THIRD
DIVISION
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TOP ART SHIRT
MANUFACTURING, INCORPORATED, MAXIMO AREJOLA and TAN SIU KHENG,
Petitioners, - versus - METROPOLITAN BANK AND TRUST COMPANY and THE COURT
OF APPEALS, Respondents. |
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G. R. No. 184005 Present: YNARES-SANTIAGO, J.,
Chairperson, CHICO-NAZARIO, VELASCO, JR., NACHURA, and PERALTA, JJ. Promulgated: August
4, 2009 |
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CHICO-NAZARIO, J.:
This Petition for Review on Certiorari[1] under Rule 45 of the Revised Rules of
Court seeks the review of the Decision[2] dated 29 April 2008 and Resolution[3] dated
31 July 2008 of the Court of Appeals in CA-G.R. SP No. 98617, entitled “Metropolitan Bank and Trust Company v. Hon.
Rogelio M. Pizarro in his capacity as the Presiding Judge, Branch 22,
RTC-Quezon City, Spouses Maximo Arejola and Tan Shiu Kheng, and Top Art
Manufacturing, Inc.,” which issued the writ of certiorari annulling and setting aside
the Orders dated 9 November 2006 and
2 February 2007 of the Regional Trial Court (RTC), Branch 222, Quezon City, in
LRC Case No. Q17996 (04) entitled “In re:
Issuance of Writ of Possession, Metropolitan Bank and Trust Company.”
As culled from the record of the present petition, the facts of the case
are as follows:
On
In a Decision dated
WHEREFORE, premises considered, the instant
petition is hereby GRANTED. Accordingly, let a Writ of Possession issue in
favor of [herein respondent] bank and the Sheriff IV of this Branch or his duly
authorized deputy is directed to cause the eviction of Spouses Maximo Arejola
and Tan Siu Kheng and all persons claiming rights under them from the subject
property TCT No. N-266564 of the Registry of Deeds of Quezon City and forthwith
place [respondent] bank in possession of the said subject premises.[4]
Accordingly, a writ of possession was issued on
On
In an Order dated
Metrobank moved for the reconsideration of the aforequoted Order arguing
that (1) “the manner by which the Writ of Possession was cancelled or set aside
was not in accordance with Section 8 of Act No. 3135, as amended, which
provides that a petition or complaint, not a mere motion, should be filed in
order to have the Writ of Possession cancelled”; and (2) “Walter Santillan, the
purported lessee [of the subject property], not Top Art x x x is the proper
party who should have questioned the issuance of [the] Writ of Possession as he
is the one supposedly adversely affected by the Writ of Possession.” Moreover,
it clarified that Top Art was not the lessor of the subject property, as the
lease contract was executed between Maximo Arejola and Walter Santillan; hence,
Top Art had “no interest whatsoever in the subject property.” And Metrobank insisted that “[t]here is
simply no factual and legal basis to even restore possession [thereof] to Top
Art x x x when it had never acquired possession of the subject property at any
time by lease or in whatever manner.”[8]
The Motion for Reconsideration of Metrobank was subsequently denied by
the RTC in an Order[9] dated
Aggrieved, Metrobank filed a Petition for Certiorari with the Court of Appeals imputing grave abuse of
discretion, amounting to lack or excess of jurisdiction, to Hon. Rogelio M.
Pizarro, the Presiding Judge of the RTC, Branch 222, Quezon City, for recalling
and setting aside, in his Orders dated 9 November 2006 and 2 February 2007
in LRC Case No. Q17996 (04), the writ of possession he
earlier directed to be issued in the said case.
The Petition was docketed as CA-G.R. SP No. 98617.
In a Decision promulgated on
The trial court exceeded its jurisdiction in
entertaining Top Art’s motion to quash, considering that the same was neither
formally a verified petition not a stranger’s complaint-in-intervention. The
trial court simply closed its eyes and neglected to address the fact that Top
Art, while being a loan beneficiary of Metrobank, was not a redemptioner nor the
debtor-mortgagor contemplated by Section 8 who, having a direct interest
(possessory and otherwise) in the realty, may cause the annulment of the writ
of possession, under any of only two specified circumstances – (1) because the
mortgage (contract) was not violated, or (2) the sale was not made in
accordance with the provisions of Art. 3135. It is well to note that in here,
the trial court anomalously authorized Top Art’s ground for cancellation of an
already-implemented, a fait accompli
no less, grant of possession: failure to disclose the pendency of a
subsequently-filed action for specific performance.
x x x x
Coming now to the question of Metrobank’s
alleged awareness of an existing lease between the spouses-mortgagors and
Walter Santillan, it was erroneous for the trial court to attribute knowledge
to Metrobank allegedly due to the latter’s failure to deny the statements
contained in the Complaint in Civil
Case No. Q-04-52965 x x x [because] Top Art is not a party to the said case, x
x x [and] the trial court may not take judicial notice of the records or the
proceedings in another case, unless the parties themselves agree thereto
(citation omitted).[10]
The Court of Appeals did not fault Metrobank for not declaring in the
Certification against Forum Shopping, appended to its Petition in LRC Case
No. Q17996 (04), the existence of Civil Case No.
