Angeles v. Intermediate Appellate Court
REITERATIONFacts
The Antecedents: The underlying dispute concerns the ownership and possession of a parcel of land in Sampaloc, Manila, originally registered under Transfer Certificate of Title No. 42347 in the names of spouses Pablo Cayetano and Filomena Mendoza. Following Pablo's death, Filomena and their children executed an extrajudicial settlement and sale, leading to a new title (TCT No. 68065) in the names of Filomena and the children of their deceased son, Manuel. Subsequently, Filomena sold a portion of the lot to her son Juanito, who then presented an Agreement of Partition of Common Property, purportedly signed by all heirs, adjudicating the same portion to himself. This led to the issuance of new titles: TCT No. 146787 to Juanito and TCT No. 146788 to Filomena and Manuel's children. Filomena later filed a case to annul the sale to Juanito due to non-payment. Juanito then sold his share to Bartolome Guevarra with a right to repurchase, and subsequently mortgaged the property to petitioner Francisco M. Angeles to secure loans for redemption and further advances. The other heirs contested the partition agreement, alleging forgery, and notified Angeles of their claims. Procedural History: Angeles foreclosed the mortgage on the property when Juanito failed to pay, and became the highest bidder at the public auction sale on June 28, 1982. Angeles was issued a final deed of sale and TCT No. 155284 on July 1, 1983. Angeles filed a petition for a writ of possession, which the trial court granted on August 23, 1984, ordering the sheriff to place Angeles in possession and eject Juanito, his wife, and other occupants. The private respondents, heirs of Filomena, filed an action (Civil Case No. 84-25611) to annul the sale by their mother to Juanito and the partition agreement. They sought a preliminary injunction against the writ of possession, which was denied. Despite this, the writ of possession was enforced on January 16, 1985, ejecting some of the private respondents, shortly after a restraining order was issued by the Court of Appeals. The Court of Appeals, in its decision dated April 24, 1986, granted the petition for certiorari, amending the writ of possession to exclude the private respondents and ordering their restoration to possession pending adjudication of their claims in Civil Case No. 84-25611. Angeles' motion for reconsideration was denied. The Petition: This case is a petition for review on certiorari filed by Francisco M. Angeles, seeking to overturn the decision of the Intermediate Appellate Court. Angeles argues that he was an innocent mortgagee and purchaser for value and in good faith, as Juanito's title was clear of liens and encumbrances at the time of the mortgage, and subsequent notices of lis pendens were recorded much later. He contends that under Act 3135, a writ of possession is a right of a purchaser in an extra-judicial foreclosure, and that the period for appeal had elapsed. The petition specifically questions the appellate court's finding that the writ of possession could not be implemented against the private respondents, who were not parties to the mortgage and foreclosure proceedings and were in adverse possession. Angeles asserts that his right, being first in time, is preferred in right. The core of the petition is to assert his right to possession based on his registered mortgage and subsequent foreclosure sale, free from unregistered claims.
Issue(s)
Whether the Court of Appeals committed a grave abuse of discretion amounting to lack of jurisdiction in amending the writ of possession to exclude the private respondents. Whether petitioner Francisco M. Angeles was an innocent mortgagee and purchaser for value and in good faith. Whether the writ of possession issued in an extrajudicial foreclosure sale can be enforced against third parties in actual possession of the property adversely to the judgment debtor.
Ruling
The petition for review on certiorari is denied. The decision of the respondent Intermediate Appellate Court is affirmed.
Ratio Decidendi
On the issue of whether the Court of Appeals committed a grave abuse of discretion amounting to lack of jurisdiction in amending the writ of possession to exclude the private respondents: The Supreme Court affirmed the ruling of the Court of Appeals. The Court held that the writ of possession, while generally ministerial upon the court to issue in favor of a purchaser in a foreclosure sale, has an exception when a third party is actually holding the property adversely to the judgment debtor. In this case, the private respondents were in actual possession of the property adversely to Juanito, as evidenced by the civil and criminal cases they filed. They were not parties to the mortgage or foreclosure proceedings, and they had been in possession even prior to the foreclosure sale, deriving their right from the original owner, Pablo Cayetano, not from Juanito. Therefore, the RTC, in issuing a writ of possession that included ejecting these third parties, acted without or in excess of its jurisdiction, constituting a grave abuse of discretion. The CA correctly limited the implementation of the writ to Juanito, Antoinette, and their agents. On the issue of whether petitioner Francisco M. Angeles was an innocent mortgagee and purchaser for value and in good faith: The Supreme Court agreed with the Court of Appeals that Angeles was not an innocent mortgagee and purchaser for value and in good faith. While Juanito's title was clean at the time of the mortgage, Angeles was notified in writing of the private respondents' demand that Juanito discharge the mortgage debt and reconvey the property due to the alleged forgery of the Partition Agreement. Angeles acknowledged receipt of this notice and assured the private respondents that he would not dispose of the property. This actual knowledge of adverse claims, even before the registration of notices of lis pendens, precluded him from claiming good faith. The Court reiterated the principle that one who purchases with knowledge of a defect in title cannot claim good faith, and that a purchaser cannot close his eyes to facts that should put him on guard. The Court noted that the notices of lis pendens were recorded after the foreclosure sale, but this fact was less significant than Angeles' actual knowledge of the adverse claims prior to the foreclosure. On the issue of whether the writ of possession issued in an extrajudicial foreclosure sale can be enforced against third parties in actual possession of the property adversely to the judgment debtor: The Supreme Court reiterated the established rule that a writ of possession may not be enforced against a third party who is in actual possession of the property adversely to the judgment debtor. Such third parties are not bound by the foreclosure decree unless they acquired possession from a party bound by the decree. The writ of possession is intended to eject only parties to the suit, those who came in under them pendente lite, and trespassers or intruders without title. The Court cited Rivero v. Natividad to emphasize that a court has no power to deprive a stranger in possession, who entered before the suit, of possession by enforcing a decree. The private respondents in this case clearly fell under the exception as they possessed the property adversely, were not parties to the mortgage or foreclosure, and had prior possession not derived from Juanito.
Main Doctrine
A writ of possession issued in an extrajudicial foreclosure sale cannot be enforced against a third party who is in actual possession of the property adversely to the judgment debtor, especially when such third party was not a party to the mortgage or foreclosure proceedings and has established their right to possession prior to the foreclosure sale.