In Metropolitan Bank and Trust Company v. Tan, the Supreme Court ruled that a trial court has a ministerial duty to issue a writ of possession to the purchaser of a mortgaged property during the redemption period. This duty is not discretionary and does not depend on the validity of the mortgage itself. This decision underscores the enforceability of extrajudicial foreclosures and clarifies the rights of purchasers in such proceedings, even when the underlying mortgage is being legally challenged.

Foreclosure Showdown: When Does a Writ of Possession Supersede Mortgage Disputes?

This case revolves around a dispute between Metropolitan Bank and Trust Company (Metrobank) and Jose B. Tan and Rey John Tan concerning the foreclosure of several properties. The central legal question is whether a trial court can issue a writ of possession in favor of Metrobank, the purchaser of the foreclosed properties, while the validity of the underlying real estate mortgages is being contested in a separate legal proceeding.

The factual background involves a series of real estate mortgages, an extrajudicial foreclosure, and conflicting court decisions. The respondents, Jose B. Tan and Rey John Tan, argued that a co-equal court had already declared the real estate mortgages void in Civil Case No. 98-225. Thus, according to the respondents, issuing a writ of possession based on a void mortgage was improper. However, Metrobank countered that the issuance of a writ of possession is a ministerial duty of the court and not dependent on the mortgage’s validity.

The Supreme Court’s analysis hinged on the interpretation of Sections 7 and 8 of Act 3135, which governs extrajudicial foreclosures. The law states that the court has a ministerial duty to issue a writ of possession in favor of the purchaser during the redemption period. This duty is triggered when a proper motion is filed, a bond is approved, and no third person is adversely affected. In other words, the court’s role is primarily administrative and does not involve a discretionary assessment of the mortgage’s validity. The pendency of an action to annul the mortgage is not a ground for denying the writ.

Building on this principle, the Court emphasized that the trial court’s order granting the writ of possession is final. The proper remedy for the respondents, therefore, was to appeal the order, not to file a petition for certiorari. Certiorari is generally reserved for situations where a court acts with grave abuse of discretion, exceeding its jurisdiction or acting without jurisdiction. The court stated, “As long as the court acts within its jurisdiction, any alleged errors committed in the exercise of its discretion will amount to nothing more than mere errors of judgment, correctable by an appeal if the aggrieved party raised factual and legal issues.”

Furthermore, the Supreme Court noted its prior ruling in Metropolitan Bank and Trust Company v. Tan, G.R. No. 163712, which had set aside the appellate court’s ruling in CA G.R. CV No. 70742, and dismissed Civil Case No. 98-225. In that case, the Court validated the extrajudicial foreclosure and subsequent sale of the mortgaged property, thereby weakening the respondents’ argument that the mortgages were invalid.

Therefore, based on Act 3135 and previous rulings, the Court concluded that Metrobank was entitled to the writ of possession, regardless of the pending challenge to the mortgages’ validity. The Court’s decision reinforces the principle that the purchaser’s right to possess the foreclosed property is immediate and independent of any collateral legal battles over the underlying mortgage.

FAQs

What is a writ of possession?	A writ of possession is a court order directing the sheriff to put someone in possession of a property. In foreclosure cases, it allows the purchaser (usually the bank) to take control of the property.
What does it mean for a court duty to be “ministerial”?	A ministerial duty is one that a court or official must perform without exercising discretion or judgment. The act is required by law, leaving no room for personal opinion or preference.
Does a pending lawsuit challenging a mortgage stop a writ of possession?	No, according to this case, the pendency of a lawsuit questioning the validity of the mortgage does not prevent the court from issuing a writ of possession to the purchaser of the foreclosed property.
What law governs extrajudicial foreclosures in the Philippines?	Act 3135, as amended, governs extrajudicial foreclosures in the Philippines. It outlines the procedures for foreclosing on a property without going through a full court trial.
What recourse does a debtor have after a writ of possession is issued?	The debtor can petition the court to set aside the sale and cancel the writ of possession within 30 days after the purchaser is given possession, as per Section 8 of Act 3135.
What happens if a mortgage is later found to be invalid?	Even if a mortgage is later invalidated, the writ of possession issued before the finding remains in effect. The debtor’s recourse lies in seeking damages and other remedies.
Why is a bond required when petitioning for a writ of possession?	The purchaser must furnish a bond to protect the debtor in case it’s later proven that the sale was made without violating the mortgage or without complying with legal requirements.
Can a petition for certiorari be used instead of an appeal?	Generally, no. Certiorari is not a substitute for a lost appeal. It is only appropriate when a court acts with grave abuse of discretion, exceeding its jurisdiction.

The Supreme Court’s ruling in Metropolitan Bank and Trust Company v. Tan clarifies the scope of the trial court’s duty regarding writs of possession in foreclosure cases. This decision solidifies the rights of purchasers at foreclosure sales and sets clear parameters for challenging such 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: Metropolitan Bank and Trust Company v. Tan, G.R. No. 159934, June 26, 2008