Lam v. Metropolitan Bank
REITERATIONFacts
The Antecedents: Spouses Alex and Julie Lam (petitioners) obtained a loan from Metropolitan Bank and Trust Company (respondent) secured by a real estate mortgage over their property. Petitioners obtained additional loans and signed amendments to the mortgage. Petitioners failed to pay the loans, leading to an extrajudicial foreclosure proceeding. The property was awarded to respondent as the sole bidder, and a Provisional Certificate of Sale was issued and registered. Petitioners failed to redeem the property within the one-year period, resulting in the execution of a Final Certificate of Sale and the consolidation of title in respondent's name. Respondent demanded possession, but petitioners refused, prompting respondent to file a Complaint for the issuance of a writ of possession with the Regional Trial Court (RTC). Procedural History: Petitioners filed an Answer, raising defenses such as the respondent's alleged lack of capacity to sue and the invalidity of the loan. The RTC initially treated the case as an ex parte proceeding, citing jurisprudence that questions on the validity of the sale are to be determined in subsequent proceedings. However, the RTC later reconsidered its order, allowing petitioners to participate and declaring the proceeding adversarial due to "equitable circumstances." Respondent filed a petition for certiorari with the Court of Appeals (CA), which reversed the RTC, holding that the RTC committed grave abuse of discretion in treating the ex parte petition as adversarial. The CA emphasized that a petition for a writ of possession is ex parte and not adversarial, and issues regarding the validity of the mortgage or foreclosure are not grounds to refuse the writ. The Petition: Petitioners filed a Petition for Review on Certiorari with the Supreme Court, assailing the CA's decision and resolution, arguing that the CA erred in ruling that the RTC committed grave abuse of discretion and in disregarding the equitable considerations that warranted treating the proceeding as adversarial.
Issue(s)
Whether the Court of Appeals erred in ruling that the Regional Trial Court Judge committed grave abuse of discretion in issuing orders that treated the proceeding for the issuance of a writ of possession as adversarial. Whether the Court of Appeals erred in disregarding the equitable considerations that warranted the application of exceptions to the general rule that proceedings for the issuance of a writ of possession are ex parte and not adversarial.
Ruling
The petition is denied. The Decision and Resolution of the Court of Appeals in CA-G.R. SP No. 00088 are affirmed.
Ratio Decidendi
On the nature of a writ of possession proceeding and the error of the Court of Appeals: The issuance of a writ of possession to a purchaser in a public auction following an extrajudicial foreclosure is a ministerial act. Once the mortgagor fails to redeem the property within the redemption period and the buyer consolidates ownership, the purchaser is entitled to a writ of possession as a matter of right. The Supreme Court reiterated that the proceeding for a writ of possession is ex parte and summary in nature, designed for the benefit of one party without notice to the adverse party. It is not an ordinary civil action where parties "sue another for the enforcement of a wrong or protection of a right." The law does not require the presentation of documentary or testimonial evidence for the court to grant the petition, as long as the verified petition states sufficient facts. The Court of Appeals, therefore, erred in finding grave abuse of discretion. On the participation of the mortgagor, equitable circumstances, and the error of the Court of Appeals: The Court found the RTC's reasoning in allowing the Spouses Lam to actively participate in the ex parte proceeding as "puerile." The fact that the RTC allowed them to file an Answer, go through pre-trial, and mediation was deemed a "glaring procedural anomaly" that the court a quo had "inexcusably abetted." The Court emphasized that such an aberration cannot be used as an excuse for defiance of the law and jurisprudence that defines a petition for a writ of possession as a non-litigious ex parte proceeding where the mortgagor's participation as an adverse party is not required. Furthermore, the Court clarified that issues regarding the validity of the mortgage or its foreclosure are not legal grounds for refusing the issuance of a writ of possession. The purchaser is entitled to the writ regardless of any pending suit for annulment, without prejudice to the outcome of those other proceedings. The Court of Appeals, therefore, erred in disregarding these considerations.
Main Doctrine
The issuance of a writ of possession to a purchaser in an extrajudicial foreclosure sale is a ministerial act that becomes a matter of right after the consolidation of title in the buyer's name due to the mortgagor's failure to redeem the property. Such proceedings are ex parte and summary in nature, and the mortgagor's participation as an adverse party is not required, nor are issues regarding the validity of the mortgage or foreclosure grounds to refuse the writ.