In Laureano v. Bormaheco, Inc., the Supreme Court affirmed that a purchaser of foreclosed property is entitled to a writ of possession, even if the previous owner raises legal challenges. The Court emphasized that once the redemption period expires without the original owner redeeming the property, the purchaser’s right to possess the property becomes absolute. This ruling clarifies that legal maneuvers by the former owner cannot indefinitely delay the purchaser’s right to possess what they legally own. The decision reinforces the security of transactions involving foreclosed properties, assuring purchasers that their ownership rights will be protected and upheld by the courts. The court also admonished the petitioner’s counsel for abusing legal processes, highlighting the importance of ethical conduct in legal practice.

From Mortgage to Possession: Can Legal Challenges Block a Purchaser’s Right?

The case began with spouses Reynaldo and Florencia Laureano obtaining credit from the Philippine National Cooperative Bank (PNCB), securing it with a real estate mortgage on two lots in Makati City. When the Laureanos failed to pay their debt, PNCB foreclosed on the mortgage and purchased the lots at a public auction in February 1984. After the Laureanos failed to redeem the properties within the one-year period, PNCB consolidated ownership and obtained new titles in its name. Subsequently, PNCB sold the properties to Bormaheco, Inc. in September 1988, which then secured new titles.

On October 20, 1988, Bormaheco filed an ex parte petition for the issuance of a writ of possession with the Regional Trial Court (RTC) of Makati. Reynaldo Laureano opposed this petition, arguing that the RTC lacked jurisdiction. After a series of legal challenges, including appeals to the Court of Appeals and the Supreme Court, Laureano’s efforts to block the writ of possession were consistently denied. Despite these setbacks, Laureano continued to file motions to dismiss and strike pleadings, alleging that Bormaheco lacked the legal capacity to file the petition. The RTC initially deferred resolving these motions due to pending cases in the Supreme Court but eventually granted the writ of possession in favor of Bormaheco on September 25, 1997. Laureano’s subsequent motion for reconsideration was also denied, leading him to file a Petition for Certiorari with the Court of Appeals, which was ultimately dismissed, prompting the appeal to the Supreme Court.

The central issue before the Supreme Court was whether the Court of Appeals erred in affirming the trial court’s order granting the writ of possession to Bormaheco, especially given Laureano’s pending motion to dismiss based on Bormaheco’s alleged lack of legal capacity. Laureano argued that issuing the writ while his motion was unresolved violated his right to due process. The Supreme Court, however, disagreed, emphasizing that Laureano had been afforded ample opportunity to contest the petition and that his legal maneuvers were merely delaying the inevitable. The Court underscored the ministerial duty of the trial court to issue a writ of possession to the purchaser after the redemption period had expired without redemption.

The Supreme Court reiterated the established principle that after the one-year redemption period expires without the property owner redeeming the property, the purchaser’s right to possession becomes absolute. This right is rooted in the purchaser’s ownership of the property, which they acquired through the foreclosure sale and subsequent consolidation of title. According to Act No. 3135, Section 7, the purchaser in an extra-judicial foreclosure sale has the right to possess the foreclosed property, even before the expiration of the redemption period, provided they furnish a bond. However, after the redemption period expires, no bond is required, and the purchaser’s right to possession is based solely on their ownership.

The Court also addressed Laureano’s claim that Bormaheco lacked the legal capacity to file the petition. The RTC found that any initial legal infirmity had been cured by Bormaheco’s formal registration with the Securities and Exchange Commission (SEC) on March 13, 1991. The RTC noted that Bormaheco, Inc. was the acronym of Border Machinery and Heavy Equipment Co., Inc., which had been registered with the SEC since 1950. The Court of Appeals affirmed this finding, stating that the amendment or change of the corporate name did not create a new corporation but merely continued the operation of the original entity. This meant that Bormaheco’s rights and obligations remained unaffected by the name change.

