The Supreme Court affirmed that a court’s duty to issue a writ of possession in favor of a purchaser who has consolidated ownership of a foreclosed property is ministerial. This means the court must issue the writ upon proper application and proof of title, even if there are pending disputes about the mortgage’s validity or foreclosure process. The ruling underscores the purchaser’s right to possess the property after the redemption period expires, solidifying their ownership. This decision reinforces the stability and predictability of property rights in foreclosure proceedings.

Foreclosure Fight: Can Loan Company’s Authority Halt Property Seizure?

This case revolves around a property in Las Piñas City mortgaged by Norma Baring to Elena Loan and Credit Company, Inc. as security for a loan. When Baring defaulted, Elena Loan initiated foreclosure proceedings, ultimately acquiring the property after Baring failed to redeem it. Elena Loan then sought a writ of possession to evict Baring, but Baring contested, arguing Elena Loan lacked the necessary authorization to operate as a lending company and that the interest rates were unconscionable. The central legal question is whether these challenges to the loan and foreclosure process can prevent the issuance of a writ of possession to the purchaser.

The Supreme Court addressed the issue by firmly reiterating the ministerial nature of the court’s duty in issuing a writ of possession once ownership has been consolidated. This principle is rooted in Section 7 of Act No. 3135, as amended, which governs extrajudicial foreclosure sales. The law clearly outlines the purchaser’s right to petition the court for possession, either during the redemption period with a bond or after the period expires without one.

Sec. 7. In any sale made under the provisions of this Act, the purchaser may petition the Court of First Instance of the province or place where the property or any part thereof is situated, to give him possession thereof during the redemption period, furnishing bond in an amount equivalent to the use of the property for a period of twelve months, to indemnify the debtor in case it be shown that the sale was made without violating the mortgage or without complying with the requirements of this Act. Such petition shall be made under oath and filed in form of an ex parte motion xxx and the court shall, upon approval of the bond, order that a writ of possession issue, addressed to the sheriff of the province in which the property is situated, who shall execute said order immediately.

The Court emphasized that after the redemption period lapses, the purchaser’s right to possession becomes absolute, transforming the issuance of the writ into a mere ministerial function. The Court underscored the progression of rights, explaining that after consolidation of title in the purchaser’s name, the right to possession ripens into the absolute right of a confirmed owner. This means that the court’s role is limited to verifying the purchaser’s title and ensuring procedural compliance, not to re-litigating the merits of the foreclosure itself.

Building on this principle, the Court dismissed Baring’s claims regarding Elena Loan’s alleged lack of authority and the purportedly excessive interest rates. The Court held that such challenges are irrelevant to the ministerial duty of issuing a writ of possession. Any questions about the mortgage’s validity or the foreclosure process must be raised in a separate action, not as a defense against the writ. A pending action for annulment of mortgage or foreclosure does not stay the issuance of a writ of possession.

The Court cited its previous ruling in Bank of the Philippine Islands v. Spouses Tarampi to further support its position. In that case, the Court explicitly stated that the trial court need not delve into the validity of the mortgages or the manner of their foreclosure when deciding on a petition for a writ of possession. The writ issues as a matter of course, without the court exercising discretion or judgment on these underlying issues.

[The court] need not look into the validity of the mortgages or the manner of their foreclosure. The writ issues as a matter of course, and the court  neither  exercises  its  official   discretion  nor  judgment.

To highlight the difference between discretionary and ministerial acts, the Court cited the case of Spouses Espiridion v. Court of Appeals. The case emphasized that a ministerial act is one performed in obedience to a legal authority, without regard to or the exercise of one’s own judgment upon the propriety or impropriety of the act done. In contrast, a discretionary act involves the exercise of official judgment in determining how or when a duty shall be performed.

Ultimately, the Supreme Court affirmed the CA’s decision, emphasizing that Elena Loan, as the registered owner of the property, was entitled to all the rights of ownership, including possession. The Court reiterated that its role is limited to verifying the purchaser’s title and ensuring procedural compliance, not to re-litigating the merits of the foreclosure itself.

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. In foreclosure cases, it’s used to give the buyer possession of the foreclosed property.
What does “ministerial duty” mean in this context?	It means the court has no discretion; if the legal requirements are met (proof of ownership, etc.), the court must issue the writ.
Can a mortgagor stop a writ of possession by questioning the loan’s validity?	No. Challenges to the loan’s validity or foreclosure process must be raised in a separate case and do not halt the writ of possession.
What happens after the redemption period expires?	If the mortgagor doesn’t redeem the property within one year, the buyer becomes the absolute owner, entitling them to possession.
Does a pending lawsuit affect the issuance of a writ of possession?	No, a pending lawsuit to annul the mortgage or foreclosure does not prevent the court from issuing a writ of possession.
What law governs the issuance of a writ of possession in foreclosure cases?	Section 7 of Act No. 3135, as amended by Act 4118, governs the process.
What if the interest rates on the loan are allegedly unconscionable?	The issue of unconscionable interest rates must be raised in a separate action and does not prevent the issuance of a writ of possession.
Does the court consider the buyer’s authority to engage in lending activities?	No, the court does not consider this issue when deciding on a petition for a writ of possession after consolidation of ownership.

This case clarifies that challenges to the underlying loan agreement or foreclosure process do not impede the issuance of a writ of possession once the purchaser has consolidated ownership. This ensures a more efficient and predictable process for those who acquire property through foreclosure. The decision emphasizes that separate legal actions are necessary to address disputes related to the loan or foreclosure itself.

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: Norma I. Baring vs. Elena Loan and Credit Company, Inc., G.R. No. 224225, August 14, 2017