Bank of the Philippine Islands v. Co
REITERATIONFacts
The Antecedents: Jupiter Real Estate Ventures, Inc. and Spouses Johnson and Evelyn Co obtained a loan from Far East Bank and Trust Company (FEBTC), secured by a mortgage on eight parcels of land. BPI later merged with FEBTC, becoming the successor-in-interest. Jupiter and Spouses Co defaulted on the loan, leading BPI to extrajudicially foreclose the mortgage. BPI emerged as the highest bidder at the auction sale, and after the redemption period expired without redemption, ownership was consolidated in BPI's name, with new titles issued. Subsequently, Spouses Co and Jupiter filed a complaint seeking the nullification of the foreclosure proceedings and damages. Procedural History: BPI filed a petition for a writ of possession. The Regional Trial Court (RTC) denied the motion to consolidate this petition with the annulment case. Despite a subsequent petition for corporate rehabilitation filed by Jupiter and a stay order issued by another court, the RTC denied the motion to suspend proceedings and eventually issued a writ of possession in favor of BPI. Spouses Co and Jupiter appealed this order, and BPI moved for reconsideration. The RTC denied BPI's motion and ordered the elevation of the records to the Court of Appeals (CA). The CA affirmed the RTC's amended order granting the writ of possession. Spouses Co and Jupiter filed a motion for reconsideration, which the CA denied. The Petition: BPI filed a petition for review on certiorari under Rule 45 of the Rules of Court, assailing the RTC's orders that allowed the appeal of the writ of possession and denied its motion for reconsideration. BPI argued that an order granting a writ of possession is not appealable. Spouses Co and Jupiter, in their own petition, questioned the CA's decision and resolution, arguing that the writ of possession should not have been issued due to the pending rehabilitation proceedings and that Act No. 3135 is unconstitutional. They also contended that the writ of possession case should have been consolidated with their annulment case.
Issue(s)
Whether the writ of possession was validly issued. Whether the RTC Br. 196 erred in giving due course to the Notice of Appeal of Spouses Co and Jupiter from its Order dated September 30, 2005 and Amended Order dated December 8, 2005 granting the writ of possession in favor of BPI. Whether or not Act No. 3135, as amended, violates the Constitution. Whether the CA erred in denying the consolidation of LRC Case No. 03-0063 with Civil Case No. 02-0331.
Ruling
The Supreme Court denied both petitions for review on certiorari. It affirmed the orders of the RTC Br. 196 and the decision and resolution of the CA. The sheriff of RTC Br. 196 was ordered to proceed with the implementation of the writ of possession without prejudice to the outcome of Civil Case No. 02-0331.
Ratio Decidendi
On the validity of the writ of possession: The Court reiterated that under Section 7 of Act No. 3135, as amended, the purchaser in a foreclosure sale may apply for a writ of possession. After the consolidation of ownership and issuance of a new TCT in the purchaser's name, the right to possession becomes absolute, and the issuance of the writ becomes a ministerial duty, even without a bond. Since Spouses Co and Jupiter failed to redeem the properties, BPI, as the new registered owner, was entitled to the writ of possession. The Court found that the auction sale, registration of the certificate of sale, and issuance of new titles in BPI's name all occurred before the filing of the petition for rehabilitation and the issuance of the stay order. Therefore, these actions were not affected by the stay order. On the RTC Br. 196 giving due course to the appeal: The Court clarified that while the issuance of a writ of possession is ministerial, the order granting it is final and thus a proper subject for appeal. However, the Court distinguished this from the remedy provided in Section 8 of Act No. 3135, which is available only after the purchaser acquires actual possession. In cases where ownership has been consolidated and title issued, the debtor contesting possession must pursue a separate action, not the remedy under Section 8. The Court found that BPI's argument that the order was interlocutory and not appealable was misplaced in the context of a consolidated title. On the constitutionality of Act No. 3135: The Court reiterated its ruling in Rayo v. Metropolitan Bank and Trust Company that the ex parte issuance of a writ of possession under Section 7 of Act No. 3135 does not violate due process. Such a petition is a non-litigious proceeding for the enforcement of a right of possession, not an ordinary suit. Furthermore, the Court noted that challenging the constitutionality of a law collaterally is not allowed. On the denial of consolidation: The Court disagreed with Spouses Co's assertion that consolidation was proper based on cited cases. It explained that consolidation would be improper when title has already been consolidated in the mortgagee-purchaser's name, as it would defeat the purpose of consolidation and adversely affect the substantive right of possession. The Court distinguished the cited cases, noting that in Barican, a third party was in adverse possession, and in Sulit, the issue of surplus proceeds was raised, neither of which were present in this case. The Court emphasized that BPI had already consolidated title and ownership.
Main Doctrine
The issuance of a writ of possession after the consolidation of ownership in the name of the purchaser in an extrajudicial foreclosure sale is a ministerial duty of the court and becomes a matter of right. The pendency of a petition for corporate rehabilitation and the issuance of a stay order do not automatically enjoin the enforcement of claims or affect the validity of actions taken prior to the stay order, especially when the foreclosure proceedings and consolidation of title occurred before the rehabilitation petition was filed.