A.G. Development Corp. v. Court of Appeals

a. Other Actions for Recovery of Possession — Writ of possession

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Case DigestChapter II — Ownership

A.G. Development Corp. v. Court of Appeals

G.R. No. 111662 · October 23, 1997 · Supreme Court

a. Other Actions for Recovery of Possession — Writ of possession

Gist

A contractor mortgaged its own lot to secure a building contract with the NHA. The NHA rescinded, foreclosed extrajudicially, bought at the auction, consolidated title, and took a writ of possession from the Quezon City RTC on an ex parte motion. When the contractor sued in Makati to annul the note, the mortgage, the foreclosure and the title, that suit was dismissed and the Court of Appeals held the writ an absolute bar. The Supreme Court reversed: a writ of possession is a ministerial, summary, ex parte order that decides nothing and is not even an action, so it cannot be res judicata against a plenary suit.

Core Doctrine

The central doctrine is that the issuance of a writ of possession to the purchaser in an extrajudicial foreclosure is a ministerial function performed in a summary, ex parte proceeding — the court "neither exercises its official discretion nor judgment" — so the writ is neither an "action" nor a judgment on the merits, and it cannot operate as res judicata against a separate action to annul the mortgage, the foreclosure, and the resulting title.

Facts

On November 4, 1981, petitioner A.G. Development Corporation (AGDC) and respondent National Housing Authority (NHA) entered into a Memorandum of Agreement under which AGDC would build, on its own lot, a dormitory-apartment-commercial building for the NHA at a total cost of ₱11,452,989.00. The lot was AGDC's own — so the mortgage that follows put the contractor's own land at risk for the performance of its contract.
To secure the undertaking, AGDC executed in the NHA's favour a promissory note and a real estate mortgage over the land.
The NHA made an initial payment of ₱3,308,440.00 covering a portion of the contract price.
On August 30, 1983, the NHA rescinded the agreement and demanded the immediate return of that payment, on the ground that AGDC had failed to complete the project on time. AGDC refused. Whether the rescission was justified is the merits question that never got tried — and the one the Supreme Court ultimately sends back.
The real estate mortgage was extrajudicially foreclosed and the property sold to the NHA as the highest bidder.
The one-year redemption period expired without redemption, and a new Transfer Certificate of Title was issued in the NHA's name.
A writ of possession was then applied for and granted by the Regional Trial Court of Quezon City, docketed as LRC Case No. 3067 (85). Applied for — on an ex parte motion, in a land registration case. That procedural detail, not the outcome, is what the Supreme Court fastens on.
On December 3, 1986, AGDC filed a complaint against the NHA before the Makati RTC, docketed as Civil Case No. 15495, for breach of contract, declaration of nullity of the promissory note and real estate mortgage, and annulment of the foreclosure sale and reversion of possession and title.
The NHA moved to dismiss on the ground of litis pendentia, and the trial court denied the motion. The first attempt to kill the Makati suit failed; the second one, on different grounds, succeeded.
While the case was pending, A. Francisco Realty and Development Corporation (AFRDC) intervened, claiming to be an innocent purchaser for value who had already bought the foreclosed property from the NHA.
AFRDC then moved to dismiss, arguing the Makati RTC had no jurisdiction to entertain the complaint and annul a writ issued by the Quezon City RTC, the two being courts of co-equal or coordinate jurisdiction. The Makati RTC agreed and dismissed AGDC's complaint. The dismissal below rested on co-equal-court jurisdiction; res judicata is the ground the Court of Appeals supplied in affirming it, and the one the Supreme Court decides.
The Court of Appeals, in CA G.R. S.P. No. 30227, upheld the dismissal, reasoning that the issuance of the writ of possession confirmed the NHA's title and was therefore an absolute bar to a subsequent action.
AGDC came to the Supreme Court on a petition for review under Rule 45, decided October 23, 1997.

Issue

Whether the issuance of a writ of possession by the Quezon City RTC in a land registration case, following an extrajudicial foreclosure, constitutes res judicata so as to bar a subsequent action to annul the promissory note, the real estate mortgage, the foreclosure sale, and the resulting title.

Secondary issues. Whether the proceeding for the issuance of a writ of possession is an "action", and whether the writ is a judgment on the merits within the requisites of res judicata.

Ruling

Main issue. NO — the writ bars nothing. Measured against the four requisites, the writ fails the third: "The issuance of a writ of possession is not a judgment on the merits." And beyond the enumerated requisites the Court identified one that is assumed rather than stated — "a basic requisite for res judicata to apply is that there are two cases which have been decided on the merits" — of which there was only, at most, one. The Court of Appeals was wrong to treat the writ as confirming the NHA's title: it "was not a judgment on the merits but simply an incident in the transfer of title."

