680 Home Appliances v. Court of Appeals
MODIFICATIONFacts
The Antecedents: This case originated from the extrajudicial foreclosure proceedings initiated by Deutsche Bank AG London against 680 Home Appliances, Inc. (680 Home) due to default on a loan secured by a real estate mortgage. First Sovereign Asset Management, Inc. (FSAMI) emerged as the highest bidder in the foreclosure sale. Subsequently, FSAMI consolidated its ownership after 680 Home failed to exercise its right of redemption, leading to the issuance of a new title in FSAMI's name. Prior to this, on March 20, 2009, 680 Home had already initiated an action to annul the mortgage and foreclosure. Procedural History: Following the consolidation of ownership, FSAMI filed a petition for the ex parte issuance of a writ of possession with the Regional Trial Court (RTC) of Makati City, Branch 141. 680 Home's motion to intervene and opposition were denied. The RTC granted FSAMI's application, issuing a writ of possession and a notice to vacate. Aldanco Merlmar, Inc. (Aldanco), a lessee of 680 Home and current occupant, was allowed to intervene. Subsequently, 680 Home filed a petition to cancel the writ of possession, invoking Section 8 of Act No. 3135 and alleging the nullity of the foreclosure and Aldanco's adverse possession. The RTC denied this petition, which was affirmed by the Court of Appeals (CA). The CA ruled that 680 Home's petition was prematurely filed, as the 30-day period under Section 8 of Act No. 3135 only begins after the purchaser obtains possession, which had not occurred due to Aldanco's continued occupancy. The Petition: 680 Home filed a petition for certiorari under Rule 65 of the Rules of Court, assailing the CA's decision. It argued that the issuance of the writ of possession should not have been ministerial due to Aldanco's adverse claim, and that it should be exempted from the possession requirement of Section 8 of Act No. 3135. The respondents, Aldanco and FSAMI, contended that 680 Home should have filed a petition for review on certiorari under Rule 45, not Rule 65. FSAMI further argued that Aldanco's possession was not adverse. The Supreme Court found the petition procedurally erroneous, noting the availability of a motion for reconsideration and the proper remedy of an appeal under Rule 45. Even disregarding procedural defects, the Court found the petition unmeritorious, clarifying that Section 8 of Act No. 3135 applies only during the redemption period and not after the lapse of redemption and consolidation of title, rendering the remedy unavailable to 680 Home in this instance.
Issue(s)
Whether the petitioner's resort to a petition for certiorari under Rule 65 was the proper procedural remedy. Whether Section 8 of Act No. 3135 is the available remedy to set aside a writ of possession issued after the redemption period has expired and title has consolidated.
Ruling
The Supreme Court DISMISSED the petition and UPHOLD the Decision of the Court of Appeals.
Ratio Decidendi
On Issue 1: The Court ruled that the petition for certiorari under Rule 65 was procedurally erroneous. Certiorari is an extraordinary remedy available only when there is no appeal or any plain, speedy, and adequate remedy in the ordinary course of law. 680 Home failed to file a Motion for Reconsideration (MR) of the CA decision, which is a mandatory prerequisite for a Rule 65 petition. Furthermore, the proper remedy to question a final decision of the CA is an appeal by certiorari under Rule 45, which 680 Home failed to utilize. The Court noted that the 58-day delay in filing the petition indicated it was used as a substitute for a lost appeal, which is legally impermissible. On Issue 2: The Court clarified that Section 8 of Act No. 3135 is applicable only when the writ of possession is issued during the redemption period. Under Section 7 of Act No. 3135, a purchaser may acquire possession during the redemption period by posting a bond, and Section 8 allows the debtor to contest that possession and proceed against the bond. However, once the redemption period expires and the purchaser consolidates title, the right to possession becomes an absolute incident of ownership. At this stage, the bond required in Section 7 is no longer necessary, and the issuance of the writ becomes a ministerial duty of the court. Consequently, the summary remedy under Section 8 is no longer available to the debtor, who must instead pursue a separate action for annulment of mortgage or foreclosure. The Court distinguished Ong v. CA, noting it applied to a writ issued during the redemption period, and held that allowing a Section 8 remedy after consolidation would also violate the rule against forum shopping since 680 Home had already filed a separate action to annul the foreclosure.
Main Doctrine
Section 8 of Act No. 3135 provides a summary remedy to set aside a writ of possession only when such writ is issued during the redemption period pursuant to Section 7 of the same Act. The Court clarified that the bond requirement in Section 7 and the indemnity relief in Section 8 are inextricably linked, applying only while the debtor retains ownership of the foreclosed property. Once the redemption period expires without exercise of the right of redemption and the purchaser consolidates title, the right to possession becomes an absolute incident of ownership, rendering the summary procedure of Section 8 inapplicable. Consequently, any challenge to the purchaser's possession after consolidation must be pursued through a separate action, such as an action for recovery of ownership or annulment of foreclosure, rather than a petition within the land registration proceedings.