Writ of Possession Not Barred by Pending Annulment of Foreclosure Case

The Supreme Court has clarified that a pending case to annul an extrajudicial foreclosure sale does not prevent a trial court from issuing a writ of possession in favor of the purchaser at the auction. This ruling, in Spouses Pahang v. Hon. Vestil (G.R. No. 148595, July 12, 2004), settles a common question for property owners who challenge a foreclosure but face eviction while their case is still pending.

The Facts of the Case

The spouses Antonio and Lolita Pahang obtained a ₱1.5 million loan from Metropolitan Bank and Trust Company in January 1996, secured by a real estate mortgage over their property. When they failed to pay, the bank extrajudicially foreclosed the mortgage. The property was sold at public auction on January 8, 1998, with the bank as the highest bidder.

The one-year redemption period was set to expire on January 27, 1999. Instead of redeeming the property, the spouses filed a complaint on January 19, 1999, seeking to annul the extrajudicial sale. They alleged that the bank had inflated their obligation by including excessive interest, penalties, and fees. They also prayed, as an alternative remedy, that they be allowed to redeem the property based on the amount the court would determine as their true obligation.

After the redemption period lapsed, the bank consolidated ownership and obtained a new title. It then filed a petition for a writ of possession before the Regional Trial Court. The spouses opposed, arguing that their pending annulment case was a prejudicial question that should suspend the writ of possession proceedings.

The Issue

The central question was whether a pending complaint for annulment of an extrajudicial foreclosure sale constitutes a prejudicial question that bars or suspends the issuance of a writ of possession in favor of the purchaser.

The Ruling

The Supreme Court denied the petition and affirmed the issuance of the writ of possession. The Court held that no prejudicial question existed between the two cases.

A prejudicial question arises when the resolution of an issue in one case is a logical antecedent of the issue in another case, such that how the first is resolved determines the outcome of the second. This principle is designed to avoid conflicting decisions.

The Court distinguished the two actions. The annulment case asked whether the foreclosure and auction sale were void. The writ of possession case asked only whether the bank, as purchaser, was entitled to possession after the redemption period had lapsed without redemption. These cases could proceed separately and independently.

The Court also rejected the spouses' reliance on Belisario v. Intermediate Appellate Court. In that case, the Court held that filing an action to enforce redemption within the redemption period is equivalent to a formal offer to redeem. However, the spouses' complaint was for annulment of the mortgage and sale, not an action to enforce redemption. Moreover, even a valid action to redeem does not suspend the running of the redemption period, nor does it bar the purchaser from obtaining a writ of possession after the period lapses.

Finally, the Court noted that proceedings for a writ of possession after the lapse of the redemption period are summary in nature. Once the court finds that the redemption period has expired without redemption, issuing the writ becomes a ministerial duty. The trial court did not abuse its discretion by complying with that duty.

Practical Takeaways

• A pending annulment case does not stop a writ of possession. Filing a complaint to nullify a foreclosure sale, without more, will not prevent the purchaser from obtaining possession of the property.
• Only an action to redeem preserves the right of redemption. To preserve redemption rights, the borrower must file an action to enforce redemption, not merely an action to annul the sale.
• Writ of possession proceedings are summary. The trial court's duty to issue the writ after the redemption period lapses is ministerial, leaving little room for the borrower to interpose defenses.
• Challenge the sale, but expect possession to transfer. A borrower who questions a foreclosure should be prepared that possession may still be awarded to the purchaser while the annulment case proceeds.
• Use the proper remedy. A party aggrieved by a writ of possession order should appeal by writ of error, not certiorari, unless grave abuse of discretion is shown.

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