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CA asserts right of bank to possess mortgaged school

[ Manila Bulletin Online ] May 16, 2008

The Court of Appeals (CA) has affirmed the right of a bank to possess the land and the schoolbuilding erected on it for failure of the owners to redeem the mortgage over the property.

In a decision written by Associate Justice Mariano C. del Castillo, the CA ruled that the Malolos City Regional Trial Court (RTC) Branch 83 committed a grave abuse of discretion when it reversed itself and granted the motion of St. Raphael Montessori Inc. to quash the writ of possession it had earlier issued in favor of the Bank of the Philippine Islands (BPI).

"Wherefore, the order dated July 30, 2007 is reversed. The motion to quash writ of possession of St. Raphael Montessori Inc. is denied and the writ of possession dated March 15, 2005 is declared valid and enforceable, thus, entitling the Bank of the Philippine Islands to the possession of the subject property, including the building occupied by St. Raphael Montessori Inc.," the CA ruled.

Associate Justices Arcangelita Romilla Lontok and Ricardo R. Rosario concurred with the decision.

From 1994 to 1998, spouses Rolando and Josefina Andaya, as president and vice president of St. Raphael Montessori Inc., obtained loans for themselves and on the behalf of the school from the then Far East Bank and Trust Co., now BPI. As security for the loans, they executed a real estate mortgage over a parcel of land where the school was built.

When the couple reneged on their financial obligations, the BPI foreclosed the mortgaged extrajudicially. On BPI’s petition, the RTC issued a writ of possession over the property on March 15, 2005.

The school executed an undertaking with the bank and pledged to vacate the property on or before Sept. 23, 2005. The Sept. 23, 2005 deadline was extended by BPI to Nov. 23, 2005 as it granted the plea of the school owners.

After Nov. 23, 2005, however, the Andaya couple refused to turn over the possession of the property to BPI, claiming that the bank no longer had a right to possess it because the writ of possession had already been implemented.

The school filed a motion to quash the writ of possession, claiming that it was not a party to the mortgage.

It was on April 19, 2007 that the writ of possession was finally implemented. The bank posted its own security guards on the premises of the school.

But on July 30, 2007, the trial court reversed its earlier writ of possession issued in favor of BPI and ordered the school to take possession of the property. The trial court ruled that the March 15, 2007 writ of possession could no longer be enforced on April 19, 2007 since it is valid only for 60 days.

It also said that the school was a stranger to the mortgage executed by the Andaya couple as collateral for their loans with BPI. (Rey G. Panaligan)
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