GR 174711; (September, 2008) (Digest)
G.R. No. 174711. September 17, 2008. SALLY SUENO, Petitioner, versus LAND BANK OF THE PHILIPPINES, Respondent.
FACTS
Petitioner Sally Sueno obtained loans from respondent Land Bank of the Philippines (LBP), secured by real estate mortgages over two parcels of land. Upon Sueno’s default, LBP extrajudicially foreclosed the mortgages and emerged as the highest bidder at the public auction sale on March 6, 2000. Before the expiration of the one-year redemption period, Sueno requested a six-month extension. LBP conditionally agreed, requiring Sueno to post P115,000.00 to cover potential penalties from delaying the consolidation of titles. Sueno partially complied by issuing a check for P50,000.00. LBP reiterated its demand for the full amount, warning that failure to pay the balance by March 7, 2001, would lead to consolidation. Sueno failed to pay the balance. Consequently, LBP denied the extension request, consolidated its ownership, and new titles were issued in its name. LBP then filed an ex parte petition for a writ of possession.
Sueno opposed, arguing that a novation of the obligation occurred when LBP accepted her partial payment, thereby extending the redemption period and suspending LBP’s right to consolidate. The Regional Trial Court granted LBP’s petition, and the Court of Appeals affirmed, holding that no novation was established and LBP’s right to possession became absolute after the redemption period expired.
ISSUE
Whether the Court of Appeals erred in: (1) ruling that no novation occurred to extend the redemption period; and (2) affirming the issuance of the writ of possession in favor of LBP.
RULING
The Supreme Court denied the petition and affirmed the assailed rulings. On the first issue, the Court held that no novation took place. Novation requires a clear agreement to replace an old obligation with a new one, extinguishing the former. Here, LBP’s acceptance of Sueno’s partial payment was merely conditional and did not constitute consent to a new agreement extending the redemption period. LBP explicitly made its approval contingent upon Sueno’s full payment of P115,000.00, a condition she failed to satisfy. Thus, the original terms, including the unextended redemption period, remained in force.
On the second issue, the Court ruled that the issuance of the writ of possession was ministerial and proper. Under Act No. 3135, as amended, the purchaser in an extrajudicial foreclosure sale is entitled to possession as a matter of right upon the expiration of the redemption period without the mortgagor exercising the right of redemption. This right becomes absolute upon the consolidation of ownership and the issuance of a new certificate of title in the purchaser’s name. Since Sueno failed to redeem the properties within the statutory period and LBP had lawfully consolidated its ownership, LBP’s corollary right to possession vested absolutely. The trial court therefore had no discretion and performed a ministerial duty in issuing the writ.