Hear me out

YE Company Inc. obtained from Da Bank an industrial loan which was secured by a real estate mortgage over the parcel of land situated in Quezon City.

For failure to to pay its loan obligation, Da Bank moved to extrajudically foreclosed the mortgage. The property was sold at public auction with the Da Bank as the highest bidder.

A certificate of sale was issued in favor of the bank. Said certificate was duly registered.

The redemption period expired without the property being redeemed. Da Bank consolidated its ownership of the property. A new title was issued in favor of it.

Upon proper application, the Regional Trial Court granted an Ex-Parte Petition for Issuance of a Writ of Possession before the Regional Trial Court.

Meanwhile, the Neighborhood Association filed its Opposition to the Writ of Possession with Prayer for Temporary Restraining Order (TRO).

The Association claimed to represent third persons in possession of the property in their own right and adverse to the mortgagor YE Company.

It alleged that it became aware of the writ only when it was being served upon the Association’s president.

The Association claimed that it should have been notified of the proceedings as it is the owner of the subject property pursuant to a Deed of Sale executed to them by the registered owner’s predecessor-in-interest and court-appointed administrator.

It disputed the ownership of YE Company as mortgagor and the bank as purchaser at auction as their claims arose from a spurious title.

The Association further claimed that as it was not included as a party in the proceedings of the issuance of the writ of possession, it was deprived of due process when the said writ was issued.

Q: What is a writ of possession?

A: A writ of possession is a writ of execution employed to enforce a judgment to recover the possession of land. It commands the sheriff to enter the land and give possession of it to the person entitled under the judgment. It may be issued in case of an extrajudicial foreclosure of a real estate mortgage under Section 7 of Act No. 3135, as amended by Act No. 4118. (LZK Holdings and Development Corp. vs. Planters Development Bank, G.R. No. 187973, January 20, 2014)

Q: What is the nature of an ex parte petition for the issuance of a writ of possession which is filed as a consequence of an extra-judicial foreclosure proceedings?

A: An ex parte petition for the issuance of a possessory writ under Section 7 of Act 3135, as amended,] is not, strictly speaking, a “judicial process”.

Even if the same may be considered a judicial proceeding for the enforcement of one’s right of possession as purchaser in a foreclosure sale, it is not an ordinary suit filed in court by which one party sues another for the enforcement or protection of a right, or the prevention or redress of a wrong.

An ex parte petition for issuance of a writ of possession is a non-litigious proceeding authorized in an extrajudicial foreclosure of mortgage pursuant to Ac 3135, as amended.

Unlike a judicial foreclosure of real estate mortgage under Rule 68 of the Rules of Court, any property brought within the ambit of the act is foreclosed by the filing of a petition, not with any court of justice, but with the office of the sheriff of the province where the sale is to be made. (Development Bank of the Philippines vs. Prime Neighborhood Association, G.R. Nos. 175728 & 178914, May 8, 2009).

Q: What is the rule with respect to the issuance of a writ of possession insofar as extra-judicial foreclosure proceedings are concerned?

A: As a rule, it is ministerial upon the court to issue a writ of possession after the foreclosure sale and during the period of redemption. The governing law, Act No. 3135, as amended, in Section 7 thereof, explicitly authorizes the purchaser in a foreclosure sale to apply for a writ of possession during the redemption period by filing an ex parte motion under oath for that purpose in the corresponding registration or cadastral proceeding in the case of property with Torrens title.

Upon the filing of such motion and the approval of the corresponding bond, the law also in express terms directs the court to issue the order for a writ of possession.

On the other hand, the writ of possession issues as a matter of course even without the filing and approval of a bond after consolidation of ownership and the issuance of a new transfer certificate of title in the name of the purchaser. (Development Bank of the Philippines vs. Prime Neighborhood Association, G.R. Nos. 175728 & 178914, May 8, 2009)

Q: Are there exceptions to the above rule, if any?

A: Under Section 35, Rule 39 of the Rules of Court, which is made suppletory to the extrajudicial foreclosure of real estate mortgages by Section 6 of Act 3135, as amended, the possession of the mortgaged property may be awarded to a purchaser in the extrajudicial foreclosure unless a third party is actually holding the property adversely to the judgment debtor.

Simply put, the obligation of a court to issue an ex parte writ of possession in favor of the purchaser in an extrajudicial foreclosure sale ceases to be ministerial once it appears that there is a third party in possession of the property who is claiming a right adverse to that of the debtor/mortgagor. (Development Bank of the Philippines vs. Prime Neighborhood Association, G.R. Nos. 175728 & 178914)

Q: Is the Neighborhood Association a third party in possession of the property claiming a right adverse to that of the debtor/mortgagor?
A: Yes. The Neighborhood Association derives its claim not from YE Company or its predecessor in interest, but from another entity.

It is thus clear that PNA asserts a claim of ownership adverse to that of YE Company and the bank, and that it acquired title and possession of the property by virtue of a title entirely distinct from that through which the bank claims.

The Neighborhood Association thus stands in the same position as a stranger or third party whose rights to the property cannot be resolved in an ex parte proceeding where it was not impleaded or where it could appear to present its side.

Indeed, the rules contemplate a situation where a third party holds the property by adverse title or right such as a co-owner, tenant or usufructuary.

In such cases, a grant of a writ of possession would be denial of such third person’s rights without giving them their day in court. Especially where question of title is involved, the matter would well be threshed out in a separate action and not in a motion for a writ of possession. (Development Bank of the Philippines vs. Prime Neighborhood Association, G.R. Nos. 175728 & 178914)

Ma. Soledad Deriquito-Mawis is currently the Dean. Lyceum of the Philippines University; president of Philippine Association of Law Schools; and Senior Partner at Gatchalian Castro & Mawis Law Office