G.R. No. 219062 - Office of the Deputy Ombudsman for Mindanao vs. Llauder

Case Summary (G.R. No. 219062)

Factual Background

On January 19, 1987, petitioner Suico Industrial Corporation borrowed P2,500,000.00 from respondent. Petitioners mortgaged two real properties located in Mandaue City, Cebu, covered by TCT Nos. 18324 and 23116. In 1991, petitioners obtained an additional P2,000,000.00 loan, again payable in five years, and secured it with the same properties through respondent PDCP Bank. Petitioners later failed to pay the balance of P3,900,000.00 as of 1993.

Consequently, respondent caused the extrajudicial foreclosure of the mortgage. At the foreclosure sale, respondent emerged as the highest bidder. A Certificate of Sale dated February 29, 1993 was issued by the sheriff in respondent’s favor. Petitioners failed to redeem the properties within the legal one-year redemption period. After expiration of that period, ownership was consolidated and new titles were issued to respondent as TCT Nos. 34988 and 34987.

Proceedings on the Writ of Possession in RTC Branch 28

On November 16, 1994, respondent filed in RTC Branch 28 an Ex parte Motion for the Issuance of Writ of Possession, which the court granted in an order dated December 8, 1994. A writ of possession followed on December 15, 1994, issued by the sheriff as reflected in the record.

The writ could not be enforced because, on December 9, 1994, petitioners filed in RTC Branch 56 a complaint for Specific Performance, Injunction and Damages with prayer for a restraining order. They sought to prevent respondent from disposing of the mortgaged properties and from taking physical possession during the pendency of the case. As a result, enforcement was delayed pending resolution of petitioners’ request for injunctive relief.

Injunction Proceedings in RTC Branch 56

On January 17, 1995, RTC Branch 56 issued an order granting petitioners’ preliminary injunction request. In the order, the trial court noted evidence presented during the preliminary injunction hearing, including testimony from Esmeraldo Suico that, based on an alleged arrangement involving former bank officers, petitioners were expected to intentionally default so that foreclosure and consolidation of title would occur in respondent’s favor, after which petitioners (or their recommended buyer) would be allowed to repurchase the properties for P5,000,000.00. The trial court also considered testimony from an asset clerk regarding petitioners’ facilitation of the transfer to respondent and the purported attendance of respondent’s representatives to inquire about petitioners’ status.

Although the court recognized that its finding on preliminary injunction would be influenced by evidence to be presented at trial, it reasoned that denial of the injunction would result in irreparable damage to petitioners due to dislocation of family and business and possible loss of properties if respondent disposed of them. It further held that maintaining the status quo would not unduly prejudice respondent because respondent already had titles. The trial court fixed an injunction bond of P50,000.00 and deferred resolution of respondent’s motion to dismiss.

On January 18, 1995, RTC Branch 56 issued a writ of preliminary injunction directing respondent—its representatives and assigns—not to dispose of the properties under TCT Nos. 18324 and 23116, including improvements, nor take physical possession until further orders from the court. Petitioners later proceeded through their litigation, while respondent sought reconsideration and dismissal, both of which the trial court denied on June 21, 1995.

Court of Appeals Proceedings and Ruling

Respondent then filed in the Court of Appeals a petition for certiorari and mandamus with prayer for a writ of preliminary prohibitory injunction on June 26, 1995, seeking to set aside the order granting the preliminary injunction and to compel implementation of the writ of possession issued by RTC Branch 28.

On August 28, 1995, the Court of Appeals granted the petition. It held that RTC Branch 56 exceeded its jurisdiction when it issued an injunction against enforcement of the writ of possession granted by RTC Branch 28, both being courts of coordinate jurisdiction. The Court of Appeals relied on the principle that no court may interfere by injunction with judgments or orders of another court of concurrent jurisdiction vested with power to grant the relief sought. It also ruled that the writ of possession should have been implemented as a ministerial function of the trial court after proper application and proof of title.

The Court of Appeals further reasoned that the purchaser at a foreclosure sale becomes the absolute owner if not redeemed during the one-year period after registration of sale, and therefore becomes entitled to possession. It stressed that, following consolidation of ownership and issuance of the new transfer certificate of title, the issuance of the writ of possession becomes a ministerial duty, referencing the doctrines stated in related decisions. It held that, in these circumstances, the trial court was improper in staying implementation of the writ. The Court of Appeals then set aside the January 17, 1995 order.

