501 Phil. 516

FIRST DIVISION

[ G.R. No. 161882, July 08, 2005 ]

BUKIDNON DOCTORS' HOSPITAL, INC., PETITIONER, VS. METROPOLITAN BANK & TRUST CO., RESPONDENT.

DECISION

DAVIDE, JR., C.J.:

At issue in this petition for review on certiorari is whether a writ of possession is the proper remedy for evicting a mortgagor who became a lessee of the mortgaged properties after the mortgagee has consolidated ownership over the properties and was issued new certificates of title.

The facts are as follows:

Sometime in 1995, petitioner Bukidnon Doctors' Hospital, Inc., obtained a loan of P25 million from respondent Metropolitan Bank and Trust Company to be used for the construction of its hospital.  To secure this loan, the petitioner mortgaged six parcels of land located in Valencia, Bukidnon, covered by TCT Nos. T-52197, T-52198, T-52199, T-52200, T-52201, and T-52202 and registered in the name of Dr. Rene Sison and Rory P. Roque, President and Administrator, respectively, of the petitioner.  Upon petitioner's default in the payment of the loan, the mortgage was extrajudicially foreclosed and the mortgaged lots were sold in a public auction to respondent bank, being the sole and highest bidder.  The petitioner failed to redeem the properties within the period of redemption.  Forthwith, the respondent consolidated its ownership over the properties and was issued new certificates of title on 1 October 2001.[1]

Earlier, in a letter received by the respondent on 7 July 2001, the petitioner expressed its desire to continue staying in the subject premises so that the operation of the hospital erected thereon would not be disrupted.  For that purpose, the petitioner proposed to pay rent in the amount of  P100,000 per month for a period of, but not limited to, three years.[2]  On 17 December 2001, the respondent agreed to lease the properties but subject to the following terms: (1) the monthly rental would be P200,000 with a one month advance rental and a deposit equivalent to three months rental; (2) the effectivity of the lease contract would be from June 2001; and (3) the contract would be subject to review every six months.[3]  The terms finally agreed upon by the parties, as culled from respondent's letter to the petitioner of 30 May 2002, were (1) a monthly rental of P150,000, and (2) the effectivity of the lease contract in November 2001.[4]

In its letter of 16 July 2003, or approximately a year and eight months after the agreed effectivity date of the lease contract, the respondent asked the petitioner to vacate the leased premises within fifteen days.  The petitioner refused, invoking the subsisting lease agreement.

On 21 August 2003, the respondent filed with the Regional Trial Court (RTC) of Malaybalay City, Bukidnon, an Ex Parte Motion for a Writ of Possession.  The case was docketed as Misc. Case No. 735-03 and raffled to Branch 9 of that court.

On 17 November 2003, the trial court issued an order granting respondent's ex parte motion for a writ of possession.  The pertinent portion of the order reads as follows:
Since all the requirements or requisites for the issuance are present in this case, the court finds that it has no choice or other alternative but to issue the same, the duty of the Court being ministerial in character.  The respondent can ventilate all its defenses in a separate case that the respondent may file for that purpose'.

. . .

After the expiration of the period of redemption, a writ of possession can be demanded by a purchaser of the foreclosed property as a matter of right.  Even during the period of redemption, possession can be demanded provided a bond is posted in accordance with Section 7, Act No. 3135 (Vda. De Zaballero vs. CA, 229 SCRA 810).[5]
Its motion for reconsideration having been denied by the trial court in the Order of 23 January 2004,[6] the petitioner filed on 29 January 2004 (the day it received the denial order) a Notice of Appeal stating that it was appealing to the Court of Appeals on both questions of fact and law.[7]  Earlier, or on 27 November 2003, the petitioner filed with the trial court an action for specific performance, injunction, and damages, docketed as Civil Case No. 3312-03.[8]  Also, on 30 January 2004, the petitioner filed a petition for rehabilitation before the RTC of Cagayan de Oro City, Branch 18, docketed as Spec. Pro. Case No. 2004-019.

