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G.R. No. 196040, August 26, 2014 - FE H. OKABE, Petitioner, v. ERNESTO A. SATURNINO, Respondent.

G.R. No. 196040, August 26, 2014 - FE H. OKABE, Petitioner, v. ERNESTO A. SATURNINO, Respondent.

PHILIPPINE SUPREME COURT DECISIONS

EN BANC

G.R. No. 196040, August 26, 2014

FE H. OKABE, Petitioner, v. ERNESTO A. SATURNINO, Respondent.

D E C I S I O N

PERALTA, J.:

Before us is a Petition for Review on Certiorari under Rule 45 of the Rules of Court seeking the reversal of the Decision1 dated September 24, 2010 and Resolution2 dated March 9, 2011 of the Court of Appeals (CA) in CA-G.R. SP No. 110029.

The facts, as culled from the records, are as follows:

The subject of the controversy is an eighty-one (81) square meter property located in Barangay San Antonio, Makati City, which was initially covered by Transfer Certificate of Title (TCT) No. 175741under the name of the wife of respondent Ernesto A. Saturnino. Sometime in 1994, the couple obtained a loan with the Philippine National Bank (PNB), which was secured by the subject property.  Because of the couple’s failure to settle their loan obligation with the bank, PNB extrajudicially foreclosed the mortgage.

On August 24, 1999, the Certificate of Sale was inscribed on TCT No. 175741. Considering that the property was not redeemed by respondent during the redemption period, consolidation of ownership was inscribed on  October 13, 2006 and a new TCT was issued in favor of PNB.

Without taking possession of the subject property, PNB sold the land to petitioner Fe H. Okabe on June 17, 2008. TCT No. 225265

was later issued in petitioner’s name on August 13, 2008.

On November 27, 2008, petitioner filed with the Regional Trial Court (RTC) of Makati City an Ex-Parte Petition for Issuance of Writ of Possession3 over the subject property, to which respondent submitted an Opposition with Motion to Dismiss.4  Petitioner filed her Reply to/ Comment on the Opposition with Motion to Dismiss,5 while respondent submitted his Oppositor-Movant’s Rejoinder with Motion for Postponement.6

On April 30 2009, the RTC issued an Order7 denying respondent’s Opposition with Motion to Dismiss for lack of merit. The RTC, citing the case of Ramos v. Mañalac and Lopez8 opined that the issuance of a writ of possession in favor of the petitioner was merely a ministerial and complementary duty of the court.

Respondent then filed an Urgent Motion for Clarification (of the Order dated 30 April 2009),9 then a Motion for Reconsideration,10 which was followed by a Supplement to the Motion for Reconsideration11 which petitioner likewise opposed.12

On July 29, 2009, the RTC issued an Order13 denying respondent’s Motion for Reconsideration and the Supplement to the Motion for Reconsideration.  The RTC ruled, among other things, that the right of the petitioner to be placed in absolute possession of the subject property was a consequence of her right of ownership and that petitioner cannot be deprived of said possession being now the registered owner of the property.

Dismayed, respondent filed on August 17, 2009 a Petition for Certiorari14 with the CA questioning the Orders of the RTC based on the following grounds:

I

HON. JUDGE BENJAMIN T. POZON FAILED TO CONSIDER THE FACT THAT PRIVATE RESPONDENT WAS ALREADY ESTOPPED FROM ASKING FOR THE ISSUANCE OF A WRIT OF POSSESSION CONSIDERING THAT THE VERY DEED OF ABSOLUTE SALE FROM WHICH HER ALLEGED RIGHT EMANATES EXPLCITLY (sic) GAVE HER THE ONLY OPTION OF FILING AN EJECTMENT SUIT.

II


HON. JUDGE BENJAMIN T. POZON FAILED TO CONSIDER THAT SECTION 7 OF ACT NO. 3135, AS AMENDED BY ACT 4118 SHOULD BE CONSTRUED STRICTLY.15

Respondent prayed, among other things, that the CA reverse and set aside the assailed Orders and that a Temporary Restraining Order (TRO) be issued enjoining the RTC from hearing the petition for the issuance of a writ of possession.