Secondary issues. NO on both counts. The proceeding is not an action: "LRC Case No. 3067 (85) is not an action as defined by law," because an action "is commenced by filing a complaint with the Court," whereas here "no complaint is necessary, the filing of an ex parte motion being enough." And the writ is not a judgment on the merits, because its issuance "is merely a ministerial function" in which "the Court neither exercises its official discretion nor judgment."

"WHEREFORE, in view of the foregoing, the decision appealed from is hereby GRANTED. Civil Case No. 15495 is hereby REINSTATED."

The dispositive is infelicitously worded — a decision cannot be "granted" — but its effect is plain and undisputed: the dismissal was set aside and the Makati action revived for trial on the merits.

Ratio

The Court began from the settled requisites: "(a) the former judgment must be final; (b) the court which rendered it had jurisdiction over the subject matter and the parties; (c) the judgment must be on the merits; and (d) there must be between the first and second actions identity of parties, subject matter and causes of action."
It added a requisite that is usually left unspoken: "Although not explicitly stated, a basic requisite for res judicata to apply is that there are two cases which have been decided on the merits."
On what the writ is: "A writ of possession is generally understood to be an order whereby the sheriff is commanded to place a person in possession of a real or personal property, such as when a property is extra-judicially foreclosed."
On how it issues: "the issuance of a writ of possession to a purchaser in an extra-judicial foreclosure is merely a ministerial function," and "the Court neither exercises its official discretion nor judgment."
The conclusion follows from the character of the act. The writ "is summary in nature, hence the same cannot be considered a judgment on the merits which is defined as one rendered after a determination of which party is right, as distinguished from a judgment rendered upon some preliminary or formal technical point."
A second, independent ground: the land registration case was never an "action" at all. An action "is an act by which one sues another in a court of justice for the enforcement or protection of a right or the prevention or redress of a wrong" and "is commenced by filing a complaint with the Court"; but for the writ "no complaint is necessary, the filing of an ex parte motion being enough." Indeed "the term 'action' does not include non-judicial proceedings, although they are before a court, as in cases where the court does not act in a judicial capacity."
The same is true of the foreclosure that preceded it, which "only requires the posting and publication of the notices to effect the same"; and "a proceeding to foreclose a mortgage by advertisement is not an action."
Finally, the limits of the doctrine itself: it "applies only to judicial or quasi-judicial proceedings and not to the exercise of administrative powers or to legislative, executive or ministerial determination," and "cases disposed of on technical grounds do not fall within the doctrine of res judicata."

Doctrine

Definition of a Writ of Possession: An order commanding the sheriff to place a person in possession of real or personal property, as where the property has been extrajudicially foreclosed and the redemption period has lapsed.
Ministerial Issuance: On the purchaser's application after consolidation of title, issuance of the writ under Section 7 of Act No. 3135 is ministerial — the court exercises "neither its official discretion nor judgment."
Not an "Action": Because no complaint is filed and a mere ex parte motion suffices, the proceeding is not an action as defined by law; the term does not reach non-judicial proceedings even when they are held before a court.
No Judgment on the Merits: A judgment on the merits is one "rendered after a determination of which party is right." A summary, ministerial order is not such a judgment, so it fails the third requisite of res judicata.
Limits of Res Judicata: The doctrine reaches only judicial and quasi-judicial determinations, never ministerial ones, and never dispositions resting on technical grounds.
Possession Enforced, Not Adjudicated: The writ delivers possession to one already entitled to it under Article 428; it presupposes the right rather than determines it, and so settles nothing about ownership.

The holding is confined to the writ's effect as a bar. The Court said nothing about the validity of the writ, the NHA's consolidated title, or AFRDC's claim to be an innocent purchaser for value — all of which were left to the reinstated case.

Full Digest — Recitation Format

I. Gist and Central Doctrine

Relationship to requested topic: DIRECT.

[Captioned in the reports as A.G. Development Corporation v. Court of Appeals, Hon. Ignacio Capulong, National Housing Authority, and A. Francisco Realty and Development Corporation. Third Division; Ponente: Romero, J.]

The case involves a contractor whose mortgaged property was extrajudicially foreclosed by the National Housing Authority; after a writ of possession issued in the NHA's favour in a land registration case, the contractor's separate suit to annul the mortgage and foreclosure was dismissed, and the Court of Appeals sustained the dismissal on the ground of res judicata. The Supreme Court reversed, holding that a writ of possession issued ex parte in an extrajudicial foreclosure is a ministerial act that decides nothing on the merits and therefore cannot bar a subsequent plenary action. The central doctrine is that the issuance of a writ of possession to the purchaser in an extrajudicial foreclosure is a ministerial function performed in a summary, ex parte proceeding that is not an "action" and not a judgment on the merits; consequently it cannot operate as res judicata against a separate action to annul the mortgage, the foreclosure, and the resulting title.

