Manalo vs. Court of Appeals

A motion to intervene in a proceeding for the issuance of a writ of possession under Act No. 3135 must be filed before rendition of judgment; after the trial court has granted the writ, intervention is untimely and will be disallowed, especially when the intervenor’s claimed interest is derived from a mortgagor who no longer holds any right over the property due to the expiration of the redemption period.

S. Villanueva Enterprises, through its president Therese Villanueva Vargas, secured loans from respondent PAIC Savings and Mortgage Bank and Philippine American Investments Corporation in 1983. The loans were secured by a joint first mortgage over two parcels of land, including a 919-square-meter property in Pasay City. The mortgage contract covered all existing and future improvements on the property. After default and unsuccessful demands, the bank extrajudicially foreclosed the mortgage, emerged as the highest bidder, and caused the annotation of the Sheriff’s Certificate of Sale on December 4, 1984. No redemption was made within the one-year statutory period. Title was consolidated in the bank’s name. Subsequently, the Central Bank filed a petition for assistance in the liquidation of PAIC Bank, which was granted. Vargas attempted to repurchase the property but failed. Her action to annul the mortgage and foreclosure sale was dismissed with finality by the trial and appellate courts, and the Supreme Court denied her tardy appeal. Meanwhile, the bank, as consolidated owner, petitioned for a writ of possession in the Regional Trial Court of Pasay City. During the pendency of that petition, Vargas sold the property to Armando Angsico and later leased a portion to petitioner Domingo Manalo for a ten-year period with a right to introduce improvements. Angsico subsequently assigned his rights to Manalo.

• The Loan, Mortgage, and Foreclosure: In 1983, S. Villanueva Enterprises, represented by Therese Villanueva Vargas, obtained loans from respondent PAIC Savings and Mortgage Bank and Philippine American Investments Corporation totaling P4,000,000. To secure both debts, Vargas executed a Joint First Mortgage over two parcels of registered land, including a 919-square-meter lot in Pasay City. The mortgage extended to all buildings and improvements existing or subsequently introduced on the property. After default and repeated demands, respondent extrajudicially foreclosed the mortgage. At the public auction on August 22, 1984, respondent tendered the highest bid and purchased the Pasay City property. The Sheriff’s Certificate of Sale was annotated on the title on December 4, 1984.

• Consolidation of Title and Liquidation: Vargas failed to redeem the property within the one-year statutory period. Title was consolidated in respondent’s name. On October 29, 1986, the Central Bank filed a petition for assistance in liquidation of PAIC Bank, which the RTC granted in an Order dated May 19, 1987. Between 1986 and 1991, Vargas negotiated with the bank’s liquidator to repurchase the foreclosed property but could not meet the appraised price. Vargas thereafter filed a complaint for annulment of mortgage and extrajudicial foreclosure sale before the Pasay City RTC; the case was dismissed on July 22, 1993, a ruling affirmed by the Court of Appeals and eventually final after the Supreme Court dismissed her petition for late filing.

• Vargas’s Subsequent Transactions and the Bank’s Petition for Writ of Possession: On June 22, 1992, respondent bank petitioned the Pasay City RTC (Branch 112) for a writ of possession (Civil Case No. 9011). During its pendency, Vargas executed a Deed of Absolute Sale on December 23, 1992, transferring the disputed property to Armando Angsico. Despite that sale, Vargas, still representing herself as owner, leased a 450-square-meter portion of the property to petitioner Domingo Manalo on August 25, 1994, for a ten-year period. The lease authorized Manalo to construct a one-story building for a karaoke music restaurant, with the improvement to be surrendered to the lessor upon termination. On June 29, 1997, Angsico assigned his rights over the property to Manalo.

