Sio Tiat King vs. Lim

A writ of possession issued after redemption of property sold on execution may not be enforced against third-party occupants who hold the property adversely to the judgment obligor under a claim of ownership; the redemptioner or successor-in-interest must file a separate ejectment suit or reivindicatory action to recover possession.

Spouses Victoriano and Evelyn Calidguid were judgment debtors in Civil Case No. 94-71083, having bound themselves under a compromise agreement to pay ₱2,520,000.00 to Spouses Jaime Lee and Lim Dechu. After default, execution issued and their property covered by TCT No. 85561 was levied and sold at public auction, with Jaime Lee as highest bidder. Sio Tiat King entered the picture as the Calidguids' assignee, acquiring their right of redemption through a Deed of Assignment of Real Property and Right of Redemption. Separately, the Lims — Michael George O. Lim, Mathew Vincent O. Lim, Mel Patrick O. Lim, Moises Francis W. Lim, and Marvin John W. Lim — claimed ownership of the same physical property under TCT No. 122207, a title distinct from that of the Calidguids.

In Civil Case No. 94-71083 before the RTC of Manila, Branch 4, Spouses Victoriano and Evelyn Calidguid executed a Compromise Agreement binding themselves to pay ₱2,520,000.00 to Spouses Jaime Lee and Lim Dechu. The RTC approved the compromise agreement in its Decision dated April 24, 1995. When the Calidguids failed to comply, the Spouses Lee sought execution, and a Writ of Execution was issued on August 2, 1995. The Calidguids' property covered by TCT No. 85561 was levied on execution and sold at public auction, where Jaime Lee emerged as the highest bidder. A Certificate of Sale was issued in his favor.

Sio Tiat King, as assignee of the Calidguids pursuant to a Deed of Assignment of Real Property and Right of Redemption, redeemed the property on October 30, 1996, before the expiration of the one-year redemption period, paying ₱2,941,478.53. The sheriff executed a Certificate of Redemption restoring full ownership of the property to the Calidguids, now substituted by King. More than eleven years later, King filed a motion for the issuance of a writ of possession, which the RTC granted in its Order dated January 22, 2008. A Writ of Possession was issued on January 25, 2008, and the sheriff served a Notice to Vacate addressed to the Calidguids, their agents, and all persons claiming rights under them at 109 P. Florentino Street corner Araneta Avenue, Sto. Domingo, Quezon City.

On February 19, 2008, the Lims — Michael George O. Lim, Mathew Vincent O. Lim, Mel Patrick O. Lim, Moises Francis W. Lim, and Marvin John W. Lim — filed a Joint Affidavit of Third Party Claim alleging that they were the registered owners of the same property under TCT No. 122207. They subsequently filed an Entry of Appearance with Motion to Quash Writ of Execution. On March 18, 2008, actual and physical possession of a part of the subject property was turned over to King, prompting the Lims to file an Extremely Urgent Motion to Issue Status Quo Ante Order, which was granted but only until April 11, 2008. The Lims then elevated the matter to the Court of Appeals via a Petition for Certiorari, alleging that the RTC judge committed grave abuse of discretion in ousting them from the property by virtue of the writ of possession without a separate and independent action to resolve ownership.

The RTC denied the Lims' motion to quash on April 28, 2008, ruling that the Calidguids' TCT, having been issued earlier, should prevail over the Lims' TCT. The CA, on July 22, 2008, granted the Lims' petition, annulling the RTC Order and quashing the writ of possession. The CA ruled that King was a successor-in-interest rather than a redemptioner, that the execution proceedings had already terminated, that the writ was improperly directed against King himself as assignee of the judgment debtors, and that the Lims, as third-party occupants claiming ownership, could not be summarily evicted. King's motion for reconsideration was denied on November 13, 2008, leading him to file the present petition.

• Statutory Construction of "Redemptioner": Petitioner argued that the word "redemptioner" in Section 33, Rule 39 of the Rules of Court should be loosely applied to include the judgment debtor's successor-in-interest, and that he was therefore entitled to a writ of possession as a redemptioner.
• Validity of the Lims' Title: Petitioner submitted that the TCT of the Lims was fictitiously issued, implying that their claim of ownership should not bar the enforcement of the writ of possession.

