Pahang vs. Vestil

A complaint for annulment of an extrajudicial foreclosure sale is not a prejudicial question to a petition for a writ of possession, the two actions being capable of proceeding separately and independently. The issuance of a writ of possession after the lapse of the statutory redemption period is a ministerial duty of the trial court, and the filing of an action to enforce redemption does not suspend the running of the redemption period, nor bar the purchaser from procuring a writ of possession after the period has lapsed.

The petitioners were mortgagors who obtained a short-term loan from the respondent bank, secured by a real estate mortgage over their parcel of land covered by Transfer Certificate of Title No. 29607. Upon default, the bank foreclosed the mortgage extrajudicially and purchased the property at public auction. The dispute concerns whether the pendency of the mortgagors' action to annul the foreclosure sale bars the issuance of a writ of possession in favor of the mortgagee-purchaser after the redemption period has lapsed.

On January 5, 1996, the petitioners, Spouses Antonio and Lolita Pahang, obtained a short-term loan of ₱1,500,000.00 from the respondent Metropolitan Bank & Trust Company, payable on December 27, 1996. The loan was covered by Non-Negotiable Promissory Note No. 190601 and was secured by a real estate mortgage on a parcel of land covered by Transfer Certificate of Title (TCT) No. 29607.

When the petitioners failed to pay the loan, the interest, and the penalties due thereon, the respondent bank foreclosed the real estate mortgage extrajudicially. The mortgaged property was sold at public auction on January 8, 1998, to the respondent bank as the highest bidder. A certificate of sale was executed by the Ex-Officio Sheriff in favor of the bank on January 14, 1998, and was registered with the Register of Deeds of Mandaue City on January 27, 1998. On December 29, 1998, the bank wrote the petitioners that the one-year redemption period of the property would expire on January 27, 1999.

Instead of redeeming the property, the petitioners filed, on January 19, 1999, a complaint for annulment of extrajudicial sale against the respondent bank and the Sheriff in the Regional Trial Court of Cebu (Mandaue City), Branch 56, docketed as Civil Case No. MAN-3454. Therein, the petitioners alleged that the bank bloated their obligation of ₱1,500,000.00 to ₱2,403,770.73 by including excessive past due interest, penalty charges, attorney's fees, and sheriff's expenses. They claimed that such exorbitant charges were made to frustrate their chance to pay the loan and to ensure that the bank would be the highest bidder during the auction sale. They also asserted that the bank failed to remit to the Sheriff the purchase price of the property and was guilty of fraud, collusion, breach of trust, or misconduct in the conduct of the auction sale. They prayed, as alternative reliefs, that the foreclosure be declared null and void and that they be allowed to pay the true obligation, or alternatively, that they be allowed to redeem the property based on the amount determined as their true and exact obligation.

After the expiration of the one-year redemption period, the bank consolidated its ownership over the foreclosed property, and TCT No. 44668 was issued by the Register of Deeds in its name. On July 23, 1999, the bank filed a Petition for Writ of Possession before the RTC of Mandaue City (Branch 56), docketed as LRC Case No. 3. The petitioners, citing the ruling in Belisario vs. The Intermediate Appellate Court, opposed the petition on the ground that the core issue in their complaint in Civil Case No. MAN-3454 constituted a prejudicial question warranting suspension of the proceedings. They averred that the filing of their complaint within the period to redeem the foreclosed property was equivalent to an offer to redeem and had the effect of preserving such right, and that the bank acted in bad faith in procuring the title despite the pendency of their complaint.

On March 28, 2000, the RTC rendered a decision in LRC Case No. 3 granting the petition and ordering the issuance of a writ of possession in favor of the bank. Citing Javelosa vs. Court of Appeals and Gawaran vs. Court of Appeals, the RTC ruled that since the petitioners failed to redeem the property within one year from the foreclosure, the bank was entitled to a writ of possession as a necessary consequence of the consolidation of ownership and the corresponding issuance of the original certificate. The petitioners' motion for reconsideration was denied, the court stating that it was merely its ministerial function to issue a writ of possession.

