Cua Lai Chu vs. Laqui

A purchaser at an extrajudicial foreclosure sale who has consolidated ownership after the lapse of the one-year redemption period without redemption is entitled as a matter of course to an ex parte writ of possession, issuance of which is ministerial and is not barred by a pending action questioning the foreclosure's validity.

Claro G. Castro and Juanita Castro, owners of the property covered by Transfer Certificate of Title No. 22990, together with Cua Lai Chu, stood as mortgagors to Philippine Bank of Communication as mortgagee under a deed of real estate mortgage and its amendment. Extrajudicial foreclosure of real estate mortgages and petitions by purchasers for possession of the foreclosed property are governed by Act No. 3135, as amended by Act No. 4118, which prescribes an ex parte petition procedure.

In November 1994, petitioners Cua Lai Chu and spouses Claro G. Castro and Juanita Castro obtained a loan of ₱3,200,000 from Philippine Bank of Communication, securing it with a Deed of Real Estate Mortgage over the spouses' property covered by Transfer Certificate of Title No. 22990. In August 1997, petitioners executed an Amendment to the Deed of Real Estate Mortgage increasing the loan by ₱1,800,000, bringing the total to ₱5,000,000.

For failure to pay the full outstanding loan upon demand, the bank applied for extrajudicial foreclosure of the mortgage. Upon receipt of notice of the extrajudicial foreclosure sale, petitioners filed in the Regional Trial Court of Quezon City a petition to annul the sale with prayer for temporary restraining order, docketed as Q-02-46184. The scheduled sale did not push through because the trial court granted the TRO, but the TRO was subsequently lifted and the sale was reset to 29 May 2002. At that sale the bank emerged as highest bidder. A certificate of sale was executed on 4 June 2002 in its favor and annotated on 7 June 2002 as Entry No. 1855 on TCT No. 22990.

After the lapse of the one-year redemption period without redemption, the bank filed an affidavit of consolidation, and on 8 July 2003 the Register of Deeds of Quezon City cancelled TCT No. 22990 and issued TCT No. 251835 in the bank's name. On 18 August 2004, the bank applied for issuance of a writ of possession, which petitioners opposed. The trial court nevertheless granted the bank's motion for declaration of general default, allowed ex parte presentation of evidence, denied reconsideration, and denied petitioners' notice of appeal.

• Due Process and Default: Petitioner argued that declaration in default despite a filed opposition denied due process, and that issuance of the writ would deprive them not only of use and possession but also of ownership.
• Possession Pending Ownership Issue: Petitioner maintained that physical possession should not be disturbed pending final determination of ownership, citing Bustos vs. Court of Appeals and Vda. De Legaspi vs. Avendaño.
• Forum Shopping: Petitioner alleged forum shopping because the application for writ of possession was filed during pendency of the case questioning the validity of the extrajudicial foreclosure sale.

• Ex Parte Nature: Respondent countered that the application for writ of possession in foreclosure is ex parte, so absence of opportunity to oppose did not violate due process.
• Pending Annulment Suit No Bar: Respondent argued that issuance of the writ may not be stayed by a pending case questioning the foreclosure's validity, the former having no bearing on the latter, hence no forum shopping occurred.
• Ministerial and Non-Appealable: Respondent asserted that no judicial determination is involved in issuing the writ, so the order granting it cannot be subject of appeal.

• Due Process in Ex Parte Possession Proceeding: Whether the writ of possession was properly issued despite petitioners having been declared in default after filing an opposition.
• Effect of Pending Annulment Suit: Whether a pending case questioning the validity of the extrajudicial foreclosure sale bars issuance of the writ of possession.
• Forum Shopping: Whether the application for a writ of possession during pendency of the annulment case constitutes forum shopping.

• Due Process in Ex Parte Possession Proceeding: No violation. The proceeding under Section 7 of Act No. 3135, as amended, is ex parte and issues as a matter of course once requisites are met, leaving no discretion and no right to oppose or appeal.
• Effect of Pending Annulment Suit: No bar. The purchaser's right to possession after lapse of the redemption period is absolute and may be demanded even pending a proceeding questioning foreclosure validity, remitted to Section 8.
• Forum Shopping: No forum shopping. An ex parte writ order is not a judgment on the merits capable of res judicata, an essential element of forum shopping.

• Due Process in Ex Parte Possession Proceeding: The certificate of sale having been registered on 7 June 2002, the redemption period lapsed on 7 June 2003; the 18 August 2004 application thus came long after lapse without redemption, vesting an absolute right to the writ enforceable by mere motion. Because ownership had been consolidated under TCT No. 251835 issued 8 July 2003, issuance became the ministerial duty of the court upon proper application and proof of title, with possession founded on ownership. Being an ex parte motion that issues as a matter of course with no discretion left to the court, opposition or appeal does not lie; the remedy is a petition within thirty days after possession to set aside the sale and cancel the writ under Section 8.
• Effect of Pending Annulment Suit: Reliance on Bustos vs. Court of Appeals and Vda. De Legaspi vs. Avendaño was misplaced, neither involving a purchaser's right at extrajudicial foreclosure, the former concerning intertwined possession-ownership in consolidated unlawful detainer and accion reinvindicatoria and the latter concerning unlawful detainer. Under controlling rulings on extrajudicial foreclosure mortgages, the purchaser's right to possession, absolute after the redemption period without bond, persists even during a pending validity challenge, which is to be determined in the subsequent Section 8 proceeding and not as justification to oppose the writ.
• Forum Shopping: Since a writ under Act No. 3135, as amended, is issued ex parte as a matter of course upon compliance, it is not a judgment on the merits that can amount to res judicata. Without that essential element, the concurrent annulment suit and possession application do not constitute forum shopping.