II. Chronological Narration of Material Facts

On November 4, 1981, A.G. Development Corporation (AGDC) and the National Housing Authority (NHA) executed a Memorandum of Agreement under which AGDC undertook to construct on its own lot a dormitory-apartment-commercial building for the NHA at a total cost of ₱11,452,989.00.
Pursuant to the agreement, AGDC executed in favour of the NHA a promissory note and a real estate mortgage over the land as security for the obligation.
The NHA made an initial payment of ₱3,308,440.00 to AGDC covering a portion of the contract price.
On August 30, 1983, the NHA rescinded the agreement and demanded the immediate return of the initial payment, on the ground that AGDC was unable to complete the project on time; the demand was refused.
The real estate mortgage was extrajudicially foreclosed and the property sold to the NHA as the highest bidder.
The one-year period to redeem expired without redemption, and a new Transfer Certificate of Title was issued in favour of the NHA.
A writ of possession was applied for and granted by the Regional Trial Court of Quezon City, docketed as LRC Case No. 3067 (85).
On December 3, 1986, AGDC filed a complaint against the NHA before the Makati RTC, docketed as Civil Case No. 15495, for breach of contract, declaration of nullity of the promissory note and real estate mortgage, and annulment of the foreclosure sale and reversion of possession and title.
The NHA filed a motion to dismiss on the ground of litis pendentia, which the trial court denied.
While the case was pending, A. Francisco Realty and Development Corporation (AFRDC) filed a motion to intervene, claiming to be an innocent purchaser for value having already bought the foreclosed property from the NHA.
AFRDC then filed a motion to dismiss, reasoning that the Makati RTC had no jurisdiction to entertain the complaint and annul the writ issued by the Quezon City RTC, both being courts of co-equal or coordinate jurisdiction; the Makati RTC ruled in AFRDC's favour and dismissed AGDC's complaint.
Recourse to the Court of Appeals in CA G.R. S.P. No. 30227 proved futile — the appellate court held that issuance of the writ of possession confirmed the NHA's title and constituted an absolute bar to a subsequent action.
On October 23, 1997, the Supreme Court reversed and reinstated Civil Case No. 15495.

III. Arguments of the Parties

A. Petitioner (A.G. Development Corporation)

AGDC's position was that the writ of possession issued by the Quezon City court was a summary, ex parte incident of the foreclosure that adjudicated nothing. It resolved no question about the validity of the promissory note, the mortgage, or the foreclosure sale, and therefore could not bar the Makati action seeking to annul the very instruments from which the foreclosure sprang.

B. Respondents (NHA and A. Francisco Realty)

AFRDC contended that the Makati RTC, being a court co-equal with the Quezon City RTC, had no jurisdiction to entertain a complaint that would annul the latter's writ. Respondents further maintained — and the Court of Appeals accepted — that the issuance of the writ of possession had the effect of confirming the NHA's title, so that its grant operated as an absolute bar, final as to the claimed nullity of the promissory note, the real estate mortgage, and the resulting extrajudicial foreclosure sale.

C. Common Ground

Neither side disputed that the mortgage was extrajudicially foreclosed, that the NHA bought at the auction, that the redemption period lapsed without redemption, that a new title issued in the NHA's name, or that the Quezon City court granted the writ of possession on an ex parte application.

IV. Issues

A. MAIN ISSUE

Whether the issuance of a writ of possession by the Quezon City RTC in a land registration case, following an extrajudicial foreclosure, constitutes res judicata so as to bar the subsequent complaint filed by AGDC to annul the promissory note, mortgage, foreclosure sale, and title.

B. SECONDARY ISSUES

Whether the proceeding for the issuance of a writ of possession is an "action", and whether the writ is a judgment on the merits within the meaning of the requisites of res judicata.

V. Ruling / Disposition

A. MAIN ISSUE

NO. The Court "cannot agree with the Court of Appeals that the action to annul both the real estate mortgage and the foreclosure sale is barred by res judicata." The writ fails the third requisite, and there was never the pair of merits-decided cases the doctrine assumes. The writ "was not a judgment on the merits but simply an incident in the transfer of title."

B. SECONDARY ISSUES

NO on both counts. "LRC Case No. 3067 (85) is not an action as defined by law," and "The issuance of a writ of possession is not a judgment on the merits."

"WHEREFORE, in view of the foregoing, the decision appealed from is hereby GRANTED. Civil Case No. 15495 is hereby REINSTATED. SO ORDERED."

In effect, the dismissal was set aside and the Makati action revived for trial on the merits.

