Title
LZK Holdings and Development Corp. vs. Planters Development Bank
Case
G.R. No. 187973
Decision Date
Jan 20, 2014
LZK Holdings contested Planters Bank's foreclosure and title consolidation, but courts upheld Bank's right to possession, affirming writ issuance as ministerial and ex parte.
writ of possession
conclusiveness of judgment
foreclosure

Case Summary (G.R. No. 187973)

Factual Background

LZK Holdings obtained a P40,000,000.00 loan from Planters Bank on December 16, 1996, and secured the obligation with a Real Estate Mortgage over its parcel of land in La Union covered by Transfer Certificate of Title No. T-45337. The lot had an area of 589 square meters. Upon LZK Holdings’ failure to pay, Planters Bank extrajudicially foreclosed the mortgage. On September 21, 1998, the property was sold at public auction, where Planters Bank emerged as the highest bidder. Its certificate of sale was registered on March 16, 1999.

Initiation of LZK Holdings’ Annulment Suit and Provisional Relief

On April 5, 1999, LZK Holdings filed before the RTC of Makati City, Branch 150, a complaint for annulment of extrajudicial foreclosure, mortgage contract, promissory note, and damages. It likewise sought a temporary restraining order (TRO) or a writ of preliminary injunction to prevent the consolidation of title in favor of Planters Bank. On March 13, 2000, the RTC-Makati issued a TRO effective for 20 days, restraining Planters Bank from consolidating its title. Subsequently, on April 3, 2000, the RTC-Makati ordered the issuance of a writ of preliminary injunction, which was later issued only on June 20, 2000, after LZK Holdings posted a P40,000.00 bond.

Despite these restraining orders, Planters Bank was able to consolidate ownership on April 24, 2000. In parallel, Planters Bank filed an ex parte motion for the issuance of a writ of possession before the RTC-San Fernando on December 27, 1999.

RTC-San Fernando Suspension of the Ex Parte Motion and Related Proceedings

The RTC-San Fernando suspended the ex parte proceeding through an order dated May 11, 2000, citing the TRO and writ of preliminary injunction issued by the RTC-Makati. Planters Bank moved for reconsideration, but its motion was denied on September 1, 2000. Meanwhile, at the instance of LZK Holdings, the RTC-Makati declared the consolidated title of Planters Bank null and void in an order dated June 2, 2000. The Court of Appeals affirmed this ruling in a decision dated February 26, 2004 in CA-G.R. SP No. 59327. The Supreme Court sustained the CA’s judgment in a resolution dated September 13, 2004 in G.R. No. 164563.

Separately, Planters Bank pursued review of the RTC-San Fernando’s order that held its ex parte motion in abeyance. In that subsequent review, the Court of Appeals ruled for Planters Bank, annulling the assailed order. LZK Holdings then sought review, and in a decision dated April 27, 2007—later referenced in the subsequent proceedings—the Supreme Court affirmed the CA’s ruling.

Supreme Court’s Earlier Ruling on the Writ of Possession and Its Ministerial Character

In LZK Holdings and Development Corp. v. Planters Development Bank, the Supreme Court held that a writ of possession is a writ of execution used to enforce entitlement to possession of land, including in the context of extrajudicial foreclosure under Section 7 of Act No. 3135, as amended by Act No. 4118. The Court emphasized that the trial court’s duty to grant the writ is ministerial, leaving no discretion once the proper motion is filed and the required bond is approved. It explained that issues on the regularity or validity of the foreclosure sale, and on cancellation of the writ, should be resolved in the subsequent proceeding provided under Section 8 of Act No. 3135; such matters cannot be used to oppose the issuance of the writ in the ex parte proceeding.

The Supreme Court further ruled that injunctions could not lawfully prohibit the issuance of a writ of possession, and that a pending action for annulment of mortgage or foreclosure does not stay the issuance of the writ. It concluded that until the foreclosure sale is annulled by a court of competent jurisdiction, the mortgagor is bereft of valid title and of the right to prevent the writ’s issuance.

Renewal of Planters Bank’s Ex Parte Motion and the RTC-San Fernando Orders

With the above doctrine as its anchor, Planters Bank moved in the RTC-San Fernando for an ex parte hearing for issuance of a writ of possession. LZK Holdings opposed the motion. In an order dated April 2, 2008, the RTC-San Fernando denied LZK Holdings’ opposition and set the hearing for April 14, 2008. On April 8, 2008, the RTC-San Fernando issued another order declaring the scheduled hearing moot and academic and granting Planters Bank’s ex parte motion.