• Issuance of the Writ and Attempts to Intervene: On April 21, 1998, the RTC granted respondent’s petition for a writ of possession, and the writ issued on April 24, 1998. The writ commanded the sheriff to cause Vargas, S. Villanueva Enterprises, and all persons claiming rights under them to vacate and surrender the premises. Vargas and S. Villanueva Enterprises moved to quash the writ on May 8, 1998. On June 25, 1998, Manalo filed an Ex-parte Permission to File Motion to Intervene, anchoring his interest on the lease contract and the deed of assignment. Before seeking intervention, Manalo had separately filed a Complaint for Mandamus (Civil Case No. 98-0868) with another branch of the Pasay City RTC to compel PAIC Bank to allow him to repurchase the property. The RTC denied both the motion to quash and the motion to intervene on October 7, 1998, and denied reconsideration on December 9, 1998.

• Subsequent Lease with the Bank: While the certiorari petition was pending before the Court of Appeals, Manalo entered into a short-term lease agreement with respondent bank over the same 450-square-meter portion, for a one-month period renewable at the lessor’s option.

• Intervention: Petitioner argued that he had a legal interest in the subject matter as a lessee in possession and assignee of the buyer, having introduced substantial improvements worth P15,000,000. He maintained that enforcing the writ without hearing him would result in injustice.

• Jurisdiction: Petitioner contended that the petition for a writ of possession should have been filed before the liquidation court, asserting that Section 29 of the Central Bank Act vests exclusive jurisdiction over all matters concerning an insolvent bank in that court. He argued that filing the petition in a regular court constituted forum shopping.

• Capacity to Sue: Petitioner claimed that respondent bank, being under liquidation, was a “dead” corporation without legal capacity to maintain the suit or obtain the writ.

• Prejudicial Question: Petitioner insisted that Civil Case No. 98-0868 (the mandamus case to compel the bank to accept his redemption price of P18,000,000) presented a prejudicial question that should suspend the writ of possession, as a ruling in his favor would negate the bank’s possessory right.

• Estoppel and Redemption Right: Petitioner argued that his act of entering into a lease contract with respondent bank should not affect his right to redeem the property.

• Intervention: Respondent maintained that the motion to intervene was properly denied because it was filed after judgment had been rendered, would unduly delay the execution of the writ, and the intervenor’s alleged rights could be fully ventilated in a separate proceeding.

• Jurisdiction: Respondent countered that the writ of possession was not a claim against the insolvent bank but an action by the bank to preserve its asset; therefore, the exclusive jurisdiction of the liquidation court did not apply. The proper venue under Act No. 3135 is the court where the property is located.

• Capacity to Sue: Respondent argued that a bank under liquidation retains its juridical personality and may sue and be sued through its liquidator, as expressly authorized by Section 29 of the Central Bank Act.

• Prejudicial Question: Respondent submitted that the mandamus case was filed after the writ had already been granted and could not retroactively affect a final and executory ministerial order; moreover, both cases being civil in nature precluded the application of the prejudicial question doctrine.

• Intervention: Whether the Court of Appeals committed grave abuse of discretion in affirming the denial of petitioner’s motion to intervene.

• Jurisdiction: Whether the Regional Trial Court of Pasay City had jurisdiction over the petition for a writ of possession despite the pendency of liquidation proceedings before another court.

• Capacity to Sue: Whether respondent bank, as an insolvent entity under liquidation, possessed legal capacity to petition for and obtain the writ of possession.

• Prejudicial Question: Whether the pending complaint for mandamus before another branch of the Pasay City RTC constituted a prejudicial question that barred enforcement of the writ.

• Estoppel and Redemption: Whether petitioner’s subsequent lease with respondent bank estopped him from questioning the bank’s ownership or otherwise affected his alleged right of redemption.

• Intervention: The denial of intervention was proper and did not constitute grave abuse of discretion. Intervention under Rule 19 of the 1997 Rules of Civil Procedure is not a matter of right; the court must consider whether the intervenor has a legal interest and whether intervention will unduly delay or prejudice the original parties. Here, petitioner’s motion to intervene was filed on June 25, 1998, after the RTC had already rendered judgment by granting the petition for a writ of possession on April 21, 1998 and issuing the writ on April 24, 1998. Section 2, Rule 19 requires that a motion to intervene be filed before rendition of judgment. The pendency of a motion to quash filed by Vargas did not change the character of the order as an adjudication on the merits. Allowing intervention at that stage would only delay the writ’s execution, to respondent’s prejudice. Moreover, the writ of possession had become a matter of right upon consolidation of title, and its issuance was ministerial. Petitioner’s possessory interest was derived from Vargas, who lost all rights over the property upon the expiration of the redemption period on December 4, 1985. Vargas could no longer legally convey any interest to Angsico or lease the property to petitioner. One cannot transmit what one does not have. Petitioner’s rights, if any, could be fully protected in the separate mandamus action.