VI. Ratio Decidendi and Doctrines

A. Ratio Decidendi

The Court measured the writ of possession against the four requisites of res judicata: "(a) the former judgment must be final; (b) the court which rendered it had jurisdiction over the subject matter and the parties; (c) the judgment must be on the merits; and (d) there must be between the first and second actions identity of parties, subject matter and causes of action."
It observed that "Although not explicitly stated, a basic requisite for res judicata to apply is that there are two cases which have been decided on the merits."
On the nature of the writ: "a writ of possession is generally understood to be an order whereby the sheriff is commanded to place a person in possession of a real or personal property, such as when a property is extra-judicially foreclosed," and "the issuance of a writ of possession to a purchaser in an extra-judicial foreclosure is merely a ministerial function."
Being ministerial, "the Court neither exercises its official discretion nor judgment" — and a court that does not judge cannot render a judgment on the merits.
The writ "is summary in nature, hence the same cannot be considered a judgment on the merits which is defined as one rendered after a determination of which party is right, as distinguished from a judgment rendered upon some preliminary or formal technical point."
The Court then held that LRC Case No. 3067 (85) "is not an action as defined by law." An action "is an act by which one sues another in a court of justice for the enforcement or protection of a right or the prevention or redress of a wrong" and "is commenced by filing a complaint with the Court"; but "in the procedure for the issuance of a writ of possession, no complaint is necessary, the filing of an ex parte motion being enough."
It added that "the term 'action' does not include non-judicial proceedings, although they are before a court, as in cases where the court does not act in a judicial capacity."
This followed the character of extrajudicial foreclosure itself, which "only requires the posting and publication of the notices to effect the same"; and "a proceeding to foreclose a mortgage by advertisement is not an action."
The Court closed with the governing limitation of the doctrine invoked: it "applies only to judicial or quasi-judicial proceedings and not to the exercise of administrative powers or to legislative, executive or ministerial determination," and "cases disposed of on technical grounds do not fall within the doctrine of res judicata."

B. Doctrines/Rules

Definition of a Writ of Possession: An order commanding the sheriff to place a party in possession of property, as where property has been extrajudicially foreclosed and the redemption period has lapsed.
Ministerial Issuance: Upon the purchaser's application after consolidation of title, issuance of the writ is ministerial; the court exercises neither discretion nor judgment.
Ex Parte and Summary: No complaint is required — a mere ex parte motion suffices — so the proceeding is not an "action" within the legal definition.
No Judgment on the Merits: A judgment on the merits is one rendered after determining which party is right; a summary, ministerial order is not such a judgment.
Limits of Res Judicata: The doctrine reaches only judicial and quasi-judicial determinations, never ministerial ones, and never dispositions resting on technical grounds.

C. Limitations/Exceptions

The holding is confined to the effect of the writ as a bar: it decides only that the writ raises no res judicata against the plenary suit.
The Court said nothing about the validity of the writ, the NHA's consolidated title, or AFRDC's claim to be an innocent purchaser for value — all of which were left to the reinstated case.
The ministerial character of the writ is itself subject to exceptions recognised in later jurisprudence, notably where a third party holds the property adversely to the judgment debtor.

D. Topic Integration

The relationship is DIRECT.
The case defines the writ of possession as an instrument for delivering possession de facto to one already entitled to it, sharply distinguishing it from any adjudication of ownership.
In the scheme of Article 428, the writ is the enforcement arm of the jus possidendi already established elsewhere — it presupposes the right rather than determines it.
That is precisely why it settles nothing and bars nothing: a mortgagor who claims the mortgage itself was void keeps his day in court, notwithstanding that he has already been put out of the property by the writ.

VII. Separate Opinions

NOT IN RECORD (Melo, Francisco and Panganiban, JJ., concurred; Narvasa, C.J., was on leave).

Cited Laws & Provisions

Every statute, rule, and issuance the decision turns on — the text as written, and the work it does in this case.

Special Law

Section 7, Act No. 3135, as amended by Act No. 4118

Writ of possession pending redemption

Act No. 3135 (6 March 1924), as amended by Act No. 4118 (7 December 1933), Section 2

No verbatim text here, and the reason is a version trap plus a defective source.

LawPhil's Act No. 3135 page carries only the original 1924 text, whose Section 7 is the effectivity clause — "This Act shall take effect on its approval." The writ-of-possession Section 7 that every foreclosure case cites was inserted later, by Section 2 of Act No. 4118 (1933), which also renumbered the old Section 7 as Section 10. Quoting "Section 7 of Act 3135" from the 1924 page therefore gives entirely the wrong provision.

The amending act's own page carries the inserted text, but LawPhil's copy of it is garbled — it reads "furnishing in amount equivalent" where words are plainly missing, and runs "duly registered in of deeds in accordance with any ex case the clerk of the court shall, petition, collect the fees," which is not a sentence. Since the wording cannot be confirmed, none is quoted.

What the section provides is not in doubt. In any sale made under the Act, the purchaser may petition the court of the place where the property is situated to be given possession during the redemption period, on a bond equivalent to the use of the property for twelve months, to indemnify the debtor should the sale prove irregular. The petition is made under oath, filed as an ex parte motion in the registration or cadastral proceeding, and on approval of the bond the court shall order that a writ of possession issue.