The Supreme Court also addressed the issue of due process, finding that Laureano had been given more than adequate opportunity to be heard. Despite the ex parte nature of the petition, the RTC ordered that Laureano be served with a copy of the petition, and he was allowed to file motions and oppositions. The Court criticized Laureano for abusing legal processes to delay the proceedings, noting that the simple ex parte petition had been pending for over twelve years due to his legal maneuvers. The Court warned Laureano’s counsel against such practices, emphasizing the importance of ethical conduct in legal practice.

In its decision, the Supreme Court cited relevant jurisprudence to support its ruling. The Court referenced A.G. Development Corporation vs. Court of Appeals, 281 SCRA 155 (1997), which affirmed the ministerial duty of the court to issue a writ of possession to the purchaser in a foreclosure sale. Additionally, the Court cited United Coconut Planters Bank vs. Reyes, 193 SCRA 756 (1991), which held that after the redemption period expires, no bond is required for the issuance of a writ of possession. These citations reinforce the established legal principles that govern the rights of purchasers in foreclosure sales.

While Bormaheco alleged that Laureano was guilty of forum shopping by filing multiple cases involving the same properties, the Supreme Court found this allegation unsubstantiated. The Court noted that Bormaheco failed to provide sufficient evidence to show that the cases involved identical parties, causes of action, and reliefs sought. Without such evidence, the Court could not determine whether the rules on non-forum shopping had been violated. This aspect of the decision underscores the importance of providing concrete evidence to support allegations of forum shopping.

FAQs

What is a writ of possession?	A writ of possession is a court order that directs the sheriff to place someone in possession of a property. In foreclosure cases, it’s used to give the purchaser possession of the foreclosed property.
What does “ex parte” mean in the context of a petition for a writ of possession?	“Ex parte” means that the petition is filed by one party without requiring notice to the other party. This is common in foreclosure cases after the redemption period has expired.
What is the redemption period in a foreclosure sale?	The redemption period is the time allowed by law for the original owner of the property to buy back the property after it has been foreclosed. In the Philippines, this period is typically one year.
What happens if the original owner fails to redeem the property within the redemption period?	If the original owner fails to redeem the property, the purchaser at the foreclosure sale has the right to consolidate ownership and obtain a writ of possession to take control of the property.
Can the original owner challenge the issuance of a writ of possession?	Yes, the original owner can challenge the issuance of a writ of possession, but the grounds for doing so are limited. Typically, challenges must be based on irregularities in the foreclosure process or lack of jurisdiction.
What is forum shopping, and why is it discouraged?	Forum shopping is the practice of filing multiple cases in different courts to obtain a favorable outcome. It is discouraged because it wastes judicial resources and can lead to inconsistent rulings.
What role does the Securities and Exchange Commission (SEC) play in this case?	The SEC’s role is significant because the petitioner questioned Bormaheco’s legal capacity to file the petition. The Court considered the SEC’s records to determine if Bormaheco was a duly registered corporation.
What is the significance of Act No. 3135 in this case?	Act No. 3135 governs the extrajudicial foreclosure of mortgages in the Philippines. Section 7 of this act outlines the purchaser’s right to possess the property after the foreclosure sale.
Why was the counsel for the petitioner admonished in this case?	The counsel was admonished for abusing legal processes and causing undue delay in the proceedings. The Court emphasized the importance of ethical conduct in legal practice.

In conclusion, the Supreme Court’s decision in Laureano v. Bormaheco, Inc. reaffirms the rights of purchasers in foreclosure sales to obtain possession of the property after the redemption period expires, regardless of ongoing legal challenges by the former owner. This ruling provides clarity and stability to real estate transactions involving foreclosed properties, ensuring that purchasers can exercise their ownership rights without undue delay. The Court’s emphasis on ethical conduct in legal practice also serves as a reminder to attorneys to avoid abusing legal processes.

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: Reynaldo L. Laureano vs. Bormaheco, Inc., G.R. No. 137619, February 06, 2001