G.R. No. 200991, March 18, 2021
SPOUSES WILFREDO AND DOMINICA ROSARIO, PETITIONERS, VS. GOVERNMENT SERVICE INSURANCE SYSTEM, RESPONDENT.

FACTS

New San Jose Builders Inc. (NSJBI) and the Government Service Insurance System (GSIS) entered into a Loan Agreement on December 10, 1997, secured by a mortgage over several properties, including Unit 205 in St. John Condominium. The mortgage was annotated on the titles. NSJBI defaulted on the loan. GSIS extrajudicially foreclosed the mortgaged properties on June 17, 2003, and, after NSJBI failed to redeem, consolidated ownership. GSIS filed a petition for a writ of possession against NSJBI and all occupants of the foreclosed properties before the Regional Trial Court (RTC). The Spouses Wilfredo and Dominica Rosario (petitioners), who allegedly purchased Unit 205 from NSJBI, filed a motion for intervention. The RTC granted the intervention and issued a writ of possession only as to unsold units and lots not in possession of third-party buyers, thus exempting Unit 205. The Court of Appeals (CA) reversed the RTC, ruling it committed grave abuse of discretion in allowing intervention in an ex-parte proceeding and in restraining the writ’s implementation against the petitioners, who were not adverse third-party possessors. The CA held the proper remedy for petitioners was to seek annulment of the mortgage or foreclosure before the HLURB.

ISSUE

Whether the CA erred in ruling that the RTC committed grave abuse of discretion for allowing petitioners to intervene in respondent’s ex-parte application for a writ of possession, and exempting from its implementation Unit 205 possessed by petitioners.

RULING

The Supreme Court found the petition meritorious. It ruled that the right to possess a foreclosed property after the redemption period is subject to the rights of third-party possessors holding the property adversely to the judgment debtor/mortgagor. While the issuance of a writ of possession is generally ministerial after consolidation of title, an exception exists under Section 33, Rule 39 of the Rules of Court (applied via Act No. 3135) when a third party is actually holding the property adversely to the judgment obligor. In such cases, the ministerial duty ceases, and the court should conduct a summary hearing to determine the nature of the third party’s possession. The Court cited jurisprudence establishing that a writ cannot issue against a third party who was not a party to the foreclosure, did not acquire possession from a party bound by the decree, and is a mere stranger who entered possession before the suit. The conflicting claims of ownership cannot be settled in an ex-parte proceeding for a writ of possession. The trial court must first determine if the possessor is a privy to the parties or a bona fide adverse claimant. Therefore, the RTC correctly allowed intervention and conducted a hearing to ascertain the nature of petitioners’ possession, and the CA erred in reversing the RTC’s resolutions.