Two points the case law builds on. The proceeding is ex parte and summary, so the issuance is treated as ministerial — the court does not try ownership or the regularity of the foreclosure in it. And after consolidation of title, the bond requirement falls away entirely: the purchaser is then the registered owner and takes possession as an incident of ownership. Section 8 gives the debtor his own remedy — a petition to set the sale aside, filed within thirty days after possession is given.

For the exact words, use the enrolled text of Act No. 4118, not this repo.

Why it is cited here

The section the writ issues under, and the source of every feature that defeats the res judicata plea. The Court cites it twice — once for what a writ of possession is, and once for how it is obtained.

The second citation is the one that decides the case. Under this section the purchaser moves ex parte; the Court's point is what that procedure lacks. "[I]n the procedure for the issuance of a writ of possession, no complaint is necessary, the filing of an ex parte motion being enough." No complaint means no action, and no action means there is no first case to bar a second.

The ministerial character follows from the same design. Because the section gives the court nothing to weigh once the purchaser's entitlement appears, "the Court neither exercises its official discretion nor judgment" — and a court that does not judge cannot produce a judgment on the merits.

Note what the case does not hold. It never says the writ was improper; the NHA had consolidated title and was entitled to it. It says only that the writ settles nothing beyond possession. Read against Jetri Construction, the two halves fit: a pending annulment suit cannot stop the writ, and the writ in turn cannot stop the annulment suit.

Implementing Rules

Section 47, Rule 39, Rules of Court

Effect of judgments or final orders

1997 Rules of Civil Procedure — Rule 39 (Execution, Satisfaction and Effect of Judgments)

The effect of a judgment or final order rendered by a court of the Philippines, having jurisdiction to pronounce the judgment or final order, may be as follows:

(a) In case of a judgment or final order against a specific thing, or in respect to the probate of a will, or the administration of the estate of a deceased person, or in respect to the personal, political, or legal condition or status of a particular person or his relationship to another, the judgment or final order is conclusive upon the title to the thing, the will or administration or the condition, status or relationship of the person, however, the probate of a will or granting of letters of administration shall only be prima facie evidence of the death of the testator or intestate;

(b) In other cases, the judgment or final order is, with respect to the matter directly adjudged or as to any other matter that could have been missed in relation thereto, conclusive between the parties and their successors in interest, by title subsequent to the commencement of the action or special proceeding, litigating for the same thing and under the same title and in the same capacity; and

(c) In any other litigation between the same parties or their successors in interest, that only is deemed to have been adjudged in a former judgment or final order which appears upon its face to have been so adjudged, or which was actually and necessarily included therein or necessary thereto. (49a)

LawPhil posts the 1997 text. The 2019 Amendments to the Rules of Civil Procedure (A.M. No. 19-10-20-SC) took effect 1 May 2020 and changed several of these rules; a decision promulgated before that date was governed by the text quoted here.

Why it is cited here

The provision behind the doctrine invoked against AGDC, and the reason it does not reach the writ. What is conclusive between parties is a "judgment or final order rendered by a court of the Philippines, having jurisdiction to pronounce the judgment or final order" — and only "with respect to the matter directly adjudged."

Every word of that is missing here. An ex parte order placing a purchaser in possession adjudges no matter at all, so there is nothing for the section to make conclusive.

The Court applied the doctrine through its four familiar requisites: "(a) the former judgment must be final; (b) the court which rendered it had jurisdiction over the subject matter and the parties; (c) the judgment must be on the merits; and (d) there must be between the first and second actions identity of parties, subject matter and causes of action." The writ fails (c), and fails an unstated threshold requisite besides — that there be "two cases which have been decided on the merits."

Two outer limits of the doctrine, both quoted in the decision, are worth keeping. It "applies only to judicial or quasi-judicial proceedings and not to the exercise of administrative powers or to legislative, executive or ministerial determination"; and "cases disposed of on technical grounds do not fall within the doctrine of res judicata."

Civil Code

Article 428, Civil Code

Civil Code of the Philippines (R.A. No. 386), Book II (Property, Ownership, and Its Modifications), Title II (Ownership), Chapter 1 (Ownership in General)

The owner has the right to enjoy and dispose of a thing, without other limitations than those established by law.

The owner has also a right of action against the holder and possessor of the thing in order to recover it. (348a)

Why it is cited here

Where the writ sits in the scheme of ownership. The owner "has also a right of action against the holder and possessor of the thing in order to recover it" — and the writ of possession is the enforcement of that right, never the adjudication of it.

That distinction is the whole case. The NHA came to the Quezon City court already holding a consolidated title; it asked to be put in possession, not to be declared owner. The writ delivers possession de facto to one whose entitlement is assumed, which is exactly why it presupposes the right rather than determines it.

