Barican v. Intermediate Appellate Court
REITERATIONFacts
1. The Antecedents: Spouses Antonio Regondola and Dominga Zabat obtained a loan from the Development Bank of the Philippines (DBP) secured by a real estate mortgage. Upon their failure to fulfill the loan terms, DBP extra-judicially foreclosed the mortgaged property. DBP emerged as the highest bidder at the public auction sale, and after the Regondolas failed to exercise their right of redemption within the one-year period, title to the property was consolidated in DBP's name. Subsequently, DBP sold the property to Nicanor Reyes. 2. Procedural History: DBP filed a petition for the issuance of a writ of possession with the Regional Trial Court (RTC) of Caloocan City, Branch 128, which was initially granted. However, petitioners Rafael Barican and Araceli Alejo intervened, claiming ownership and possession of the property based on a deed of sale with assumption of mortgage from the Regondolas. They had also filed a separate civil case for declaration of ownership. The RTC stayed the writ of possession and later denied DBP's application for an alias writ of possession. Upon appeal, the Intermediate Appellate Court (IAC) set aside the RTC's order and directed the issuance of the writ of possession in favor of DBP. The petitioners' motion for reconsideration was denied, leading them to file the present petition. 3. The Petition: The petitioners seek review of the IAC's decision, arguing that the pendency of their civil case for ownership and the fact that the property had already been sold to a third party (Nicanor Reyes) by DBP, coupled with their continuous possession since 1979 and DBP's acceptance of payments from them, render the issuance of a writ of possession non-ministerial. They contend that the IAC erred in applying Section 4 of P.D. 385 and relying on jurisprudence that mandates a ministerial issuance of such writs, as these circumstances create exceptions to the general rule. The Supreme Court issued a temporary restraining order enjoining the enforcement of the IAC's decision.
Issue(s)
Whether the pendency of Civil Case No. C-11232 for ownership of the foreclosed property constitutes a bar or legal impediment to the issuance of a writ of possession in favor of the respondent bank. Whether the issuance of a writ of possession remains a ministerial act under the circumstances presented.
Ruling
The petition is GRANTED. The decision of the Court of Appeals is REVERSED and SET ASIDE. The order dated March 21, 1986 of the Regional Trial Court of Caloocan City, Branch 128 is REINSTATED. The temporary restraining order issued on October 1, 1987, is made permanent.
Ratio Decidendi
On the issue of whether the pendency of Civil Case No. C-11232 is a bar to the issuance of a writ of possession: The Supreme Court held that while the issuance of a writ of possession in favor of a purchaser in a foreclosure sale is generally a ministerial act, this rule is not unqualified. In the instant case, the obligation of the court to issue the writ ceases to be ministerial due to the peculiar circumstances. These include the existence of a pending civil case for declaration of ownership filed by third parties (the petitioners herein) who are in actual possession of the property, the fact that the respondent bank had already divested itself of ownership by selling the property to Nicanor Reyes, and the bank's prior knowledge of the petitioners' possession and assumption of mortgage. The Court emphasized that the rights of third parties were involved, necessitating a ventilation of these claims in the merits of the civil case before possession could be disturbed. The Court also noted the unexplained delay by DBP in filing the petition for a writ of possession and the fact that neither DBP nor Nicanor Reyes had taken physical possession of the property. On the issue of whether the issuance of a writ of possession remains a ministerial act: The Court reiterated the well-settled rule that the purchaser in a foreclosure sale is entitled to a writ of possession, and its issuance is ordinarily a ministerial act. However, this ministerial duty is suspended when there are claims involving the rights of third persons, as in this case. The Court cited IFC Service Leasing and Acceptance Corporation v. Nera and Tan Soo Huat v. Ongwico to support the principle that courts should not order the sheriff to yield possession where the rights of third persons are involved. Furthermore, Section 4 of P.D. 385, which mandates the prompt issuance of writs of possession in favor of government financial institutions, was deemed inapplicable because DBP had already sold the property, thereby divesting itself of its rights as a purchaser in the foreclosure sale. The Court also found it irregular that DBP, knowing the petitioners were in possession, did not file an ejectment case if they believed the petitioners were possessors in bad faith.
Main Doctrine
The ministerial duty of a court to issue a writ of possession in favor of a purchaser in a foreclosure sale ceases to be ministerial when there are claims involving the rights of third parties, a pending civil case for ownership, and the purchaser has divested itself of ownership over the foreclosed property.