DEVELOPMENT
BANK OF THE G.R. Nos. 175728 & 178914
Petitioner, Present:
CARPIO
MORALES, J.,*
Acting
Chairperson,
- versus - TINGA,
VELASCO, JR.,
LEONARDO-DE
CASTRO,** and
BRION,
JJ.
PRIME
NEIGHBORHOOD
ASSOCIATION Promulgated:
Respondents.
May 8, 2009
x----------------------------------------------------------------------------x
Tinga,
J.:
Before
this court are two consolidated cases involving two petitions for review on
certiorari. The petitions seek to set
aside the following decisions and resolutions
of the Court of Appeals: in G.R.
No. 175728, the Decision[1]
dated
These consolidated cases arose from
an Ex-Parte Petition for Issuance of a Writ of Possession[5]
filed before the Regional Trial Court (RTC) of P408,000.00 secured by a Real Estate
Mortgage executed by the spouses Victorino Yenko and Rosa Jaranilla-Yenko in
favor of DBP, over the parcel of land situated in Quezon City, covered by
certificate of title TCT No. 342461 (RT-101612).
Y-Electric
failed to pay its loan obligation; hence, DBP instituted extrajudicial
foreclosure of the mortgage. On
On
On
On
In
the meantime, on
In
CA-G.R. SP No. 85870, the Court of Appeals promulgated the assailed Decision[14]
dated
WHEREFORE,
in view of all the foregoing, the petition is GRANTED and the assailed orders
of the public respondent are declared NULL and VOID and are hereby SET
ASIDE.
This
case is hereby remanded to the court a quo for further proceedings,
specifically, to determine whether or not members of petitioner Prime
Neighborhood Association, Inc., are actually in possession of subject property
who are claiming right adverse to that of the original mortgagor.
SO
ORDERED.[17]
The appellate court also denied DBP’s
motion for reconsideration in the assailed Resolution[18]
dated
In CA-G.R. SP No. 89051, the Court of
Appeals promulgated the assailed Decision[19]
dated
WHEREFORE, premises considered, the Petition is hereby
DISMISSED. The questioned Orders of Br.
92, Regional Trial Court,
SO ORDERED.[20]
DBP filed a motion for
reconsideration but this was denied in the assailed Resolution[21] dated
DBP thus filed these petitions for
review. In G.R. No. 175728 assailing the
decision and resolution in CA-G.R. SP No. 85870, DBP assigns the following
errors:
(a)
The
Court of Appeals erred in granting the intervention of PNA in a proceeding which
is ex parte in nature.
(b)
The
Court of Appeals erred in giving due course to the petition for certiorari
filed by PNA which is clearly frivolous and unfounded and a collateral attack
on herein petitioner’s valid and subsisting title.
(c)
The
Court of Appeals erred in disregarding the ruling of this Honorable Supreme
Court in St. Dominic Corp. v. Intermediate Appellate Court[22]
where it was held that there is no denial of the right of a third party in an ex
parte proceeding when the latter is merely an intruder/squatter.[23]
In G.R. No. 178914 assailing the
decision and resolution in CA-G.R. SP No. 178914, DBP raises the following
grounds:
(a)
The
Court of Appeals erred in denying DBP’s motion for demolition for its reliance
on Philippine National Bank v. Court of Appeals is off tangent and
hence, bereft of basis.
(b)
The
Court of Appeals should not have considered PNA’s allegations collaterally
attacking the integrity of DBP’s titles.
(c)
DBP’s
right to the property is founded on the right to ownership, hence its right
over the property is absolute, vesting upon it the right of possession of the
property which the court must aid in effecting its delivery.[24]
The
propriety of the issuance of the writ of possession relating to the foreclosure
of the real estate mortgage is at issue in these consolidated cases. Consequently, DBP’s arguments in the two
petitions are inter-related, if not similar.