Q-04-52965, finding that:
Metrobank could not have stated in its Certification against Forum shopping (sic)
the fact of another pending case related to its petition for a writ of
possession, because the said petition was filed ahead of Civil Case No.
Q-04-52965.[11]
All in all, the Court of Appeals concluded that:
In sum, the trial court gravely abused its
discretion and exceeded its jurisdiction in issuing the twin orders assailed
through this petition.[12]
The fallo of the Decision of
the Court of Appeals reads:
WHEREFORE, in view of the foregoing, the
petition is GRANTED, and the assailed Orders of the trial court dated 9
November 2006 and 2 February 2007, are ANNULLED and SET ASIDE and in lieu
thereof, the previous Decision dated 25 May 2005 which granted the writ of
possession in favor of Metrobank is hereby reinstated.[13]
Top Art and the Spouses Arejola’s Motion for Reconsideration was denied
by the Court of Appeals in a Resolution dated
Hence, this Petition for Review on Certiorari
under Rule 45 of the Revised Rules of Court based on the following assignment
of errors:
I.
THE HONORABLE COURT OF APPEALS COMMITTED A
GRAVE ERROR IN NOT HOLDING THAT PETITIONER TOP ART MANUFACTURING, INC. HAS THE
LEGAL STANDING TO QUASH THE WRIT OF POSSESSION;
II.
THE HONORABLE COURT OF APPEALS GRAVELY ERRED
IN NOT SUSTAINING AND AFFIRMING THE ASSAILED ORDERS OF THE TRIAL COURT (RTC-QUEZON
CITY, BRANCH 222) WHICH QUASHED AND SET ASIDE THE PREVIOUSLY ISSUED WRIT OF
POSSESSION CONSIDERING THAT PRIVATE RESPONDENT METROBANK HAD PRIOR KNOWLEDGE OF
THE SUBSISTING LEASE OVER THE MORTGAGED PROPERTY; and
III
THE HONORABLE COURT OF APPEALS GRAVELY ERRED
WHEN IT RULED THAT THE TRIAL COURT (
Top Art and the Spouses Arejola
insist that Top Art has “legal standing to question and/or to quash the writ of
possession earlier issued by the trial court in favor of Metrobank”[14]
for the simple reason that its Motion to Quash “also included its
co-petitioners, the Spouses Maximo Arejola and Tan Siu Kheng, the registered
owners of the 480-sq.m. real property. Petitioner Maximo Arejola was the one
who entered in the subject lease contract with Walter Santillan over the
subject property.”[15]
On the other hand, Metrobank
maintains that Sec. 8 of Act No. 3135, as amended, is clear in that a writ of
possession may be set aside only through the filing of a complaint or petition
for that purpose and not by mere unverified motion. Likewise, it persistently
disputes the contention that Top Art was joined in its Motion to Quash Writ of
Possession by the Spouses Arejola. Metrobank submits that “[a] simple reading
of all the pleadings filed by Top Art x x x shows that they were filed solely
on behalf of Top Art x x x.” The bank
contends as well that “[t]he issue of whether or not Metrobank had prior
knowledge of the lease contract, which was purportedly raised by Walter
Santillan in the separate civil action x x x is one properly left to the
Regional Trial Court before which the said civil case [Civil Case No.
Q-04-52965] was filed to resolve, not the Trial Court Judge in LRC Case No.
Q17996 (04) before whom Walter Santillan has not even appeared as an
oppositor.”
Considering all the foregoing, We
determine that the basic issue to be resolved in the present Petition is
whether the Presiding Judge of the RTC, Branch 222,
We rule in the affirmative.
The procedure
for extrajudicial foreclosure of real estate mortgage is governed by Act No.
