MANUEL IBASCO AND EDITA TAMPINGCO, PETITIONERS, VS. HON. EDUARDO P. CAGUIOA, IN HIS CAPACITY AS PRESIDING JUDGE OF THE COURT OF FIRST INSTANCE OF BULACAN BRANCH VIII, VALENZUELA…

Ibasco versus Caguioa

The Case

This is a petition for certiorari brought by Manuel Ibasco and Edita Tampingco, lessees of a residential house in Valenzuela, against the presiding judge of the Court of First Instance of Bulacan and against Banco Filipino Savings and Mortgage Bank. The lessees ask the Supreme Court to annul the writ of possession that the trial court issued in favor of the bank, which had foreclosed on the mortgaged property and bought it at the foreclosure sale. The case matters because it fixes the rule on who prevails when a mortgagee forecloses and claims possession while a tenant is still occupying the premises: the writ of possession issues, unless the lease was registered, or the mortgagee actually knew of its existence and duration.

Procedural History

The mortgage over the property was foreclosed because the owners, the spouses Anastacio Garcia and Asuncion Garcia, failed to pay. The bank purchased the property at the foreclosure sale, and the redemption period expired. The trial court, the Court of First Instance of Bulacan, Branch Eight, presided over by Judge Eduardo Caguioa, ordered the issuance of a writ of possession. On December 1, 1982, the deputy sheriff served the writ on the lessees, giving them five days to vacate. The lessees went directly to the Supreme Court by petition for certiorari, claiming grave abuse of discretion in the issuance of the writ. The Court granted a temporary restraining order, enjoined the sheriff from enforcing the writ, ordered the private respondents to comment, gave due course to the petition, treated the comment as the answer, and submitted the case for decision.

Facts

Ibasco and Tampingco leased a residential house at Number 12, Tamaraw Street, Marulas, Valenzuela, Metro Manila, from the spouses Garcia, at a monthly rental of 1,500 pesos. Ibasco paid 1,000 pesos for the portion he occupied, and Tampingco paid 500 pesos for the part she used. They paid their rentals faithfully and did not know that the Garcias had mortgaged the property to Banco Filipino.

Because the Garcias failed to pay, the mortgage was foreclosed and the bank bought the property at the sale. The redemption period expired. The lessees knew nothing of the mortgage, the foreclosure, or the lapse of redemption.

On December 1, 1982, the deputy sheriff served on the lessees a copy of the writ of possession, which had been ordered by the trial court and which gave them five days from that date to vacate the premises. The lessees then elevated the matter to the Supreme Court.

Issues

• Whether or not Act 3135, on the grant of the writ of possession, was impliedly repealed by Batas Pambansa Blg. 25, the House Rental Law.
• Whether or not a writ of possession may be granted only in a land registration case and not in an extrajudicial foreclosure of a mortgage.
• Whether or not the petition for certiorari is the only adequate remedy available to the lessees.
• Whether or not a mortgagee who foreclosed and purchased the property at the sale may be granted a writ of possession despite the presence of a lessee whose lease has not been terminated.

Applicable Provisions

Section 7 of Act 3135, on the petition for possession in foreclosure sales, provides:

In any sale made under the provisions of this Act, the purchaser may petition the Court of First Instance 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 complying with the requirements of this Act. Such petition shall be made oath and filed in form of an ex-parte motion in the registration or cadastral proceedings if the property is registered.

This is the very provision under which the trial court ordered the writ of possession, and it answers the claim that the writ belongs only to land registration cases.

Article 1648 of the Civil Code, on the recording of leases, provides:

Every lease of real estate may be recorded in the Registry of Property. Unless a lease is recorded, it shall not be binding upon third persons.

This is the provision that would have saved the lessees, had their lease been recorded or had its existence and duration been known to the bank.

Ruling

On the first issue, the Court held that there is no implied repeal, there being nothing inconsistent between the two laws. Act 3135 provides the procedure in extrajudicial foreclosure of mortgages, while Batas Pambansa Blg. 25 refers to the maximum rent in certain leases and to grounds for ejectment. It is true that under the latter law there can be no ejectment of a lessee simply because the property has been sold or mortgaged to another, but it is different if, as a result of the mortgage, the property has been foreclosed upon, as provided for in Act 3135, which expressly grants the issuance of a writ of possession, without prejudice to the rights of a lessee under the Civil Code. Besides, Batas Pambansa Blg. 25 can in no case apply, because the rental is 1,500 pesos monthly, far in excess of the 300 pesos rent regulated by the Batas.

On the second issue, the Court held that Section 7 of Act 3135 itself requires that the petition for possession be filed in the registration or cadastral proceedings of the property, and that this is precisely what was done in this case.

On the third issue, the Court found no need to discuss the remedies that could have been availed of by the petitioners, in view of what had already been stated.

On the fourth issue, the Court held that the mortgagee who foreclosed and purchased the property may be granted the writ of possession despite the presence of a lessee whose lease has not yet been terminated. The exception is where the lease had been previously registered in the Registry of Property, or where, despite non-registration, the mortgagee had prior knowledge of the existence and duration of the lease, actual knowledge being equivalent to registration. Here, neither circumstance was alleged and proved.

Doctrine

A mortgagee who forecloses on the mortgaged real property of a delinquent debtor and purchases the same at the foreclosure sale may be granted a writ of possession over the property even though the premises are in the possession of a lessee whose lease has not yet been terminated. The exception is where the lease had been previously registered in the Registry of Property, or where, despite non-registration, the mortgagee had prior knowledge of the existence and duration of the lease, actual knowledge being equivalent to registration. This flows from Article 1648 of the Civil Code: unless a lease is recorded, it shall not be binding upon third persons. Act 3135 is not repealed by Batas Pambansa Blg. 25, because the two are not inconsistent, and the writ of possession under Section 7 of Act 3135 is sought in the registration or cadastral proceedings of the property.

Disposition

The petition was dismissed, with no costs; the bank prevailed and the writ of possession stood.

Remember This

Memorize this line: the writ of possession issues to the foreclosing purchaser even against a lessee, unless the lease was registered or the mortgagee actually knew of its existence and duration. Examiners use this case to test the interplay of Act 3135, Batas Pambansa Blg. 25, and Article 1648 of the Civil Code on unrecorded leases.