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SPS. JOSE O. GATUSLAO v. LEO RAY V. YANSON

FACTS:

The case involves a dispute between the spouses Jose and Ermila Gatuslao and Leo Ray Yanson over the issuance of a writ of possession. Ermila is the daughter of the late Felicisimo Limsiaco, who owned two parcels of land in Bacolod City. These properties were mortgaged to the Philippine National Bank (PNB) by Limsiaco. However, Limsiaco failed to pay, resulting in a foreclosure and a public auction where PNB emerged as the highest bidder. After the redemption period expired and Limsiaco's estate failed to redeem the properties, PNB acquired ownership and Transfer Certificates of Title (TCTs) were issued in its name. Subsequently, PNB sold the properties to Leo Ray Yanson.

Leo Ray Yanson then filed a motion for the issuance of a writ of possession, which the Regional Trial Court (RTC) granted. However, the Gatuslao spouses argued that Yanson is not entitled to the writ because he was not the buyer at the public auction. They also claimed that there is a pending civil suit for the annulment of the foreclosure, which should bar the issuance of the writ. The RTC denied the motion for reconsideration, and Yanson moved to execute the possessory writ.

As a response, the Gatuslao spouses filed a petition for review on certiorari with the Supreme Court. They raised several issues, including the contention that the pending civil suit should prevent the issuance of the writ, that their right to due process was violated as they were not parties to the foreclosure, and that Yanson, as a mere purchaser through a negotiated sale with PNB, cannot avail of the writ of possession.

ISSUES:

  1. Whether the pending action for annulment of foreclosure of mortgage and sale at public auction bar the issuance of a writ of possession.

  2. Whether the petitioners, as parties to the foreclosure sale, were deprived of due process.

  3. Whether petitioners fall under the exception of adverse possession, which would prevent the issuance of a writ of possession.

  4. Whether petitioners' right to due process was violated by the issuance of the writ of possession.

  5. Whether respondent is entitled to the issuance of the writ of possession as a transferee or successor-in-interest.

  6. Whether the petitioner is entitled to possession of the foreclosed property even after the expiration of the redemption period.

  7. Whether the subsequent buyer of the foreclosed property has the right to possess the property after the redemption period without any redemption made by the previous owner.

RULING:

  1. The issuance of a writ of possession may not be stayed by a pending action for annulment of mortgage or the foreclosure itself. Until the foreclosure sale is annulled by a court of competent jurisdiction, the issuance of a writ of possession remains a ministerial duty of the trial court. The trial court does not need to look into the validity of the mortgage or the manner of its foreclosure. The purchaser is entitled to a writ of possession without prejudice to the outcome of the pending annulment case.

  2. The petitioners, as parties to the foreclosure sale, were not strangers or third parties and were not deprived of due process. Section 7 of Act No. 3135 provides the procedure for the issuance of a writ of possession in cases of extrajudicial foreclosures. The purchaser has the absolute right to possess the property upon the expiration of the period to redeem and no redemption was made.

  3. Petitioners do not fall under the exception of adverse possession. They are considered transferees or successors-in-interest of the right of possession of the mortgagor, not third parties holding the properties adversely to the mortgagor. Therefore, the trial court was justified in issuing the writ of possession.

  4. Petitioners' claim that their right to due process was violated is unfounded. The ex parte nature of the proceedings does not deny due process, and the issuance of the writ of possession does not prevent a separate case for annulment of mortgage and foreclosure sale. Moreover, the records show that petitioners were given the opportunity to present their side.

  5. Respondent is entitled to the issuance of the writ of possession. As a transferee or successor-in-interest of the actual purchaser of the subject properties, he is considered to have stepped into the shoes of the purchaser and can avail of the provisions of Section 7 of Act No. 3135. The Deed of Absolute Sale between the parties clearly states that the vendee agrees to undertake the ejectment of any occupant of the property.

  6. No, the petitioner is not entitled to possession of the foreclosed property after the expiration of the redemption period. The petitioner lost his possessory right over the property after the expiration of the redemption period without redeeming the properties.

  7. Yes, the subsequent buyer of the foreclosed property has the right to possess the property after the redemption period without any redemption made by the previous owner. The provisions of Section 7 of Act No. 3135 apply to such a subsequent purchaser.

PRINCIPLES:

  • A pending action for annulment of mortgage or foreclosure sale does not stay the issuance of a writ of possession.

  • The issuance of a writ of possession is a ministerial duty of the trial court until the foreclosure sale is annulled by a court of competent jurisdiction.

  • The purchaser, as confirmed owner, has the absolute right to possess the property upon the expiration of the redemption period and no redemption was made.

  • Where the foreclosed property is in the possession of a third party who is holding it adversely to the judgment debtor or mortgagor, a hearing must be conducted to determine the nature of the adverse possession before issuing a writ of possession.

  • Adverse possession does not apply when the property is held by a third party who is a transferee or successor-in-interest of the right of possession of the mortgagor.

  • The ex parte nature of the proceedings in issuing a writ of possession does not violate due process, and a separate case for annulment of mortgage and foreclosure sale can still be pursued.

  • A transferee or successor-in-interest of the actual purchaser at a public auction sale is entitled to avail of a writ of possession.

  • The expiration of the redemption period without redemption being made renders the ejectment suit moot, and the subsequent buyer becomes entitled to possession.