Spouses Reyes vs. Spouses Chung

A subsequent purchaser of property acquired through extrajudicial foreclosure may avail of the remedy of a writ of possession under Section 33, Rule 39 of the Rules of Court and Section 7 of Act No. 3135, but unlike the original mortgagee-purchaser, the subsequent purchaser must be granted a hearing to determine that the property remains in the possession of the mortgagor before the writ may issue.

Petitioner spouses Rosalino Jr. and Sylvia Reyes obtained a loan from Export and Industry Bank Inc. (EIBI), secured by a real estate mortgage over a 1,202.60 square-meter lot in La Vista, Pansol, Quezon City. Upon default, the property was extrajudicially foreclosed with EIBI as highest bidder. After petitioners failed to redeem the property within the statutory one-year period, title consolidated in EIBI's name. EIBI subsequently sold the property to LNC (SPV-AMC) Corporation, which then sold and assigned it to respondent spouses Herbert Bun Hong and Wienna Chung. Respondents were issued Transfer Certificate of Title No. 004-2012005446.

• The Loan and Foreclosure: Petitioner spouses Rosalino R. Reyes, Jr. and Sylvia S. Reyes obtained a loan from Export and Industry Bank Inc. (EIBI), secured by a Deed of Real Estate Mortgage over a 1,202.60 square-meter lot located at No. 59 Maranaw St., La Vista, Pansol, Quezon City (subject property), registered under Transfer Certificate of Title (TCT) No. RT-98958 (281043). Upon petitioners' default, the subject property was extrajudicially foreclosed and sold at public auction, with EIBI as the highest bidder. The Certificate of Sale was issued and registered with the Registry of Deeds.
• Consolidation of Title and Subsequent Sales: After petitioners failed to redeem the property within the one-year redemption period, title consolidated in EIBI's name, and a new certificate of title was issued to EIBI. EIBI subsequently sold the property to LNC (SPV-AMC) Corporation (LNC), resulting in the cancellation of EIBI's title and the issuance of a new one in LNC's name. By a Deed of Absolute Sale dated May 8, 2012 and a Deed of Assignment dated May 11, 2012, LNC sold and assigned the subject property to respondent spouses Herbert Bun Hong G. Chung and Wienna T. Chung. LNC's certificate of title was cancelled, and TCT No. 004-2012005446 was issued in the respondents' names.
• Ejectment Proceedings: Respondents made several demands on petitioners to vacate the property, the final demand being made on June 29, 2012. When petitioners refused, respondents filed a Complaint for Ejectment before the Metropolitan Trial Court (MeTC) of Quezon City, Branch 42, docketed as Civil Case No. 41580. In a Decision dated April 11, 2013, the MeTC dismissed the complaint for insufficiency of evidence. Respondents appealed the dismissal to the RTC, Quezon City, Branch 223.
• Petition for Writ of Possession: While the appeal was pending, respondents filed an "Ex-Parte Petition for Issuance of Writ of Possession under Act No. 3135" before the RTC, Quezon City, Branch 226, docketed as LRC Case No. Q-13-02781, on August 28, 2013. The RTC set the petition for hearing on September 13, 2013. On August 29, 2013, respondents withdrew their appeal before RTC-Branch 223, which withdrawal was allowed per Order dated September 4, 2013.
• Issuance and Implementation of Writ: In a Decision dated September 20, 2013, RTC-Branch 226 granted the Ex-Parte Petition and, on September 24, 2013, issued a notice to vacate addressed to petitioners and a writ of possession directing the sheriff to place respondents in possession. Petitioners refused to sign the writ and notice. On September 26, 2013, respondents filed an "Urgent Ex-Parte Omnibus Motion" praying for the issuance of a Break Open Order.
• Motion to Quash and Break Open Order: Petitioners filed a "Verified Urgent Motion to Quash Writ of Possession" on October 22, 2013, alleging lack of jurisdiction and forum shopping. In a Resolution dated January 20, 2014, the RTC denied the motions of both parties, holding that respondents could validly file the petition as successors-in-interest and that no forum shopping was committed. When the sheriff reported that the gate of the property was padlocked as of February 21, 2014, respondents moved again for a Break Open Order. In a Resolution dated April 28, 2014, the RTC denied petitioners' motion for reconsideration but granted the Break Open Order, noting the property was unoccupied and padlocked. The writ of possession was implemented on May 13, 2014.

