HH & Co. Agricultural Corporation vs. Adriano Perlas

After the one‑year redemption period in an extrajudicial foreclosure of real estate mortgage has expired without redemption, the issuance of a writ of possession in favor of the purchaser is a ministerial duty of the court; it cannot be stayed by a pending action for annulment of the mortgage or foreclosure, nor by a preliminary injunction issued in such separate case, especially where the party opposing possession is merely an heir of the mortgagor and not a third party holding the property by adverse title.

HH & Co. Agricultural Corporation extrajudicially foreclosed a real estate mortgage on Lot No. 3 in Cadiz City, emerged as the highest bidder at the public auction on April 22, 1994, and obtained a certificate of sale. The redemption period was to expire on December 15, 2001. Consolidation of title was, however, enjoined by a preliminary injunction issued in Civil Case No. 655‑C, a separate complaint for declaration of nullity of mortgage, interest, penalties, and damages filed by the Perlas siblings, heirs of the mortgagor. Another case, Civil Case No. 255‑C for annulment of sale, recovery of possession, and cancellation of title, was also pending on appeal. Years later, petitioner sought a writ of possession in LRC Case No. 679‑C.

• Foreclosure and Certificate of Sale: On April 22, 1994, petitioner HH & Co. Agricultural Corporation extrajudicially foreclosed a real estate mortgage over Lot No. 3, Cadiz City, covered by TCT No. T‑11964. Petitioner was the highest bidder at the public auction; a certificate of sale was issued in its favor the same day.
• Redemption Period and Injunction: Petitioner caused the annotation of the certificate of sale on December 15, 2000 and maintained that the redemption period expired on December 15, 2001. However, a preliminary injunction had been issued in Civil Case No. 655‑C — a complaint for declaration of nullity of mortgage, foreclosure sale, interest, penalties, and damages filed by the Perlas siblings — that prevented petitioner from executing an affidavit of consolidation and registering it with the Register of Deeds. A separate case for annulment of sale, recovery of possession, and cancellation of title (Civil Case No. 255‑C) was also pending appeal.
• Application for Writ of Possession: Petitioner filed an Application for Writ of Possession on December 5, 2008, docketed as LRC Case No. 679‑C. The RTC granted the application in an Order dated March 16, 2009, and a Writ of Possession was issued. An Entry of Final Judgment was made on April 27, 2009.
• Motion to Quash and RTC Recall: Respondent Adriano Perlas, one of the mortgagor’s heirs, filed a Motion to Quash Writ of Possession on June 3, 2009. He cited the pending nullity and annulment cases and argued that the property belonged to his mother’s estate and that he had a legal interest entitling him to intervene. He prayed that the March 16, 2009 Order be reconsidered and the writ quashed. On January 8, 2010, the RTC recalled and set aside the writ. It reasoned that the writ of possession would run counter to the preliminary injunction in Civil Case No. 655‑C, which created a legal impediment preventing petitioner from exercising possession. The RTC also ordered consolidation of LRC Case No. 679‑C with Civil Case No. 655‑C.
• CA Ruling: The CA affirmed, holding that because petitioner sought the writ after the redemption period had lapsed, consolidation of ownership and issuance of a new certificate of title were conditions precedent to make the writ’s issuance a ministerial duty. Since the preliminary injunction barred consolidation, there was no proof of title, and thus the writ of possession had not become an absolute right.

• Finality of the Order: Petitioner contended that respondent’s motion to quash was improper because the RTC Order granting the writ of possession had already become final and executory, as evidenced by the Entry of Final Judgment.
• Ministerial Duty and Vested Right: Petitioner maintained that the issuance of the writ after the redemption period is a ministerial function of the court. Consolidation of ownership takes effect by operation of law upon expiration of the redemption period; thus, it had acquired a vested right of ownership over the property and was entitled to the writ as a matter of course.

• Prior Preliminary Injunction: Respondent argued that the RTC properly recalled the writ due to the prior preliminary injunction issued in Civil Case No. 655‑C. He asserted that the recall promoted the efficient administration of justice and was neither capricious nor whimsical.
• Absence of Title and Consolidation: Respondent insisted that because no new certificate of title had been issued in petitioner’s name, there was no basis for a ministerial writ of possession. In the absence of consolidation and proof of title, petitioner was not entitled to the writ.