DBP
argues that as the purchaser of the foreclosed property in the public auction,
it has the right to petition the trial court to place him in possession of the
property through the filing of an ex parte motion, pursuant to Sec. 7[25]
of Act No. 3135,[26] as
amended by Act No. 4118.[27] The issuance of a writ of possession to the
purchaser in the extrajudicial foreclosure has long been held to be a ministerial
function of the trial court. By the very
nature of an ex parte proceeding that it is brought for the benefit of
one party only and without notice to or consent by any person adversely
interested, PNA should not have been allowed to intervene by filing an
opposition to the motion for issuance of writ of possession. Instead, DBP claims, PNA should have filed a
direct proceeding to have DBP’s title declared void and not have resorted to
the procedural short cut of intervention.
DBP also argues that PNA’s claim of
ownership upon which it based its opposition is baseless. DBP alleges that PNA, through its president
Oscar Estopoin, recognized DBP’s ownership over the subject property. Estopin was the former Vice President of
Luzonville Homeowner’s Association, Inc. (LHA) and one of its
incorporators. The Articles of
Incorporation and By-Laws of LHA were registered with the Home Insurance and
Guaranty Corporation on
PNA claims that DBP’s title to the
foreclosed property is void, having as its source a fraudulent original
certificate of title, OCT No. 614. Such
a claim, DBP argues, constitutes a collateral attack on DBP’s titles to the foreclosed
property. DBP points out that the
property is covered by a certificate of title and has passed through different
owners until it was acquired by DBP. DBP
has already consolidated its title to the property and has had it registered in
its name. Previous to that, nobody
claimed ownership thereof adverse to the former owners and to DBP. In sanctioning PNA’s baseless claim of
ownership, DBP alleges that the Court of Appeals has ignored the protection
given by law to the
DBP thus prays that the decision of
the CA in CA-G.R. SP No. 85870 be set aside and the writ of possession granted
by the RTC be reinstated, and that the decision in CA-G.R. SP No. 89051
affirming the denial of the motion for a writ of demolition be set aside and
the implementation of the writ of possession through the issuance of the writ
of demolition against PNA be ordered.
The Court finds the petitions bereft
of merit. They should be denied.
It is ministerial upon the court to
issue a writ of possession after the foreclosure sale and during the period of
redemption. The governing law, Act No. 3135,
as amended, in Section 7 thereof, explicitly authorizes the purchaser in a
foreclosure sale to apply for a writ of possession during the redemption period
by filing an ex parte motion under oath for that purpose in the corresponding
registration or cadastral proceeding in the case of property with
But the rule is not without
exception. Under Section 35,[31]
Rule 39 of the Rules of Court, which is made suppletory to the extrajudicial
foreclosure of real estate mortgages by Section 6 of Act 3135, as amended, the
possession of the mortgaged property may be awarded to a purchaser in the
extrajudicial foreclosure unless a third party is actually holding the
property adversely to the judgment debtor.
Thus, in the cited case of Philippine National Bank v. Court of
Appeals,[32] the
Court held that the obligation of a court to issue an ex parte writ of
possession in favor of the purchaser in an extrajudicial foreclosure sale
ceases to be ministerial once it appears that there is a third party in
possession of the property who is claiming a right adverse to that of the
debtor/mortgagor.[33] This is substantiated by the Civil Code which
protects the actual possessor of a property.
The discussion in Philippine National Bank on this matter is
informative:
Under [Article 433[34]
of the Civil Code], one who claims to be the owner of a property possessed by
another must bring the appropriate judicial action for its physical
recovery. The term “judicial process” could
mean no less than an ejectment suit or reivindicatory action in which ownership
claims of the contending parties may be properly heard and adjudicated.
An ex parte petition for issuance of a
possessory writ under Section 7 of Act
3135[, as amended,] is not, strictly speaking, a “judicial process” as
contemplated above. Even if the same may
be considered a judicial proceeding for the enforcement of one’s right of
possession as purchaser in a foreclosure sale, it is not an ordinary suit filed
in court by which one party “sues another for the enforcement or protection of
a right, or the prevention or redress of a wrong.”
