Teves vs. Integrated Credit & Corporate Services (Carol Aqui)

Posted Apr 4, 2018

By Anonymous

6 min read

Case Title and Citation

Spouses Godfrey and Ma. Teresa Teves, petitioners, vs. Integrated Credit & Corporate Services, Co. (now Carol Aqui), respondent.
G.R. No. 216714, April 4, 2018
Supreme Court - First Division
Ponente: DEL CASTILLO, J.

Facts

In 1996 Standard Chartered Bank extended loans to petitioners Godfrey and Ma. Teresa Teves; petitioners mortgaged their property covered by TCT No. 1075205 as security.
Petitioners defaulted. Standard extrajudicially foreclosed the mortgage; the property was sold to Integrated Credit & Corporate Services Co. (ICCS). The redemption period expired on May 23, 2007 and TCT No. T-188758 was issued in favor of ICCS.
ICCS filed a petition for issuance of a writ of possession (L.R.C. Rec. No. 9468 Case No. 12 Lot No. 32 Blk. 3) before Branch 16, RTC Cebu City. On September 7, 2009 the RTC issued a decision ordering issuance of a writ of possession in favor of ICCS.
In May 2010 ICCS was substituted by Carol Aqui, who appears to have acquired the property; a new title in Aqui’s name (TCT No. 107-2010001206) was issued.
On July 14, 2010 the RTC issued two orders:
- First Order: held granting a writ of possession is ministerial where procedural requisites are satisfied.
- Second Order: ordered petitioners to deliver or deposit with the court monthly rentals of ₱50,000 covering the period from May 24, 2007 until surrender of possession, finding petitioners had no right to collect rentals after redemption period lapsed.
Petitioners filed a Partial Motion for Reconsideration; on September 2, 2010 the RTC denied it, reiterating that the Compromise Agreement in Makati Civil Case No. 06-227 did not bind ICCS/Aqui and that as highest bidder ICCS was entitled to possession and rentals.
In Makati RTC Civil Case No. 06-227 (annulment of contract), petitioners and Standard entered into a Compromise Agreement; the Makati court issued a Judgment (Based on Compromise Agreement) on July 23, 2010, which included Standard’s waiver of deficiency claims. Petitioners surrendered possession to Aqui in September 2010.
Petitioners filed a Petition for Certiorari before the Court of Appeals (CA-G.R. SP. No. 05483) challenging the RTC orders; the CA dismissed the petition on March 28, 2014 as improperly brought via certiorari because the orders were final and appealable. The CA denied reconsideration on January 7, 2015.
Petitioners elevated the matter to the Supreme Court via petition for review on certiorari.

Issues

Can collection of back rentals be awarded in an ex parte application for writ of possession under Act No. 3135?
Are the orders dated July 14, 2010 and September 2, 2010 final orders and not interlocutory, thereby making certiorari under Rule 65 improper?

Ruling

Yes - The court may award rentals in proceedings for a writ of possession where the purchaser’s ownership and right to fruits have vested upon expiration of the redemption period; petitioners had no right to collect rents after May 23, 2007.
Yes - The challenged orders are final in nature and appealable; certiorari under Rule 65 is not the proper remedy when an appeal is available.

Reasoning / Ratio Decidendi

Ownership and fruits after redemption period: Upon expiration of the redemption period (May 23, 2007), ICCS became the owner and entitled to the fruits of the property. Section 32, Rule 39 of the Rules of Court provides that rents, earnings and income derived from property pending redemption belong to the judgment obligor only until the expiration of the period of redemption; after that period the purchaser is entitled to the rents. Precedent recognizes that a purchaser at foreclosure, upon consolidation of title and issuance of a new title, becomes the absolute owner entitled to possession and rents (citing cases including Powell v. Philippine National Bank and China Banking Corporation v. Spouses Lozada as discussed in the decision).
Procedural authority to award rentals: The RTC acted within its power under Section 6, Rule 135 of the Rules of Court, which permits courts to employ auxiliary writs, processes and suitable modes of proceeding necessary to carry into effect their jurisdiction. The Court explained that the land registration court’s limited-jurisdiction distinction was removed by PD No. 1529, and trial courts have authority to hear and determine questions arising from petitions after original registration.
Successor-in-interest and remittance: Aqui acquired the property in 2010 and thus is entitled to rents from the time she became owner; rentals collected from May 24, 2007 belonged to ICCS. The Supreme Court allowed Aqui, as successor-in-interest, to collect the award of rentals that pertain to ICCS with the obligation to remit them to ICCS.
Procedural irregularity overlooked for substantive justice: The RTC should have impleaded Aqui rather than allowed substitution, because ICCS had an outstanding claim for unremitted rentals. Nevertheless, the Supreme Court excused the procedural misstep to effectuate substantive rights, preferring correction of unjust enrichment over technical procedural defects.
On remedy: The CA correctly held that the orders were final and appealable; certiorari is not a substitute for an appeal when an adequate remedy exists. The Supreme Court denied the petition for review on certiorari and addressed the substantive correctness of the RTC’s orders.

Doctrine / Legal Principle

A purchaser at an extrajudicial foreclosure sale becomes absolute owner after the redemption period expires and is entitled to possession and to receive rents and fruits of the property.
Section 32, Rule 39 (renis/earnings pending redemption) governs entitlement to rents during redemption periods.
Section 6, Rule 135 empowers courts to employ suitable processes to effectuate jurisdiction and render substantial justice, including awarding ancillary reliefs necessary to prevent unjust enrichment.
Certiorari under Rule 65 is inappropriate where an appeal is available; remedies of appeal and certiorari are mutually exclusive.

Disposition

The petition is DENIED.
The RTC orders dated July 14, 2010 and September 2, 2010 stand. The award ordering petitioners to deliver or deposit the rentals remains effective. Carol Aqui, as ICCS’s successor-in-interest, is permitted to collect the award but must remit amounts that belong to ICCS for the period prior to her acquisition; she is entitled to rentals from the time she became owner.

Concurring / Dissenting Opinions

No separate dissenting or concurring opinions were filed. The decision lists concurrence by the other members of the Division: MARIA LOURDES P.A. SERENO (Acting Chairperson, on leave noted), TERESITA J. LEONARDO-DE CASTRO, FRANCIS H. JARDELEZ, and NOEL GIMENEZ TIJAM.

Significance / Notes

Confirms that purchasers at extrajudicial foreclosure who consolidate title after the redemption period are entitled to possession and rents; courts may order remittance of rents unlawfully collected by former owners.
Affirms the authority of trial courts (including land registration courts) to grant ancillary reliefs necessary to effectuate jurisdiction and prevent unjust enrichment, under Section 6, Rule 135 and PD No. 1529.
Reiterates the principle that certiorari is not an available remedy when appeal lies; parties must use the appellate route to challenge final orders.
Procedural lesson: substitution of parties should be handled properly (impleading vs. substitution) where original purchaser retains claims; nevertheless, substantive rights may be protected despite procedural errors.
Practical effect: buyers at foreclosure should enforce possession and rents through available remedial mechanisms; prior compromise agreements between debtor and foreclosing creditor do not automatically affect the rights of an intervening purchaser who is not a party to such compromise.

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