Penson vs. Spouses Maranan

A writ of possession issued in an extrajudicial foreclosure proceeding may be enforced against a party who, through a notarized Special Power of Attorney, authorized the mortgage of his property, even if he is not named in the writ, because he is not a "third party in possession claiming a right adverse to the debtor/mortgagor" under Section 35, Rule 39 of the Rules of Court.

Angelo Dwight Penson is the registered owner of two parcels of land in Parañaque covered by TCT Nos. 110503 and 110504, each measuring 640 square meters, on which the family home stands. He is married to Jovita Lorna Penson, who executed a promissory note and a deed of real estate mortgage over the property in favor of respondents Spouses Melchor and Virginia Maranan to secure a loan. Jovita acted both in her own behalf and as petitioner's attorney-in-fact pursuant to a Special Power of Attorney dated July 9, 1992. The dispute centers on whether petitioner, who claims the Special Power of Attorney and mortgage were fraudulent, may be dispossessed through an ex-parte writ of possession issued in an extrajudicial foreclosure proceeding.

Angelo Dwight Penson is the registered owner of two parcels of land in Parañaque City, each covering 640 square meters, covered by TCT Nos. 110503 and 110504, on which the family home of petitioner and his wife Jovita Lorna Penson stands. On August 14, 1992, Jovita executed a promissory note in favor of respondents Spouses Melchor and Virginia Maranan, covering a loan of ₱1,950,000.00. Three days later, on August 17, 1992, Jovita, acting in her own behalf and as petitioner's attorney-in-fact pursuant to a Special Power of Attorney dated July 9, 1992, executed a Deed of Real Estate Mortgage over the property to secure the loan. The Special Power of Attorney authorized Jovita to apply for loans and to offer as collateral any property constituting their conjugal or exclusive property. Petitioner later alleged that both the Deed of Real Estate Mortgage and the Special Power of Attorney were fraudulent.

When Jovita failed to pay the loan, she filed Civil Case No. 95-0100 against respondents on May 9, 1995, seeking annulment of the contract. The case was resolved through a Compromise Agreement dated March 7, 1997, approved by the RTC of Parañaque City, Branch 257, whereby Jovita acknowledged her total obligation of ₱6,082,373.00 and agreed to pay ₱3,000,000.00 in six monthly installments covered by postdated checks. The agreement provided that if any check was dishonored, respondents could foreclose the real estate mortgage and move for the issuance of a writ of execution by mere motion. Jovita defaulted on the installment payments, and the property was extrajudicially foreclosed on October 23, 1997, with respondents as the highest bidders. A Certificate of Sale was issued on November 6, 1997, and new TCT Nos. 139462 and 139463 were issued in respondents' names on November 18, 1998.

Respondents then sought a writ of possession. The RTC initially denied the motion on March 19, 1999, holding that the Compromise Agreement did not provide for automatic issuance and that the proper remedy was a petition under Act No. 3135. Respondents filed an ex-parte petition docketed as LRC Case No. 99-065, which the RTC granted on July 14, 1999, ordering Jovita and all persons claiming rights under her to deliver possession to respondents. A writ of possession was issued on July 21, 1999. Before it could be enforced, petitioner filed Civil Case No. 99-0272 for annulment of title with damages before the RTC of Parañaque City, Branch 260, and obtained a preliminary mandatory injunction on August 17, 1999, enjoining enforcement of the writ, subject to a bond of ₱3,000,000.00. Respondents' motion for reconsideration was denied on March 20, 2000.

Respondents then filed a petition for certiorari with the Court of Appeals, contending that the RTC Branch 260 had no jurisdiction to issue the injunction because it interfered with the orders of a co-equal court, and that respondents were already the owners of the property. The CA granted the petition on November 14, 2000, setting aside the RTC Branch 260 Orders. Petitioner's motion for reconsideration was denied on June 20, 2001. Petitioner elevated the matter to the Supreme Court via a petition for review on certiorari under Rule 45.

• Unlawful Interference by Co-Equal Court: Petitioner argued that the writ of preliminary injunction issued by RTC Branch 260 did not constitute unlawful interference with a co-equal court because it merely ordered the sheriff not to enforce the writ of possession against persons other than Jovita, and the real issue was whether the writ could be enforced against petitioner, who was not named in the writ.
• Inapplicability of PDCP vs. Vestil: Petitioner maintained that the case of PDCP Development Bank vs. Vestil, relied upon by the CA, was inapplicable because unlike that case where both spouses jointly executed the mortgage, the mortgage here was solely executed by Jovita over property exclusively owned by petitioner, who did not consent to it and was not a privy thereto.
• Distinction Between Issuance and Enforcement: Petitioner contended that the issuance of a writ of possession is distinct from its enforcement, likening the situation to a trial court enjoining the implementation of a writ of attachment against property not belonging to a defendant.
• Validity of Special Power of Attorney: Petitioner argued that the CA erred in finding the notarized Special Power of Attorney valid on its face, because the CA was limited to jurisdictional issues in the certiorari petition and could not make such a ruling, which should be threshed out in a proper trial.