Meanwhile, on November 23, 2009, the RTC rendered a Decision16 in favor of petitioner, which granted her ex-parte petition and ordered that the corresponding writ of possession over the subject property be issued in her favor.  The decretal portion of which reads:

WHEREFORE, premises considered, and in accordance with Section 7 of Act No. 3135, as amended, the instant petition [is] hereby GRANTED.

Let the corresponding Writ be issued in favor of the herein petitioner Fe H. Okabe to place her in possession of the subject property.  No bond is required to be posted by petitioner Fe H. Okabe, she, being the successor-in-interest of Philippine National Bank, the purchaser in the foreclosure sale, which had consolidated that title on the subject property in its name prior to the herein petitioner.

Furnish copies of this Decision to the parties and their respective counsels.

SO ORDERED.17

Respondent filed a motion to set aside the said Decision, but the same was denied by the RTC in its Order18 dated April 27, 2010.

On May 13, 2010, petitioner filed a Motion for Execution of Judgment.

On July 8, 2010, the RTC issued an Order19 granting the motion. On even date, the branch clerk of court issued a Writ of Possession20 addressed to the Sheriff ordering the latter to place petitioner in possession of the subject property.

On July 14, 2010, the Sheriff, together with petitioner, tried to cause the service of the notice to vacate upon the respondent, but the property was already abandoned by its occupants.  The Sheriff, with the assistance of barangay officials, thus, posted the notice to vacate together with the writ of possession in front of the gate of the subject property.21

On July 20, 2010, the Sheriff, the petitioner, and the barangay officials returned to the property to cause the implementation of the writ of possession.  After finding that no one was occupying the property, the Sheriff turned over possession of the subject property to the petitioner free and clear of occupants and personal property.22

In the proceedings before the CA, respondent filed a Motion to Admit Herein Memorandum of Authorities in Amplification/Support of the Position of Petitioner in this Case and Reiterating Prayer for Issuance of a Temporary Restraining Order and/or Writ of Preliminary Injuction.23  In the said motion, respondent alleged that the RTC was about to issue the writ of possession prayed for by the petitioner and that a TRO was necessary to prevent great and irreparable injury which respondent may suffer if removed from possession of the property in question.

On July 19, 2010, the CA issued a Resolution24 granting the issuance of a TRO in favor of the respondent and commanding petitioner and the RTC to refrain from committing any acts relative to the proceedings before it upon the posting of a bond.

In a Manifestation25 dated July 21, 2010 the RTC Presiding Judge informed the CA that as much as the court would like to comply with its directive, it can no longer do so because the writ of possession had already been implemented by the Branch Sheriff on July 20, 2010.

On September 24, 2010, the CA rendered the assailed Decision which granted respondent’s petition and vacated the challenged orders of the RTC. The fallo reads:

WHEREFORE, we resolve to GRANT the instant petition. The challenged orders below are consequently vacated. The respondents are permanently enjoined from proceeding against the petitioner via an ex-parte motion for a writ of possession.

IT IS SO ORDERED.26

The CA opined, among other things, that although it may be true that by virtue of the contract of sale, petitioner obtained the same rights of a purchaser-owner and which rights she derived from erstwhile mortgagee turned owner PNB, this does not mean that the right to file an ex-parte motion for a writ of possession under Act 3135 had also been transferred to the petitioner.  Such a special right is granted only to purchasers in a sale made under the provisions of Act 3135. The CA ruled that to allow a second, third, or even tenth subsequent buyer of the foreclosed property to evict the mortgagor-debtor or his successor-in-interest from the said property or wrench away possession from them via a mere ex-parte motion is to trample upon due process because whatever defenses that the owner mortgagor/actual possessor may have would have been drowned and muted by the ex-parte writ of possession.  Considering that the transaction between PNB and the petitioner was by an ordinary contract of sale, an ex-parte writ of possession may not therefore be issued in favor of the latter.

