G.R. No. 161882 - Bukidnon Doctors' Hospital Inc. vs. Metropolitan Bank and Trust Co.

Case Summary (G.R. No. 161882)

Key Dates and Factual Background

Petitioner obtained the loan (circa 1995). After default and extrajudicial foreclosure, respondent became sole purchaser and, after the redemption period, consolidated ownership and was issued new certificates of title (1 October 2001). Prior to and after consolidation the parties negotiated and admitted the existence of a lease: petitioner sought to remain (letter of 7 July 2001 proposing P100,000 monthly); respondent initially proposed different terms (17 December 2001) and later agreed to P150,000 monthly with effectivity in November 2001 (letter of 30 May 2002). Respondent demanded vacation (letter of 16 July 2003); respondent filed an Ex Parte Motion for a Writ of Possession (21 August 2003); the trial court issued the writ (17 November 2003) and denied reconsideration (23 January 2004). Petitioner filed suit for specific performance, injunction and damages (Civil Case No. 3312-03) and a petition for rehabilitation; it withdrew a notice of appeal in the trial court and filed a petition for review on certiorari pursuant to Rule 45.

Applicable Law

1987 Philippine Constitution (as the operative constitution in decisions dated 1990 or later).
Act No. 3135, as amended by Act No. 4118 (regulating sale of property under special powers in real estate mortgages), particularly Section 7 concerning writs of possession.
Civil Code: Articles 523–525 (possession defined and its concepts).
Rules of Court: Rule 45 (petition for review on certiorari), Rule 41 Section 2(c) (appeals involving only questions of law), Rule 70 (unlawful detainer/ejectment).
Relevant jurisprudence cited by the court, including Philippine National Bank v. Adil; F. David Enterprises v. Insular Bank; Vda. de Zaballero v. CA; Banco de Oro Savings and Mortgage Bank v. Court of Appeals.

Procedural Posture

The trial court granted respondent’s ex parte motion for a writ of possession after the redemption period expired. Petitioner sought relief by filing separate civil actions (for specific performance and for rehabilitation), moved for reconsideration of the writ order which was denied, attempted an appeal (later withdrawn), and then filed a Rule 45 petition alleging that issuance of a writ of possession was improper in view of the lease between the parties executed after respondent consolidated title.

Issue Presented

Whether a writ of possession under Act No. 3135 is the proper remedy to evict a former mortgagor who, after foreclosure and consolidation of title in the mortgagee, entered into a lease with the mortgagee and continued in possession as lessee.

Parties’ Contentions

Respondent maintained that a purchaser at a valid extrajudicial foreclosure sale, who has consolidated title, is entitled as a matter of right to a writ of possession under Act No. 3135; in its view the subsequent “agreement to stay” did not extinguish that right and was, at most, a month-to-month arrangement. Petitioner argued that the admitted lease agreement (executed after consolidation) created a new landlord-tenant relationship; therefore issuance of an ex parte writ of possession to dispossess the lessee was improper and the correct remedy to resolve possession rights is an action for ejectment or unlawful detainer.

Court’s Rulings on Procedural Objections

The Supreme Court rejected respondent’s procedural objections. The Court found no forum-shopping because the other actions filed by petitioner involved distinct causes of action (specific performance; corporate rehabilitation) different from the challenge to the writ. The Court also held that petitioner did not waive its right to file a Rule 45 petition: it timely withdrew its notice of appeal and, because the sole issue presented was a pure question of law, direct review in the Supreme Court pursuant to Rule 41(2)(c) and Rule 45 was appropriate.

Legal Principles on Writs of Possession and Possession

Under Act No. 3135 (and Section 7), a writ of possession ordinarily issues as a matter of course, upon proper motion, after expiration of the redemption period (or during the redemption period if a bond is posted). The rationale is that ownership following a valid foreclosure confers the right to possession, and the courts may assist the purchaser to effect delivery. Possession, however, is a material fact defined by the Civil Code (Arts. 523–525): it is acquired by material occupation or by the exercise of a right, and may be held in one’s own name or in that of another. A person occupying property with the owner’s permission or under a lease is a legitimate possessor under Article 525.

Application of Law to Facts

Because both parties admitted the existence of a lease executed after respondent’s consolidation of title, the legal relationship changed from mortgagor–mortgagee to landlord–tenant (owner–lessee). Respondent, having consolidated title, became owner in material possession but delivered possession to petitioner as lessee; respondent accepted rentals and enjoyed the fruits of ownership. Given that petitioner occupied the premises as a lessee, it was a lawful possessor entitled to statutory protections. Consequently, an ex parte writ of possession—issued to effectuate deliv

Case Syllabus (G.R. No. 161882)

Case Citation and Panel

Decision reported at 501 Phil. 516, First Division, G.R. No. 161882, July 08, 2005.
Ponente: Chief Justice Davide, Jr.
Justices Quisumbing, Ynares‑Santiago, and Azcuna concurred; Justice Carpio was on official leave.

