G.R. No. 79906 - Barican vs. Intermediate Appellate Court

Spouses Antonio Regondola and Dominga Zabat obtained a loan from the Development Bank of the Philippines (DBP).
As security for the loan, the Regondolas and the bank entered into a real estate mortgage contract covering a property documented by TCT No. 57677 (495811, Caloocan Register of Deeds).
Due to the mortgagors’ failure to comply with the terms of the contract, DBP extra-judicially foreclosed the mortgage.
The foreclosed property was sold at a public auction by the Assistant City Sheriff of Caloocan City, where DBP was declared the highest bidder.
The certificate of sale was duly registered on October 7, 1980.
The Regondola spouses did not redeem the property within the one-year redemption period, leading to the consolidation of the title in favor of DBP.
Subsequently, the original transfer certificate of title (in the names of the mortgagors) was annulled, and a new one (TCT No. 117068) was issued in favor of DBP.

On October 28, 1984, DBP sold the foreclosed property to Nicanor Reyes.
On October 5, 1985, DBP filed a petition with the lower court for the issuance of a writ of possession.
On October 7, 1985, the Regional Trial Court of Caloocan City, Branch 128, issued an order granting the writ of possession covering the foreclosed property and its improvements.

Before the writ could be implemented, petitioners Rafael Barican and Araceli Alejo intervened by filing a petition to stay the writ’s implementation.
The petitioner-spouses asserted that they were the actual owners and possessors of the property, supporting their claim with a deed of sale with assumption of mortgage executed with the Regondola spouses.
They had initiated a separate legal action for declaration of ownership and damages, accompanied by a preliminary injunction, which was docketed as Civil Case No. C-11232 in the Regional Trial Court of Caloocan City, Branch 128.
On October 16, 1985, the lower court issued an order staying the writ of possession on the ground that the plaintiffs’ rights in the pending civil case would suffer prejudice if the execution proceeded.
A subsequent petition ex-parte for an alias writ of possession by DBP was denied by the lower court on March 21, 1986.
The Court of Appeals later set aside the March 21, 1986, order and compelled the lower court to issue the writ of possession in favor of DBP.
Petitioners, unsatisfied with this outcome, elevated the matter for review, leading to the present petition.

In Civil Case No. C-11232, the petitioner-spouses claimed ownership over the foreclosed property against both DBP and Nicanor Reyes.
Their complaint further alleged that:

DBP was aware of the deed of sale with assumption of mortgage between the Regondola spouses and the petitioners.
The petitioners had made payments to update the loan balances and for transfer and restructuring fees.

It was established that the petitioners had been in actual possession of the property since September 28, 1979—well before DBP sold the property to Nicanor Reyes.
Notably, DBP had never taken physical possession of the property.

Whether the pendency of Civil Case No. C-11232, which involves the ownership dispute over the foreclosed property, constitutes a legal bar or impediment to the issuance of a writ of possession in favor of DBP, the highest bidder at the foreclosure auction.
Whether the ministerial rule that mandates the issuance of a writ of possession in favor of the purchaser in a foreclosure sale applies even when conflicting claims and possession by third parties (i.e., the petitioners) are present.
The proper application and scope of Section 4 of P.D. No. 385, especially considering that DBP had already divested its ownership interest by selling the property to Nicanor Reyes.