LZK Holdings and Development Corp. vs. Planters Development Bank

The duty of the trial court to grant a writ of possession in favor of the purchaser in an extrajudicial foreclosure sale is ministerial, and the writ issues as a matter of course upon the filing of the proper motion and approval of the corresponding bond. Neither a pending action for annulment of the foreclosure nor an injunction against consolidation of title may stay the issuance of the writ, since questions regarding the regularity and validity of the sale are to be determined in a subsequent proceeding under Section 8 of Act No. 3135.

Petitioner LZK Holdings and Development Corporation and respondent Planters Development Bank were parties to a loan agreement secured by a real estate mortgage over a parcel of land in Catbangen, San Fernando City, La Union. The dispute arose within the framework of Act No. 3135, as amended by Act No. 4118, which governs extrajudicial foreclosure of real estate mortgages and provides for the issuance of a writ of possession to the purchaser at the foreclosure sale. The case also implicates the doctrine of non-interference with the orders of courts of coordinate and concurrent jurisdiction, as two different Regional Trial Court branches were involved in related proceedings.

Petitioner LZK Holdings and Development Corporation (LZK) obtained a loan of ₱40,000,000 from respondent Planters Development Bank (Planters Bank), secured by a mortgage on a land situated in Catbangen, San Fernando City, La Union, covered by Transfer Certificate of Title No. T-45337. When LZK failed to pay the loan, Planters Bank initiated extrajudicial foreclosure proceedings against the mortgaged property. At the auction sale held on September 21, 1998, Planters Bank emerged as the highest bidder, and the sale was registered on March 16, 1999.

Thereafter, LZK filed a complaint for annulment of extrajudicial foreclosure, mortgage contract, promissory notes and damages, docketed as Civil Case No. 6215 with the RTC of San Fernando City, La Union, Branch 29, but this was dismissed for improper venue in an Order dated June 23, 1998. On December 27, 1999, Planters Bank filed an ex parte petition for the issuance of a writ of possession with the RTC of San Fernando City, La Union, Branch 66. In the meantime, LZK filed another complaint for annulment of extrajudicial foreclosure, mortgage contract, promissory notes, and damages, docketed as Civil Case No. 99-741 with the RTC of Makati City, Branch 150, together with an urgent motion for the issuance of a writ of preliminary injunction.

Three days before the one-year redemption period expired, the Makati RTC issued a temporary restraining order dated March 13, 2000, effective for twenty days, enjoining Planters Bank from consolidating title over the property. On April 3, 2000, the Makati RTC ordered the issuance of the writ of preliminary injunction upon posting of a bond of ₱40,000,000 and suspended the consolidation of title, but LZK failed to post the required bond. Planters Bank filed a petition for certiorari with the Court of Appeals docketed as CA-G.R. SP No. 59327, which affirmed the Makati RTC order; the subsequent petition for review to the Supreme Court, docketed as G.R. No. 164536, was denied and became final and executory on January 19, 2005.

Meanwhile, Planters Bank executed a final deed of sale and an affidavit of consolidation of ownership on April 24, 2000. On May 11, 2000, the San Fernando RTC held in abeyance the resolution of the ex parte petition for the issuance of the writ of possession in view of the Makati RTC order suspending consolidation of title. In an Order dated June 20, 2000, the Makati RTC issued the writ of preliminary injunction upon LZK's posting of a bond. Planters Bank then filed a petition for certiorari before the Court of Appeals assailing the San Fernando RTC order, which the appellate court granted, annulling and setting aside the said orders. The appellate court reasoned that the writ of possession issues as a matter of course upon motion and approval of the corresponding bond, and that the Makati RTC order was not directed to the San Fernando RTC and merely enjoined the consolidation of title.

• Effect of the Injunction: Petitioner contended that the appellate court erred in disregarding the writ of preliminary injunction issued by the Makati RTC, which had been upheld by the Supreme Court.
• Non-Interference Doctrine: Petitioner argued that in issuing the writ of preliminary injunction, the Makati RTC did not interfere with the judgments or decrees of a court of concurrent jurisdiction, considering that the San Fernando RTC had yet to resolve the ex parte petition for the issuance of the writ of possession.
• Ministerial Duty Condition: Petitioner contended that the ministerial duty of the court to issue the writ of possession only arises when title to the property has been consolidated in the name of the applicant, and that the consolidated title of respondent bank had been declared null and void since the consolidation violated the injunction order.
• Forum Shopping: Petitioner claimed that the various petitions for certiorari filed with the Court of Appeals, docketed as CA-G.R. SP No. 59327, CA-G.R. SP No. 61262, CA-G.R. SP No. 67410, and CA-G.R. SP No. 60944, constituted forum shopping.

