Okabe vs. Saturnino

A third-party purchaser who acquires an extrajudicially foreclosed property after the expiration of the redemption period may still avail of the remedy of a writ of possession, but the issuance thereof is no longer ex-parte and non-adversarial; the court must first conduct a hearing to determine whether the property is in the possession of the mortgagor or of a third party holding the same adversely to the defaulting debtor. If possession remains with the mortgagor, the writ may issue; if the property is held by an adverse third party, the remedy of a writ of possession is unavailable and the purchaser must resort to an ordinary action of ejectment.

The controversy concerns an eighty-one-square-meter parcel of land in Barangay San Antonio, Makati City, initially covered by Transfer Certificate of Title No. 175741 in the name of the wife of respondent Ernesto A. Saturnino. In 1994 the spouses obtained a loan from the Philippine National Bank, secured by a real estate mortgage over the property, which contained a clause appointing the mortgagee as attorney-in-fact of the mortgagors with authority, upon breach, to take actual possession of the mortgaged property without the necessity of any judicial order or permission. Act No. 3135, as amended by Act No. 4118, regulates the sale of property under special powers inserted in or annexed to real estate mortgages and supplies the summary remedy by which a purchaser at a foreclosure sale may be placed in possession.

The property in dispute is an eighty-one-square-meter parcel of land located in Barangay San Antonio, Makati City, then covered by Transfer Certificate of Title No. 175741 in the name of the wife of respondent Ernesto A. Saturnino. In 1994 the spouses obtained a loan from the Philippine National Bank, secured by a real estate mortgage over the property. The mortgage contract contained a clause appointing the mortgagee as attorney-in-fact of the mortgagors, with full power and authority, effective upon breach of any condition of the mortgage, to take actual possession of the mortgaged property without the necessity of any judicial order or permission. Because the couple failed to settle their loan obligation, the bank extrajudicially foreclosed the mortgage. On August 24, 1999, the Certificate of Sale was inscribed on TCT No. 175741. Respondent did not redeem the property within the redemption period; consolidation of ownership was inscribed on October 13, 2006, and a new transfer certificate of title was issued in favor of the bank. Without taking possession of the property, the bank sold the land to petitioner Fe H. Okabe on June 17, 2008, and TCT No. 225265 was issued in petitioner's name on August 13, 2008.

On November 27, 2008, petitioner filed with the Regional Trial Court of Makati City an Ex-Parte Petition for Issuance of Writ of Possession over the subject property. Respondent submitted an Opposition with Motion to Dismiss, to which petitioner filed a Reply to/Comment on the Opposition with Motion to Dismiss; respondent then filed an Oppositor-Movant's Rejoinder with Motion for Postponement. On April 30, 2009, the RTC issued an Order denying the Opposition with Motion to Dismiss for lack of merit, citing Ramos vs. Mañalac and Lopez and opining that the issuance of a writ of possession in petitioner's favor was merely a ministerial and complementary duty of the court. Respondent filed an Urgent Motion for Clarification of the April 30, 2009 Order, then a Motion for Reconsideration, followed by a Supplement to the Motion for Reconsideration, which petitioner opposed. On July 29, 2009, the RTC denied the Motion for Reconsideration and the Supplement, ruling that petitioner's right to be placed in absolute possession of the property was a consequence of her right of ownership and that she could not be deprived of possession, being the registered owner.

Dismayed, respondent filed on August 17, 2009 a Petition for Certiorari with the Court of Appeals questioning the RTC Orders. He argued that petitioner was already estopped from asking for a writ of possession because the very Deed of Absolute Sale from which her alleged right emanated explicitly gave her the only option of filing an ejectment suit, and that Section 7 of Act No. 3135, as amended by Act No. 4118, should be construed strictly. He prayed that the assailed Orders be reversed and set aside and that a temporary restraining order be issued enjoining the RTC from hearing the petition. Meanwhile, on November 23, 2009, the RTC rendered a Decision in favor of petitioner, granting the ex-parte petition and ordering that the corresponding writ of possession be issued in her favor; no bond was required of her, she being the successor-in-interest of the bank, which had consolidated title in its name prior to her. Respondent's motion to set aside that Decision was denied in an Order dated April 27, 2010.

