G.R. No. 166734 - Mandy Commodities Co., Inc. vs. The International Commercial Bank of China

On July 17 and December 17, 1996, petitioner Mandy Commodities Co., Inc., through its authorized representative William Mandy, obtained a total loan of P20,000,000.00 from respondent The International Commercial Bank of China (ICBC).
The loan was secured by two deeds of chattel mortgage over twenty-five (25) units of two-storey concrete buildings located in Binondo, Manila.
Although the buildings were owned by petitioner, the land on which they stood was under lease from PNB-Management and Development Corporation.
The parties expressly agreed that the buildings were to be treated as chattels and thus subject to a chattel mortgage under the applicable law (Act No. 1508).

Upon default in payment, respondent invoked the power granted by paragraph 18 of the chattel mortgage agreements, which conferred upon it full and irrevocable power of attorney to effect a sale upon default.
On February 26, 1999, respondent applied before a notary public for a notarial sale of the mortgaged buildings.
Notice of the extrajudicial sale was posted at the Office of the Register of Deeds, the Office of the Ex Officio Sheriff, and the Regional Trial Court (RTC) of Manila, and published in The Philippine Recorder in its March 1, 8, and 15, 1999 issues.
At the sale held on March 26, 1999, respondent placed the highest bid amounting to P25,435,716.89 and, on April 12, 1999, a Certificate of Sale was issued by the notary public with the condition that the sale was “subject to petitioner’s right of redemption.”

On May 17, 1999, respondent filed an ex parte petition for the issuance of a writ of possession pending redemption with the RTC of Manila, Branch 4.
The petition relied on Act No. 3135 (The Real Estate Mortgage Law), invoking its Section 7 that allows a creditor to take possession pending redemption upon posting a bond.
On September 7, 1999, the RTC issued an Order approving respondent’s bond of P600,000.00 and directed the issuance of a writ of possession.
Later, on December 10, 2001, the RTC issued the writ of possession, and the sheriff subsequently served a notice to vacate on petitioner.

Petitioner filed a Motion for Reconsideration, arguing that based on the chattel mortgage agreement (and the intent to treat the buildings as chattels), the foreclosure should have been governed by Act No. 1508 and not by Act No. 3135, which provides for a 10-day personal notice requirement.
The trial court denied this motion on January 16, 2001, prompting petitioner to file further petitions for annulment via a Rule 47 petition before the Court of Appeals.
The Court of Appeals, in its August 30, 2002 Decision, affirmed the September 7, 1999 Order and dismissed petitioner’s petition, holding that the proper remedy was not the petition for annulment since the trial court had validly acquired jurisdiction over the application for the writ of possession.
Petitioner, alleging that the issuance of the writ of possession was erroneous due to the wrong application of law and lack of due process, ultimately raised the issue again in a petition for review under Rule 65, which was also dismissed.
Respondent was later substituted by ROP Investments, Limited - Philippine Branch, which maintained that the writ of possession was a ministerial duty and that petitioner’s remedy had been wrongly availed.

Whether the extrajudicial foreclosure sale conducted under the provisions of Act No. 3135 was valid given that the parties had explicitly agreed to treat the buildings as chattels subject to Act No. 1508.
Whether the issuance of a writ of possession pending redemption was appropriate and lawful under the disputed procedural framework.

Whether the Annexed petition for annulment of the trial court’s order under Rule 47 (and subsequent petition under Rule 65) was the proper remedy.
Whether petitioner’s failure to avail the proper appeal remedy (as provided under Rule 45) rendered the petition procedurally infirm.

Whether the trial court and the Court of Appeals committed any grave abuse of discretion amounting to lack or excess of jurisdiction by issuing the writ of possession despite alleged procedural irregularities under Act No. 1508.