Unfazed, petitioner filed a Motion for Reconsideration on the ground that respondent’s possession of the property had become illegal and that the procedure affecting his possession was moot and academic for he was no longer in possession of the subject property.

In a Resolution dated March 9, 2011, the CA denied petitioner’s Motion for Reconsideration.

Hence, the present petition wherein petitioner raises the following arguments to support its petition:

I

RESPONDENT IS WELL AWARE OF THE FACT THAT OWNERSHIP HAD TRANSFERRED TO PETITIONER AND THAT HIS POSSESSION OF THE PROPERTY HAD BECOME ILLEGAL.

II

PETITIONER, AS THE REGISTERED OWNER OF THE PROPERTY, IS ENJOYING POSSESSION OF THE PROPERTY IN THE CONCEPT OF AN OWNER AND A RULING OF THIS HONORABLE COURT REGARDING THE PROCEDURE PERTAINING TO PETITIONER’S POSSESSION OF THE PROPERTY IS MOOT AND ACADEMIC.27

Petitioner argues that her possession of the subject property as its registered owner should not be disturbed.  Petitioner posits that considering that respondent failed to redeem the subject property within the redemption period, respondent should not be granted a favor nor rewarded for his failure to redeem and for his illegal occupation of the property.  Petitioner contends that the issue regarding possession of the property has become moot and academic since she, being the registered owner of the property, has been in possession thereof since July 20, 2010.  Petitioner stresses that the ruling of the CA, that she is “permanently enjoined from proceeding against the [respondent] via an ex-parte motion for a writ of possession,” would result in an absurdity since she is already in possession of the land.

Petitioner now prays that the Court rectify the situation and for it to reverse the ruling of the CA based on the fact that the proceedings for the ex-parte motion for a writ of possession has already been terminated and possession of the subject property was awarded by the lower court in her favor, thus rendering the arguments raised by respondent in his petition for certiorari before the CA moot and academic.

In essence, the issue is whether or not, in the case at bar, an ex-parte petition for the issuance of a writ of possession was the proper remedy of the petitioner in obtaining possession of the subject property.

Section 7 of Act No. 3135,28 as amended by Act No. 4118,29 states:

Section 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 the form of an ex parte motion x x x 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.

Under the provision cited above, the purchaser or the mortgagee who is also the purchaser in the foreclosure sale may apply for a writ of possession during the redemption period,30 upon an ex-parte motion and after furnishing a bond.

In GC Dalton Industries, Inc. v. Equitable PCI Bank,31 the Court held that the issuance of a writ of possession to a purchaser in an extrajudicial foreclosure is summary and ministerial in nature as such proceeding is merely an incident in the transfer of title. Also, in China Banking Corporation v. Ordinario,32 we held that under Section 7 of Act No. 3135, the purchaser in a foreclosure sale is entitled to possession of the property.

In the recent case of Spouses Nicasio Marquez and Anita Marquez v. Spouses Carlito Alindog and Carmen Alindog,33 although the Court allowed the purchaser in a foreclosure sale to demand possession of the land during the redemption period, it still required the posting of a bond under Section 7 of Act No. 3135. Thus:

It is thus settled that the buyer in a foreclosure sale becomes the absolute owner of the property purchased if it is not redeemed during the period of one year after the registration of the sale. As such, he is entitled to the possession of the said property and can demand it at any time following the consolidation of ownership in his name and the issuance to him of a new transfer certificate of title. The buyer can in fact demand possession of the land even during the redemption period except that he has to post a bond in accordance with Section 7 of Act No. 3135, as amended. No such bond is required after the redemption period if the property is not redeemed. Possession of the land then becomes an absolute right of the purchaser as confirmed owner. Upon proper application and proof of title, the issuance of the writ of possession becomes a ministerial duty of the court.34

Here, petitioner does not fall under the circumstances of the aforequoted case and the provisions of Section 7 of Act No. 3135, as amended, since she bought the property long after the expiration of the redemption period.  Thus, it is PNB, if it was the purchaser in the foreclosure sale, or the purchaser during the foreclosure sale, who can file the ex-parte petition for the issuance of writ of possession during the redemption period, but it will only issue upon compliance with the provisions of Section 7 of Act No. 3135.

