De Los Angeles vs. Court of Appeals

An extrajudicial foreclosure sale conducted after the lifting of a status quo order is valid, and the issuance of a writ of possession to the purchaser is a ministerial duty under Section 8 of Act No. 3135, as amended. The property is not in custodia legis merely because an action to enjoin the sale is pending, since such an action is in personam. The mortgagor’s exclusive remedy to challenge the sale is a petition to set aside the sale and cancel the writ of possession, filed not later than thirty days after possession is given, pursuant to Section 112 of the Land Registration Act (Act No. 496).

Petra Farin and Benjamin Farin defaulted on a loan secured by a real estate mortgage over their property in favor of Marcelo Steel Corporation. The mortgagee initiated extrajudicial foreclosure proceedings under Act No. 3135. To forestall the sale, the Farins filed a civil action seeking an injunction. The trial court initially issued a status quo order but later dissolved it. The sheriff then proceeded with the public auction; Marcelo Steel Corporation emerged as the highest bidder and obtained a writ of possession. The Farins appealed the trial court’s dissolution of the injunction. A certiorari proceeding (G.R. No. L-35851) was also subsequently filed between the same parties.

• The property in dispute was covered by a real estate mortgage executed by the Farins in favor of Marcelo Steel Corporation.
• Upon the Farins’ default, Marcelo Steel Corporation initiated extrajudicial foreclosure proceedings under Act No. 3135, as amended by Act No. 4118.
• The Farins filed an action in the Court of First Instance to enjoin the foreclosure sale.
• The trial court issued a status quo order at the inception of the case, subsequently lifted it.
• After the lifting of the status quo order, Sheriff Benito Macrohon conducted the foreclosure sale, at which Marcelo Steel Corporation was the purchaser.
• A writ of possession was issued in favor of the purchaser. The Farins did not file a petition to set aside the sale and cancel the writ of possession within thirty days after the purchaser was given possession, as required under Section 112 of the Land Registration Act.
• The Farins appealed the trial court’s decision and also filed a separate petition for certiorari (G.R. No. L-35851) pending in the Supreme Court.

• Validity of Sale: Petitioners maintained that the sheriff merely performed a ministerial duty under Act No. 3135 after the trial court lifted the status quo order; the foreclosure sale was therefore regular and valid.
• Nature of the Action: Petitioners argued that the Farins’ action to enjoin the foreclosure was an action in personam, which did not place the property in custodia legis.
• Exclusive Remedy: Petitioners asserted that the Farins’ exclusive remedy to challenge the sale was a petition under Section 112 of the Land Registration Act, and their failure to file it within thirty days rendered the sale unassailable.

• Custodia Legis: Whether the mortgaged property was in custodia legis such that the foreclosure sale and the writ of possession were void.
• Effect of Appeal: Whether the pendency of the Farins’ appeal or of the related certiorari case (G.R. No. L-35851) barred the foreclosure sale.
• Remedy for Mortgagor: Whether the Farins’ failure to file a petition to set aside the sale under Section 112 of the Land Registration Act within thirty days from possession was fatal to their challenge.

• Custodia Legis: The property was not in custodia legis. The action to enjoin the foreclosure sale is a personal action in personam; the trial court did not acquire jurisdiction over the property by virtue of the complaint. The only sanction behind the status quo order was to punish anyone who would violate it — it did not vest the court with custody of the res.
• Effect of Appeal: Neither the Farins’ appeal from the trial court’s decision nor the pendency of G.R. No. L-35851 barred the foreclosure sale. The appeal did not automatically reinvest the status quo order or place the property under judicial custody.
• Remedy for Mortgagor: Pursuant to the ruling in De Garcia v. San Jose (94 Phil. 623), it is implicit in Section 8 of Act No. 3135 that the issuance of a writ of possession to the purchaser is a ministerial duty of the court. The mortgagor’s only remedy is to question the validity of the sale by a petition to set aside the sale and cancel the writ of possession, which must be filed not later than thirty days after possession is given, under Section 112 of the Land Registration Act. The Farins did not follow this procedure; consequently, the sale and the writ of possession must be respected.

• Action to enjoin foreclosure is in personam; no custodia legis — An action seeking to enjoin an extrajudicial foreclosure sale is a personal action, not an action in rem or quasi in rem. The filing of such a complaint and the issuance of a status quo order do not place the property under custodia legis. The only sanction of the status quo order is to punish its violation.
• Ministerial duty to issue writ of possession under Act No. 3135 — Under Section 8 of Act No. 3135, as amended, it is ministerial upon the court to issue a writ of possession in favor of the purchaser at a foreclosure sale of mortgaged property. The mortgagor cannot resist the writ on grounds extrinsic to the regularity of the sale.
• Exclusive remedy of mortgagor: Section 112, Land Registration Act — The mortgagor’s exclusive remedy to challenge the validity of a foreclosure sale and the consequent writ of possession is a petition to set aside the sale and cancel the writ, filed not later than thirty days after the purchaser is given possession. This summary proceeding under Section 112 of the Land Registration Act is mandatory. Failure to avail of it in a timely manner leaves the sale and possessory writ beyond judicial interference.

• “Contrary to the impression of movants, the property herein involved is not in custodia legis. The trial court did not acquire jurisdiction over it by virtue of respondents' complaint. The action to enjoin the foreclosure sale of said property is a personal action in personam. The court did not acquire jurisdiction over said property by virtue of the status quo order, the only sanction behind said order being merely to punish anyone who would violate the same.”
• “We reiterate that pursuant to the ruling of this Court in De Garcia vs. San Jose, 94 Phil. 623, it is implicit in Section 8 of Act 3135 that it is ministerial upon the court to issue a writ of possession in favor of the purchaser in a foreclosure sale of a mortgaged property and the only remedy of the mortgagor is ‘to question the validity of the sale in the manner provided by law’, namely, by a petition to set aside the sale and to cancel the writ of possession, which should be disposed of in accordance with the summary procedure prescribed in Section 112 of the Land Registration Act, provided the petition is filed ‘not later than thirty days after the purchaser was given possession.’”

• De Garcia v. San Jose, 94 Phil. 623 — Followed. The Supreme Court relied on this case for the principle that Section 8 of Act No. 3135 makes the issuance of a writ of possession ministerial and that the mortgagor’s sole remedy is a petition under Section 112 of the Land Registration Act within thirty days from possession.

• Section 8, Act No. 3135 (as amended by Act No. 4118) — Applied to hold that the court’s duty to issue a writ of possession in favor of the foreclosure purchaser is ministerial.
• Section 112, Act No. 496 (Land Registration Act) — Applied to establish that the mortgagor’s exclusive remedy to set aside the foreclosure sale and cancel the writ of possession must be pursued within thirty days from the purchaser’s possession; failure to do so rendered the challenge too late.

Justices Fernando, Antonio, Fernandez, and Aquino concurred.