G.R. No. 101083
METROPOLITAN BANK AND TRUST COMPANY, petitioner, vs. HON. COURT OF APPEALS AND SPOUSES ANTONIO and LETICIA BERNARDO, respondents.

July 8, 1996

FACTS

Spouses Antonio and Leticia Bernardo obtained a loan from Metropolitan Bank and Trust Company (Metrobank) secured by a real estate mortgage over their property. They defaulted on the loan. Metrobank extrajudicially foreclosed the mortgage and purchased the property as the highest bidder at the public auction. The one-year redemption period expired without the spouses redeeming the property. Metrobank then filed a petition for the issuance of a writ of possession with the Regional Trial Court (RTC), which was granted. The spouses Bernardo filed a motion to quash the writ, arguing that the foreclosure and auction sale were void because they were not properly notified of the foreclosure proceedings. The RTC denied the motion. On appeal, the Court of Appeals reversed the RTC and quashed the writ of possession, ruling that the issue of the validity of the foreclosure sale (due to alleged lack of notice) should first be resolved in a separate action before the writ may be issued. Metrobank elevated the case to the Supreme Court via petition for review.

ISSUE

Whether the issuance of a writ of possession in favor of the purchaser in an extrajudicial foreclosure sale may be refused or quashed on the ground that the foreclosure sale is void due to lack of notice to the mortgagors.

RULING

NO. The Supreme Court granted Metrobank’s petition, reversed the decision of the Court of Appeals, and reinstated the RTC’s order granting the writ of possession.

The Court held that under Act No. 3135, as amended, the purchaser in an extrajudicial foreclosure sale is entitled to a writ of possession as a matter of right, upon ex parte application and the posting of a bond, after the expiration of the redemption period without the property being redeemed. The duty of the court in such an application is ministerial. The writ issues as a necessary consequence of the foreclosure sale and the failure to redeem.

The Court emphasized that the procedure for obtaining a writ of possession is summary and ex parte. It is not the proper proceeding to litigate the validity of the mortgage or the foreclosure sale. Questions regarding the regularity and validity of the sale, including claims of lack of notice, are to be determined in a subsequent separate and independent action, such as an action for annulment of the sale or for reconveyance. The pendency of such an action for annulment does not bar the issuance of the writ of possession. To hold otherwise would defeat the very purpose of the summary remedy provided by Act No. 3135.

Thus, the Court of Appeals erred in quashing the writ of possession based on the alleged nullity of the foreclosure sale. The proper recourse for the spouses Bernardo was to file a separate action to annul the sale and, if successful, claim damages. They could not delay the ministerial issuance of the writ by raising collateral attacks on the sale’s validity in the possessory proceeding.