G.R. No. 167998 - LZK Holdings and Development Corp. vs. Planters Development Bank

Case Summary (G.R. No. 167998)

Procedural background — foreclosure, sale, and initial litigation

Lender instituted extrajudicial foreclosure after LZK’s default. Auction was held on September 21, 1998; Planters Bank was the highest bidder and the sale was registered on March 16, 1999. LZK filed a complaint for annulment of the foreclosure, mortgage, promissory notes, and damages before the RTC, but an earlier filing (Civil Case No. 6215, RTC San Fernando) was dismissed for improper venue.

Parallel proceedings in Makati and the interim injunctions

LZK later filed Civil Case No. 99‑741 in the RTC of Makati, together with a motion for injunctive relief. Three days before the one‑year redemption period expired, the Makati RTC issued a temporary restraining order (TRO) dated March 13, 2000 and subsequently a writ of preliminary injunction (April 3, 2000) enjoining Planters Bank from consolidating title. The Makati court conditioned the writ of preliminary injunction on LZK’s posting a bond of P40,000,000; LZK failed to post the bond. Planters Bank sought relief from the Court of Appeals and ultimately from the Supreme Court, which denied relief and allowed the injunction ruling to become final and executory on January 19, 2005.

Ex parte petition for writ of possession and San Fernando RTC action

While the Makati proceedings were pending, Planters Bank filed an ex parte petition for issuance of a writ of possession before the RTC of San Fernando (December 27, 1999). The San Fernando RTC, on May 11, 2000, held in abeyance resolution of that ex parte petition in view of the Makati RTC’s injunction order suspending consolidation of title. Planters Bank moved for reconsideration; the San Fernando RTC denied reconsideration (September 1, 2000).

Court of Appeals intervention and appellate outcome

Planters Bank petitioned the Court of Appeals for certiorari challenging the San Fernando RTC’s orders. The Court of Appeals granted the petition, annulled and set aside the RTC orders, and held that a writ of possession issues as a matter of course upon motion and approval of the corresponding bond. The appellate court also ruled that the Makati RTC’s injunction merely enjoined consolidation of title and was not a directive to the San Fernando RTC to withhold the writ of possession.

Issues raised by petitioner (assignments of error)

LZK advanced several assignments of error: (1) its complaint for annulment was filed before the bank’s ex parte petition for writ of possession; (2) the Makati RTC’s injunction, which predated the San Fernando RTC’s action, should have prevented possession; (3) the Court of Appeals misapplied the doctrine of non‑interference among coordinate courts; (4) the bank allegedly engaged in forum‑shopping and took inconsistent positions on venue; (5) the consolidated title had been declared null and void by the trial court; and (6) the bank and its lawyers violated the rule against forum‑shopping by filing multiple petitions with the Court of Appeals.

Respondent’s contentions

Planters Bank argued: (1) pendency of an annulment action does not defeat its right to possession after extrajudicial foreclosure; (2) issuance of the writ of possession under Act No. 3135 is a ministerial duty of the court; (3) LZK lost redemption rights when it failed to redeem within one year after registration of sale; (4) the Makati injunction did not operate to suspend proceedings in the San Fernando court; (5) the multiple petitions did not amount to forum‑shopping because the main case had not reached pretrial and only preliminary matters were involved; and (6) the bank could take possession even before consolidation of title.

Statutory and jurisprudential framework governing writ of possession

The Court relied on Section 7 of Act No. 3135 (as amended) which authorizes a purchaser at foreclosure sale to petition for possession during the redemption period upon furnishing a bond to indemnify the debtor should the sale be later set aside. Section 8 allows the debtor to petition within thirty days after possession is given to set aside the sale and seek cancellation of the writ, with disposition of the bond if the sale is invalid. Jurisprudence referenced in the decision establishes that the duty of the trial court to grant a writ of possession is ministerial: it issues as a matter of course upon filing of the proper ex parte motion and approval of the bond, and questions about the validity of the sale are addressed in subsequent proceedings, not by refusal to issue the writ.

Court’s analysis — distinction between consolidation of title and possession; effect of injunction

The Supreme Court emphasized that the Makati injunction specifically enjoined Planters Bank from consolidating its title; it did not expressly prohibit the bank from taking physical possession. A writ of possession is a writ of execution to give actual possession and may be issued during the redemption period upon bond or after the redemption period without bond if title has been consolidated. Because injunctions cannot be used to p

Case Syllabus (G.R. No. 167998)

Case Caption, Citation, and Panel

Supreme Court Second Division decision reported at 550 Phil. 825, G.R. No. 167998, April 27, 2007.
Parties: LZK Holdings and Development Corporation (petitioner) v. Planters Development Bank (respondent).
Decision authored by Justice Quisumbing; concurring Justices Carpio, Carpio‑Morales, Tinga, and Velasco, Jr.
The petition challenges: (a) the Court of Appeals Decision dated March 15, 2005 in CA‑G.R. SP No. 60944; and (b) the Court of Appeals Resolution dated May 5, 2005 denying motion for reconsideration. (Rollo references provided in source.)