3135, as amended, entitled “An Act to
Regulate the Sale of Property Under Special Powers Inserted in or Annexed to
Real Estate Mortgages.” Sec. 7 of Act No. 3135, as amended,
provides that the purchaser at the public auction sale of an extrajudicially
foreclosed real property may seek possession thereof, thus:
SEC. 7. In any sale made under the provisions
of this Act, the purchaser may petition the Court of First
Instance of the province or place where the property or any part thereof is
situated, to give him possession thereof during the
redemption period, furnishing bond in an amount equivalent to the use of the
property for a period of twelve months, to indemnify the debtor in case it be
shown that the sale was made without violating the mortgage or without
complying with the requirements of this Act. Such petition shall be made under oath and filed in form or an ex parte motion in the
registration or cadastral proceedings if the property is registered, or in
special proceedings in the case of property registered under the Mortgage Law
or under section one hundred and ninety-four of the Administrative Code, or of
any other real property encumbered with a mortgage duly registered in the
office of any register of deeds in accordance with any existing law, and in
each case the clerk of court shall, upon the filing of such petition, collect
the fees specified in paragraph eleven of section one hundred and fourteen of
Act Numbered Four hundred and ninety six as amended by Act Numbered
Twenty-eight hundred and sixty-six, and the court shall, upon approval of the
bond, order that a writ of possession issue addressed to the sheriff of the
province in which the property is situated, who shall execute said order
immediately. (Emphases supplied.)
In De
Gracia v. San Jose,[16]
We expounded on the application of the preceding provision, as follows:
As may be seen, the law expressly authorizes
the purchaser to petition for a writ of possession during the redemption period
by filing an ex parte motion under oath for that purpose in the
corresponding registration or cadastral proceeding in the case of property with
Torrens title; and upon the filing of such motion and the approval of the
corresponding bond, the law also in express terms directs the court to issue
the order for a writ of possession. Under the legal provisions above copied,
the order for a writ of possession 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 court. And any question regarding the
regularity and validity of the sale (and the consequent cancellation of the
writ) is left to be determined in a subsequent proceeding as outlined in
section 8. Such question is not to be raised as a justification for opposing
the issuance of the writ of possession, since, under the Act, the proceeding
for this is ex parte. (Emphasis supplied.)
Sec. 7 of Act
No. 3135, as amended, refers to a situation wherein the purchaser seeks
possession of the foreclosed property during the 12-month period for
redemption. Upon the purchaser’s filing of the ex parte petition and
posting of the appropriate bond, the RTC shall, as a matter of course, order
the issuance of the writ of possession in the purchaser’s favor.
But equally
well settled is the rule that a writ of possession will issue 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.[17] In IFC Service Leasing and Acceptance
Corporation v. Nera,[18] We reasoned that if under Sec. 7 of Act No.
3135, as amended, the RTC has the power during the period of redemption to
issue a writ of possession on the ex parte application of the purchaser,
there is no reason why it should not also have the same power after the
expiration of the redemption period, especially where a new title had already
been issued in the name of the purchaser.
Put simply, a purchaser seeking possession of the foreclosed property he
bought at the public auction sale, after the redemption period expired without
redemption having been made, may still avail itself of the procedure under Sec.
7 of Act No. 3135, as amended; this time, without any more need for the
purchaser to furnish a bond.
Possession of
the foreclosed real property, purchased at a public auction sale, becomes the
absolute right of the purchaser upon the consolidation of his title when no
timely redemption of the said property had been made because:
It is settled that upon receipt of the definitive deed in an execution sale, legal title over the property sold is perfected (33 C. J. S. 554). And this court has also [said] and that the land bought by him and described in the deed deemed (sic) within the period allowed for that purpose, its ownership becomes consolidated in the purchaser, and the latter, "as absolute owner . . . is entitled to its possession and to receive the rents and fruits thereof." (Powell v. Philippine National Bank, 54 Phil., 54, 63.) x x x.[19]
Hence, the
general rule is that upon proper application and proof of title, the issuance
of the writ of possession to the purchaser of the foreclosed property at a
public auction sale becomes a ministerial duty of the court.[20]
However, as
in all general rules, there is an exception. In Roxas v. Buan,[21] we explained thus:
In the extrajudicial
foreclosure of real estate mortgages, possession of the property may be awarded
to the purchaser at the foreclosure sale during the pendency of the period of
redemption under the terms provided in Sec. 6 of Act 3135, as amended (An Act
to Regulate the Sale of Property Under Special Powers Inserted In or Annexed to
