China Banking Corporation v. Spouses Oscar and Lolita Ordinario
REITERATIONFacts
1. The Antecedents: China Banking Corporation (petitioner) granted three loans totaling P27,353,000.00 to TransAmerican Sales and Exposition, Inc., owned by spouses Jesus and Lorelie Garcia. These loans were secured by real estate mortgages on forty-five parcels of land owned by Jesus Garcia. Upon TransAmerican's failure to pay, petitioner bank foreclosed the mortgages extrajudicially, and the properties were sold at public auction to the bank as the highest bidder. 2. Procedural History: Following the auction sale, petitioner bank filed an ex parte petition for a writ of possession with the Regional Trial Court (RTC) of Quezon City. The RTC granted the petition, ordering the issuance of the writ. However, spouses Oscar and Lolita Ordinario (respondents) filed a motion for reconsideration, asserting they had purchased one of the parcels of land (covered by TCT No. 7637) and were thus indispensable parties who had not been properly notified. The RTC denied their motion. On appeal, the Court of Appeals reversed the RTC's order, excluding the property covered by TCT No. 7637 from the writ of possession. The Court of Appeals subsequently denied petitioner's motion for reconsideration. 3. The Petition: Petitioner China Banking Corporation seeks review on certiorari of the Court of Appeals' decision and resolution. The petition argues that the Court of Appeals erred in setting aside the RTC's order and excluding the property covered by TCT No. 7637 from the writ of possession. Petitioner contends that the RTC, acting as a land registration court, correctly found that the respondents, as third-party claimants, should have pursued their claim through a separate action or a terceria, rather than a motion for reconsideration, and that the RTC's order granting the writ of possession had become final and executory.
Issue(s)
Whether the Court of Appeals erred in setting aside the RTC orders and excluding the property covered by TCT No. 7637 from the writ of possession. Whether the third party claiming the property must be holding it adversely to the owner for the exception to the issuance of a writ of possession to apply. Whether the April 10, 1991 order granting the writ of possession had become final and executory.
Ruling
The petition is GRANTED. The Decision and Resolution of the Court of Appeals are REVERSED and SET ASIDE. The orders of the RTC directing the issuance of a writ of possession in favor of petitioner bank are AFFIRMED.
Ratio Decidendi
On the first issue: The Court held that the Court of Appeals committed palpable error in granting the respondents' motion for reconsideration and setting aside the RTC orders. Under Section 7 of Act No. 3135, the purchaser in a foreclosure sale is entitled to possession, and the issuance of a writ of possession is a ministerial duty of the trial court. The Court emphasized that no discretion is left to the trial court in granting such a writ. Any question regarding the validity of the sale or the rights of adverse parties should be determined in a subsequent proceeding, not by denying the writ of possession. On the second issue: The Court clarified that while Section 33, Rule 39 of the 1997 Rules of Civil Procedure provides an exception to the issuance of a writ of possession when a third party is actually holding the property adversely to the judgment debtor, this exception does not warrant the denial of the writ through a motion for reconsideration. Instead, such adverse third parties have specific remedies available, namely, filing a terceria to claim the property from the sheriff or instituting a separate action to vindicate their claim of ownership or possession. The Court noted that the respondents' resort to a motion for reconsideration was a procedural misstep. On the third issue: The Court affirmed that the April 10, 1991 order granting the writ of possession had become final and executory. The Court reiterated that the proceedings for the issuance of a writ of possession in cases of extrajudicial foreclosure are ex parte and in rem, and thus bind all parties, including those who may have acquired rights over the property after the mortgage was constituted and registered. The respondents' claim of purchase in November 1989, after the mortgage was constituted, did not divest the bank of its right to seek possession via a writ.
Main Doctrine
A writ of possession is a ministerial duty of the trial court to issue to a purchaser in a foreclosure sale, and any question regarding the validity of the sale or the rights of adverse third parties must be determined in a subsequent proceeding, not through a motion for reconsideration of the writ of possession.