Philippine National Bank v. Gotesco Tyan Ming Development
REITERATIONFacts
The Antecedents: Philippine National Bank (PNB), along with other banks, extended a P800,000,000.00 credit facility to Gotesco Tyan Ming Development, Inc. (GOTESCO), secured by a mortgage on a Pasig City property. GOTESCO defaulted on the loan, leading to foreclosure proceedings. The property was auctioned and awarded to PNB as the highest bidder. After GOTESCO failed to exercise its right of redemption within the one-year period, PNB consolidated the title in its name and subsequently filed an ex-parte petition for the issuance of a writ of possession. Procedural History: PNB filed its petition for a writ of possession with the Regional Trial Court (RTC) of Pasig City. GOTESCO then filed a motion to consolidate this petition with its pending civil case for annulment of foreclosure proceedings, specific performance, and damages against PNB. The RTC granted the motion for consolidation, ordering the records of the writ of possession case to be forwarded to the branch handling the civil case. PNB's motion for reconsideration was denied. Subsequently, PNB filed a petition for certiorari with the Court of Appeals (CA), which affirmed the RTC's orders. PNB's motion for reconsideration with the CA was also denied. The Petition: PNB filed the present petition for review, seeking to nullify the CA's decision and the RTC's orders. PNB argues that consolidating its ex-parte petition for a writ of possession, which is summary in nature, with GOTESCO's litigious civil action for annulment of foreclosure proceedings prejudices its right to immediate possession. PNB contends that a pending action for annulment of a foreclosure sale does not stay the issuance of a writ of possession and that the consolidation serves only to delay and frustrate its rightful acquisition of the property. PNB also sought a temporary restraining order and/or writ of preliminary injunction to enjoin the consolidated proceedings, which was initially granted by the Supreme Court.
Issue(s)
Whether the consolidation of an ex-parte petition for a writ of possession with a litigious civil action for annulment of foreclosure proceedings is proper. Whether the RTC committed grave abuse of discretion in ordering the consolidation of the two cases. Whether the consolidation prejudiced PNB's right to immediate possession of the foreclosed property.
Ruling
The petition is meritorious. The assailed Decision and Resolution of the Court of Appeals and the Orders of the Regional Trial Court are SET ASIDE. The Ex-Parte Petition for Issuance of a Writ of Possession and the Complaint for Annulment of Foreclosure, Specific Performance and Damages shall proceed and be heard independently and resolved with dispatch.
Ratio Decidendi
On the propriety of consolidating an ex-parte petition for a writ of possession with a litigious civil action: The Court reiterated that consolidation is proper when actions involve a common question of law or fact, arise from the same act, event or transaction, involve the same or like issues, and depend substantially on the same evidence, provided it does not give one party an undue advantage or prejudice substantial rights. While the Court has previously disregarded the technical difference between an action and a proceeding to promote expeditious resolution, as in Philippine Savings Bank v. Mañalac, Jr., this principle is not absolute. In the present case, the consolidation served none of the purposes of consolidation; instead, it delayed the issuance of the writ of possession, prejudiced PNB's right to immediate possession, and gave GOTESCO an undue advantage by allowing it to continue possessing the property despite the consolidation of title in PNB's name. The Court emphasized that a pending action for annulment of mortgage or foreclosure sale does not stay the issuance of the writ of possession, and consolidation runs counter to this doctrine. On whether the RTC committed grave abuse of discretion: The Court found that the RTC's exercise of discretion in ordering the consolidation was less than judicious, constituting grave abuse of discretion. The consolidation resulted in the delay of PNB's petition, which is supposed to be summary in nature, for three years. This delay, coupled with the fact that GOTESCO failed to redeem the property and instead filed a case to annul the foreclosure, indicated that the motion for consolidation was a ploy to delay, if not prevent, PNB from taking possession of the property it acquired at a public auction ten years prior. The Court noted that GOTESCO's maneuvering to delay the issuance of the writ of possession could not be countenanced. On whether the consolidation prejudiced PNB's right to immediate possession: The Court held that the consolidation clearly prejudiced PNB's right to immediate possession. Upon the expiration of the redemption period, the purchaser's right to possession becomes absolute. A petition for a writ of possession is a non-litigious proceeding, and its consolidation with a litigious civil action for annulment of foreclosure proceedings, specific performance, and damages, which is adversarial in character, would prejudice the purchaser's right to immediate possession. Citing De Vera v. Agloro and Teston v. Development Bank of the Philippines, the Court stated that consolidation should be denied when prejudice would result to any of the parties or would cause complications, delay, or restrict the rights of a party. The consolidation in this case directly contravened the principle that a pending action for annulment does not stay the issuance of a writ of possession.
Main Doctrine
The consolidation of an ex-parte petition for a writ of possession with a litigious civil action for annulment of foreclosure proceedings is generally improper as it defeats the summary nature of the former and prejudices the rights of the purchaser, unless it can be shown that consolidation will not cause undue advantage or prejudice to any party and will serve the ends of justice. In this case, the consolidation was found to have caused undue delay and prejudice to the petitioner's right to immediate possession.