So a mortgagor who says the mortgage was void from the start keeps his day in court even after he has been physically put out. The article's right of action belongs to whoever really owns the thing, and a summary order that never asked who that is cannot answer the question.

This is the line between the writ and the plenary possessory actions in the rest of this topic. Accion publiciana and reivindicatoria decide who is entitled; the writ merely executes an entitlement established somewhere else.

Cited laws & provisions

Section 7, Act No. 3135, as amended by Act No. 4118

Special Law

Writ of possession pending redemption

Act No. 3135 (6 March 1924), as amended by Act No. 4118 (7 December 1933), Section 2

No verbatim text here, and the reason is a version trap plus a defective source.

For the exact words, use the enrolled text of Act No. 4118, not this repo.

Why it is cited here

Full entry below ↓

Section 47, Rule 39, Rules of Court

Implementing Rules

Effect of judgments or final orders

1997 Rules of Civil Procedure — Rule 39 (Execution, Satisfaction and Effect of Judgments)

The effect of a judgment or final order rendered by a court of the Philippines, having jurisdiction to pronounce the judgment or final order, may be as follows:

Why it is cited here

Every word of that is missing here. An ex parte order placing a purchaser in possession adjudges no matter at all, so there is nothing for the section to make conclusive.

Full entry below ↓

Article 428, Civil Code

Civil Code

Civil Code of the Philippines (R.A. No. 386), Book II (Property, Ownership, and Its Modifications), Title II (Ownership), Chapter 1 (Ownership in General)

The owner has the right to enjoy and dispose of a thing, without other limitations than those established by law.

The owner has also a right of action against the holder and possessor of the thing in order to recover it. (348a)

Why it is cited here

Full entry below ↓

Facts

On November 4, 1981, petitioner A.G. Development Corporation (AGDC) and respondent National Housing Authority (NHA) entered into a Memorandum of Agreement under which AGDC would build, on its own lot, a dormitory-apartment-commercial building for the NHA at a total cost of ₱11,452,989.00. The lot was AGDC's own — so the mortgage that follows put the contractor's own land at risk for the performance of its contract.
To secure the undertaking, AGDC executed in the NHA's favour a promissory note and a real estate mortgage over the land.
The NHA made an initial payment of ₱3,308,440.00 covering a portion of the contract price.
On August 30, 1983, the NHA rescinded the agreement and demanded the immediate return of that payment, on the ground that AGDC had failed to complete the project on time. AGDC refused. Whether the rescission was justified is the merits question that never got tried — and the one the Supreme Court ultimately sends back.
The real estate mortgage was extrajudicially foreclosed and the property sold to the NHA as the highest bidder.
The one-year redemption period expired without redemption, and a new Transfer Certificate of Title was issued in the NHA's name.
A writ of possession was then applied for and granted by the Regional Trial Court of Quezon City, docketed as LRC Case No. 3067 (85). Applied for — on an ex parte motion, in a land registration case. That procedural detail, not the outcome, is what the Supreme Court fastens on.
On December 3, 1986, AGDC filed a complaint against the NHA before the Makati RTC, docketed as Civil Case No. 15495, for breach of contract, declaration of nullity of the promissory note and real estate mortgage, and annulment of the foreclosure sale and reversion of possession and title.
The NHA moved to dismiss on the ground of litis pendentia, and the trial court denied the motion. The first attempt to kill the Makati suit failed; the second one, on different grounds, succeeded.
While the case was pending, A. Francisco Realty and Development Corporation (AFRDC) intervened, claiming to be an innocent purchaser for value who had already bought the foreclosed property from the NHA.
AFRDC then moved to dismiss, arguing the Makati RTC had no jurisdiction to entertain the complaint and annul a writ issued by the Quezon City RTC, the two being courts of co-equal or coordinate jurisdiction. The Makati RTC agreed and dismissed AGDC's complaint. The dismissal below rested on co-equal-court jurisdiction; res judicata is the ground the Court of Appeals supplied in affirming it, and the one the Supreme Court decides.
The Court of Appeals, in CA G.R. S.P. No. 30227, upheld the dismissal, reasoning that the issuance of the writ of possession confirmed the NHA's title and was therefore an absolute bar to a subsequent action.
AGDC came to the Supreme Court on a petition for review under Rule 45, decided October 23, 1997.

Issue

Secondary issues. Whether the proceeding for the issuance of a writ of possession is an "action", and whether the writ is a judgment on the merits within the requisites of res judicata.

Ruling

"WHEREFORE, in view of the foregoing, the decision appealed from is hereby GRANTED. Civil Case No. 15495 is hereby REINSTATED."

