Saguan v. Philippine Bank of Communications
REITERATIONFacts
1. The Antecedents: Spouses Ruben and Violeta Saguan obtained a loan of P3 Million from Philippine Bank of Communications, securing it with a mortgage on five parcels of land. Upon default, the bank extra-judicially foreclosed the mortgage. The bank was the sole and highest bidder at the auction sale. After the Saguans failed to redeem the properties within the one-year period, the bank consolidated ownership and obtained new titles in its name. 2. Procedural History: Following the consolidation of ownership, the Philippine Bank of Communications filed a petition for a writ of possession with the Regional Trial Court (RTC) of Tagum City, as the properties were still physically occupied by the Saguans and others. The Saguans opposed the petition, arguing that the bank failed to return the excess proceeds from the foreclosure sale, citing the ruling in Sulit v. Court of Appeals. The RTC, after admitting the bank's evidence, denied the Saguans' motion to present evidence and granted the petition for a writ of possession. The Court of Appeals (CA) affirmed the RTC's orders, holding that the issuance of a writ of possession was a ministerial function and distinguishing the case from Sulit because ownership had already been consolidated. 3. The Petition: The Saguans filed a petition for review on certiorari with the Supreme Court, challenging the CA's decision. They argued that the bank's failure to return the surplus proceeds of the foreclosure sale should have prevented the issuance of the writ of possession. The Supreme Court affirmed the CA's ruling, holding that the issuance of a writ of possession after the lapse of the redemption period and consolidation of ownership is a ministerial duty. However, the Court noted that the issue of the surplus proceeds remained unsettled and could be pursued in a separate civil action, without prejudice to the writ of possession already granted.
Issue(s)
Whether the RTC should have issued a writ of possession considering respondent’s failure to remit the excess or surplus proceeds of the extrajudicial foreclosure sale. Whether respondent may unilaterally apply the excess or surplus proceeds of the extrajudicial foreclosure sale to petitioner’s remaining unsecured obligations. Whether the RTC should have granted petitioners’ motion to dismiss the petition for writ of possession based on respondent’s failure to comply with the RTC’s Orders on the filing of a formal offer of evidence.
Ruling
The Supreme Court denied the petition, affirming the writ of possession in favor of Philippine Bank of Communications. The Court held that the issuance of a writ of possession after the expiration of the redemption period and consolidation of ownership is a ministerial function. The issue of the excess or surplus proceeds of the foreclosure sale remains unsettled and must be pursued in a separate civil action, as it does not affect the ministerial duty to issue the writ of possession. The Court also found no grave abuse of discretion by the RTC in admitting PBCom's evidence despite delays.
Ratio Decidendi
On the issuance of a writ of possession and the issue of surplus proceeds: The Court reiterated that under Act No. 3135, as amended, a writ of possession may be issued after the lapse of the redemption period without the need for a bond. Once ownership has been consolidated in the purchaser and a new title issued, the purchaser's right to possession ripens into an absolute right of a confirmed owner, making the issuance of the writ a ministerial function. The Court distinguished the present case from Sulit v. Court of Appeals, emphasizing that in Sulit, the writ was sought during the redemption period, whereas here, redemption had expired and ownership was consolidated. The failure to return surplus proceeds, while a valid claim for the mortgagor, does not divest the court of its ministerial duty to issue the writ of possession after consolidation of ownership. The Court clarified that the mortgagor's claim for surplus proceeds must be pursued in a separate civil action for collection, not as a ground to prevent the issuance of a writ of possession. On the unilateral application of surplus proceeds to unsecured obligations: The Court found PBCom's argument for unilaterally applying the surplus proceeds to unsecured obligations unacceptable. The foreclosure of the mortgaged properties was solely to answer for the obligation secured by the mortgage, as provided by Article 2126 of the Civil Code. Obligations not collateralized by the foreclosed properties cannot be made subject to the extrajudicial foreclosure. The Court stressed that surplus money arising from a foreclosure sale stands in place of the land and belongs to the mortgagor, representing a substantial right that must prevail over technicalities. However, the remedy for the mortgagor is a separate civil action for collection, where the proper application of compensation can be determined after a liquidation of expenses and claims. On the RTC's admission of evidence and motion to dismiss: The Court agreed with the CA that the RTC did not commit grave abuse of discretion in admitting PBCom's evidence despite delays. The RTC's liberality in giving PBCom time to present its evidence was deemed to have no taint of partiality, especially since the proceedings, though ex-parte in nature, allowed the spouses to file oppositions. The Court noted that petitioners were not denied due process. The admission of PBCom's uncontroverted evidence was therefore upheld. The Court also pointed out that the proper remedy for the spouses should have been an ordinary appeal, not a petition for certiorari, as the RTC's order granting the writ was a matter of judgment within its jurisdiction, not an act constituting grave abuse of discretion.
Main Doctrine
The issuance of a writ of possession after the expiration of the redemption period and consolidation of ownership in the purchaser is a ministerial function of the court, and the mortgagor's claim for surplus proceeds from the foreclosure sale does not affect this ministerial duty, but must be pursued in a separate civil action.