GR 170906; (November, 2009) (Digest)
G.R. No. 170906 ; November 27, 2009
METROPOLITAN BANK & TRUST CO., Petitioner, vs. LAMB CONSTRUCTION CONSORTIUM CORPORATION, Respondent.
FACTS
Respondent Lamb Construction Consortium Corporation obtained a loan from petitioner Metropolitan Bank & Trust Co., secured by a real estate mortgage over six parcels of land. Upon respondent’s default, petitioner extrajudicially foreclosed the properties. At the auction sale on January 27, 2000, petitioner was the highest bidder at ₱6,669,765.75. During the redemption period, petitioner filed a petition for a writ of possession. The Regional Trial Court (RTC) denied the petition, ruling that petitioner failed to deposit the alleged surplus proceeds from the sale (the bid price less the outstanding obligation) with the clerk of court. The RTC held this deposit was a prerequisite for issuing the writ.
The Court of Appeals (CA) reversed the RTC, correctly holding that petitioner was entitled to a writ of possession. However, the CA proceeded to compute the exact surplus from the foreclosure sale, ordering petitioner to pay respondent the amount of ₱488,289.35, representing the excess of the bid price over the total obligation, plus legal interest. Petitioner sought partial reconsideration, arguing the CA erred in adjudicating the surplus in the writ of possession proceedings.
ISSUE
Whether the appellate court erred in ordering the payment of the surplus proceeds from the foreclosure sale within the summary proceedings for the issuance of a writ of possession.
RULING
Yes. The Supreme Court granted the petition, modifying the CA decision by deleting the order for petitioner to pay the surplus. The Court reiterated that a petition for a writ of possession under Act No. 3135 is ex parte, non-adversarial, and summary. The court’s duty to issue the writ is ministerial upon the filing of the proper petition and approval of the bond. The only issue resolvable in such proceedings is the purchaser’s right to possession. The existence or amount of any surplus from the foreclosure sale is not a litigable issue in this summary remedy and does not affect the validity of the sale or the right to possession. The failure of a mortgagee-purchaser to return any surplus does not bar the issuance of the writ; it merely gives the mortgagor a separate cause of action to recover such surplus in an ordinary civil action. Consequently, both the RTC and the CA exceeded their jurisdiction by delving into the computation and ordering the payment of the surplus within the writ of possession proceedings. The CA correctly ordered the issuance of the writ but erred in concurrently adjudicating the surplus claim.