In the Philippines, a key principle in property law is clarified by LZK Holdings and Development Corporation vs. Planters Development Bank: after a foreclosure sale, courts have a ministerial duty to issue a writ of possession to the purchaser. This means that once the proper motion and bond are filed, the court must grant the writ. Any disputes about the sale’s validity must be addressed in a separate legal action. This decision reinforces the purchaser’s right to possess the property, streamlining the process and providing clarity for both financial institutions and property owners. This ensures a swift and predictable process for those who acquire property through foreclosure.

Foreclosure Fight: When Does a Bank Get the Keys?

LZK Holdings obtained a loan from Planters Bank, securing it with a real estate mortgage. When LZK Holdings failed to pay, Planters Bank foreclosed on the mortgage and won the property at a public auction. LZK Holdings then filed a complaint to annul the foreclosure, while Planters Bank sought a writ of possession. The central legal question was whether the bank, as the purchaser in the foreclosure sale, was entitled to a writ of possession despite LZK Holdings’ pending legal challenge to the foreclosure itself. The procedural history of this case, involving multiple court decisions and appeals, highlights the complexities that can arise in foreclosure proceedings in the Philippines.

The Supreme Court, in its resolution, firmly anchored its decision on the principle of conclusiveness of judgment, stemming from a prior ruling in G.R. No. 167998 involving the same parties and subject matter. This legal doctrine, a subset of res judicata, prevents the relitigation of issues that have already been decided by a competent court. As the Court explained:

”when a right or fact has been judicially tried and determined by a court of competent jurisdiction, or when an opportunity for such trial has been given, the judgment of the court, as long as it remains unreversed, should be conclusive upon the parties and those in privity with them.”^[19]

The Court emphasized that all the elements of res judicata were present. The prior judgment was final, rendered by a court with jurisdiction, a judgment on the merits, and involved the same parties. Building on this, the Court stated, “Hence, LZK Holdings can no longer question Planter Bank’s right to a writ of possession over the subject property because the doctrine of conclusiveness of judgment bars the relitigation of such particular issue.” This serves as a strong reminder that final judicial pronouncements must be respected to maintain stability and predictability in the legal system.

Furthermore, the Court addressed LZK Holdings’ reliance on PNB v. Sanao Marketing Corporation, clarifying that the ruling actually supported Planters Bank’s position. The Supreme Court explained the distinction between applications for a writ of possession before and after the expiration of the redemption period. When sought during the redemption period, as in this case, the purchaser in the foreclosure sale is entitled to the writ upon filing an ex parte motion and posting the required bond. This approach contrasts with applications made after the redemption period, where ownership is the primary basis for the writ.

Addressing LZK Holdings’ due process argument, the Court reiterated that proceedings for a writ of possession are ex parte and summary in nature. Quoting Espinoza v. United Overseas Bank Phils., the Court highlighted this point:

The proceeding in a petition for a writ of possession is ex parte and summary in nature. It is a judicial proceeding brought for the benefit of one party only and without notice by the court to any person adverse of interest. It is a proceeding wherein relief is granted without giving the person against whom the relief is sought an opportunity to be heard.^[25]

Given this ex parte nature, the RTC did not err in canceling the hearing and granting Planters Bank’s motion without notice to LZK Holdings. This underscores the streamlined nature of the writ of possession process and the limited scope of judicial inquiry at this stage.

Finally, regarding the amount of the surety bond, the Court declined to delve into the factual dispute over the computation, emphasizing its role as a reviewer of errors of law. The RTC had found the P2,000,000.00 bond to be sufficient, and the CA affirmed this finding. The Supreme Court deferred to these lower court findings, highlighting the principle that factual matters are generally within the competence of the trial court. The Court’s decision not to review the factual determination of the bond amount underscores the limits of appellate review and the importance of respecting the factual findings of lower courts.

FAQs

What is a writ of possession?	A writ of possession is a court order that directs the sheriff to give possession of a property to the person entitled to it, typically the purchaser in a foreclosure sale.
What does “ministerial duty” mean in this context?	It means the court has no discretion; it must issue the writ of possession once the legal requirements (motion and bond) are met.
Is a hearing required before a writ of possession is issued?	No, the proceedings for a writ of possession are ex parte, meaning they are conducted without notice to the opposing party.
What is the significance of the redemption period?	The redemption period is the time allowed for the original owner to buy back the property after foreclosure. After it expires, ownership is consolidated.
What is ‘Res Judicata’?	It means “a matter judged.” If a court decides an issue, the same parties cannot relitigate it in a new case.
What bond is required for a writ of possession?	The bond must be sufficient to cover damages to the property owner, and is usually equivalent to the property’s rent for twelve months.
Can the issuance of a writ of possession be stopped by another pending case?	No, a pending case, such as an action to annul the foreclosure, does not stay the issuance of a writ of possession.
What should a property owner do if they believe the foreclosure was illegal?	The property owner must file a separate legal action to challenge the foreclosure’s validity; this does not prevent the issuance of the writ.

In conclusion, the Supreme Court’s resolution in LZK Holdings reinforces the ministerial duty of courts to issue writs of possession in foreclosure cases, ensuring a swift and efficient process for purchasers. While property owners retain the right to challenge the foreclosure itself, they cannot obstruct the issuance of the writ, highlighting the importance of understanding one’s rights and obligations in real estate transactions.

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 Corporation vs. Planters Development Bank, G.R. No. 187973, January 20, 2014