possession. On the ministerial duty of the court and entitlement to possession: The Court stressed that the ministerial duty of the trial court to issue the writ of possession arises when title to the property has been consolidated. However, even if title has not yet been consolidated, the purchaser in a foreclosure sale may still apply for a writ of possession during the redemption period. In this case, Planters Bank applied for the writ within the redemption period. The San Fernando RTC, given its ministerial duty, should have acted on the ex parte petition. Until the foreclosure sale is annulled by a competent court, the petitioner is bereft of valid title and the right to prevent the issuance of a writ of possession to the respondent. Thus, it remained the trial court's ministerial function to grant the possessory writ to the respondent.
Main Doctrine
The issuance of a writ of possession in cases of extrajudicial foreclosure is a ministerial duty of the court, which may be availed of by the purchaser either within the redemption period upon filing of a bond, or after the lapse of the redemption period without need of a bond. An injunction order enjoining the consolidation of title does not prohibit the issuance of a writ of possession, and a pending action for annulment of the foreclosure sale does not stay the issuance of said writ.