On 11 February 2004, before its Notice of Appeal could be acted upon by the trial court, the petitioner filed a Manifestation and Motion stating that due to the nature of the appeal that it intended to file, it was withdrawing the Notice of Appeal.[9]  Two days thereafter, or on 13 February 2004, which was the last day within which to appeal the 29 January 2004 Order, it filed with us a motion for extension of thirty days from the expiration of the reglementary period to file a petition for review on certiorari or until 14 March 2004.  We granted this motion for extension in our Resolution of 3 March 2004.  Then, on 4 March 2004, the petitioner instituted the instant petition for review on certiorari under Rule 45, in relation to Section 2(c) of Rule 41, of the Rules of Court, raising a single issue for our consideration, to wit:
WHETHER [OR] NOT THE COURT A QUO CORRECTLY RULED THAT RESPONDENT, A FORMER MORTGAGEE-BUYER, WAS STILL ENTITLED TO A WRIT OF POSSESSION AS A MATTER OF RIGHT AS PROVIDED UNDER ACT 3135, AS AMENDED, DESPITE A LEASE AGREEMENT BETWEEN ITSELF AND THE FORMER MORTGAGOR-SELLER EXECUTED AFTER RESPONDENT BECAME THE ABSOLUTE OWNER OF THE FORECLOSED PROPERTIES.[10]
In its Comment,[11] the respondent asserts that the petitioner is guilty of forum-shopping for having "gone to four different courts for the same relief."  Besides, by filing an ordinary appeal under Rule 41 of the Rules of Court, the petitioner had already waived its right to file a petition for review on certiorari under Rule 45, since the two modes of appeal are mutually exclusive and governed by different rules.  Pursuant to the principle of hierarchy of courts, the petitioner should have first filed the instant petition with the Court of Appeals, which has concurrent jurisdiction with the Supreme Court to resolve cases involving only questions of law.  As to the main issue, the respondent argues that as a purchaser in a valid extrajudicial foreclosure sale under Act No. 3135 and as the absolute owner of the subject parcels of land, it was entitled as a matter of right to the issuance of a writ of possession.  The subsequent "agreement to stay" between the parties did not negate respondent's right to take possession of the subject properties through a writ of possession.  In any event, the "agreement to stay" on the subject properties was deemed to be on a month-to-month basis, since the period therefor was not fixed.

The petitioner rebuts, in its Reply, respondent's arguments, contending that it did not shop for a favorable forum, since the three cases where it is either a defendant/oppositor or plaintiff/petitioner do not involve the same subject matter, causes of action, and parties.  Contrary to the claim of the respondent, it immediately withdrew by proper motion its notice of appeal in the trial court after realizing that the proper remedy was a petition for review on certiorari under Rule 45 of the Rules of Court, not a petition for review under Rule 42.  Rule 42 is not applicable to the case at bar because it is the Supreme Court that has jurisdiction over the petition as it involves a pure question of law pursuant to Section 2(c) of Rule 41 and Section 1 of Rule 45 of the Rules of Court.  Lastly, the trial court clearly erred in granting respondent's ex parte motion for a writ of possession because of the existence of a lease agreement between the parties, which was executed after the respondent consolidated its title to the subject properties.

In our Resolution of 2 August 2004, we gave due course to the petition and resolved to decide the case based on the pleadings already filed.[12]

On 17 December 2004, the respondent filed a Manifestation and Motion to Dismiss Petition.[13]  It brings to our attention petitioner's letter dated 3 November 2004 informing it that the petitioner had decided to close its hospital operations and to turn over the premises to the respondent on 30 November 2004 in view of the expiration of the lease agreement.  According to the respondent, petitioner's express and unequivocal recognition of the expiration of the alleged lease agreement and its act of turning over the possession of the subject property to the respondent had rendered the instant petition moot and academic.  The petitioner countered that the legal issue of whether a writ of possession may be issued despite the existence of a lease agreement must be resolved by this Court, since this issue may again arise as "banks continue to foreclose, seek possession and/or lease out the foreclosed premises to previous mortgagors."

Indeed, because of petitioner's act of surrendering the possession of the subject properties owing to the expiration of the lease agreement, the instant petition praying (1) for the reversal of the order for the issuance of a writ of possession and (2) for full possession by the petitioner of the subject properties was rendered moot and academic.  Nonetheless, for the guidance of the bench and the bar, we shall proceed to resolve the important issue of whether a writ of possession will lie to recover the material possession of previously mortgaged properties that have been leased to the mortgagor after the mortgagee consolidated its ownership over the properties.

However, we shall first take up the procedural issues raised by the respondent.

We are not convinced that the petitioner is guilty of forum- shopping.

