LZK Holdings and Development Corporation vs. Planters Development Bank

A final and executory judgment holding that a foreclosure-sale purchaser is entitled to a writ of possession bars the mortgagor from relitigating that specific right under the doctrine of conclusiveness of judgment, and the writ must be issued as a ministerial duty ex parte and without hearing upon the filing of the proper motion and bond.

LZK Holdings obtained a ₱40,000,000.00 loan from Planters Bank in December 1996, secured by a real estate mortgage over a 589-square-meter lot in La Union. After LZK Holdings defaulted, Planters Bank extrajudicially foreclosed the mortgage and acquired the property as the highest bidder at the September 1998 public auction. The certificate of sale was registered in March 1999. LZK Holdings then sued to annul the foreclosure, mortgage, and promissory note in the Makati RTC and secured a temporary restraining order and later a writ of preliminary injunction to prevent consolidation of title. Separately, Planters Bank moved ex parte for a writ of possession in the RTC of San Fernando, La Union. That court suspended proceedings due to the Makati injunction, but on appeal the Supreme Court ultimately ruled in G.R. No. 167998 that Planters Bank was entitled to the writ as a matter of ministerial duty, unaffected by the injunction. When Planters Bank renewed its motion, the RTC granted it, and the Court of Appeals affirmed. LZK Holdings then elevated the matter to the Supreme Court.

• Loan and Mortgage: On December 16, 1996, LZK Holdings obtained a ₱40,000,000.00 loan from Planters Bank and secured it with a real estate mortgage over its 589-square-meter lot in La Union covered by TCT No. T-45337.
• Foreclosure and Auction Sale: Due to default, Planters Bank extrajudicially foreclosed the mortgage. At the public auction on September 21, 1998, Planters Bank emerged as the highest bidder. The certificate of sale was registered on March 16, 1999.
• Annulment Suit and Injunction: On April 5, 1999, LZK Holdings filed a complaint in the RTC of Makati for annulment of the extrajudicial foreclosure, mortgage contract, and promissory note, with a prayer for TRO and writ of preliminary injunction to stop consolidation of title. The Makati RTC issued a TRO on March 13, 2000 (three days before expiration of the redemption period) and, on June 20, 2000, a writ of preliminary injunction, upon LZK Holdings’ posting of a ₱40,000.00 bond.
• Consolidation and Nullification: Despite the injunction, Planters Bank consolidated its title on April 24, 2000. On June 2, 2000, the Makati RTC declared the consolidated title null and void. That ruling was affirmed by the CA in CA-G.R. SP No. 59327 and by the Supreme Court in G.R. No. 164563 (Resolution dated September 13, 2004).
• First Writ of Possession Proceedings: On December 27, 1999, Planters Bank filed an ex-parte motion for a writ of possession with the RTC of San Fernando, La Union. The RTC suspended proceedings on May 11, 2000 in light of the Makati injunction. Planters Bank appealed; the CA annulled the suspension. LZK Holdings appealed to the Supreme Court in G.R. No. 167998, which on April 27, 2007 ruled that Planters Bank was entitled to the writ, the duty of the court being ministerial and the injunction not a bar.
• Renewed Motion and Issuance of Writ: Armed with the G.R. No. 167998 decision, Planters Bank moved to set an ex-parte hearing for issuance of the writ. LZK Holdings opposed the motion. The RTC denied the opposition, later declared the scheduled hearing moot, and on April 8, 2008 granted the writ upon posting of a ₱2,000,000.00 bond.
• CA Affirmance: The CA affirmed the RTC order and denied reconsideration; hence, this petition.

• Ownership and Right to Possession: Petitioner LZK Holdings argued that the cancellation of Planters Bank’s consolidated title left it without ownership and therefore without any right to a writ of possession. It invoked PNB v. Sanao Marketing Corporation for the proposition that the right of possession is based on the applicant’s ownership of the property.
• Due Process: Petitioner maintained that the RTC deprived it of due process by issuing the writ of possession without conducting a hearing on Planters Bank’s motion, thus denying it an opportunity to be heard.
• Bond Amount: Petitioner contended that the ₱2,000,000.00 bond fixed by the RTC did not comply with Section 7 of Act No. 3135, which requires a bond equivalent to twelve months’ use of the property; at the time, twelve months’ rent allegedly amounted to ₱7,801,472.28.

• Res Judicata/Conclusiveness: Respondent Planters Bank’s position, as sustained by the lower courts, was that the final and executory judgment in G.R. No. 167998 had already settled its entitlement to the writ of possession, and the issue could no longer be relitigated.
• Ministerial Nature of the Writ: Respondent invoked the settled rule that under Act No. 3135, the issuance of a writ of possession is a ministerial duty of the trial court upon the ex parte motion of the foreclosure purchaser who posts the required bond, not subject to any hearing or opposing motion.

• Conclusiveness of Judgment: Whether the prior final judgment in G.R. No. 167998, which declared Planters Bank entitled to a writ of possession, bars LZK Holdings from challenging the issuance of the writ in the present case.
• Effect of Nullified Consolidated Title: Whether the nullification of Planters Bank’s consolidated title defeats its right as foreclosure-sale purchaser to obtain a writ of possession during the redemption period.
• Due Process: Whether the RTC deprived LZK Holdings of due process when it issued the writ of possession without conducting a hearing.
• Bond Amount: Whether the ₱2,000,000.00 bond fixed by the RTC violates the requirement under Section 7 of Act No. 3135 that the bond correspond to twelve months’ use of the property.

