CHU vs.

LAQUI FACTS: Petitioners (Chu, Castros) obtained a loan in the amount of P3,200,000 from private respondent Philippine Bank of Communication. To secure the loan, petitioners executed in favor of private respondent a Deed of Real Estate Mortgage4 over the property of petitioner. Petitioners executed an Amendment to the Deed of Real Estate Mortgage5 increasing the amount of the loan by P1,800,000, bringing the total loan amount to P5,000,000. For failure of petitioners to pay the full amount of the outstanding loan upon demand, 6 private respondent applied for the extrajudicial foreclosure of the real estate mortgage. 7 Upon receipt of a notice8 of the extrajudicial foreclosure sale, petitioners filed a petition to annul the extrajudicial foreclosure sale with a prayer for temporary restraining order (TRO). The extrajudicial foreclosure sale did not push through as originally scheduled because the trial court granted petitioners prayer for TRO. The trial court subsequently lifted the TRO and reset the extrajudicial foreclosure sale. At the foreclosure sale, private respondent emerged as the highest bidder. A certificate of sale10was executed in favor of private respondent. After the lapse of the one-year redemption period, private respondent filed in the Registry of Deeds of Quezon City an affidavit of consolidation to consolidate its ownership and title to the foreclosed property. Private respondent applied for the issuance of a writ of possession of the foreclosed property.13 Petitioners filed an opposition.14 RTC denied Pet notice of appeal. Petitioners filed in the CA a petition for certiorari. The appellate court dismissed the petition. It also denied petitioners motion for reconsideration. RTC: granted private respondents motion for a declaration of general default and allowed private respondent to present evidence ex parte CA: Dismissed on both procedural and substantive grounds the petition for certiorari filed by petitioners. CA held that a proceeding for the issuance of a writ of possession is ex parte in nature. As such, petitioners right to due process was not violated even if they were not given a chance to file their opposition. ISSUE: WON the writ of possession was properly issued despite the pendency of a case questioning the validity of the extrajudicial foreclosure sale and despite the fact that petitioners were declared in default in the proceeding for the issuance of a writ of possession. HELD: YES. The Court ruled that the purchaser at an extrajudicial foreclosure sale has a right to the possession of the property even during the one-year redemption period provided the purchaser files an indemnity bond. After the lapse of the said period with no redemption having been made, that right becomes absolute and may be demanded by the purchaser even without the posting of a bond. Possession may then be obtained under a writ which may be applied for ex parte pursuant to Section 7 of Act No. 3135,24 as amended by Act No. 4118,25 thus: SEC. 7. In any sale made under the provisions of this Act, the purchaser may petition the Court of First Instance of the province or place where the property or any part thereof is situated, to give him possession thereof during the redemption period, furnishing bond in an amount equivalent to the use of the property for a period of twelve months, to indemnify the debtor in case it be shown that the sale was made without violating the mortgage or without complying with the requirements of this Act. Such petition shall be made under oath and filed in form of an ex parte motion x x x and the court shall, upon approval of the bond, order that a writ of possession issue, addressed to the sheriff of the province in which the property is situated, who shall execute said order immediately. In the present case, the certificate of sale of the foreclosed property was annotated on 7 June 2002. The redemption period thus lapsed on 7 June 2003, one year from the registration of the sale. 26 When private

respondent applied for the issuance of a writ of possession on 18 August 2004, the redemption period had long lapsed. Since the foreclosed property was not redeemed within one year from the registration of the extrajudicial foreclosure sale, private respondent had acquired an absolute right, as purchaser, to the writ of possession. It had become the ministerial duty of the lower court to issue the writ of possession upon mere motion. Petitioners are wrong in insisting that they were denied due process of law when they were declared in default despite the fact that they had filed their opposition to the issuance of a writ of possession. The application for the issuance of a writ of possession is in the form of an ex parte motion. It issues as a matter of course once the requirements are fulfilled. No discretion is left to the court. Petition for review is denied.

SUICO vs.PHILIPPINE NATIONAL BANK FACTS: Herein petitioners, Spouses Esmeraldo and Elizabeth Suico, obtained a loan from the Philippine National Bank (PNB) secured by a real estate mortgage1 on real properties in the name of the former. The petitioners were unable to pay their obligation prompting the PNB to extrajudicially foreclose the mortgage over the subject properties before the City Sheriff of Mandaue City. Petitioners claimed that during the foreclosure sale of the subject properties held PNB, as the lone bidder, offered a bid in the amount of P8,511,000.00. By virtue of the said bid, a Certificate of Sale of the subject properties was issued by the Mandaue City Sheriff in favor of PNB. PNB did not pay to the Sheriff who conducted the auction sale the amount of its bid or give an accounting of how said amount was applied against petitioners outstanding loan, which, amounted only toP1,991,770.38. Since the amount of the bid grossly exceeded the amount of petitioners outstanding obligation as stated in the extrajudicial foreclosure of mortgage, it was the legal duty of the winning bidder, PNB, to deliver to the Mandaue City Sheriff the bid price or what was left thereof after deducting the amount of petitioners outstanding obligation. PNB failed do such. One year after the issuance of the Certificate of Sale, PNB secured a Certificate of Final Sale from the Mandaue City Sheriff and, as a result, PNB transferred registration of all the subject properties to its name. Petitioners averred that the extrajudicial foreclosure conducted over the subject properties were all null and void. PNB disputed petitioners factual narration. PNB asserted that petitioners had other loans which had likewise become due. contradicting the claim of surplus proceeds due the petitioners. Petitioners were well aware that their total principal outstanding obligation on the date of the auction sale wasP5,503,293.21. RTC: Extrajudicial foreclosure of mortgage is null and void. RTC reasoned that given that petitioners had other loan obligations which had not yet matured on 10 March 1992 but became due by the date of the auction sale on 30 October 1992, it does not justify the shortcut taken by PNB and will not excuse it from paying to the Sheriff who conducted the auction sale the excess bid in the foreclosure sale. To allow PNB to do so would constitute fraud CA: Reversed. Ruling- Even assuming that indeed there was a surplus and the [PNB] is retaining more than the proceeds of the sale than it is entitled, this fact alone will not affect the validity of the sale but simply gives the [petitioners] a cause of action to recover such surplus. In fine, the failure of the [PNB] to remit the surplus, if any, is not tantamount to a non-compliance of statutory requisites that could constitute a jurisdictional defect invalidating the sale. This situation only gives rise to a cause of action on the part of the [petitioners] to recover the alleged surplus from the [PNB]. ISSUE: WON the extrajudicial foreclosure is null and void on the ground that PNB failed to pay and tender the price of its bid or the surplus thereof to the sheriff.

