Cabling vs. Lumapas

The ministerial duty of a court to issue a writ of possession to the purchaser in an extrajudicial foreclosure sale under Act No. 3135 ceases only when a third party holds the property by a title or right that is adverse to the judgment debtor—i.e., a right independent of and superior to that of the debtor, such as that of a co-owner, tenant, or usufructuary—and not when the third party’s possession rests on a mere conditional sale that reserves ownership in the seller until full payment of the purchase price. A conditional sale does not transfer title; the buyer’s possession is not in the concept of an owner and does not constitute adverse possession sufficient to defeat the purchaser’s right to an ex parte writ of possession.

Helen Cabling was the highest bidder at the extrajudicial foreclosure sale of a 216-square-meter property in Olongapo City covered by TCT No. T-14852. The sale was conducted on December 21, 2007; the Sheriff issued a Final Deed of Sale on February 14, 2009, and a new title (TCT No. T-14853) was issued in Cabling’s name on March 23, 2009. Cabling applied ex parte for a writ of possession, which was granted by the Regional Trial Court. Before the writ could be implemented, Joselin Lumapas moved to intervene as a third party in actual possession, asserting that the property had previously been sold to her by Aida Ibabao, the registered owner and judgment debtor-mortgagor, under a Deed of Conditional Sale. The RTC recalled the writ, ruling that a writ issued under Act No. 3135 cannot be enforced against a third person in possession who is not in privity with the debtor-mortgagor; the Court of Appeals sustained that ruling, prompting Cabling to elevate the matter to the Supreme Court.

• The Foreclosure Sale: Petitioner Helen E. Cabling was the highest bidder at the December 21, 2007 extrajudicial foreclosure sale of a 216-square-meter property in Sta. Rita, Olongapo City, covered by TCT No. T-14852 in the name of Aida Ibabao, the judgment debtor-mortgagor. A Final Deed of Sale was executed by the Sheriff on February 14, 2009. Title was consolidated and a new TCT No. T-14853 was issued in Cabling’s name on March 23, 2009.

• Application for Writ of Possession: On May 6, 2009, Cabling filed an ex parte Application for Issuance of a Writ of Possession with the RTC, Branch 75, Olongapo City. The RTC granted the application on May 19, 2009, issued a Writ of Possession on May 20, and a Notice to Vacate on May 25.

• Lumapas’s Claim and Intervention: Before implementation, respondent Joselin Tan Lumapas filed a Motion for Leave to Intervene as Party Defendant (with Urgent Motion to Hold in Abeyance Implementation) and an Answer in Intervention. Lumapas alleged that she was in actual possession of the property pursuant to a Deed of Conditional Sale executed between her and the registered owner/judgment debtor Aida Ibabao. The Deed of Conditional Sale stipulated a total price of ₱2.2 million and expressly provided that ownership would remain with the seller until full payment of the purchase price, at which point a deed of absolute sale would be executed. No deed of absolute sale had ever been executed in Lumapas’s favor.

• RTC’s Reversal: Initially, the RTC held the writ’s implementation in abeyance on June 1, 2009 and denied intervention on June 2, 2009. Upon reconsideration, the RTC granted Lumapas’s motion and recalled the writ in its July 14, 2009 order. It ruled that an ex parte writ of possession issued under Act No. 3135 cannot be enforced against a third person in actual possession who is not in privity with the debtor-mortgagor. The RTC directed the petitioner to resort to the appropriate judicial process. Petitioner’s motion for reconsideration was denied on September 10, 2009.

• CA Proceedings and Ruling: Petitioner sought certiorari under Rule 65, arguing that the RTC gravely abused its discretion. The CA dismissed the petition, holding that the obligation to issue a writ ceases to be ministerial once there is a third party in possession claiming a right adverse to the debtor-mortgagor and that the RTC correctly ordered a hearing to determine the nature of that possession.

• Nature of Lumapas’s Possession Not Adverse: Petitioner argued that while Lumapas was in actual possession, such possession was not adverse to the judgment debtor-mortgagor. Under the Deed of Conditional Sale, ownership remained with the seller until full payment of the purchase price; Lumapas’s possession was not in the concept of an owner, and her right was not independent of or superior to that of the mortgagor. Thus, the exception to the ministerial issuance of a writ of possession under Section 33, Rule 39 did not apply.

• Ministerial Duty Prevails: Petitioner maintained that the general rule—the purchaser in an extrajudicial foreclosure sale is entitled to a writ of possession as a matter of course upon consolidation of title—governed, and that the RTC committed grave abuse of discretion by recalling the writ and requiring a separate judicial action.

• Third Party in Possession Exception: Respondent countered that she was a third person in actual possession of the foreclosed property by virtue of a prior sale to her, thereby claiming a right adverse to that of the judgment debtor-mortgagor. Consequently, the RTC’s duty to issue an ex parte writ of possession ceased to be ministerial; a hearing was necessary to determine the nature of her possession before she could be ousted.

• Adverse Possession Exception: Whether a third party who is in actual possession of a foreclosed property under a deed of conditional sale that reserves ownership in the judgment debtor-mortgagor until full payment holds the property in a capacity adverse to the judgment obligor, thus removing the court’s ministerial duty to issue a writ of possession under Section 33, Rule 39 of the Rules of Court.