Real Estate Mortgages), or after the lapse of the redemption period, without
need of a separate and independent action [IFC Service Leasing and
Acceptance Corp. v. Nera, G.R. No. L-21720,
This rule is, however, not without exception. Under Sec. 35, Rule 39 of the Revised Rules of Court, which was made applicable to the extrajudicial foreclosure of real estate mortgages by Sec. 6 Act No. 3135, the possession of the mortgaged property may be awarded to a purchaser in extrajudicial foreclosures "unless a third party is actually holding the property adversely to the judgment debtor." [Emphasis supplied.] (Clapano v. Gapultos, G.R. Nos. 51574-77, September 30, 1984, 132 SCRA 429, 434; Philippine National Bank v. Adil, G.R. No. 52823, November 2, 1982, 118 SCRA 110; IFC Service Leasing and Acceptance Corp. v. Nera, supra.) As explained by the Court in IFC Service Leasing and Acceptance Corp. v. Nera, supra:
x x x The applicable
provision of Act No. 3135 is Section 6 which provides that, in cases in which
an extrajudicial sale is made, "redemption shall be governed by the
provisions of sections four hundred and sixty-four to four hundred and sixty-six,
inclusive, of the Code of Civil Procedure in so far as these are not
inconsistent with the provisions of this Act." Sections 464-466 of the
Code of Civil Procedure were superseded by Sections 25-27 and Section 31 of
Rule 39 of the Rules of Court which in turn were replaced by Sections 29-31 and
Section 35 of Rule 39 of the Revised Rules of Court. Section 35 of the Revised
Rules of Court expressly states that "If no redemption be made within
twelve (12) months after the sale, the purchaser, or his assignee, is entitled
to a conveyance and possession of the property x x x." The possession of
the property shall be given to the purchaser or last redemptioner by the
officer unless a party is actually holding the property adversely to the
judgment debtor. (
Sec. 35 of
Rule 39 of the Revised Rules of Court referred to above had been further
revised, and is now Sec. 33 of the same Rule, which reads:
SEC. 33. Deed and possession to be given at expiration of redemption period; by whom executed or given. – If no redemption be made within one (1) year from the date of the registration of the certificate of sale, the purchaser is entitled to a conveyance and possession of the property; x x x.
Upon the expiration
of the right of redemption, the purchaser or redemptioner shall be substituted
to and acquire all the rights, title, interest and claim of the judgment
obligor to the property as of the time of the levy. The possession of the
property shall be given to the purchaser or last redemptioner by the same
officer unless a third party is
actually holding the property adversely to the judgment obligor.
(Emphasis supplied.)
In an
extrajudicial foreclosure of real property, when the foreclosed property is in
the possession of a third party holding the same adversely to the defaulting
debtor/mortgagor, the issuance by the RTC of a writ of possession in favor of
the purchaser of the said real property ceases to be ministerial and may no
longer be done ex parte. But, for the exception to apply, the property
must be possessed by a third party; and such possession must be adverse to the
debtor/mortgagor.
In the case
at bar, is Top Art a third party, in possession of the subject property,
claiming a right adverse to the mortgagors Spouses Arejola; which would give
rise to the exception rather than the general rule, and bar Metrobank from
acquiring possession of the subject property despite its consolidated title?
The facts of
the case are simple and We can only answer no.
Top Art is
not alleging that it is the one in possession of the subject property. It is invoking the possession of Santillan,
who is purportedly leasing the subject property from Maximo Arejola. Additionally, although Top Art was not the
owner of the subject property, it was actually the debtor of Metrobank. The Spouses Arejola executed mortgages over
their real properties, including the subject property, only to secure the
dollar-denominated loans of Top Art with Metrobank. The subject property was foreclosed due to
the failure of Top Art to pay its loans.
Therefore, Top Art cannot claim to be a third party to the loan
transactions that led to the foreclosure of the subject property, it being, in
fact, a principal party thereto.
Moreover, Top Art does not assert any right to the subject property
adverse to the Spouses Arejola. It can
even be said that Top Art and the Spouses Arejola, being the debtor and
mortgagors, respectively, share exactly the same rights as against Metrobank
insofar as the subject property is concerned.
And, inasmuch as Top Art is not a third party actually holding the
subject property adversely to the obligor, it cannot seek the quashal or
prevent the implementation of the writ of possession issued ex parte to Metrobank.
Surprisingly,
Top Art and the Spouses Arejola allege in their Reply to the Comment of
Metrobank in this case that Top Art is leasing the subject property from the
Spouses Arejola.[22] Not only is this allegation belatedly made,
it is contradictory to the averments of Top Art in its Motion to Quash before
the RTC that the lessee of the subject property is Santillan. Even granting that Top Art is indeed the
lessee of the subject property, it will not affect the ruling of this Court,
since Top Art still cannot be deemed a third party. It will not change the fact that Top Art is a
party to the loan transactions that ended in the foreclosure of the subject
property.
