No present substantial interest to institute annulment of judgment

Petitioner insists that contrary to the ruling of the Court of Appeals, he has the legal personality to institute the annulment of judgment case against Metrobank, considering that the March 25, 2002 deed of assignment he entered into with Louisville and Winston Linwy L. Chua makes him a co-assignee over the subject real properties.

For its part, Metrobank claims that it was not a party to the deed of assignment among Louisville, Chua and petitioner, hence, it has no privity of contract with petitioner Rayo. Moreover, Metrobank points out that the real properties had already been extrajudicially foreclosed when petitioner and his assignors executed the deed of assignment.

Under Section 2, Rule 3 of the Rules of Court, every action must be prosecuted or defended in the name of the real party-in-interest, or one who stands to be benefited or injured by the judgment in the suit. A real party-in-interest is one with a present substantial interest which means such interest of a party in the subject matter of the action as will entitle him, under the substantive law, to recover if the evidence is sufficient, or that he has the legal title to demand.

Now, is petitioner Rayo a real party-in-interest? Initially, the Supreme Court recognized herein petitioner as the co-assignee of the subject real properties as shown in the March 25, 2002 deed of assignment. However, while petitioner would be injured by the judgment in this suit, the Supreme Court finds that petitioner has no present substantial interest to institute the annulment of judgment proceedings and nullify the order granting the writ of possession.

First, there was no violation of petitioners right to constitutional due process. In a long line of cases, the Supreme Court has consistently ruled that the issuance of a writ of possession in favor of the purchaser in a foreclosure sale of a mortgaged property under Section 7 of Act No. 3135, as amended is a ministerial duty of the court. The purchaser of the foreclosed property, upon ex parte application and the posting of the required bond, has the right to acquire possession of the foreclosed property during the 12-month redemption period and with more reason, after the expiration of the redemption period.

An ex parte petition for the issuance of a writ of possession under Section 7 of Act No. 3135 is not, strictly speaking, a judicial process as contemplated in Article 433 of the Civil Code. It is a judicial proceeding for the enforcement of one's right of possession as purchaser in a foreclosure sale. It is not an ordinary suit filed in court, by which one party sues another for the enforcement of a wrong or protection of a right, or the prevention or redress of a wrong. It is a non-litigious proceeding authorized in an extrajudicial foreclosure of mortgage pursuant to Act No. 3135, as amended, and is brought for the benefit of one party only, and without notice to, or consent by any person adversely interested. It is a proceeding where the relief is granted without requiring an opportunity for the person against whom the relief is sought to be heard. No notice is needed to be served upon persons interested in the subject property.

Second, in the deed of assignment, petitioner also acknowledged that the subject real properties were already sold at various extrajudicial foreclosure sales and bought by Metrobank. Clearly, petitioner recognized the prior existing right of Metrobank as the mortgagee-purchaser over the subject real properties. Actual knowledge of a prior mortgage with Metrobank is equivalent to notice of registration in accordance with Article 2125 of the Civil Code. Conformably with Articles 1312 and 2126 of the Civil Code, a real right or lien in favor of Metrobank had already been established, subsisting over the properties until the discharge of the principal obligation, whoever the possessor(s) of the land might be. As petitioner is not a party whose interest is adverse to that of Louisville, there was no bar to the issuance of a writ of possession to Metrobank. It does not matter that petitioner was not specifically named in the writ of possession nor notified of such proceedings.

Third, the Supreme Court also notes that petitioner availed of the wrong remedy in filing Civil Case No. Q02-46514, for nullification of real estate mortgage and extrajudicial foreclosure sale, more than six (6) months after the issuance of the writ of possession considering the mandate of Section 8 of Act No. 3135, as amended. Hence, even petitioners action for annulment of judgment cannot prosper as it cannot be a substitute for a lost remedy. (G.R. No. 165142; December 10, 2007)