G.R. No. 200667 - Rural Bank of Sta. Barbara , Inc. vs. Centeno

Spouses Gregorio and Rosario Centeno originally owned Cadastral Lot Nos. 964, 958, and 959 of the Ajuy, Iloilo Cadastre.
The properties were mortgaged in favor of Rural Bank of Sta. Barbara (Iloilo), Inc. as security for a loan amounting to P1,753.65.
Upon default by the Centenos, the petitioner initiated an extrajudicial foreclosure of the mortgage.

The foreclosure sale was held at public auction where the petitioner emerged as the highest bidder.
On October 10, 1969, the petitioner obtained a Certificate of Sale at Public Auction.
The Certificate of Sale was later recorded with the Register of Deeds of Iloilo City on December 13, 1971.
The Centenos failed to redeem the property within the one-year redemption period provided under Section 6 of Act No. 3135, yet they continued to possess and cultivate the property.

In 1983, respondent Gerry Centeno, son of the Centenos, assumed the cultivation of the properties.
On March 14, 1988, respondent purchased the subject lots from his parents, formalizing his interest in the property.
Rosario Centeno subsequently paid the capital gains taxes, and tax declarations were eventually issued in the name of the respondent.

While the respondent was in possession, the petitioner secured a Final Deed of Sale on November 25, 1997, and obtained corresponding tax declarations in 1998.
On March 19, 1998, the petitioner filed a petition for the issuance of a writ of possession before the Regional Trial Court (RTC), claiming that the Final Deed of Sale converted its interest into an absolute right.
The respondent opposed the petition, asserting:

He had been in actual, open, and exclusive possession of the property for at least fifteen (15) years.
The foreclosure sale was null and void due to alleged forged signatures on the mortgage documents.
The petitioner’s rights over the subject lots had already prescribed.

On October 8, 2002, the RTC ruled in favor of the petitioner by declaring the petitioner the lawful owner and ordering the issuance of a writ of possession.
The respondent appealed the RTC decision, and on January 31, 2012, the Cebu City Court of Appeals (CA) reversed the RTC ruling, denying the issuance of a writ of possession.
The CA based its decision on the ground that the respondent, being a successor-in-interest, was not a third party holding the property adversely, and that he should pursue his claims via proper judicial proceedings such as an ejectment suit or reinvindicatory action.

Whether the petitioner, having consolidated title in its name by virtue of the extrajudicial foreclosure sale and failure of redemption, is entitled to a writ of possession over the subject lots.
Whether the respondent, as a successor-in-interest who acquired the property from his parents, can be considered a third party holding the property adversely to the judgment obligor.