SALUD E. MAGSAKAY, PETITIONER, VS. METROPOLITAN BANK & TRUST COMPANY, THE REGIONAL TRIAL COURT, BR. 77, MALOLOS CITY, BULACAN, PRESIDED OVER BY THE HON. JAIME L. DOJILLO, JR., I…

Magsakay versus Metropolitan Bank and Trust Company

The Case

This is a petition for certiorari brought by Salud Magsakay against Metropolitan Bank and Trust Company, the Regional Trial Court of Malolos City presided over by Judge Jaime Dojillo, and the sheriff, questioning the orders that directed the issuance of a writ of possession in favor of the bank after it purchased a mortgaged lot at a public foreclosure sale. The case matters because it draws the precise boundary between the trial court's ministerial duty to issue a writ of possession to a foreclosure purchaser and the narrow exception in favor of a third party who actually holds the property adversely to the mortgagor. It is a staple of remedial law and land registration examinations.

Procedural History

Metrobank filed an ex parte petition for the issuance of a writ of possession before the Regional Trial Court, Branch 77, Malolos City. The trial court granted the petition in its decision dated February 15, 2013, directing the sheriff to place the bank in possession and to eject the mortgagor and her attorney-in-fact. The Spouses Magsakay moved for reconsideration, and the trial court granted it on June 17, 2013, on the view that they appeared to be strangers to the mortgage holding the property adversely. On Metrobank's motion, the trial court set aside that order and reinstated the writ in its order dated November 21, 2013. The Spouses Magsakay's second motion for reconsideration was denied on March 4, 2014. Salud Magsakay then went directly to the Supreme Court by petition for certiorari under Rule 65, impleading the sheriff as an additional respondent.

Facts

A 142-square meter parcel of land in Malolos, Bulacan was registered in the name of Rosie Rivera. To secure a loan of 3,500,000 pesos from Metrobank, Rivera, through her attorney-in-fact Maritzie Magsakay, executed a deed of real estate mortgage dated July 23, 2009 over the property.

Rivera defaulted. Metrobank filed a petition for extrajudicial foreclosure, and after publication and posting, the property was sold at public auction on January 21, 2011, with Metrobank as the highest bidder. A certificate of sale was issued and registered with the Registry of Deeds. On February 15, 2012, the bank filed its ex parte petition for a writ of possession, invoking its right as purchaser under Section 7 of Act Number 3135.

The Spouses Magsakay then surfaced, claiming to be the true owners and possessors. They alleged that the deed of sale in favor of Rivera was forged, and that they had already filed an action for annulment of mortgage, reconveyance and damages. Metrobank countered that the spouses were not adverse third parties but mere tenants of an apartment Rivera had built on the lot with the loan proceeds. The trial court agreed with the bank and reinstated the writ.

Issues

• Whether or not the Spouses Magsakay are third parties actually holding the property adversely to the mortgagor, such that the issuance of the writ of possession ceases to be ministerial.
• Whether or not the trial court gravely abused its discretion in finding that the spouses had personal knowledge of the bank's transaction with Rivera.
• Whether or not the trial court gravely abused its discretion in granting the ex parte petition for a writ of possession.

Applicable Provisions

Section 7 of Act Number 3135 provides:

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 in the registration or cadastral proceedings if the property is registered, or in special proceedings in the case of property registered under the Mortgage Law or under Section 194 of the Administrative Code, or of any other real property encumbered with a mortgage duly registered in the office of any register of deeds in accordance with any existing law, and in each case the clerk of court shall, upon the filing of such petition, collect the fees specified in paragraph 11 of Section 114 of Act Number 496, 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.

This is the source of the purchaser's right to possession and of the ex parte, summary character of the proceeding.

Section 33 of Rule 39 provides:

Upon the expiration of the right of redemption, the purchaser or redemptioner shall be substituted to and acquire all the rights, title, interest and claim of the judgment obligor to the property as of the time of the levy. The possession of the property shall be given to the purchaser or last redemptioner by the same officer unless a third party is actually holding the property adversely to the judgment obligor.

This supplies the lone exception: a third party actually holding the property adversely to the judgment obligor.

Ruling

On the first issue, the Court held that the spouses were not adverse third parties. By the third party contemplated under Section 33 of Rule 39 is meant one who possesses the property in his own right, not merely as successor or transferee of another's right of possession. As occupants of the apartment Rivera built, their claim of adverse possession was correctly discounted. Their forgery claim belongs in their separate action for cancellation of title and annulment of mortgage, not in the summary proceeding.

On the second issue, the Court found that the trial court had in fact given the spouses ample opportunity to be heard, requiring memoranda on the motions for reconsideration before resolving the nature of their possession. There was therefore no denial of due process.

On the third issue, the Court held that the grant of the writ was proper. Any question on the validity of the mortgage or its foreclosure cannot be a legal ground for refusing the writ, and the trial court's duty to issue it does not become discretionary upon the filing of a complaint questioning the mortgage. The Court also held that no certificate of non-forum shopping was required, because an ex parte petition for a writ of possession is neither a complaint nor an initiatory pleading. Certiorari lies only for errors of jurisdiction or grave abuse of discretion, and none was shown.

Doctrine

A purchaser at a public foreclosure sale is entitled to a writ of possession as a matter of right after the redemption period lapses, and its issuance is the ministerial duty of the trial court upon a proper ex parte petition. The exception under Section 33 of Rule 39 requires that the property be held by a third party in his own right and adversely to the judgment obligor; a mere tenant or transferee of the debtor's right does not qualify. A pending suit to annul the mortgage or the foreclosure does not stay the writ, and its outcome operates as a resolutory condition, not a suspensive one.

Disposition

The petition was denied for lack of merit, and the challenged orders granting the writ of possession in favor of Metrobank were sustained.

Remember This

Memorize the line: the writ of possession is ministerial, and only a third party holding the property adversely to the mortgagor in his own right can block it. Examiners use this case to test the Section 33, Rule 39 exception and the rule that a pending annulment suit is a resolutory, not a suspensive, condition.