Spouses Jayag v. BDO Unibank, Inc.
REITERATIONFacts
The Antecedents: In 2005, spouses Jose P. Jayag and Marilyn P. Jayag obtained a loan of P1,700,000.00 from the Rural Bank of San Juan, Inc. (RBSJ), with stipulated interest and penalty charges. They later obtained another loan of P500,000.00 from the paid-up portion of the initial loan, both maturing in September 2010. These loans were secured by a mortgage over their property. In 2012, RBSJ assigned its rights to respondent BDO Unibank, Inc. (BDO). A dispute arose regarding the computation of the outstanding loan balance. Consequently, BDO initiated extrajudicial foreclosure proceedings due to the alleged failure of the Jayag spouses to pay the outstanding balance, which BDO claimed amounted to P4,699,956.67. Procedural History: Following the extrajudicial foreclosure sale where BDO emerged as the highest bidder, the Jayag spouses filed a complaint for annulment of mortgage and foreclosure sale, seeking a Temporary Restraining Order (TRO) and preliminary injunction. The Regional Trial Court (RTC) denied their applications for injunctive relief. Subsequently, BDO filed a petition for a writ of possession, which the RTC granted. The Jayag spouses filed a petition to hold the implementation of the writ in abeyance, which was denied. They then filed a motion to cancel and/or suspend the enforcement of the writ, which was also denied, as was their motion for reconsideration. The Jayag spouses then filed a petition for certiorari with the Court of Appeals (CA), arguing grave abuse of discretion by the trial court. The CA dismissed the petition, ruling that the Jayag spouses had availed of the wrong remedy and that the writ of possession was a ministerial duty of the court. The Petition: The Jayag spouses filed a Petition for Review under Rule 45 of the Rules of Court, assailing the CA's decision. They argued that the CA erred in holding that they should have resorted to appeal instead of a petition for certiorari, that a writ of possession remains a ministerial duty even with a decision annulling the foreclosure sale, and that there was an urgent need for a TRO and/or writ of preliminary injunction. They contended that their property rights were in peril and that the RTC's finding of nullity of the foreclosure sale warranted protection. BDO countered that appeal was the proper remedy and that the Jayag spouses had lost their right to appeal. The Supreme Court denied the petition, finding no reversible error committed by the CA, and noted that the Jayag spouses had subsequently filed another petition (G.R. No. 230289) concerning the same matter, which was also denied.
Issue(s)
Whether the Court of Appeals erred in holding that the petitioners should have resorted to appeal instead of a petition for certiorari. Whether the Court of Appeals erred in holding that a writ of possession remains a ministerial duty of the lower court even if there is a decision annulling the foreclosure sale and certificate of sale. Whether there is an urgent and compelling reason to issue a TRO and/or writ of preliminary injunction.
Ruling
The Supreme Court denied the petition for review, affirming the Court of Appeals' decision. The Court held that the issuance of a writ of possession in an extrajudicial foreclosure sale becomes a ministerial duty of the court once the mortgagor fails to redeem the property within the prescribed period. A pending action for annulment of the mortgage or foreclosure sale does not stay the issuance of the writ. The proper remedy from an order granting a writ of possession is appeal, not certiorari, especially after the redemption period has lapsed. The Court noted that while the RTC Makati City, Br. 145 had declared the foreclosure sale null and void, that decision was still on appeal and not yet final and executory at the time the CA resolved the certiorari petition. The Court also pointed out that petitioners had already instituted a separate civil case for annulment, which was a plain and adequate remedy.
Ratio Decidendi
On Issue 1 (Propriety of Certiorari vs. Appeal): The Court affirmed the CA's ruling that petitioners availed of the wrong remedy. While petitioners argued that they filed a petition to set aside the writ due to time constraints, the Court clarified that after the redemption period has lapsed and a writ of possession has been issued, the proper remedy is an appeal from the order granting the writ, not a petition for certiorari. The Court distinguished between errors of judgment, correctible by appeal, and errors of jurisdiction, reviewable by certiorari, emphasizing that the order granting the writ of possession is a final order and thus subject to appeal. The Court further noted that Section 8 of Act No. 3135, which provides a remedy to set aside a writ of possession, is generally applicable during the redemption period or within thirty days after the purchaser is given possession, and not applicable when the redemption period has already lapsed and the purchaser's title has been consolidated. On Issue 2 (Ministerial Duty vs. Annulled Sale): The Court reiterated the time-honored precept that after the consolidation of titles in the buyer's name due to the mortgagor's failure to redeem, the purchaser's entitlement to a writ of possession becomes a matter of right, and its issuance is a ministerial duty of the court. The Court emphasized that a pending action for annulment of the mortgage or foreclosure sale does not stay the issuance of the writ of possession. The trial court, in an application for a writ of possession, does not need to delve into the validity of the mortgage or the foreclosure proceedings; the purchaser is entitled to the writ without prejudice to the outcome of the annulment case. The Court clarified that the exceptions to the ministerial nature of issuing a writ of possession, such as gross inadequacy of price or the claim of a third party, were not present in this case. The petitioners' objections centered on the alleged nullity of the foreclosure sale due to excessive interest, which should be threshed out in a separate action for annulment, not in opposition to the writ of possession. On Issue 3 (Urgent Need for Injunctive Relief): The Court found no urgent and compelling reason to issue a TRO or preliminary injunction. The Court noted that petitioners had already instituted a civil case for annulment of the mortgage and foreclosure sale (Civil Case No. 13-330), which was the proper venue to litigate the validity of the foreclosure. The issuance of the writ of possession is a consequence of ownership consolidation after the lapse of the redemption period, and it is a ministerial duty of the court. The Court also took judicial notice of subsequent developments, including the CA's affirmation with modification of the RTC's decision nullifying the foreclosure proceedings due to an overstated loan amount, and this Court's denial of petitioners' subsequent petition (G.R. No. 230289) seeking further reduction of their obligation. These developments indicated that there was no longer any legal impediment for petitioners to file an appropriate motion before the trial court for the cancellation of the Writ of Possession, rendering the need for an immediate injunctive relief from the Supreme Court moot.
Main Doctrine
The issuance of a writ of possession in an extrajudicial foreclosure sale becomes a ministerial function after the mortgagor fails to redeem the property within the prescribed period. A pending action for annulment of the mortgage or foreclosure sale does not stay the issuance of the writ of possession. The proper remedy from an order granting a writ of possession is appeal, not certiorari, especially after the redemption period has lapsed.