• Third-Party Claim: The Lims alleged that they were the registered owners of the subject property under TCT No. 122207 and that they could not be summarily evicted by virtue of a writ of possession issued in a case to which they were strangers.
• Grave Abuse of Discretion: The Lims contended that the RTC judge committed grave abuse of discretion in ousting them from the property without a separate and independent action to resolve the issue of ownership.

• Propriety of Writ of Possession: Whether the Lims may be evicted from the property by virtue of a writ of possession issued in favor of King, who redeemed the property as assignee of the judgment debtors.
• Status of King as Redemptioner vs. Successor-in-Interest: Whether King should be treated as a "redemptioner" under Section 33, Rule 39 of the Rules of Court, or as a mere successor-in-interest of the judgment obligor.
• Effect of Third-Party Adverse Possession: Whether the exception in Section 33, Rule 39 — that possession shall not be given to the purchaser or redemptioner if a third party is actually holding the property adversely to the judgment obligor — bars the issuance of the writ of possession against the Lims.

• Propriety of Writ of Possession: No. The Lims, as third-party occupants holding the property adversely to the judgment obligor under a claim of ownership, may not be summarily evicted by a writ of possession. King must file a separate ejectment suit or reivindicatory action.
• Status of King as Redemptioner vs. Successor-in-Interest: King is a successor-in-interest, not a redemptioner. He acquired his right from the Calidguids through a Deed of Assignment of Real Property and Right of Redemption, subrogating him to the rights and obligations of the judgment obligors.
• Effect of Third-Party Adverse Possession: The exception in Section 33, Rule 39 applies. The Lims hold the property adversely to the judgment obligor under TCT No. 122207, and their possession is legally presumed to be based on just title, which may only be overcome in a judicial proceeding for recovery of the property.

• Propriety of Writ of Possession: The writ of possession is a ministerial issuance in execution proceedings, but it cannot be used to dispossess third-party occupants who claim ownership adverse to the judgment obligor. King and the Lims are contending for possession and ownership of the same property under ostensibly conflicting titles — TCT No. 85561 (derived from the Calidguids) and TCT No. 122207 (registered in the Lims' names). Because of this conflict coupled with the Lims' actual possession, an ejectment suit or reivindicatory action should have been filed before the Lims could be evicted. King took a procedural shortcut by applying for a writ of possession instead of filing a separate suit. Moreover, the execution proceedings in Civil Case No. 94-71083 had already been terminated after the issuance of the Certificate of Redemption and the satisfaction of the judgment creditors' claims, as manifested by the Spouses Lee. King cannot enforce his claim of possession and ownership in a case that had long been concluded, especially against the Lims, who are strangers to that case.

• Status of King as Redemptioner vs. Successor-in-Interest: King argued that the term "redemptioner" in Section 33, Rule 39 should be loosely construed to include the judgment debtor's successor-in-interest. This reasoning was rejected. King acquired his right over the property from the Calidguids when their right to redeem was assigned to him and redemption was thereafter made. By virtue of the Deed of Assignment of Real Property and Right of Redemption, King stepped into the shoes of the judgment debtors and was subrogated to their rights and obligations. The Certificate of Redemption itself stated that it restored full ownership to the Calidguids, "now being substituted by the Assignee." King is therefore a successor-in-interest under Section 27 of Rule 39, not a redemptioner in the sense contemplated by Section 33. The writ of possession was issued not to a purchaser or redemptioner in the execution sale but to King as successor-in-interest, making its issuance non-ministerial. Furthermore, the writ was directed against the Calidguids and all persons claiming rights under them — which ironically includes King himself as their assignee.

• Effect of Third-Party Adverse Possession: Even assuming arguendo that King were treated as a redemptioner, the same provision he invoked contains an exception: 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 Lims' claim of ownership is based on TCT No. 122207 registered in their names, while King's claim derives from TCT No. 85561 of the Calidguids. The Lims thus hold the property adversely to the judgment obligor, Spouses Calidguid. The third party's possession is legally presumed to be based on just title, a presumption that may be overcome only in a judicial proceeding for recovery of the property, where the third party is accorded due process and the opportunity to be heard. Article 433 of the Civil Code provides that actual possession under claim of ownership raises a disputable presumption of ownership, and the true owner must resort to judicial process for recovery. The "judicial process" contemplated means no less than an ejectment suit or a reivindicatory action. As to King's contention that the Lims' TCT was fictitiously issued, the Court held that the petition was not the proper forum to resolve issues of ownership, which should be ventilated in a separate proceeding.

