apply for a writ of possession during the redemption period, upon an ex-parte motion and after

furnishing a bond.

 In GC Dalton Industries, Inc. v. Equitable PCI Bank, the Court held that the issuance of a
writ of possession to a purchaser in an extrajudicial foreclosure is summary and
ministerial in nature as such proceeding is merely an incident in the transfer of title. Also, in
China Banking Corporation v. Ordinario, we held that under Section 7 of Act no. 3135, the
purchaser in a foreclosure is entitled to possession of the property.

Here, petitioner does not fall under the circumstances of the aforequoted case and the
provisions of Section 7 of Act no. 3135, as amended, since she bought the property long after
the expiration of the redemption period. Thus, it is PNB, if it was the purchaser in the foreclosure
sale, or purchase during the foreclosure sale, who can file the ex-parte petition for the issuance
of the writ of possession during the redemption period, but it will only Issue upon compliance
with the provisions of Section 7 of Act no. 3135.

In fact, the Real Estate Mortgage contains a waiver executed by the mortgagor in favor of the
mortgagee, wherein the mortgagor even waives the issuance of the writ of possession in favor
of the mortgagee. The contract provides that “effective upon the breach of any condition of the
mortgage and in addition to the remedies herein stipulated, the mortgagee is hereby likewise
appointed Attorney-in-Fact of the Mortgagor/s with full power and authority with the use of force,
if necessary, to take actual possession of the mortgaged property/ies without the necessity of
any judicial order or permission, or power, to collect rents, to eject tenants, to lease or sell the
mortgaged property/ies or any part thereof at a private sale without previous notice or
advertisement of any kind and execute the corresponding bills or sale, lease or other agreement
that may be deemed convenient to make repairs or improvements on the mortgaged
property/ies and pay for the same and perform any other act which the Mortgagee may deem
convenient for the proper administration of the mortgaged property/ies.

Moreover, even without the waiver, the issuance of the writ of possession is ministerial and non-
adversarial for the only issue involved is the purchaser’s right to possession; thus, an ex-parte
proceeding is allowed.

Nevertheless, the purchaser is not left without any remedy. Section 6 of Act no. 3135, as
amended by Act no. 4118, provides:

Sec. 6. In all cases which an extrajudicial sale is made under the special power herein before
referred to, the debtor, his successor-in-interest or any judicial creditor or judgment creditor on
the property subsequent to the mortgage or deed of trust under which the property is sold, may
redeem the same at any time within the term of one year from and after the date of the sale; and
such redemption shall be governed by the provisions of section four hundred and sixty-six,
inclusive, of the Code of Civil Procedure, in so far as these are not inconsistent with the
provisions of this Act.
Consequently, the provision of Section 33, Rule 39 of the Rules of Court relative to an execution
sale is made applicable to extrajudicial foreclosure of real estate mortgages by virtue of Section
6 of Act no. 3135, as amended. Section 33, Rule 39 of the Rules of Court provides:

Sec. 33. Deed and possession to be given at expiration of redemption period; by whom
executed or given.- If no redemption be made within one(1) year from the date of registration of
the certificate of sale, the purchaser is entitled to a conveyance and possession of the property;
or, if so redeemed whenever sixty (60) days have elapsed and no other redemption has been
made, and notice thereof given, and the time for redemption has expired, the last redemptioner
is entitled to the conveyance and possession; but in all cases the judgment obligor shall have
the entire period of one (1) year from the date of registration to the sale to redeem the property.
The deed shall be executed by the officer making the sale or his successor in office, and in the
latter case shall have the same validity as though the office making the sale had continued in
office and executed it.

Upon the expiration of the right of redemption, the purchaser or redemptioner shall be
substituted to and acquire all the rights, title, interest and claim of the judgment obligor to the
property as of the time of the levy. The possession of the property shall be given to the
purchaser or last redemptioner by the same officer unless a third party is actually holding
the property adversely to the judgment obligor.