• Propriety of the Recall: Whether the Court of Appeals correctly ruled that the RTC did not commit grave abuse of discretion in setting aside its final order granting the writ of possession, given that the order had attained finality and the issuance of the writ after the redemption period is a ministerial duty.

• Propriety of the Recall: The recall of the writ of possession constituted grave abuse of discretion. The RTC Order dated March 16, 2009 had become final and executory, and an entry of judgment had already been issued. Under the doctrine of immutability of judgments, a final judgment is unalterable and courts have a ministerial duty to enforce it; none of the recognized exceptions — correction of clerical errors, nunc pro tunc entries that cause no prejudice, void judgment, or supervening events rendering execution unjust or inequitable — applied. The issuance of a writ of possession after the redemption period is a ministerial duty that is not stayed by a pending action for annulment of the mortgage or the foreclosure. The only exception is when a third party holds the property by adverse title or right. Respondent, as an heir of the mortgagor, is not such a third party; his possession is merely derivative of the mortgagor’s title. Consequently, the preliminary injunction issued in Civil Case No. 655‑C could not defeat the final and executory order granting the writ.

• Immutability of Final Judgments — A final and executory judgment is immutable and unalterable; courts have the ministerial duty to enforce it. The exceptions are: (i) correction of clerical errors; (ii) nunc pro tunc entries that cause no prejudice; (iii) void judgment; and (iv) supervening circumstances that render execution unjust or inequitable. No exception applied here; the final order granting the writ could not be recalled.
• Ministerial Issuance of Writ of Possession after Redemption Period — Upon expiration of the one‑year redemption period without redemption, the purchaser in a foreclosure sale becomes the absolute owner of the property and is entitled to a writ of possession as a matter of right. The court’s duty to issue the writ is ministerial; no bond is required. The pendency of an action for annulment of the mortgage or the foreclosure does not stay the issuance of the writ.
• Exception: Third Party in Adverse Possession — A writ of possession may be refused only when a third party holds the property by adverse title or right, i.e., in his own right and not as a mere successor or transferee of the debtor or mortgagor. An heir of the mortgagor does not qualify as a third‑party adverse possessor.

• “It is already a settled rule that a buyer in a foreclosure sale becomes the absolute owner of the property purchased if no redemption is made within one year from the registration of the sale. Being the absolute owner, he is entitled to all the rights of ownership over the property including the right of possession.”
• “The duty of the court to issue a writ of possession is ministerial and may not be stayed by a pending action for annulment of the mortgage or the foreclosure itself. The only exception is when a third party is actually holding the property by adverse title or right.”
• “In this case, respondent, as heir of the mortgagor, is not a third party as contemplated under the exception.”

• Mercury Drug Corp., et al. v. Spouses Huang, et al., 817 Phil. 434 (2017) — Enumerated the exceptions to the immutability of final judgments; the Court relied on this to hold that no exception permitted the recall of the final writ‑granting order.
• Teves v. Integrated Credit & Corporate Services, Co., G.R. No. 216714, April 4, 2018 and Bascara v. Sheriff Javier, et al., 760 Phil. 766 (2015) — Affirmed that a buyer in a foreclosure sale becomes the absolute owner if no redemption is made within one year from registration of the sale; followed as controlling doctrine.
• LZK Holdings & Dev’t. Corp. v. Planters Dev’t. Bank, 725 Phil. 83 (2014) — Held that the ministerial duty to issue a writ of possession cannot be stayed by a pending action for annulment of mortgage or foreclosure; applied.
• Sps. Gallent v. Velasquez, 784 Phil. 44 (2016) — Clarified that a third party must be in adverse possession in his own right, not as a successor of the debtor/mortgagor; the Court distinguished respondent’s status accordingly.

• Section 7, Act No. 3135, as amended — Governs the issuance of a writ of possession in extrajudicial foreclosure of real estate mortgage. The provision requires the purchaser to post a bond if possession is sought during the redemption period; after the redemption period expires without redemption, no bond is required and the writ issues as a matter of course. Here, the redemption period had long expired, so the writ was ministerial and bond‑free.

Perlas‑Bernabe (Senior Associate Justice, Chairperson), A. Reyes, Jr., Hernando, and Delos Santos, JJ., concurred.