• Third-Party Adverse Possession as Exception to Issuance of Writ of Possession — Under Section 33, Rule 39 of the Rules of Court, the possession of property sold on execution shall be given to the purchaser or last redemptioner upon expiration of the redemption period, unless a third party is actually holding the property adversely to the judgment obligor. A third party's possession is legally presumed to be based on just title, which may be overcome only in a judicial proceeding for recovery of the property, where the third party is accorded due process and the opportunity to be heard. The third party may be ejected only after such proceedings. In this case, the Lims held the property under TCT No. 122207, adverse to the judgment obligors Spouses Calidguid, and could not be summarily evicted by a writ of possession.

• Successor-in-Interest vs. Redemptioner — Under Section 27, Rule 39, a "successor-in-interest" of the judgment obligor includes a person to whom the judgment debtor has transferred his right of redemption or conveyed his interests in the property for purposes of redemption. A successor-in-interest who redeems the property is subrogated to the rights and obligations of the judgment debtor and is deemed to have restored full ownership to the judgment debtor. Such a person is distinct from a "redemptioner" under Section 33, which refers to a creditor having a lien subsequent to the lien under which the property was sold. King, as assignee of the Calidguids, fell under the former category, not the latter.

• Disputable Presumption of Ownership from Actual Possession — Article 433 of the Civil Code provides that actual possession under claim of ownership raises a disputable presumption of ownership, and the true owner must resort to judicial process for recovery. The "judicial process" required means no less than an ejectment suit or a reivindicatory action, in which the ownership claims of contending parties may be properly heard and adjudicated.

• "The third party's possession of the property is legally presumed to be based on a just title, a presumption which may be overcome by the purchaser in a judicial proceeding for recovery of the property." — This passage articulates the controlling doctrine on why a writ of possession cannot summarily evict third-party occupants who claim ownership adverse to the judgment obligor.

• "One who claims to be the owner of a property possessed by another must bring the appropriate judicial action for its physical recovery. The 'judicial process' could mean no less than an ejectment suit or a reivindicatory action, in which the ownership claims of the contending parties may be properly heard and adjudicated." — This defines the remedy available to a redemptioner or successor-in-interest seeking to recover possession from third-party claimants, establishing that a writ of possession is an insufficient procedural vehicle.

• "The possession of the property 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." — This is the verbatim text of the exception in Section 33, Rule 39, which the Court applied to bar the issuance of the writ against the Lims.

• Villanueva vs. Cherdan Lending Investors Corp., 647 Phil. 494 (2010) — Cited for the doctrine that a third party's possession of property is legally presumed to be based on just title and may be overcome only in a judicial proceeding for recovery, and that one who claims ownership of property possessed by another must bring the appropriate judicial action for its physical recovery. Followed and applied to the facts of this case.

• Dayot vs. Shell Chemical Company (Phils.), Inc., 552 Phil. 602 (2007) — Cited for the proposition that the proper forum for resolving issues of ownership is a separate proceeding, not a petition limited to the propriety of issuance of a writ of possession.

• Section 33, Rule 39, Rules of Court — Governs the deed and possession to be given at the expiration of the redemption period. 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 applied the exception to bar the writ of possession against the Lims.

• Section 27, Rule 39, Rules of Court — Enumerates the persons entitled to redeem real property sold on execution, including the judgment obligor or his successor-in-interest in the whole or any part of the property. The Court used this provision to classify King as a successor-in-interest of the Calidguids rather than a redemptioner.

• Article 433, Civil Code — Provides that actual possession under claim of ownership raises a disputable presumption of ownership, and the true owner must resort to judicial process for recovery. Applied to hold that the Lims' actual possession under claim of ownership could not be defeated summarily and required a separate judicial action.

Presbitero J. Velasco, Jr. (Chairperson), Diosdado M. Peralta, Martin S. Villarama, Jr., and Francis H. Jardeleza concurred.