G.R. No. 164919 - China Banking Corp. vs. Spouses Lozada

In June 1995, the spouses Lozada entered into a Contract to Sell with Primetown Property Group, Inc. (PPGI) for Unit No. 402 of Cluster 1 in the Makati Prime City Condominium Townhomes Project.
The contract stipulated a total price of PhP1,444,014.04, with 30% as downpayment payable within 15 months starting October 2, 1995, and a 70% balance payable upon completion or turnover of the unit.

In December 1995, PPGI executed two Deeds of Real Estate Mortgage in favor of China Banking Corporation (CBC) covering 51 units of the project, including Unit No. 402, to secure credit facilities amounting to a maximum of PhP37,000,000.00.
PPGI incurred a principal obligation of PhP29,067,708.10 to CBC and, upon default in payment, CBC filed a petition for extrajudicial foreclosure on July 31, 1998.
A public auction sale was conducted on September 11, 1998, where CBC became the highest bidder for the foreclosed properties, followed by the issuance of a Certificate of Sale on October 15, 1998.

On April 25, 2000, CBC’s CEO executed an Affidavit of Consolidation, noting that after the expiration of the redemption period, titles to the remaining foreclosed properties, including Unit No. 402, were consolidated in CBC’s name.
The Registry of Deeds then cancelled the original title (CCT No. 34898) and, on May 12, 2000, issued a new title (CCT No. 69096) in the name of CBC.

Prior to the foreclosure, PPGI’s Senior Manager sent a letter (dated March 30, 1998) instructing respondent Erlina to remit payments directly to CBC, citing provisions of Presidential Decree No. 957 on mortgage requirements.
Despite no evident immediate action by the spouses, Erlina later executed a Notice of Adverse Claim on September 13, 1999, regarding Unit No. 402.
Subsequent communications between Erlina, PPGI, and CBC ensued in December 1999, where Erlina tendered the balance payment (PhP1,010,809.83) but also contested additional charges and conditions imposed by CBC.

CBC filed an ex parte petition with the Makati City RTC on July 27, 2001, seeking the issuance of a writ of possession over Unit No. 402.
After rescheduling, the RTC on August 31, 2001, granted the petition even in the absence of the spouses Lozada, issuing the writ on September 3, 2001, and directing the Sheriff to execute Notices to Vacate.
On the very same period, the spouses Lozada initiated a complaint before the HLURB (Case No. REM-0080701-11582) and later filed a Petition for Certiorari and Prohibition with the Court of Appeals, arguing due process violations and asserting their right to possession under the Contract to Sell.

The Court of Appeals annulled the RTC’s Order, the writ of possession, and the notices to vacate, holding that the spouses’ possession—derived from their Contract to Sell and not an independent adverse possession—required a hearing before any ex parte issuance.
CBC then filed a Petition for Review on Certiorari with the Supreme Court, arguing that the ex parte issuance was proper and ministerial as provided by law.

Whether the Regional Trial Court had the authority to issue a writ of possession ex parte, without affording the spouses Lozada a hearing.
Whether the spouses Lozada’s possession of Unit No. 402, derived from their contractual relation with PPGI, constitutes an “adverse” possession that would preclude the issuance of a writ of possession.
Whether the procedural due process rights of the spouses were violated by the ex parte issuance of the writ of possession.
Whether the Court of Appeals erred in annulling the RTC’s Order and the subsequent writ and notices, particularly in view of the ministerial nature of the writ’s issuance upon compliance with Section 7 of Act No. 3135.