G.R. No. 213736 - Sy vs. China Banking Corp.

The subject property is Lot No. 4740, located in Linao-Lipata, Minglanilla, Cebu City with an area of 8,371 square meters.
The property is originally covered by Transfer Certificate of Title (TCT) No. 5235 in the name of Bernandina Fernandez, who was married to Sy Thian Un, and the couple had eight children.
On July 18, 1969, Bernandina executed a simulated Deed of Absolute Sale in favor of her son, Priscilo, ostensibly to enable him to start a livestock-poultry business. This transaction led to the issuance of TCT No. 21283 in Priscilo’s name.

After acquiring the property through the simulated sale, Priscilo mortgaged the subject property to the Development Bank of the Philippines (DBP).
Due to Priscilo’s failure to pay the indebtedness, the property was foreclosed.
Priscilo migrated to the United States and executed a Special Power of Attorney (SPA) authorizing his sister, Elena, to redeem the property for the benefit of the younger brothers (petitioners), who were already in actual possession.
Subsequently, Elena allegedly forged the signatures of Priscilo and his wife, and using the forged documents, executed a Deed of Waiver and Relinquishment of Rights dated November 22, 1993 and a Deed of Donation dated February 21, 1994, transferring title to Eleazar Jr. and Elaine.

Following the forgery, TCT No. T-83948 was issued in the names of Eleazar Jr. and Elaine.
These mortgagors later mortgaged the subject property to China Banking Corporation (China Bank) as security for a loan amounting to P3,700,000.00.
Owing to nonpayment, China Bank foreclosed the property in a public auction held on September 28, 1988, where it bid P4,200,000.00.
As the mortgagors failed to redeem the property within the one-year redemption period, China Bank consolidated its title and was issued TCT No. 111058 on December 16, 1999.

China Bank filed a petition for a Writ of Possession on December 11, 2000, resulting in the RTC issuing a writ on December 30, 2000 and a Notice to Vacate on January 5, 2001.
Petitioners, asserting actual possession and claiming that the title transfer to Eleazar Jr. and Elaine was fraudulent, filed a motion before the RTC to dissolve the writ. The RTC granted this motion and issued an Order dissolving the writ of possession.
China Bank’s subsequent appeal against the dissolution was dismissed due to failure to pay docket fees, and its motion for reconsideration was likewise denied.

On August 21, 1998, petitioners had initiated an action for recovery of ownership, possession, and partition, as well as criminal cases for Estafa through Falsification of Public Documents against the mortgagors.
Despite the earlier dissolution of the writ, China Bank filed a second petition for a writ of possession on January 22, 2009, which was granted by the RTC on January 4, 2010.
Contrary to the earlier dissolution, the second writ of possession failed to mention that fact, and petitioners opposed it through an Omnibus Motion which was denied by the RTC on April 7, 2010.
An additional forcible entry case was instituted by China Bank (filed on August 3, 2012), but it was eventually dismissed on merits because petitioners were shown to have prior physical possession of the property.

Petitioners presented a certification from a document examiner of the Philippine National Police Crime Laboratory attesting that the signatures on the Deed of Donation and the Deed of Waiver and Relinquishment of Rights were forged.
An Undertaking attached to the Sheriff’s Report indicated that petitioners acknowledged China Bank’s superior right to possess the property, which later became a point of probative value.
China Bank’s reliance on the ministerial character of the application for the writ of possession was questioned in light of the adverse possession by a third party (petitioners) and the irregularities involving the forged documents.

Whether the issuance of the writ of possession in favor of China Bank, pursuant to its second application, is proper given that the petitioners are the actual possessors of the subject property.

The issue requires examination of the ministerial nature of the writ issuance after title consolidation in extra-judicial foreclosure sales.
It also involves determining whether the existence of a third party adversely possessing the property (petitioners) precludes ex parte issuance of the writ, thereby necessitating due process in the form of a judicial hearing.

Whether the fraudulent actions (i.e., the alleged forgery of signatures on the Deed of Donation and the Deed of Waiver and Relinquishment of Rights by Elena) that led to the transfer of title to Eleazar Jr. and Elaine affect the validity of China Bank’s consolidated title and its right to possess the property.

Whether China Bank’s repeated applications for the writ of possession, despite the prior dissolution and the passage of significant time, constitute an abuse of judicial process.