Mandy Commodities Co., Inc. vs. The International Commercial Bank of China

1. Case Title and Citation

Mandy Commodities Co., Inc., petitioner, vs. The International Commercial Bank of China, respondent.
G.R. No. 166734, July 3, 2009
Supreme Court - Third Division
Ponente: Del Castillo, J.

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1. Facts

• On July 17, 1996 and December 17, 1996, petitioner Mandy Commodities Co., Inc., through its authorized representative William Mandy, obtained loans totaling ₱20,000,000.00 from respondent The International Commercial Bank of China (ICBC).
• The loans were secured by two deeds of chattel mortgage over twenty-five (25) units of two-storey concrete buildings in Binondo, Manila. The buildings were owned by petitioner; the land was leased from PNB-Management and Development Corporation.
• On the date of the first deed, the parties executed an agreement stipulating that the buildings were to be considered “as chattels” and subject to chattel mortgage; the deeds and agreement were registered with the Chattel Mortgage Registry of Manila.
• Petitioner defaulted. On February 26, 1999, respondent applied before a notary public for an extrajudicial sale pursuant to paragraph 18 of the chattel mortgage, which granted broad power of attorney to the mortgagee to sell without notice.
• The sale was scheduled for March 26, 1999. Notice of Extrajudicial Sale was posted March 1, 1999 at the Register of Deeds of Manila, Office of the Ex Officio Sheriff, and the Regional Trial Court of Manila; the notice was published in The Philippine Recorder on March 1, 8 and 15, 1999.
• At the sale respondent was the highest bidder (₱25,435,716.89). On April 12, 1999 the notary issued a Certificate of Sale in respondent’s name, noting the sale was “subject to petitioner’s right of redemption.”
• On May 17, 1999 respondent filed an Ex Parte Petition for the Issuance of a Writ of Possession Pending Redemption in the Regional Trial Court of Manila, Branch 4, invoking provisions of Act No. 3135 (The Real Estate Mortgage Law), particularly Section 7, entitling possession pending redemption upon approval of bond.
• On September 7, 1999 the trial court approved respondent’s bond of ₱600,000.00 and granted the petition for a writ of possession pending redemption. A writ of possession dated December 10, 2001 directed the sheriff to place respondent in possession; the sheriff served a notice to vacate on petitioner.
• Petitioner filed a motion for reconsideration before the trial court; it was denied in an order dated January 16, 2001. Petitioner filed a Rule 45 petition with this Court (G.R. No. 146929), which was dismissed for violation of hierarchy of courts.
• Petitioner then filed a Rule 47 petition for annulment with the Court of Appeals; the CA gave due course, issued a temporary restraining order, and after hearing denied relief and affirmed the trial court order by Decision dated August 30, 2002; reconsideration was denied.
• Petitioner filed the present petition for certiorari under Rule 65, contending the foreclosure sale was governed by Act No. 1508 (The Chattel Mortgage Law) and thus the sale and issuance of possession under Act No. 3135 were void; petitioner argued the CA abused its discretion in affirming the trial court.
• Respondent’s rights were later assigned to ROP Investments, Limited — Philippine Branch, which was permitted substitution as respondent in the case.

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1. Issues

2. Should the writ of possession issued pursuant to the trial court’s September 7, 1999 Order be annulled on the ground that the mortgage was governed by Act No. 1508 (Chattel Mortgage Law) and not by Act No. 3135 (Real Estate Mortgage Law)?
3. Did the Court of Appeals commit grave abuse of discretion amounting to lack or excess of jurisdiction in affirming the trial court’s issuance of the writ of possession?

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1. Ruling

2. No - The petition for annulment/certiorari is the wrong remedy to attack the trial court’s order; errors alleged are correctible by appeal and do not establish absolute lack of jurisdiction.
3. No - Petitioner failed to show grave abuse of discretion amounting to lack or excess of jurisdiction by the Court of Appeals; dismissal of the Rule 47 petition was proper.

