Edralin v. Veterans Bank (G.R. No. 168523; March 9, 2011)


FACTS: Veterans Bank granted petitioner spouses Fernando and Angelina Edralin (Edralins) a loan in the amount of P270,000.00.As security thereof, petitioners executed a Real Estate Mortgage (REM) in favor of Veterans Bank over a real property situated in Paraque and registered in the name of petitioner Fernando Edralin. The Edralins failed to pay their obligation to Veterans Bank.Thus,on June 28, 1983, Veterans Bank filed a Petition for Extrajudicial Foreclosure. Veterans Bank emerged as the highest bidder at the said foreclosure sale and was issued the corresponding Certificate of Sale. Upon the Edralins failure to redeem the property during the one-year period provided under Act No. 3135, Veterans Bank acquired absolute ownership of the subject property.Consequently, Veterans Bank caused the consolidation of ownership of the subject property in its name.

Despite the foregoing, the Edralins failed to vacate and surrender possession of the subject property to Veterans Bank. Veterans Bank filed an ex-parte petition for issuance of a writ of possession. The trial court found no merit in the Veterans Banks application.It explained that, under paragraph (d) of the REM, the Veterans Bank agreed to take possession of the Edralins property without any judicial intervention.The court held that granting the writ of possession to the Veterans Bank will violate the contractual agreement of the parties. It also held that, assuming the contract allowed for the issuance of a writ of possession, Veterans Banks right to seek possession had already prescribed.Upon denial of a motion for reconsideration, Veterans Bank to file a Petition for Mandamus with Prayer for Issuance of a Preliminary Mandatory Injunction before the CA, which was granted, thus this petition for review by the Edralins.

Is mandamus the proper remedy
Is Veterans Bank entitled to a writ of possession?

HELD: First issue: According to Section 7 of Act No. 3135, as amended by Act No. 4118, during the period of redemption, the mortgagee is entitled to a writ of possession upon depositing the approved bond.When the redemption period expires without the mortgagor exercising his right of redemption, the mortgagor is deemed to have lost all interest over the foreclosed property, and the purchaser acquires absolute ownership of the property. With the consolidated title, the purchaser becomes entitled to a writ of possession and the trial court has the ministerial duty to issue such writ of possession. Thus, the remedy of mandamus lies to compel the performance of this ministerial duty.Second issue: Petitioners argue that Veterans Bank is not entitled to a writ of possession because it failed to properly consolidate its title over the subject property, and that the deed of sale issued by the bank in its own favor constitutes a pactum commissorium. They also argue that the period for filing for a petition for the issuance of a writ of possession has prescribed.

The elements of pactum commissorium, which enable the mortgagee to acquire ownership of the mortgaged propertywithout the need of any foreclosure proceedings, are: (1) there should be a property mortgaged by way of security for the payment of the principal obligation, and (2) there should be a stipulation for automatic appropriation by the creditor of the thing mortgaged in case of non-payment of the principal obligation within the stipulated period. The second element is missing here. That Veterans Bank went through all the stages of extrajudicial foreclosure indicates that there was no pactum commissorium.

In addition, the purchasers right to request for the issuance of the writ of possession of the land never prescribes, as already established by jurisprudence. The right to possess a property merely follows the right of ownership, and it would be illogical to hold that a person having ownership of a parcel ofland is barred from seeking possession thereof. DENIED.