Madriaga, Jr. vs. China Banking Corporation

The issuance of a writ of possession under Section 7 of Act 3135 is a ministerial duty of the RTC when the purchaser at foreclosure has consolidated title, except when a third-party is actually holding the property adversely to the judgment obligor under Rule 39, Section 33; a purchaser at an execution sale who derives rights from the original owners is not such a third-party.

Competing claims arose over two residential properties originally owned by Spouses Rolando and Norma Trajano. The spouses first agreed to sell the properties to Cesar Madriaga, Sr. (Madriaga, Sr.) in 1991, but later mortgaged the same to China Bank in 1995 while the titles were still in their name, leading to conflicting certificates of title and possession claims between Madriaga's successor and China Bank.

• Filed in RTC: China Bank filed an ex parte petition for writ of possession (Civil Case No. P-167-2002) in the RTC, Branch 17 of Malolos on April 2, 2002
• Decision of lower court: The RTC granted the writ on July 12, 2002; subsequently denied Madriaga, Sr.'s opposition and Motion to Quash/Abate in Orders dated February 6, 2006 and August 11, 2006
• Appealed to CA: Petitioner filed a petition for certiorari (CA-G.R. SP No. 96640) assailing the RTC orders
• Decision of CA: The CA dismissed the petition (Decision dated January 27, 2010) and denied the Motion for Reconsideration (Resolution dated May 26, 2010)
• Elevated to SC: Petition for review filed with the SC (G.R. No. 192377)

• Spouses Trajano were registered owners of two residential properties in Ibayo, Marilao, Bulacan (covered by TCT Nos. 114853(M) and 114854(M))
• 1991: Spouses Trajano agreed to sell the properties to Madriaga, Sr. for P1,300,000.00 on installment; Deed of Absolute Sale executed September 2, 1992 after full payment, but titles were not delivered
• 1993: Madriaga, Sr. sued for specific performance (Civil Case No. 521-M-93, RTC Branch 19)
• 1994: Compromise agreement approved June 13, 1994: Spouses Trajano agreed to secure a loan from Asia Trust Bank to pay Madriaga, Sr. P1,225,000.00; lis pendens annotated on the titles was cancelled
• Trajanos failed to comply; the RTC issued a writ of execution September 6, 1994; notice of levy given to Register of Deeds January 18, 1995; execution sale held February 22, 1995; Madriaga, Sr. declared winning bidder; Certificate of Sale issued March 22, 1995; after the redemption period, Final Deed of Sale issued and new TCT Nos. T-284713(M) and T-284714 issued to Madriaga, Sr.; ex parte writ of possession secured January 27, 1997
• January 2, 1995: Spouses Trajano obtained a P700,000.00 loan from China Bank secured by a real estate mortgage over the same properties (TCT Nos. 114853(M) and 114854(M))
• Trajanos defaulted; China Bank extrajudicially foreclosed the mortgage on October 20, 1997; declared highest bidder at foreclosure sale November 24, 1997; after consolidation, new TCT Nos. T-346239(M) and T-346240(M) issued to China Bank
• April 2, 2002: China Bank filed ex parte petition for writ of possession in Civil Case No. P-167-2002 (RTC Branch 17) against "Sps. Trajano and/or all persons claiming rights under their name"
• July 12, 2002: Writ granted; served on Madriaga, Sr. August 2, 2002
• November 1, 2002: Madriaga, Sr. filed opposition asserting ownership via earlier execution sale
• April 13, 2005: Petitioner (Cesar V. Madriaga, Jr., successor to Madriaga, Sr.) filed "Motion to Quash/Abate the Writ of Possession"
• February 6, 2006: RTC denied motion — held it had no jurisdiction over contending ownership claims (pending in Civil Case No. 406-M-2002, RTC Branch 12); also declared the motion moot because the writ was satisfied on April 15, 2005 per Sheriff's return (physical removal of Madriaga, Sr.)
• August 11, 2006: RTC denied Motion for Reconsideration — held issuance of writ was a ministerial duty
• Civil Case No. 406-M-2002 (for Specific Performance, Nullification of Title, Reconveyance and Damages) remained pending in RTC Branch 12 between petitioner and China Bank

• The writ of possession was directed against Spouses Trajano and "persons claiming rights under them," not against his father; Madriaga, Sr. derived titles not through a voluntary transaction with Trajanos but by purchase at execution sale
• China Bank's titles are void because they came from a void mortgage
• China Bank failed to investigate the titles before approving the loan despite the lis pendens annotation; the RTC in Civil Case No. 406-M-2002 charged China Bank with notice of serious flaws in Trajanos' titles
• Petitioner's titles came from an earlier execution sale; he and his father had been in open, uninterrupted, and adverse possession since 1991
• An ex parte writ of possession can be attacked directly or collaterally for being void ab initio due to lack of due process, notwithstanding that it has been satisfied
• Restoration to possession must be ordered because eviction by a mere ex parte writ violated due process (no notice of the petition)

• The motion to quash had been rendered moot and academic by the satisfaction of the writ on April 15, 2005 (physical removal of petitioner from premises)
• The issuance of a writ of possession under Act 3135, Section 7 is a ministerial function of the RTC when the purchaser has consolidated title
• The proceeding is ex parte and summary; no notice is required to adversely interested persons
• The petitioner’s predecessor is not a third-party holding the property adversely to Spouses Trajano; he derived his rights from them as successor/transferee

