Campos v. Bank of the Philippine Islands
REITERATIONFacts
The Antecedents: In 1980, petitioner Anecito Campos mortgaged fourteen lots to Far East Bank and Trust Co. (FEBTC), now Bank of the Philippine Islands (BPI), to secure a loan. Campos later constructed a two-storey building on one of these lots, Lot No. 7-G-4, allegedly with the Bank's knowledge and consent. Due to business losses, Campos defaulted on his loan, which had ballooned to P11,000,000.00. Consequently, BPI initiated extrajudicial foreclosure proceedings. BPI emerged as the highest bidder at the public auction, and after Campos failed to exercise his right of redemption, BPI consolidated its ownership over the properties. Procedural History: Following the consolidation of ownership, BPI filed an ex parte motion for a writ of possession with the Regional Trial Court (RTC). The RTC granted the motion and issued a writ of possession on August 7, 2006, and subsequently on September 8, 2006. Long after these orders became final and executory, Campos filed a motion to suspend the implementation of the writ of possession, arguing he was a builder in good faith and should be reimbursed for the building's value, citing Articles 546, 448, and 450 of the Civil Code. The RTC denied this motion on April 16, 2007, and again on September 10, 2007, after denying Campos' motion for reconsideration. The RTC reasoned that its duty to issue the writ was ministerial and that any claim for reimbursement should be pursued in a separate civil action. Campos then filed a petition for certiorari with the Court of Appeals (CA), which was dismissed on July 24, 2012, for lack of grave abuse of discretion by the RTC. The CA affirmed that the RTC's issuance of the writ was a ministerial duty under Section 7 of Act No. 3135. Campos' motion for reconsideration was denied by the CA on May 23, 2013. The Petition: Campos seeks review on certiorari, insisting on his right to prove he was a builder in good faith, citing the case of Policarpio v. Court of Appeals. He also raises issues regarding the Bank's possession of other mortgaged lots, the alleged exorbitant interest rates and penalties charged by the Bank, and claims he was denied notice of the ex parte motion for the writ of possession. Campos argues that the Bank would be unduly enriched at his expense if he is not reimbursed for the value of the improvements constructed in good faith. The petition also contends that the Bank did not furnish him a copy of the ex parte motion or the RTC's order granting the writ of possession.
Issue(s)
Whether the RTC committed grave abuse of discretion in issuing the writ of possession ex parte and denying Campos' motion to suspend its implementation. Whether Campos, as a mortgagor who constructed improvements on the mortgaged property, can claim to be a builder in good faith and entitled to reimbursement, thereby suspending the execution of the writ of possession. Whether the ruling in Policarpio v. Court of Appeals is applicable to the present case.
Ruling
The petition is denied for lack of merit. The decision of the Court of Appeals affirming the RTC's denial of Campos' motion is affirmed.
Ratio Decidendi
On the RTC's issuance of the writ of possession and denial of the motion to suspend: The Court reiterated that Section 7 of Act No. 3135 explicitly allows the purchaser of a foreclosed property to file an ex parte motion for a writ of possession. The Bank and the RTC were not obligated to furnish Campos with notice of these proceedings, as an ex parte proceeding benefits only one party without notice to the adverse party. Campos' remedy was under Section 8 of Act No. 3135, which allows him to petition to set aside the writ within thirty days after possession is given, provided he specifies damages due to violations of the mortgage or non-compliance with the Act. Since Campos did not question the validity of the sale, his recourse for reimbursement should be a separate civil action. The Court emphasized that following the consolidation of ownership, the purchaser becomes the absolute owner and is entitled to possession, making the issuance and implementation of the writ of possession a ministerial duty of the court, leaving it with no discretion but to issue the writ. On Campos' claim as a builder in good faith and entitlement to reimbursement: The Court found Campos' claim of being a builder in good faith inapplicable in this context. Firstly, the mortgage contract expressly included "all the buildings and improvements now existing or which may hereafter be erected or constructed thereon" as part of the mortgage. This contractual stipulation, consistent with the principle of autonomy of contracts under Article 1306 of the Civil Code, rendered Campos' alleged good faith and the value of the improvements immaterial. He voluntarily included the building in the mortgage. Secondly, the Court clarified that Articles 448, 450, and 546 of the Civil Code, which deal with builders in good faith, contemplate situations where a person builds on the land of another, not when the owner builds on their own property or on property that has become part of the mortgage. On the applicability of Policarpio v. Court of Appeals: The Court distinguished the present case from Policarpio. It highlighted that Policarpio involved a judicial foreclosure, not an extrajudicial one as in the present case. Furthermore, in Policarpio, the construction of the new house occurred three years after the foreclosure sale and while the heirs were negotiating to repurchase the property, and the main issue was the trial court's arbitrary actions and denial of due process. In contrast, the mortgage contract in the present case explicitly included future improvements, and the issuance of the writ of possession in extrajudicial foreclosures is a ministerial duty, unlike in judicial foreclosures where possession might be subject to further proceedings. The Court concluded that the developments in Policarpio and its judicial nature removed it from the ambit of Section 7 of Act No. 3135, placing it within the Rules on Accession, which is not the situation here.
Main Doctrine
The issuance of a writ of possession in extrajudicial foreclosure sales is a ministerial duty of the court upon the consolidation of ownership in the purchaser, and the mortgagor's claim of being a builder in good faith, or any other cause of action for reimbursement, must be pursued in a separate civil action, not in a motion to suspend the implementation of the writ.