Town and Country v.

Quisimbing

Facts:
-There is no dispute that petitioner obtained loans in the sum of P12M from respondent Metrobank.
Petitioner executed a Deed of REM to secure the loans over 20 parcels of land registered in its
name.
-Petitioner failed to pay, thus, respondent bank caused the REM to be extrajudicially foreclosed and
an auction was held. Respondent bank was the highest bidder.
-Petitioner refused to turn over the lands to respondent Bank. Thus, respondent bank filed for a writ
of possession.
-However, petitioner filed for a declaration of suspension of payments before the same court (RTC
Cavite).
-Petitioner then filed a motion to suspend the proceedings in the previous case which was granted.
-Respondent bank filed petition for certiorari before the CA.
-The CA directed respondent judge to continue the previous case (writ of possession case) and
eventually to issue the required writ of possession in favor of respondent bank.
-Aggrieved, petitioner filed an appeal but was denied. CA ruled that, as purchaser of the foreclosed
properties, respondent bank was entitled to the writ of possession.
- In the meantime, petitioner discovered that its certificates of titles were already cancelled as of
June 26, 2003. Maintaining that the transfers of titles were void, petitioner filed a motion to bring
back the titles in its name. They argued that the transferring of titles to respondent bank
amounted to contempt. This was denied.
- Insisting that the transfers of titles to respondent bankw as violative of the Stay Order, petitioner
filed a petition for review before the CA but was dismissed for lack of merit on the ground that
respondent bank was already the owner thereof. More so, the CA took appropriate note of the fact
that Metrobank’s ownership of the foreclosed properties was considered consolidated since
petitioner failed to exercise right of redemption. Considering also that the decision had already
attained finality, the CA ruled that the determinations therein already amounted to res judicata.

ISSUES:

1.) Whether or not the granting of the Writ of Possession by the RTC in favor of Metrobank is
valid, in as much as the Stay Order issued by the SEC in the rehabilitation proceeding to the TCEI.

2.) Whether or not the register of deeds to transfer the titles in the name of Metrobank with
respect to the stay order issued to the petitioner is valid.

RULING:

1.) Yes, the granting of the Writ of Possession is valid because the properties under the Deed of
Real Estate Mortgage are no longer within the scope of the corporate rehabilitation proceeding.

The purpose of corporate rehabilitation is to enable an insolvent company to gain a new lease on
life and eventually pay its loans. To allow this to happen, a stay order is issued to defer all present
claims against the company until the time of its projected recovery. In this case, however,
Metrobank had already acquired ownership over the mortgaged parcels of land when TCEI started
its petition for corporate rehabilitation. No doubt Metrobank acquired ownership over the
properties when TCEI failed to redeem these within the three-month period prescribed by Section
47 of Republic Act 8791.

It does not matter, then, if Metrobank only had the certificate of sale registered before the Deed
of Registry a couple of months later, and had consolidated its ownership over a year later. "The
mortgagor loses all interest over the foreclosed property after the expiration of the redemption
period and the purchaser becomes the absolute owner thereof when no redemption is made."

Thus, having acquired ownership of the said properties, Metrobank can simply file an ex-parte
motion for issuance of the writ of possession - "the issuance of which has been held to be a
ministerial function which cannot be hindered by an injunction or an action for the annulment of
the mortgage or the foreclosure itself." There is an exception to this rule, however, and that is
where the property is held by a third party claiming a right adverse to that of the judgment debtor.
But, on the other hand, the rehabilitation receiver's claim is far from adverse. He is an officer of
the court who is appointed to protect the interests of TCEI's investors and creditors, not the
interests of TCEI itself or its officers and directors.

2.) Yes, the register of deeds can transfer the titles in the name of Metrobank. "Upon failure to
redeem foreclosed realty, consolidation of title becomes a matter of right on the part of the
auction buyer, and the issuance of a certificate of title in favor of the purchaser becomes
ministerial upon the Register of Deeds."

Finally, proceedings in corporate rehabilitation cases are summary and non-adversarial, and do
not impair the debtor's contracts or diminish the status of preferred creditors. Thus, the stay
order, which only suspends the enforcement of all claims, cannot be held to extend to the period
not within its scope. In this case, there was no more claim by Metrobank to speak of because the
bank had already acquired ownership over the subject properties prior to the issuance of the stay
order.