On May 13, 2010, petitioner filed a Motion for Execution of Judgment, which the RTC granted on July 8, 2010; on the same date, the branch clerk of court issued a Writ of Possession addressed to the Sheriff ordering the latter to place petitioner in possession of the subject property. On July 14, 2010, the Sheriff, together with petitioner, tried to cause the service of the notice to vacate upon respondent, but the property had already been abandoned by its occupants; the Sheriff, with the assistance of barangay officials, thus posted the notice to vacate together with the writ of possession in front of the gate of the property. On July 20, 2010, the Sheriff, petitioner, and the barangay officials returned to the property; finding that no one was occupying it, the Sheriff turned over possession to petitioner free and clear of occupants and personal property. In the proceedings before the Court of Appeals, respondent filed a Motion to Admit Herein Memorandum of Authorities in Amplification/Support of the Position of Petitioner in this Case and Reiterating Prayer for Issuance of a Temporary Restraining Order and/or Writ of Preliminary Injunction, alleging that the RTC was about to issue the writ of possession prayed for and that a TRO was necessary to prevent great and irreparable injury. On July 19, 2010, the Court of Appeals issued a Resolution granting a TRO in respondent's favor and commanding petitioner and the RTC to refrain from committing any acts relative to the proceedings before it upon the posting of a bond. In a Manifestation dated July 21, 2010, the RTC Presiding Judge informed the Court of Appeals that, as much as the court would have wanted to comply with the directive, it could no longer do so because the writ of possession had already been implemented by the Branch Sheriff on July 20, 2010.

The RTC's grant of the writ rested on its findings that the property had not been redeemed within the redemption period, that ownership had been consolidated in the bank and a new title issued in its name, that the bank thereafter sold the land to petitioner, and that a new certificate of title had been issued in petitioner's name. It likewise appeared that by July 20, 2010 the property had been abandoned by its occupants and possession had been turned over to petitioner.

• Registered Ownership and Right to Possession: Petitioner argued that her possession of the subject property as its registered owner should not be disturbed, and that respondent, having failed to redeem the property within the redemption period, should not be granted a favor nor rewarded for his failure to redeem and for his illegal occupation of the property.
• Mootness of the Possessory Issue: Petitioner contended that the issue regarding possession of the property had become moot and academic since she, being the registered owner, had been in possession thereof since July 20, 2010, and that the Court of Appeals' ruling permanently enjoining her from proceeding via an ex-parte motion for a writ of possession would result in an absurdity given that she was already in possession of the land.
• Termination of the Ex-Parte Proceedings: Petitioner maintained that the proceedings for the ex-parte motion for a writ of possession had already been terminated and possession of the subject property had been awarded by the lower court in her favor, thus rendering the arguments raised by respondent in his petition for certiorari before the Court of Appeals moot and academic.

• Estoppel Arising from the Deed of Absolute Sale: Respondent maintained, in his petition for certiorari before the Court of Appeals, that petitioner was already estopped from asking for the issuance of a writ of possession considering that the very Deed of Absolute Sale from which her alleged right emanated explicitly gave her the only option of filing an ejectment suit.
• Strict Construction of Section 7, Act No. 3135: Respondent argued that Section 7 of Act No. 3135, as amended by Act No. 4118, should be construed strictly.

• Propriety of the Ex-Parte Petition for a Writ of Possession: Whether an ex-parte petition for the issuance of a writ of possession was the proper remedy of petitioner in obtaining possession of the subject property.
• Availability of the Remedy to a Subsequent Purchaser: Whether a third-party purchaser who acquired the extrajudicially foreclosed property after the expiration of the redemption period may avail of the remedy of a writ of possession, and whether such writ may issue ex-parte.

• Propriety of the Ex-Parte Petition for a Writ of Possession: No, strictly speaking. Petitioner, having bought the property long after the expiration of the redemption period, does not fall within Section 7 of Act No. 3135, as amended, which grants the ex-parte remedy to the purchaser in the foreclosure sale during the redemption period; the Court of Appeals therefore erred in holding that no writ of possession could issue to her at all.
• Availability of the Remedy to a Subsequent Purchaser: Yes, but not ex-parte. Under Section 33, Rule 39 of the Rules of Court, made applicable by Section 6 of Act No. 3135, as amended, a subsequent purchaser may obtain a writ of possession only after a hearing determining whether the property is still in the possession of the mortgagor or of a third party holding it adversely.

