GR 101632; (January, 1997) (Digest)
G.R. No. 101632. January 13, 1997.
Government Service Insurance System, petitioner, vs. Hon. Court of Appeals and Philippine Village Hotel, Inc., respondents.
FACTS
Philippine Village Hotel, Inc. (PVHI) obtained substantial loans from the Government Service Insurance System (GSIS), secured by mortgages on its hotel properties. After PVHI defaulted, GSIS initiated foreclosure proceedings. The Presidential Commission on Good Government (PCGG) subsequently sequestered PVHI’s assets. PVHI attempted to enjoin the foreclosure in the Sandiganbayan, but the court ultimately denied the injunction after the PCGG interposed no objection. The foreclosure sale proceeded, and GSIS was the winning bidder.
GSIS then filed an ex-parte petition for a writ of possession in the Pasay City RTC (LRC Case No. 3079). The court granted the writ. PVHI, in response, filed a separate petition in the same Pasay RTC to set aside the foreclosure sale, alleging full payment of the obligation and procedural infirmities. The Pasay RTC dismissed this petition for annulment, ruling it lacked jurisdiction because the issues pertained to the validity of the mortgage and foreclosure, which should be litigated in a regular civil action, not as an incident in the land registration case for possession.
ISSUE
Whether the Regional Trial Court, acting as a land registration court in an ex-parte proceeding for a writ of possession, has jurisdiction to entertain a separate petition to annul the foreclosure sale filed in the same case.
RULING
No. The Supreme Court affirmed the Court of Appeals’ ruling that the Pasay RTC correctly dismissed PVHI’s petition to annul the foreclosure sale for lack of jurisdiction. The Court explained the distinct nature of the proceedings. An ex-parte petition for a writ of possession under Act No. 3135, filed as an incident in the land registration case, is a summary proceeding. Its sole purpose is to place the purchaser in possession of the property after a confirmed foreclosure sale. The court in such a proceeding exercises limited jurisdiction and cannot delve into questions regarding the validity of the mortgage or the foreclosure itself, which involve substantive issues requiring a full-blown trial.
These substantive issues, such as whether the debt had been paid or if the foreclosure was procedurally defective, must be raised in a separate ordinary civil action for the annulment of the mortgage or foreclosure sale. To allow their adjudication in the summary possession proceeding would violate the fundamental principle that a land registration court, in a petition for a writ of possession, cannot entertain matters beyond the ministerial duty of issuing the writ. Therefore, the Pasay RTC properly dismissed PVHI’s petition to set aside the sale, without prejudice to PVHI’s right to file an appropriate independent civil action to litigate the validity of the foreclosure.