BPI Family Savings Bank v. Golden Power Diesel

G.R. No. 176019 (January 12, 2011)

BPI Family Savings Bank's writ of possession upheld; respondents lacked legitimate rights.

Facts:

On October 26, 1994, CEDEC Transport, Inc. (CEDEC) executed a mortgage over two parcels of land in favor of BPI Family Savings Bank, Inc. (BPI Family) to secure a loan of P6,570,000. This mortgage was duly annotated on the titles of the properties. Subsequently, CEDEC obtained additional loans from BPI Family, mortgaging the same properties, which were also annotated on the titles. CEDEC defaulted on its mortgage obligations, prompting BPI Family to file a verified petition for extrajudicial foreclosure on October 12, 1998. The properties were sold at public auction on December 10, 1998, with BPI Family as the highest bidder, acquiring the properties for P13,793,705.31. The one-year redemption period expired on May 15, 1999, without CEDEC redeeming the properties, leading to the issuance of new titles in BPI Family's name.

Despite several demand letters, CEDEC refused to vacate the properties. On January 31, 2002, BPI Family filed an Ex-Parte Petition for Writ of Possession, which was granted by the Regional Trial Court (RTC) on June 27, 2002. However, on July 29, 2002, respondents Golden Power Diesel Sales Center, Inc. and Renato C. Tan (respondents) filed a motion to hold the implementation of the writ, claiming they were in possession of the properties through a Deed of Absolute Sale with Assumption of Mortgage from CEDEC. They argued that they were third parties with rights adverse to CEDEC.

The RTC denied the respondents' motion on September 12, 2002, but later issued an alias writ of possession that expired without implementation. Respondents filed an Affidavit of Third Party Claim, leading the sheriff to refer the matter back to the RTC. BPI Family then filed a motion to compel the sheriff to enforce the writ, which the RTC denied, stating that the order should not affect third parties holding adverse rights. BPI Family subsequently filed a petition for mandamus and certiorari with the Court of Appeals, which dismissed the petition, affirming the RTC's decision to suspend the implementation of the writ.

Legal Issues:

  1. Whether the Court of Appeals erred in upholding the RTC's finding that respondents, as vendees of CEDEC, were considered third parties claiming rights adverse to CEDEC.
  2. Whether the pendency of a case questioning the legality of a mortgage or auction sale can be a ground for the non-issuance or non-implementation of a writ of possession.

Arguments:

  • Petitioner (BPI Family): BPI Family contended that respondents, as vendees, merely stepped into CEDEC's shoes and should not be considered third parties with adverse rights. They argued that the RTC had a ministerial duty to grant the writ of possession since they were the rightful owners of the properties after the foreclosure sale. BPI Family also asserted that the pendency of the annulment case should not prevent the issuance of the writ.

  • Respondents (Golden Power and Tan): The respondents argued that they were third parties in possession of the properties, claiming rights adverse to CEDEC. They maintained that the obligation of the court to issue a writ of possession ceases to be ministerial when a third party is in possession of the property claiming adverse rights. They emphasized that they had filed a complaint for the cancellation of the Sheriff’s Certificate of Sale.

Court's Decision and Legal Reasoning:

The Supreme Court granted BPI Family's petition, setting aside the decisions of the Court of Appeals and the RTC. The Court held that respondents could not be considered third parties holding the properties adversely to CEDEC. The Court reasoned that respondents, as transferees of CEDEC, derived their rights from CEDEC and were bound to respect the mortgage in favor of BPI Family. The Court emphasized that possession by a transferee does not equate to adverse possession against the original owner.

The Court also reiterated that the pendency of an annulment case does not stay the issuance of a writ of possession. The purchaser in a foreclosure sale is entitled to a writ of possession without prejudice to the outcome of any pending cases questioning the validity of the mortgage or sale.

Significant Legal Principles Established:

  1. A purchaser in a foreclosure sale is entitled to a writ of possession as a matter of right, and the issuance of such writ is generally a ministerial duty of the court, except when a third party is in possession of the property claiming adverse rights.
  2. The mere fact that a third party is in possession does not automatically preclude the issuance of a writ of possession if that party's rights are derived from the judgment obligor.
  3. The pendency of a case questioning the legality of a mortgage or auction sale does not prevent the issuance or implementation of a writ of possession.