GR 159882; (November, 2007) (Digest)
G.R. No. 159882; November 23, 2007
SPOUSES RUBEN and VIOLETA SAGUAN, Petitioners, vs. PHILIPPINE BANK OF COMMUNICATIONS and COURT OF APPEALS (Second Division), Respondents.
FACTS
Petitioners Spouses Saguan obtained a loan from respondent Philippine Bank of Communications (PBCOM), secured by a real estate mortgage over five parcels of land. Due to default, PBCOM extrajudicially foreclosed the mortgage and emerged as the highest bidder at the auction sale. After the one-year redemption period expired without redemption by the petitioners, PBCOM consolidated its ownership and obtained new titles. PBCOM then filed a petition for a writ of possession with the Regional Trial Court (RTC). Petitioners opposed, arguing that a writ should not issue because PBCOM failed to return the excess proceeds from the foreclosure sale, citing Sulit v. Court of Appeals. PBCOM countered that it applied the surplus to the petitioners’ other remaining unsecured obligations.
ISSUE
The primary issue is whether the respondent bank’s failure to return or account for the surplus proceeds from the extrajudicial foreclosure sale bars the issuance of a writ of possession.
RULING
No. The Supreme Court ruled that the issuance of a writ of possession is a ministerial duty once the foreclosure purchaser has consolidated ownership after the redemption period. The right to a writ is absolute and unconditional, based solely on the purchaser’s status as the confirmed owner. The court distinguished this case from Sulit. In Sulit, the failure to return the surplus was a bar because the debtor had fully paid the secured obligation, making the retention of any surplus unlawful. Here, PBCOM demonstrated that the petitioners still had substantial unsecured obligations. The application of the surplus to these obligations, while potentially disputable as a mode of compensation, does not affect the ministerial issuance of the writ. Any claim regarding the proper disposition of the surplus proceeds is a separate cause of action that does not impede the purchaser’s right to possession upon consolidation of title. The Court also found no grave abuse of discretion in the RTC’s procedural handling of the case. The petition was denied, and the assailed Court of Appeals decision was affirmed.