G.R. No. L-13783 - Capalungan vs. Medrano

In 1980, petitioner Anecito Campos mortgaged fourteen (14) lots in favor of the Far East Bank and Trust Co. (FEBTC), which later merged with the Bank of the Philippine Islands (BPI).
Among the mortgaged lots was Lot No. 7-G-4 – the subject lot, on which Campos later constructed a two-storey building.
The construction was purportedly done with the Bank’s knowledge and consent.

Due to business losses, Campos failed to pay his loan, which eventually ballooned to Eleven (11) Million pesos.
The Bank initiated an extrajudicial foreclosure of the mortgaged properties.
A Certificate of Sale was issued to the Bank after it became the highest bidder at a public auction with a bid of 11.3 million pesos.
After Campos failed to redeem the properties within the legal redemption period, the Bank consolidated its ownership of the lots.
Subsequently, the Bank filed a verified ex parte motion before the RTC for the issuance of a writ of possession, which was granted on August 7, 2006, and executed on September 8, 2006.

After the writ of possession became final and executory, Campos filed a motion on February 12, 2007, seeking the suspension of its implementation and/or the allowance to present evidence of good faith regarding the improvements he made on the subject lot.
Campos argued that he constructed the building in good faith with the Bank’s consent and, citing Civil Code provisions (Articles 448, 450, and 546), claimed the right to retain possession until reimbursed for the value of the improvements.
The Bank opposed this motion, emphasizing that the foreclosure sale vested the right to possession in the purchaser without any obligation to reimburse improvements.
The Mortgage Contract included a stipulation that transferred “all the buildings and improvements now existing or which may hereafter be erected or constructed” as part of the mortgage.
On April 16, 2007, the RTC denied Campos’ motion, clarifying that the issuance of the writ was ministerial and any claim for reimbursement should be pursued in a separate civil action.
Campos moved for reconsideration on April 20, 2007, citing the case of Policarpio, but the motion was eventually denied on September 10, 2007.

Campos filed a petition for certiorari with the Court of Appeals (CA), challenging the RTC’s denial of his motion and incorporating allegations of being denied notice of the ex parte proceedings.
The CA dismissed the petition on July 24, 2012, finding no grave abuse of discretion on the part of the RTC, and maintained that the RTC acted in accordance with Section 7 of Act No. 3135.
Campos later moved for reconsideration of the CA’s dismissal, reiterating his claims regarding the lack of notice and the good faith construction, but this motion was denied on May 23, 2013.
Houston HomeDepot, Inc.—as the Bank’s transferee—and the Bank further contested Campos’ claims in separate comments, emphasizing both contractual stipulations including improvements and the proper remedy that should have been pursued.

Whether the RTC acted beyond its jurisdiction or gravely abused its discretion in denying Campos’ motion to suspend the implementation of the writ of possession.
Whether Campos’ asserted right to reimbursement for the value of the improvements constructed in good faith is valid, considering both the relevant Civil Code provisions and the explicit stipulations of the Mortgage Contract.
Whether the ex parte proceedings, which did not provide notice to Campos, violated any due process rights.
Whether the case of Policarpio is applicable or distinguishable from the present case regarding the right to present evidence of good faith during foreclosure proceedings.