Title
Philippine National Bank vs. Fontanoza
Case
G.R. No. 213673
Decision Date
Mar 2, 2022
Spouses Fontanoza defaulted on a PNB loan, leading to foreclosure. PNB acquired the property at auction, and the RTC granted a writ of possession. Alma’s opposition, citing a repurchase agreement, was denied as the writ had become final. SC upheld PNB’s right to possession, ruling the writ issuance ministerial and final.
writ of possession
redemption period
separate civil case
A

Case Summary (G.R. No. 63796-97)

Factual Background

Spouses Salvador and Alma Fontanoza obtained a bank loan from the Ozamiz Branch of Philippine National Bank secured by a real property described in Original Certificate of Title No. P-29979. After default, the property was foreclosed extrajudicially and, as sole bidder at the public auction, PNB acquired the lot for P236,000.00 on January 8, 2002; the sale was recorded on January 28, 2002. The mortgagors did not redeem the property within the statutory one-year redemption period. More than nine years after registration of the sale, PNB filed an ex parte petition for issuance of a writ of possession on July 18, 2011.

RTC Proceedings

The RTC granted PNB’s petition by Resolution dated August 17, 2011; that Resolution became final and executory on September 15, 2011 as evidenced by a Certificate of Finality dated November 21, 2011. Alma filed an opposition and an urgent motion to recall the writ of possession on November 25, 2011, alleging that she had entered into a contract to repurchase the property, had made down payments and other remittances, and that she was not notified of the ex parte petition. The RTC directed PNB and Alma to submit evidence clarifying the alleged repurchase transaction. PNB replied that no repurchase contract was perfected, that the payments were unaccepted offers and had been returned, and that the issuance of the writ was ministerial and required no prior notice in an ex parte proceeding. Alma submitted receipts, deposit slips, and a notice of lis pendens and maintained that she remained in possession of the lot as a purchaser, not as a mortgagor. By Order dated February 21, 2012, the RTC denied Alma’s opposition for lack of merit and ordered her and all persons claiming under her to vacate the premises and placed possession in favor of PNB, reasoning that the pendency of a separate action to annul the foreclosure or to enforce an alleged repurchase could not be used to prevent issuance of the writ of possession.

Court of Appeals Ruling

On appeal, the CA recognized the general rule that a purchaser at an extrajudicial foreclosure who is not redeemed within the one-year period is ordinarily entitled as a matter of right to a writ of possession upon proper motion and bond. The CA nonetheless found the case analogous to Barican v. Intermediate Appellate Court, where issuance of the writ was denied because of grave inequity: the mortgagor’s property had been in the possession of a third person pursuant to a sale with assumption of mortgage, and the foreclosing bank had delayed for years before seeking the writ. The CA held that PNB unduly delayed in applying for the writ and that Alma remained in possession claiming to be a purchaser; on those grounds the CA set aside the RTC Order dated February 21, 2012. The CA denied PNB’s motion for reconsideration on July 28, 2014.

Issues on Review

The petition framed the dispositive issues as whether the CA correctly applied Barican to the instant case; whether the alleged delay in seeking the writ of possession and the mortgagor’s continued possession justified setting aside an RTC order that denied a motion to recall an already final and executory writ; and whether a writ of possession issued under a resolution already final and executory can still be disturbed by a subsequently filed motion to recall or by an appellate reversal on the ground that the earlier issuance was unjust.

Parties’ Contentions before the Supreme Court

PNB contended that the RTC’s grant of the writ had attained finality before Alma filed her opposition and that the duty of the trial court to issue a writ of possession in favor of the purchaser is ministerial; consequently the CA erred in applying Barican. PNB argued that Alma was not a third party to the mortgage and never proved that the bank accepted any purported repurchase payments. PNB further invoked BPI Family Savings Bank, Inc. v. Golden Power Diesel Sales Center, Inc. for the proposition that possession should be given to the purchaser unless a third party holds the property adversely, and maintained that delay in seeking a writ does not divest a purchaser of the right to possess after consolidation of title. Alma countered that she was not notified of the ex parte petition and that her due process rights had been violated; she emphasized that she remained in actual and adverse possession as a repurchaser and presented documentary proof of multiple payments and an alleged written offer and acceptance, and additionally asserted laches and prescription as defenses.

Supreme Court’s Ruling

The Supreme Court, through Hernando, J., granted the petition. The Court reversed and set aside the CA’s January 23, 2014 Decision and July 28, 2014 Resolution, and reinstated the RTC Order dated February 21, 2012. The Court ordered costs against the respondent. The Court held that the CA erred in relying on Barican and that the circumstances did not preclude issuance of the writ of possession in favor of PNB.

Legal Basis and Reasoning

The Court began from the established rule that once a purchaser at a foreclosure sale is registered as such and the mortgagor fails to redeem within the one-year period, the purchaser’s right to possession ripens into that of a confirmed absolute owner and the issuance of a writ of possession becomes a ministerial duty of the trial court. The record showed that PNB was recorded as purchaser by a Certificate of Sale on January 28, 2002, and that Alma failed to redeem within the statutory period. The Court recognized jurisprudential exceptions to the ministerial duty as enunciated in Nagtalon v. United Coconut Planters Bank: gross inadequacy of the purchase price, the presence of a third party actually holding the property adversely to the mortgagor, and failure to pay surplus proceeds. The Court focused on the second exception as articulated through Section 33, Rule 39 and Act No. 3135, Sec. 6, and in related precedents: the exception requires a third party who holds the property adversely to the judgment debtor in his own right and not merely as a successor or transferee. The Court found that Alma could not be considered a third-party adverse possessor because she was the mortgagor who failed to redeem and therefore had knowledge of the foreclosure and the purchaser’s status; her continued occupation did not convert her into an adverse third-party possessor for purposes of that exception. The Court distinguished Barican on the ground that in that case the bank knew of an intervening sale with assumption of mortgage, accepted payments from third-party possessors and materially delayed enforcement, circumstances absent here. The Court further held that alleged repurchase and disputed payments were not matters for resolution in an ex parte petition for a w

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