It should be emphasized
that an ex parte petition for issuance of a writ of possession is a non-litigious
proceeding authorized in an extrajudicial foreclosure of mortgage pursuant to
Ac 3135, as amended. Unlike a judicial
foreclosure of real estate mortgage under Rule 68 of the Rules of Court, any
property brought within the ambit of the act is foreclosed by the filing of a
petition, not with any court of justice, but with the office of the sheriff of
the province where the sale is to be made.
As such, a third person in
possession of an extrajudicially foreclosed realty, who claims a right superior
to that of the original mortgagor, will have no opportunity to be heard on his
claim in a proceeding of this nature. It
stands to reason, therefore, that such third person may not be dispossessed on
the strength of a mere ex parte possessory writ, since to do so would be tantamount
to his summary ejectment, in violation of the basic tenets of due process.
Besides, as earlier
stressed, Article 433 of the Civil Code, cited above, requires nothing less
that an action for ejectment to be brought even by the true owner. After all, the actual possessor of a property
enjoys a legal presumption of just title in his favor, which must be overcome
by the party claiming otherwise.[35]
This was
reiterated in Dayot v. Shell Chemical Company
(Phils.), Inc.[36]
The question now is whether PNA is a
third party in possession of the property claiming a right adverse to that of
the debtor/mortgagor. The answer is yes.
DBP’s right of possession is founded
on its right of ownership over the property which he purchased at the auction
sale. Upon expiration of the redemption
period and consolidation of the title to the property in its name, DBP became
substituted to and acquired all the rights, title and interest of the mortgagor
Y Electric. As the new owner of the
property, DBP can validly exercise his right of possession over it. Thus, as against Y Electric and its
successors-in-interest, DBP can apply for the issuance of a writ of possession
against them to compel them to deliver and transfer possession to DBP. Note, however, that a third party not privy
to the debtor/mortgagor—in this case, Y Electric—is protected by law. The purchaser’s right of possession is
recognized only as against the judgment debtor and his successor-in-interest
but not against persons whose right of possession is adverse to the latter.[37] As
previously stated, under the law, such third party’s possession of the property
is legally presumed to be pursuant to a just title which may be overcome by the
purchaser in a judicial proceeding for recovery of the property. It is through such a judicial proceeding that
the nature of such adverse possession by the third party is determined,
according such third party due process and the opportunity to be heard. The third party may be ejected from the
property only after he has been given an opportunity to be heard, conformably
with the time-honored principle of due process.[38]
In its petition for certiorari in
CA-G.R. No. SP No. 85870, PNA claims that it is the owner of the property in
dispute as it purchased it from its true owner, and that the title to the
property upon which Y Electric and DBP base their claim is fictitious and
non-existent. In exercise of its right
of ownership, PNA filed an ejectment case against DBP which is now on appeal
with the RTC of Quezon City. There is
nothing in the records that would show that PNA derives its claim of ownership
from Y Electric or from Y Electric’s predecessors-in-interest, or that PNA is a
successor-in-interest or transferee of Y Electric’s rights. It is thus clear that PNA asserts a claim of
ownership adverse to that of Y Electric and DBP, and that it acquired title and
possession of the property by virtue of a title entirely distinct from that
through which DBP claims. PNA thus
stands in the same position as a stranger or third party whose rights to the
property cannot be resolved in an ex parte proceeding where it was not
impleaded or where it could appear to present its side.
