Rural Bank of Sta. Barbara v. Centeno
REITERATIONFacts
1. The Antecedents: Spouses Gregorio and Rosario Centeno mortgaged their properties, Cadastral Lot Nos. 964, 958, and 959, to the Rural Bank of Sta. Barbara (Iloilo), Inc. as security for a loan. Upon default, the bank foreclosed the mortgage extrajudicially, and the bank emerged as the highest bidder. The Certificate of Sale was issued on October 10, 1969, and registered on December 13, 1971. Despite the expiration of the redemption period, the Spouses Centeno remained in possession, and their son, Gerry Centeno, eventually took over cultivation in 1983 and purchased the lots from his parents in 1988. Gerry Centeno subsequently obtained tax declarations in his name. 2. Procedural History: The Rural Bank of Sta. Barbara (Iloilo), Inc. obtained a Final Deed of Sale for the subject lots on November 25, 1997, and secured tax declarations in its name in 1998. On March 19, 1998, the bank filed a petition for a writ of possession with the Regional Trial Court (RTC). The RTC ruled in favor of the bank, finding it to be the lawful owner and deeming the issuance of the writ ministerial. Gerry Centeno appealed this decision to the Court of Appeals (CA). The CA reversed the RTC's decision, considering Gerry Centeno a third party holding the property adversely and thus entitled to ventilate his claims in a separate proceeding. 3. The Petition: The Rural Bank of Sta. Barbara (Iloilo), Inc. filed a Petition for Review on Certiorari with the Supreme Court, assailing the CA's decision. The bank argues that Gerry Centeno is a mere successor-in-interest of the original mortgagors and not a third party holding the property adversely to the judgment obligor, as contemplated by law. Therefore, the bank contends that the RTC had a ministerial duty to issue the writ of possession. The core issue before the Supreme Court is whether the bank is entitled to a writ of possession over the subject lots.
Issue(s)
Whether petitioner is entitled to a writ of possession over the subject lots. Whether respondent is a third party holding the property adversely to the judgment obligor; and the relevance of the identity of the lots and laches.
Ruling
The petition is meritorious. The January 31, 2012 Decision of the Court of Appeals is REVERSED and SET ASIDE. The October 8, 2002 Decision of the Regional Trial Court is REINSTATED.
Ratio Decidendi
On the entitlement to a writ of possession: The Court reiterated the well-established principle that after the consolidation of title in the purchaser's name due to the mortgagor's failure to redeem, the purchaser's right to possession becomes absolute. The issuance of a writ of possession in such cases is a ministerial function of the court, provided there is no third party actually holding the property adversely to the judgment obligor. Section 33, Rule 39 of the 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. This rule is designed to give effect to the finality of the foreclosure sale once the redemption period has expired and title has consolidated. On whether respondent is a third party holding the property adversely; and the identity of the lots and laches: The Court clarified that the phrase "a third party who is actually holding the property adversely to the judgment obligor" contemplates a situation where the third party possesses the property by their own independent right, such as a co-owner, tenant, or usufructuary, and not merely as a successor or transferee of the judgment obligor's right of possession. In this case, respondent Gerry Centeno acquired the subject lots from his parents, Sps. Centeno, after the foreclosure sale and registration of the Certificate of Sale. Therefore, respondent is merely a successor-in-interest of the original mortgagors, Sps. Centeno. As such, he cannot be considered a "third party holding the property adversely" in the legal contemplation required to stay the ministerial issuance of a writ of possession. His claim of purchase from his parents does not divest him of his status as a successor-in-interest to the original mortgagors whose rights were extinguished by the foreclosure and failure to redeem. The Court noted that the RTC had already passed upon the petitioner's title and established the identity of the lots during the proceedings for the writ of possession. Absent a clear showing of abuse or capriciousness, the RTC's findings of fact are binding. Furthermore, the issue of laches, along with other defenses respondent might have, should be ventilated in a proper proceeding, as the current case solely revolves around the ministerial issuance of a writ of possession.
Main Doctrine
The issuance of a writ of possession to a purchaser in an extrajudicial foreclosure sale becomes a ministerial function upon consolidation of title in the purchaser's name, unless the property is in the possession of a third party claiming a right adverse to that of the mortgagor. A successor-in-interest of the mortgagor is not considered such a third party.