Writ of Possession and Third-Party Rights in Extrajudicial Foreclosure Sales

In extrajudicial foreclosure sales, the issuance of a writ of possession is generally a ministerial duty of the court. But what happens when a third party claims to be in possession of the foreclosed property? The Supreme Court's decision in Cabling v. Lumapas (G.R. No. 196950, June 18, 2014) clarifies the boundaries of this rule and its exception.

The Case Background

Helen Cabling was the highest bidder in an extrajudicial foreclosure sale of a property in Olongapo City. After the redemption period lapsed, the Final Deed of Sale was issued, and a new Transfer Certificate of Title (TCT No. T-14853) was registered in her name on March 23, 2009.

Cabling then filed an application for a writ of possession with the Regional Trial Court (RTC), which was granted. However, Joselin Tan Lumapas, a third party in actual possession of the property, filed a motion to intervene, claiming she had bought the property through a Deed of Conditional Sale from Aida Ibabao, the original owner and mortgagor.

The RTC initially granted the writ but later recalled it, ruling that an ex parte writ of possession cannot be enforced against a third party in actual possession who is not in privity with the debtor/mortgagor. The Court of Appeals affirmed this ruling, prompting Cabling to elevate the case to the Supreme Court.

The Legal Framework

Under Act No. 3135, as amended, which governs extrajudicial foreclosure of real estate mortgages, the issuance of a writ of possession is ministerial upon the court after the foreclosure sale and during the redemption period. The writ may be issued upon the mere filing of an ex parte motion and approval of the corresponding bond.

After the lapse of the redemption period and the consolidation of ownership in the purchaser's name, the writ issues as a matter of course, without need of a bond or separate action.

The Exception: Adverse Possession by Third Parties

The exception lies in Section 33, Rule 39 of the Rules of Court, which applies to extrajudicial foreclosures. This provision states that possession of the property shall be given to the purchaser unless a third party is actually holding the property adversely to the judgment obligor.

The Court emphasized that this exception contemplates a situation where a third party holds the property by adverse title or right—such as a co-owner, tenant, or usufructuary—who possesses the property in their own right, and is not merely a successor or transferee of the possession rights of the owner.

Applying the Rule to Conditional Sales

The respondent in this case claimed possession based on a Deed of Conditional Sale. The Supreme Court ruled that this did not constitute adverse possession. Under a conditional sale, ownership remains with the seller until the fulfillment of a positive suspensive condition—typically full payment of the purchase price.

In this case, the Deed of Conditional Sale expressly reserved ownership to the seller until full payment of the P2.2 million purchase price. Since no deed of absolute sale had been executed in the respondent's favor, her possession could not be considered "in the concept of an owner." Her right was merely derivative of the mortgagor's, not independent or superior to it.

The Court's Ruling

The Supreme Court granted Cabling's petition, reversing the Court of Appeals' decision. It held that the general rule—not the exception—applied. The RTC was ordered to issue the writ of possession in favor of Cabling.

Practical Takeaways

• A writ of possession in extrajudicial foreclosures is generally ministerial—courts must issue it upon proper application after the redemption period and consolidation of title.
• A third party's mere possession is not enough to block the writ—the third party must prove possession adverse to the judgment debtor/mortgagor, meaning a right independent of and superior to the debtor's.
• Conditional sale buyers are not "adverse" possessors—until full payment and execution of an absolute deed, their possession derives from the seller/mortgagor and does not defeat a purchaser's right to a writ.
• Buyers of foreclosed properties can act with confidence—once title is consolidated in their name, they can seek possession through the summary procedure, unless a genuine adverse claimant exists.
• Third-party claimants must assert their rights properly—those with legitimate adverse claims (e.g., co-owners, tenants) should raise them in the proper proceedings, as intervention may not suffice to stop a writ.

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