G.R. No. 213020 March 20, 2017
PUERTO AZUL LAND, INC. and TERNATE UTILITIES, INC., Petitioners vs EXPORT INDUSTRY BANK, INC., (formerly named Urban Bank, Inc.), through its TRUST DEPARTMENT (formerly named Urban Trust Department); PACIFIC WIDE HOLDINGS, INCORPORATED; PHILIPPINE BUSINESS BANK – TRUST and INVESTMENT CENTER; HON. RACQUELEN ABARYV ASQUEZ, in her capacity as Executive Judge, and ATTY. MARIVIC S. TIBAYAN, in her capacity as Clerk of Court and Ex-Officio Sheriff, both of the Regional Trial Court of Pasay City, Respondents

FACTS

Petitioner Puerto Azul Land, Inc. (PALI) obtained loans secured by a Mortgage Trust Indenture, with properties of petitioner Ternate Utilities, Inc. (TUI) included as collateral. PALI subsequently filed a petition for corporate rehabilitation. The rehabilitation court issued a Stay Order but later modified it to specifically exclude TUI’s mortgaged properties in Pasay City from the stay, allowing respondent Export and Industry Bank, Inc. (EIB) to foreclose them. The foreclosure proceeded, and the properties were sold. The Executive Judge of the Pasay City RTC then issued an Order directing the Clerk of Court to release the entire bid price to the successor trustee, Philippine Business Bank.
Petitioners filed this Petition for Certiorari and Prohibition, arguing the release order was issued with grave abuse of discretion. They contended the rehabilitation court’s order merely allowed foreclosure but did not authorize the release of proceeds, which should be governed by the rehabilitation proceedings. They also challenged the computation of foreclosure fees and asserted that the release violated the Stay Order as it pertained to a claim against the debtor under rehabilitation.

ISSUE

Whether the public respondent Executive Judge committed grave abuse of discretion in ordering the release of the foreclosure sale proceeds to the successor trustee.

RULING

No. The Supreme Court held that the respondent judge did not commit grave abuse of discretion. The legal logic is anchored on the finality and specific nature of the rehabilitation court’s orders. The rehabilitation court’s March 31, 2005 and August 16, 2005 Orders explicitly excluded the subject properties from the Stay Order and authorized EIB to foreclose. This authorization was unconditional and became final after petitioners’ challenge via certiorari was dismissed by the Court of Appeals. Consequently, the foreclosure was a valid proceeding separate from the rehabilitation case.
The release of the proceeds was a ministerial duty following the valid foreclosure sale. The power to direct such release is inherent in the court’s authority over extrajudicial foreclosure proceedings under Act No. 3135. The petitioners’ claim that the proceeds form part of PALI’s assets for rehabilitation is unavailing. The rehabilitation court’s orders severed these specific properties from the rehabilitation estate, and the foreclosure extinguished the mortgage lien, converting the property into a fund for the mortgagee-creditor. The Court also found the computation of foreclosure fees to be in accordance with the rules. Therefore, the respondent judge acted within her jurisdiction, and certiorari does not lie to correct an act lacking arbitrariness or caprice.