• Absolute right to writ of possession after redemption period — After lapse of the one-year redemption period from registration of the extrajudicial sale with no redemption made, the purchaser's right to possession becomes absolute and may be demanded even without posting a bond; during the redemption period it may be exercised upon filing an indemnity bond. Applied to hold that the bank, as highest bidder with unredeemed sale registered 7 June 2002 and title consolidated 8 July 2003, had an absolute right when it applied on 18 August 2004.
• Ministerial, ex parte issuance under Section 7 of Act No. 3135, as amended — The petition for possession is made under oath as an ex parte motion and, upon fulfillment of requisites including proof of title after consolidation, issuance is ministerial with no discretion left to the court. Applied to reject due process and appeal claims and to sustain the default and ex parte presentation.
• Exclusive Section 8 remedy against writ — The debtor may, in the possession proceedings but not later than thirty days after the purchaser was given possession, petition to set aside the sale and cancel the writ for non-violation of the mortgage or non-compliance with statutory requirements. Applied to remit validity disputes to a subsequent proceeding rather than as opposition to issuance.
• Pending annulment does not bar possession — A pending action questioning the validity of the extrajudicial foreclosure does not bar the purchaser's entitlement to possession of the foreclosed property. Applied to allow the writ despite Q-02-46184.
• Forum shopping requires res judicata-capable judgment — Forum shopping requires, among others, a judgment on the merits capable of res judicata. Applied to hold that an ex parte writ issuance as a matter of course cannot support forum shopping.

• "After the lapse of the said period with no redemption having been made, that right becomes absolute and may be demanded by the purchaser even without the posting of a bond." — States the post-redemption absolute right to possession that grounded the bank's entitlement after 7 June 2003.
• "The application for the issuance of a writ of possession is in the form of an ex parte motion. It issues as a matter of course once the requirements are fulfilled. No discretion is left to the court." — Defines the ex parte, ministerial character that defeated the due-process and opposition claims.
• "Any question regarding the validity of the extrajudicial foreclosure sale and the resulting cancellation of the writ may be determined in a subsequent proceeding as outlined in Section 8 of Act No. 3135, as amended. Such question should not be raised as a justification for opposing the issuance of a writ of possession since under Act No. 3135, as amended, the proceeding for this is ex parte." — Directs validity challenges to the statutory subsequent remedy rather than opposition to the writ.

• Banco Filipino Savings and Mortgage Bank vs. Pardo, 235 Phil. 487 (1987) — Followed as squarely ruling that the purchaser at auction in an extrajudicial foreclosure is entitled to a writ of possession upon motion and bond pending redemption.
• Navarra vs. Court of Appeals, G.R. No. 86237, 17 December 1991, 204 SCRA 850 — Followed for the rule that possession may be had during redemption with indemnity bond and becomes absolute after lapse without redemption, obtainable ex parte under Section 7.
• Chailease Finance Corporation vs. Spouses Ma, 456 Phil. 498 (2003) — Followed for the rule that once ownership is consolidated, issuance of the writ becomes ministerial upon proper application and proof of title.
• De Gracia vs. San Jose, 94 Phil. 623 (1954) — Followed for the ex parte, matter-of-course nature of the writ with no discretion left to the court.
• PNB vs. Sanao Marketing Corporation, G.R. No. 153951, 29 August 2005 — Followed for the rule that a pending case questioning foreclosure validity is no bar to the purchaser's possession.
• Cruz vs. Caraos, G.R. No. 138208, 23 April 2007, 521 SCRA 510 — Followed to negate forum shopping, an ex parte writ not being a judgment on the merits for res judicata.
• Bustos vs. Court of Appeals, 403 Phil. 21 (2001) — Distinguished as concerning intertwined possession-ownership in consolidated unlawful detainer and accion reinvindicatoria, not foreclosure-purchaser possession.
• Vda. De Legaspi vs. Avendaño, 169 Phil. 138 (1977) — Distinguished as an unlawful-detainer ruling on physical possession pending ownership resolution, inapplicable to extrajudicial foreclosure.
• Rosario vs. Tayug Rural Bank, Inc., 131 Phil. 324 (1968) — Applied to reckon the one-year redemption period from registration of the sale.

• Section 7, Act No. 3135, as amended by Act No. 4118 — Authorizes the purchaser at a sale under the Act to petition the court where the property lies for possession during redemption via sworn ex parte motion with bond, executed immediately by the sheriff; applied to sustain ex parte, ministerial issuance, absolute without bond after lapse without redemption.
• Section 8, Act No. 3135, as amended — Allows the debtor, within thirty days after the purchaser was given possession, to petition in the possession proceedings to set aside the sale and cancel the writ for non-violation of mortgage or non-compliance; applied as petitioners' exclusive remedy for validity and damages issues.

Brion, J., Del Castillo, J., Abad, J., Perez, J.