• Conclusiveness of Judgment: The doctrine of res judicata by conclusiveness of judgment applied. All its elements were present: the judgment in G.R. No. 167998 was final and rendered by a court of competent jurisdiction, it was a judgment on the merits of Planters Bank’s right to a writ, and it involved the identical parties. The specific issue of Planters Bank’s entitlement to the writ had been judicially determined and could no longer be contested.
• Effect of Nullified Consolidated Title: The argument was rejected. The pronouncement in PNB v. Sanao Marketing Corporation that the right of possession is based on ownership pertained to writs issued after expiration of the redemption period. In this case, the writ was sought during the redemption period, when the purchaser’s right rests on the acquisition at the foreclosure sale, not on full consolidated ownership. Moreover, PNB itself reaffirmed the purchaser’s right to possession during the redemption period through an ex parte motion.
• Due Process: No hearing was required. The proceeding for a writ of possession under Act No. 3135 is ex parte and summary in nature—a non-litigious proceeding for enforcement of the purchaser’s right, wherein relief is granted without notice or opportunity to be heard to persons adverse in interest. The RTC therefore correctly cancelled the scheduled hearing and granted the motion ex parte.
• Bond Amount: The correctness of the bond amount is a question of fact. In a petition for review on certiorari under Rule 45, review is confined to errors of law. The RTC’s finding that ₱2,000,000.00 was sufficiently equivalent to twelve months’ use of the property was a factual determination, which the CA affirmed and which is binding on the Supreme Court.

• Res Judicata by Conclusiveness of Judgment — Where a right or fact has been judicially tried and determined by a court of competent jurisdiction in a final judgment, that determination is conclusive upon the parties and their privies in a subsequent litigation, even if the causes of action differ, provided there is identity of parties. Here, the prior Supreme Court judgment in G.R. No. 167998 conclusively settled Planters Bank’s entitlement to a writ of possession, barring LZK Holdings from relitigating that specific issue.
• Ministerial Duty to Issue Writ of Possession — Under Section 7 of Act No. 3135, as amended, the trial court’s duty to grant a writ of possession to the purchaser at 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; no discretion resides in the court. Questions regarding the validity or regularity of the foreclosure sale cannot be raised to defeat the writ and must be pursued in a separate proceeding under Section 8 of the same Act.
• Ex Parte and Summary Nature of Writ of Possession — A petition for a writ of possession under Act No. 3135 is an ex parte, summary, and non-litigious proceeding. It is brought for the benefit of the applicant alone, without notice to adverse parties, and relief is granted without affording them an opportunity to be heard.

• "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. 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." (Quoted from the prior decision in G.R. No. 167998, which the Resolution reaffirmed as conclusive.)
• "The proceeding in a petition for a writ of possession is ex parte and summary in nature. It is a judicial proceeding brought for the benefit of one party only and without notice by the court to any person adverse of interest. It is a proceeding wherein relief is granted without giving the person against whom the relief is sought an opportunity to be heard. By its very nature, an ex parte petition for issuance of a writ of possession is a non-litigious proceeding." (From Espinoza v. United Overseas Bank Phils., adopted as controlling on the character of the proceeding.)

• LZK Holdings and Development Corp. v. Planters Development Bank, 550 Phil. 825 (2007) [G.R. No. 167998] — The controlling prior judgment between the same parties. It conclusively held that Planters Bank, as the foreclosure-sale purchaser, was entitled to a writ of possession and that the trial court’s duty to issue it was ministerial. Applied as res judicata by conclusiveness of judgment.
• PNB v. Sanao Marketing Corporation, 503 Phil. 260 (2005) — Distinguished. Its statement that right of possession is anchored on ownership related to writs requested after the redemption period. The case otherwise affirmed the purchaser’s ability to obtain possession during the redemption period by ex parte motion, consistent with the ruling in G.R. No. 167998.
• Espinoza v. United Overseas Bank Phils., G.R. No. 175380, March 22, 2010, 616 SCRA 353 — Followed for its definitive articulation of the ex parte, summary, and non-litigious nature of a proceeding for a writ of possession under Act No. 3135.

• Section 7, Act No. 3135, as amended by Act No. 4118 — The statutory basis for the writ of possession in extrajudicial foreclosures. It authorizes the purchaser to petition for the writ during the redemption period upon filing a bond, and after expiration of redemption without bond. The provision was interpreted as imposing a purely ministerial, non-discretionary duty on the trial court.
• Section 8, Act No. 3135 — Referred to as the remedy by which the validity of the foreclosure sale may be challenged in a separate proceeding; such challenges cannot be entertained as defenses to the issuance of the writ.

Chief Justice Maria Lourdes P. A. Sereno (Chairperson), Justice Teresita J. Leonardo-De Castro, Justice Lucas P. Bersamin, and Justice Martin S. Villarama, Jr.

N/A — The decision was unanimous.