Petitioners’ Arguments in the Supreme Court

After the Court of Appeals denied respondent’s motion for reconsideration in a resolution dated December 12, 1995, petitioners filed in the Supreme Court a certiorari petition seeking to uphold the writ of preliminary injunction issued by RTC Branch 56. Petitioners contended that a trial on the merits should proceed and that the injunction should remain in effect so as to prevent enforcement of the writ of possession.

Petitioners’ position was premised on their allegations in the complaint for specific performance, injunction, and damages before RTC Branch 56. They asserted that they had an arrangement with respondent whereby they would intentionally default to bring about foreclosure and eventual consolidation of title in respondent’s name. They further claimed that respondent would then permit petitioners to repurchase the properties for P5,000,000.00 through petitioners’ recommended buyers. Petitioners alleged that respondent rejected those recommended buyers and increased the selling price, which they claimed prevented them from redeeming the properties effectively. Based on these allegations, petitioners sought injunctive relief to restrain respondent from selling the properties to buyers not recommended by petitioners and from taking physical possession while the action was pending.

The Supreme Court’s Issues and Ruling

The Supreme Court addressed the focal inquiry of whether RTC Branch 56 could enjoin enforcement of the writ of possession issued by RTC Branch 28. The Court found the petition lacking in merit and denied it. It affirmed the Court of Appeals’ decision dated August 28, 1995 and resolution dated December 12, 1995, and it assessed costs against petitioners.

Legal Basis and Reasoning

First, the Supreme Court held that RTC Branch 56 acted with grave abuse of discretion in issuing the writ of injunction because petitioners failed to show a clear legal right sufficient to support preliminary injunctive relief. The Court reiterated the rule for preliminary injunction: the invasion of the right sought to be protected must be material and substantial; the complainant’s right must be clear and unmistakable; and there must be urgent and paramount necessity to prevent serious damage. It emphasized that injunction is not meant to protect contingent or future rights and is not proper when the complainant’s title or right is doubtful or disputed. The Court stressed that a possibility of irreparable damage without proof of an actual existing right does not justify injunctive relief.

Applying these principles, the Court held that after petitioners failed to pay the loan balance and failed to redeem within the statutory period, title had already transferred and respondent’s right to possession became clear. The Court characterized respondent’s right as grounded in its ownership as foreclosure purchaser whose title had been consolidated and registered in its favor. It invoked Section 7 of Act No. 3135 and Section 35 of Rule 39, concluding that under those provisions the purchaser in a foreclosure sale is entitled to possession. It further held that petitioners therefore lacked a legal basis to enjoin enforcement of respondent’s possessory right.

The Court also faulted petitioners’ procedural choice. It held that petitioners should have availed themselves of the remedy under Section 8 of Act No. 3135. That section permits the debtor, in the proceedings where possession was requested and not later than thirty days after the purchaser was given possession, to petition that the sale be set aside and the writ of possession cancelled, specifying damages and invoking a summary procedure described in the statute. The Court stressed that petitioners’ choice to file a separate complaint for specific performance and injunction in RTC Branch 56—rather than follow the statutory mechanism for challenging the sale and possession—did not comply with the system contemplated by Act No. 3135.

Second, the Supreme Court underscored that the issuance of the writ of possession to a foreclosure purchaser is ministerial, not discretionary. It relied on prior jurisprudence

Case Syllabus (G.R. No. 219062)

