G.R. No. 168523 ; March 9, 2011
Spouses Fernando and Angelina Edralin, Petitioners, vs. Philippine Veterans Bank, Respondent.

FACTS

Respondent Philippine Veterans Bank (Veterans Bank) granted petitioners Spouses Fernando and Angelina Edralin (Edralins) a loan secured by a Real Estate Mortgage (REM) over a property registered under TCT No. 204889. The Edralins defaulted. Veterans Bank extrajudicially foreclosed the mortgage on September 8, 1983, emerged as the highest bidder, and the Certificate of Sale was registered on October 25, 1983. After the Edralins failed to redeem, Veterans Bank consolidated ownership, and TCT No. 204889 was cancelled and replaced with TCT No. 78332 in the bank’s name on February 3, 1994. The Edralins refused to vacate. Veterans Bank filed an Ex-Parte Petition for a Writ of Possession (LRC No. 96-060) in 1996, which was dismissed for failure to prosecute. In 2003, Veterans Bank filed another Ex-Parte Petition (LRC No. 03-0121). The Edralins moved to dismiss on grounds of res judicata, which the RTC denied. However, the RTC dismissed the petition in its Order dated November 8, 2004, citing two reasons: (1) Paragraph (d) of the REM granted the bank the power to take possession without judicial intervention, making a judicial writ redundant and a violation of the contract; and (2) the bank’s right to seek possession had prescribed, supposedly within 10 years from February 24, 1983. The RTC denied reconsideration in an Order dated January 28, 2005. Veterans Bank filed a Petition for Mandamus with the Court of Appeals, which granted the petition, annulled the RTC orders, and directed the issuance of the writ of possession. The Edralins elevated the case to the Supreme Court via a Petition for Review on Certiorari.

ISSUE

Whether the Court of Appeals correctly annulled the RTC orders and directed the issuance of a writ of possession in favor of Veterans Bank.

RULING

Yes, the Court of Appeals is correct. The Supreme Court denied the Edralins’ petition and affirmed the CA Decision.
1. On the Contractual Argument (Paragraph (d) of the REM): The RTC erred in holding that the contractual stipulation in paragraph (d) barred Veterans Bank from seeking a judicial writ of possession. A writ of possession is a remedy grounded in law, specifically Act No. 3135 , as amended, and is not a contractual right. The contractual appointment of the mortgagee as attorney-in-fact to take possession is a separate, additional remedy that does not preclude the bank from availing itself of the judicial remedy provided by statute. The right to possess follows the right of ownership. Since Veterans Bank had consolidated its title and was the registered owner under TCT No. 78332, it was entitled to a writ of possession as a matter of right. The issuance of such a writ is a ministerial duty of the court once the foreclosure sale is confirmed and title is consolidated in the purchaser’s name.
2. On Prescription: The RTC’s finding that the right to seek possession prescribed in 10 years is erroneous. An action for a writ of possession is an action for recovery of real property. Under Article 555(4) of the Civil Code, the possession of a real right holder (like a registered owner) is deemed to have continued from the time the right was created. Veterans Bank’s right as owner was created upon registration of the consolidation of ownership and the issuance of TCT No. 78332 on February 3, 1994. An action for recovery of possession based on ownership, where the owner has been deprived of possession, prescribes in 10 years (from the time the cause of action accrues) under Article 555 in relation to Article 1141 of the Civil Code. However, the cause of action accrues from the date of demand to vacate and the owner’s deprivation of possession. The bank’s filing of the petition in 2003 was well within this prescriptive period. More fundamentally, the right to a writ of possession after consolidation of title does not prescribe. The purchaser at a foreclosure sale who has consolidated ownership is entitled to possession as an incident of that ownership, and the court’s duty to issue the writ is ministerial and imprescriptible.
The Supreme Court held that the Court of Appeals correctly granted the writ of mandamus. The RTC committed grave abuse of discretion in dismissing the ex-parte petition based on an erroneous interpretation of the contract and an unfounded ruling on prescription. The bank, as the confirmed owner, is entitled to possession as a matter of right.