G.R. No. 192813; January 18, 2012
VASHDEO GAGOOMAL, Petitioner, vs. SPOUSES RAMON AND NATIVIDAD VILLACORTA, Respondents.

FACTS

Albert Zeñarosa was the registered owner of a parcel of land in Ayala Alabang Village, covered by TCT No. 170213. He mortgaged it to BPI Family Savings Bank. He later obtained a loan from RAM Holdings Corporation (RAM), secured by a second mortgage and a Promissory Note, and executed a Memorandum of Agreement authorizing RAM to sell the property if he defaulted. Zeñarosa failed to pay his obligations. RAM filed a Complaint for collection of sum of money against him and BPI before the RTC of Pasig, Branch 152 (Civil Case No. 67381) and caused the annotation of a notice of lis pendens on the title on June 11, 1999. Pending this case, Zeñarosa also defaulted on his obligation to BPI, resulting in the foreclosure of the property, with the certificate of sale annotated on March 24, 2000. RAM later sold its rights to New Summit International, Inc., represented by its President, petitioner Vashdeo Gagoomal; the assignment was annotated on October 16, 2000.
Meanwhile, Luis P. Lorenzo, Jr. filed a complaint for recovery of sum of money against Zeñarosa before the RTC of Makati (Civil Case No. 02-1038), obtained a writ of preliminary attachment, and attached the property on September 20, 2002; the lien was annotated on September 30, 2002. Zeñarosa redeemed the foreclosed property from BPI on March 23, 2003, and then sold it to Patricia A. Tan on April 4, 2003 (TCT No. 10206). The annotations of the notice of lis pendens (from Civil Case No. 67381) and the notice of levy on attachment (from Civil Case No. 02-1038) were carried over to Tan’s title.
In Civil Case No. 02-1038, Lorenzo obtained a final and executory judgment. A notice of levy and execution was issued, and the property was sold at public auction to Lorenzo on January 15, 2004; the Certificate of Sale was annotated on January 30, 2004, giving Zeñarosa until January 29, 2005, to redeem.
Subsequently, on April 30, 2004, the RTC rendered judgment in favor of RAM in Civil Case No. 67381 for sum of money. Pending Zeñarosa’s appeal, RAM’s motion for execution pending appeal was granted. On December 14, 2004, the property was sold at public auction to petitioner Gagoomal, RAM’s successor-in-interest; the certificate of sale was annotated on December 17, 2004.
On January 29, 2005, Zeñarosa failed to redeem the property from Lorenzo, so the title was consolidated in Lorenzo’s name. A writ of possession was issued to Lorenzo, who then sold the property to respondent Natividad Villacorta. Respondents took possession.
Zeñarosa’s appeal in the RAM case was dismissed, and the judgment became final on October 7, 2005. With no redemption by Zeñarosa, a final Deed of Sale was issued to petitioner on December 14, 2005. By virtue of a writ of possession issued by the RTC on February 1, 2007, in Civil Case No. 67381, petitioner divested respondents of possession.
Respondents filed a Motion to Quash Writ of Possession in Civil Case No. 67381. The RTC denied the motion and directed the Registry of Deeds to issue a new title in petitioner’s name. Respondents filed a petition for certiorari with the CA. The CA granted the petition, reversed the RTC orders, and quashed the writ of possession, holding that the lis pendens annotation by RAM was improper as the underlying case was a personal action for collection of sum of money, and that at the time of the auction sale to petitioner, Zeñarosa only had a remaining right of redemption, not ownership.

ISSUE

Whether the Court of Appeals erred in granting the respondents’ petition and quashing the writ of possession issued in favor of the petitioner.

RULING

The Supreme Court DENIED the petition and AFFIRMED the Decision of the Court of Appeals.
The Court held that a writ of possession may be quashed if it appears that it was issued by a court without authority or that the property levied upon is not that of the judgment debtor. In this case, the property sold at public auction on December 14, 2004, to satisfy the judgment in Civil Case No. 67381 (RAM vs. Zeñarosa) no longer belonged to the judgment debtor, Albert Zeñarosa, at the time of the sale. By that date, Zeñarosa’s ownership had already been transferred to Patricia A. Tan (on April 4, 2003), and more critically, the property had been sold on execution to Luis Lorenzo on January 15, 2004, in Civil Case No. 02-1038. Zeñarosa’s failure to redeem from Lorenzo by January 29, 2005, resulted in the consolidation of title in Lorenzo’s favor, who then sold it to respondents. Therefore, the execution sale to petitioner was void, as it concerned property not belonging to the judgment debtor. The trial court’s order directing the issuance of a new title to petitioner was issued with grave abuse of discretion.
Furthermore, the Court agreed with the CA that the notice of lis pendens annotated by RAM was improper. The doctrine of lis pendens applies only to actions that directly affect the title to or possession of real property. Civil Case No. 67381 was a personal action for collection of a sum of money; the relief sought did not include recovery of possession, enforcement of a lien, or adjudication of title to the specific property. The Memorandum of Agreement authorizing a sale in case of default did not convert the action into a real one. Consequently, the lis pendens did not bind subsequent transferees, and respondents, as purchasers from Lorenzo (the execution sale purchaser), acquired valid title.
The Court also found that the RTC, in issuing the writ of possession and ordering the transfer of title, effectively adjudicated claims of ownership in favor of petitioner against respondents, who were not parties to Civil Case No. 67381. This violated respondents’ right to due process. The proper recourse for a third party claiming ownership against a writ of execution is not a motion to quash the writ itself but a separate independent action to vindicate their claim. However, under the exceptional circumstances of this case, where the execution was patently void (as the property no longer belonged to the judgment debtor), the CA correctly exercised its supervisory power to correct the lower court’s grave abuse of discretion.