Fernandez v. Espinoza
REITERATIONFacts
The Antecedents: Firematic Philippines, Inc. (FPI), represented by its President Gregorio Espinoza, obtained loans from United Overseas Bank (UOB) totaling P4,000,000.00, with trust receipts amounting to P6,325,588.71. As security, Sps. Gregorio and Joji Gador-Espinoza executed a Deed of Real Estate Mortgage over their property covered by TCT No. PT-84838. FPI defaulted on its loan obligations, leading UOB to extrajudicially foreclose the mortgaged property, with UOB being the highest bidder at the public auction sale on July 29, 1996. After the redemption period expired without redemption, UOB consolidated its title and obtained TCT No. PT-108565 in its name. Subsequently, FPI and the spouses Espinoza filed a Complaint (Civil Case No. 66256) for the nullification of the extrajudicial foreclosure proceedings and certificate of sale, alleging bad faith in the execution of the mortgage and unilateral rescission of a loan restructuring agreement by UOB, while also claiming substantial payments made and demanding an accounting. Procedural History: UOB filed an Ex-Parte Petition for Issuance of a Writ of Possession (LRC Case No. R-5792) before the RTC, Branch 158. The spouses Espinoza opposed this petition and moved for its consolidation with Civil Case No. 66256 pending before RTC, Branch 164. The RTC, Branch 158, denied the opposition and motion for consolidation in its Orders dated May 10, 2000, and July 10, 2000, and subsequently granted UOB's petition, ordering the issuance of a writ of possession in its favor in its Order dated July 13, 2000, later denying the spouses Espinoza's motion for reconsideration and clarification in its Order dated August 25, 2000. The spouses Espinoza then filed a Petition for Certiorari with the Court of Appeals (CA-G.R. SP No. 60865), alleging grave abuse of discretion by the RTC, and the Court of Appeals reversed the RTC Orders, holding that the issuance of the writ of possession ceased to be ministerial due to peculiar and equitable circumstances. The Petition: UOB filed a Petition for Review on Certiorari with the Supreme Court, assailing the Court of Appeals' Decision and Resolution.
Issue(s)
Whether the Court of Appeals committed gross and reversible error in giving due course to the spouses Espinoza’s Petition for Certiorari. Whether the Court of Appeals committed gross and reversible error in not declaring that UOB is entitled to the issuance of the writ of possession.
Ruling
The Supreme Court granted the petition, reversed and set aside the Decision and Resolution of the Court of Appeals, and reinstated the Orders of the Regional Trial Court, Branch 158.
Ratio Decidendi
On the Court of Appeals giving due course to the petition: The Court found that the Court of Appeals erred in reversing the RTC's Orders. The RTC, in denying the motion for consolidation and granting the writ of possession, acted in accordance with law and settled jurisprudence. The issuance of the writ was a ministerial duty, and the RTC judge cannot be charged with grave abuse of discretion for performing such a duty. Therefore, certiorari was not the proper remedy for the spouses Espinoza, as there was no grave abuse of discretion amounting to lack or excess of jurisdiction on the part of the RTC. The appellate court's reversal was based on an erroneous application of exceptions to the general rule regarding the ministerial nature of issuing a writ of possession. On the entitlement to the issuance of the writ of possession: The Court reiterated that under Act No. 3135, as amended, the issuance of a writ of possession in cases of extrajudicial foreclosure is a ministerial duty of the court. The purchaser at the foreclosure sale, upon consolidation of title and failure of the mortgagor to redeem the property, becomes the absolute owner and is entitled to possession as a matter of right. The RTC judge has no discretion in granting the writ once the legal requirements are met. The Court emphasized that any question regarding the validity of the mortgage or the foreclosure proceedings should be raised in a separate proceeding and does not serve as a ground to refuse the issuance of the writ of possession. The proceeding for the issuance of a writ of possession is ex parte and summary in nature, and it can proceed independently of any pending action for annulment of the mortgage or foreclosure sale. The Court found that the spouses Espinoza's claim of peculiar and equitable circumstances, as relied upon by the Court of Appeals, were not sufficiently established to warrant a deviation from the established rule, unlike in cases such as Cometa and Barican. The ruling in Vaca v. Court of Appeals was deemed on all fours with the present petition, supporting UOB's entitlement to the writ as a matter of right.
Main Doctrine
The issuance of a writ of possession in extrajudicial foreclosure proceedings is a ministerial duty of the court, and the pendency of an action for annulment of the mortgage or foreclosure sale does not stay its issuance, absent peculiar and equitable circumstances that would justify a deviation from the general rule.