St. Dominic Corp. v. Intermediate
Appellate Court,[39] cited
by DBP, actually supports the finding that PNA is a third party possessor
claiming against DBP an adverse right. The
facts in St. Dominic are as follows:
In 1961, the People’s Homesite and Housing Corporation
(PHHC) awarded a parcel of land covered by TCT No. 83783 to Cristobal Santiago,
who sold the same to the spouses Carlos Robes and Adelia Francisco. The spouses Robes mortgaged the lot to
Manufacturer’s Bank and Trust Company, and this fact was duly annotated on the
back of TCT No. 84387. Thereafter, Civil
Case No. Q-11895, entitled “Ricardo Castulo and Juan V. Ebreo v. Carlos Robes,
Adelia Francisco, and People’s Homesite and Housing Corporation,” was filed
seeking the cancellation of TCT No. 83783.
Claiming legal interest in the property, the Bustamante spouses were
allowed to intervene in the case. A
notice of lis pendens was annotated on the title at the instance of the
Bustamante spouses. For failure of the
Robes spouses to pay the mortgage obligation, Manufacturer’s Bank foreclosed
the lot which was then bought at public auction by Aurora Francisco, who was
subsequently issued a certificate of sale.
As no redemption of the property was effected, TCT No. 84387 issued in
the name of the Robes spouses was cancelled and TCT No. 217192 was issued to
the buyer Aurora Francisco. The notice
of lis pendens was not carried over to TCT No. 217192.
Aurora Francisco applied for, and was issued, a writ
of possession for the property. The Bustamante
spouses filed a motion to quash the writ, which motion was denied by the lower
court. The spouses then filed a petition
for certiorari with the Supreme Court.
Thereafter, Aurora Francisco sold the property to petitioner St. Dominic
Corp, which was issued TCT No. 22337.
Again, no notice of any lien or encumbrance appeared on the title.
Meanwhile, Civil Case No. Q-11895 was decided. The trial court ruled that the sale by PHHC
to Cristobal Santiago was void and cancelled TCT No. 83783. The sale of the same lot to the spouses Robes
was likewise declared void and TCT No. 84387 was cancelled. PHHC was ordered to process Bustamante’s
application to purchase the lot and execute documents awarding the lot to her. A writ of execution was issued to the
Bustamante spouses, with the qualification, however, that the writ could not be
enforced against St. Dominic Corp. The
spouses questioned the order via certiorari [with St. Dominic Corp. and Aurora
Francisco, though not parties to Civil Case No. Q-11895, made respondents
thereto] with the Intermediate Appellate Court, which granted the writ of
certiorari and ordered the trial court to issue the writ of execution against
St. Dominic Corp. [40]
This Court reversed the ruling of the
Intermediate Appellate Court and held that St. Dominic Corp. was not bound by
the decision in that case because it was never impleaded in Civil Case No.
Q-11895. Anent the effect of the trial court’s judgment on Manufacturer’s
Bank’s (mortgagee bank) rights and on the foreclosure of the property in
question, it was held that where a Torrens title was issued as a result of
regular land registration proceedings and was in the name of the mortgagor when
given as a security for a bank loan, the subsequent declaration of said title as
null and void would not nullify the rights of the mortgagee who acted in good
faith. The mortgagee is under no
obligation to look beyond the certificate of title and has the right to rely on
what appears on its face. The title to
the property given as security to Manufacturer’s Bank by the spouses Robes was
valid, regular, and free from any lien or encumbrance. The title of Aurora Francisco, as a purchaser
at the auction sale of the property in question, could not be affected by any
adverse claim of the plaintiffs in Civil Case No. Q-11895. This is even more true with petitioner St.
