Kho v. Court of Appeals
REITERATIONFacts
The Antecedents: Spouses Kho executed a real estate mortgage in favor of Banco Filipino to secure a loan. The mortgage was amended several times, eventually securing an obligation of P2,869,000.00 payable by September 29, 1995. The spouses Kho paid P688,060.00 but defaulted on subsequent amortizations. Consequently, Banco Filipino extrajudicially foreclosed the mortgage on May 13, 1982, and purchased the property for P4,153,865.47. The certificate of sale was registered on June 17, 1982. Procedural History: The spouses Kho had until June 17, 1983, to redeem the property. Ten days before the redemption period expired, on June 7, 1983, they filed a complaint for annulment of the extrajudicial foreclosure with a prayer for preliminary injunction before the Regional Trial Court (RTC) of Cebu, Branch IX. The RTC granted the injunction on November 4, 1983. The case was later raffled to Branch XIV, presided over by Judge Juan Y. Reyes, after the initial judge inhibited himself. The bank's motion to lift the injunction was denied on April 30, 1985. Upon Judge Reyes' retirement, the case was assigned to Judge Meinrado P. Paredes, who also denied the bank's motion for reconsideration on April 29, 1987. The Court of Appeals (CA) reversed these RTC orders on February 17, 1988, lifting the writ of preliminary injunction. The CA denied the motion for reconsideration on March 17, 1988. The Petition: The spouses Kho filed a petition for certiorari with the Supreme Court, assailing the CA's decision and resolution, alleging grave abuse of discretion amounting to lack of jurisdiction and that the CA preempted the lower court's determination of the merits.
Issue(s)
Whether the Court of Appeals acted with grave abuse of discretion amounting to lack of jurisdiction in lifting the writ of preliminary injunction. Whether an injunction can be issued to restrain the issuance of a writ of possession after an extrajudicial foreclosure sale.
Ruling
The petition is denied for lack of merit. The assailed decision of the Court of Appeals lifting the writ of preliminary injunction is affirmed. The case is remanded to the Regional Trial Court of Cebu City, Branch XIV for further proceedings.
Ratio Decidendi
On the issue of the Court of Appeals' alleged grave abuse of discretion: The Supreme Court held that the Court of Appeals did not act with grave abuse of discretion. The appellate court's action in lifting the preliminary injunction was based on established legal principles regarding foreclosure sales. The Court emphasized that the issuance of a writ of possession is a statutory right of the purchaser in a foreclosure sale, and an injunction to prevent its issuance is generally not warranted. The Court found that the CA's decision was a correct application of the law and jurisprudence on the matter, thus negating any claim of grave abuse of discretion. On the propriety of an injunction to restrain the issuance of a writ of possession: The Supreme Court reiterated the established rule that both during and after the period of redemption, the purchaser at a foreclosure sale is entitled as of right to a writ of possession. This right exists regardless of whether there is a pending suit for the annulment of the mortgage or the foreclosure itself. The Court cited Act 3135, which governs extrajudicial foreclosure of real estate mortgages, as the basis for this entitlement. Therefore, an injunction to prohibit the issuance of a writ of possession is considered entirely out of place and contrary to law and jurisprudence.
Main Doctrine
A writ of injunction to prohibit the issuance of a writ of possession after a foreclosure sale is out of place, as the purchaser is entitled to a writ of possession as a matter of right during and after the redemption period, regardless of any pending suit for annulment.