• Prejudicial Question: Petitioners argued that their complaint in Civil Case No. MAN-3454 and the respondent's petition for a writ of possession in LRC Case No. 3 were raffled to the same branch, and that the filing of their complaint before the expiry of the redemption period to enforce their right of redemption was equivalent to a formal offer to redeem, having the effect of preserving their right of redemption.
• Suspension of Proceedings: Petitioners argued that the RTC should have suspended the proceedings in LRC Case No. 3 pending the final resolution of Civil Case No. MAN-3454, conformably with the ruling in Belisario vs. The Intermediate Appellate Court, so as not to render the latter case moot and academic.
• Grave Abuse of Discretion: Petitioners averred that the trial court committed grave abuse of discretion amounting to excess or lack of jurisdiction in granting the petition for a writ of possession, and that the Court of Appeals erred in affirming the trial court's decision and in declaring the Belisario ruling inapplicable.

• Prejudicial Question: Whether the complaint of the petitioners in Civil Case No. MAN-3454 for annulment of extrajudicial sale is a prejudicial question to the petition of the respondent bank for the issuance of a writ of possession in LRC Case No. 3.
• Grave Abuse of Discretion: Whether the RTC committed a grave abuse of its discretion amounting to excess or lack of jurisdiction in granting the petition of the respondent in LRC Case No. 3 and in issuing the writ of possession in its favor.

• Prejudicial Question: No. A prejudicial question requires that the resolution of an issue in one case be a logical antecedent of the issue involved in another case, with cognizance pertaining to another tribunal. Here, the complaint for annulment of extrajudicial sale is a civil action, while the petition for a writ of possession is but an incident in a land registration case, so no prejudicial question can arise from the existence of the two actions.
• Grave Abuse of Discretion: No. The proceedings for a writ of possession after the lapse of the statutory period for redemption are summary in nature, and the trial court is mandated to issue the writ upon a finding of the lapse of the statutory period without the redemptioner having redeemed the property. The trial court cannot be said to have abused its discretion when it merely complied with its ministerial duty.

• Prejudicial Question: The Court defined a prejudicial question as one that arises in a case the resolution of which is a logical antecedent of the issue involved therein, and the cognizance of which pertains to another tribunal. It generally comes into play where a civil action and a criminal action are both pending and there exists in the former an issue that must be preemptively resolved before the criminal action may proceed, because howsoever the issue raised in the civil action is resolved would be determinative juris et de jure of the guilt or innocence of the accused in the criminal case. The rationale behind the principle is to avoid two conflicting decisions. In the present case, the complaint for annulment of extrajudicial sale is a civil action, while the petition for the issuance of a writ of possession is but an incident in the land registration case; therefore, no prejudicial question can arise. Citing Manalo vs. Court of Appeals, the Court noted that the basic issue in the annulment case — whether the purchaser in the extrajudicial foreclosure may be compelled to have the property repurchased or resold — and the issue in the writ of possession case — whether the purchaser is entitled to a writ of possession after the statutory period for redemption has expired — can proceed separately and take their own direction independent of each other. The focal issue in Civil Case No. MAN-3454 was whether the extrajudicial foreclosure and the sale at public auction for ₱2,403,770.73 were null and void, whereas the issue in LRC Case No. 3 was whether the bank was entitled to possession after the statutory period for redemption had lapsed and title was issued.
• Belisario Inapplicable: The Court held that the ruling in Belisario has no application in this case because no prejudicial question was involved there. The Court merely held in Belisario that the filing of an action to enforce redemption within the period of redemption is equivalent to a formal offer to redeem, and should the Court allow the redemption, the redemptioner should then pay the amount already determined. The filing of an action by the redemptioner to enforce his right to redeem does not suspend the running of the statutory period to redeem the property, nor bar the purchaser at public auction from procuring a writ of possession after the statutory period of redemption had lapsed, without prejudice to the final outcome of such complaint to enforce the right of redemption.
• Grave Abuse of Discretion: The Court held that the remedy of the petitioners from the assailed decision of the RTC in LRC Case No. 3 was to appeal by writ of error to the Court of Appeals. Instead of appealing by writ of error, the petitioners filed a petition for certiorari. Certiorari is not proper where the aggrieved party has a plain, speedy, and adequate remedy at law. Moreover, the error of the trial court in granting the respondent bank a writ of possession, if at all, was an error of judgment correctible only by an ordinary appeal. The proceedings in a petition and/or motion for the issuance of a writ of possession, after the lapse of the statutory period for redemption, is summary in nature. The trial court is mandated to issue a writ of possession upon a finding of the lapse of the statutory period for redemption without the redemptioner having redeemed the property. It cannot be validly argued that the trial court abused its discretion when it merely complied with its ministerial duty to issue the said writ of possession.

