G.R. No. 148630 - Penson vs. Spouses Mara

Case Summary (G.R. No. 148630)

Factual Background: Mortgage, Compromise, and Extrajudicial Foreclosure

Petitioner received a copy of a writ of possession issued by the RTC of Parañaque City, Branch 257, in LRC Case No. 99-065 on July 22, 1999. Upon inquiry, petitioner learned that the property had been the subject of a Deed of Real Estate Mortgage dated August 17, 1992. He alleged that both the Deed of Real Estate Mortgage and a Special Power of Attorney dated July 9, 1992 were fraudulent.

The foreclosure history was traced to a compromise agreement entered in Civil Case No. 95-0100, an action for annulment of contract with prayer for issuance of a writ of preliminary injunction and restraining order, filed on May 9, 1995 by Jovita against respondents. The compromise agreement, approved by the RTC in an order dated March 7, 1997, acknowledged Jovita’s obligation to respondents in the total amount of P6,082,373.00 as of October 17, 1996. Under the compromise, respondents accepted Jovita’s offer to settle for P3,000,000.00, payable in six monthly installments covered by postdated checks. The compromise expressly provided that if Jovita failed to pay any installment or if any check was dishonored, the failure would be construed as a violation, and respondents would have the right to foreclose the real estate mortgage executed by Jovita on August 17, 1992 over the parcels covered by the existing titles, together with the improvements. The compromise further stated that respondents could likewise move for issuance of a writ of execution by mere motion in case of violation.

Because of Jovita’s failure to fulfill her obligation, the property was extrajudicially foreclosed on October 23, 1997, with respondents as the highest bidders. A Deputy Sheriff’s Certificate of Sale was issued on November 6, 1997. On November 18, 1998, new titles, TCT Nos. 139462 and 139463, were issued in the names of respondents.

After the foreclosure sale, respondents moved for issuance of a writ of possession. The RTC denied the initial motion in an order dated March 19, 1999 on the ground that the compromise agreement did not contain a provision on automatic issuance of a writ of possession. Respondents’ motion for reconsideration was likewise denied in an order dated May 4, 1999, and the RTC explained that the proper remedy was the filing of a petition for issuance of a writ of possession under Act No. 3135. Respondents then filed an ex-parte petition for the issuance of a writ of possession with the same RTC, docketed as LRC Case No. 99-065.

RTC Proceedings on the Writ of Possession and the Injunction Issued in Civil Case No. 99-0272

The RTC granted respondents’ petition in a decision dated July 14, 1999. In its dispositive portion, the RTC ordered Jovita Lorna F. Penson and all persons claiming rights under her to deliver and transfer possession of the properties covered by TCT Nos. 139462 and 139463 to respondents. On July 21, 1999, a writ of possession was issued directing the deputy sheriff to implement the RTC’s decision.

Before the writ could be satisfied, petitioner filed an action for Annulment of Title with Damages with an urgent prayer for a Temporary Restraining Order and/or preliminary injunction with the RTC of Parañaque City, Branch 260, docketed as Civil Case No. 99-0272. Acting on petitioner’s prayer for a writ of preliminary mandatory injunction, the RTC issued an order dated August 17, 1999, enjoining respondents and those acting in their behalf to cease and desist from implementing the writ of possession, subject to petitioner’s filing of a bond in the amount of P3,000,000.00. Respondents’ motion for reconsideration was denied.

Petitioner’s civil suit thus produced conflicting RTC orders. Respondents challenged the injunction through a petition for certiorari with the CA, attacking the RTC’s authority to issue the injunction in a manner that would interfere with the processes of a co-equal court.

The Parties’ Contentions Before the Court of Appeals

Respondents argued before the CA that the RTC had no jurisdiction to issue a writ of preliminary injunction because the relief constituted interference with the orders of a co-equal and co-ordinate court. They also argued that respondents were already the owners of the property by virtue of the foreclosure and that petitioner had no right in esse that required judicial protection through injunction.