Core Legal Question Presented

Whether a writ of possession is the proper remedy to evict a mortgagor who became a lessee of foreclosed, mortgaged properties after the mortgagee consolidated ownership and was issued new certificates of title.

Facts — Loan, Mortgage, Foreclosure, and Consolidation of Title

In 1995, petitioner Bukidnon Doctors’ Hospital, Inc. obtained a P25 million loan from respondent Metropolitan Bank and Trust Company for hospital construction.
To secure the loan, six parcels in Valencia, Bukidnon (covered by TCT Nos. T-52197 through T-52202) were mortgaged; titles were registered in the names of Dr. Rene Sison and Rory P. Roque (petitioner’s President and Administrator, respectively).
Petitioner defaulted; respondent conducted extrajudicial foreclosure and purchased the mortgaged lots at public auction as sole and highest bidder.
Petitioner failed to redeem within the redemption period.
Respondent consolidated ownership and was issued new certificates of title on October 1, 2001.

Facts — Negotiations and Lease Agreement between Parties

July 7, 2001: Petitioner informed respondent of desire to continue occupying the premises to avoid disrupting hospital operations and proposed paying P100,000/month for "a period of, but not limited to, three years."
December 17, 2001: Respondent agreed to lease subject to terms: P200,000 monthly, one month advance, deposit equal to three months rent, effective June 2001, contract subject to review every six months.
May 30, 2002: Parties’ agreed terms, according to respondent’s letter, were modified to: P150,000 monthly rent and an effectivity date of November 2001.
Petitioner paid monthly rentals (respondent admitted acceptance of P150,000/month from November 2001).

Events Leading to Litigation

July 16, 2003: Respondent demanded petitioner vacate within fifteen days; petitioner refused citing the subsisting lease.
August 21, 2003: Respondent filed an Ex Parte Motion for a Writ of Possession in RTC Malaybalay City, Bukidnon (Misc. Case No. 735‑03), raffled to Branch 9.
November 17, 2003: Trial court granted respondent’s ex parte motion and issued writ of possession. Trial court characterized issuance as ministerial where requirements are present.
November 27, 2003: Petitioner filed Civil Case No. 3312‑03 for specific performance, injunction, and damages in the RTC.
January 30, 2004: Petitioner filed a petition for corporate rehabilitation in RTC Cagayan de Oro (Spec. Pro. Case No. 2004‑019).
January 29, 2004: Petitioner filed a Notice of Appeal to the Court of Appeals (later withdrawn by manifestation and motion on February 11, 2004).
Petitioner’s motion for reconsideration of the writ denial was denied on January 23, 2004.
February 13, 2004: Petitioner filed a motion for extension of thirty days to file a Rule 45 petition; Supreme Court granted extension on March 3, 2004.
March 4, 2004: Petitioner filed the instant petition for review on certiorari under Rule 45, invoking Section 2(c) of Rule 41, raising a single pure question of law concerning the propriety of the writ of possession despite a post‑consolidation lease.
November 3, 2004: Petitioner later sent respondent a letter informing closure of hospital operations and turning over premises on November 30, 2004; respondent moved to dismiss as moot.

Petitioner’s Contentions

The trial court erred in issuing an ex parte writ of possession because the parties had a subsisting lease agreement executed after respondent consolidated title.
The existence of the lease made the issue one of the law on lease and possession, not exclusively extrajudicial foreclosure procedure; thus deprivation of possession could not be accomplished by an ex parte writ of possession.
Petitioner denied forum‑shopping: its multiple filings involved different causes of action and parties; it withdrew its notice of appeal to file a Rule 45 petition within the reglementary period because the issue was purely legal.

Respondent’s Contentions

Petitioner engaged in forum‑shopping by litigating in multiple forums for the same relief.
By filing an ordinary appeal (Notice of Appeal) petitioner waived its right to file a Rule 45 petition; the proper appellate route under hierarchy of courts and general practice required seeking relief in the Court of Appeals where appropriate.
As purchaser at a valid extrajudicial foreclosure sale under Act No. 3135 (as amended), and as absolute owner after consolidation of title, respondent was entitled as of right to the issuance of a writ of possession.
The subsequent arrangement to allow petitioner to stay did not negate respondent’s right to possess; respondent characterized any stay as month‑to‑month tenancy because no