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Jetri Construction Corp. v. Bank of the Philippine Islands

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

Jetri Construction Corp. v. Bank of the Philippine Islands

Case Decision Date

G.R. No. 171687 June 8, 2007

The case involves a petition for review of a Court of Appeals (CA) resolution that dismissed an appeal due to a procedural lapse—the failure to file an appellant’s brief—in an action concerning the issuance of a writ of possession. The underlying controversy arose after petitioner Jetri Construction Corporation (Jetri) defaulted on a loan secured by a real estate mortgage, leading to an extrajudicial foreclosure where the respondent bank emerged as the highest bidder. Despite Jetri's pending suit for the annulment of the mortgage foreclosure, the Regional Trial Court (RTC) issued a writ of possession in favor of the bank, a decision the Supreme Court affirmed.

Core Doctrine

The central doctrine is that the issuance of a writ of possession to a purchaser in an extrajudicial foreclosure sale is a ministerial function of the court that becomes a matter of right after the consolidation of title in the buyer's name; consequently, any challenge to the validity of the mortgage or the regularity of the foreclosure sale cannot serve as a legal ground to refuse the issuance of said writ and must instead be threshed out in a separate, subsequent proceeding.

Case Digest (G.R. No. 171687)

Case DigestChapter II — Ownership

Jetri Construction Corp. v. Bank of the Philippine Islands

G.R. No. 171687 · June 8, 2007 · Supreme Court

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

Gist

The case involves a petition for review of a Court of Appeals (CA) resolution that dismissed an appeal due to a procedural lapse—the failure to file an appellant’s brief—in an action concerning the issuance of a writ of possession. The underlying controversy arose after petitioner Jetri Construction Corporation (Jetri) defaulted on a loan secured by a real estate mortgage, leading to an extrajudicial foreclosure where the respondent bank emerged as the highest bidder. Despite Jetri's pending suit for the annulment of the mortgage foreclosure, the Regional Trial Court (RTC) issued a writ of possession in favor of the bank, a decision the Supreme Court affirmed.

Core Doctrine

The central doctrine is that the issuance of a writ of possession to a purchaser in an extrajudicial foreclosure sale is a ministerial function of the court that becomes a matter of right after the consolidation of title in the buyer's name; consequently, any challenge to the validity of the mortgage or the regularity of the foreclosure sale cannot serve as a legal ground to refuse the issuance of said writ and must instead be threshed out in a separate, subsequent proceeding.

Facts

  • In 1994, petitioner Jetri Construction Corporation applied for and was granted a ₱20,000,000.00 credit facility by Far East Bank and Trust Company (the predecessor-in-interest of respondent Bank of the Philippine Islands BPI), securing the loan with a mortgage over a parcel of land (TCT No. 213950) and a 4-storey building in Sampaloc, Manila.
  • Jetri eventually defaulted on its loan obligations, prompting the bank to initiate extrajudicial foreclosure proceedings under Act No. 3135.
  • In 1999, a public auction was held where the bank was the highest bidder; the certificate of sale was thereafter registered and annotated on the title.
  • The one-year redemption period expired without Jetri exercising its right to redeem the property.
  • Ownership was consolidated in favor of the bank, and a new certificate of title (TCT No. 250654) was issued in its name.
  • On August 28, 2001, BPI filed a deficiency suit (Civil Case No. 01-1336) against Jetri in the RTC of Makati.
  • Jetri subsequently filed two complaints: one for the annulment of the mortgage foreclosure and quieting of title (Civil Case No. 04-111298 in RTC Manila), and another for estafa against BPI’s managing officers.
  • On August 15, 2003, BPI filed a Petition for the Issuance of Writ of Possession in the RTC of Manila because Jetri refused to vacate the premises.
  • On February 28, 2005, the RTC of Manila, Branch IV, issued an order granting the writ of possession, ruling that any question on the sale's validity must be determined in a subsequent proceeding.
  • Jetri appealed to the Court of Appeals, but on November 17, 2005, the CA dismissed the appeal because Jetri failed to file its appellant's brief within the reglementary period.
  • Jetri elevated the matter to the Supreme Court via the instant petition for review, which was decided on June 8, 2007.

Issue

Whether a pending suit for the annulment of an extrajudicial foreclosure sale can bar the issuance of a writ of possession in favor of a purchaser who has already consolidated title and obtained a new certificate of title.
Secondary issues. Whether the issuance of a writ of possession§ to a purchaser§ in an extrajudicial foreclosure sale is a discretionary or a ministerial act of the trial court.