The RTC’s dispositive directive ordered the issuance of a writ placing Planters Bank (or its authorized representatives) in possession of the subject property covered by TCT-45337, including existing improvements, against LZK Holdings and other occupants claiming through it, and conditioned the writ upon Planters Bank’s filing of a bond in the amount of P2,000,000.00.

CA Proceedings and LZK Holdings’ Petition

In its decision dated January 27, 2009, the Court of Appeals affirmed the RTC-San Fernando’s issuance of the writ of possession and dismissed LZK Holdings’ petition for certiorari docketed as CA-G.R. S.P. No. 103267. The CA denied reconsideration in a resolution dated May 12, 2009.

LZK Holdings later moved for a 30-day extension from receipt of the resolution granting the extension to file its petition for review. The Supreme Court granted the extension but directed that the extended period be counted from the expiration of the original reglementary period. When LZK Holdings filed the petition beyond the extended period, the Supreme Court initially denied it in a resolution dated August 26, 2009. LZK Holdings moved for reconsideration and explained that it obtained the copy of the resolution on July 29, 2009 and had to secure case records and arrange for a substitute lawyer. The Supreme Court, in a resolution dated October 13, 2010, allowed the liberal approach and reinstated the petition for review.

Issues Considered by the Supreme Court

After reinstatement, the Supreme Court re-examined the substantive merits. LZK Holdings argued, first, that because Planters Bank’s consolidated title had been previously declared void in earlier proceedings, LZK Holdings allegedly remained the registered owner and therefore Planters Bank allegedly had no right to apply for a writ of possession under PNB v. Sanaa Marketing Corporation. Second, LZK Holdings argued it was denied due process because the RTC did not conduct a hearing on Planters Bank’s motion. Third, it contended that the P2,000,000.00 bond did not comply with the bond requirement under Section 7 of Act No. 3135, which LZK Holdings claimed should have been equivalent to “twelve (12) months use” of the subject property, allegedly computed at P7,801,472.28 when the writ was issued.

Legal Basis and Reasoning: Conclusiveness of Judgment and Res Judicata

The Supreme Court held that LZK Holdings could no longer question Planters Bank’s entitlement to a writ of possession. The Court invoked the principle of conclusiveness of judgment, a branch of res judicata. It explained that once a right or fact has been judicially tried and determined by a court of competent jurisdiction, the judgment remains conclusive upon the parties and those in privity unless reversed.

The Court found the requisites for conclusiveness of judgment in place. It noted that the final judgment in G.R. No. 167998 was rendered by the Supreme Court in the exercise of its jurisdiction over the review of Court of Appeals rulings. It emphasized that the ruling was on the merits of Planters Bank’s right to apply for and be issued a writ of possession. It further pointed out that the parties in G.R. No. 167998 were the same as those in the present case, such that LZK Holdings was barred from relitigating the issue already settled.

The Court also rejected the invocation of PNB v. Sanaa Marketing Corporation. It held that the principle relied upon by LZK Holdings—that the right of possession is based on the applicant’s ownership—did not support LZK Holdings’ position in the context of the present facts, because PNB referred to applications for a writ of possession after the expiration of the redemption period, which was not the situation contemplated here. In the earlier ruling, the Court had expressly affirmed that Planters Bank, as purchaser, may apply for a writ of possession during the redemption period through an ex parte application, upon the posting of the required bond.

Legal Basis and Reasoning: Ex Parte Nature of the Writ and Due Process Argument

On the due process objection, the Supreme Court reiterated settled doctrine that a petition for a writ of possession is ex parte and summary in nature. It relied on the explanation in Espinoza v. United Overseas Bank Phils. that the proceeding for issuance of a writ of possession is a judicial proceeding brought for the benefit of one party only, without notice by the court to adverse claimants. The Court described it as non-litigious and not an ordinary civil action in which the opposing party is heard. Because of this nature, the RTC did not err when it cancelled the previously scheduled hearing and granted Planters Bank’s motion without affording notice to LZK Holdings.

Legal Basis and Reasoning: Bond Amount and Limited Review in Petition for Review on Certiorari

As to the bond computation issue, the Supreme Court treated the challenge as an error that would require factual re-evaluation. It stressed that in an appeal by petiti

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