Ordinarily, a purchaser in an extrajudicial foreclosure sale of a mortgaged property is entitled to its possession upon the expiration of the redemption period so that trial court has to issue a writ of possession as a matter of course upon petition of the purchaser. But when a third party is actually holding the property and claiming a right adverse to that of the debtor/mortgagor the court has to conduct a hearing first to determine the nature of the adverse possession. This rule is illustrated in this case of Nadia.
The case involved a parcel of land located at Ayala Alabang registered in the name of the spouses Temy and Lita. On October 2, 1996, the spouses mortgaged the said property to AB bank to secure the loan they obtained. For failure to settle their loan, AB foreclosed the mortgage where it emerged as the highest bidder in the foreclosure sale. Temy and Lita however also failed to redeem the property within the one year redemption period. Hence AB consolidated its ownership over the property.
But when AB subsequently filed a Petition for Issuance of a Writ of Possession with the Regional Trial Court (RTC), Nadia opposed the petition and submitted a Deed of Sale of the property executed in her favor by Temy dated April 22, 1998 and the first page of the certified true copy of the TCT which Temy gave her.
Hence the RTC set Nadia’s opposition for hearing. But neither Nadia nor her counsel appeared at said hearing. So the RTC granted the writ of possession in favor of AB. The RTC said that the Deed of Sale in favor of Nadia appears to be void since it was signed only by Temy and it was not shown that he was authorized by Lita to sell the conjugal property.
But before the writ of possession could be fully implemented, Nadia filed a petition for certiorari and prohibition in the Court of Appeals (CA) which also affirmed the RTC ruling. So Nadia questioned both the RTC and CA rulings contending that the writ of possession should not have been issued in favor of AB since she was a third party in possession of the property and under Section 33 of Rule 39 of the Rules of Court, the possession can not be given to the purchaser (AB) if there is a third party actually holding the property adverse to that of said purchaser. Was Nadia correct?
No. The RTC conducted the required hearing but neither Nadia nor her counsel appeared. So the RTC and the CA cannot be faulted for evaluating only the Deed of Sale and the certified true copy of the TCT and for finding the validity of the sale questionable since only Temy signed the Deed and it was not shown that he was authorized by Lita to sell the conjugal property.
Even if the spouses had signed the Deed, the result would still be the same given the circumstances in this case. The deed was not even registered, a truly fatal defect. It is hard to believe that Nadia did not compel the spouses to register the sale and to have the proper title issued in her name. Her reliance on the certified true copy of the TCT given her by Temy on the assurance that the title was clean is also misplaced. A person dealing with a registered property is charged with notice only of such burdens and claims annotated on the title. Yet Nadia accepted the first page of the TCT sans the dorsal page where AB’s mortgage was annotated. Nadia should have been more circumspect in protecting her interest.
Nadia’s alleged possession of the property as a third party could not also prevent the issuance of the writ of possession in favor of AB. The third party in possession must have been occupying the property even prior to the mortgage in favor of the bank. More importantly the bank must be aware that there was a third party possessor before it granted the loan to the original owners of the property. Such is not the case here. The mortgage in favor of AB preceded the sale in favor of Nadia. It was not likewise alleged or proven that AB was at any point of time aware that Nadia occupied the property.
Thus no reversible error was committed by the RTC and the CA. AB had no legal obligation to honor Nadia’s possession of the property. Rather, it is Nadia who has the legal obligation to honor AB’s prior ownership and existing right to possess it (Policarpio vs. Active Bank, G.R. 157125, September 19, 2008).
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