• Effect of Pending Annulment Case: Respondent argued that the earlier filing and pendency of an action for annulment of extrajudicial foreclosure, mortgage contract, promissory notes, and damages will not affect the right to possess an extra-judicially foreclosed property.
• Ministerial Duty: Respondent maintained that it is the ministerial duty of the court to grant the petition for the issuance of a writ of possession based on Act No. 3135, as amended.
• Loss of Right by Failure to Redeem: Respondent argued that petitioner lost its right over the mortgaged property when it failed to redeem the same within one year from registration of the sale.
• Non-Interference: Respondent argued that the writ of injunction issued by the Makati RTC cannot be used to interfere in or suspend the proceedings in the San Fernando RTC.
• No Forum Shopping: Respondent argued that the filing of the four petitions before the Court of Appeals did not constitute forum shopping, considering the main case had not yet reached the pre-trial stage and only preliminary matters had been resolved.
• Possession Without Consolidation: Respondent maintained that it can still take possession of the subject property even if title to it was not yet consolidated.

• Entitlement to Writ of Possession: Whether respondent bank is entitled to the possession of the foreclosed property.
• Effect of Injunction on Consolidation: Whether the writ of preliminary injunction enjoining consolidation of title also prohibits the purchaser from taking possession of the property.
• Ministerial Duty of the Court: Whether the trial court's duty to issue a writ of possession is ministerial notwithstanding a pending annulment case and an injunction against consolidation.
• Forum Shopping: Whether the filing of the various petitions for certiorari with the Court of Appeals constituted forum shopping.

• Entitlement to Writ of Possession: Yes. The purchaser in a foreclosure sale is entitled to a writ of possession, which the trial court has a ministerial duty to issue upon the filing of the proper motion and approval of the corresponding bond, pursuant to Section 7 of Act No. 3135, as amended.
• Effect of Injunction on Consolidation: No. The injunction granted by the Makati RTC and upheld by the Supreme Court mainly enjoined respondent from consolidating its title over the foreclosed property; it did not prohibit respondent from taking possession of the property.
• Ministerial Duty of the Court: Yes. The duty of the trial court to grant a writ of possession is ministerial, and such writ issues as a matter of course; questions regarding the regularity and validity of the sale are to be determined in a subsequent proceeding under Section 8 of Act No. 3135.
• Forum Shopping: No. The Court did not find that the filing of the various petitions constituted forum shopping, as the main case had not yet reached the pre-trial stage and only preliminary matters had been resolved.

• Entitlement to Writ of Possession: A writ of possession is a writ of execution employed to enforce a judgment to recover the possession of land, commanding the sheriff to enter the land and give possession to the person entitled under the judgment. Under Section 7 of Act No. 3135, as amended by Act No. 4118, the writ may be issued to the purchaser in a foreclosure sale either within the one-year redemption period upon the filing of a bond, or after the lapse of the redemption period without need of a bond. The Court has consistently held that the duty of the trial court to grant a writ of possession is ministerial, issuing as a matter of course upon the filing of the proper motion and the approval of the corresponding bond, with no discretion left to the trial court. Any question regarding the regularity and validity of the sale is to be determined in a subsequent proceeding as outlined in Section 8 of Act No. 3135, and cannot be raised to oppose the issuance of the writ since the proceeding is ex parte.

• Effect of Injunction on Consolidation: The injunction granted by the Makati RTC and upheld by the Supreme Court mainly enjoined respondent from consolidating its title over the foreclosed property. It was not correct for petitioner to assume that the injunction also prohibited respondent from taking possession of the property. The temporary restraining order issued on March 13, 2000 and the writ of injunction that followed effectively halted the tolling of the redemption period three days short of its expiration. Nonetheless, respondent, as the purchaser in the foreclosure sale, may apply for a writ of possession during the redemption period, and in fact did apply for a writ on December 27, 1999, well within the redemption period.

• Ministerial Duty of the Court: The San Fernando RTC, given its ministerial duty to issue the writ, should have acted on the ex parte petition. The injunction order is of no moment because it should be understood to have merely stayed the consolidation of title. An injunction is not allowed to prohibit the issuance of a writ of possession, and neither does a pending case for annulment of foreclosure sale, mortgage contract, promissory notes and damages stay the issuance of said writ. Until the foreclosure sale of the property is annulled by a court of competent jurisdiction, petitioner is bereft of valid title and of the right to prevent the issuance of a writ of possession to respondent.

• Forum Shopping: The Court did not expressly rule on the forum shopping issue in its reasoning, as the dispositive outcome was based on the ministerial character of the writ of possession and the inapplicability of the injunction to bar possession.

• Ministerial Duty to Issue Writ of Possession — The duty of the trial court to grant a writ of possession in favor of the purchaser in an extrajudicial foreclosure sale is ministerial; the writ issues as a matter of course upon the filing of the proper motion and the approval of the corresponding bond, and no discretion is left to the trial court. The Court applied this doctrine in holding that the San Fernando RTC should have acted on the ex parte petition for the writ of possession notwithstanding the pending annulment case and the injunction against consolidation of title.