• Lack of Jurisdiction: Petitioner maintained that RTC-Branch 226 had no jurisdiction to issue the writ of possession because respondents did not purchase the subject property via a foreclosure sale under Act No. 3135, and only the purchaser at the foreclosure sale or the mortgagee-purchaser could avail of the remedy under Section 7 of Act No. 3135.
• Forum Shopping: Petitioner argued that respondents committed forum shopping by filing the Complaint for Ejectment before the MeTC and subsequently filing the Ex-Parte Petition for Issuance of Writ of Possession before the RTC, constituting the pursuit of multiple remedies based on the same transactions and essential facts.

• Right to Writ of Possession: Respondent countered that as purchasers and successors-in-interest of EIBI and LNC, they acquired all the rights of the previous owner/buyer in the foreclosure sale, including the right to ask for the writ of possession pursuant to Section 7 of Act No. 3135 and Section 33, Rule 39 of the Rules of Court.
• No Forum Shopping: Respondent argued that no forum shopping was committed because the application for writ of possession is a mere incident in the registration proceeding, not an independent action, and they had withdrawn their appeal of the ejectment case before filing the petition for writ of possession, rendering the remedies successive rather than simultaneous.

• Forum Shopping: Whether respondents committed forum shopping in filing a Complaint for Ejectment and subsequently an Ex-Parte Petition for Issuance of Writ of Possession.
• Availability of Writ of Possession to Subsequent Purchasers: Whether the trial court correctly issued the Writ of Possession and Break Open Order in favor of respondents who were not the purchasers at the foreclosure sale but subsequent purchasers from the mortgagee-purchaser.

• Forum Shopping: No forum shopping was committed. Forum shopping exists only where the elements of litis pendentia are present or where a final judgment in one case will amount to res judicata in another. The requisites of litis pendentia—identity of parties, identity of rights asserted and relief prayed for, and identity of the two cases such that judgment in one would amount to res judicata in the other—were absent. Similarly, res judicata did not apply because the ejectment case and the petition for writ of possession were not identical actions; the latter was merely an incident in the registration proceeding. The remedies of appeal in the ejectment case and the petition for writ of possession were mutually exclusive and not alternative or successive, and respondents withdrew the appeal before filing the petition, negating any element of simultaneity required for forum shopping.
• Writ of Possession for Subsequent Purchasers: The issuance of the writ of possession to respondents was upheld, but the Court clarified that subsequent purchasers of foreclosed property may avail of the remedy only after a hearing and after determining that the subject property is still in the possession of the mortgagor. The trial court erred in issuing the writ ex parte, as the right to an ex parte writ is limited to the mortgagee-purchaser or a third-party purchaser during the redemption period, not to subsequent purchasers who acquired title after the redemption period had lapsed. However, the defect was deemed cured because petitioners were afforded their day in court through their Motion to Quash, and requiring a new petition would only prolong the proceedings and deny respondents their right to possession which follows ownership. Furthermore, the issue was rendered moot by petitioners' voluntary relinquishment of possession.
• Break Open Order: The issuance of the Break Open Order was proper because the sheriff's report established that the property was padlocked and unoccupied at the time of service, and the character of the writ carries with it the authority to break open the property if the sheriff could not otherwise execute its command.

