G.R. No. 272689 , October 16, 2024
FEI HUA FINANCE AND LEASING SERVICE, REPRESENTED BY ELIZABETH O. LIM, PETITIONER, VS. EDILBERTO CASTAÑEDA, RESPONDENT.

FACTS

Petitioner Fei Hua Finance and Leasing Service (Fei Hua) granted a credit facility to Goldland Properties and Development Corporation (Goldland). As security, Goldland executed a Deed of Real Estate Mortgage over 60 parking spaces in Porto Vita Condominium in Quezon City, covered by Condominium Certificates of Title (CCT) in its name. One parking slot, covered by CCT No. 004-2011006807, was allegedly sold by Goldland to respondent Edilberto Castañeda prior to the mortgage. Goldland defaulted, prompting Fei Hua to extrajudicially foreclose the mortgage. Fei Hua emerged as the highest bidder at the auction, and after the redemption period lapsed, consolidated the titles, resulting in the cancellation of the subject CCT and the issuance of a new one in Fei Hua’s name. Fei Hua then filed an ex-parte petition for a writ of possession, which the Regional Trial Court (RTC) granted. The writ was issued, became final, and was implemented.
Castañeda filed a motion to recall the writ, claiming he was the owner and possessor of the parking slot. He presented a Reservation Agreement and Acknowledgment dated September 28, 2013, showing full payment, and a Deed of Absolute Sale dated September 12, 2018, wherein Goldland declared the property free from liens. Castañeda alleged Goldland turned over the property to him on August 12, 2017, and he had since been in actual possession, using it, and paying association dues and taxes, though Goldland failed to deliver the CCT. The RTC denied his motion as moot and academic since the writ had been served and satisfied, and ruled Castañeda was not a third party holding the property adversely to the mortgagor but merely a successor/transferee of Goldland. The Court of Appeals (CA) reversed the RTC, setting aside its orders and ruling that the writ should exclude Castañeda’s parking space. The CA held that under the modified rule from Spouses Rosario v. GSIS, individual buyers like Castañeda, while having privity with the developer-mortgagor, should be excluded from the writ if they are in actual occupation, and his possession was adverse to the judgment debtor. Fei Hua’s petition for review followed.

ISSUE

Whether or not the Court of Appeals erred in holding that the execution or implementation of the subject writ of possession did not render Castañeda’s motion to recall the same moot and academic.

RULING

No, the Court of Appeals did not err. The Supreme Court denied the petition and affirmed the CA’s Decision and Resolution. The Court held that the implementation of the writ of possession did not render Castañeda’s motion moot and academic because the core issue was the validity of the writ’s enforcement against him, a claimed third-party possessor. Citing Integrated Credit and Corporate Services Co. v. Labrador, the Court reiterated that a writ of possession issued in an extrajudicial foreclosure is enforceable only against the mortgagor and its successors-in-interest, not against third parties actually holding the property adversely to the judgment debtor at the time of levy, as provided under Rule 39, Section 33 of the Rules of Court. The Court, applying the doctrine from Spouses Rosario v. GSIS, clarified that an individual buyer of a condominium unit or lot from a developer-mortgagor, who is in actual possession, is considered a third-party adverse possessor exempt from the writ, despite the technical privity from the sale. Castañeda, having purchased the property in good faith and for value prior to the mortgage (as evidenced by the 2013 reservation and full payment, 2018 deed of sale, and 2017 turnover), and being in actual possession, was holding the property adversely to Goldland. Therefore, Fei Hua’s writ of possession could not be validly enforced against him. Consequently, the motion to recall was not moot, as the enforcement against Castañeda was void and could be assailed at any time. The RTC’s orders were correctly set aside.