Dominic Corp. which had acquired title from Francisco without any notice or
flaw.[41]
The Bustamante spouses assailed the
grant ex parte by the trial court of the writ of possession over the
property in favor of Aurora Francisco, alleging that a court has no
jurisdiction, power and authority to eject a third person who is not a party to
the foreclosure proceedings or mortgage by a mere writ of possession summarily
issued in a foreclosure suit. This Court
approved of the trial court’s disquisition on this matter. The trial court was aware of the limitation
that a writ of possession may not issue when the property is in the possession
of a third party who holds the property adverse to the buyer in the foreclosure
sale. But by their express admission in
their motion to intervene, the Bustamante spouses were merely
occupants-applicants for the purchase of the land from PHHC. Their claim was at best inchoate, and cannot prevent
the issuance of the writ of possession prayed for; to do so would becloud the
integrity of the
Indeed, the rules contemplate a situation where a
third party holds the property by adverse title or right such as a co-owner,
tenant or usufructuary. In such cases, a
grant of a writ of possession would be denial of such third person’s rights
without giving them their day in court.
Especially where question of title is involved, the matter would well be
threshed out in a separate action and not in a motion for a writ of possession.[43]
Clearly, the facts in St. Dominic are
hugely different from the facts of the case at bar. The Bustamante spouses’ claim is not as owner
of the property, but only as an occupant-applicant thereto; it rests on a mere
expectancy. They did not hold the
property by any adverse title or right.
In the case at bar, however, PNA claims ownership of the property
through a title adverse to that of DBP and DBP’s predecessor-in-interest.
The other cases[44]
cited by DBP also support the finding of PNA as a third party claiming an
adverse right. These cases support the
ruling that trespassers or intruders without title can be evicted by writ of possession. However, the issuance of the writ of
possession in these cases, except for one, is not pursuant to the foreclosure
of a mortgage under Act No. 3135, as amended.
The said cases involve different judicial proceedings which have for its
purpose the recovery of property. Thus, Caballero
v. Court of Appeals involves an action for cancellation of sale. Mendoza v. National Housing Authority and
Galay v. Court of Appeals are cases for ejectment. E.B. Marcha Transport Co. v. Intermediate
Appellate Court involves a case for recovery of possession of
property. Rodil v. Benedicto and Demorar
v. Ibanez concern registration proceedings.
It should be noted too that in these cases, there was a categorical
finding by the courts, or there was an admission by the parties, that the
persons to be evicted are indeed squatters or intruders without any right to
the property.
The only case cited by DBP which
involves the issuance of a writ of possession under Act No. 3135 is Rivero
de Ortega v. Natividad which, however, supports the finding that PNA is a
third party possessor protected under the law.
Thus:
But where a party in possession was not a party to the
foreclosure, and did not acquire his possession from a person who was bound by
the decree, but who is a mere stranger and who entered into possession before
the suit was begun, the court has no power to deprive him of possession by
enforcing the decree. x x x Thus, it was held that only parties to the suit,
persons who came in under them pendente lite, and trespassers or
intruders without title, can be evicted by a writ of possession. x x x The reason for this limitation is that
the writ does not issue in case of doubt, nor will a question of legal title be
tried or decided in proceedings looking to the exercise of the power of the
court to put a purchaser in possession.
A very serious question may arise upon full proofs as to where the legal
title to the property rests, and should not be disposed of in a summary way. The petitioner, it is held, should be
required to establish his title in a proceeding directed to that end.[45]
PNA also need not prove its ownership
of the foreclosed property in the same ex parte proceeding instituted by
DBP. The jurisdiction of the court in
the ex parte proceeding is limited only to the issuance of the writ of
possession. It has no jurisdiction to
determine who between the parties is the rightful owner and lawful possessor of
the property. As earlier stated, the
appropriate judicial proceeding must be resorted to.[46] Consequently, the Court of Appeals’ order in
CA-G.R. SP No. 85870 to remand the case to the court a quo to determine
whether PNA and its members are actually in possession of the property claiming
a right adverse to that of the original mortgagor is unnecessary.
WHEREFORE, the
petitions for review in certiorari are DENIED.
In G.R. No. 175728, the Court of
Appeals Decision dated
In G.R. No. 178914, the Decision
dated
SO ORDERED.