• Jurisdictional Interference: Respondents contended that the RTC Branch 260 had no jurisdiction to issue a writ of preliminary injunction because it constituted interference with the processes of a co-equal court (Branch 257) that had issued the writ of possession.
• Ownership and Right in Esse: Respondents argued that they were already the owners of the property, having acquired it through the foreclosure sale and obtained new titles in their names, and that petitioner had no more right in esse that needed protection by injunctive relief.

• Co-Equal Court Interference: Whether the RTC Branch 260's issuance of a writ of preliminary injunction enjoining enforcement of the writ of possession issued by RTC Branch 257 constituted unlawful interference with a co-equal court.
• Third-Party Possession Exception: Whether petitioner qualifies as a "third party in possession of the property who is claiming a right adverse to that of the debtor/mortgagor" under Section 35, Rule 39 of the Rules of Court, such that the ministerial duty to issue a writ of possession ceases.
• Validity of Special Power of Attorney: Whether the Court of Appeals erred in making a prima facie finding that the notarized Special Power of Attorney was valid on its face.

• Co-Equal Court Interference: No. The RTC Branch 260 erred in issuing the preliminary injunction because the writ of possession was issued in a proper proceeding by a court of concurrent jurisdiction, and injunction may not stay its enforcement.
• Third-Party Possession Exception: No. Petitioner is not a third party claiming a right adverse to the debtor/mortgagor because he was a party to the loan and mortgage through the Special Power of Attorney executed by his wife as his attorney-in-fact.
• Validity of Special Power of Attorney: No. The CA's prima facie finding of validity was proper and necessary to resolve the issue of petitioner's right in esse; the presumption of validity remains rebuttable in the pending annulment case before the RTC.

• Co-Equal Court Interference: The issuance of a writ of possession in an extrajudicial foreclosure is a ministerial duty of the court, issuing as a matter of course after consolidation of ownership and the issuance of a new transfer certificate of title in the name of the purchaser. Jurisprudence establishes that no court has the power to interfere by injunction with the issuance or enforcement of a writ of possession issued by another court of concurrent jurisdiction. The judge to whom an application for writ of possession is filed need not look into the validity of the mortgage or the manner of its foreclosure; any question regarding the cancellation of the writ or the validity and regularity of the public sale should be determined in a subsequent proceeding under Section 8 of Act No. 3135. The RTC Branch 260's injunction was therefore improper, as it effectively prejudged the main case by assuming the invalidity of the notarized documents without proof.

• Third-Party Possession Exception: Under Section 35, Rule 39 of the Rules of Court, made suppletory to extrajudicial foreclosure by Section 6 of Act No. 3135, possession may be awarded to the purchaser unless a third party is actually holding the property adversely to the judgment debtor. This exception exists because an ex-parte petition for writ of possession is a non-litigious proceeding under Act No. 3135, and a third party claiming a superior right would not have the opportunity to be heard; summary dispossession of such a party would violate due process. However, petitioner does not qualify as such a third party. The promissory note, the Deed of Real Estate Mortgage, and the Special Power of Attorney all show that petitioner was a party to the loan and mortgage, having authorized Jovita to mortgage his property. His right to possess is based on titles already conveyed to respondents, who hold new TCTs in their names. The fact that he is not named in the writ of possession does not render it unenforceable against him, since he was a party to the documents that were the bases of the foreclosure.

• Validity of Special Power of Attorney: The notarized Special Power of Attorney and Deed of Real Estate Mortgage enjoy the presumption of validity and due execution. The CA's prima facie finding was merely preliminary, made to resolve whether petitioner had a right in esse warranting injunctive relief. Such finding does not bind the RTC of Parañaque City, Branch 260, where Civil Case No. 99-0272 is pending. The presumption of validity remains rebuttable, and petitioner retains the opportunity to present controverting evidence of forgery in that proceeding. The Court relied on this presumption in resolving the petition because the long-standing rule is that documents acknowledged before a notary public carry evidentiary weight as to their due execution and regularity.

