Policarpio v. Active Bank
REITERATIONFacts
The Antecedents: Spouses Septem and Grelita Ricaza mortgaged their property in Ayala Alabang, Muntinlupa City, covered by Transfer Certificate of Title (TCT) No. 207131, to Active Bank (formerly Maunlad Savings and Loan Bank) on October 2, 1996. Due to the spouses' failure to settle their obligation, the bank foreclosed the mortgage. The spouses failed to redeem the property within the redemption period, leading the bank to consolidate its ownership. Meanwhile, petitioner Iluminada "Lumen" R. Policarpio claimed she purchased the property from Septem Ricaza via a Deed of Sale dated April 22, 1998, which was unregistered and signed only by the husband. Procedural History: Active Bank filed a Petition for Issuance of Writ of Possession with the Regional Trial Court (RTC) of Muntinlupa City, Branch 276. Policarpio opposed the Petition based on her Deed of Sale. The RTC set a hearing, but neither Policarpio nor her counsel appeared. On January 18, 2002, the RTC ordered the issuance of the writ, observing that the Deed of Sale appeared void as it lacked the wife's consent for the sale of conjugal property. Policarpio filed a petition for certiorari and prohibition with the Court of Appeals (CA), which denied the Petition on August 21, 2002, citing the questionable validity of the sale, the lack of registration, and laches. The Petition: Policarpio filed a Petition for Review on Certiorari under Rule 45 before the Supreme Court. She argued that she was a third party in possession as contemplated under Section 33, Rule 39 of the Rules of Court, which should have precluded the ministerial issuance of the Writ of Possession. She further contended that the lower courts erred in finding her Deed of Sale void and in ruling that her right of action was barred by laches.
Issue(s)
Whether petitioner is a third party in possession of the property contemplated under Section 33, Rule 39 of the Rules of Court such as to preclude the trial court from issuing a Writ of Possession in favor of respondent. Whether the Deed of Sale executed by only one spouse over conjugal property is valid against a prior registered mortgage. Whether petitioner's claim is barred by laches.
Ruling
The Supreme Court DENIED the petition and AFFIRMED the Decision and Resolution of the Court of Appeals.
Ratio Decidendi
On Issue 1: The Supreme Court held that while the issuance of a writ of possession is generally ministerial, Section 33, Rule 39 of the Rules of Court provides an exception when a third party is actually holding the property adversely to the judgment obligor. In such cases, the trial court must conduct a hearing to determine the nature of the possession. Here, the RTC conducted the required hearing, but the petitioner failed to appear, justifying the court's summary resolution based on the submitted documents. The Court found that the petitioner did not qualify as an adverse possessor because her claim was based on a sale that occurred after the mortgage was already registered. Unlike the precedent in Philippine National Bank v. Court of Appeals, where the third party's possession predated the mortgage and the bank had knowledge of it, the mortgage here preceded the sale and the bank had no notice of the petitioner's occupancy. On Issue 2: The Court affirmed that the validity of the sale was questionable because it involved conjugal property but was signed only by Septem Ricaza without proof of authority from his wife, Grelita. Under the law, the sale of conjugal property requires the consent of both spouses. Furthermore, the Court emphasized that the Deed of Sale was not registered, which is a fatal defect when competing against a registered mortgage. The petitioner, being a lawyer, was expected to be more circumspect in protecting her interests by verifying the dorsal page of the TCT where the mortgage was annotated. Consequently, the bank had no legal obligation to honor the petitioner's possession, while the petitioner had a legal obligation to honor the bank's prior ownership and existing right to possess. On Issue 3: The Court agreed with the Court of Appeals that laches worked against the petitioner. Laches is the failure or neglect, for an unreasonable and unexplained length of time, to do that which, by exercising due diligence, could or should have been done earlier. The petitioner failed to actively prosecute her claim during the RTC proceedings and failed to appear at the hearing intended to determine the nature of her possession. Given the urgency and grave consequences of a writ of possession, her inaction and failure to register the sale or verify the title's encumbrances demonstrated a lack of diligence that barred her from seeking equitable relief.
Main Doctrine
Ordinarily, a purchaser of property in an extrajudicial foreclosure sale is entitled to possession of the property, and the trial court's duty to issue a writ of possession is ministerial. However, this duty ceases to be ministerial under Section 33, Rule 39 of the Rules of Court if a third party is actually holding the property adversely to the judgment obligor. To qualify as an adverse possessor, the party's right must not be derived from the judgment debtor after the mortgage was already constituted and registered. This ensures that the integrity of the Torrens system is maintained by prioritizing registered interests over subsequent unregistered claims.