In fact, the Real Estate Mortgage35 contains a waiver executed by the mortgagor in favor of the mortgagee, wherein the mortgagor even waives the issuance of the writ of possession in favor of the mortgagee.  The contract provides that “effective upon the breach of any condition of the mortgage and in addition to the remedies herein stipulated, the mortgagee is hereby likewise appointed Attorney-in-Fact of the Mortgagor/s with full power and authority with the use of force, if necessary, to take actual possession of the mortgaged property/ies without the necessity of any judicial order or permission, or power, to collect rents, to eject tenants, to lease or sell the mortgaged property/ies or any part thereof at a private sale without previous notice or advertisement of any kind and execute the corresponding bills of sale, lease or other agreement that may be deemed convenient to make repairs or improvements on the mortgaged property/ies and pay for the same and perform any other act which the Mortgagee may deem convenient for the proper administration of the mortgaged property/ies.”36

Moreover, even without the waiver, the issuance of the writ of possession is ministerial and non-adversarial for the only issue involved is the purchaser’s right to possession; thus, an ex-parte proceeding is allowed.

Nevertheless, the purchaser is not left without any remedy.  Section 6 of Act No. 3135, as amended by Act No. 4118, provides:

SEC. 6.  In all cases in which an extrajudicial sale is made under the special power herein before referred to, the debtor, his successor-in-interest or any judicial creditor or judgment creditor of said debtor, or any person having a lien on the property subsequent to the mortgage or deed of trust under which the property is sold, may redeem the same at any time within the term of one year from and after the date of the sale; and such redemption shall be governed by the provisions of sections four hundred and sixty-six, inclusive, of the Code of Civil Procedure, in so far as these are not inconsistent with the provisions of this Act.

Consequently, the provision of Section 33, Rule 39 of the Rules of Court relative to an execution sale is made applicable to extrajudicial foreclosure of real estate mortgages by virtue of Section 6 of Act No. 3135, as amended.37 Section 33, Rule 39 of the Rules of Court provides:

SEC. 33. Deed and possession to be given at expiration of redemption period; by whom executed or given. – If no redemption be made within one (1) year from the date of registration of the certificate of sale, the purchaser is entitled to a conveyance and possession of the property; or, if so redeemed whenever sixty (60) days have elapsed and no other redemption has been made, and notice thereof given, and the time for redemption has expired, the last redemptioner is entitled to the conveyance and possession; but in all cases the judgment obligor shall have the entire period of one (1) year from the date of registration of the sale to redeem the property. The deed shall be executed by the officer making the sale or his successor in office, and in the latter case shall have the same validity as though the officer making the sale had continued in office and executed it.

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.38

From the foregoing, 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 debtor to the property, and its possession shall be given to the purchaser or last redemptioner unless a third party is actually holding the property adversely to the judgment debtor.  In which case, the issuance of the writ of possession ceases to be ex-parte and non-adversarial.  Thus, where the property levied upon on execution is occupied by a party other than a judgment debtor, the procedure is for the court to conduct a hearing to determine the nature of said possession, i.e., whether or not he is in possession of the subject property under a claim adverse to that of the judgment debtor.

