In the Philippine real estate market, a growing phenomenon involves unsuspecting individuals "buying" or "renting" properties from scammers who have no legal title. Often, these properties are already under foreclosure or have been consolidated in the name of a bank (REO - Real Estate Owned). When the bank eventually moves to take possession, the occupants—who may have paid their life savings—find themselves facing sudden eviction.
Navigating this legal labyrinth requires understanding the intersection of criminal law, civil law, and the specific rules governing foreclosure and writs of possession.
1. The Legal Status of the Occupant: "Possessor in Good Faith?"
In Philippine Civil Law, a possessor in good faith is one who is not aware that there exists a flaw in their title or mode of acquisition that invalidates it (Art. 526, Civil Code).
- The Dilemma: While an occupant scammed into a property may subjectively be in good faith, the law often holds that since the property’s title (TCT) is registered under the Torrens System, the occupant is "constructively" notified of the true owner.
- The Reality: If the foreclosure was already registered on the title at the time of the "sale," the occupant's claim of good faith is legally weakened. However, they remain victims of a crime, which provides different avenues for redress.
2. The Power of the Writ of Possession
Under Act No. 3135 (the law governing extrajudicial foreclosure), the purchaser at the foreclosure sale (usually the bank) has the right to demand a writ of possession.
- During the Redemption Period: The bank can get possession by posting a bond.
- After the Redemption Period: If the one-year period expires without redemption, the right to a writ of possession becomes absolute and ministerial (mandatory for the court to issue).
- The "Third Party" Exception: This is the primary shield for scammed occupants. Under Section 33, Rule 39 of the Rules of Court, a writ of possession cannot be enforced against a third party who is actually holding the property adversely to the judgment obligor (the original debtor).
3. Remedies for the Occupant
If you are an occupant facing eviction from a foreclosed property you believed you rightfully acquired, the following legal steps are typically pursued:
A. Invoking the "Third-Party Adverse Possession"
If the bank applies for a writ of possession, the occupant can file an Affidavit of Third-Party Claim (Terceria) or a Very Urgent Motion to Quash the Writ. You must prove that your possession is independent of the original mortgagor who defaulted on the loan. While this may not grant you ownership, it can delay eviction and force the bank to file a separate "Accion Publiciana" (recovery of possession) case where you can fully present your defense.
B. Criminal Action Against the Scammer
The most direct legal path is filing a criminal complaint for Estafa (Article 315 of the Revised Penal Code).
- Scammers often use "Other Forms of Deceit" or "Pretended Possession" to extract money.
- If the scammer sold the property claiming ownership they did not have, they may also be liable under Article 316 (Special Cases of Estafa), which specifically penalizes those who pretend to be the owner of real property and alienate it.
C. Recovery of Improvements
Under Article 448 of the Civil Code, a builder/occupant in good faith may be entitled to reimbursement for necessary and useful expenses (like house repairs or construction) made on the property before discovering the flaw in the title. The owner (the bank) may have to choose between paying for the improvements or selling the land to the occupant, though this is difficult to apply against banks in foreclosure cases.
4. Summary of Key Legal Principles
| Legal Concept | Application to Scammed Occupants |
|---|---|
| Caveat Emptor | "Buyer Beware." The law expects buyers to check the Title at the Registry of Deeds. |
| Ministerial Duty | Courts generally must issue a writ of possession to the bank after foreclosure. |
| Adverse Possession | If the occupant's right is distinct from the debtor, they cannot be summarily ousted without a separate hearing. |
| Indefeasibility of Title | The bank's registered title usually prevails over any private "contract" issued by a scammer. |
5. Practical Steps for Protection
- Verify the Title: Always secure a Certified True Copy of the Transfer Certificate of Title (TCT) from the Registry of Deeds. Check "Entry No." at the back for any Memorandum of Encumbrances or notices of Lis Pendens (pending litigation).
- Verify the Seller: Ensure the person selling or leasing has a notarized Special Power of Attorney (SPA) specifically authorizing the transaction for that specific property.
- Physical Inspection: Talk to neighbors. They often know if a property is "bank-owned" or if the previous owners were evicted.
- Police Report: If a scam is discovered, immediately file a report to establish a paper trail of your status as a victim of a crime, which can be used as evidence in stay-of-execution proceedings.