• Ministerial Duty to Issue Writ of Possession — The issuance of a writ of possession concomitant to an extrajudicial foreclosure proceeding is a ministerial duty of the court, issuing as a matter of course even without the filing and approval of a bond after consolidation of ownership and the issuance of a new TCT in the name of the purchaser. The Court applied this doctrine to hold that the RTC Branch 257 properly issued the writ and that the RTC Branch 260 could not enjoin its enforcement.

• Third-Party Possession Exception — Under Section 35, Rule 39 of the Rules of Court, made suppletory to Act No. 3135, the obligation of a court to issue an ex-parte writ of possession ceases to be ministerial once it appears that a third party is in possession of the property claiming a right adverse to the debtor/mortgagor. The Court held that this exception did not apply because petitioner was a party to the mortgage through the Special Power of Attorney and therefore was not a third party claiming adverse to the mortgagor.

• Prohibition on Injunction Against Writ of Possession — No court has the power to interfere by injunction with the issuance or enforcement of a writ of possession issued by another court of concurrent jurisdiction having the power to issue such writ. The Court applied this rule to reverse the RTC Branch 260's preliminary injunction.

• Presumption of Validity of Notarized Documents — Documents acknowledged before a notary public have evidentiary weight with respect to their due execution and regularity, and are presumed valid and duly executed. The Court relied on this presumption in upholding the CA's prima facie finding, while stressing that the presumption is rebuttable in the pending annulment case.

• "the obligation of a court to issue an ex-parte writ of possession in favor of the purchaser in an extrajudicial foreclosure sale ceases to be ministerial once it appears that there is a third party in possession of the property who is claiming a right adverse to that of the debtor/mortgagor." — This passage articulates the controlling exception to the ministerial issuance of a writ of possession, defining when due process requires that a third party be heard before dispossession.

• "The fact that he is not named in the writ of possession does not render the writ of possession unenforceable against him since he was a party to the documents which were the bases of the foreclosure." — This statement establishes that a party to the mortgage documents, even if not named in the writ, may be validly dispossessed, distinguishing such a party from a protected third-party possessor.

• "any third person in possession of an extrajudicially foreclosed realty who claims a right superior to that of the original mortgagor, will not have the opportunity to be heard on his claim in a proceeding of this nature." — This explains the rationale for the third-party possession exception: the ex-parte, non-litigious character of proceedings under Act No. 3135 deprives adverse possessors of due process, justifying the exception.

• Philippine National Bank vs. Court of Appeals, 424 Phil. 757 (2002) — Controlling precedent on the third-party possession exception; held that the ministerial duty to issue an ex-parte writ of possession ceases when a third party in possession claims a right adverse to the debtor/mortgagor. The Court applied its principle but distinguished the facts, finding petitioner was not such a third party.
• PDCP Development Bank vs. Vestil, 332 Phil. 507 (1996) — Cited by the CA for the rule that no court may interfere by injunction with a writ of possession issued by another court of concurrent jurisdiction; petitioner argued it was inapplicable but the Court found the underlying rule still controlling.
• Philippine National Bank vs. Sanao Marketing Corporation, G.R. No. 153951, July 29, 2005 — Followed for the propositions that the judge need not look into the validity of the mortgage or the manner of foreclosure when issuing a writ of possession, and that injunction may not stay its issuance.
• Medina vs. Greenfield Development Corporation, G.R. No. 140228, November 19, 2004 — Cited for the rule that courts should avoid issuing preliminary injunctions that would effectively dispose of the main case without trial, which would prejudge the issues and reverse the burden of proof.

• Section 35, Rule 39, Rules of Court — Provides that possession of property may be awarded to a purchaser in extrajudicial foreclosure unless a third party is actually holding the property adversely to the judgment debtor. Applied as the suppletory provision (through Section 6 of Act No. 3135) defining the third-party possession exception to the ministerial writ of possession.
• Section 6, Act No. 3135 (as amended) — Governs extrajudicial foreclosure of real estate mortgages and makes the Rules of Court suppletory. The Court relied on it to apply Section 35, Rule 39 to extrajudicial foreclosure proceedings.
• Section 8, Act No. 3135 — Provides that questions regarding the validity and regularity of the public sale should be determined in a subsequent proceeding. The Court cited it to emphasize that such matters cannot be litigated in the ex-parte proceeding for a writ of possession.

Chief Justice Artemio V. Panganiban (Chairperson), Associate Justice Consuelo Ynares-Santiago, Associate Justice Romeo J. Callejo, Sr., and Associate Justice Minita V. Chico-Nazario concurred.