Writs of Possession in Extrajudicial Foreclosures: What Borrowers Should Know

When a borrower defaults on a loan secured by real property, the lender may foreclose extrajudicially under Act No. 3135. After the foreclosure sale, the winning bidder often seeks a writ of possession to take physical control of the property. Many borrowers assume that filing a case to annul the foreclosure will stop this process. The Supreme Court's decision in Jayag v. BDO Unibank, Inc. (G.R. No. 222503, September 14, 2021) clarifies when a writ of possession must be issued, what remedies remain available, and why timing matters.

The Facts of the Case

In 2005, spouses Jose and Marilyn Jayag obtained a ₱1.7 million loan from the Rural Bank of San Juan, Inc. (RBSJ), secured by a mortgage over their Makati property. They later availed of additional loans under similar terms. After the bank assigned the loan account to BDO Unibank, a dispute arose over the outstanding balance.

BDO filed a petition for extrajudicial foreclosure in February 2013. At the auction, BDO emerged as the highest bidder and received a Certificate of Sale. The one-year redemption period was set to expire on July 5, 2014.

Meanwhile, the Jayags filed a civil case seeking to annul the mortgage and foreclosure. In August 2014, the trial court in that case declared the foreclosure null and void. However, BDO appealed, so that decision was not yet final.

In June 2014, BDO filed a separate petition for a writ of possession before a different branch of the RTC. The court granted the petition and issued the writ. The Jayags then filed various motions to cancel or suspend the writ, all of which were denied. They elevated the matter to the Court of Appeals via certiorari, but the CA dismissed their petition. The Supreme Court ultimately denied their appeal.

When a Writ of Possession Is Issued

A writ of possession is a court order directing the sheriff to place the winning bidder in physical possession of the foreclosed property. Under Act No. 3135, the purchaser may petition the court for possession during the redemption period by filing an ex parte motion and posting a bond equivalent to twelve months' use of the property.

Once the redemption period lapses without the mortgagor redeeming, the purchaser's entitlement to a writ of possession becomes a matter of right. The purchaser is now the absolute owner, and the court has a ministerial duty to issue the writ upon proper application and proof of title. No bond is even required at this stage.

The Limited Exceptions

The rule that issuance of a writ of possession is ministerial is not absolute. The Supreme Court has recognized three exceptions:

1. Gross inadequacy of purchase price — where the foreclosure sale price is shockingly low
2. A third party claiming rights adverse to the debtor-mortgagor
3. Failure to pay surplus proceeds of the sale to the mortgagor

In Jayag, none of these exceptions applied. The borrowers' objections centered on the alleged nullity of the foreclosure due to excessive interest charges — a ground that does not suspend the writ.

Pending Annulment Cases Do Not Stop the Writ

A common misconception is that filing an action to annul the mortgage or foreclosure sale will automatically halt the issuance of a writ of possession. The Supreme Court is clear: a pending annulment case does not stay the writ. The court handling the writ application need not examine the validity of the mortgage or the manner of foreclosure. The purchaser is entitled to possession without prejudice to the outcome of the separate annulment case.

However, if the annulment case becomes final and executory — meaning all appeals are exhausted — the writ may then be cancelled or revoked. In Jayag, the trial court's nullification decision was still on appeal when the writ was issued, so it had no effect on the writ at that time.

The Proper Remedy After the Redemption Period

The Court also clarified an important procedural point. During the redemption period, the debtor may petition that the sale be set aside and the writ cancelled, but this remedy is time-bound and available only within a limited window after the purchaser is given possession.

Once the redemption period lapses and the purchaser consolidates title, this remedy no longer applies. The debtor's remedy shifts to a separate action — such as an action for annulment of mortgage or foreclosure. Errors of judgment by the court are correctible by appeal, while grave abuse of discretion may be raised via certiorari.

In Jayag, the borrowers had already filed their annulment case. The Court noted that because they had this adequate remedy, certiorari was improper.

Practical Takeaways

• Act quickly after a foreclosure sale. The redemption period is one year from registration of the certificate of sale. Once it lapses, the purchaser's right to possession becomes absolute and the court must issue the writ.
• A pending annulment case will not stop the writ. File the annulment action, but expect that possession may still be transferred to the purchaser while the case is pending.
• Know the three exceptions. Grossly inadequate purchase price, adverse third-party claims, and unpaid surplus proceeds may justify resisting the writ.
• File the right remedy at the right time. During the redemption period, a summary remedy is available to contest the writ. After the period lapses, a separate action is required.
• A final annulment judgment can undo the writ. If the foreclosure is declared void and that decision becomes final, the borrower may move to cancel the writ of possession.

This article is general information and not legal advice. For your specific situation, consult a lawyer or ask ASG Legal AI.