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EDUARDO L. RAYO v. METROPOLITAN BANK

FACTS:

Midas Diversified Export Corp. (Midas) obtained multiple loans from Metropolitan Bank and Trust Company (Metrobank) amounting to P588,870,000. Louisville Realty & Development Corporation (Louisville) executed a real estate mortgage over three parcels of land in favor of Metrobank to secure one of the loans. Midas failed to pay its debt, leading Metrobank to foreclose the mortgage and become the highest bidder in a public auction. Metrobank subsequently filed a petition for the issuance of a writ of possession, which was granted by the Regional Trial Court (RTC). Although a writ of possession was issued, it was only partially implemented. Petitioner Eduardo L. Rayo filed a complaint against Metrobank seeking nullification of the mortgage contract and foreclosure sale. Rayo then filed a petition for annulment of judgment with the Court of Appeals, but it was denied. Rayo now argues that Section 7 of Act No. 3135, which allows for ex parte proceedings, is contrary to due process. Additionally, Rayo raises secondary issues concerning his legal standing and an alleged violation of the rule against forum-shopping by Metrobank.

ISSUES:

  1. Whether Section 7 of Act No. 3135 is contrary to the due process provision of the Philippine Constitution.

  2. Whether the petitioner has the legal personality to seek the annulment of judgment.

  3. Whether the private respondent violated the rule against forum-shopping.

RULING:

  1. The Court of Appeals ruled that there is no basis to challenge the constitutionality of Section 7 of Act No. 3135, as it constitutes a collateral attack against said provision. Thus, the petition for annulment of judgment was denied.

  2. The Court of Appeals held that the petitioner is neither the registered owner nor the successor-in-interest of the registered owner and, therefore, not a real party-in-interest in seeking the annulment of judgment.

  3. The Court of Appeals did not discuss the issue of whether the private respondent violated the rule against forum-shopping.

PRINCIPLES:

  • Collateral Attack - Challenging the constitutionality of a provision or law in an action where it is not the main issue is considered a collateral attack and generally not allowed.

  • Real Party-in-Interest - In order to have legal standing, a party seeking relief must be a real party-in-interest, that is, someone who stands to be benefited or injured by the judgment in the suit or the party entitled to the avails of the suit.