DANTE O. TINGA
Associate
Justice
WE CONCUR:
CONCHITA CARPIO
MORALES
Associate
Justice
Acting Chairperson
PRESBITERO J. VELASCO, JR. TERESITA J. LEONARDO-DE CASTRO
Associate Justice Associate Justice
ARTURO D. BRION
Associate Justice
ATTESTATION
I attest that the conclusions in the above
Decision had been reached in consultation before the case was assigned to the
writer of the opinion of the Court’s Division.
CONCHITA CARPIO MORALES
Associate
Justice
Acting
Chairperson, Second Division
CERTIFICATION
Pursuant to Section 13, Article VIII
of the Constitution, and the Division Chairperson’s Attestation, it is hereby
certified that the conclusions in the above Decision had been reached in
consultation before the case was assigned to the writer of the opinion of the
Court’s Division.
REYNATO S. PUNO
Chief Justice
**Per Special Order No. 619, Justice Teresita J. Leonardo-De Castro is hereby designated as additional member of the Second Division in lieu of Justice Leonardo A. Quisumbing, who is on official leave
[14]Supra note 1. Penned by Associate Justice Sesinando E. Villon and concurred in by Associate Justices Elvi John S. Asuncion and Jose Catral Mendoza.
[19]Supra note 3. Penned by Associate Justice Normandie B. Pizarro, concurred in by Associate Justices Eliezer R. De Los Santos and Aurora Santiago-Lagman.
[25]Sec. 7. In any sale made under the provisions of this Act, the purchaser may petition the Court of First Instance of the province or place where the property or any part thereof is situated, to give him possession thereof during the redemption period, furnishing bond in an amount equivalent to the use of the property for a period of twelve months, to indemnify the debtor in case it be shown that the sale was made without violating the mortgage or without complying with the requirements of this Act. Such petition shall be made under oath and filed in form of an ex parte motion in the registration or cadastral proceedings if the property is registered, or in special proceedings in the case of property registered under the Mortgage Law or under section one hundred and ninety-four of the Administrative Code, or of any other real property encumbered with a mortgage duly registered in the office of any register of deeds in accordance with any existing law, and in each case the clerk of the court shall, upon the filing of such petition, collect the fees specified in paragraph eleven of section one hundred and fourteen of Act Numbered Four hundred and ninety-six, as amended by Act Numbered Twenty-eight hundred and sixty-six, and the court shall, upon approval of the bond, order that a writ of possession issue, addressed to the sheriff of the province in which the property is situated, who shall execute said order immediately.
[26]An Act to Regulate
the
[27]An Act to Amend Act
Numbered Thirty-One Hundred and Thirty-Five, Entitled “An Act to Regulate the
[31]Now Section 33, Rule 39 of the Rules of Court as revised. The second paragraph thereof reads: “Sec. 33. Deed and possession to be given at expiration of redemption period; by whom executed or given.—x x x Upon the expiration of the right of redemption, the purchaser or redemptioner shall be substituted to and acquire all the rights, title, interest and claim of the judgment obligor to the property as of the time of the levy. The possession of the property shall be given to the purchaser or last redemptioner by the same officer unless a third party is actually holding the property adversely to the judgment obligor.”
[34]Art. 43. Actual possession under claim of ownership raises a disputable presumption of ownership. The true owners must resort to judicial process for the recovery of the property.
[43]
[44]Caballero v. Court of Appeals, G.R. No. 59888, 29 January 1993, 218 SCRA 56, 64; Mendoza v. National Housing Authority, 197 Phil. 596 (1982); E.B. Marcha Transport Co., Inc. v.. Intermediate Appellate Court, 231 Phil. 275 (1987); Galay v. Court of Appeals, 321 Phil. 224 (1995); Lourdes Rivero D. Ortega v. Hon. Felipe Natividad, et al., 71 Phil. 340, 342; Tomas Rodil, et al. v. Judge Benedicto, 184 Phil. 107 (1980); and Demorar v. Ibanez, etc., 97 Phil. 72, 74 (1955).