From the foregoing, upon the expiration of the right of redemption, the purchaser or
redemptioner shal be substituted to and acquire all the rights, title, interest and claim of the
judgment debtor to the property, and its possession shall be given to the purchaser or last
redemptioner unless a third party is actually holding the property adversely to the judgment
debtor. In which case, the issuance of the writ of possession ceases to be ex-parte and non-
adversarial. Thus, where the property levied upon on execution is occupied by a party other
than a court to conduct a hearing to determine whether or not he is in possession of the subject
property under a claim adverse to that of the judgment debtor.

It is but logical that Section 33, Rule 39 of the Rules of Court be applied to cases involving
extrajudicially foreclosed properties that were bought by a purchaser and later sold to a third-
party-purchaser after the lapse of the redemption period. The remedy of a writ of possession, a
remedy that is available to the mortgagee-purchaser to acquire possession of the foreclosed
property from the mortgagor, is made available to a subsequent, purchaser, but only after
hearing and after determining that the subject property is still in the possession of the
mortgagor. Unlike if the purchaser is the mortgagee or a third party during the redemption
period, a writ of possession may issue ex-parte or without hearing. In other words, if the
purchaser is a third party who acquired the property after the redemption period, a hearing must
be conducted to determine whether the possession over the subject property is stil with the
mortgagor or is already in the possession of a third party holding the same adversely to the
defaulting debtor or mortgagor. If the property is in the possession of the mortgagor, a writ of
possession could thus be issued. Otherwise, the remedy of a writ of possession is no longer
available such purchaser, but he can wrest possession over the property through an ordinary of
ejectment.
 To be sure, immediately requiring the subsequent purchaser to file a separate case of
ejectment instead of a petition for the issuance of a writ of possession, albeit not ex-parte,
will only prolong the proceedings and unduly deny the subsequent purchaser of possession
of the property which he already bought.

 Heirs of Spouses Joaquin Manguardia and Susana Manalo, et. Al. vs. Heirs of
Simplicio Valles and Marta Valles, el. Al. G.R. No. 177616. August 27, 2014

“[T]he burden of proving the status of a purchaser in good faith and for value lies upon
him who asserts that standing.”
Petitioners failed to discharge the burden of proving that their predecessors-in-interest
were buyers in good faith.

Petitioners do not disoute that the original Deed of Absolute Sale is a forgery because the
alleged vendors were already long dead when the questioned deed was executed. While their
ownership rights are ultimately based upon this forged deed, petitioners assert that the good
faith of their predecessors-in-interest validates their title over the lots.

The Court, however, disagrees. It must be noted that the relationships by consanguinity or
affinity, between and among the vendors and vendees in the series of sales of the subject
properties, were established by testimonial evidence. Again, these were not contradicted by the
trial court, it can reasonable be assumed from these relations that the spouses Manguardia and
Leonardo were not buyers in good faith, viz:

Are the Manguardias and Leonardo Araza third persons x x x who are innocent
purchaser for values?

The general rule x x x that a person dealing with registered land has a right to rely on the
Torrens Certificate of Title without need of inquiring further cannot apply when the party has
actual knowledge of facts and circumstances that would impel a reasonable cautious man to
ake such inquiry or when the purchaser has knowledge of sufficient facts to induce a reasonably
prudent man to [inquire] into the status of the title of the property litigation (Voluntad vs. Dizon,
313 SCRA 209). If circumstances exist that [require] a prudent man to investigate and he does
not, he is deemed to have acted in mala fide, and his willful closing of his eyes to the possibility
of the existence of a defect in his vendor’s title will not make him an innocent purchaser for
value (Voluntad vs. Dizon, supra).

Spouses Soledad Manalo and Pedro Araza purchased the properties in question from Roberto
Araza, x x x [Visitacion] Valles Araza’s son. The father of Roberto Araza, Panfilo Araza, was
Pedro Araza’s brother, aking Pedro Araza the uncle of Roberto Araza. Encarnacion Ordas, one
of the two [v]endors of the land in question to Pedro Araza and Soledad Manalo Araza, is
Roberto Araza’s cousin as the mother of Encarnacion Ordas and Roberto’s mother, x x x
[Visitacion] are sisters. Joaquin Manguardia, on the other hand, is the husband of Susana
Manalo, niece of Soledad Manalo Araza, being the dauther of Jose Manalo, Soledad’s brother.

