Fortaleza v. Lapitan
REITERATIONFacts
The Antecedents: Spouses Charlie and Ofelia Fortaleza (spouses Fortaleza) obtained a loan of P1.2 million from spouses Rolando and Amparo Lapitan (creditors) with a 34% annual interest. As security, spouses Fortaleza executed a Deed of Real Estate Mortgage over their residential property. Due to non-payment, the creditors initiated extrajudicial foreclosure proceedings. The property was auctioned, and the creditors' son, Dr. Raul Lapitan, and his wife Rona (spouses Lapitan), emerged as the highest bidders. A Certificate of Sale was issued and registered. After the one-year redemption period expired without redemption, spouses Lapitan executed an affidavit of consolidation of ownership and obtained a new Transfer Certificate of Title (TCT) in their names. Despite this, spouses Fortaleza refused to vacate the property. Procedural History: Spouses Lapitan filed an ex parte petition for a writ of possession. Spouses Fortaleza opposed, questioning the validity of the mortgage and foreclosure sale due to alleged exorbitant interest and non-compliance with posting requirements. The Regional Trial Court (RTC) allowed spouses Lapitan to present evidence ex parte due to the opposition's failure to appear. The RTC granted the writ of possession, deeming it a ministerial duty. Spouses Fortaleza moved for reconsideration, claiming the property was their family home and exempt from foreclosure, but the RTC denied it. The Court of Appeals (CA) affirmed the RTC's decision, stating that questions on the mortgage's validity cannot be raised to oppose the writ's issuance, as the proceeding is ex parte and non-litigious, and the issuance is ministerial until the sale is annulled. The Petition: Spouses Fortaleza filed a petition for review on certiorari, assailing the CA's decision. They argued that the CA violated its internal rules by rendering a decision without following the two-raffle system, indicating bias. They also contended that the CA erred in upholding the writ of possession despite alleged non-compliance with statutory requirements for foreclosure and fatal defects in the proceedings. Finally, they claimed they were prevented from exercising their right of redemption by an inequitable redemption price, especially since the property is their family home.
Issue(s)
Whether the Court of Appeals violated its Internal Rules of Procedure by rendering a decision without adhering to the two-raffle system, thereby rendering its decision void. Whether the Court of Appeals committed a reversible error in upholding the trial court's issuance of a writ of possession despite alleged failure of respondents to establish entitlement, non-compliance with statutory requirements for extrajudicial foreclosure, and fatal defects in the foreclosure proceedings. Whether the Court of Appeals erred in not holding that petitioners were prevented from exercising their right of redemption by respondents demanding a highly inequitable redemption price, particularly as the foreclosed property is their family home.
Ruling
The petition is denied. The Decision of the Court of Appeals dated January 10, 2007, and its Resolution dated June 6, 2007, are affirmed.
Ratio Decidendi
On the alleged violation of the CA's Internal Rules of Procedure: The Court clarified that while the 2002 Internal Rules of the Court of Appeals (IRCA) provided for a two-raffle system, this system was abandoned under the 2009 IRCA. The Court noted that rules of procedure can be modified and that there are no vested rights to rules of procedure. Furthermore, the 2002 IRCA did not specify the effect of non-compliance with the two-raffle system on the validity of a decision, nor did it prohibit a justice who handled the completion stage from writing the decision. The Court also emphasized that personal bias and prejudgment cannot be inferred from mere allegations of procedural breaches; clear and convincing evidence is required, which was absent in this case. The Court found that the opinions formed were based on the evidence presented. On the issuance of the writ of possession: The Court reiterated that the issuance of a writ of possession in extrajudicial foreclosure cases is generally a ministerial duty of the court, as provided by Section 7 of Act No. 3135, as amended. The Court distinguished the present case from precedents like Barican and Cometa, where exceptions were made due to the presence of adverse third parties or pending actions directly challenging the validity of the sale. In this case, the occupants were the judgment debtors themselves, no direct action for annulment of the foreclosure sale was filed, and there was no gross inadequacy of the purchase price. The Court stressed that questions regarding the validity of the mortgage or foreclosure cannot be raised to oppose the issuance of the writ, as these issues can only be determined after the writ is issued and implemented, or within 30 days after possession is given, as provided by Section 8 of Act No. 3135. On the exemption of the family home and the right of redemption: The Court found the argument regarding the family home's exemption from forced sale to be without merit because Article 155(3) of the Family Code allows forced sale for debts secured by mortgages. Even if the property were exempt, the spouses Fortaleza failed to set up and prove such exemption to the Sheriff before the sale. Furthermore, their reliance on cases allowing redemption after the period expired was misplaced, as those cases involved timely actions or tenders of payment. In this case, the spouses Fortaleza neither filed an action nor made a formal offer to redeem with a tender of payment within the one-year period, thus waiving or abandoning their right of redemption.
Main Doctrine
Unless a case falls under recognized exceptions, courts should maintain the ex parte, non-adversarial, summary, and ministerial nature of the issuance of a writ of possession, even if questions regarding the validity of the mortgage or foreclosure are raised, as these issues can only be determined after the writ has been issued and implemented.