Title
Heirs of Penaflor vs. Heirs of Dela Cruz
Case
G.R. No. 197797
Decision Date
Aug 9, 2017
A property dispute arose after foreclosure, with heirs of the original owner resisting a writ of possession. The Supreme Court ruled in favor of the purchaser’s heirs, affirming their right to possession as the property’s rightful owners.
property dispute
mortgagee
legal battle
A

Case Summary (G.R. No. 197797)

Factual Background

The subject property is a parcel at No. 11, Ifugao St., Brgy. Barretto, Olongapo City, with a two-storey building. The original owner was Nicolasa dela Cruz. On April 15, 1991, Nicolasa authorized her daughter Carmelita to mortgage the property to Jose R. Penaflor, predecessor-in-interest of petitioners, to secure a P112,000 loan. When Nicolasa failed to pay, Penaflor initiated extrajudicial foreclosure proceedings. After compliance with posting, notices, and publication, the property was sold at public auction where Penaflor was the highest bidder. A Certificate of Sale and, after lapse of redemption, a Final Bill of Sale were issued and registered in Penaflor’s name, followed by an Affidavit of Consolidation of Ownership.

Possessory Conflict and Competing Claims

Despite consolidation of title in Penaflor, Nicolasa continued occupancy and refused to deliver possession. Her son Artemio dela Cruz claimed prior lawful ownership and possession and took various steps to assert his claim. Artemio produced a notarized instrument dated May 3, 1989 described as a “Waiver and Transfer of Possessory Rights,” purportedly executed by Nicolasa in his favor, tax declarations in his name, mortgages he executed in 1968 and 1973, and a Miscellaneous Sales Application dated October 2, 1968. These instruments were the basis of Artemio’s claim in separate proceedings and underpinned an ejectment action against Carmelita.

RTC Proceedings for Writ of Possession

Penaflor sought an ex parte writ of possession from the RTC in Other Case No. 38-0-93. The RTC granted the petition on November 19, 1993. A writ of possession issued but was not implemented because Artemio filed ancillary litigation, including a complaint for annulment of judgment which the trial court later dismissed for lack of jurisdiction. The RTC issued an Amended Order and a new writ of possession on June 27, 2008, and issued notices to vacate in 2008 and 2009. Several of Nicolasa’s children and other persons filed motions to quash the writ and notices, asserting ownership or possessory rights adverse to Nicolasa. The RTC denied those motions and denied motions for reconsideration, and it also denied a motion by respondents to hold enforcement of the writ in abeyance.

Ejectment Action and Related Supreme Court Decision

In April 1998 Artemio filed an ejectment complaint against Carmelita before the Municipal Trial Court in Cities (Civil Case No. 4065). The ejectment judgment in Artemio’s favor was affirmed by this Court in Guanga v. Dela Cruz, 519 Phil. 764 (2006). In that ejectment appeal this Court expressly stated that the inquiry was limited to determining prior possession and that the evidence presented there was used for that limited purpose.

Proceedings Before the Court of Appeals

Respondents sought relief from the denial of their motions to quash by petitioning the Court of Appeals. In its Decision dated February 18, 2011, the CA annulled and set aside the writ of possession and notice to vacate issued by the RTC. The CA found that respondents’ predecessor-in-interest, Artemio, held the property adversely to Nicolasa. The CA gave weight to the totality of evidence previously considered in the ejectment case, including the May 3, 1989 Waiver, tax declarations, mortgage instruments, and sales application, and concluded that Artemio’s claim of ownership as against Nicolasa was bona fide. The CA ruled that enforcement of the writ was improper and that the proper remedy for the purchaser was to institute ejectment or reinvindicatory proceedings.

Issue Before the Supreme Court

The principal issue before the Supreme Court was whether the Court of Appeals erred in annulling and setting aside the Writ of Possession and Notice to Vacate issued by the RTC in favor of petitioners’ predecessor-in-interest, thereby depriving petitioners of possession incident to their consolidated title by extrajudicial foreclosure.

Petitioners’ Contentions

Petitioners contended that consolidation of title following extrajudicial foreclosure vested absolute ownership in the purchaser, entitling him to possession as a matter of right. They argued that under Act No. 3135, as amended, and controlling jurisprudence, the RTC’s issuance of an ex parte writ of possession was ministerial once proof of consolidation of title was shown and no third party in actual adverse possession had established an independent right. Petitioners asserted that respondents failed to establish such an independent adverse claim in the possession proceedings and that the CA improperly relied on evidence from the ejectment case that was neither offered nor subject to contest in the RTC proceedings, thereby violating petitioners’ right to due process.

Respondents’ Contentions

Respondents maintained that Artemio was a third party in actual possession who claimed ownership adverse to Nicolasa, the judgment obligor, and that the RTC therefore lacked authority to issue or enforce the writ without first conducting an adversarial hearing. They relied on the ejectment record, including the May 3, 1989 Waiver and supporting documents, and on this Court’s affirmance in Guanga v. Dela Cruz, to contend that their claim was bona fide and merited protection under the exception to the ministerial issuance of writs of possession.

Supreme Court’s Ruling

The Supreme Court granted the petition. It reversed the Court of Appeals Decision dated February 18, 2011 and Resolution dated July 8, 2011, and reinstated the Writ of Possession dated June 27, 2008 and Notice to Vacate dated June 18, 2009 issued by the RTC in favor of petitioners. The Court held that respondents did not establish that they were third parties actually holding the property adversely to the judgment obligor so as to defeat the ministerial duty of the RTC to issue a writ of possession to the purchaser in an extrajudicial foreclosure.

Legal Basis and Reasoning

The Court reaffirmed the settled doctrine that a purchaser at an extrajudicial foreclosure becomes absolute owner if no redemption is made within one year after registration of the certificate of sale, and that such owner is entitled to possession as a matter of right. The Court relied on Act No. 3135, as amended by Act No. 4118, and on consistent jurisprudence including Spouses Arquiza v. CA, Asia United Bank v. Goodland Company, Inc., and BPI Family Savings Bank, Inc. v. Golden Power Diesel Sales Center, Inc., which describe the ex parte petition for writ of possession as a non-litigious summary proceeding and the ministerial duty of courts to issue such writs upon proof of consolidated title. The Court acknowledged the exception under Section 33, Rule 39 that possession must be given to the purchaser unless a third party is actually holding the property adversely to the judgment obligor. It cited China Banking Corporation v. Spouses Lozada and related authorities to explain that the exception applies only where the third-party possessor holds the property in his own right, not merely as successor or transferee of the debtor, and that the court must order a hearing to determine the nature of the adverse possession when properly raised.

Applying these principles, the Court found three defects in the CA’s approach. First, the documents relied upon by the CA to establish Artemio’s adverse possession were introduced in a separate ejectment proceeding against a different party and were never offered or received in the RTC possession proceedings; admitting them against petitioners would violate due process. Second, those documents in any event were inadequate to show independent title sufficient to oust the mortgagee’s consolidated ownership. The Court explained that a waiver instrument of the kind dated May 3, 1989 is not a recognized mode of transfer of ownership under the Civil Code and cannot, by itself, operate as a derivative mode of acqui

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