• Adverse Possession Exception: The exception did not apply. The obligation to issue a writ of possession in an extrajudicial foreclosure ceases to be ministerial only when a third party holds the property by adverse title or right—i.e., in a capacity independent of and superior to that of the judgment debtor, such as a co-owner, tenant, or usufructuary. Respondent Lumapas’s possession was grounded solely on a conditional sale that expressly reserved ownership in the seller until full payment. A conditional sale does not transfer title; the seller retains ownership and the buyer merely holds possession as a transferee of the seller’s right. No deed of absolute sale was ever executed, and the suspensive condition (full payment) remained unfulfilled. Thus, Lumapas’s possession was not adverse; she was not a possessor in the concept of an owner and did not hold a right superior to that of the judgment debtor-mortgagor. The general rule—that a writ of possession issues as a matter of course to the foreclosure purchaser after consolidation of title—governed. The RTC therefore gravely abused its discretion in recalling the writ, and the CA erred in affirming the RTC’s orders.

• Ministerial Issuance of Writ of Possession in Extrajudicial Foreclosure — Under Act No. 3135, as amended, after the foreclosure sale and during the redemption period, the court may issue a writ of possession upon ex parte motion and approval of a bond (Section 7). After the redemption period has lapsed and ownership has been consolidated in the purchaser’s name with issuance of a new certificate of title, the writ issues as a matter of course without need of bond or a separate action.

• Exception: Third Party with Adverse Title or Right — The ministerial duty ceases when a third party is actually holding the property adversely to the judgment obligor (Section 33, Rule 39, Rules of Court). The exception contemplates a third party who possesses the property in his own right under an adverse title or right—such as a co-owner, tenant, or usufructuary—and not a mere successor or transferee of the right of possession of the owner or judgment debtor. The third party must assert a right that is independent of and even superior to that of the judgment debtor-mortgagor.

• Effect of Conditional Sale on Ownership and Possession — In a contract of conditional sale, ownership or title is retained by the seller until the fulfillment of a positive suspensive condition, typically the full payment of the purchase price. The buyer’s possession, even if actual, is not in the concept of an owner and does not constitute adverse possession against the seller or the seller’s successors-in-interest. Until the condition is fulfilled, the seller remains the owner, and any third-party claim based solely on the unfulfilled conditional sale cannot defeat the right of a foreclosure purchaser to a writ of possession.

• "The well-settled rule is that in the extrajudicial foreclosure of real estate mortgages under Act No. 3135 (as amended), the issuance of a writ of possession is ministerial upon the court after the foreclosure sale … The writ of possession also issues as a matter of course, without need of a bond or of a separate and independent action, after the lapse of the period of redemption, and after the consolidation of ownership and the issuance of a new TCT in the purchaser’s name." — Articulates the baseline rule that governs the purchaser’s right.

• "Under Section 33, Rule 39 of the Rules of Court, which is made applicable to extrajudicial foreclosures of real estate mortgages, the possession of the property shall be given to the purchaser or last redemptioner unless a third party is actually holding the property in a capacity adverse to the judgment obligor." — Introduces the statutory exception.

• "We emphasize that the exception provided under Section 33, Rule 39 of the Rules of Court contemplates a situation in which a third party holds the property by adverse title or right, such as that of a co-owner, tenant or usufructuary, who possesses the property in his own right, and is not merely the successor or transferee of the right of possession of another co-owner or the owner of the property." — Defines the scope of adverse possession that defeats the ministerial duty.

• "The execution of a contract of conditional sale does not immediately transfer title to the property to be sold from seller to buyer. In such contract, ownership or title to the property is retained by the seller until the fulfillment of a positive suspensive condition which is normally the payment of the purchase price in the manner agreed upon." — Explains why a conditional vendee’s possession is not adverse and cannot block the issuance of the writ.

• China Banking Corp. v. Sps. Lozada, 579 Phil. 454 (2008) — Followed and applied for the definition of the exception to the ministerial issuance of a writ of possession: the third party must hold the property by adverse title or right in his own right, not merely as a successor or transferee of the owner’s right of possession.

• Gomez v. Court of Appeals, 395 Phil. 115 (2000) — Applied to establish that a conditional sale does not transfer title and that ownership remains with the seller until full payment, thereby negating any claim of adverse ownership or possession by the conditional buyer.

• Bank of the Phil. Islands v. Icot, 618 Phil. 320 (2009) — Cited for the general rule that a writ of possession issues as a matter of course during and after the redemption period under Act No. 3135, subject to the exception under Section 33, Rule 39.

• Dev’t Bank of the Phils. v. Prime Neighborhood Ass’n., 605 Phil. 660 (2009) — Cited for the rule that after consolidation of title and issuance of a new TCT, the writ of possession issues without need of a bond or separate action.

• Act No. 3135, Section 7 (as amended by Act No. 4118) — Governs extrajudicial foreclosure of real estate mortgages. The provision allows the court to issue a writ of possession upon ex parte motion of the purchaser during the redemption period upon the filing of a bond, and as a matter of course after consolidation of title. The Court relied on this to establish the ministerial nature of the writ’s issuance.

• Section 33, Rule 39 of the Rules of Court — Made applicable to extrajudicial foreclosures; provides that possession shall be given to the purchaser or last redemptioner “unless a third party is actually holding the property adversely to the judgment obligor.” The Court interpreted this exception as requiring a truly adverse and independent right, which the conditional vendee’s possession did not satisfy.

Associate Justice Mariano C. Del Castillo; Associate Justice Jose Portugal Perez; Associate Justice Jose Catral Mendoza (Acting Member); Associate Justice Estela M. Perlas-Bernabe.