Ruling

Main issue. NO — a pending annulment suit is no bar to the writ. Once the redemption period expires unredeemed, "the purchaser of the property has the right to be placed in possession thereof," and Jetri did not redeem, so the bank's right became absolute. A pending action to annul the mortgage or the foreclosure is "not a legal ground for refusing the issuance of a writ of possession": under Section 8 of Act No. 3135 any question about the regularity and validity of the sale "is to be determined in a subsequent proceeding," so the writ issues without prejudice to the outcome of that case.
Secondary issues. Ministerial. The trial court exercises no discretion at all. Under Section 7 of Act No. 3135, as amended by Act No. 4118, "the order for a writ of possession issues as a matter of course... No discretion is left to the court," and "after the consolidation of title in the buyer's name for failure of the mortgagor to redeem the property, the writ of possession becomes a matter of right." During the redemption year the purchaser must post an indemnity bond to take possession; once the year passes unredeemed, even that falls away.
"WHEREFORE, premises considered, the instant petition is hereby DENIED. The Resolution of the Court of Appeals in CA-G.R. CV No. 84788 dismissing petitioner's appeal for failure of appellant to file its appellant's brief within the reglementary period despite notice is hereby AFFIRMED. Costs against petitioner.".

Ratio

  • The Court's reasoning is anchored on the summary and ministerial nature of the writ of possession under Act No. 3135, as amended by Act No. 4118.
  • The Court held that "after the redemption period has expired, the purchaser of the property has the right to be placed in possession thereof".
  • Because Jetri failed to redeem the property within the one-year period, the bank’s right to possession became absolute.
  • The Court clarified that the trial court exercises no discretion in these proceedings.
  • Under Section 7 of Act No. 3135, the "order for a writ of possession issues as a matter of course... No discretion is left to the court".
  • Furthermore, the Court emphasized that a pending suit for annulment of the mortgage or the foreclosure itself is "not a legal ground for refusing the issuance of a writ of possession".
  • The determination of the validity of the foreclosure sale is properly left to the court where the annulment case was filed, and cannot be raised as a justification to oppose the summary ex parte issuance of the writ.

Doctrine

  1. Ministerial Duty: The issuance of a writ of possession to a purchaser in a public auction after the consolidation of title is a purely ministerial function of the trial court.
  2. Matter of Right: "After the consolidation of title in the buyer's name for failure of the mortgagor to redeem the property, the writ of possession becomes a matter of right".
  3. Separation of Proceedings: "Any question regarding the regularity and validity of the sale, as well as the consequent cancellation of the writ, is to be determined in a subsequent proceeding" as provided in Section 8 of Act No. 3135.
  4. Effect of Redemption Expiry: Under Rule 39§, Section 35 of the Rules of Court, if no redemption is made within twelve months, the purchaser is entitled to a conveyance and possession of the property.
  5. Indemnity Bond Requirement: During the one-year redemption period, a purchaser can obtain possession by filing an indemnity bond; however, after the period expires without redemption, the right is absolute and possession may be obtained without a bond.
The Court noted that while the purchaser is entitled to the writ regardless of pending suits, this is "without prejudice of course to the eventual outcome of the said case" for annulment. If the foreclosure is later found invalid, the writ may be cancelled in that subsequent proceeding.

Full Digest — Recitation Format

I. Gist and Central Doctrine

Relationship to requested topic: DIRECT. The case involves a petition for review of a Court of Appeals (CA) resolution that dismissed an appeal due to a procedural lapse—the failure to file an appellant’s brief—in an action concerning the issuance of a writ of possession. The underlying controversy arose after petitioner Jetri Construction Corporation (Jetri) defaulted on a loan secured by a real estate mortgage, leading to an extrajudicial foreclosure where the respondent bank emerged as the highest bidder. Despite Jetri's pending suit for the annulment of the mortgage foreclosure, the Regional Trial Court (RTC) issued a writ of possession in favor of the bank, a decision the Supreme Court affirmed. The central doctrine is that the issuance of a writ of possession to a purchaser in an extrajudicial foreclosure sale is a ministerial function of the court that becomes a matter of right after the consolidation of title in the buyer's name; consequently, any challenge to the validity of the mortgage or the regularity of the foreclosure sale cannot serve as a legal ground to refuse the issuance of said writ and must instead be threshed out in a separate, subsequent proceeding.

