Rayo V Metrobank
Rayo V Metrobank
Rayo V Metrobank
Midas Diversified Export Corp. (Midas), thru its president, Mr. Samuel U. Lee, obtained six (6) loans from
private respondent Metropolitan Bank and Trust Company (Metrobank), amounting to ₱588,870,000 as
evidenced by promissory notes. To secure the payment of an ₱8,000,000 loan, Louisville Realty &
Development Corporation (Louisville), thru its president, Mr. Samuel U. Lee, executed in favor of
Metrobank, a real estate mortgage over three parcels of land situated at No. 40 Timog Ave., Brgy. Laging
Handa, Quezon City, with all the buildings and improvements thereon. The properties are covered by
Transfer Certificates of Title (TCT) Nos. N-163455, N-166349 and N-166350 issued by the Registry of
Deeds of Quezon City.
When the debtor-mortgagor failed to pay, Metrobank extra-judicially foreclosed the real estate
mortgage Thereafter, in a public auction, Metrobank was the highest bidder. A Certificate of Sale4 dated
December 11, 2000 was duly registered with the Registry of Deeds of Quezon City on December 13,
2000. When Louisville refused to turn over the real properties, on March 17, 2001, Metrobank filed
before the Regional Trial Court (RTC), Branch 223, Quezon City, an ex parte petition5 for the issuance of
a writ of possession docketed as LRC Case No. Q-13915(01). RTC granted the petition
Metrobank posted the required bond. Consequently, a writ of possession was issued on October 9,
2001. This was partially implemented as to TCT No. N-163455, as evidenced by the Turn-Over Receipt8
dated December 13, 2002. The writ over the two remaining properties, under TCT Nos. N-166349 and N-
166350, were subsequently implemented as evidenced by the Turn-Over Receipt9 dated December 3,
2003.
Meanwhile, on April 3, 2002, petitioner Eduardo L. Rayo filed a complaint10 docketed as Civil Case No.
Q02-46514 against Metrobank for Nullification of Real Estate Mortgage Contract(s) and Extrajudicial
Foreclosure Sale, in the RTC, Branch 99, Quezon City.
On May 13, 2004, petitioner Rayo filed with the Court of Appeals a Petition11 for Annulment of
Judgment on the ground of "absolute lack of due process." Petitioner alleged that his predecessor,
Louisville, was not notified of the proceedings
Does petitioner have the legal personality in the annulment of judgment proceedings?
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.
Under Section 2,15 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."16 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.
while petitioner would be injured by the judgment in this suit, we find that petitioner has no present
substantial interest to institute the annulment of judgment proceedings and nullify the order granting
the writ of possession.
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
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