Forum-shopping is an act of a party against whom an adverse judgment or order has been rendered in one forum of seeking and possibly getting a favorable opinion in another forum, other than by appeal or special civil action for certiorari.  It may also be the institution of two or more actions or proceedings grounded on the same cause on the supposition that one or the other court would make a favorable disposition.  The elements are as follows: (1) identity of parties, or at least such parties as would represent the same interest in both actions; (2) identity of rights asserted and relief prayed for, the relief being founded on the same facts; and (3) identity of the two preceding particulars such that any judgment in the other action, regardless of which party is successful, will amount to res judicata in the action under consideration.[14]

Before filing on 4 March 2004 the petition in this case, the petitioner had filed two other cases, namely, (1) an Action for Specific Performance, Injunction, and Damages with the RTC of Malaybalay City, docketed as Civil Case No. 3312-03 and (2) a Petition for Corporate Rehabilitation with the RTC of Cagayan de Oro City, docketed therein as S.P. Case No. 2004-019.  However, these two cases involve causes of action different from the one at bar.  In Civil Case No. 3312-03, the petitioner sought the enforcement of the lease contract between it and the respondent, with prayer for damages for the latter's breach of its contractual obligation.  In S.P. Case No. 2004-019, the petitioner prayed for rehabilitation pursuant to the Interim Rules on Corporation Rehabilitation.

Upon the other hand, in this case, the ex parte motion for a writ of possession was filed at the instance of the respondent.  When the motion was granted, the petitioner filed a notice of appeal to the Court of Appeals, which it later withdrew.  Thereafter, it appealed to us via Rule 45 of the Rules of Court questioning the propriety of the issuance of a writ of possession for the purpose of evicting the petitioner despite the lease agreement subsequently entered into by the parties after the expiration of the redemption period.  As can be clearly seen, the two cases and the appeal filed by the petitioner involved different causes of action.  Thus, the petitioner cannot be said to have engaged in forum-shopping.

Neither can the petitioner be deemed to have waived its right to file this petition.  Realizing that the remaining issue was a pure question of law, it withdrew its Notice of Appeal stating that it was appealing the 28 January 2002 Order on both questions of law and fact.  Section 9 of Rule 41 of the Rules of Court provides that prior to the transmittal of the original record, the court may allow withdrawal of the appeal.

Nothing in the Rules prevents a party from filing a petition under Rule 45 of the Rules of Court after seasonably withdrawing the Notice of Appeal as long as it is done within the reglementary period and the issue involved is purely one of law.  In this case it was before the lapse of the reglementary period to appeal that the petitioner withdrew its Notice of Appeal to the Court of Appeals and filed with us a motion for extension of time to file a petition under Rule 45 of the Rules of Court.  And the petition was filed within the extended period we granted, raising only one question of law.

Nor is there a violation of the doctrine of hierarchy of courts.  Section 2(c), Rule 41 of the Rules of Court categorically provides that in all cases where only questions of law are raised, the appeal from a decision or order of the Regional Trial Court shall be to the Supreme Court by petition for review on certiorari in accordance with Rule 45.  Section 2(c) of Rule 41 of the Rules of Court reads:
SEC. 2. Modes of appeal.

(a) Ordinary appeal. — The appeal to the Court of Appeals in cases decided by the Regional Trial Court in the exercise of its original jurisdiction shall be taken by filing a notice of appeal with the court which rendered the judgment or final order appealed from and serving a copy thereof upon the adverse party.  No record on appeal shall be required except in special proceedings and other cases of multiple or separate appeals where the law or these Rules so require.  In such cases, the record on appeal shall be filed and served in like manner.

(b) Petition for review. — The appeal to the Court of Appeals in cases decided by the Regional Trial Court in the exercise of its appellate jurisdiction shall be by petition for review in accordance with Rule 42.

(c) Appeal by certiorari. — In all cases where only questions of law are raised or involved, the appeal shall be to the Supreme Court by petition for review on certiorari in accordance with Rule 45.
Section 1 of Rule 45 provides:
SECTION 1. Filing of petition with Supreme Court. — A party desiring to appeal by certiorari from a judgment or final order or resolution of the Court of Appeals, the Sandiganbayan, the Regional Trial Court or other courts whenever authorized by law, may file with the Supreme Court a verified petition for review on certiorari. The petition shall raise only questions of law which must be distinctly set forth.
A question of law exists when the doubt or controversy concerns the correct application of law or jurisprudence to a certain set of facts; or when the issue does not call for an examination of the probative value of the evidence presented, the truth or falsehood of facts being admitted.  A question of fact exists when the doubt or difference arises as to the truth or falsehood of facts or when the query invites calibration of the whole evidence considering mainly the credibility of the witnesses, the existence and relevancy of specific surrounding circumstances, as well as their relation to each other and to the whole, and the probability of the situation.[15]

As earlier stated, the only issue raised in this petition is  "whether [or] not the court a quo correctly ruled that respondent, a former mortgagee-buyer, was still entitled to a writ of possession as a matter of right as provided under act 3135, as amended, despite a lease agreement between itself and the former mortgagor-seller executed after respondent became the absolute owner of the foreclosed properties."