Ratio

The Court began from the settled requisites: "(a) the former judgment must be final; (b) the court which rendered it had jurisdiction over the subject matter and the parties; (c) the judgment must be on the merits; and (d) there must be between the first and second actions identity of parties, subject matter and causes of action."
It added a requisite that is usually left unspoken: "Although not explicitly stated, a basic requisite for res judicata to apply is that there are two cases which have been decided on the merits."
On what the writ is: "A writ of possession is generally understood to be an order whereby the sheriff is commanded to place a person in possession of a real or personal property, such as when a property is extra-judicially foreclosed."
On how it issues: "the issuance of a writ of possession to a purchaser in an extra-judicial foreclosure is merely a ministerial function," and "the Court neither exercises its official discretion nor judgment."
The conclusion follows from the character of the act. The writ "is summary in nature, hence the same cannot be considered a judgment on the merits which is defined as one rendered after a determination of which party is right, as distinguished from a judgment rendered upon some preliminary or formal technical point."
A second, independent ground: the land registration case was never an "action" at all. An action "is an act by which one sues another in a court of justice for the enforcement or protection of a right or the prevention or redress of a wrong" and "is commenced by filing a complaint with the Court"; but for the writ "no complaint is necessary, the filing of an ex parte motion being enough." Indeed "the term 'action' does not include non-judicial proceedings, although they are before a court, as in cases where the court does not act in a judicial capacity."
The same is true of the foreclosure that preceded it, which "only requires the posting and publication of the notices to effect the same"; and "a proceeding to foreclose a mortgage by advertisement is not an action."
Finally, the limits of the doctrine itself: it "applies only to judicial or quasi-judicial proceedings and not to the exercise of administrative powers or to legislative, executive or ministerial determination," and "cases disposed of on technical grounds do not fall within the doctrine of res judicata."

Doctrine

Definition of a Writ of Possession: An order commanding the sheriff to place a person in possession of real or personal property, as where the property has been extrajudicially foreclosed and the redemption period has lapsed.
Ministerial Issuance: On the purchaser's application after consolidation of title, issuance of the writ under Section 7 of Act No. 3135 is ministerial — the court exercises "neither its official discretion nor judgment."
Not an "Action": Because no complaint is filed and a mere ex parte motion suffices, the proceeding is not an action as defined by law; the term does not reach non-judicial proceedings even when they are held before a court.
No Judgment on the Merits: A judgment on the merits is one "rendered after a determination of which party is right." A summary, ministerial order is not such a judgment, so it fails the third requisite of res judicata.
Limits of Res Judicata: The doctrine reaches only judicial and quasi-judicial determinations, never ministerial ones, and never dispositions resting on technical grounds.
Possession Enforced, Not Adjudicated: The writ delivers possession to one already entitled to it under Article 428; it presupposes the right rather than determines it, and so settles nothing about ownership.

Full Digest — Recitation Format

I. Gist and Central Doctrine

Relationship to requested topic: DIRECT.

II. Chronological Narration of Material Facts

On November 4, 1981, A.G. Development Corporation (AGDC) and the National Housing Authority (NHA) executed a Memorandum of Agreement under which AGDC undertook to construct on its own lot a dormitory-apartment-commercial building for the NHA at a total cost of ₱11,452,989.00.
Pursuant to the agreement, AGDC executed in favour of the NHA a promissory note and a real estate mortgage over the land as security for the obligation.
The NHA made an initial payment of ₱3,308,440.00 to AGDC covering a portion of the contract price.
On August 30, 1983, the NHA rescinded the agreement and demanded the immediate return of the initial payment, on the ground that AGDC was unable to complete the project on time; the demand was refused.
The real estate mortgage was extrajudicially foreclosed and the property sold to the NHA as the highest bidder.
The one-year period to redeem expired without redemption, and a new Transfer Certificate of Title was issued in favour of the NHA.
A writ of possession was applied for and granted by the Regional Trial Court of Quezon City, docketed as LRC Case No. 3067 (85).
On December 3, 1986, AGDC filed a complaint against the NHA before the Makati RTC, docketed as Civil Case No. 15495, for breach of contract, declaration of nullity of the promissory note and real estate mortgage, and annulment of the foreclosure sale and reversion of possession and title.
The NHA filed a motion to dismiss on the ground of litis pendentia, which the trial court denied.
While the case was pending, A. Francisco Realty and Development Corporation (AFRDC) filed a motion to intervene, claiming to be an innocent purchaser for value having already bought the foreclosed property from the NHA.
AFRDC then filed a motion to dismiss, reasoning that the Makati RTC had no jurisdiction to entertain the complaint and annul the writ issued by the Quezon City RTC, both being courts of co-equal or coordinate jurisdiction; the Makati RTC ruled in AFRDC's favour and dismissed AGDC's complaint.
Recourse to the Court of Appeals in CA G.R. S.P. No. 30227 proved futile — the appellate court held that issuance of the writ of possession confirmed the NHA's title and constituted an absolute bar to a subsequent action.
On October 23, 1997, the Supreme Court reversed and reinstated Civil Case No. 15495.

