MANILA — The Supreme Court (SC) has ruled that borrowers may challenge the issuance of a writ of possession or the validity of an extrajudicial foreclosure, but filing an appeal does not automatically prevent the purchaser of the foreclosed property from taking possession.

In a decision written by Associate Justice Maria Filomena D. Singh, the SC Third Division denied the petition of spouses Anthony and Ma. Fatima An and affirmed the issuance of a writ of possession in favor of Philippine National Bank (PNB).

The spouses obtained a ₱2-million loan from Allied Banking Corporation, using their property as collateral. After they failed to settle the debt, PNB, which acquired Allied Bank through a merger, initiated extrajudicial foreclosure and purchased the property at a public auction as the highest bidder.

The spouses failed to redeem the property within the one-year period provided by law, prompting PNB to seek a writ of possession from the Regional Trial Court (RTC) after the borrowers refused to vacate the premises.

The spouses opposed the petition, claiming they had regularly paid their loan and were not notified of the foreclosure sale. They also attempted to redeem the property, but PNB rejected the attempt, saying they had waived their redemption right.

The RTC granted PNB’s request, ruling that the spouses’ failure to redeem the property within the prescribed period required the issuance of the writ. However, it later suspended the writ’s implementation while the spouses’ appeal was pending.

The Court of Appeals upheld the issuance of the writ but ruled that the RTC had no basis to suspend its enforcement, explaining that challenges to the validity of the mortgage or foreclosure do not prevent the purchaser from obtaining possession.

The SC affirmed the appellate court’s ruling, reiterating that a purchaser becomes the absolute owner of foreclosed property if it is not redeemed within one year from the registration of the certificate of sale.

With ownership transferred to PNB, the RTC had a ministerial duty to issue the writ of possession, meaning it was legally required to recognize the bank’s right to possess the property.

The high court clarified that the general rule suspending execution of a judgment while an appeal is pending does not apply to appeals involving writs of possession issued under Section 7 of Act No. 3135, as amended.

It outlined the remedies available to borrowers in extrajudicial foreclosure cases, depending on the stage of the proceedings and whether the purchaser has taken actual possession.

During the redemption period, if the purchaser has obtained actual possession, the borrower may petition the same RTC that issued the writ to challenge it on grounds that the mortgage was not violated or that the foreclosure sale failed to comply with the procedural requirements of Act No. 3135.

However, filing such a petition will not suspend implementation of the writ. An appeal from a ruling sustaining the writ will likewise not stop its enforcement under Section 8 of the law.

After the redemption period has expired and ownership has been consolidated in the purchaser’s name, but the purchaser has yet to obtain actual possession, the borrower may appeal the order granting the writ. The SC noted that the order is a final judgment, allowing an appeal despite the ex parte nature of the proceedings.

Still, the appeal will not suspend enforcement of the writ in favor of the purchaser.

The borrower may also file a separate case seeking the annulment of the mortgage and foreclosure sale. Such an action challenges the existence of the mortgage and the validity of the foreclosure sale itself, rather than merely alleging procedural irregularities.

The filing of a separate annulment case does not prevent the issuance of a writ of possession, without prejudice to the outcome of that case.

Applying these principles, the SC ruled that the RTC had no legal basis to suspend enforcement of PNB’s writ while the spouses’ appeal was pending. The filing of the appeal alone did not prevent the bank from taking possession of the property.