The Supreme Court has affirmed that a trial court’s duty to issue a writ of possession is ministerial, meaning it must be issued as a matter of course upon the filing of a motion and approval of the corresponding bond, even if there’s a pending case for annulment of the foreclosure sale. This ruling emphasizes the purchaser’s right to possess the foreclosed property, reinforcing the security of transactions in extrajudicial foreclosures. It clarifies that questions regarding the sale’s validity should be resolved in a separate proceeding, not as a bar to the writ’s issuance.

Mortgage Default and Possession: A Bank’s Entitlement Amidst Legal Challenges

The case of LZK Holdings and Development Corporation versus Planters Development Bank revolves around a loan secured by a mortgage on a property in La Union. LZK failed to repay the loan, leading to extrajudicial foreclosure proceedings initiated by Planters Bank. At the auction sale, the bank emerged as the highest bidder. This prompted LZK to file complaints aimed at annulling the foreclosure, mortgage contract, and promissory notes. However, Planters Bank subsequently filed an ex parte petition for a writ of possession. The central legal question is whether Planters Bank is entitled to possess the foreclosed property despite LZK’s ongoing legal challenges.

Petitioner LZK argues that the appellate court erred by disregarding a writ of preliminary injunction issued by the Makati RTC, which was upheld by the Supreme Court. They contend that this injunction prevented the consolidation of title in favor of the bank, thereby negating the bank’s right to seek a writ of possession. Furthermore, LZK claims that the bank engaged in forum shopping by filing multiple petitions raising similar issues in different appellate courts.

Respondent Planters Bank counters that the appellate court committed no reversible error. They assert that the earlier filing of an action for annulment does not affect the right to possess an extrajudicially foreclosed property. The bank emphasizes the ministerial duty of the court to grant a writ of possession based on Act No. 3135, as amended. They further argue that LZK lost its rights over the mortgaged property by failing to redeem it within one year. Also, they claim that the injunction issued by the Makati RTC cannot interfere with proceedings in the San Fernando RTC. It is important to note that the injunction pertained solely to consolidation of title, not possession.

The Supreme Court clarified the nature of a writ of possession. It is essentially a writ of execution used to enforce a judgment for the recovery of land possession. This writ is issued to the purchaser in a foreclosure sale under Section 7 of Act No. 3135, as amended by Act No. 4118. The purchaser can obtain the writ either within the one-year redemption period by posting a bond, or after the redemption period has lapsed, without needing a bond.

The court emphasized that the trial court’s duty to grant a writ of possession is ministerial, meaning there is no discretion involved. The writ must be issued upon the filing of a motion and approval of the corresponding bond. Any issues regarding the sale’s validity or regularity must be addressed in a separate proceeding, as outlined in Section 8 of Act No. 3135. Such issues cannot be raised to oppose the writ’s issuance because the proceeding is ex parte. The recourse is available even before the redemption period expires.

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.

The Court underscored the ministerial nature of the writ by referencing previous cases that disallowed injunctions to prohibit its issuance. Similarly, a pending action for annulment of the mortgage or foreclosure cannot stay its issuance. However, a writ of possession can also be issued after the purchaser consolidates ownership of the property. If the property is not redeemed within one year after the sale’s registration, the buyer becomes the absolute owner. They are then entitled to possess the property and can demand it anytime after ownership consolidation and the issuance of a new transfer certificate of title. In this case, the bond required in Section 7 of Act No. 3135 becomes unnecessary, and possession becomes an absolute right.

In this case, the respondent bank was enjoined from consolidating its title over the foreclosed property. Consequently, possession did not become an absolute right. The temporary restraining order, followed by the injunction, effectively halted the redemption period three days before its expiration. Nevertheless, the Court held that Planters Bank, as the purchaser in the foreclosure sale, could still apply for a writ of possession during the redemption period. The injunction only stayed the consolidation of title, and the pending case for annulment does not halt the writ’s issuance.

The Court also noted that the trial on the merits had not yet begun. Until a competent court annuls the foreclosure sale, LZK lacks valid title and cannot prevent the writ’s issuance to Planters Bank. The trial court’s ministerial function remains to grant the possessory writ to the bank.

FAQs

What was the key issue in this case?	The key issue was whether Planters Bank, as the purchaser in a foreclosure sale, was entitled to a writ of possession despite a pending case for annulment of the foreclosure and an injunction against consolidating title.
What is a writ of possession?	A writ of possession is a court order directing the sheriff to enter land and give possession of it to the person entitled under a judgment. In foreclosure cases, it allows the purchaser to take possession of the foreclosed property.
Is the issuance of a writ of possession discretionary for the court?	No, the Supreme Court has consistently held that the duty of the trial court to grant a writ of possession is ministerial. This means the court must issue the writ upon proper motion and approval of the bond, without exercising discretion.
Can a pending case for annulment of foreclosure prevent the issuance of a writ of possession?	No, a pending case for annulment of the foreclosure sale, mortgage contract, or promissory notes does not stay the issuance of a writ of possession. The issues raised in the annulment case are to be resolved in a separate proceeding.
What is the effect of an injunction against consolidating title on the right to a writ of possession?	An injunction against consolidating title only prevents the purchaser from becoming the absolute owner of the property. It does not prevent the issuance of a writ of possession during the redemption period, provided the purchaser posts the required bond.
When can a purchaser obtain a writ of possession in a foreclosure sale?	A purchaser can obtain a writ of possession either within the one-year redemption period by posting a bond, or after the lapse of the redemption period without needing a bond, provided ownership has been consolidated.
What should a debtor do if they believe the foreclosure sale was invalid?	The debtor can petition to set aside the sale and cancel the writ of possession within 30 days after the purchaser was given possession, specifying the damages suffered. The court will then take cognizance of the petition.
Does the doctrine of non-interference apply in this case?	The doctrine of non-interference, which generally prevents courts of coordinate jurisdiction from interfering with each other’s orders, does not prevent the San Fernando RTC from issuing a writ of possession, even with the Makati RTC’s injunction against title consolidation.

In conclusion, the Supreme Court’s decision underscores the ministerial duty of trial courts to issue writs of possession in foreclosure cases, reinforcing the rights of purchasers and the stability of foreclosure proceedings. While debtors have avenues to challenge the validity of foreclosure sales, these challenges do not automatically prevent the issuance of a writ of possession.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: LZK HOLDINGS AND DEVELOPMENT CORP. VS. PLANTERS DEVELOPMENT BANK, G.R. NO. 167998, April 27, 2007