This question is undoubtedly one of law.  The existence of a lease agreement between the parties, which is a question of fact, ceased to be an issue in view of the admission thereof by both the petitioner and the respondent.[16]  Thus, with only a question of law raised in this petition, direct resort to this Court is proper.

In sum, the petition at bar is not tainted with any of the procedural errors attributed to it by the respondent.

We shall now consider the issue of the propriety of the issuance of a writ of possession in favor of the respondent.

The law[17] and jurisprudence[18] are clear that in extrajudicial foreclosure proceedings, an order for a writ of possession issues as a matter of course, upon proper motion, after the expiration of the redemption period without the mortgagor exercising the right of redemption, or even during the redemption period provided a bond is posted to indemnify the debtor in case the foreclosure sale is shown to have been conducted without complying with the requirements of the law or without the debtor violating the mortgage contract.[19] The rationale for the ministerial issuance of a writ of possession is to put the foreclosure buyer in possession of the property sold without delay, since the right to possession is founded on ownership of the property.[20]

However, in the instant case, a writ of possession was not the correct remedy for the purpose of ousting the petitioner from the subject premises.  It must be noted that possession is the holding of a thing or the enjoyment of a right.[21]  It is acquired by the material occupation of a thing or the exercise of a right, or by the fact that a thing or right is subject to the action of one's will, or by the proper acts and legal formalities established for acquiring such right.[22] "By material occupation of a thing," it is not necessary that the person in possession should be the occupant of the property; the occupancy can be held by another in his name.[23] Thus Articles 524 and 525 of the Civil Code provide:
Art. 524. Possession may be exercised in one's own name or in that of another.

Art. 525. The possession of things or rights may be had in one of two concepts: either in the concept of owner, or in that of the holder of the thing or right to keep or enjoy it, the ownership pertaining to another person.
In other words, an owner of a real estate has possession, either when he himself is physically occupying the property, or when another person who recognizes his rights as owner is occupying it.

In the case at bar, it is not disputed that after the foreclosure of the property in question and the issuance of new certificates of title in favor of the respondent, the petitioner and the respondent entered into a contract of lease of the subject properties.  This new contractual relation presupposed that the petitioner recognized that possession of the properties had been legally placed in the hands of the respondent, and that the latter had taken such possession but delivered it to the former as lessee of the property.  By paying the monthly rentals, the petitioner also recognized the superior right of the respondent to the possession of the property as owner thereof.  And by accepting the monthly rentals, the respondent enjoyed the fruits of its possession over the subject property.[24]  Clearly, the respondent is in material possession of the subject premises. Thus, the trial court's issuance of a writ of possession is not only superfluous, but improper under the law.  Moreover, as a lessee, the petitioner was a legitimate possessor of the subject properties under Article 525 of the Civil Code.  Thus, it could not be deprived of its lawful possession by a mere ex parte motion for a writ of possession.

Apropos to this case is Banco de Oro Savings and Mortgage Bank v. Court of Appeals.[25]  There, the spouses Nery were not able to redeem the property they mortgaged to the bank; hence, the latter was able to consolidate the title to the property in its name.  The Nerys requested the bank for more time to repurchase the subject property, obligating themselves to pay monthly rentals or reasonable compensation for the continued occupation of the premises on the ground that they had leased portions of the building to tenants.  Since neither the Nerys nor their tenants vacated the subject premises nor paid reasonable compensation for the use thereof, the bank instituted three separate ejectment suits against them before the Metropolitan Trial Court of Parañaque.  The Nerys argued that the proper remedy that should have been taken by the bank as mortgagee was to obtain a writ of possession and not an action for ejectment.  We rejected Nerys' argument and ruled that it was proper for the bank to sue for ejectment.  Thus:
The Nerys forget, however, that they had asked the Bank for a grace period within which to repurchase the mortgaged property and to be allowed to pay monthly rentals or reasonable compensation for the use of the premises. In fact, they did pay rentals for several months. Their continued stay in the property was thereby converted to one by tolerance or permission. "A person who occupies the land of another at the latter's tolerance or permission, without any contract between them, is necessarily bound by an implied promise that he will vacate upon demand, failing which, a summary action for ejectment is proper against him" (Dakudao v. Consolacion, L-54573, 24 June 1983, 112 SCRA 877). The Nerys refused to vacate upon demand, the last of which was made by letter, dated 25 July 1984, as found by the Trial Court, and not 9 September 1983 as the Nerys allege. An ejectment suit, therefore, was proper, with the legally prescribed period to institute the same having been complied with.