• Propriety of the Ex-Parte Petition for a Writ of Possession: Section 7 of Act No. 3135, as amended by Act No. 4118, allows the purchaser in a sale made under the Act to petition the court, during the redemption period, to be given possession of the property upon an ex-parte motion and after furnishing a bond equivalent to the use of the property for twelve months. As held in Fortaleza vs. Lapitan, the purchaser or the mortgagee who is also the purchaser in the foreclosure sale may apply for a writ of possession during the redemption period upon an ex-parte motion and after posting a bond. GC Dalton Industries, Inc. vs. Equitable PCI Bank established that the issuance of a writ of possession to a purchaser in an extrajudicial foreclosure is summary and ministerial in nature, being merely an incident in the transfer of title, while China Banking Corporation vs. Ordinario held that under Section 7 the purchaser in a foreclosure sale is entitled to possession. In Spouses Marquez vs. Spouses Alindog, the Court reiterated that the buyer in a foreclosure sale becomes the absolute owner of the property if it is not redeemed within one year from registration of the sale, that he is entitled to possession and may demand it at any time following consolidation of ownership and issuance of a new title, that a bond is required only if possession is demanded during the redemption period, and that after the redemption period possession becomes an absolute right and the issuance of the writ a ministerial duty of the court. Petitioner, however, does not fall under these circumstances, because she bought the property long after the expiration of the redemption period; it was the bank, as purchaser in the foreclosure sale, that could have filed the ex-parte petition during the redemption period, subject to compliance with Section 7. The Real Estate Mortgage itself contained a waiver executed by the mortgagor in favor of the mortgagee, who was appointed attorney-in-fact with authority to take actual possession of the mortgaged property without judicial order or permission. Even without the waiver, the issuance of the writ of possession is ministerial and non-adversarial, the only issue being the purchaser's right to possession, so that an ex-parte proceeding is allowed.
• Availability of the Remedy to a Subsequent Purchaser: Section 6 of Act No. 3135, as amended by Act No. 4118, governs redemption and renders the provisions of the Code of Civil Procedure on redemption, now Section 33 of Rule 39 of the Rules of Court, applicable to extrajudicial foreclosure of real estate mortgages. Under Section 33, if no redemption is made within one year from the date of registration of the certificate of sale, the purchaser is entitled to a conveyance and possession of the property; upon expiration of the right of redemption, the purchaser or redemptioner is substituted to and acquires all the rights, title, interest, and claim of the judgment obligor, and possession shall be given to the purchaser or last redemptioner by the same officer unless a third party is actually holding the property adversely to the judgment obligor. Where a third party holds the property adversely, the issuance of the writ of possession ceases to be ex-parte and non-adversarial, and the court must conduct a hearing to determine the nature of the possession, that is, whether the occupant holds the property under a claim adverse to that of the judgment debtor. This rule applies with equal force to extrajudicially foreclosed properties bought by a purchaser and later sold to third-party purchasers after the lapse of the redemption period: the writ of possession remedy available to the mortgagee-purchaser is made available to a subsequent purchaser, but only after hearing and after determining that the subject property is still in the possession of the mortgagor. If the purchaser is the mortgagee or a third party during the redemption period, the writ may issue ex-parte or without hearing; if the purchaser is a third party who acquired the property after the redemption period, a hearing must be conducted. If the property is in the possession of the mortgagor, a writ of possession may issue; otherwise, the remedy is no longer available and the purchaser must resort to an ordinary action of ejectment. Requiring the subsequent purchaser to file a separate ejectment case outright, instead of a petition for a writ of possession albeit not ex-parte, would only prolong the proceedings and unduly deny him possession of property he has already bought. The Court of Appeals thus erred in permanently enjoining petitioner from proceeding against respondent via a motion for a writ of possession.

