G.R. No. 200683 , 200710, 201546, 211512. July 28, 2021.
NEW SAN JOSE BUILDERS, INC., DONARDO S. DONATO, CARLITOS L. ESCUETA, CARLOS C. ABESAMIS AND CO-INTERVENORS (MEMBERS OF THE ST. JOHN UNIT OWNERS ASSOCIATION, INC.), PETITIONERS, VS. GOVERNMENT SERVICE INSURANCE SYSTEM, RESPONDENT.

FACTS

On December 10, 1997, New San Jose Builders Inc. (NSJBI) obtained a Php600 million loan from the Government Service Insurance System (GSIS). As security, NSJBI mortgaged several properties, including 102 condominium units at St. John Condominium in Quezon City. The loan agreement allowed NSJBI to continue selling the mortgaged properties, provided the net proceeds were used to repay the loan. NSJBI subsequently sold units to various buyers, including petitioners Donardo Donato, Carlitos Escueta, and others, who were issued Condominium Certificates of Title and occupied their units.
NSJBI defaulted on the loan. On March 31, 2003, GSIS applied for extrajudicial foreclosure. An auction sale was held on June 17, 2003, with GSIS as the highest bidder. After NSJBI failed to redeem the properties, titles were consolidated in favor of GSIS. GSIS then filed an ex-parte petition for a writ of possession against NSJBI and all occupants of the foreclosed properties before the Regional Trial Court (RTC) of Quezon City.
NSJBI and the individual buyers (petitioners) filed oppositions and pleadings-in-intervention, arguing they were owners/occupants unaware of the mortgage and that a writ of possession could not be issued ex-parte against third-party possessors. The RTC, in a Resolution dated April 7, 2008, granted the interventions to establish the buyers’ possession but limited the writ of possession to unsold units not possessed by third-party buyers. The RTC denied GSIS’s motion for reconsideration on June 11, 2009.
GSIS filed a petition for certiorari with the Court of Appeals (CA). On July 28, 2011, the CA granted GSIS’s petition, reversing the RTC. The CA held that the RTC committed grave abuse of discretion in allowing intervention in an ex-parte proceeding and that petitioners were not third parties in adverse possession. The CA denied reconsideration on February 20, 2012. Petitioners elevated the case to the Supreme Court via consolidated petitions for review on certiorari.

ISSUE

Whether the Court of Appeals erred in holding that the Regional Trial Court committed grave abuse of discretion when it allowed petitioners to intervene in GSIS’s ex-parte application for a writ of possession and exempted from its implementation the units possessed by petitioners.

RULING

The Supreme Court GRANTED the petitions. The Court ruled that the CA erred. Applying its prior ruling in Spouses Rosario v. GSIS, the Court held that condominium unit buyers who are in actual possession of their units are considered third parties who possess their units adverse to the developer-mortgagor (NSJBI). Consequently, they are protected against possessory writs secured by mortgagee-creditors (GSIS) of the developer. The issuance of a writ of possession is ministerial only against the mortgagor and its successors-in-interest, not against third parties who are in adverse, physical, and actual possession of the foreclosed property. Since petitioners were such third-party possessors, the RTC correctly allowed their intervention to bring their adverse possession to the court’s attention and properly exempted their units from the ex-parte writ of possession. The proper remedy for GSIS is to file a separate action for ejectment against the petitioners.