• Prejudicial Question — A prejudicial question is one that arises in a case the resolution of which is a logical antecedent of the issue involved in another case, and the cognizance of which pertains to another tribunal. It generally comes into play where a civil action and a criminal action are both pending and the civil issue must be preemptively resolved because it would be determinative juris et de jure of the guilt or innocence of the accused. The rationale is to avoid two conflicting decisions. In this case, the Court held that no prejudicial question can arise between a civil action for annulment of extrajudicial sale and a petition for a writ of possession, which is an incident in a land registration case, because the two actions can proceed separately and independently.
• Ministerial Duty to Issue Writ of Possession — After the lapse of the statutory period for redemption without the redemptioner having redeemed the property, the trial court is mandated to issue a writ of possession. The proceedings are summary in nature, and the court's compliance with this ministerial duty cannot be considered an abuse of discretion.
• Belisario Doctrine — The filing of an action to enforce redemption within the period of redemption is equivalent to a formal offer to redeem, and should the Court allow the redemption, the redemptioner should then pay the amount already determined. However, the filing of such action does not suspend the running of the statutory period to redeem the property, nor bar the purchaser at public auction from procuring a writ of possession after the statutory period had lapsed, without prejudice to the final outcome of such complaint to enforce the right of redemption.

• "A prejudicial question is one that arises in a case the resolution of which is a logical antecedent of the issue involved therein, and the cognizance of which pertains to another tribunal." — This defines the doctrine of prejudicial question as applied by the Court to determine whether the annulment action and the writ of possession petition could coexist.
• "In the present case, the complaint of the petitioners for Annulment of Extrajudicial Sale is a civil action and the respondent's petition for the issuance of a writ of possession of Lot No. 3-A, Block 1, Psd-07-021410, TCT No. 44668 is but an incident in the land registration case and, therefore, no prejudicial question can arise from the existence of the two actions." — This is the Court's application of the prejudicial question doctrine to the facts, holding that the two actions can proceed independently.
• "In fine, the filing of an action by the redemptioner to enforce his right to redeem does not suspend the running of the statutory period to redeem the property, nor bar the purchaser at public auction from procuring a writ of possession after the statutory period of redemption had lapsed, without prejudice to the final outcome of such complaint to enforce the right of redemption." — This clarifies the scope of the Belisario doctrine and its non-applicability to the petitioners' situation.
• "The trial court is mandated to issue a writ of possession upon a finding of the lapse of the statutory period for redemption without the redemptioner having redeemed the property. It cannot be validly argued that the trial court abused its discretion when it merely complied with its ministerial duty to issue the said writ of possession." — This states the ministerial duty of the trial court and the standard for determining abuse of discretion in this context.

• Belisario vs. The Intermediate Appellate Court, 165 SCRA 101 (1988) — Distinguished; the Court held it inapplicable because no prejudicial question was involved, and clarified that the filing of an action to enforce redemption does not suspend the running of the redemption period.
• Manalo vs. Court of Appeals, 366 SCRA 752 (2001) — Followed; cited for the proposition that the annulment action and the writ of possession petition can proceed separately and take their own direction independent of each other.
• Javelosa vs. Court of Appeals, 265 SCRA 493 (1996) — Cited by the RTC for the rule that the bank was entitled to a writ of possession as a necessary consequence of the consolidation of ownership after failure to redeem.
• Gawaran vs. Court of Appeals, 162 SCRA 154 (1988) — Cited by the RTC for the same proposition as Javelosa.
• Vda. de Jacob vs. Court of Appeals, 184 SCRA 294 (1990) — Cited by the CA for the rule that the pendency of a separate proceeding questioning the validity of the mortgage and the extrajudicial foreclosure cannot bar the issuance of a writ of possession.
• Navarra vs. Court of Appeals, 204 SCRA 850 (1991) — Cited by the CA for the same proposition as Vda. de Jacob.
• Ong vs. Court of Appeals, 333 SCRA 189 (2000) — Cited for the proposition that the filing of an action to enforce redemption does not suspend the running of the statutory period to redeem.
• Government Service Insurance System vs. Court of Appeals, 169 SCRA 244 (1989) — Cited for the rule that the remedy from the RTC decision was appeal by writ of error, not certiorari, and that the proceedings for a writ of possession are summary in nature.
• Yulienco vs. Court of Appeals, 393 SCRA 143 (2002) — Cited for the definition of prejudicial question and the ministerial duty of the trial court to issue the writ of possession.

Puno (Chairman), Quisumbing, Austria-Martinez, and Tinga, JJ., concurred.