The Court
cannot give much credence to the allegation by Top Art in its Motion to Quash
that the subject property is presently in the possession of Santillan as
lessee. The basic rule is that mere
allegation is not evidence and is not equivalent to proof.[23]
To be sure, Santillan, the alleged lessee whose physical possession was being
threatened by the writ of possession issued in favor of Metrobank, did not even
intervene in LRC Case No. Q-17996 (04). Between Top Art and Santillan, the
latter was the proper party to question the ex
parte issuance and enforcement of the
writ of possession for the subject property.
Even assuming arguendo that
the subject real property is actually being held adversely by Santillan, a
third party, he is not without remedy. The third party can file (1) a terceria
to determine whether the Sheriff had rightly or wrongly taken hold of the property
not belonging to the judgment debtor or obligor; and (2) an independent
"separate action" to vindicate his claim of ownership and/or
possession over the foreclosed property.
Given the
foregoing, We find no justifiable reason to disturb the assailed Decision and
Resolution of the Court of Appeals.
Verily, Top Art cannot be considered a third party holding the subject
real property adversely to itself, as debtor; or the Spouses Arejola, the
mortgagors. Neither can Santillan be
deemed such a third party, since his alleged possession as lessee of the
subject real property has not been adequately proved. Resultantly, the general rule, and not the
exception, applies to the instant Petition.
It is the mandatory and ministerial duty of the Quezon City RTC, Branch
222, to grant the ex parte petition of Metrobank for the issuance of a
writ of possession, following the consolidation of title to the subject
property and issuance of a new certificate of title in the name of the said
bank. As We held in St. Dominic Corp.
v. The Intermediate Appellate Court[24]:
The right of the respondent to the possession
of the property is clearly unassailable. It is founded on the right of
ownership. As the purchaser of the properties in the foreclosure sale, and to
which the respective titles thereto have already been issued, the petitioner's
rights over the property has become absolute, vesting upon it the right of
possession of the property which the court must aid in affecting its delivery.
After such delivery, the purchaser becomes the absolute owner of the property.
As we said in Tan Soo Huat v. Ongwico (63 Phil., 746), the deed of
conveyance entitled the purchaser to have and to hold the purchased property.
This means, that the purchaser is entitled to go immediately upon the real
property, and that it is the sheriff's inescapable duty to place him in such
possession. (Philippine National Bank v. Adil, 118 SCRA 110).
WHEREFORE, premises
considered, the instant Petition is DENIED. The assailed Decision dated
SO ORDERED.
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MINITA V. CHICO-NAZARIOAssociate Justice |
WE
CONCUR:
Associate Justice
Chairperson
PRESBITERO J. VELASCO, JR.
Associate Justice |
ANTONIO EDUARDO B. NACHURAAssociate Justice |
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DIOSDADO M. PERALTA Associate
Justice |
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ATTESTATION
I attest that the conclusions in the above
Decision were reached in consultation before the case was assigned to the
writer of the opinion of the Court’s Division.
CONSUELO YNARES-SANTIAGO
Associate Justice
Chairperson, Third Division
Pursuant to Article VIII,
Section 13 of the Constitution, and the Division Chairman’s Attestation, it is
hereby certified that the conclusions in the above Decision were reached in
consultation before the case was assigned to the writer of the opinion of the
Court’s Division.
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REYNATO S. PUNO
Chief Justice |
[1] Rollo, pp. 41-84.
[2] Penned by Court of Appeals Associate Justice Apolinario D. Bruselas, Jr. with Associate Justices Rebecca de Guia-Salvador and Vicente S.E. Veloso concurring; rollo, pp. 86-97.
[3]
[4]
[5]
[6]
[7]
[8]
[9]
[10]
[11]
[12]
[13]
[14] Petition, p. 26; rollo, p. 66.
[15]
[16] 94 Phil. 623, 625-626 (1954).
[17] Sps. Ong v. Court of Appeals, 388 Phil. 857, 865-866 (2000).
[18] 125 Phil. 595 (1967).
[19] Belleza v. Zandaga, 98 Phil. 702, 703 (1956).
[20] F. David Enterprises v. Insular Bank of
[21] G.R.
No. L-53798,
[22] Reply, pp. 5-6; rollo, pp. 358-359.
[23] Philippine National Bank v. Court of Appeals, 334 Phil. 120, 122 (1997).
[24] G.R. No. L-70623,