III. Arguments of the Parties

A. Petitioner (A.G. Development Corporation)

B. Respondents (NHA and A. Francisco Realty)

C. Common Ground

IV. Issues

A. MAIN ISSUE

B. SECONDARY ISSUES

Whether the proceeding for the issuance of a writ of possession is an "action", and whether the writ is a judgment on the merits within the meaning of the requisites of res judicata.

V. Ruling / Disposition

A. MAIN ISSUE

B. SECONDARY ISSUES

NO on both counts. "LRC Case No. 3067 (85) is not an action as defined by law," and "The issuance of a writ of possession is not a judgment on the merits."

"WHEREFORE, in view of the foregoing, the decision appealed from is hereby GRANTED. Civil Case No. 15495 is hereby REINSTATED. SO ORDERED."

In effect, the dismissal was set aside and the Makati action revived for trial on the merits.

VI. Ratio Decidendi and Doctrines

A. Ratio Decidendi

The Court measured the writ of possession against the four requisites of res judicata: "(a) the former judgment must be final; (b) the court which rendered it had jurisdiction over the subject matter and the parties; (c) the judgment must be on the merits; and (d) there must be between the first and second actions identity of parties, subject matter and causes of action."
It observed that "Although not explicitly stated, a basic requisite for res judicata to apply is that there are two cases which have been decided on the merits."
On the nature of the writ: "a writ of possession is generally understood to be an order whereby the sheriff is commanded to place a person in possession of a real or personal property, such as when a property is extra-judicially foreclosed," and "the issuance of a writ of possession to a purchaser in an extra-judicial foreclosure is merely a ministerial function."
Being ministerial, "the Court neither exercises its official discretion nor judgment" — and a court that does not judge cannot render a judgment on the merits.
The writ "is summary in nature, hence the same cannot be considered a judgment on the merits which is defined as one rendered after a determination of which party is right, as distinguished from a judgment rendered upon some preliminary or formal technical point."
The Court then held that LRC Case No. 3067 (85) "is not an action as defined by law." An action "is an act by which one sues another in a court of justice for the enforcement or protection of a right or the prevention or redress of a wrong" and "is commenced by filing a complaint with the Court"; but "in the procedure for the issuance of a writ of possession, no complaint is necessary, the filing of an ex parte motion being enough."
It added that "the term 'action' does not include non-judicial proceedings, although they are before a court, as in cases where the court does not act in a judicial capacity."
This followed the character of extrajudicial foreclosure itself, which "only requires the posting and publication of the notices to effect the same"; and "a proceeding to foreclose a mortgage by advertisement is not an action."
The Court closed with the governing limitation of the doctrine invoked: it "applies only to judicial or quasi-judicial proceedings and not to the exercise of administrative powers or to legislative, executive or ministerial determination," and "cases disposed of on technical grounds do not fall within the doctrine of res judicata."

B. Doctrines/Rules

Definition of a Writ of Possession: An order commanding the sheriff to place a party in possession of property, as where property has been extrajudicially foreclosed and the redemption period has lapsed.
Ministerial Issuance: Upon the purchaser's application after consolidation of title, issuance of the writ is ministerial; the court exercises neither discretion nor judgment.
Ex Parte and Summary: No complaint is required — a mere ex parte motion suffices — so the proceeding is not an "action" within the legal definition.
No Judgment on the Merits: A judgment on the merits is one rendered after determining which party is right; a summary, ministerial order is not such a judgment.
Limits of Res Judicata: The doctrine reaches only judicial and quasi-judicial determinations, never ministerial ones, and never dispositions resting on technical grounds.

C. Limitations/Exceptions

The holding is confined to the effect of the writ as a bar: it decides only that the writ raises no res judicata against the plenary suit.
The Court said nothing about the validity of the writ, the NHA's consolidated title, or AFRDC's claim to be an innocent purchaser for value — all of which were left to the reinstated case.
The ministerial character of the writ is itself subject to exceptions recognised in later jurisprudence, notably where a third party holds the property adversely to the judgment debtor.

D. Topic Integration

The relationship is DIRECT.
The case defines the writ of possession as an instrument for delivering possession de facto to one already entitled to it, sharply distinguishing it from any adjudication of ownership.
In the scheme of Article 428, the writ is the enforcement arm of the jus possidendi already established elsewhere — it presupposes the right rather than determines it.
That is precisely why it settles nothing and bars nothing: a mortgagor who claims the mortgage itself was void keeps his day in court, notwithstanding that he has already been put out of the property by the writ.

VII. Separate Opinions

NOT IN RECORD (Melo, Francisco and Panganiban, JJ., concurred; Narvasa, C.J., was on leave).