• Forum Shopping Test: Forum shopping is determined by the presence of litis pendentia or res judicata. When neither exists, forum shopping cannot exist. Litis pendentia requires: (a) identity of parties, or at least such as representing the same interests in both actions; (b) identity of rights asserted and relief prayed for, the relief being founded on the same facts; and (c) identity of the two cases such that judgment in one, regardless of which party is successful, would amount to res judicata in the other. Res judicata requires: (a) the former judgment must be final; (b) the court which rendered it had jurisdiction over the subject matter and the parties; (c) it must be a judgment on the merits; and (d) there must be, between the first and second actions, identity of parties, subject matter, and causes of action.
• Writ of Possession for Subsequent Purchasers: Under Section 33, Rule 39 of the Rules of Court, applied by analogy to extrajudicial foreclosure under Act No. 3135, the remedy of a writ of possession available to the mortgagee-purchaser is made available to a subsequent purchaser, but only after hearing and after determining that the subject property is still in the possession of the mortgagor. Unlike the mortgagee-purchaser or a third-party purchaser during the redemption period who may obtain the writ ex parte, a subsequent purchaser who acquired title after the redemption period must be granted a hearing to determine whether possession is still with the mortgagor or with a third party holding adversely to the mortgagor.
• Right to Possession Follows Ownership: Possession is an essential right of ownership (jus possidendi), and the right to possess property merely follows the right of ownership. A person having ownership of a parcel of land cannot be barred from seeking possession thereof.

• "The test to determine whether a party violated the rule against forum shopping is whether the elements of litis pendentia are present, or whether a final judgment in one case will amount to res judicata in another. Simply put, when litis pendentia or res judicata does not exist, neither can forum shopping exist."
• "The remedy of a writ of possession, a remedy that is available to the mortgagee-purchaser to acquire possession of the foreclosed property from the mortgagor, is made available to a subsequent purchaser, but only after hearing and after determining that the subject property is still in the possession of the mortgagor. Unlike if the purchaser is the mortgagee or a third party during the redemption period, a writ of possession may issue ex-parte or without hearing."
• "To be heard does not mean verbal argumentation alone inasmuch as one may be heard just as effectively through written explanations, submissions or pleadings."
• "The right to possess a property merely follows the right of ownership, and it would be illogical to hold that a person having ownership of a parcel of land is barred from seeking possession thereof."

• Okabe v. Saturnina, G.R. No. 196040, August 26, 2014 — Established the doctrine that subsequent purchasers of foreclosed property must be granted a hearing before a writ of possession may issue, distinguishing them from mortgagee-purchasers who may obtain the writ ex parte. Followed and applied.
• Topacio v. Banco Filipino Savings and Mortgage Bank, G.R. No. 157644, November 17, 2010 — Cited for the principle that an application for writ of possession is merely an incident in the transfer of title and not identical to an ejectment action, thus negating res judicata. Followed.
• Dayal v. Shell Chemical Company (Phils.), Inc., G.R. No. 156542, June 26, 2007 — Cited for the requisites of litis pendentia and res judicata in the context of forum shopping. Followed.
• Javate v. Tiotuico, G.R. No. 187606, March 9, 2015 — Cited for the principle that being heard may be effected through written pleadings and not solely through verbal argumentation. Followed.

• Section 7, Act No. 3135 (as amended) — Governs the issuance of a writ of possession in extrajudicial foreclosure proceedings, imposing a ministerial duty upon the RTC to issue the writ to the new owner upon a proper petition. Applied to hold that the remedy extends to subsequent purchasers but requires a hearing.
• Section 33, Rule 39 of the Rules of Court — Provides that a writ of possession may be issued in execution sales, applied by analogy to extrajudicial foreclosure to allow subsequent purchasers to avail of the remedy, subject to the hearing requirement established in Okabe.
• Article 428 of the New Civil Code — Defines the rights of ownership, including the right to possession (jus possidendi), supporting the principle that the right to possession follows ownership.
• Rule 45 of the Rules of Court — Governs petitions for review on certiorari to the Supreme Court.

Lucas P. Bersamin
Marvic M.V.F. Leonen
Samuel R. Martires
Alexander G. Gesmundo