Material Facts

LZK obtained a loan of P40,000,000 from Planters Bank, secured by a mortgage on land in Catbangen, San Fernando City, La Union, covered by Transfer Certificate of Title No. T‑45337.
LZK defaulted on the loan; Planters Bank initiated extrajudicial foreclosure proceedings.
Foreclosure auction took place on September 21, 1998; Planters Bank was the highest bidder. The sale was registered on March 16, 1999.
LZK filed a complaint for annulment of extrajudicial foreclosure, mortgage contract, promissory notes and damages (Civil Case No. 6215) with the RTC of San Fernando City, Branch 29, which was dismissed for improper venue in an Order dated June 23, 1998.
On December 27, 1999, Planters Bank filed an ex parte petition for issuance of a writ of possession with the RTC of San Fernando City, Branch 66.
LZK filed a new complaint (Civil Case No. 99‑741) in the RTC of Makati City, Branch 150, and an urgent motion for a writ of preliminary injunction.
The Makati RTC issued a temporary restraining order dated March 13, 2000 (effective for twenty days), enjoining Planters Bank from consolidating title over the property.
On April 3, 2000, the Makati RTC ordered issuance of a writ of preliminary injunction upon posting of a bond of P40,000,000 and suspended consolidation of title; LZK failed to post the bond.
Planters Bank sought relief by filing certiorari in the Court of Appeals (CA‑G.R. SP No. 59327) challenging the Makati RTC order; the CA affirmed the Makati RTC order. Planters filed a petition for review with the Supreme Court (G.R. No. 164536), which was denied for failure to show reversible error, becoming final and executory on January 19, 2005.
Despite the Makati injunctions, Planters Bank executed a final deed of sale and an affidavit of consolidation of ownership on April 24, 2000 (documents in rollo).
On May 11, 2000, the San Fernando RTC held in abeyance resolution of the ex parte petition for writ of possession because of the Makati RTC order; Planters Bank’s motion for reconsideration of that abeyance was denied on September 1, 2000.
Makati RTC subsequently issued the writ of preliminary injunction upon LZK’s posting of a bond in an Order dated June 20, 2000.
Planters Bank filed certiorari with the Court of Appeals assailing the San Fernando RTC order; the Court of Appeals granted the petition, annulled and set aside the San Fernando RTC orders, and ruled that the writ of possession issues as a matter of course upon motion and approval of the corresponding bond and that the Makati RTC order merely enjoined consolidation of title and was not directed to San Fernando RTC.

Procedural Posture and Relief Sought in the Supreme Court

LZK petitioned the Supreme Court for review of the Court of Appeals decision reversing the San Fernando RTC and denying LZK’s motion for reconsideration.
The central question presented to the Supreme Court: whether the respondent bank (Planters) is entitled to possession of the foreclosed property.

Petitioner’s (LZK’s) Contentions

The complaint for annulment of the mortgage, promissory notes, and extrajudicial foreclosure was filed before the ex parte petition for writ of possession; this chronological priority affects entitlement.
The Makati RTC issued a writ of preliminary injunction enjoining the bank from consolidating title before the San Fernando RTC acted on the writ of possession petition; the Court of Appeals erred in disregarding that injunction.
The Court of Appeals misapplied the doctrine of non‑interference with orders, decrees, or judgments of courts of coordinate and concurrent jurisdiction.
The Court of Appeals failed to consider the bank’s prior position on the proper venue for disputes between the parties.
The Court of Appeals failed to consider the Makati RTC’s final and executory ruling declaring the bank’s consolidated title null and void; thus the bank is not entitled to a writ of possession.
The bank and its lawyers engaged in forum‑shopping by raising identical or closely related issues in separate petitions filed with the Court of Appeals (four CA petitions cited: CA‑G.R. SP Nos. 59327, 61262, 67410, and 60944).

Respondent’s (Planters Bank’s) Arguments

The mere earlier filing and pendency of an annulment action does not affect the purchaser’s right to possess an extrajudicially foreclosed property.
The court’s duty to grant a writ of possession is ministerial under Act No. 3135, as amended; the writ issues as a matter of course upon proper motion and approval of bond.
LZK lost rights to the mortgaged property when it failed to redeem within one year from registration of sale.
The Makati RTC injunction cannot be used to interfere with or suspend proceedings in the San Fernando RTC.
The filing of the four petitions with the Court of Appeals did not constitute forum‑shopping because the