Parties and Procedural Posture

Petitioners were Suico Industrial Corporation and the spouses Esmeraldo Suico and Elizabeth Suico.
Respondent was the Court of Appeals and the PDCP Development Bank, Inc. (formerly Private Development Corporation of the Philippines, and hereinafter referred to as PDCP Bank).
The dispute stemmed from extrajudicial foreclosure of a real estate mortgage and subsequent issuance of a writ of possession by an RTC branch.
Petitioners filed a civil action for specific performance, injunction and damages before RTC of Mandaue City, Branch 56, seeking to prevent enforcement of the other RTC branch’s writ of possession.
RTC Branch 56 granted preliminary injunction, and later denied petitioners’ motion for reconsideration and PDCP Bank’s motion to dismiss.
PDCP Bank sought relief via certiorari and mandamus with the Court of Appeals, challenging the RTC Branch 56 injunction as void.
The Court of Appeals granted PDCP Bank’s petition and set aside the RTC Branch 56 order granting injunction, on jurisdictional grounds.
Petitioners then filed the present certiorari petition in the Supreme Court, seeking to uphold the RTC Branch 56 injunction so that the case would proceed to trial on the merits.
The Supreme Court denied the petition and affirmed the Court of Appeals’ decision and resolution.

Key Factual Allegations

On January 19, 1987, Suico Industrial Corporation, represented by Esmeraldo Suico, obtained a loan of P2,500,000.00 payable in five (5) years from Private Development Corporation of the Philippines (now PDCP Bank).
As security, petitioners mortgaged two (2) real properties in Mandaue City, Cebu covered by TCT Nos. 18324 and 23116.
In 1991, petitioners obtained a second loan of P2,000,000.00 payable in five (5) years, secured by the same properties, from PDCP Bank.
Petitioners failed to pay the loan balance amounting to P3,900,000.00 as of 1993, prompting extrajudicial foreclosure by PDCP Bank.
At the foreclosure sale, PDCP Bank was adjudged highest bidder, and the Certificate of Sale dated February 29, 1993 was issued by the Sheriff of Mandaue in its favor.
Petitioners did not redeem the properties within the statutory period.
After the one (1)-year redemption period, ownership was consolidated, and TCT Nos. 34988 and 34987 were issued in PDCP Bank’s name.
On November 16, 1994, PDCP Bank filed an ex parte motion for issuance of writ of possession with RTC of Mandaue City, Branch 28, which the court granted on December 8, 1994.
A writ of possession was issued on December 15, 1994, but enforcement was precluded because petitioners filed a complaint on December 9, 1994.
Petitioners filed Complaint for Specific Performance, Injunction and Damages with prayer for a restraining order in RTC Branch 56, seeking to enjoin PDCP Bank from selling and from taking physical possession pending the case.
At the preliminary injunction hearing, petitioners presented evidence asserting an alleged arrangement with former bank officers whereby petitioners would intentionally default so PDCP Bank could consolidate title, while petitioners could later repurchase for P5,000,000.00.
Petitioners claimed they facilitated the transfer of the lots to PDCP Bank and that PDCP Bank representatives inquired about whether petitioners had been at the Assessors Office.
Petitioners alleged that PDCP Bank rejected petitioners’ recommended buyers, raised the selling price, and prevented redemption.
Petitioners thus sought to uphold RTC Branch 56’s preliminary injunction against enforcement of the writ of possession issued by RTC Branch 28.

Statutory and Jurisprudential Framework

The Supreme Court anchored the purchaser’s right to possession on Section 7 of Act No. 3135, as amended.
The Supreme Court likewise referenced Section 35 of Rule 39 to support that the foreclosure purchaser is entitled to possession.
The Court discussed Section 8 of Act No. 3135, which allows a debtor to petition to set aside the sale and cancel the writ of possession within a limited period and through the summary procedure.
The Court treated the writ of possession after extrajudicial foreclosure as a remedy that operates through an ex parte proceeding at the purchaser’s instance, with challenges deferred to the statutory post-possession mechanism.
The decision relied on doctrines governing propriety of preliminary injunction, requiring a showing of a clear and unmistakable right, material and substantial invasion, and urgent and paramount necessity to avert serious damage.
The Supreme Court treated injunction as improper where it protects only contingent or future rights or where the complainant’s right is doubtful or disputed.
The Court relied on the constitutional and doctrinal principle that courts of concurrent jurisdiction may not interfere by injunction with the orders or judgments of another court of equal authority.
The Supreme Court cited controlling precedents that characterize the issuance of writ of possession as a ministerial function after the redemption period and consolidation of title.

Issues Presented

The focal issue was whether RTC Branch 56 could enjoin the enforcement of the writ of possession issued by RTC Branch 28.
The case also required determination of whether petitioners