• Non-Interference with Orders of Courts of Coordinate Jurisdiction — Courts of coordinate and concurrent jurisdiction should not interfere with each other's orders, decrees, or judgments. The Court applied this doctrine in the context of determining that the Makati RTC's injunction was not directed to the San Fernando RTC and merely enjoined consolidation of title, not the issuance of the writ of possession.

• Writ of Possession During Redemption Period — Under Section 7 of Act No. 3135, as amended, the writ of possession may be issued to the purchaser in a foreclosure sale either within the one-year redemption period upon the filing of a bond, or after the lapse of the redemption period without need of a bond. The Court applied this in holding that respondent, as purchaser, could apply for the writ during the redemption period, which it did on December 27, 1999.

• Consolidation of Title and Absolute Ownership — The buyer in a foreclosure sale becomes the absolute owner of the property purchased if it is not redeemed during the period of one year after the registration of sale, and is entitled to possession of the property, which can be demanded at any time following consolidation of ownership and issuance of a new transfer certificate of title. The Court noted that because respondent was enjoined from consolidating title, possession did not become an absolute right, but this did not bar the issuance of the writ during the redemption period.

• "We have consistently held that the duty of the trial court to grant a writ of possession is ministerial. Such writ issues as a matter of course upon the filing of the proper motion and the approval of the corresponding bond. No discretion is left to the trial court." — This passage articulates the core ratio decidendi of the case: the ministerial character of the trial court's duty to issue the writ of possession in extrajudicial foreclosure proceedings.

• "Any question regarding the regularity and validity of the sale, as well as the consequent cancellation of the writ, is to be determined in a subsequent proceeding as outlined in Section 8 of Act No. 3135. Such question cannot be raised to oppose the issuance of the writ, since the proceeding is ex parte." — This passage establishes the procedural limitation on challenging the issuance of the writ, directing such challenges to a subsequent proceeding under Section 8.

• "The injunction order is of no moment because it should be understood to have merely stayed the consolidation of title. As previously stated, an injunction is not allowed to prohibit the issuance of a writ of possession." — This passage resolves the central conflict in the case, clarifying the scope of the injunction and reaffirming that injunctions cannot bar the issuance of the writ.

• "Until the foreclosure sale of the property in question is annulled by a court of competent jurisdiction, petitioner is bereft of valid title and of the right to prevent the issuance of a writ of possession to respondent." — This passage states the conclusive effect of an unannulled foreclosure sale on the debtor's right to oppose the writ of possession.

• Ong vs. Court of Appeals, G.R. No. 121494, June 8, 2000, 333 SCRA 189 — Cited for the definition of a writ of possession as a writ of execution employed to enforce a judgment to recover possession of land.
• Samson vs. Rivera, G.R. No. 154355, May 20, 2004, 428 SCRA 759 — Cited for the proposition that the writ of possession may be issued within the redemption period upon filing of a bond, and that the recourse is available even before the expiration of the redemption period.
• Chailease Finance Corporation vs. Ma, G.R. No. 151941, August 15, 2003, 409 SCRA 250 — Cited for the rule that injunctions are disallowed to prohibit the issuance of the writ of possession, and that issuance may not be stayed by a pending action for annulment of mortgage or the foreclosure itself; also cited for the rule on issuance of the writ after consolidation of ownership.
• Unionbank of the Philippines vs. Court of Appeals, G.R. No. 133366, August 5, 1999, 311 SCRA 795 — Cited in support of the proposition that the temporary restraining order and writ of injunction effectively halted the tolling of the redemption period.
• Yulienco vs. Court of Appeals, G.R. No. 141365, November 27, 2002, 393 SCRA 143 — Cited for the proposition that until the foreclosure sale is annulled by a court of competent jurisdiction, the debtor is bereft of valid title and of the right to prevent the issuance of a writ of possession.

• Section 7, Act No. 3135, as amended by Act No. 4118 — Provides that in any sale made under the Act, the purchaser may petition the court to give him possession of the property during the redemption period, furnishing a bond equivalent to the use of the property for twelve months; the court shall, upon approval of the bond, order that a writ of possession issue. The Court applied this provision in holding that respondent, as purchaser, was entitled to the writ during the redemption period.
• Section 8, Act No. 3135 — Provides that the debtor may, in the proceedings in which possession was requested, but not later than thirty days after the purchaser was given possession, petition that the sale be set aside and the writ of possession cancelled. The Court applied this provision in holding that questions regarding the regularity and validity of the sale must be raised in a subsequent proceeding and cannot oppose the issuance of the writ.

Carpio, J., Carpio Morales, J., Tinga, J., and Velasco, Jr., J., concurred in the decision.

N/A — No dissenting opinion was noted in the provided case text.