G.R. No. 238659 - Vaporoso vs. People

The petitioners, Spouses Montano T. Tolosa and Merlinda Tolosa (collectively “Spouses Tolosa”), entered into a Credit Agreement with United Coconut Plantters Bank (UCPB) on 7 April 1997 for availing credit facilities.
To secure their credit, the Spouses Tolosa executed deeds of real estate mortgage over four properties located in Barangay Caticlan, Malay, Aklan.
The secured properties were evidenced by the following documents:

The Spouses Tolosa defaulted in paying their principal obligation amounting to P13,300,000.00 (exclusive of interests, penalties, and other charges).
In response, UCPB foreclosed the mortgage and filed a petition for the extrajudicial sale on 22 October 1999 with the Office of the Clerk of Court and the Ex-Officio Sheriff in Kalibo, Aklan.
Subsequent to due notice and publication, the properties were sold at a public auction on 4 January 2000, where UCPB emerged as the highest bidder with a bid of P17,240,000.00.
The proceeds from the sale were credited toward the partial satisfaction of the outstanding mortgage obligation, which inclusive of additional charges, totaled P24,253,847.64.

The Spouses Tolosa failed to exercise their right of redemption within the prescribed one-year period.
Consequently, UCPB consolidated its ownership over the subject properties on 22 January 2001.
New certificates of title and tax declarations were then issued in UCPB’s name:

On 2 September 2004, UCPB filed an ex parte petition for the issuance of a writ of possession in the cadastral proceedings (Cadastral Case No. 3028) before the Regional Trial Court (RTC), Branch 5, Kalibo, Aklan.
Upon being notified of the petition, the Spouses Tolosa opposed the issuance on 8 November 2004. Their opposition highlighted the pendency of an action filed as Civil Case No. 6180 before RTC Branch 8 seeking the declaration of nullity of the promissory notes, foreclosure of the mortgage, certificate of sale, and the accounting of damages.
The Spouses Tolosa argued that they were misled into signing the Credit Agreement, Promissory Notes, and Real Estate Mortgage, and that UCPB had not disbursed the full proceeds of their loans.
On 1 December 2004, the RTC, invoking considerations of equity and substantial justice due to the pending annulment action, issued an order holding in abeyance the issuance of the writ of possession.
UCPB’s motion for reconsideration of the RTC’s December 2004 order, filed on 28 December 2004, was subsequently denied by an RTC order on 31 January 2005.

UCPB filed a Rule 65 petition for certiorari (docketed as CA-G.R. SP No. 00593) challenging the RTC’s order.
On 31 May 2007, the CA issued a decision nullifying the RTC’s December 2004 order and granted the writ of possession in favor of UCPB.
The CA emphasized that, being an extrajudicial foreclosure sale with the consolidation of title in the purchaser’s name, the issuance of a writ of possession is a ministerial duty.
The Spouses Tolosa filed motions for reconsideration of the CA decision on 22 June 2007, which were denied on 21 May 2008.

Not finding that the prima facie invalidity of the mortgage obligation and the foreclosure sale justified putting the issuance of the writ of possession on hold;
Granting the writ of possession to UCPB despite the contention that the surplus from the bid price should have been paid to the mortgagors before deprivation of possession of the mortgaged property.

Whether the pending civil action (Civil Case No. 6180) questioning the validity of the mortgage, its foreclosure, and the certificate of sale can legally affect the issuance of the writ of possession, which is considered a ministerial duty.