GC Dalton Industries, Inc. v. Equitable PCI Bank
REITERATIONFacts
The Antecedents: In 1999, Equitable PCI Bank extended a P30-million credit line to Camden Industries, Inc. (CII). To secure these loans, which included promissory notes and trust receipts, petitioner GC Dalton Industries, Inc. executed a third-party mortgage over its real properties in Quezon City and Bulacan. CII failed to pay its obligations, which by 2003 had ballooned to P68,149,132.40. Procedural History: On May 7, 2004, respondent filed a petition for extrajudicial foreclosure of petitioner's Bulacan properties. The properties were sold at auction on August 3, 2004, with respondent as the highest bidder. A certificate of sale was issued, and subsequently, the certificate of sale and an affidavit of consolidation of ownership were filed with the Register of Deeds of Bulacan on September 13, 2004, leading to the cancellation of petitioner's titles and the issuance of new ones in respondent's name. Respondent then filed an ex parte motion for a writ of possession on January 10, 2005. Meanwhile, CII had filed a separate action for specific performance and damages in the Pasig RTC, alleging full payment and fraudulent foreclosure. The Pasig RTC ruled in favor of CII, ordering respondent to return overpayments and the mortgaged properties. Respondent appealed this decision, but its appeal was dismissed by the Pasig RTC for failure to pay docket fees and for alleged forum-shopping. The Bulacan RTC, however, granted respondent's motion for a writ of possession on December 10, 2005. Petitioner challenged this order via a petition for certiorari to the Court of Appeals (CA), arguing it lacked factual and legal bases. The CA dismissed the petition, holding that an order for a writ of possession is not a judgment on the merits and thus not subject to the constitutional requirement of stating clear factual and legal bases. The Petition: Petitioner elevated the CA's resolution to the Supreme Court, assailing the January 13, 2006 resolution. Petitioner insists that the December 10, 2005 order of the Bulacan RTC was void for lacking factual and legal bases and that it conflicted with the Pasig RTC's order for the entry of its decision, which purportedly ordered the return of the properties. Petitioner argues that since CII had allegedly paid its obligation in full, the issuance of a writ of possession was erroneous. Respondent countered that petitioner raised questions of fact and failed to disclose that the Pasig RTC had partially reconsidered its earlier order and given due course to respondent's appeal.
Issue(s)
Whether the Court of Appeals erred in dismissing the petition for certiorari, which assailed the order of the Regional Trial Court granting the writ of possession. Whether the Regional Trial Court's order granting the writ of possession was void for allegedly lacking factual and legal bases. Whether the issuance of a writ of possession is a judgment on the merits contemplated by Section 14, Article VIII of the Constitution. Whether the mortgagor, a juridical person, lost its right of redemption over the foreclosed properties. Whether questions regarding the validity of the mortgage or foreclosure can be grounds for refusing a writ of possession.
Ruling
The petition is denied. The Court of Appeals correctly upheld the order of the Bulacan RTC granting the writ of possession.
Ratio Decidendi
On the propriety of the writ of possession and the CA's dismissal of the petition for certiorari: The issuance of a writ of possession to a purchaser in an extrajudicial foreclosure is summary and ministerial in nature, being merely an incident in the transfer of title. The Court of Appeals correctly ruled that the CA resolution upholding the Bulacan RTC's order was proper. On whether the RTC order granting the writ of possession was void: The trial court does not exercise discretion in its issuance. Therefore, an order for the issuance of a writ of possession is not a judgment on the merits contemplated by Section 14, Article VIII of the Constitution, which requires clear factual and legal bases. On the issuance of a writ of possession as a judgment on the merits: An order for the issuance of a writ of possession is not a judgment on the merits contemplated by Section 14, Article VIII of the Constitution, which requires clear factual and legal bases. On the loss of the right of redemption: Under Section 47 of the General Banking Law, a juridical person loses its right of redemption over foreclosed property upon the registration of the certificate of foreclosure sale within three months after foreclosure, whichever is earlier. In this case, respondent registered the certificate of sale and affidavit of consolidation on September 13, 2004, which terminated the redemption period. Consequently, petitioner, as the mortgagor, no longer had any legal interest in the Bulacan properties when it opposed the motion for a writ of possession on January 10, 2005. On questions regarding the validity of the mortgage or foreclosure as grounds for refusal and the availability of remedies: Any question regarding the validity of the mortgage or its foreclosure cannot be a legal ground for refusing to issue a writ of possession. Regardless of a pending suit for annulment, the purchaser is entitled to a writ of possession, without prejudice to the outcome of the annulment case. Even if ownership had consolidated, petitioner could have availed of the remedy under Section 8 of Act 3135 by filing a petition to annul the auction sale and cancel the writ of possession within 30 days after respondent was given possession. Petitioner failed to do so, and the period for availing this remedy had lapsed, precluding it from assailing the validity of the sale. The Pasig RTC's decision, even if it were final and executory, did not negate respondent's right to a writ of possession incident to the foreclosure sale. Relying solely on the Pasig RTC case for relief was a misstep.
Main Doctrine
The issuance of a writ of possession to a purchaser in an extrajudicial foreclosure is a ministerial and summary proceeding, and any question regarding the validity of the mortgage or foreclosure cannot be a legal ground for its refusal. The mortgagor loses all legal interest over the foreclosed property after the expiration of the redemption period.