HELD: NO. Modified ruling of CA- Private respondents should pay excess with interest. Conspicously emphasized under Section 21 of Rule 39 is that if the amount of the loan is equal to the amount of the bid, there is no need to pay the amount in cash. Same provision mandates that in the absence of a thirdparty claim, the purchaser in an execution sale need not pay his bid if it does not exceed the amount of the judgment; otherwise, he shall pay only the excess. The raison de etre is that it would obviously be senseless for the Sheriff or the Notary Public conducting the foreclosure sale to go through the idle ceremony of receiving the money and paying it back to the creditor, under the truism that the lawmaking body did not contemplate such a pointless application of the law in requiring that the creditor must bid under the same conditions as any other bidder. Rule 68, Section 4 of the Rules of Court provides: Under the above rule, the disposition of the proceeds of the sale in foreclosure shall be as follows: (a) first, pay the costs (b) secondly, pay off the mortgage debt (c) thirdly, pay the junior encumbrancers, if any in the order of priority (d) fourthly, give the balance to the mortgagor, his agent or the person entitled to it.29 Based on the foregoing, after payment of the costs of suit and satisfaction of the claim of the first mortgagee/senior mortgagee, the claim of the second mortgagee/junior mortgagee may be satisfied from the surplus proceeds. The application of the proceeds from the sale of the mortgaged property to the mortgagors obligation is an act of payment, not payment by dacion; hence, it is the mortgagees duty to r eturn any surplus in the selling price to the mortgagor.

IFC SERVICE LEASING and ACCEPTANCE CORPORATION, vs. NERA FACTS: The writ of possession was issued by the lower court, on the ex parte application of the appellee. The petition recited that, as mortgagee of the property of the spouses Venancio Nera and Rosa F. Nera, appellee filed with a verified petition for the extrajudicial foreclosure of the mortgage; that on October 27, 1961, after notice and publication, the property (consisting of a house and lot) was sold to appellee as the highest bidder; that the period of redemption expired on October 27, 1962 without the property being redeemed, for which reason the property was consolidated in the name of appellee of whom a new title was issued. Appellant asked for a reconsideration of the order granting the writ of possession on the ground that his failure to redeem the property was due to appellee's misrepresentation. According to appellant, he was notified by the appellee on October 31, 1962 that the period of redemption had expired when the truth was, as he found later, that the sale was registered only on November 3, 1961 from which date the period of redemption must be reckoned. The court denied the motion for failure of appellant to serve a copy on the appellee. Appellant contends that the jurisdiction of the lower court to issue a writ of possession is limited only to the duration of the period of redemption and that after the expiration of that period, the mortgagee's remedy is an ordinary action for recovery of possession. In support of this proposition, appellant cites Sec 7 of Act No. 3135, as amended by Act No. 4118 and Appellant also invokes Luna vs. Encarnacion, in which it was held that in case of refusal of the mortgagor to surrender the possession of the property sold by the Sheriff the remedy

of the purchaser is to bring an ordinary action for recovery of possession, instead of merely asking for a writ of possession, in order to give the mortgagor the opportunity to be heard not only regarding possession but also regarding the obligation covered by the mortgage. CFI: Order denying appellants motion to set aside writ of possession and auction sale. ISSUE: WON in cases of extrajudicial foreclosure of real estate mortgages, a regular action must be instituted in order to secure possession of the property sold HELD: NO. Section 35 of Rule 39 of the Revised Rules of Court expressly states that "If no redemption be made within twelve (12) months after the sale, the purchaser, or his assignee, is entitled to a conveyance and possession of the property .... The possession of the property shall be given to the purchaser or last redemptioner by the officer unless a third party is actually holding the property adversely to the judgment debtor ." Indeed, as this Court held in Tan Soo Huat vs. Ongwico: There is no law in this jurisdiction whereby the purchaser at a sheriff's sale of real property is obliged to bring a separate and independent suit for possession after the one-year period for redemption has expired and after he has obtained the sheriff's final certificate of sale. There is neither legal ground nor reason of public policy precluding the court from ordering the sheriff in this case to yield possession of the property purchased at public auction where it appears that the judgment debtor is the one in possession thereof and no rights of third persons are involved. Under Section 7 of Act No. 3135 the court has the power, on the ex parte application of the purchaser, to issue a writ of possession during the period of redemption, there is no reason why it should not also have the same power after the expiration of that period, especially where, as in this case, a new title has already been issued in the name of the purchaser. The case of Luna vs. Encarnacion, supra, cannot be applied to the present case because that case involves the extrajudicial foreclosure of a chattel mortgage. SC affirms order of CFI.