II. Chronological Narration of Material Facts

  • In 1994, petitioner Jetri Construction Corporation applied for and was granted a ₱20,000,000.00 credit facility by Far East Bank and Trust Company (the predecessor-in-interest of respondent Bank of the Philippine Islands BPI), securing the loan with a mortgage over a parcel of land (TCT No. 213950) and a 4-storey building in Sampaloc, Manila.
  • Jetri eventually defaulted on its loan obligations, prompting the bank to initiate extrajudicial foreclosure proceedings under Act No. 3135.
  • In 1999, a public auction was held where the bank was the highest bidder.
  • The certificate of sale was thereafter registered and annotated on the title.
  • The one-year redemption period expired without Jetri exercising its right to redeem the property.
  • Ownership was consolidated in favor of the bank, and a new certificate of title (TCT No. 250654) was issued in its name.
  • On August 28, 2001, BPI filed a deficiency suit (Civil Case No. 01-1336) against Jetri in the RTC of Makati.
  • Jetri subsequently filed two complaints: one for the annulment of the mortgage foreclosure and quieting of title (Civil Case No. 04-111298 in RTC Manila), and another for estafa against BPI’s managing officers.
  • On August 15, 2003, BPI filed a Petition for the Issuance of Writ of Possession in the RTC of Manila because Jetri refused to vacate the premises.
  • On February 28, 2005, the RTC of Manila, Branch IV, issued an order granting the writ of possession, ruling that any question on the sale's validity must be determined in a subsequent proceeding.
  • Jetri appealed to the Court of Appeals, but on November 17, 2005, the CA dismissed the appeal because Jetri failed to file its appellant's brief within the reglementary period.
  • Jetri elevated the matter to the Supreme Court via the instant petition for review, which was decided on June 8, 2007.

III. Arguments of the Parties

A. Petitioner (Jetri Construction Corp.)

Petitioner argued that the RTC committed an error in issuing the writ of possession because the validity of the foreclosure sale was being contested in a separate pending suit. They maintained that the alleged nullity of the extrajudicial foreclosure sale served as a legitimate ground to attack the propriety of the writ's issuance.

B. Respondent (BPI)

Respondent maintained that as the purchaser who had consolidated title after the expiration of the redemption period, its right to possession was absolute. They argued that the issuance of the writ was a purely ministerial function and that pending suits questioning the mortgage do not bar such issuance.

C. Common Ground

The parties do not dispute that the property was foreclosed, that the redemption period expired without redemption being made, and that a new title was issued in the bank's name.

IV. Issues

A. MAIN ISSUE

Whether a pending suit for the annulment of an extrajudicial foreclosure sale can bar the issuance of a writ of possession in favor of a purchaser who has already consolidated title and obtained a new certificate of title.

B. SECONDARY ISSUES

Whether the issuance of a writ of possession to a purchaser in an extrajudicial foreclosure sale is a discretionary or a ministerial act of the trial court.

V. Ruling / Disposition

A. MAIN ISSUE

NO — a pending annulment suit is no bar to the writ. Once the redemption period expires unredeemed, "the purchaser of the property has the right to be placed in possession thereof," and Jetri did not redeem, so the bank's right became absolute. A pending action to annul the mortgage or the foreclosure is "not a legal ground for refusing the issuance of a writ of possession": under Section 8 of Act No. 3135 any question about the regularity and validity of the sale "is to be determined in a subsequent proceeding," so the writ issues without prejudice to the outcome of that case.

B. SECONDARY ISSUES

Ministerial. The trial court exercises no discretion at all. Under Section 7 of Act No. 3135, as amended by Act No. 4118, "the order for a writ of possession issues as a matter of course... No discretion is left to the court," and "after the consolidation of title in the buyer's name for failure of the mortgagor to redeem the property, the writ of possession becomes a matter of right." During the redemption year the purchaser must post an indemnity bond to take possession; once the year passes unredeemed, even that falls away.
"WHEREFORE, premises considered, the instant petition is hereby DENIED. The Resolution of the Court of Appeals in CA-G.R. CV No. 84788 dismissing petitioner's appeal for failure of appellant to file its appellant's brief within the reglementary period despite notice is hereby AFFIRMED. Costs against petitioner.".