Petitioner opposed these arguments by maintaining, among others, that the writ of preliminary injunction issued by the RTC merely ordered the sheriff not to enforce the writ of possession against persons other than Jovita. Petitioner also emphasized that injunction was distinct from enforcement and analogized the relief to a scenario involving injunction against enforcement of another remedy directed to a particular property not belonging to the defendant. He insisted that the real issue was whether the writ of possession could be enforced against him, even though he was not expressly named in the writ.

Decision of the Court of Appeals

The CA sustained respondents’ arguments and granted the petition for certiorari. It set aside the RTC orders dated August 17, 1999 and March 20, 2000, as reflected in the CA’s decision dated November 14, 2000, and later denied petitioner’s motion for reconsideration through a resolution dated June 20, 2001. The CA thus held that the RTC’s issuance of preliminary injunctive relief was improper in light of the effect of interfering with the writ of possession issued by another RTC.

Grounds Raised in the Petition for Review on Certiorari (Rule 45)

Petitioner elevated the matter to the Supreme Court via a petition for review under Rule 45, assigning as errors, in substance, that the CA: (a) incorrectly found the preliminary injunction unlawful for being interference with a co-equal court; (b) incorrectly ruled that the writ of possession could not be enjoined, and misapplied PNB v. Adil; and (c) incorrectly found that the notarized Special Power of Attorney enjoyed a presumption of validity when, according to petitioner, the CA was limited to jurisdictional issues in resolving the certiorari petition.

Legal Basis and Reasoning of the Supreme Court

The Court denied the petition. It began by reiterating the general rule that issuance of a writ of possession concomitant to an extrajudicial foreclosure proceeding is a ministerial duty of the court and that the writ issues as a matter of course, even without special conditions after consolidation of ownership and issuance of a new transfer certificate of title in the purchaser’s name. The Court also restated the general rule that no court may interfere by injunction with the issuance or enforcement of a writ of possession issued by another court of concurrent jurisdiction with power to issue such writ.

The Court acknowledged that these rules were subject to recognized exceptions. It relied on Section 35, Rule 39 of the Rules of Court, made suppletory to extrajudicial foreclosure by Section 6 of Act No. 3135. Under that framework, possession may be awarded to the purchaser unless a third party in possession is holding the property adversely to the judgment debtor. The Court found guidance in Philippine National Bank v. Court of Appeals, where the Court held that the obligation of a court to issue an ex-parte writ of possession ceases to be ministerial once it appears that a third party is actually in possession and is claiming a right adverse to the debtor/mortgagor. The Court similarly cited earlier formulations in which a writ of possession could not be issued in a manner that would effectively eject an adverse possessor without due process.

The Court then framed the decisive inquiry: whether petitioner was a “third party in possession of the property who is claiming a right adverse to that of the debtor/mortgagor.” It answered in the negative. It observed that the Promissory Note and Deed of Real Estate Mortgage were signed by Jovita and petitioner, through Jovita who acted as petitioner’s attorney-in-fact. Jovita’s authority stemmed from a Special Power of Attorney dated July 9, 1992. Based on the documents, petitioner was thus a party to the loan and to the mortgage that constituted the basis of the foreclosure. Accordingly, petitioner could not be treated as an adverse third party for purposes of the exception.

The Court also held that petitioner’s claim of a right to possess derived from titles that had already been conveyed to respondents in their capacity as highest bidders in the foreclosure sale. The Court further rejected the relevance of the fact that petitioner was not named in the writ. It ruled that the writ remained enforceable against him because his possessory claim was anchored on the same documents that formed the bases of the foreclosure.

Petitioner’s complaint that he could not be ousted through an ex-parte proceeding was also addressed. The Court explained that an ex-parte petition for issuance of a writ of possession under Act No. 3135 is a non-litigious proceeding, unlike a judicial foreclosure under Rule 68 of the Rules of Court. Under the Act, foreclosure-related petitions are filed not with a court for litigious determination but with the sheriff’s office for implementation. The Court recognized that a third person with a superior claim would otherwise not have an opportunity to be heard, which is why the third-party adverse possession exception is recognized to avoid summary ejectment and due process violations. In petitioner’s case, however, the Court found no basis to invoke that exception because petitioner was not an adverse third party.

