Agricultural Tenancy Bars Foreclosure Writ of Possession: Land Bank v. Basilan

The Supreme Court has ruled that agricultural tenants who till a foreclosed property may stop a bank from taking possession of it. In Land Bank of the Philippines v. Basilan (G.R. No. 229438, June 13, 2022), the Court held that agricultural tenancy is a valid third-party claim that bars the ex parte issuance of a writ of possession in favor of the winning bidder at a foreclosure sale. The ruling protects tenant-farmers from eviction when a bank purchases the land they cultivate.

The Facts

Julia R. Perez owned a 21,000-square meter property in Santiago, Isabela, and mortgaged it to Land Bank. When she defaulted, the property was extrajudicially foreclosed and sold at public auction on September 30, 1997. Land Bank won as the highest bidder. Julia did not redeem the property, so ownership was consolidated in Land Bank's name, and a new title was issued in December 2002.

In June 2006, Land Bank filed an ex parte petition for a writ of possession, which the Regional Trial Court granted. When sheriffs served demands to vacate, Mary Basilan, Efren Basilan, and Benjamin Camiwet came forward, claiming they were agricultural tenants of Julia. They said they had cultivated the land since 1995 and paid rent to Julia and, after her death, to her son Artemio.

The tenants filed a petition before the Department of Agrarian Reform Adjudication Board (DARAB). The Provincial Adjudicator ruled in their favor, declaring them agricultural lessees and directing Land Bank to respect their peaceful possession. Land Bank later moved for an alias writ of possession, but the trial court denied it, holding that agricultural tenancy is a valid third-party claim. The Court of Appeals affirmed, and Land Bank appealed to the Supreme Court.

The Issue

Whether agricultural tenancy over a foreclosed property constitutes a third-party claim that bars the ex parte issuance of a writ of possession in favor of the purchaser at a public auction.

The Ruling

The Supreme Court denied Land Bank's petition and affirmed the rulings of the lower courts. The Court explained that under Rule 39, Section 33 of the Rules of Court, a purchaser at a foreclosure sale is generally entitled to possession of the property. However, possession shall not be turned over when a third party is actually holding the property adversely to the judgment obligor.

The Court clarified that the exception contemplates a situation where a third party holds the property by adverse title or right, such as a co-owner, tenant, or usufructuary. These persons possess the property in their own right, independent of the landowner's possession. As the Court quoted from St. Dominic Corp. v. Intermediate Appellate Court, granting a writ of possession in such cases would deny the third person's rights without giving them their day in court.

The Court also noted that the issue of whether the respondents were tenants or mere caretakers was a factual question. Under Rule 45, only questions of law may be raised before the Supreme Court. Moreover, the Court respected the findings of the DARAB and the Municipal Agrarian Reform Office, which have expertise in agrarian matters. The Court found no proof of Land Bank's allegation that the tenants' claims were a mere afterthought to circumvent the writ.

Practical Takeaways

• Agricultural tenancy is a valid third-party claim. A tenant who holds foreclosed property adversely to the debtor-mortgagor can stop the issuance of a writ of possession.
• The writ of possession is not ministerial when a third party is involved. The trial court must conduct a hearing to determine the nature of the adverse possession.
• Factual findings of agrarian agencies are highly respected. Courts generally defer to the DARAB and Municipal Agrarian Reform Offices on questions of tenancy.
• Banks and buyers should verify occupancy before foreclosure. A property tilled by tenants may not be immediately deliverable to the purchaser.
• Tenants should assert their rights promptly. Filing a case before the DARAB and securing certifications from agrarian reform officers strengthens their claim.

This article is general information and not legal advice. For your specific situation, consult a lawyer or ask ASG Legal AI.