G.R. No. 233653 - People vs. Guanzon y Ceneta

On December 10, 1997, New San Jose Builders Inc. (NSJBI) and the Government Service Insurance System (GSIS) entered into a Loan Agreement wherein NSJBI borrowed Php600 million for a five-year term.
The funds were to be used for completing two housing projects and purchasing a lot for the construction of additional housing projects.
As security for the loan, NSJBI mortgaged three parcels of land that included:

365 lots with low-cost houses at Mary Homes, Bacoor, Cavite.
102 condominium units at St. John Condominium in Scout Rallos, Quezon City, plus additional improvements such as those pertaining to the Waterfun project.
Rights over 240 condominium units in GSIS Metro Homes.

The parties agreed that although NSJBI was restricted from alienating, selling, disposing of, or otherwise encumbering the mortgaged properties without GSIS’s prior consent, NSJBI could continue to sell the properties provided that the net sales proceeds were exclusively applied to recoup the loan.

NSJBI subsequently entered into contracts to sell parts of the mortgaged properties to various individual buyers, including petitioners such as Atty. Donardo Donato, Carlitos Escueta, Marcelino H. Delos Reyes, and the Spouses Wilfredo and Dominica D. Rosario.
NSJBI defaulted on its payment obligations, prompting GSIS to proceed with foreclosure actions.
GSIS initiated an extrajudicial foreclosure process on March 31, 2003, culminating in an auction sale on June 17, 2003, where GSIS emerged as the highest bidder.
NSJBI’s failure to exercise the right of redemption resulted in the consolidation of titles and their cancellation from NSJBI’s records in favor of GSIS.

On August 23, 2006, GSIS filed an ex-parte petition for the issuance of a writ of possession against NSJBI and all occupants of the foreclosed properties under LRC Case No. 22034 (06) before the RTC of Quezon City.
NSJBI, along with individual buyers (petitioners Donato, Escueta, Delos Reyes, and intervenors such as the Spouses Rosario), contested the writ on several grounds:

GSIS’s failure to include the individual buyers as parties-in-interest.
The inappropriateness of dispossessing buyers from their properties via an ex-parte writ.
The ministerial character of the ex-parte proceeding being compromised by the presence of third parties in possession.
The contention that the actual possessors of the condominium units enjoyed a presumption of just title.

The RTC, in a Resolution issued on April 7, 2008, granted the motions for intervention of the individual buyers to establish their acquisition and actual possession of the units. It limited the issuance of the writ of possession against NSJBI to those properties not already occupied by third-party buyers.
Subsequent resolutions by the RTC denied GSIS’s motion for partial reconsideration and allowed the presence of petitioners regarding their possession rights.

GSIS escalated the matter by filing a petition for certiorari, contending that the RTC erred by allowing the intervention of the buyers.
On July 28, 2011, the CA reversed the RTC’s earlier resolutions, holding that the trial court committed grave abuse of discretion in permitting the buyers’ intervention.
The CA ruled that the RTC’s restraint on the execution of the writ of possession against the individual buyers was erroneous, determining that these buyers were not third parties possessing adverse rights.
The decision of the CA led to consolidated petitions for review on certiorari involving several GR Nos., with petitioners arguing that as bona fide condominium buyers, they are entitled to the protections provided under PD No. 957.

As buyers of condominium units at St. John Condominium, they should be regarded as third-party possessors with adverse rights, immune from a possessory writ which would otherwise eject them forcibly.
The mortgage entered into between NSJBI and GSIS was executed without the necessary oversight of the HLURB, thereby infringing Section 18 of PD No. 957.
Their actual possession of the property should confer upon them the legal protection provided under existing statutory provisions and jurisprudence.

The CA correctly reversed the RTC’s decision permitting intervention due to the inherent nature of ex-parte proceedings.
By consolidating title through extrajudicial foreclosure and the registration process, GSIS had acquired a right to a writ of possession.
The individual buyers were merely transferees or successors of NSJBI and did not possess independent rights adverse to the original mortgagor.

Whether the CA erred in holding that the RTC committed grave abuse of discretion in allowing the intervention of individual buyers in GSIS’s ex-parte application for a writ of possession.
Whether condominium unit buyers, by virtue of their actual possession and the protections provided under PD No. 957 and related laws, should be considered third-party possessors with rights adverse to NSJBI.
Whether the procedural shortcut of issuing an ex-parte writ of possession, without a proper hearing on the claims of adverse possession by bona fide buyers, violates due process and the protective purpose of PD No. 957.