• Writ of possession in extrajudicial foreclosure — ministerial and ex-parte as to the purchaser in the foreclosure sale — Under Section 7 of Act No. 3135, as amended by Act No. 4118, the purchaser, or the mortgagee who is also the purchaser in the foreclosure sale, may apply for a writ of possession during the redemption period by an ex-parte motion and after furnishing a bond equivalent to the use of the property for twelve months. The issuance of the writ is summary and ministerial in nature, being merely an incident in the transfer of title, and the proceeding is non-adversarial because the only issue involved is the purchaser's right to possession. No bond is required after the redemption period if the property is not redeemed; possession then becomes an absolute right of the purchaser as confirmed owner, and upon proper application and proof of title the issuance of the writ becomes a ministerial duty of the court.
• Writ of possession in favor of a subsequent purchaser after the redemption period — available but only after hearing — A third-party purchaser who acquires an extrajudicially foreclosed property after the lapse of the redemption period may still avail of the writ of possession remedy, but the issuance thereof ceases to be ex-parte and non-adversarial. By virtue of Section 6 of Act No. 3135, as amended, Section 33 of Rule 39 of the Rules of Court applies: upon expiration of the right of redemption, the purchaser or redemptioner is substituted to and acquires all the rights, title, interest, and claim of the judgment obligor, and possession shall be given to him unless a third party is actually holding the property adversely to the judgment obligor. A hearing is therefore required to determine whether the property is still in the possession of the mortgagor or is held by a third party claiming adversely to the defaulting debtor or mortgagor.
• Consequences of the required hearing — If the property is in the possession of the mortgagor, a writ of possession may issue in favor of the subsequent purchaser. If the property is held by a third party adversely to the mortgagor, the remedy of a writ of possession is no longer available to such purchaser, who must instead wrest possession through an ordinary action of ejectment. Requiring the subsequent purchaser to file a separate ejectment case outright, rather than a petition for a writ of possession albeit not ex-parte, would only prolong the proceedings and unduly deny him possession of property he has already bought.
• Waiver of the writ of possession in the mortgage contract — A real estate mortgage may validly contain a stipulation appointing the mortgagee as attorney-in-fact of the mortgagors with authority, upon breach, to take actual possession of the mortgaged property without the necessity of any judicial order or permission. Such a waiver operates in favor of the mortgagee, and even without it, the issuance of the writ of possession remains ministerial and non-adversarial as to the purchaser in the foreclosure sale.

• "It is thus settled that the buyer in a foreclosure sale becomes the absolute owner of the property purchased if it is not redeemed during the period of one year after the registration of the sale. As such, he is entitled to the possession of the said property and can demand it at any time following the consolidation of ownership in his name and the issuance to him of a new transfer certificate of title. The buyer can in fact demand possession of the land even during the redemption period except that he has to post a bond in accordance with Section 7 of Act No. 3135, as amended. No such bond is required after the redemption period if the property is not redeemed. Possession of the land then becomes an absolute right of the purchaser as confirmed owner. Upon proper application and proof of title, the issuance of the writ of possession becomes a ministerial duty of the court." — Quoted by the Court from Spouses Nicasio Marquez and Anita Marquez vs. Spouses Carlito Alindog and Carmen Alindog, this passage states the settled rule on the purchaser's entitlement to possession and the ministerial character of the writ, and supplies the basis for the ruling that no bond was required of petitioner.
• "It is but logical that Section 33, Rule 39 of the Rules of Court be applied to cases involving extrajudicially foreclosed properties that were bought by a purchaser and later sold to third-party-purchasers after the lapse of the redemption period. The remedy of a writ of possession, a remedy that is available to the mortgagee-purchaser to acquire possession of the foreclosed property from the mortgagor, is made available to a subsequent purchaser, but only after hearing and after determining that the subject property is still in the possession of the mortgagor." — This is the ratio decidendi of the case, extending the writ of possession remedy to subsequent purchasers while qualifying it with the requirement of a hearing.
• "In other words, if the purchaser is a third party who acquired the property after the redemption period, a hearing must be conducted to determine whether possession over the subject property is still with the mortgagor or is already in the possession of a third party holding the same adversely to the defaulting debtor or mortgagor. If the property is in the possession of the mortgagor, a writ of possession could thus be issued. Otherwise, the remedy of a writ of possession is no longer available to such purchaser, but he can wrest possession over the property through an ordinary action of ejectment." — This passage defines the procedure mandated for a subsequent purchaser and identifies the alternative remedy of ejectment where an adverse third party holds the property.
• "To be sure, immediately requiring the subsequent purchaser to file a separate case of ejectment instead of a petition for the issuance of a writ of possession, albeit not ex-parte, will only prolong the proceedings and unduly deny the subsequent purchaser of possession of the property which he already bought." — This passage justifies the Court's refusal to confine the subsequent purchaser to an ejectment suit and explains why the Court of Appeals' permanent injunction was set aside.

