Teves v. Aqui
REITERATIONFacts
The Antecedents: Spouses Godfrey and Ma. Teresa Teves obtained loans from Standard Chartered Bank (Standard), securing them with a mortgage on their property. Upon defaulting, Standard extrajudicially foreclosed the mortgage, and the property was sold to Integrated Credit & Corporate Services Co. (ICCS). After the redemption period expired on May 23, 2007, ICCS became the owner, and subsequently, respondent Carol Aqui acquired the property from ICCS. The Spouses Teves continued to occupy the property and collected monthly rentals from a lessee, Ms. Sarah Park, despite no longer having ownership rights. Procedural History: ICCS filed a petition for a writ of possession with the Regional Trial Court (RTC) of Cebu City, which was later substituted by Carol Aqui. The RTC issued a writ of possession in favor of ICCS. Subsequently, the RTC issued two Orders on July 14, 2010: one denying the Spouses Teves' motion for reconsideration of the writ of possession, and another ordering them to deliver the monthly rentals collected from May 24, 2007, until they surrendered possession. The RTC denied the Spouses Teves' partial motion for reconsideration of the second order on September 2, 2010. The Spouses Teves then filed a Petition for Certiorari with the Court of Appeals (CA), arguing that the RTC gravely abused its discretion in ordering the turnover of back rentals and in not considering a compromise agreement from a separate case. The CA dismissed the petition, holding that certiorari was an improper remedy as the RTC's orders were final and appealable under Rule 41, not interlocutory. The Petition: The Spouses Teves filed a Petition for Review on Certiorari with the Supreme Court, assailing the CA's decision. They argue that the RTC, in a petition for a writ of possession, lacked jurisdiction to award back rentals, as this should be pursued in an independent action. They also question whether the RTC's orders were final or interlocutory. The Supreme Court denied the petition, holding that the RTC had the authority to order the turnover of rentals collected by the Spouses Teves after the redemption period expired, as these fruits belonged to the new owner. The Court also clarified that the distinction between land registration courts and ordinary courts has been removed, and the RTC could utilize auxiliary means to carry its jurisdiction into effect, including ordering the return of unjustly collected rentals. The Court found that the compromise agreement in the separate case did not cover the issue of rentals from the foreclosed property.
Issue(s)
Can collection of back rentals be awarded in an ex parte application for a writ of possession under Act 3135? Are the Orders dated July 14, 2010 and September 2, 2010 final orders and not interlocutory which can be subjected to certiorari under Rule 65?
Ruling
The Petition is denied. The Court of Appeals correctly dismissed the Petition for Certiorari, and the RTC did not err in ordering the surrender of rentals collected by the petitioners after the expiration of the redemption period.
Ratio Decidendi
On the issue of whether collection of back rentals can be awarded in an ex parte application for a writ of possession under Act 3135: The Court held that when the redemption period expired on May 23, 2007, ICCS became the owner of the subject property and was entitled to its fruits. Petitioners ceased to be owners and had no right to the property or its fruits. Under Section 32, Rule 39 of the Rules of Court, all rents, earnings, and income derived from the property pending redemption belong to the judgment obligor only until the expiration of the redemption period. Therefore, rentals collected by petitioners after the redemption period expired rightfully belonged to ICCS or Aqui. While the RTC should not have allowed Aqui to substitute for ICCS without impleading her as an additional necessary party, the substantive rights of the parties weighed more than procedural technicalities. The Court also clarified that the distinction between a land registration court and an ordinary court has been removed by Presidential Decree No. 1529, granting trial courts broader jurisdiction. Furthermore, Section 6, Rule 135 of the Rules of Court empowers courts to employ auxiliary means necessary to carry their jurisdiction into effect, which justified the RTC's order for the surrender of unlawfully collected rentals to remedy unjust enrichment. On the issue of whether the RTC Orders dated July 14, 2010 and September 2, 2010 were final orders and not interlocutory, making certiorari an improper remedy: The Court affirmed the CA's ruling that the assailed orders were final. A final order disposes of the subject matter in its entirety or terminates a particular proceeding, leaving nothing more to be done except to enforce it by execution. The RTC's orders, which directed the surrender of rentals and denied reconsideration, left nothing more to be done regarding the issue of possession and the fruits thereof, thus constituting final orders. Since an appeal under Rule 41 was available, the remedy of certiorari under Rule 65 was not proper. The Court reiterated that certiorari cannot be a substitute for an appeal, especially when the failure to avail of the latter was due to the party's own negligence or error in choosing the remedy.
Main Doctrine
The purchaser in a foreclosure sale, upon consolidation of title after the expiration of the redemption period without redemption being made, becomes the absolute owner and is entitled to possession and to receive the rents and fruits thereof. While a writ of possession is generally ministerial, the court, in the exercise of its inherent power to preserve its integrity and insure effectiveness in the administration of justice, may employ auxiliary means to carry its jurisdiction into effect, including ordering the surrender of rentals unlawfully collected by the previous owner.