GR 177881; (October, 2010) (Digest)
G.R. No. 177881 ; October 13, 2010
EMMANUEL C. VILLANUEVA, Petitioner, vs. CHERDAN LENDING INVESTORS CORPORATION, Respondent.
FACTS
Respondent Cherdan Lending Investors Corporation extrajudicially foreclosed a real estate mortgage executed by spouses Fortunato and Rachel Peñaredondo. After the auction sale and the expiration of the redemption period, title was consolidated in Cherdan’s name. Cherdan then filed an ex-parte petition for a writ of possession, which the Regional Trial Court (RTC) granted. Petitioner Emmanuel Villanueva, claiming to be the true owner in actual possession of the property, moved for reconsideration, alleging the property was fraudulently transferred to the Peñaredondos and that he had filed related criminal and civil cases. The RTC granted Villanueva’s motion, recalling the writ, allowing him to remain in possession pending the resolution of his cases.
Subsequently, an RTC branch dismissed the Peñaredondos’ civil case for nullity of mortgage. Cherdan then filed a motion for an alias writ of possession, which the RTC denied. Cherdan filed a petition for certiorari with the Court of Appeals (CA). The CA granted the petition, annulled the RTC orders, and directed the issuance of an alias writ of possession against all adverse claimants, without prejudice to the outcome of cases regarding title validity.
ISSUE
Whether the Court of Appeals erred in directing the issuance of an alias writ of possession in favor of Cherdan despite the claim of a third party (Villanueva) in adverse possession of the foreclosed property.
RULING
The Supreme Court granted Villanueva’s petition and reversed the CA decision. The Court held that the issuance of a writ of possession in extrajudicial foreclosure is a ministerial duty only when the property is not in the possession of a third party claiming a right adverse to that of the mortgagor. The legal logic is anchored on the distinction between the ministerial and discretionary issuance of such writs under Act No. 3135 , as amended.
The Court explained that after consolidation of title, the purchaser is entitled to a writ of possession as a matter of right, and its issuance is a ministerial function of the court. However, this ministerial duty applies only against the mortgagor and those claiming under them. A recognized exception exists when a third party, like Villanueva, is in possession of the property claiming a right adverse to the mortgagor’s title prior to the foreclosure sale. In such a case, the issuance of the writ ceases to be ministerial and becomes discretionary. The third party’s claim cannot be summarily resolved in the ex-parte proceedings for the writ; the proper recourse for the purchaser is to file a separate action for ejectment to assert its claim of possession. Since Villanueva asserted ownership and adverse possession based on a claim antedating the mortgage, the RTC correctly exercised discretion in recalling the initial writ. The CA erred in ordering the issuance of the alias writ.