Significantly, too, with the consolidation of title in the Bank, it had become the owner of the subject premises. As such, it could bring an action for ejectment to obtain possession and occupation. Thus, Section 1, Rule 70 provides "an action for unlawful detainer may be brought by a landlord, vendor, vendee, or other person against whom the possession of any land or building is unlawfully withheld after the expiration or termination of the right to hold possession xxx."

It is indeed, correct that in ordinary extra-judicial foreclosure cases, the mortgagee's remedy is to apply for a Writ of Possession. As already intimated, however, the stay of the Nerys in the premises had been converted to one by permission with a corresponding commitment to pay rentals. An implied lease was thereby treated between the parties. "Where the question relates to the relation between landlord and tenant, the nature of the lease premises involved, the reasonableness of the rentals demanded, the right or lack of right of the tenant to continue occupying the premises against the will of the landlord, the applicability of the rental law, etc., a case for ejectment is proper. (Commander Realty, Inc., vs. Court of Appeals, L-77227, 9 May 1988, 161 SCRA 264). Notably, too, there were other tenants in the premises who were not privy to the foreclosure proceedings but had to be rejected as well. (emphasis ours)[26]
In a nutshell, where a lease agreement, whether express or implied, is subsequently entered into by the mortgagor and the mortgagee after the expiration of the redemption period and the consolidation of title in the name of the latter, a case for ejectment or unlawful detainer, not a motion for a writ of possession, is the proper remedy in order to evict from the questioned premises a mortgagor-turned-lessee.  The rationale for this rule is that a new relationship between the parties has been created.  What applies is no longer the law on extrajudicial foreclosure, but the law on lease.  And when an issue arises, as in the case at bar, regarding the right of the lessee to continue occupying the leased premises, the rights of the parties must be heard and resolved in a case for ejectment or unlawful detainer under Rule 70 of the Rules of Court.

WHEREFORE, the petition is hereby GRANTED.  The Orders of the Regional Trial Court of Malaybalay City, Bukidnon, Branch 9, in Misc. Case. No. 735-03 dated 17 November 2003 and 23 January 2004, are hereby REVERSED and SET ASIDE.

No pronouncement as to costs.

SO ORDERED.

Quisumbing, Ynares-Santiago, and Azcuna, JJ., concur.
Carpio, J., on official leave.



[1] Rollo, 13, 52-57, 170-171.

[2] Id., 72.

[3] Id., 73-74.

[4] Id., 75.

[5] Rollo, 80-81.

[6] Id., 41.

[7] Id., 203.

[8] Id., 205-222.

[9] Id., 308.

[10] Rollo, 18.

[11] Id., 176-177.

[12] Rollo, 312.

[13] Id., 353.

[14] GSIS v. Bengson Commercial Buildings, Inc., 426 Phil. 111 (2002); Santos v. COMELEC, G.R. No. 155618, 26 March 2003, 399 SCRA 611, 619.

[15]  Republic v. Sandiganbayan, G.R. No. 102508, 30 January 2002, 375 SCRA 145.

[16] Rollo, 79-80.

[17] Act No. 3135, as amended by Act. No. 4118, entitled An Act to Regulate the Sale of Property under Special Powers Inserted in or Annexed to Real Estate Mortgages.

[18] Philippine National Bank v. Adil, 203 Phil. 492(1982); F. David Enterprises v. Insular Bank of Asia and America, G.R. No. 78714, 21 November 1990, 191 SCRA 516; Vda. de Zaballero v. Court of Appeals, G.R. No. 106958, 9 February 1994, 229 SCRA 810.

[19] Section 7, Act No. 3135, as amended.

[20] The purchaser of the property sold at public auction is entitled to the aid of the court in effecting its delivery the reason being that upon the expiration of the redemption period (or confirmation of sale) the ownership of the property is transferred to him (Barrameda v. Gontang,  125 Phil. 787 [1967]).

[21] Article 523, Civil Code.

[22] Id.

[23] Repide v. Astar, 2 Phil. 757 (1902); Alo v. Rocamora, 6 Phil. 197 (1906); Luna v. Court of Appeals, G.R. No. 94490, 6 August 1992, 212 SCRA 276; Reyes v. Court of Appeals, 374 Phil. 236 (1999).

[24] The respondent admitted (1) the existence of the lease agreement, arguing only that it was on a month-to-month basis and not for three years, and (2) the fact that it accepted rental payments from the petitioner in the amount of P150,000 per month from November 2001, the effectivity date of the lease contract ( Rollo, 80).

[25] G.R. No. 85448, 21 February 1990, 182 SCRA 464.

[26] Supra, at 469.



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