VI. Ratio Decidendi and Doctrines

A. Ratio Decidendi

  • The Court's reasoning is anchored on the summary and ministerial nature of the writ of possession under Act No. 3135, as amended by Act No. 4118.
  • The Court held that "after the redemption period has expired, the purchaser of the property has the right to be placed in possession thereof".
  • Because Jetri failed to redeem the property within the one-year period, the bank’s right to possession became absolute.
  • The Court clarified that the trial court exercises no discretion in these proceedings.
  • Under Section 7 of Act No. 3135, the "order for a writ of possession issues as a matter of course... No discretion is left to the court".
  • Furthermore, the Court emphasized that a pending suit for annulment of the mortgage or the foreclosure itself is "not a legal ground for refusing the issuance of a writ of possession".
  • The determination of the validity of the foreclosure sale is properly left to the court where the annulment case was filed, and cannot be raised as a justification to oppose the summary ex parte issuance of the writ.

B. Doctrines/Rules

  1. Ministerial Duty: The issuance of a writ of possession to a purchaser in a public auction after the consolidation of title is a purely ministerial function of the trial court.
  2. Matter of Right: "After the consolidation of title in the buyer's name for failure of the mortgagor to redeem the property, the writ of possession becomes a matter of right".
  3. Separation of Proceedings: "Any question regarding the regularity and validity of the sale, as well as the consequent cancellation of the writ, is to be determined in a subsequent proceeding" as provided in Section 8 of Act No. 3135.
  4. Effect of Redemption Expiry: Under Rule 39§, Section 35 of the Rules of Court, if no redemption is made within twelve months, the purchaser is entitled to a conveyance and possession of the property.
  5. Indemnity Bond Requirement: During the one-year redemption period, a purchaser can obtain possession by filing an indemnity bond; however, after the period expires without redemption, the right is absolute and possession may be obtained without a bond.

C. Limitations/Exceptions

  • The Court noted that while the purchaser is entitled to the writ regardless of pending suits, this is "without prejudice of course to the eventual outcome of the said case" for annulment.
  • If the foreclosure is later found invalid, the writ may be cancelled in that subsequent proceeding.

D. Topic Integration

  • The relationship is DIRECT.
  • This case serves as a definitive authority for the Writ of Possession as a specific remedy for the Recovery of Real Property.
  • It distinguishes this ministerial writ from plenary possessory actions like accion publiciana by establishing that a registered owner (via foreclosure) has an immediate, summary path to physical possession that cannot be obstructed by substantive litigation over the underlying contract, thereby preserving the utility of the mortgage system.

VII. Separate Opinions

NOT IN RECORD (Unanimous decision by the Third Division).

Cited Laws & Provisions

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

Implementing Rules

Section 33, Rule 39, Rules of Court

Deed and possession to be given at expiration of redemption period; by whom executed or given

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

If no redemption be made within one (1) year from the date of the registration of the certificate of sale, the purchaser is entitled to a conveyance and possession of the property; or, if so redeemed whenever sixty (60) days have elapsed and no other redemption has been made, and notice thereof given, and the time for redemption has expired, the last redemptioner is entitled to the conveyance and possession; but in all cases the judgment obligor shall have the entire period of one (1) year from the date of the registration of the sale to redeem the property. The deed shall be executed by the officer making the sale or by his successor in office, and in the latter case shall have the same validity as though the officer making the sale had continued in office and executed it.

Upon the expiration of the right of redemption, the purchaser or redemptioner shall be substituted to and acquire all the rights, title, interest and claim of the judgment obligor to the property as of the time of the levy. The possession of the property shall be given to the purchaser or last redemptioner by the same officer unless a third party adversely to the judgment obligor. (35a)

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 purchaser's entitlement, and the word that decides the case is ministerial.

"If no redemption be made within one (1) year from the date of the registration of the certificate of sale, the purchaser is entitled to a conveyance and possession of the property."

Once the redemption period lapses and title consolidates, possession follows as a matter of right. Issuing the writ is therefore a ministerial function: the court verifies that the sale happened, that the period ran, and that title consolidated — and then it must issue. It exercises no discretion and weighs no equities.

Two consequences follow, and both surprise litigants.

Pending questions about the validity of the mortgage or the foreclosure do not suspend the writ. Those are litigated in a separate action; a purchaser is not kept out of the property while they are.

And an injunction will not lie against it, because the purchaser's right is precisely the kind of clear, existing right that Rule 58 protects rather than restrains — which is the other side of Idolor.

