Sy v. China Banking Corporation
REITERATIONFacts
The Antecedents: This case concerns Lot No. 4740, originally titled in the name of Bernandina Fernandez. Bernandina executed a simulated Deed of Absolute Sale over the property in favor of her son, Priscilo, to facilitate his business. Priscilo subsequently mortgaged and defaulted on the property, leading to its foreclosure. Priscilo then authorized his sister, Elena, to redeem the property on behalf of their brothers, herein petitioners Alfredo and Rodolfo Sy, who were the actual occupants. However, Elena allegedly forged Priscilo's signature and executed a Deed of Waiver and Relinquishment of Rights and a Deed of Donation in favor of her children, Eleazar Jr. and Elaine Adlawan. Eleazar Jr. and Elaine mortgaged the property to China Banking Corporation (China Bank), defaulted, and China Bank foreclosed and consolidated its title to the property. Procedural History: China Bank filed a Petition for the Issuance of a Writ of Possession, which the Regional Trial Court (RTC) initially granted. However, the RTC later dissolved this writ upon the motion of petitioners Alfredo and Rodolfo Sy, who claimed to be the actual possessors and alleged fraud in the title transfer. China Bank's appeal of this dissolution was dismissed for failure to pay docket fees. Subsequently, China Bank filed a second Petition for the Issuance of a Writ of Possession, which the RTC granted. Petitioners' opposition to this second writ was denied by the RTC. The Court of Appeals (CA) affirmed the RTC's denial, holding that the remedy of certiorari was improper and that the prior dissolution of the writ did not bar a new application. The CA also found that res judicata did not apply and gave probative value to an undertaking signed by the petitioners. The Petition: Petitioners Alfredo F. Sy and Rodolfo F. Sy filed a Petition for Review on Certiorari under Rule 45 of the Rules of Court, assailing the Decision and Resolution of the Court of Appeals. They argue that the CA erred in affirming the RTC's issuance of the second Writ of Possession. The core of their argument is that the exception to the general rule on the ministerial issuance of a writ of possession applies, as they are third parties actually holding the property adversely to the judgment obligor. They presented evidence of forgery in the deeds that led to the transfer of title to the mortgagors and highlighted the prior dissolution of a writ of possession in China Bank's favor, which became final. They contend that China Bank's second application was an improper attempt to circumvent the prior ruling and that banks are expected to exercise greater diligence in their dealings.
Issue(s)
Whether the issuance of the Writ of Possession in favor of China Bank and against petitioners was proper, considering the petitioners' claim of adverse possession and pending civil action. Whether the initial dissolution of the first Writ of Possession was binding and barred China Bank from praying for another writ of possession. Whether res judicata was applicable to China Bank's second application for a writ of possession, and the effect of the prior dissolution on subsequent applications.
Ruling
The petition is meritorious. The assailed Decision and Resolution of the Court of Appeals are REVERSED and SET ASIDE. The Writ of Possession dated January 4, 2010, addressed to Sheriff Generoso Regalado is RECALLED and DISSOLVED.
Ratio Decidendi
On the Propriety of the Writ of Possession: The Court reiterated that the issuance of a writ of possession in favor of a purchaser in an extrajudicial foreclosure sale is a ministerial duty upon consolidation of title, unless a third party is actually holding the property adversely to the judgment obligor. This exception applies here, as petitioners claim ownership based on their mother's title, presented evidence of forgery, filed an independent civil action, and are the actual possessors. The dismissal of China Bank's forcible entry case further supports the petitioners' adverse possession. On the Binding Effect of the Initial Dissolution: The initial dissolution of the first Writ of Possession was binding. The CA erred in holding otherwise. China Bank's appeal of the dissolution was dismissed, and its motion for reconsideration was denied, making the dissolution final. China Bank's failure to mention the dissolution in its second application and its nine-year delay were criticized. On the Applicability of Res Judicata: While res judicata is not applicable because an ex parte petition for a possessory writ is not a litigious judicial process, this does not negate the binding effect of the final dissolution of the first writ of possession, which was a decided matter between the parties concerning the same property and the same claim for possession.
Main Doctrine
While the issuance of a writ of possession in favor of a purchaser in an extrajudicial foreclosure sale is generally a ministerial duty of the court, this rule admits of an exception when a third party is in actual possession of the property adversely to the judgment debtor, in which case a hearing must be conducted to determine the rights of the adverse possessor.