• Jurisdiction: The RTC validly exercised jurisdiction. Section 29 of Republic Act No. 265 (the Central Bank Act) vests exclusive jurisdiction in the liquidation court only over “claims against the bank.” The object is to prevent a multiplicity of suits against the insolvent institution and to ensure orderly liquidation. The petition for a writ of possession is not a claim against the bank but an action initiated by the bank itself to protect and recover its asset. Section 7 of Act No. 3135 explicitly provides that the purchaser may petition the court of the province or place where the property is situated to obtain possession. The property being in Pasay City, the RTC of that city properly took cognizance. No forum shopping occurred because respondent filed only one action for a writ of possession.

• Capacity to Sue: A bank ordered closed by the Monetary Board retains its juridical personality and may sue and be sued through its liquidator. The third paragraph of Section 29 of the Central Bank Act authorizes the liquidator to “institute such actions as may be necessary in the appropriate court to collect and recover accounts and assets” of the institution. Respondent was therefore legally capacitated to petition for the writ.

• Prejudicial Question: No prejudicial question existed. A prejudicial question generally applies when a civil action and a criminal action are both pending, and an issue in the civil case must be resolved first because it is determinative of the accused’s guilt or innocence. Both cases here were civil. Moreover, Civil Case No. 98-0868 was filed only on May 7, 1998, after the RTC had already granted respondent’s petition and issued the writ. A subsequently filed action cannot prejudice a decided case. The two cases involve different issues — one concerns the right to possess after consolidation of title, the other concerns an alleged right to repurchase — and can proceed independently. Issuance of a writ of possession may not be stayed by a pending action for annulment of mortgage or foreclosure, much less by a belated mandamus complaint.

• Estoppel and Redemption: The possible legal implication of the lease contract on petitioner’s claimed right of redemption was not resolved. The question of whether the lease constituted a waiver of the right to redeem or an acknowledgment of respondent’s title was left for the court handling the mandamus case, as that forum was the most appropriate to determine the matter fully.

• Intervention is not a matter of right; it is addressed to the sound discretion of the court. — A motion to intervene must show a legal interest in the matter in litigation, and the court must assess whether intervention will unduly delay or prejudice the rights of the original parties and whether the intervenor’s rights may be fully protected in a separate proceeding. The motion must be filed before rendition of judgment; after judgment, intervention is no longer allowed because the remedy is ancillary and supplemental to an existing litigation, not an independent action.

• Writ of possession after consolidation is ministerial. — Upon consolidation of title in the purchaser’s name following the expiration of the redemption period in an extrajudicial foreclosure, the purchaser’s right to a writ of possession becomes a matter of right. The court exercises no discretion or judgment in issuing it; the function is purely ministerial. Consequently, injunction does not lie to prohibit its issuance, and it may not be stayed by a pending action for annulment of mortgage or foreclosure.

• Exclusive jurisdiction of the liquidation court under Section 29 of the Central Bank Act covers only claims against the insolvent bank. — The provision aims to prevent multiplicity of suits and ensure orderly liquidation by requiring all adjudications of disputed claims against the bank to be filed in the liquidation proceeding. It does not apply to actions filed by the bank to collect and recover its accounts and assets; the liquidator is expressly authorized to institute such actions in the appropriate court.

• A mortgagor loses all rights over the foreclosed property upon expiration of the redemption period. — Under Section 78 of the General Banking Act (R.A. No. 337, as amended) and Section 6 of Act No. 3135, the mortgagor may redeem the property within one year from the date of the extrajudicial sale. After that period, all interests are extinguished. Any subsequent conveyance or lease by the former mortgagor transfers no right or title, as one cannot give what one does not have (nemo dat quod non habet).