It is but logical that Section 33, Rule 39 of the Rules of Court be applied to cases involving extrajudicially foreclosed properties that were bought by a purchaser and later sold to third-party-purchasers after the lapse of the redemption period.  The remedy of a writ of possession, a remedy that is available to the mortgagee-purchaser to acquire possession of the foreclosed property from the mortgagor, is made available to a subsequent purchaser, but only after hearing and after determining that the subject property is still in the possession of the mortgagor.  Unlike if the purchaser is the mortgagee or a third party during the redemption period, a writ of possession may issue ex-parte or without hearing.  In other words, if the purchaser is a third party who acquired the property after the redemption period, a hearing must be conducted to determine whether possession over the subject property is still with the mortgagor or is already in the possession of a third party holding the same adversely to the defaulting debtor or mortgagor.  If the property is in the possession of the mortgagor, a writ of possession could thus be issued.  Otherwise, the remedy of a writ of possession is no longer available to such purchaser, but he can wrest possession over the property through an ordinary action of ejectment.

To be sure, immediately requiring the subsequent purchaser to file a separate case of ejectment instead of a petition for the issuance of a writ of possession, albeit not ex-parte, will only prolong the proceedings and unduly deny the subsequent purchaser of possession of the property which he already bought.

WHEREFORE, premises considered, the instant petition is GRANTED. The Decision dated September 24, 2010 and Resolution dated March 9, 2011 of the Court of Appeals in CA-G.R. SP No. 110029 are hereby REVERSED AND SET ASIDE.

SO ORDERED.

Carpio, Velasco, Jr., Leonardo-De Castro, Peralta, Bersamin, Del Castillo, Perez, Mendoza, Reyes, and Leonen,  JJ., concur.
Brion, and Jardeleza, JJ., on leave.
Villarama, Jr., and Perlas-Bernabe, JJ., on official  leave.

Endnotes:


1 Penned by Associate Justice Apolinario D. Bruselas, Jr., with Associate Justices Mariflor P. Punzalan-Castillo, and Rodil V. Zalameda, concurring; rollo, pp. 8-16.

2 Id. at 18-19.

3 Records, pp. 1-6.

4 Id. at 19-23.

5 Id. at 28-31.

6 Id. at 36-39.

7 Id. at 41-44.

8 89 Phil. 270 (1951).

9 Records, pp. 45-47.

10 Id. at 51-54.

11 Id. at 59-61.

12 Id. at 68-74.

13 Id. at 75-76.

14 CA rollo, pp. 2-15.

15 Id. at 7.

16 Records,  pp. 255-258.

17 Id. at 258.

18 Id. at 327-329.

19 Id. at 387-388.

20 CA rollo, pp. 134-135.

21 Id. at 130.

22 Id. at 131.

23 Id. at 110-122.

24 Id. at 124-125.

25 Id. at 128-129.

26Rollo, p. 16. (Emphasis in the original)

27 Id. at 27-28.

28 AN ACT TO REGULATE THE SALE OF PROPERTY UNDER SPECIAL POWERS INSERTED IN OR ANNEXED TO REAL-ESTATE MORTGAGES.

29 AN ACT TO AMEND ACT NUMBERED THIRTY-ONE HUNDRED AND THIRTY-FIVE, ENTITLED “AN ACT TO REGULATE THE SALE OF PROPERTY UNDER SPECIAL POWERS INSERTED IN OR ANNEXED TO REAL ESTATE MORTGAGES.”

30Fortaleza v. Lapitan, G.R. No. 178288, August 15, 2012, 678 SCRA 469, 483.

31 G.R. No. 171169, August 24, 2009, 596 SCRA 723, 729.

32 447 Phil. 557, 562 (2003).

33 G.R. No. 184045, January 22, 2014.

34Spouses Nicasio Marquez and Anita Marquez v. Spouses Carlito Alindog and Carmen Alindog, supra. (Emphasis and underscoring omitted)

35 Records, pp. 247-251.

36 Id. at 248.

37 See Metropolitan Bank & Trust Co., v. Lamb Construction Consortium Corporation, G.R. No. 170906, November 27, 2009, 606 SCRA 159.

38Emphasis supplied.
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