Leonardo Araza, on the other hand is x x x [Visitacion] Valles-Araza’s son, whose father,
Araza’s husband. x x x [Visitacion] is a sister of Simplicio Valles and Marta Valles, both of whom
were dead when the Deed of Sale, exh. “B” was purportedly executed in 1968, selling the
property, Lot 835, to x x x [Visitacion’s] brothers, Rustico and Melquiades, and [Visitacion’s]
nieces,namely Encarnacion Ordas and Adelaida Valles.

The transfer of the properties in question did not go far, but [were] limited to close family
relatives by affinity and consanguinity. Circuitous and convoluted [as they may be], and
involving more than two families but belonging to a clan which, although living in different
barangays, such adjacent to each other. Good faith among the parties to the series of
conveyances is therefore hard if not possible to presume.

Unfortunately for the petitioners, they did not provide any sufficient evidence that would
convince the courts that the proximity of relationships between/among the vendors and vendees
in the questioned sales was not used to perpetrate fraud. Thus there is nothing to dispel the
notion that apparent anomalies attended the transaction among close relations. Glaringly
emphasized were the established facts that the parties to the alleged original sale in 1968, and
the witnesses thereto were close relatives (siblings, children and nephew of Marta and
Simplicio). Similarly, the vendors and vendees in subsequent sale transactions were either the
co-vendees themselves in the original sale, first cousins, and close relatives by consanguinity
and affinity. In addition, these transactions between close relatives happened at a time when
everybody knew everyone, in a place where vendees lived in close proximity to the vendors,
and to the disputed properties.

This is not to say however, that a sale between close relatives is automatically anomalous. It is
just that in this particular case, the circumstances strongly show that fraud was committed by
relatives against relatives and the evidence adduced by petitioners was insufficient to remove
the cloud of doubt pertaining to the good faith of their predecessor-in-interest in acquiring the
properties in question.

It must be emphasized that “the burden of proving the status of a purchaser in good faith and for
value lies upon him who asserts that standing. In discharging the burden, it is not enough to
invoke the ordinary presumption of good faith that everyone is presumed to act in good faith.
The good faith that is here essential is integral with the very status that must be proved. x x x
Petitioners have failed to discharge that burden.

Acquisitive prescription is not applicable in the case at bar.

Petitioners’ contention of acquisitive prescription cannot prevail over the rights of respondents.
To begin with, the disputed property is a duly registered land under the Torrens system. “It is
well-settled that no title to registered land in derogation of that of the registered owner shall be
acquired by prescription or adverse possession. Neither can prescription be allowed against the
hereditary successors of the registered owner, because they merely step into the shoes of the
decedent and are merely the continuation of the personality of their predecessor[-]in[-]interest.
Consequently, since a certificate of registration covers it, the disputed land cannot be acquired
by prescription regardless of petitioner’s good faith.

Laches cannot be used to perpetrate injustice.

On the claim of laches, this Court reiterates that “[l]aches is based upon equity and the public
policy or discouraging stale claims. Since laches is an equitable doctrine, its application is
controlled by equitable considerations. It cannot be used to defeat justice or to [perpetrate] fraud
and injustice. Thus, the assertion of laches to thwart the claim of respondent is foreclosed
because the [d]eed upon which [petitioners base their] claim is [, first and foremost,] a forgery.

 Philnico Industrial Corporation (formerly Philnico Mining and Industrial

Corporation) Vs. Privatization and Management Office (formerly Asset
Privatization Trust)/Privatization and Management Office (formerly Asset
Privatization Trust) vs. Philnico Industrial Corporation (formerly Philnico Mining
and Industrial Corporation) G.R. Nos. 19940/199432. August 27, 2014.

 RULING OF THE COURT


 The allegations and arguments of PIC, and PMO in their respective petitions essentially
boil down to two fundamental issues: (1) Whether Section 8.02 of the ARDA on ipso
facto or automatic reversion of the PPC shares of stock to PMO in case of default by PIC
constitutes pactum commissorium; and (2) Whether the Writ of Preliminary Injunction
should be dissolved.

