Madriaga v. China Banking Corp.
REITERATIONFacts
1. The Antecedents: The underlying dispute originated from a sale agreement between the Spouses Trajano and Cesar V. Madriaga, Sr. (Madriaga, Sr.) for two residential properties. After Spouses Trajano failed to deliver the titles despite payment, Madriaga, Sr. sued for specific performance. A compromise agreement was reached, wherein Spouses Trajano were to secure a loan, settle their debt to Madriaga, Sr., and deliver the titles. However, Spouses Trajano defaulted, leading to the properties being levied upon and sold at an execution sale to Madriaga, Sr. Subsequently, Spouses Trajano obtained a loan from China Banking Corporation (China Bank), secured by a mortgage over the same properties. Upon their default, China Bank foreclosed the mortgage and acquired the properties. 2. Procedural History: China Bank filed an ex parte petition for a writ of possession, which was granted by the Regional Trial Court (RTC). Madriaga, Sr. opposed the writ, asserting his ownership based on the execution sale. The RTC denied his opposition and subsequent motions. The petitioner, Cesar V. Madriaga, Jr., who succeeded his father, then filed a motion to quash the writ, which was also denied by the RTC. The RTC reasoned that the issuance of the writ was ministerial and that the motion was mooted by the satisfaction of the writ. The petitioner appealed to the Court of Appeals (CA) via a petition for certiorari, arguing grave abuse of discretion. The CA affirmed the RTC's decision, holding that the motion to quash was moot and that the RTC did not commit grave abuse of discretion. The CA denied the motion for reconsideration, leading to the present petition. 3. The Petition: The petitioner seeks review of the CA's decision, arguing that the ex parte writ of possession was issued in violation of due process, as his father was not properly notified. He contends that his father's claim to the properties, derived from an execution sale, was adverse to Spouses Trajano and thus should not have been subject to an ex parte writ. The petitioner also asserts that China Bank's titles are void due to a flawed mortgage and that China Bank acted in bad faith by failing to investigate the titles, which had a notice of lis pendens. He maintains that his eviction via the ex parte writ, without his father's participation, warrants restoration to possession.
Issue(s)
Whether the petition for review has been rendered moot and academic by the satisfaction of the writ of possession. Whether the issuance of the ex parte writ of possession violated the petitioner's predecessor's right to due process. Whether the petitioner's predecessor was a third-party whose possession of the disputed properties was adverse to that of Spouses Trajano, thus warranting a deviation from the ministerial issuance of the writ of possession.
Ruling
The petition is denied for lack of merit. The case has been rendered moot and academic by the full implementation and satisfaction of the writ of possession. The issuance of the ex parte writ of possession did not violate the petitioner's predecessor's right to due process. The petitioner's predecessor was not a third-party whose possession was adverse to that of Spouses Trajano.
Ratio Decidendi
On the issue of mootness: The Supreme Court affirmed the CA's finding that the petition was moot and academic. The RTC had noted in its February 6, 2006 Order that the Sheriff's return indicated the writ of possession had been satisfied on April 15, 2005, with the petitioner's predecessor removed from the premises. Consequently, the petitioner's motion to quash/abate the writ was rendered moot and academic. The Court reiterated that judicial power presupposes actual controversies, and where no live subject of controversy exists, the Court ceases to have a reason to render a ruling, as a declaration would be of no practical use or value. The exceptions to the mootness rule, such as compelling constitutional issues or cases capable of repetition yet evading review, were not present. On the issue of due process: The Court held that the issuance of the ex parte writ of possession did not violate the petitioner's predecessor's right to due process. Section 7 of Act 3135 expressly allows a buyer at an auction sale to file a verified petition in the form of an ex parte motion for the issuance of a writ of possession. This procedure is for the benefit of one party without notice to or challenge by an adverse party, and it is summary in nature, not a judgment on the merits. The Court cited Sps. Ong v. Court of Appeals and Philippine National Bank v. Court of Appeals, emphasizing that such a petition is not strictly a judicial or litigious proceeding. Furthermore, the Court noted that the petitioner's predecessor had ample opportunity to air his side by filing an opposition, a motion to quash, and a motion for reconsideration. When a party has been afforded the opportunity to present his side, he cannot claim denial of due process, as held in Dayrit v. Phil. Bank of Communications. On the issue of adverse possession: The Supreme Court clarified that the petitioner's predecessor was not a third-party whose possession was adverse to that of Spouses Trajano. A writ of possession may be withheld from a purchaser if a third-party is actually holding the property adversely to the mortgagor, as provided in Section 33, Rule 39 of the Rules of Court. However, for this exception to apply, the possession must be held adversely in right, such as that of a co-owner, tenant, or usufructuary, as discussed in BPI Family Savings Bank, Inc. v. Golden Power Diesel Sales Center, Inc.. In this case, Madriaga, Sr.'s possession stemmed from a 1991 agreement for the sale of the properties with Spouses Trajano, and his subsequent claim through an execution sale was a consequence of Spouses Trajano's failure to comply with their obligations under that sale and a subsequent compromise agreement. Therefore, Madriaga, Sr.'s interest and possession originated from Spouses Trajano, confirming the existence of a previous transaction and not an adverse claim independent of them. The RTC had the authority to issue the ex parte writ of possession. The Court also noted that the petitioner had pursued a separate plenary action (Civil Case No. 406-M-2002) to resolve the contending ownership claims.
Main Doctrine
The issuance of an ex parte writ of possession in extrajudicial foreclosure proceedings is a ministerial duty of the court, and its satisfaction renders any motion to quash or abate moot and academic. While a third party in possession adversely to the mortgagor may be an exception, the possession must be adverse in right, not merely derived from the mortgagor.