In Baldueza v. Court of Appeals, the Supreme Court affirmed that a bank, as the purchaser in a foreclosure sale, is entitled to a writ of possession over the property even if there is a pending case questioning the validity of the mortgage or sale. The Court emphasized that once the redemption period expires without the mortgagor redeeming the property, the bank’s right to possess the property becomes absolute. This decision clarifies that good faith of the bank is not a prerequisite for the issuance of a writ of possession, especially after the redemption period.

Foreclosure Fight: Can Banks Get Property Possession Despite Ongoing Lawsuits?

The case arose from a real estate mortgage executed by Cecilia S. Baldueza in favor of Prudential Bank to secure a loan. Upon Baldueza’s failure to pay, the bank foreclosed the property and emerged as the highest bidder. Baldueza then filed a complaint questioning the validity of the foreclosure. However, she failed to redeem the property within the one-year redemption period.

Prudential Bank then sought a writ of possession from the Regional Trial Court (RTC). Baldueza opposed this, arguing that the bank acted in bad faith and therefore should not be entitled to the writ. The RTC granted the writ of possession, and the Court of Appeals affirmed this decision. The core legal question centered on whether the bank’s alleged bad faith could prevent the issuance of a writ of possession after the redemption period had lapsed.

The Supreme Court upheld the lower courts’ decisions, emphasizing the ministerial duty of the court to issue a writ of possession under Section 7 of Act No. 3135, as amended, once the redemption period has expired and ownership has been consolidated in the purchaser’s name. The Court referenced established jurisprudence stating that a buyer in a foreclosure sale becomes the absolute owner of the property if it is not redeemed within one year after the registration of the sale. This confers an absolute right to possession, irrespective of pending suits questioning the foreclosure’s validity.

The Court addressed Baldueza’s argument that the bank’s alleged bad faith should preclude the issuance of the writ. The court noted that Baldueza raised factual allegations already considered by the lower courts. Further, it reaffirmed its position as primarily a reviewer of legal errors, not a trier of facts. Thus, it deferred to the factual findings of the RTC and the Court of Appeals, which had not found evidence of the bank’s bad faith sufficient to prevent the writ’s issuance. The key factor was Baldueza’s failure to redeem the property within the statutory period, triggering the bank’s right to possession.

Even the pendency of a suit to annul the mortgage and notice of sale does not bar the issuance of a writ of possession. This writ can be issued without prejudice to the outcome of that pending case. The writ of possession ensures that the purchaser (the bank, in this case) can take control of the foreclosed property, which becomes its right upon consolidation of ownership. This principle reinforces the stability of foreclosure proceedings and the rights of purchasers in such sales. The purpose of this law is to give the buyer possession of the property without delay.

In sum, this decision highlights the importance of adhering to redemption periods in foreclosure proceedings. Failure to redeem within the prescribed period extinguishes the mortgagor’s right to the property and solidifies the purchaser’s right to possession. Furthermore, the case reaffirms the ministerial duty of courts to issue writs of possession in favor of purchasers who have consolidated ownership after a valid foreclosure sale. Allegations of bad faith alone, without sufficient factual basis established in the lower courts, are generally insufficient to prevent the writ’s issuance.

FAQs

What is a writ of possession?	A writ of possession is a court order directing the sheriff to place someone in possession of a property.
What happens after a property is foreclosed?	After foreclosure, there is a redemption period during which the original owner can reclaim the property by paying the debt. If they fail to redeem it, ownership consolidates in the buyer’s name.
What is the redemption period?	The redemption period is typically one year from the date of the foreclosure sale registration, during which the mortgagor can redeem the property.
Is good faith a requirement for getting a writ of possession?	After the redemption period expires, the purchaser’s right to a writ of possession is generally ministerial, and not conditioned upon proving good faith.
Does a pending lawsuit affect the right to a writ of possession?	A pending lawsuit challenging the validity of the mortgage or foreclosure does not automatically prevent the issuance of a writ of possession.
What does consolidation of ownership mean?	Consolidation of ownership refers to the transfer of title to the buyer (usually the bank) after the redemption period expires without the original owner redeeming the property.
What law governs extrajudicial foreclosure?	Extrajudicial foreclosure is primarily governed by Act No. 3135, as amended.
What is the role of the court in issuing a writ of possession?	The court’s role is largely ministerial; it must issue the writ upon proper application and proof of title by the purchaser after the redemption period.

This case illustrates the strict application of foreclosure laws in the Philippines, particularly concerning the right to possession after the redemption period. It underscores the importance of understanding and complying with legal timelines and requirements in real estate transactions and foreclosure proceedings.

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: Baldueza v. Court of Appeals, G.R. No. 155813, October 15, 2008