SPOUSES ANTONIO S. PAHANG AND LOLITA T. PAHANG, PETITIONERS, VS. HON. AUGUSTINE A. VESTIL, PRESIDING JUDGE OF REGIONAL TRIAL COURT- BRANCH 56, MANDAUE CITY, DEPUTY SHERIFF, REGI…

Pahang versus Metropolitan Bank and Trust Company

The Case

This is a petition for review on certiorari brought by the spouses Antonio and Lolita Pahang against Metropolitan Bank and Trust Company and the presiding judge and sheriff of the Regional Trial Court of Mandaue City. The spouses ask the Supreme Court to nullify the decision and resolution of the Court of Appeals which upheld the trial court's order granting the bank a writ of possession over their foreclosed property. The case matters because it draws the dividing line between a complaint to annul a foreclosure and a petition for a writ of possession, and it settles when the filing of a complaint can preserve a mortgagor's right of redemption.

Procedural History

The spouses filed a complaint for annulment of extrajudicial sale before the Regional Trial Court of Cebu, sitting in Mandaue City, Branch 56. While that case was pending, the bank filed a petition for a writ of possession in the same court. The trial court granted the petition and ordered the issuance of a writ of possession, ruling that the spouses had failed to redeem within one year and that issuing the writ was a ministerial duty. The spouses moved for reconsideration, but the court denied the motion, reiterating that the issuance of the writ was merely ministerial.

The spouses then filed a petition for certiorari before the Court of Appeals, which dismissed the petition on the ground that the trial court did not act with grave abuse of discretion. The appellate court held that the pendency of a separate proceeding questioning the validity of the mortgage and the foreclosure cannot bar the issuance of a writ of possession, and that the Belisario ruling did not apply because the spouses' complaint was for annulment, not for enforcement of redemption. After the Court of Appeals denied their motion for reconsideration, the spouses elevated the matter to the Supreme Court by petition for review on certiorari.

Facts

On January 5, 1996, the spouses received a short-term loan of one million five hundred thousand pesos from the bank, covered by a promissory note and secured by a real estate mortgage over a parcel of land in Mandaue City. The spouses failed to pay the loan, its interest, and the penalties. The bank then foreclosed the mortgage extrajudicially, and on January 8, 1998, the property was sold at public auction to the bank as the highest bidder. A certificate of sale was executed in favor of the bank and registered with the Register of Deeds of Mandaue City on January 27, 1998.

On December 29, 1998, the bank wrote the spouses to inform them that the one-year redemption period would expire on January 27, 1999. Instead of redeeming, the spouses filed a complaint for annulment of the extrajudicial sale on January 19, 1999. They alleged that the bank had bloated their obligation of one million five hundred thousand pesos to two million four hundred three thousand seven hundred seventy pesos and seventy-three centavos by including excessive interest, penalties, attorney's fees, and sheriff's expenses, and that the bank had failed to remit the purchase price to the sheriff. As an alternative relief, they prayed that they be allowed to redeem the property based on the amount the court would determine as their true obligation.

After the redemption period lapsed without redemption, the bank consolidated its ownership and a new title was issued in its name. The bank then filed a petition for a writ of possession before the same trial court. The spouses opposed it, invoking the Belisario ruling and claiming that their complaint amounted to an offer to redeem and that the issues in their complaint constituted a prejudicial question. The trial court nonetheless granted the writ, and the Court of Appeals affirmed.

Issues

• Whether or not the complaint for annulment of extrajudicial sale is a prejudicial question to the petition for the issuance of a writ of possession.
• Whether or not the trial court committed grave abuse of discretion amounting to excess or lack of jurisdiction in granting the petition and issuing the writ of possession.

Applicable Provisions

The decision does not quote a specific statutory provision in full. It instead applies the settled rule on the writ of possession, which the Court states as follows:

The trial court is mandated to issue a writ of possession upon a finding of the lapse of the statutory period for redemption without the redemptioner having redeemed the property.

This rule bears directly on the case because it defines the trial court's duty once the one-year redemption period has lapsed without redemption.

Ruling

On the first issue, the Court held that no prejudicial question arises. A prejudicial question is one that arises in a case the resolution of which is a logical antecedent of the issue involved therein, and the cognizance of which pertains to another tribunal. It generally comes into play where a civil action and a criminal action are both pending. Here, the complaint for annulment is a civil action, while the petition for a writ of possession is but an incident in the land registration case. The Court quoted its earlier ruling in Manalo versus Court of Appeals:

The two cases, assuming both are pending, can proceed separately and take their own direction independent of each other.

The Court explained that the focal issue in the annulment case was whether the foreclosure and the auction sale were null and void, whereas the issue in the possession case was whether the bank was entitled to possession after the redemption period had lapsed and title had been issued.

On the second issue, the Court held that the trial court did not commit grave abuse of discretion. The proceedings for the issuance of a writ of possession after the lapse of the statutory redemption period are summary in nature. The trial court is mandated to issue the writ upon a finding that the period has lapsed without redemption. It cannot be said to have abused its discretion when it merely complied with its ministerial duty. The Court also stressed that the spouses' proper remedy from the trial court's decision was an appeal by writ of error, not a petition for certiorari, since certiorari is not proper where the aggrieved party has a plain, speedy, and adequate remedy at law.

Finally, the Court clarified that the Belisario ruling does not apply. In that case, the action was to enforce redemption within the period, which is equivalent to a formal offer to redeem. The Court held that such an action does not suspend the running of the statutory period, nor does it bar the purchaser from obtaining a writ of possession after the period lapses, without prejudice to the final outcome of the complaint.

Doctrine

A complaint for annulment of an extrajudicial sale is not a prejudicial question to a petition for a writ of possession, because the latter is a mere incident in the land registration case and the two actions can proceed independently of each other. After the statutory period for redemption has lapsed without redemption, the issuance of a writ of possession becomes a ministerial duty of the trial court, and the pendency of a separate action questioning the validity of the foreclosure does not bar it. The filing of an action to enforce the right of redemption within the period is equivalent to a formal offer to redeem, but it does not suspend the running of the statutory period nor bar the purchaser from procuring a writ of possession after the period lapses, without prejudice to the final outcome of that action. The remedy from an adverse ruling on a petition for a writ of possession is an appeal by writ of error, not a petition for certiorari.

Disposition

The Supreme Court denied the petition for lack of merit and affirmed the decision of the Court of Appeals, with costs against the spouses.

Remember This

The single line worth memorizing is that after the redemption period lapses, the issuance of a writ of possession is a ministerial duty of the trial court, and a pending complaint for annulment of the foreclosure is not a prejudicial question that can bar it. Examiners like to use this case to test the distinction between an action to annul a foreclosure and an action to enforce redemption, and to test whether a student knows that certiorari will not lie where appeal is the plain, speedy, and adequate remedy.