• “In the first place, petitioner’s Ex-parte Permission to File a Motion to Intervene was submitted to the RTC only on June 25, 1998. At that stage, the lower court had already granted respondent's petition for the writ in an Order dated April 21, 1998. It had issued the Writ of Possession on April 24, 1998. Petitioner's motion then was clearly out of time, having been filed only at the execution stage. For that reason alone, it must meet the consequence of denial.”

• “Allowing petitioner to intervene, furthermore, will serve no other purpose but to unduly delay the execution of the writ, to the prejudice of the respondent. This cannot be countenanced considering that after the consolidation of title in the buyer's name, for failure of the mortgagor to redeem, the writ of possession becomes a matter of right. Its issuance to a purchaser in an extrajudicial foreclosure is merely a ministerial function.”

• “Petitioner cannot validly predicate his supposed interest over the property in litigation on that of Vargas, for the simple reason that as early as December 4, 1985, the latter has already been stripped of all her rights over the land when she, as mortgagor, failed to redeem it. … It is axiomatic that one can not transmit what one does not have.”

• “The exclusive jurisdiction of the liquidation court pertains only to the adjudication of claims against the bank. It does not cover the reverse situation where it is the bank which files a claim against another person or legal entity.”

• Valenzuela v. Court of Appeals, 168 SCRA 623 (1988) — Distinguished. It held that all claims against an insolvent bank must be filed in the liquidation proceeding. Here, the action was not a claim against the bank but by the bank, hence outside the exclusive jurisdiction rule.

• Big Country Ranch Corporation v. Court of Appeals, 227 SCRA 161 (1993) — Followed. It outlined the dual considerations for intervention: legal interest and the absence of undue delay or prejudice, as well as the availability of another remedy.

• Ong v. Court of Appeals, 253 SCRA 105 (1996) — Cited. It explained that the requirement of filing claims against an insolvent bank in the liquidation proceeding is meant to prevent multiplicity of actions and to establish due process and orderliness.

• Vaca v. Court of Appeals, 234 SCRA 146 (1994) — Followed. The issuance of a writ of possession to a purchaser in an extrajudicial foreclosure is a ministerial function.

• Union Bank v. Court of Appeals, 311 SCRA 795 (1999) — Followed. A mortgagor has one year to redeem; after lapse of the period, all interests are lost.

• Section 29, Republic Act No. 265 (The Central Bank Act, as amended, now Section 30 of R.A. No. 7653) — The liquidator shall file a petition in the Regional Trial Court for assistance in liquidation; the court shall have jurisdiction to adjudicate disputed claims against the bank and to enforce individual liabilities. The provision limits the liquidation court’s exclusive jurisdiction to claims against the bank and authorizes the liquidator to institute actions to collect and recover assets. Applied to hold that the bank’s petition for a writ of possession was validly filed in the RTC of the property’s location, not the liquidation court.

• Act No. 3135 (as amended by Act No. 4118), Sections 6 and 7 — Section 6 grants the debtor or successors-in-interest a one-year redemption period after the extrajudicial sale. Section 7 vests jurisdiction over a petition for a writ of possession in the Court of First Instance (now Regional Trial Court) of the province or place where the property is situated. Applied to affirm the RTC’s jurisdiction and to underscore that the writ becomes a matter of right upon consolidation.

• Section 78, Republic Act No. 337 (General Banking Act, as amended) — The mortgagor has the right to redeem the foreclosed property within one year from the sale. Applied to establish that Vargas’s right of redemption and all interests in the property were extinguished by December 1985.

• Rule 19, Sections 1 and 2, 1997 Rules of Civil Procedure — Section 1 governs who may intervene and the factors courts must consider (legal interest, delay, prejudice, availability of separate remedy). Section 2 requires that the motion to intervene be filed before rendition of judgment. Applied to uphold the denial of intervention as untimely and otherwise improper.

Davide, Jr., C.J., Pardo, and Ynares-Santiago, JJ., concurred. Kapunan, J., on official leave.