• Spouses Nicasio Marquez and Anita Marquez vs. Spouses Carlito Alindog and Carmen Alindog, G.R. No. 184045, January 22, 2014 — The most extensively relied-upon precedent; quoted at length for the rule that the buyer in a foreclosure sale becomes absolute owner if the property is not redeemed, is entitled to possession, needs no bond after the redemption period, and obtains the writ as a matter of ministerial duty.
• GC Dalton Industries, Inc. vs. Equitable PCI Bank, G.R. No. 171169, August 24, 2009, 596 SCRA 723 — Followed for the holding that the issuance of a writ of possession to a purchaser in an extrajudicial foreclosure is summary and ministerial in nature, being merely an incident in the transfer of title.
• China Banking Corporation vs. Ordinario, 447 Phil. 557 (2003) — Followed for the holding that under Section 7 of Act No. 3135, the purchaser in a foreclosure sale is entitled to possession of the property.
• Fortaleza vs. Lapitan, G.R. No. 178288, August 15, 2012, 678 SCRA 469 — Cited for the proposition that the purchaser, or the mortgagee who is also the purchaser in the foreclosure sale, may apply for a writ of possession during the redemption period upon an ex-parte motion and after furnishing a bond.
• Metropolitan Bank & Trust Co. vs. Lamb Construction Consortium Corporation, G.R. No. 170906, November 27, 2009, 606 SCRA 159 — Cited for the application of Section 33, Rule 39 of the Rules of Court to extrajudicial foreclosure of real estate mortgages by virtue of Section 6 of Act No. 3135, as amended.
• Ramos vs. Mañalac and Lopez, 89 Phil. 270 (1951) — Cited by the RTC as authority that the issuance of a writ of possession in favor of the petitioner was a ministerial and complementary duty of the court.

• Section 7, Act No. 3135, as amended by Act No. 4118 — Provides that in any sale made under the Act, the purchaser may petition the Court of First Instance of the province or place where the property is situated to be given possession thereof during the redemption period, furnishing a bond equivalent to the use of the property for twelve months; the petition shall be under oath and filed in the form of an ex-parte motion, and the court shall, upon approval of the bond, order that a writ of possession issue. The Court held that this provision grants the ex-parte remedy to the purchaser or mortgagee-purchaser in the foreclosure sale during the redemption period, and that petitioner, having bought the property long after the redemption period, does not fall within its terms.
• Section 6, Act No. 3135, as amended by Act No. 4118 — Governs redemption, allowing the debtor, his successor-in-interest, judicial creditor or judgment creditor, or any person having a lien on the property subsequent to the mortgage, to redeem the property within one year from and after the date of the sale, with redemption governed by the provisions of the Code of Civil Procedure insofar as consistent with the Act. The Court used this provision as the bridge making Section 33, Rule 39 of the Rules of Court applicable to extrajudicial foreclosure of real estate mortgages.
• Section 33, Rule 39, Rules of Court — Provides that if no redemption is made within one year from the date of registration of the certificate of sale, the purchaser is entitled to a conveyance and possession of the property; that upon expiration of the right of redemption the purchaser or redemptioner shall be substituted to and acquire all the rights, title, interest, and claim of the judgment obligor as of the time of the levy; and that possession shall be given to the purchaser or last redemptioner by the same officer unless a third party is actually holding the property adversely to the judgment obligor. The Court applied this provision to hold that where a third party holds the property adversely, the issuance of the writ of possession ceases to be ex-parte and non-adversarial and a hearing becomes necessary.

• Maria Lourdes P. A. Sereno (Chief Justice)
• Antonio T. Carpio
• Presbitro J. Velasco, Jr.
• Teresita J. Leonardo-De Castro
• Arturo D. Brion
• Lucas P. Bersamin
• Mariano C. Del Castillo
• Martin S. Villarama, Jr.
• Jose Portugal Perez
• Jose Catral Mendoza
• Bienvenido L. Reyes
• Estela M. Perlas-Bernabe
• Marvic Mario Victor F. Leonen
• Francis H. Jardeleza

The text lists these justices under the "WE CONCUR" clause and annotates several of the names with "On leave" or "On official leave," with corresponding asterisk annotations.