Case Digest (G.R. No. 36345)
Facts:
In Spouses Esmeraldo and Elizabeth Suico v. Philippine National Bank, petitioners obtained a loan from respondent Philippine National Bank (PNB) in 1992, secured by a real estate mortgage over several titled lots in Mandaue City. When the Suicos failed to pay, PNB initiated an extrajudicial foreclosure under EJF Case No. 92-5-15 before the City Sheriff, publishing a Notice of Sheriff’s Sale stating an outstanding obligation of ₱1,991,770.38 as of March 10, 1992. On October 30, 1992, PNB—being the lone bidder—offered ₱8,511,000.00, obtained a Certificate of Sale, but did not remit any cash to the sheriff nor return the excess over the stated debt to the Suicos. One year later, PNB secured a Certificate of Final Sale and transferred registration of the properties into its name. The Suicos then filed Civil Case No. MAN-2793 in the Regional Trial Court (RTC) of Mandaue City seeking nullity of the foreclosure proceedings, cancellation of titles, reversion of registration, and damagesCase Digest (G.R. No. 36345)
Facts:
- Loan and Mortgage
- Petitioners Spouses Esmeraldo and Elizabeth Suico obtained a loan from Philippine National Bank (PNB), secured by a real estate mortgage on several parcels in Mandaue City.
- The mortgage covered:
- TCT No. 13196 (Lot 701, 2,078 sq. m.)
- Tax Decl. No. 00553 (Cad. Lot 700-C-1, 200 sq. m.); No. 00721 (Cad. Lots 700-C-3 & 700-C-2, 1,683 sq. m. combined); Nos. 0237 & 9267 (Cad. Lots 700-B & 700-A, .1785 ha each).
- Extrajudicial Foreclosure
- On May 6, 1992 PNB filed EJF Case No. 92-5-15 before the Mandaue City Sheriff, alleging an outstanding obligation of ₱1,991,770.38 as of March 10, 1992.
- At the October 30, 1992 auction, PNB was the lone bidder at ₱8,511,000.00. A Certificate of Sale and, one year later, a Certificate of Final Sale issued in PNB’s favor, but PNB did not remit the bid amount or account for surplus proceeds.
- Civil Case for Nullity
- Petitioners filed Civil Case No. MAN-2793 in RTC Mandaue City, praying for:
- Nullification of the foreclosure, Certificate of Sale, and final deed.
- Cancellation of titles in PNB’s name and reversion to petitioners.
- Damages, attorney’s fees and costs.
- PNB moved to dismiss, invoking pendency of an action in RTC Cebu City (CEB-15236) for deficiency claim; motion denied. PNB answered, disputing the debt amount and asserting petitioners owed more than the bid.
- Lower Court and Appellate Rulings
- On February 2, 1999 the RTC granted petitioners’ nullity suit, annulled the foreclosure and titles, and ordered a new foreclosure.
- On April 12, 2005 the Court of Appeals reversed, upholding the validity of the foreclosure sale and holding that failure to remit surplus only gives a separate cause of action. An amended decision directed PNB to pay deficiency in filing fees.
- Petitioners elevated the case to the Supreme Court, challenging (a) alleged defect in the Notice of Sale and (b) PNB’s failure to remit surplus proceeds.
Issues:
- Validity of Notice of Sheriff’s Sale
- Does the discrepancy between the debt stated in the Notice (₱1,991,770.38) and the actual loan obligation invalidate the foreclosure sale?
- Remittance of Bid Price or Surplus
- Is PNB, as mortgagee-purchaser, obliged to deliver the full bid price or the excess over the indebtedness to the sheriff or mortgagors?
- Interest on Returned Surplus
- What rate and computation period of interest apply to the surplus to be returned to petitioners?
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)