• Procedural Issues:
  • Whether the petition has been rendered moot and academic by the full satisfaction of the writ of possession on April 15, 2005
• Substantive Issues:
  • Whether the ex parte issuance of the writ of possession violated Madriaga, Sr.'s right to due process
  • Whether Madriaga, Sr. (and petitioner as successor) qualifies as a "third-party actually holding the property adversely to the judgment obligor" under Rule 39, Section 33, thereby converting the RTC's ministerial duty into a discretionary one

• Procedural: The petition is moot and academic. The writ of possession was fully satisfied on April 15, 2005 when the Sheriff physically removed Madriaga, Sr. from the premises. Judicial power presupposes actual controversies; where no live subject exists, the SC ceases to have reason to render any ruling. Courts decline jurisdiction on mootness save for exceptions such as (1) compelling constitutional issues requiring controlling principles, or (2) cases capable of repetition yet evading review — neither of which exist here.
• Substantive:
  • Due Process: The ex parte issuance did not violate due process. Section 7 of Act 3135 expressly allows the buyer at auction to file a verified petition in the form of an ex parte motion. The proceeding is summary, not litigious, and is simply an incident in the transfer of title, not a judgment on the merits. It does not bar a separate action for annulment of mortgage and foreclosure sale. Moreover, Madriaga, Sr. was afforded opportunity to be heard when he filed an opposition (November 1, 2002), Motion to Quash (April 13, 2005), and Motion for Reconsideration (March 6, 2006).
  • Third-Party Status: Madriaga, Sr. is not a third-party holding adversely to Spouses Trajano. Under Rule 39, Section 33, the exception to the ministerial issuance of writ of possession applies only to a third-party actually holding the property adversely to the mortgagor/debtor (such as a co-owner, tenant, or usufructuary possessing in their own right). Madriaga, Sr.'s possession sprang from the 1991 sale agreement with Spouses Trajano; he is merely a successor or transferee of their rights, not an adverse claimant with independent title. The RTC correctly issued the writ as a ministerial duty.

• Mootness Doctrine — Courts decline jurisdiction where there is no longer a live subject of controversy, absent exceptions such as (1) compelling constitutional issues requiring the formulation of controlling principles to guide the bench, the bar, and the public; or (2) cases capable of repetition yet evading judicial review.
• Ex Parte Writ of Possession under Act 3135 — Section 7 allows the purchaser at an extrajudicial foreclosure to petition for a writ of possession ex parte. The proceeding is summary, non-litigious, and grants relief without notice to adversely interested persons. It is not a judgment on the merits and does not preclude a separate action for annulment of the mortgage or foreclosure sale.
• Exception to Ministerial Duty (Rule 39, Section 33) — The RTC's duty to issue a writ of possession ceases to be ministerial and becomes discretionary when a third-party is actually holding the property adversely to the judgment obligor/mortgagor.
• Requisites for Exception:
  1. Possession by a third-party; and
  2. Such possession is adverse to the debtor/mortgagor (holding by independent title/right, such as co-owner, tenant, or usufructuary, not as successor/transferee).
  3. Due Process in Summary Proceedings — Opportunity to be heard must be afforded at some stage; filing of oppositions and motions constitutes sufficient opportunity to present one's side.

• "Judicial power presupposes actual controversies, the very antithesis of mootness. Where there is no more live subject of controversy, the Court ceases to have a reason to render any ruling or make any pronouncement."
• "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 adversely interested. It is a proceeding wherein relief is granted without affording the person against whom the relief is sought the opportunity to be heard."
• "The exception provided under Section 33 of Rule 39 of the Revised Rules of Court contemplates a situation in which a third party holds the property by adverse title or right, such as that of a co-owner, tenant or usufructuary. The co-owner, agricultural tenant, and usufructuary possess the property in their own right, and they are not merely the successor or transferee of the right of possession of another co-owner or the owner of the property."

• Sps. de Vera v. Hon. Agloro — Cited for the principle that when a writ has been satisfied, motions concerning it become moot.
• Philippine National Bank v. Court of Appeals — Cited to establish that an ex parte petition for writ of possession under Act 3135 is not a judicial or litigious proceeding, as extrajudicial foreclosure is accomplished by filing with the sheriff, not a court.
• Carlos v. Court of Appeals — Cited for the rule that the ex parte nature of the proceeding does not deny due process because the issuance of the writ does not bar a separate case for annulment of mortgage and foreclosure sale.
• BPI Family Savings Bank, Inc. v. Golden Power Diesel Sales Center, Inc. — Cited for the definition of "third-party actually holding adversely" as one possessing by independent title (co-owner, tenant, usufructuary), not as successor or transferee.
• China Banking Corporation v. Lozada — Cited for the rule that for the exception under Rule 39, Sec. 33 to apply, the property must be held by a third-party adversely to the debtor/mortgagor.

• Section 7 of Act 3135 (as amended by Act 4118) — Governs possession during redemption period in extrajudicial foreclosure; allows ex parte petition for writ of possession by purchaser.
• Section 33, Rule 39 of the Rules of Court — Provides exception to issuance of writ of possession when third-party is actually holding property adversely to judgment obligor.
• Articles 428-430 of the Civil Code — Cited regarding the right of possession as an essential attribute of ownership.

• N/A (Carpio, Del Castillo, Perez, and Sereno, JJ., concurred)