The Supreme Court held that the Court of Appeals (CA) overstepped its authority in National Home Mortgage Finance Corporation (NHMFC) v. Florita C. Tarobal, G.R. No. 206345, January 23, 2017, by ordering NHMFC to give a former property owner priority to reacquire foreclosed property. This ruling clarifies that in a petition for certiorari, courts must limit their review to whether the lower court committed grave abuse of discretion. The CA’s decision to grant reacquisition rights exceeded this scope, impacting the rights of a third-party buyer and the stability of foreclosure sales.

Foreclosure Fallout: Can Courts Grant Reacquisition Rights in Certiorari Proceedings?

This case revolves around a property initially owned by Joy M. Dela Cruz, who secured a loan from China Banking Corporation (CBC) in 1990, using the property as collateral. The loan was later assigned to National Home Mortgage Finance Corporation (NHMFC). Dela Cruz defaulted, leading NHMFC to foreclose on the property. At the public auction on September 30, 1994, NHMFC emerged as the highest bidder.

Florita C. Tarobal claimed she bought the property from Dela Cruz in 2005. NHMFC, having won the bidding at public auction, initiated an ex-parte petition for a writ of possession with the Regional Trial Court (RTC) of Antipolo City. The RTC granted the writ, but Tarobal filed a Motion for Reconsideration, asserting she wasn’t notified of the foreclosure and had invested in property improvements. Meanwhile, NHMFC entered into a Contract to Sell with Gilda J. Torres during a Housing Fair.

Tarobal then filed a Petition for Certiorari with the Court of Appeals (CA), arguing that the RTC issued the writ of possession without resolving her Motion for Reconsideration. The CA denied her petition, but also ordered NHMFC to prioritize Tarobal’s reacquisition of the property. NHMFC questioned the CA’s order, asserting it exceeded the scope of certiorari, as well as infringing on the rights of the Housing Fair buyer. The Supreme Court agreed with NHMFC.

The Supreme Court emphasized the limited scope of certiorari proceedings. A writ of certiorari is designed to correct errors of jurisdiction, meaning it’s used when a court acts without legal authority or abuses its power. The court reiterated that certiorari is not a tool for correcting procedural errors or mistakes in a judge’s findings, unless those errors result from a lack of jurisdiction or grave abuse of discretion. The Court underscored the importance of staying within these bounds:

The doctrine is that certiorari will issue only to correct errors of jurisdiction and that no error or mistake committed by a court will be corrected by certiorari unless said court acted without jurisdiction or in excess thereof or with such grave abuse of discretion as would amount to lack of jurisdiction. The writ is available only for these purposes and not to correct errors of procedure or mistake in the findings or conclusions of the judge.

In this case, the core issue before the CA was whether the RTC committed grave abuse of discretion by issuing the writ of possession without addressing Tarobal’s Motion for Reconsideration. By ordering NHMFC to prioritize Tarobal’s reacquisition, the CA ventured beyond this scope, essentially deciding on property rights—an issue not properly before it. The Supreme Court referenced Chua v. Court of Appeals to illustrate a similar overreach:

Indeed, respondent Court of Appeals acted ultra jurisdictio in affirming the judgment rendered by the Regional Trial Court on the ejectment and consignation cases. Elevated by petitioner to the Court of Appeals was only the propriety of the issuance of the writ of execution of the judgment by the trial court. The decision on the merits affirming the judgment of the Metropolitan Trial Court was never appealed… Therefore, the authority of respondent appellate court was confined only to ruling upon the issue of whether the Regional Trial Court committed grave abuse of discretion in issuing the order directing the issuance of a writ of execution against petitioner. Whether the trial court committed a mistake in deciding the case on the merits is an issue way beyond the competence of respondent appellate court to pass upon in a certiorari proceeding.

The Supreme Court also addressed Tarobal’s rights as a transferee of Dela Cruz. Since Tarobal acquired the property after the mortgage, she essentially stepped into Dela Cruz’s shoes. Her rights were thus limited to those of the original mortgagor, including the right of redemption, which she failed to exercise within the prescribed period.

The practical implication of the CA’s decision, had it stood, would have been to undermine the writ of possession and prejudice the rights of Gilda J. Torres, the Housing Fair buyer. Granting Tarobal priority reacquisition would disrupt the sale agreement and potentially invalidate NHMFC’s dealings. The court emphasized that the CA’s role was not to determine who had superior rights to the property. This point is critical in understanding the limitations of the Court of Appeals.

Moreover, the Supreme Court found that the CA’s finding that Tarobal was still occupying the property was incorrect. The sheriff’s report confirmed that Tarobal, along with others claiming rights under Dela Cruz, had been ejected. Tarobal herself, in her filings, sought to be restored to the property, indicating she was no longer in possession.

In summary, the Supreme Court’s decision in NHMFC v. Tarobal reinforces the principle that courts exercising certiorari jurisdiction must confine their review to whether the lower court acted with grave abuse of discretion. They cannot use certiorari to resolve underlying property rights or grant remedies beyond the scope of the original issue. This case also underscores the importance of adhering to procedural rules in foreclosure proceedings and the limits of rights for those who acquire property subject to existing mortgages.

FAQs

What was the key issue in this case?	The key issue was whether the Court of Appeals exceeded its jurisdiction in a certiorari proceeding by ordering the NHMFC to give a former property owner priority to reacquire foreclosed property. The Supreme Court found that it did.
What is a writ of certiorari?	A writ of certiorari is a legal remedy used to review decisions of lower courts, but it is limited to addressing errors of jurisdiction or grave abuse of discretion, not errors of judgment. It is not intended to re-evaluate the facts.
What did the Court of Appeals order in this case?	The Court of Appeals, while denying Tarobal’s petition for certiorari, also ordered NHMFC to give her priority to reacquire the property, which the Supreme Court found to be an overreach of its authority. The CA’s decision was, therefore, reversed.
Why did the Supreme Court reverse the Court of Appeals’ decision?	The Supreme Court reversed the decision because the CA went beyond the scope of certiorari by addressing property rights and imposing an obligation on NHMFC that was not related to whether the RTC committed grave abuse of discretion. The decision was beyond the original issues.
What rights did Florita Tarobal have as a transferee of the property?	As a transferee, Tarobal stepped into the shoes of the original mortgagor, Dela Cruz, and was entitled to the right of redemption, which she failed to exercise within the prescribed period. She could not claim any additional rights.
How did this case affect the rights of the Housing Fair buyer?	The CA’s decision, if upheld, would have prejudiced the rights of the Housing Fair buyer, Gilda J. Torres, by creating uncertainty about the sale agreement and potentially invalidating NHMFC’s dealings with her. This outcome was ultimately avoided.
What was the basis for the Court of Appeals’ decision to grant Tarobal priority reacquisition?	The Court of Appeals based its decision on its finding that Tarobal was occupying the property and had an endorsement from the Housing and Urban Development Coordinating Council (HUDCC), which the Supreme Court found to be factually incorrect. In reality, Tarobal was not occupying the property.
What is the significance of this ruling for foreclosure proceedings?	The ruling clarifies the procedural boundaries in foreclosure cases and ensures that courts adhere to the limited scope of certiorari, preventing them from overstepping their authority and potentially disrupting settled property rights. This clarity provides stability.

The Supreme Court’s decision in NHMFC v. Tarobal reinforces the importance of adhering to procedural boundaries in legal proceedings, particularly in cases involving property rights and foreclosure. By clarifying the limits of certiorari, the Court has provided guidance for future cases and helped ensure that judicial review remains focused and effective.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: NHMFC v. Tarobal, G.R. No. 206345, January 23, 2017