 The Court resolves the first issue in the positive and the second issue in the negative.

Section 8.02 of the ARDA constitutes pactum commissorium and, thus, null and
void for being contrary to Article 2088 of the Civil Code.

Article 1305 of the Civil Code allows contracting parties to establish such stipulation,
clauses, terms, and conditions as they may deem convenient, provided, however, that
they are not contrary to law, morals, good customs, public order, or public policy.
Pactum commissorium is among the contractual stipulations that are deemed contrary to
law. It is defined as “a stipulation empowering the creditor to appropriate the thing given
as guaranty for the fulfillment of the obligation in the event the obligor fails to live up to
his undertakings, without further formality, such as foreclosure proceedings, and a public
sale.”. It is explicitly prohibited under article 2088 of the Civil Code which provides;

Art. 2088. The creditor cannot appropriate the things given by way of pledge or
mortgage, or dispose of them. Any stipulation to the contrary is null and void.
There are two elements for pactum commissorium to exist; (1) that there should be a
pledge or mortgage wherein a property is pledged or mortgaged by way of security for
the payment of principal obligation; and (2) that there should be a stipulation for an
automatic appropriation by the creditor of the thing pledged or mortgaged in the event of
nonpayment of the principal obligation within the stipulated period.
Both elements of pactum commissorium are present in the instant case: (1) By virtue of
the Pledge Agreement dated May 2, 1997, PIC pledged its PPC shares of stock in favor
of PMO as security for the fulfillment of the former’s obligations under the ARDA dated
May 10, 1996 and the Pledge Agreement itself; and (2) There is automatic appropriation
as under Section 8.02 of the ARDA, in the event of default of PIC, the title of the PPC
shares of stock shall ipso facto revert from PIC to PMO without need of demand.
PMO though insists that there is no valid Pledge Agreement, arguing that PIC could not
have validly pledged the PPC shares of stock because it is not yet the absolute owner of
said shares. According to PMO, the sale of the PPC shares of stock to PIC is subject to
the resolutory condition of nonpayment by PIC of the installments due on the purchase
price.
Again the Court is unconvinced.
Among the requirements of a contract of pledge is that the pledger is the absolute owner
of the thing pledged. Based on the provisions of the ARDA, ownership of the PPC
shares of stock had passed on to PIC, hence, enabling PIC to pledge the very same
shares to PMO. In accordance with Section 2.07(a)(1) and 2.07(a)(2) of the ARDA, PMO
had transferred to PIC all rights, title, and interests in and to the PPC shares of stock,
and delivered to PIC the certificate for said shares for the cancellation and replacement
of new certificates already in the name of PIC. In addition, Section 2.07(b) of the ARDA
explicitly declares that PIC as buyer shall exercise all the rights, including the right to
vote, a shareholder in the respect of the PPC shares of stock.
PMO cannot maintain that the ownership of the PPC shares of stock did not pass on to
PIC, but in the same breath claim that non-payment by PIC of the installments due on
the purchase price is a resolutory condition for the contract of sale – these two
arguments are actually contradictory. As the court clearly explained in Heirs of Paulino
Atienza v. Espidol:

Regarding the right to cancel the contract for nonpayment of an installment, there
is need to initially determine if what the parties had was a contract of sale or a contract
to sell. In the contract of sale, the title to the property passes to the buyer upon the
delivery of the thing sold. In a contract to sell, on the other hand, the ownership is, by
agreement, retained by the seller and is not to pass to the vendee until full payment of
the purchase price. In the contract of sale, the buyer’s nonpayment of the price is a
negative resolutory condition; In the contract to sell, the buyer’s full payment of the
price is a positive suspensive condition to the coming into effect of the agreement. In the
first case, the seller has lost and cannot recover the ownership of the property
unless he takes action to set aside the contract of sale. In the second case, the title
simply remains in the seller if the buyer does not comply with the condition precedent of
making payment at the time specified in the contract. x x x (Emphases supplied, citation
omitted.)