Metropolitan Bank & Trust Co. vs.

Lamb Construction Consortium Corporation,

represented by Victor T. Nubla and Edgardo C. Santos
G.R. No. 170906. November 27, 2009

Facts:
Respondent obtained a loan from petitioner Bank - secured by a Real Estate
Mortgage involving six parcels of land. Respondent failed to pay the loan upon maturity;
hence petitioner filed a petition for the extra-judicial foreclosure of the said properties.
Petitioner filed a verified petition for issuance of a writ of possession because allegedly
respondent would not turn over the possession of such parcels of land.
In the course of the proceedings in the RTC and CA, petitioner Bank was
ordered to pay the surplus or excess of the purchase price. Now, petitioner comes
before the SC arguing that it was improper for the RTC and the CA to rule upon the
surplus or excess of the purchase price because the only issue that must be resolved is
the purchaser’s entitlement to the writ. According to petitioner, if there is any surplus
or excess, the remedy of the respondent is to file an independent action for collection
of surplus.
Issue: Was it proper for the lower courts to decide on the issue of purchase price
in a petition for the issuance of a writ of possession?
Ruling: No. The failure of the mortgagee to deliver the surplus proceeds does
not affect the validity of the foreclosure sale. It may however give rise to a cause of
action for the mortgagee to file an action to collect the surplus proceeds.
In this case, the cadastral court is without jurisdiction to order petitioner to
deliver to respondent the surplus or excess of the purchase price. The only issue in a
petition for the issuance of a writ of possession is the purchaser’s entitlement to
possession. No documentary or testimonial evidence is even required for the issuance
of the writ as long as the verified petition states the facts sufficient to entitle the
purchaser to the relief requested.
Issue 2: Is it proper to file an action to collect the surplus proceeds where there
is a pending action for the nullification of the same foreclosure proceedings?
Ruling: No. It bears stressing that the collection of surplus is inconsistent with
the annulment of foreclosure because in suing for the return of the surplus proceeds,
the mortgagor is deemed to have affirmed the validity of the sale since nothing is due
if no valid sale has been made. It is only after the dismissal of complaint for annulment
or when the foreclosure sale is declared valid that the mortgagor may recover the
surplus in an action specifically brought for that purpose.

NOTES:
1) In the interest of avoiding multiplicity of suits, the better recourse is for the
mortgagor to file a case for annulment of foreclosure with an alternative cause
of action for the return of the surplus, if any.
2) As a general rule, the issuance of a writ of possession is ministerial.
Nevertheless, in Sulit v. Court of Appeals, we withheld the issuance of the
writ considering the peculiar circumstances prevailing in said case.
In Sulit v. Court of Appeals, we withheld the issuance of a writ of
possession because the mortgagee failed to deliver the surplus from the
proceeds of the foreclosure sale which is equivalent to approximately 40%
of the total mortgage debt. Equitable considerations prevailing in said case
demand that a writ of possession should not issue.