The Supreme Court affirmed that the issuance of a writ of possession in favor of a purchaser at a foreclosure sale is a ministerial duty of the court, even when challenged on due process grounds. This means that once the purchaser has complied with the legal requirements, the court must issue the writ, ensuring the purchaser can take possession of the foreclosed property, reinforcing the security and enforceability of real estate mortgages in the Philippines. The court found that an ex parte petition for a writ of possession does not violate due process.

Foreclosure Fallout: Can a Subsequent Assignee Challenge the Writ of Possession?

This case revolves around a property dispute following the extrajudicial foreclosure of a real estate mortgage. Midas Diversified Export Corp. obtained loans from Metropolitan Bank and Trust Company (Metrobank), secured by a real estate mortgage executed by Louisville Realty & Development Corporation. After Louisville defaulted on the loan, Metrobank foreclosed the mortgage and emerged as the highest bidder at the public auction. When Louisville refused to surrender the properties, Metrobank filed an ex parte petition for a writ of possession, which was granted by the Regional Trial Court (RTC). Subsequently, Eduardo L. Rayo, claiming to be a co-assignee of the property through a deed of assignment, filed a petition for annulment of judgment, arguing that the ex parte nature of the proceedings violated due process.

The central legal question is whether Rayo, as a subsequent assignee, has the legal standing to challenge the writ of possession issued to Metrobank and whether Section 7 of Act No. 3135, which allows for ex parte proceedings for the issuance of a writ of possession, is unconstitutional for allegedly violating the due process clause of the Constitution. The Supreme Court addressed Rayo’s standing, the constitutionality of the provision, and allegations of forum-shopping.

The Supreme Court held that Rayo did not have the legal personality to seek annulment of the judgment. The court emphasized that every action must be prosecuted or defended in the name of the real party-in-interest, defined as one who stands to be benefited or injured by the judgment in the suit. While Rayo claimed to be a co-assignee of the subject properties, the court found that he lacked a present substantial interest to institute the annulment proceedings, especially since the deed of assignment was executed after the foreclosure sale.

Moreover, the Court underscored that the issuance of a writ of possession under Section 7 of Act No. 3135 is a ministerial duty of the court. This means that upon compliance with the requirements, such as posting the required bond, the court has no discretion but to issue the writ. The Court reiterated its consistent stance that an ex parte petition for a writ of possession is not strictly a “judicial process” in the ordinary sense but rather a judicial proceeding for the enforcement of one’s right of possession as a purchaser in a foreclosure sale. Such a proceeding is brought for the benefit of one party only, without notice to or consent by any person adversely interested, and thus does not require a hearing.

Regarding the constitutionality of Section 7 of Act No. 3135, the Court ruled that Rayo’s attempt to challenge the constitutionality of the law constituted a collateral attack, which is not allowed. The Court stated that for reasons of public policy, the constitutionality of a law cannot be attacked collaterally. This principle ensures stability and predictability in the application of laws.

The Court also addressed Rayo’s allegation of forum-shopping. Forum-shopping is defined as the filing of multiple suits involving the same parties for the same cause of action, either simultaneously or successively, for the purpose of obtaining a favorable judgment. The Court found that Metrobank was not guilty of forum-shopping because the issuance of the writ of possession is a ministerial function and not a judgment on the merits. Therefore, a separate case for annulment of mortgage and foreclosure sale cannot be barred by litis pendentia or res judicata.

The Supreme Court’s decision reinforces the ministerial nature of the court’s duty to issue a writ of possession after a foreclosure sale, thus upholding the rights of purchasers and ensuring the efficient enforcement of mortgage agreements. The ruling confirms that the constitutionality of a law cannot be challenged collaterally. It reaffirms the ex parte nature of a petition for a writ of possession does not violate constitutional due process rights.

FAQs

What was the key issue in this case?	The key issue was whether a subsequent assignee of foreclosed property has legal standing to challenge the issuance of a writ of possession and whether the ex parte nature of proceedings under Section 7 of Act No. 3135 violates due process.
What is a writ of possession?	A writ of possession is a court order directing the sheriff to place a party in possession of real property. In foreclosure cases, it allows the purchaser at the foreclosure sale to take possession of the property.
What does “ministerial duty” mean in the context of issuing a writ of possession?	“Ministerial duty” means that once the applicant has met all legal requirements, the court has no discretion and must issue the writ. The court’s role is purely administrative in this context.
Why did the Court say the petitioner lacked legal standing?	The petitioner, as a subsequent assignee, acquired interest in the property after the foreclosure sale. The Court found that he lacked a “present substantial interest” to challenge the writ of possession issued to Metrobank.
What is the significance of Act No. 3135, Section 7?	Section 7 of Act No. 3135 allows a purchaser in a foreclosure sale to petition the court for a writ of possession through an ex parte proceeding. This provision is designed to facilitate the purchaser’s right to possess the property.
What is a collateral attack on a law’s constitutionality?	A collateral attack on a law’s constitutionality is an attempt to challenge the law’s validity in a proceeding where that issue is not directly raised. Courts generally disallow collateral attacks for policy reasons.
What is forum-shopping, and why was it relevant in this case?	Forum-shopping is the practice of filing multiple suits involving the same issues and parties in different courts to obtain a favorable outcome. The Court found Metrobank not guilty of forum-shopping because the writ of possession is a ministerial function and does not constitute a judgment on the merits.
Does an ex parte proceeding violate due process?	In the context of a writ of possession, the Court has consistently ruled that an ex parte proceeding does not violate due process. This is because it is considered a ministerial duty and part of the enforcement of rights following a valid foreclosure sale.

In conclusion, the Supreme Court’s decision in this case underscores the importance of adhering to established legal procedures in real estate transactions and foreclosure proceedings. The ruling reaffirms the ministerial duty of courts to issue writs of possession, bolstering the enforceability of mortgage contracts and providing clarity to purchasers of foreclosed properties.

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: Eduardo L. Rayo v. Metropolitan Bank and Trust Company, G.R. No. 165142, December 10, 2007