Key Takeaway: The Issuance of a Writ of Possession in Extrajudicial Foreclosures is a Ministerial Duty Post-Redemption Period

Jose P. Jayag and Marilyn P. Jayag v. BDO Unibank, Inc., Ex-Officio Sheriff, and/or Assigned Sheriff, G.R. No. 222503, September 14, 2021

Imagine waking up one day to find your home being taken over by a bank due to a foreclosure sale. This is the real-life scenario faced by the Jayags, who found themselves in a legal battle over the possession of their property. In the case of Jose P. Jayag and Marilyn P. Jayag v. BDO Unibank, Inc., the Supreme Court of the Philippines had to decide whether a writ of possession should be issued to BDO Unibank despite ongoing legal challenges to the foreclosure sale. This case highlights the complexities of property rights and the legal mechanisms surrounding extrajudicial foreclosures.

The central issue was whether a writ of possession could be enforced even when a trial court had already declared the foreclosure sale null and void, but the decision was still under appeal. The Supreme Court’s ruling provides critical insights into the rights of property owners and the procedural aspects of extrajudicial foreclosures.

Legal Context: Understanding Writs of Possession and Extrajudicial Foreclosures

A writ of possession is a legal document that allows a party to take possession of a property. It is commonly used in foreclosure cases where a property has been sold due to unpaid debts. In the Philippines, the process of extrajudicial foreclosure is governed by Act No. 3135, which outlines the steps and rights of both the debtor and the purchaser.

Under Section 7 of Act No. 3135, a purchaser in an extrajudicial foreclosure sale can petition for a writ of possession during the redemption period by posting a bond. The court’s role in issuing the writ is ministerial, meaning it must issue the writ upon proper application and proof of title. However, this ministerial duty is subject to certain exceptions, such as gross inadequacy of purchase price or the presence of a third-party claiming rights over the property.

It’s important to understand that a writ of possession does not determine the validity of the mortgage or the foreclosure itself. It is merely a tool to enforce the possession of the property. This distinction is crucial, as it means that even if a foreclosure is challenged in court, the writ of possession may still be issued.

For example, if a homeowner defaults on their mortgage and the bank forecloses the property, the bank can apply for a writ of possession to take control of the property. Even if the homeowner disputes the foreclosure in court, the writ of possession can still be issued, provided the bank follows the legal requirements.

Case Breakdown: The Journey of the Jayags

The Jayags took out a loan from the Rural Bank of San Juan, Inc. (RBSJ) in 2005, secured by a mortgage on their property. They later availed of additional loans, which were also secured by the same property. In 2012, RBSJ assigned the loan to BDO Unibank, and a dispute arose over the outstanding balance.

BDO filed for an extrajudicial foreclosure in 2013 due to the alleged non-payment of the loan. The property was sold at a public auction, and BDO, as the highest bidder, received a certificate of sale. The Jayags filed a complaint to enjoin the foreclosure, which was later amended to seek the annulment of the mortgage and foreclosure sale.

Despite the ongoing legal battle, BDO applied for and received a writ of possession in September 2014. The Jayags challenged the writ, arguing that it should not be enforced because the trial court had already declared the foreclosure sale null and void. However, the Supreme Court upheld the issuance of the writ, emphasizing that it is a ministerial duty once the redemption period has lapsed.

The Court’s reasoning was clear: “It is a time-honored legal precept that after the consolidation of titles in the buyer’s name, for failure of the mortgagor to redeem, entitlement to a writ of possession becomes a matter of right.” The Court also noted that “a pending action for annulment of mortgage or foreclosure sale does not stay the issuance of the writ of possession.”

The procedural steps taken by the Jayags and BDO were as follows:

• The Jayags filed a complaint to enjoin the foreclosure sale.
• BDO filed a petition for extrajudicial foreclosure and won the auction.
• The Jayags amended their complaint to seek annulment of the mortgage and foreclosure.
• BDO applied for and received a writ of possession.
• The Jayags challenged the writ through various motions and petitions, which were denied.
• The Supreme Court upheld the writ of possession, stating it was a ministerial duty.

Practical Implications: Navigating Extrajudicial Foreclosures

This ruling has significant implications for property owners and banks involved in extrajudicial foreclosures. For property owners, it underscores the importance of redeeming the property within the one-year period to avoid the issuance of a writ of possession. If a foreclosure is challenged, it is crucial to understand that the writ of possession may still be issued, and other legal remedies should be pursued.

For banks, the ruling reinforces their right to possession after a successful foreclosure sale, provided they follow the legal requirements. However, they must be aware of the exceptions that may prevent the issuance of a writ of possession.

Key Lessons:

• Property owners should redeem their property within the one-year period to prevent the issuance of a writ of possession.
• Challenging a foreclosure sale does not automatically prevent the issuance of a writ of possession.
• Banks must adhere to the legal requirements for extrajudicial foreclosures to secure a writ of possession.

Frequently Asked Questions

What is a writ of possession?
A writ of possession is a legal document that allows a party to take possession of a property, often used in foreclosure cases.

Can a writ of possession be issued if a foreclosure sale is challenged in court?
Yes, a writ of possession can still be issued even if a foreclosure sale is challenged, provided the legal requirements are met.

What are the exceptions to the issuance of a writ of possession?
Exceptions include gross inadequacy of purchase price, the presence of a third-party claiming rights over the property, and failure to pay the surplus proceeds of the sale to the mortgagor.

How long do property owners have to redeem their property after a foreclosure sale?
Property owners have one year from the date of the registration of the certificate of sale to redeem their property.

What should property owners do if they cannot redeem their property?
If unable to redeem, property owners should seek legal advice to explore other remedies, such as challenging the validity of the mortgage or foreclosure.

ASG Law specializes in property law and foreclosure disputes. Contact us or email hello@asglawpartners.com to schedule a consultation.