Civil Code

Article 2085, Civil Code

Civil Code of the Philippines (R.A. No. 386), Book IV (Obligations and Contracts), Title XVI (Pledge, Mortgage and Antichresis), Chapter 1 (Provisions Common to Pledge and Mortgage)

The following requisites are essential to the contracts of pledge and mortgage:

(1) That they be constituted to secure the fulfillment of a principal obligation;

(2) That the pledgor or mortgagor be the absolute owner of the thing pledged or mortgaged;

(3) That the persons constituting the pledge or mortgage have the free disposal of their property, and in the absence thereof, that they be legally authorized for the purpose.

Third persons who are not parties to the principal obligation may secure the latter by pledging or mortgaging their own property. (1857)

Why it is cited here

Why the consolidated purchaser's position is so strong: the mortgage was constituted by an absolute owner with free disposal, so it was a valid disposition of the property from the outset.

Foreclosure is the mortgage doing exactly what the parties agreed it would do on default. The purchaser at the sale therefore takes what the mortgagor's own act put on the block, and after consolidation he holds ownership rather than a contested claim.

Set against Idolor, the two cases are one story from opposite ends: the mortgagor loses his right when the period expires, and at the same moment the purchaser's becomes absolute.

Study digest — refer to the full text of the decision for accuracy. https://lawphil.net/judjuris/juri2007/jun2007/gr_171687_2007.html

Cited laws & provisions

Section 33, Rule 39, Rules of Court

Implementing Rules

Deed and possession to be given at expiration of redemption period; by whom executed or given

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

If no redemption be made within one (1) year from the date of the registration of the certificate of sale, the purchaser is entitled to a conveyance and possession of the property; or, if so redeemed whenever sixty (60) days have elapsed and no other redemption has been made, and notice thereof given, and the time for redemption has expired, the last redemptioner is entitled to the conveyance and possession; but in all cases the judgment obligor shall have the entire period of one (1) year from the date of the registration of the sale to redeem the property. The deed shall be executed by the officer making the sale or by his successor in office, and in the latter case shall have the same validity as though the officer making the sale had continued in office and executed it.

Upon the expiration of the right of redemption, the purchaser or redemptioner shall be substituted to and acquire all the rights, title, interest and claim of the judgment obligor to the property as of the time of the levy. The possession of the property shall be given to the purchaser or last redemptioner by the same officer unless a third party adversely to the judgment obligor. (35a)

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 purchaser's entitlement, and the word that decides the case is ministerial.

"If no redemption be made within one (1) year from the date of the registration of the certificate of sale, the purchaser is entitled to a conveyance and possession of the property."

Once the redemption period lapses and title consolidates, possession follows as a matter of right. Issuing the writ is therefore a ministerial function: the court verifies that the sale happened, that the period ran, and that title consolidated — and then it must issue. It exercises no discretion and weighs no equities.

Two consequences follow, and both surprise litigants.

Pending questions about the validity of the mortgage or the foreclosure do not suspend the writ. Those are litigated in a separate action; a purchaser is not kept out of the property while they are.

And an injunction will not lie against it, because the purchaser's right is precisely the kind of clear, existing right that Rule 58 protects rather than restrains — which is the other side of Idolor.

Full entry below ↓

Article 2085, Civil Code

Civil Code

Civil Code of the Philippines (R.A. No. 386), Book IV (Obligations and Contracts), Title XVI (Pledge, Mortgage and Antichresis), Chapter 1 (Provisions Common to Pledge and Mortgage)

The following requisites are essential to the contracts of pledge and mortgage:

(1) That they be constituted to secure the fulfillment of a principal obligation;

(2) That the pledgor or mortgagor be the absolute owner of the thing pledged or mortgaged;

(3) That the persons constituting the pledge or mortgage have the free disposal of their property, and in the absence thereof, that they be legally authorized for the purpose.

Third persons who are not parties to the principal obligation may secure the latter by pledging or mortgaging their own property. (1857)

Why it is cited here

Why the consolidated purchaser's position is so strong: the mortgage was constituted by an absolute owner with free disposal, so it was a valid disposition of the property from the outset.

Foreclosure is the mortgage doing exactly what the parties agreed it would do on default. The purchaser at the sale therefore takes what the mortgagor's own act put on the block, and after consolidation he holds ownership rather than a contested claim.

Set against Idolor, the two cases are one story from opposite ends: the mortgagor loses his right when the period expires, and at the same moment the purchaser's becomes absolute.

Full entry below ↓