On petitioner’s challenge to the CA’s determination that the Special Power of Attorney was valid and regular on its face, the Court treated the CA’s finding as preliminary. It reasoned that notarized documents carry a presumption of validity and due execution by reason of acknowledgment before a notary public. It noted that petitioner himself had alleged

Case Syllabus (G.R. No. 148630)

Parties and Procedural Posture

Angelo Dwight Penson was the petitioner, and he was the registered owner of the subject properties in TCT Nos. 110503 and 110504.
Spouses Melchor and Virginia Maranan were the respondents and they became the purchasers at an extrajudicial foreclosure sale.
Petitioner questioned the RTC orders that restrained enforcement of a writ of possession through a writ of preliminary mandatory injunction.
The Court of Appeals (CA) granted respondents’ petition for certiorari, set aside the RTC orders, and ruled that the injunction was invalid.
Petitioner elevated the CA decision to the Supreme Court via a Rule 45 petition for review on certiorari.

Key Factual Allegations

Petitioner alleged that he was the registered owner of two parcels of land in Paranaque, each covered by 640 square meters, and that their family home had been occupied by them for more than 10 years.
Petitioner received, on July 22, 1999, a copy of a writ of possession issued by the RTC of Paranaque City, Branch 257, in LRC Case No. 99-065.
Petitioner learned that the properties had been mortgaged through a Deed of Real Estate Mortgage dated August 17, 1992 securing a promissory note dated August 14, 1992 in the amount of P1,950,000.00.
Petitioner claimed that the Deed of Real Estate Mortgage and the Special Power of Attorney dated July 9, 1992 were fraudulent.
The mortgage and foreclosure proceeded based on a Compromise Agreement dated March 7, 1997 in Civil Case No. 95-0100, an action for annulment of contract filed by Jovita against respondents.
The compromise required Jovita to pay P3,000,000.00 in six monthly installments using postdated checks.
The compromise expressly provided that if Jovita failed to pay an installment or if any check was dishonored, respondents could foreclose the real estate mortgage executed on August 17, 1992.
Due to Jovita’s failure to fulfill her obligation, the property was extrajudicially foreclosed on October 23, 1997, with respondents as the highest bidders.
A Certificate of Sale was issued on November 6, 1997, and new titles were issued to respondents as TCT Nos. 139462 and 139463 on November 18, 1998.
Respondents moved for issuance of a writ of possession, but the RTC initially denied it because the compromise agreement did not contain a provision on automatic issuance of such writ.
Upon reconsideration denial, the RTC indicated that respondents’ remedy was a petition for a writ of possession under Act No. 3135.
Respondents then filed an ex-parte petition for a writ of possession, and the RTC granted it in a decision dated July 14, 1999.
After the writ of possession issued on July 21, 1999, petitioner filed an action for Annulment of Title with Damages with an urgent prayer for injunctive relief in Civil Case No. 99-0272.
The RTC of Paranaque City, Branch 260 issued an order dated August 17, 1999 granting petitioner’s request for writ of preliminary mandatory injunction, enjoining respondents and all persons acting for them from implementing the writ of possession, subject to the posting of a bond of P3,000,000.00.
The CA later set aside the RTC injunction orders and upheld the enforceability of the writ of possession.

Competing Arguments

Petitioner argued that the CA erred by treating his situation as analogous to PDCP Development Bank v. Vestil despite the alleged lack of his consent to the mortgage.
Petitioner maintained that he was not named in the writ of possession and that his right of possession as owner required protection.
Petitioner contended that there was no improper interference with a co-equal court because the injunction only prevented enforcement against persons other than Jovita.
Petitioner likened the injunction to orders that prevent enforcement against property not belonging to a defendant, such as injunctions involving attachments.
Petitioner asserted that the real issue was whether the writ of possession could be enforced against him as a non-named occupant.
Petitioner also challenged the CA’s conclusion that the notarized Special Power of Attorney was valid and regular on its face, arguing that such issue required trial.
Respondents argued that the RTC had no jurisdiction to issue an injunction because it interfered with orders of a co-equal and coordinate court.
Respondents also argued that they were already the owners of the property and that petitioner