TOPIC Real Estate Mortgage - Art.

2131
CASE NO. G.R. No. 121943. March 24, 2003.
CASE NAME CHINA BANKING CORPORATION, petitioner, vs. SPOUSES OSCAR and LOLITA
ORDINARIO, respondents.
MEMBER Marie Kayla Galit

DOCTRINE
§ Under Section 7 of Act No. 3135, the purchaser in a foreclosure sale is entitled to possession of the property. Thus the
writ prayed for by petitioner granting it possession has to be issued as a matter of course. This Court has consistently
ruled that it is a ministerial duty of the trial court to grant such writ of possession. No discretion is left for the trial
court. Any question regarding the cancellation of the writ or in respect of the validity and regularity of the public sale
should be determined in a subsequent proceeding as outlined in Section 8 of Act No. 3135.
§ Under Section 33, Rule 39 of the 1997 Rules of Civil Procedure, as amended, the possession of the foreclosed
property may be awarded to the purchaser or highest bidder "unless a third party is actually holding the property
adversely to the judgment debtor."
- Assuming arguendo that respondent spouses are adverse third parties, as they so averred, Section 16 of the same
Rule reserves to them the remedies of:
(1) terceria to determine whether the sheriff has rightly or wrongly taken hold of the property not belonging to the
judgment debtor or obligor and
(2) an independent "separate action" to vindicate their claim of ownership and/or possession over the foreclosed
property.

RECIT-READY DIGEST (Synopsis from CD-Asia; For additional ratio, see doctrine part)
China Bank was the highest bidder at the public auction held on the extrajudicially foreclosed mortgaged properties of
TransAmerican Corp. Thus, China Bank with the RTC an ex parte verified petition for the issuance of a writ of
possession, the same was granted by the trial court. Spouses Ordinario, however, filed a motion for reconsideration for the
exclusion of the land covered by TCT 7637. Allegedly, they are purchasers of the property prior to the auction sale and
the petition for a writ of possession did not bind them for lack of notice. The trial court denied the motion for
reconsideration, but the same reversed by the Court of Appeals.

Ordinario's motion for reconsideration was properly denied for being bereft of merit. Under Section 7 of Act No. 3135,
the purchaser in a foreclosure sale is entitled to possession of the property. Thus, it is a ministerial duty of the trial court to
grant the writ of possession prayed for by China Bank. Any question regarding the cancellation of the writ or in respect of
the validity and regularity of the public sale should be determined in a subsequent proceeding as outlined in Sec. 8 of Act
No. 3135.

FACTS
• On various dates, China Banking Corporation granted three (3) loans in the total sum of P27,353,000.00 to
TransAmerican Sales and Exposition, Inc. (TransAmerican) owned and controlled by spouses Jesus and Lorelie
Garcia.
• The loans were secured by real estate mortgages constituted by Jesus Garcia (with the consent of his wife) on his
45 parcels of land, all registered in the Registry of Deeds of Quezon City. The contracts of mortgage were all
registered in the same Registry.
• For failure of TransAmerican to pay its loans, China Banking foreclosed extrajudicially the 3 REMS.
• On August 27, 1990, the mortgaged properties were sold at public auction for P38,004,205.01 to China Bank,
being the highest bidder.
• On September 3, 1990, the Certificate of Sale was registered in the Registry of Deeds of Quezon City.
• On October 4, 1990, China Bank filed with RTC-QC, an ex-parte verified petition for issuance of a writ of
possession.
o The trial court issued an order granting the petition and placing China Bank in possession of the 45
parcels of land.
• On August 16, 1991, Oscar and Lolita Ordinario, filed a motion for reconsideration praying that parcel of land
with its improvement covered by TCT No. 7637 be excluded from the above order. They alleged:

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 o they are indispensable parties in the case, claiming that in November 1989, they purchased the land
covered by TCT No. 7637 on which was constructed their townhouse;
o the petition for a writ of possession does not bind them for lack of notice;
o China Bank should have filed an action for recovery of possession, not an ex-parte petition for a writ of
possession since there are parties in actual possession of the lots involved.
• RTC: Denied; CA: Reversed, in favor of Spouses Ordinario

ISSUE/S and HELD

RATIO
- Under Section 7 of Act No. 3135, the purchaser in a foreclosure sale is entitled to possession of the property.
o Thus the writ prayed for by China Bank granting it possession has to be issued as a matter of course.
- This Court has consistently ruled that it is a ministerial duty of the trial court to grant such writ of possession.
No discretion is left for the trial court.
o Any question regarding the cancellation of the writ or in respect of the validity and regularity of the
public sale should be determined in a subsequent proceeding as outlined in Section 8 of Act No. 3135.
- Section 7 of Act No. 3135, as amended, 6 provides:
o Sec. 7. In any sale made under the provisions of this Act, the purchaser may petition the Court of First
Instance (now RTC) of the province or place where the property or any part thereof is situated, to give
him possession thereof during the redemption period, furnishing bond in an amount equivalent to the use
of the property for a period of twelve months, to indemnify the debtor in case it be shown that the sale
was made without violating the mortgage or without complying with the requirements of this Act. Such
petition shall be made under oath and led in the form of an ex parte motion in the registration or cadastral
proceedings if the property is registered, or in special proceedings in the case of property registered under
the Mortgage Law . . . , and in each case the clerk of the court shall, upon the filing of such petition,
collect the fees specified . . . , and the court shall upon approval of the bond, order that a writ of
possession issue, addressed to the sheriff of the province in which the property is situated, who shall
execute said order immediately.
- The above provision is not without exception. Under Section 33, Rule 39 of the 1997 Rules of Civil
Procedure, the possession of the foreclosed property may be awarded to the purchaser or highest bidder "unless a
third party is actually holding the property adversely to the judgment debtor.
o Assuming arguendo that spouses Ordinario are adverse third parties, Section 16 of the same Rule
reserves to them the remedies of:
§ Terceria to determine whether the sheriff has rightly or wrongly taken hold of the property not
belonging to the judgment debtor or obligor and
§ An independent "separate action" to vindicate their claim of ownership and/or possession over the
foreclosed property.
- Under the Section 16 of Rule 39, a third-party claimant or a stranger to the foreclosure suit, like Ordinario
spouses, can opt to file a remedy known as terceria against the sheriff or officer effecting the writ by serving on
him an affidavit of his title and a copy thereof upon the judgment creditor.
o By the terceria, the officer shall not be bound to keep the property and could be answerable for damages.
- A third-party claimant may also resort to an independent "separate action," the object of which is the recovery of
ownership or possession of the property seized by the sheriff, as well as damages arising from wrongful seizure
and detention of the property despite the third-party claim.
o If a "separate action" is the recourse, the third-party claimant must institute in a forum of competent
jurisdiction an action, distinct and separate from the action in which the judgment is being enforced, even
before or without need of filing a claim in the court that issued the writ.
- Both remedies are cumulative and may be availed of independently of or separately from the other. Availment of
the terceria is not a condition sine qua non to the institution of a "separate action."
- Thus, respondents' resort to a motion for reconsideration is obviously a procedural misstep.

DISPOSTIVE PORTION

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 WHEREFORE, the instant petition is GRANTED. The appealed Decision and Resolution of the Court of
Appeals dated March 20, 1995 and September 6, 1995 in CA- G.R. CV No. 40953 are REVERSED and SET ASIDE. The
orders of the RTC, Branch 90, Quezon City, in LRC Case No. Q-4534 (90) directing the issuance of a writ of possession
in favor of petitioner bank are AFFIRMED.