Bank of the Philippine Islands v. Icot
REITERATIONFacts
The Antecedents: Spouses Vicente and Trinidad Velasco obtained a loan from petitioner Bank of the Philippine Islands (BPI) secured by a real estate mortgage over a parcel of land. The spouses Velasco failed to pay the loan, leading to the foreclosure of the mortgage and BPI becoming the highest bidder at the auction sale. Subsequently, BPI consolidated its ownership and obtained a new title in its name. Meanwhile, respondents, claiming ownership and possession of the subject property since 1964 through an extrajudicial settlement of their father's estate, filed cases for quieting of title against the Velascos upon learning of the mortgage. A compromise agreement was later entered into, recognizing respondents' ownership and acknowledging that the property was included in the mortgage to BPI. Procedural History: Following the compromise agreement, BPI entered into a Contract to Sell with Vicente Velasco, which was later canceled due to non-payment. Respondents offered to purchase the property from BPI, but their offers were rejected. BPI then filed a Petition for the Issuance of a Writ of Possession with the Regional Trial Court (RTC) of Mandaue City. The RTC granted the petition and ordered the issuance of the writ. Respondents moved for reconsideration, which was denied. They then filed a Petition for Certiorari with the Court of Appeals, which reversed the RTC's decision and set aside the writ of possession. BPI's motion for reconsideration was subsequently denied by the Court of Appeals. The Petition: Petitioner BPI filed this petition for review under Rule 45 of the 1997 Rules of Civil Procedure, seeking to reverse the Court of Appeals' decision. The sole issue presented is whether BPI is entitled to the issuance of a writ of possession over the subject property. BPI argues that as the purchaser in an extrajudicial foreclosure sale, it has a right to possession. However, the Court of Appeals found that respondents are third parties in possession of the property under a title adverse to the judgment obligor, Velasco, and that BPI's right to a writ of possession is not ministerial in such cases, requiring BPI to resort to a separate judicial action for recovery.
Issue(s)
Whether petitioner BPI is entitled to the issuance of a writ of possession over the subject property, specifically considering the rights of third parties in possession. Whether the respondents, as third parties in possession claiming adverse title based on an extrajudicial settlement and subsequent actions, can be dispossessed via an ex parte writ of possession, and the effect of the Compromise Agreement on their claim.
Ruling
The petition is denied. The Court affirmed the Court of Appeals' decision reversing the RTC's order for the issuance of a writ of possession.
Ratio Decidendi
On the entitlement to a writ of possession against third parties: The Court reiterated that while a writ of possession is generally issued after extrajudicial foreclosure, this right is not absolute when a third party is in actual possession of the property claiming a right adverse to the judgment obligor. Section 33 of Rule 39 of the Revised Rules of Court explicitly states that possession shall be given to the purchaser unless a third party is actually holding the property adversely to the judgment obligor. The Court emphasized that an ex parte petition for a writ of possession is not a "judicial process" in the sense of an ejectment suit or reivindicatory action where ownership claims can be fully adjudicated. Issuing a possessory writ against such a third party would violate their right to due process, as they would be summarily ejected without a proper hearing on their adverse claim. The actual possessor is presumed to have a just title, which must be overcome through appropriate judicial action. On the respondents' adverse claim and the effect of the Compromise Agreement: The respondents are considered third parties in possession of the subject property, claiming title by virtue of an extrajudicial settlement of their father's estate executed in 1964, which is adverse to the mortgagor, Velasco. Their filing of a quieting of title case against Velasco and Velasco's subsequent recognition of their ownership in the Compromise Agreement further solidified their adverse claim. The Court clarified that respondents were not parties to the mortgage contract between Velasco and BPI. Their offer to repurchase the property from BPI was not an acknowledgment of BPI's superior title or an assumption of Velasco's obligations, but rather an attempt to protect their claimed possession. Therefore, BPI's right to a writ of possession cannot be invoked against respondents, whose possession is presumed to be under a just title that BPI must overcome in a separate judicial proceeding.
Main Doctrine
A writ of possession may not be issued against a third party in possession of the property who claims a right adverse to the judgment obligor, as this would violate the third party's right to due process. The purchaser's right to possession is recognized only as against the judgment debtor and his successors-in-interest, not against persons holding adversely.