The Supreme Court has affirmed that a purchaser in an extrajudicial foreclosure sale has an absolute right to a writ of possession once the redemption period has lapsed, even if there is a pending case questioning the validity of the foreclosure. This means that banks and other financial institutions can more effectively enforce their mortgage rights and take possession of foreclosed properties, streamlining the process and reducing potential delays caused by legal challenges from defaulting borrowers. The issuance of a writ of possession becomes a ministerial duty of the court upon proper application and proof of title, ensuring that the purchaser’s rights are promptly enforced.

Mortgage Default to Possession Dispute: Did the Court Err in Issuing a Writ?

In this case, Cua Lai Chu, Claro G. Castro, and Juanita Castro (petitioners) sought to challenge the issuance of a writ of possession in favor of Philippine Bank of Communication (private respondent) following the extrajudicial foreclosure of their property. The petitioners had obtained a loan from the bank, secured by a real estate mortgage. Upon their failure to meet their loan obligations, the bank foreclosed the mortgage and emerged as the highest bidder at the foreclosure sale. The core of the dispute lies in whether the writ of possession was properly issued, given the petitioners’ pending case questioning the validity of the foreclosure sale and their claim that they were denied due process during the proceedings. The petitioners argued that they were declared in default despite filing an opposition, and that the issuance of the writ would unjustly deprive them of their property rights.

The Court addressed the issue by emphasizing the ministerial nature of a writ of possession in foreclosure cases. Citing Banco Filipino Savings and Mortgage Bank v. Pardo, the Court reiterated that a purchaser at an extrajudicial foreclosure sale is entitled to a writ of possession upon motion and the posting of a bond during the redemption period, or absolutely after the lapse of the redemption period without need for a bond. The Court further noted that once ownership has been consolidated in the name of the purchaser, the issuance of the writ becomes a ministerial duty, provided that the purchaser presents the necessary title and proof of ownership. This principle is rooted in Section 7 of Act No. 3135, as amended by Act No. 4118, which governs the procedure for extrajudicial foreclosure sales:

SEC. 7. 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 violating the mortgage or without complying with the requirements of this Act. Such petition shall be made under oath and filed in form of an ex parte motion x x x and the court shall, upon approval of the bond, order that a writ of possession issue, addressed to the sheriff of the province in which the property is situated, who shall execute said order immediately.

The Court highlighted that the petitioners’ reliance on Bustos v. Court of Appeals and Vda. De Legaspi v. Avendaño was misplaced, as those cases involved different factual scenarios and legal issues, such as disputes over ownership and unlawful detainer, rather than the specific rights of a purchaser in an extrajudicial foreclosure sale. In contrast, the present case directly involves the application of Act No. 3135, as amended, which provides a clear framework for the issuance of a writ of possession in foreclosure proceedings.

The Court dismissed the petitioners’ claim of a denial of due process, explaining that the application for a writ of possession is an ex parte proceeding. This means that it is a one-sided application made without the need for the opposing party to be heard. The Court emphasized that the issuance of the writ is a matter of course once the requirements are met, leaving no discretion to the court. Therefore, the petitioners’ opposition to the issuance of the writ and their subsequent declaration of default did not violate their due process rights, as the proceeding is inherently summary and ministerial in nature.

Regarding the petitioners’ remedy, the Court pointed to Section 8 of Act No. 3135, as amended, which allows the debtor to petition for the sale to be set aside and the writ of possession cancelled within thirty days after the purchaser is given possession. This remedy is available if the debtor believes that the mortgage was not violated or the sale was not conducted in accordance with the law. However, such a challenge must be made in a separate proceeding and cannot be used as a justification for opposing the issuance of the writ of possession itself.

The Court also addressed the issue of forum shopping, which the petitioners raised based on the pendency of a case questioning the validity of the foreclosure sale. The Court rejected this argument, explaining that a writ of possession is issued ex parte and does not constitute a judgment on the merits. Thus, it cannot form the basis of a claim of res judicata, an essential element of forum shopping. The Court emphasized that the right to possession of a purchaser at an extrajudicial foreclosure sale is not affected by a pending case questioning the validity of the foreclosure. Even with such a case pending, the purchaser is still entitled to possession of the foreclosed property.

To further illustrate this point, the following table summarizes the key differences between the proceeding for a writ of possession and a separate action questioning the foreclosure sale:

Proceeding for Writ of Possession	Action Questioning Foreclosure Sale
Ex parte, ministerial duty of the court	Adversarial, requires full litigation
Focuses on compliance with statutory requirements for issuance of the writ	Focuses on the validity of the mortgage and foreclosure process
Does not determine the ultimate rights of the parties	Determines the ultimate rights of the parties
Remedy under Section 8 of Act No. 3135, as amended, to set aside sale	Seeks to invalidate the foreclosure and restore ownership

FAQs

What is a writ of possession?	A writ of possession is a court order directing the sheriff to place a certain person in possession of a property. In foreclosure cases, it allows the purchaser to take possession of the foreclosed property.
When can a purchaser obtain a writ of possession in a foreclosure case?	A purchaser can obtain a writ of possession during the redemption period by posting a bond, or after the redemption period has lapsed without redemption. After the redemption period, it becomes a ministerial duty of the court to issue the writ.
Is the issuance of a writ of possession discretionary for the court?	No, the issuance of a writ of possession is a ministerial duty of the court once the requirements under Act No. 3135, as amended, are met. The court has no discretion to refuse its issuance.
What is the effect of a pending case questioning the validity of the foreclosure sale on the issuance of a writ of possession?	A pending case questioning the validity of the foreclosure sale does not prevent the issuance of a writ of possession. The purchaser is still entitled to the writ even if the foreclosure’s validity is being challenged.
Can the debtor oppose the issuance of a writ of possession?	While the proceeding for a writ of possession is ex parte, the debtor can later petition to have the sale set aside and the writ cancelled under Section 8 of Act No. 3135, as amended. This petition must be filed within 30 days after the purchaser is given possession.
What is the remedy if the debtor believes the foreclosure sale was invalid?	The debtor can file a petition under Section 8 of Act No. 3135, as amended, to have the sale set aside and the writ of possession cancelled. This requires proving that the mortgage was not violated or that the sale was not conducted according to the law.
Is the proceeding for a writ of possession considered a judgment on the merits?	No, the issuance of a writ of possession is not a judgment on the merits, as it is an ex parte proceeding. Therefore, it cannot be the basis for a claim of res judicata or forum shopping.
What should a purchaser do to obtain a writ of possession?	The purchaser should file a motion with the court, presenting the certificate of sale and proof of compliance with the requirements of Act No. 3135, as amended. After the redemption period, no bond is required.
What is the significance of consolidating ownership in the purchaser’s name?	Once ownership is consolidated and a new title is issued in the purchaser’s name, the right to possession becomes absolute. The issuance of the writ then becomes a ministerial duty of the court upon proper application and proof of title.

In conclusion, the Supreme Court’s decision reinforces the rights of purchasers in extrajudicial foreclosure sales to obtain possession of the foreclosed property, even amidst legal challenges. This ruling provides clarity and stability in the enforcement of mortgage rights, ensuring that financial institutions can efficiently recover their investments while also providing debtors with specific remedies to address potential irregularities in the foreclosure process.

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: Cua Lai Chu, et al. vs. Hon. Hilario L. Laqui, et al., G.R. No. 169190, February 11, 2010