Villanueva v. Cherdan Lending Investors Corp.
REITERATIONFacts
The Antecedents: Spouses Peñaredondo obtained a loan from Cherdan Lending Investors Corporation (Cherdan), secured by a real estate mortgage. Upon failure to pay, Cherdan extrajudicially foreclosed the mortgage, becoming the highest bidder. After the redemption period expired, Cherdan consolidated ownership and obtained a new TCT. Cherdan then filed an ex-parte petition for a writ of possession. Procedural History: The RTC initially granted the writ of possession. However, upon motion for reconsideration by petitioner Emmanuel C. Villanueva (who claimed ownership and possession adverse to the mortgagors) and the spouses Peñaredondo, the RTC recalled and set aside the writ, allowing Villanueva to remain in possession pending resolution of related cases. Cherdan later filed a motion for an alias writ of possession after a civil case for nullity of mortgage filed by a mortgagor was dismissed, but this was denied by the RTC. Cherdan then filed a special civil action for certiorari with the Court of Appeals (CA), which annulled the RTC orders and directed the issuance of an alias writ of possession. The Petition: Petitioner Villanueva sought review of the CA decision, arguing that the CA erred in directing the issuance of the writ of possession despite his adverse claim of ownership and actual possession.
Issue(s)
Whether the Court of Appeals erred in requiring petitioner Villanueva to comment on a petition for certiorari wherein he was not impleaded as a party. Whether Cherdan's petition for certiorari was barred by a prior court order; and whether Cherdan's petition for certiorari was the proper remedy. Whether there exists a legal obstacle to placing Cherdan in possession of the property. Whether the CA decision and resolution are in accord with Supreme Court decisions on the matter of writs of possession. On the procedural issues raised.
Ruling
The petition is meritorious. The Court of Appeals Decision dated October 31, 2006 and Resolution dated May 10, 2007 in CA-G.R. SP No. 89910 are REVERSED and SET ASIDE. The Orders dated December 20, 2004 and March 8, 2005 of the Regional Trial Court, Parañaque City, Branch 258 in LRC Case No. 01-0123, are REINSTATED.
Ratio Decidendi
On the CA's reversal: The Court of Appeals erred in annulling the RTC orders and directing the issuance of an alias writ of possession. By doing so, the CA disregarded the established exception to the ministerial issuance of the writ and effectively ordered the dispossession of a third party without affording them due process and a determination of their adverse claim of ownership. The CA's reliance on cases involving mortgagors' objections was misplaced given the distinct factual milieu of a third-party adverse possessor. On the applicability of cited cases; and On the propriety of the writ of possession: The Court distinguished the present case from Ancheta v. Metropolitan Bank and Trust Company, Inc. and PNB v. Sanao Marketing Corporation. In those cases, the oppositors were parties to the mortgage and foreclosure proceedings, and their objections were based on the pendency of cases challenging the validity of the mortgage or foreclosure. In contrast, petitioner Villanueva was a stranger to the mortgage and foreclosure proceedings, claiming ownership adverse to the mortgagor, and his objection was based on his actual possession and claim of ownership. Therefore, the principle that the pendency of a case challenging the mortgage is not a bar to the issuance of a possessory writ, as applied in Ancheta and PNB, was deemed inapplicable here. Instead, the Court found the principles laid down in cases involving third-party adverse possessors to be controlling. The issuance of a writ of possession in extrajudicial foreclosure proceedings is generally ministerial upon the court. However, this ministerial duty ceases when it appears that a third party is in actual possession of the property and claims a right adverse to that of the judgment debtor or mortgagor. In such cases, the third party's claim of ownership must be determined through a proper judicial proceeding, respecting the right to due process. Article 433 of the Civil Code mandates that the true owner must resort to judicial process for recovery when possession is under a claim of ownership. An ex parte petition for a writ of possession is not the appropriate judicial process to dispossess a third party claiming adverse ownership, as it does not afford the third party an opportunity to be heard on their claim. To enforce the writ against such a party would be a violation of due process and would amount to taking property without proper judicial intervention. The Court reiterated that the purchaser's right of possession is recognized against the judgment debtor and successors-in-interest, but not against persons whose possession is adverse to the latter. On the RTC's recall of the writ: The RTC correctly recalled and set aside the writ of possession when it was established that petitioner Villanueva was in actual possession of the property and asserting a claim of ownership adverse to the mortgagors. This action was in accordance with the exception to the ministerial duty of issuing the writ, ensuring that Villanueva's claim of ownership would be properly adjudicated through due process. The subsequent denial of the alias writ of possession by the RTC was also justified, as the underlying issue of adverse possession and ownership had not been resolved. On the propriety of the writ of possession: The issuance of a writ of possession in extrajudicial foreclosure proceedings is generally ministerial upon the court. However, this ministerial duty ceases when it appears that a third party is in actual possession of the property and claims a right adverse to that of the judgment debtor or mortgagor. In such cases, the third party's claim of ownership must be determined through a proper judicial proceeding, respecting the right to due process. Article 433 of the Civil Code mandates that the true owner must resort to judicial process for recovery when possession is under a claim of ownership. An ex parte petition for a writ of possession is not the appropriate judicial process to dispossess a third party claiming adverse ownership, as it does not afford the third party an opportunity to be heard on their claim. To enforce the writ against such a party would be a violation of due process and would amount to taking property without proper judicial intervention. The Court reiterated that the purchaser's right of possession is recognized against the judgment debtor and successors-in-interest, but not against persons whose possession is adverse to the latter. On the procedural issues raised: While the petition raised several procedural issues, the Court found the core substantive issue regarding the propriety of the writ of possession to be meritorious, rendering a detailed discussion of the procedural points unnecessary for the resolution of the case. The primary concern was the protection of due process for a third-party possessor claiming adverse ownership.
Main Doctrine
The issuance of a writ of possession in extrajudicial foreclosure is ministerial, but this rule admits of exceptions, particularly when a third party is in actual possession of the property claiming ownership adverse to the mortgagor, in which case, due process requires a judicial determination of such claim.