G.R. No. 224225 . August 14, 2017.
NORMA I. BARING, PETITIONER, VS. ELENA LOAN AND CREDIT COMPANY, INC., RESPONDENT.

FACTS

Petitioner Norma Baring, along with other debtors, obtained loans from respondent Elena Loan and Credit Company, Inc., secured by a Real Estate Mortgage over Baring’s property. Upon default, the respondent extrajudicially foreclosed the mortgage, emerged as the highest bidder at the public auction, and, after the redemption period lapsed, consolidated its ownership. A new title was issued in the respondent’s name. The respondent then filed an ex-parte petition for a writ of possession, which the Regional Trial Court granted.
Petitioner appealed to the Court of Appeals, which affirmed the lower court’s decision. In a motion for reconsideration, Baring raised for the first time the argument that the respondent lacked the legal personality to file the petition because it was not authorized by the Securities and Exchange Commission (SEC) to operate as a lending company under Republic Act No. 9474 . She also contended that the loan carried usurious and unconscionable interest rates. The CA denied the motion, prompting this petition.

ISSUE

The core issue is whether the respondent’s alleged lack of SEC authorization to operate as a lending company, and the alleged usurious nature of the interest rates, are valid grounds to deny the issuance of a writ of possession over a foreclosed property.

RULING

The Supreme Court denied the petition and affirmed the CA’s rulings. The issuance of a writ of possession to a purchaser in an extrajudicial foreclosure sale is a ministerial duty of the court once the sale is confirmed and the redemption period expires. This ministerial function is based on the purchaser’s right, as the confirmed owner, to possess the property under Article 428 of the Civil Code. The court in such proceedings does not exercise discretion or adjudicate the validity of the mortgage or the foreclosure.
Consequently, the petitioner’s challenges regarding the respondent’s corporate capacity and the loan’s interest rates are irrelevant and improper in a summary proceeding for a writ of possession. These defenses, which essentially attack the validity of the mortgage contract and the foreclosure sale itself, must be raised in a separate direct action, such as for the annulment of the sale or mortgage. The pendency of such an action does not bar the ministerial issuance of the writ. The Court emphasized that until a competent court annuls the foreclosure sale, the purchaser’s right to possession is absolute, and the duty to issue the writ is mandatory.