G.R. No. 168061 - Bank of the Philippine Islands vs. Icot

On 6 July 1976, spouses Vicente and Trinidad Velasco secured a loan of P50,000 from the Bank of the Philippine Islands (BPI) by mortgaging a parcel of land in Liloan, Cebu.

The property was covered by Transfer Certificate of Title (TCT) No. 675, registered in the name of Vicente Velasco, and described in detail with reference to its lot and boundaries.

Due to nonpayment of the loan, petitioner foreclosed the property. At the auction sale held on 6 July 1979, petitioner emerged as the highest bidder.

The spouses Velasco did not redeem the property within the one-year redemption period, resulting in the consolidation of ownership in favor of the petitioner.

The original title TCT No. 675 was cancelled, and on 14 October 1982, a new title, TCT No. P-1619, was issued in the name of the petitioner.

Respondents, including Teofilo Icot and the heirs of Genaro Icot, claimed to have been in quiet, open, and continuous possession of the property since 1964, allegedly acquired from their father, Roberto Icot, via an extrajudicial settlement of estate.

Following the discovery of the mortgage, respondents filed separate cases for quieting title against Vicente Velasco (the mortgagor) as Civil Case Nos. CEB-1493 and CEB-1494 in RTC Branch XXI of Cebu City.

The RTC later consolidated these cases and issued an Order on 22 November 1985 directing Velasco to expedite negotiations for repurchase, a proposal which was later manifested by petitioner to its Head Office without subsequent definitive action.

On 17 October 1988, petitioner and Velasco entered into a Contract to Sell for a purchase price of P60,387, payable on installment; Velasco’s failure to pay led to the contract’s cancellation by petitioner.

In June 1993, petitioner formally reiterated the cancellation and requested peaceable surrender of possession of the property by Velasco.

On 23 February 1994, respondents made an offer to purchase the property from petitioner, initially at P150,000 and later increased to P250,000, which was rejected by petitioner.

On 26 October 1999, petitioner filed a Petition for the Issuance of a Writ of Possession before the RTC of Mandaue City, which culminated in a Decision on 21 December 2001 granting the writ.

Respondents’ motion for reconsideration of this RTC decision was denied on 29 July 2003.

Respondents subsequently filed a Petition for Certiorari under Rule 65 with the Court of Appeals.

On 7 January 2005, the Court of Appeals reversed the RTC’s decision granting the writ, a decision further confirmed when petitioner’s own Motion for Reconsideration was denied on 3 May 2005.

The central dispute now escalated to a petition for review before the Supreme Court.

Whether petitioner, as the purchaser at an extrajudicial foreclosure sale, is entitled to the issuance of a writ of possession over the subject property.
Whether the presence of third parties (the respondents) who claim adverse possession under a just title, acquired through an extrajudicial settlement of estate, prevents the issuance of a writ of possession against them.
The extent to which the doctrine under Section 7 of Act 3135 allows the petitioner to enforce possession when a third party is currently holding the property under a claim that is adverse to that of the judgment obligor.