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1. Reasoning / Ratio Decidendi

• The Court held that a petition for annulment under Rule 47 is an extraordinary, equitable remedy available only when ordinary remedies (new trial, appeal, petition for relief) can no longer be pursued through no fault of the petitioner. The grounds for Rule 47 relief are limited to lack of jurisdiction and extrinsic fraud (Rules of Court, Rule 47, Sec. 2).
• Lack of jurisdiction for Rule 47 purposes is confined to absolute lack of jurisdiction over the person or subject matter, not mere errors in the exercise of jurisdiction or abuse of discretion. Alleged procedural or substantive errors in arriving at an order do not equate to absence of jurisdiction. (See Morales v. Subic Shipyard & Engineering, Inc.; Ramos v. Hon. Judge Combong Jr.; Republic v. “G” Holdings, Inc.; Tolentino v. Leviste.)
• The trial court acquired jurisdiction over the application for a writ of possession upon filing and, where the law vests the power to act, the duty to issue the writ is essentially ministerial. Errors in procedure or judgment are correctible by ordinary appeal, not Rule 47 annulment. (See Oliveros v. Presiding Judge; Chailease Finance Corp. v. Ma; Samson v. Rivera.)
• A writ of possession pending redemption granted under Act No. 3135 is a final order from which an appeal is the proper remedy. Petitioner’s choice of annulment (Rule 47) and later certiorari (Rule 65) were improper because appeal under Rule 45 was available. (See San Fernando Rural Bank, Inc. v. Pampanga Omnibus Development Corporation.)
• Certiorari under Rule 65 is an extraordinary remedy and cannot substitute for a lost appeal; to obtain a writ the petitioner must show capricious or whimsical exercise of judgment amounting to lack or excess of jurisdiction. Mere allegations of error or procedural irregularity are insufficient. (See Alba v. Court of Appeals; Linzag v. Court of Appeals; Tagle v. Equitable PCI Bank; San Fernando Rural Bank, Inc.)
• Petitioner also failed to timely appeal the Court of Appeals’ denial of reconsideration (received September 21, 2004) and thus cannot now invoke certiorari to cure the lapse. The Court of Appeals’ dismissal of the Rule 47 petition was within its discretion and not shown to be gravely abusive.

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1. Doctrine / Legal Principle

• Rule 47 relief is extraordinary and limited to absolute lack of jurisdiction or extrinsic fraud; it does not supplant ordinary appellate remedies.
• Errors in the exercise of jurisdiction or errors of judgment do not convert a proceeding into one lacking jurisdiction for purposes of annulment.
• Certiorari under Rule 65 is an extraordinary remedy reserved for cases of grave abuse of discretion amounting to lack or excess of jurisdiction; it is not a substitute for an appeal.
• Where jurisdiction over the subject matter is properly acquired, the trial court’s duty to act on an application for writ of possession is ministerial; alleged procedural irregularities are remedied by appeal.

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1. Disposition

• The petition for certiorari under Rule 65 is DISMISSED.
• The Court of Appeals’ August 30, 2002 Decision and September 3, 2004 Resolution affirming the trial court’s September 7, 1999 Order are upheld.
• The trial court’s writ of possession pending redemption remains in effect; the proceedings related to the extrajudicial sale and possession were not annulled by this Court.

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1. Concurring / Dissenting Opinions

• No separate concurring or dissenting opinions were filed; the decision was rendered by the Third Division with concurrence noted.

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1. Significance / Notes

• Reinforces the limited scope of Rule 47 annulment petitions: available only for absolute lack of jurisdiction or extrinsic fraud; procedural or substantive errors are not sufficient.
• Confirms that certiorari under Rule 65 cannot be used to remedy a lost or forfeited appeal; parties must timely pursue available appellate remedies.
• Affirms that where a court properly acquires jurisdiction over an application (including writs of possession), issuance of such writ is ministerial and errors in procedure are corrected by appeal.
• Illustrates procedural consequences when parties select inappropriate remedies and fail to timely appeal adverse rulings.