REPUBLIC OF THE PHILIPPINES REGIONAL TRIAL COURT 4th JUDICIAL REGION BRANCH 33 Siniloan, Laguna In Re: Petition for

Issuance of Writ of Possession (ex-parte) RURAL BANK OF MABITAC (LAGUNA), INC.. represented by MARIA CECILIA S. TANAEL, SPL. CIVIL ACTION NO. S-1113-12 Petitioner. X--------------------------------------------------X MOTION TO QUASH THE WRIT AND THE AMENDED WRIT OF POSSESSION/AND OR TO SET ASIDE WRIT Movants, Sps. Antonia and Nestor M. Bonsol, by counsel, unto this Honorable Court most respectfully move that the writ of possession and the Amended Writ of Possession be quashed and set-aside and aver: 1. That the mortgage and its foreclosure proceedings in this case was in gross violation of the requirements of Act No. 3135 as enunciated by Supreme Court rulings, specifically, that no notice was sent to the herein movant and that the notice of auction sale was not posted in the place where the subject property is located (Lucena vs. Court of Appeals, 313 SCRA 47); That the mortgage is null and void as the interest and penalties are unconscionable and exorbitant, hence, the foreclosure case is null and void. That furthermore, movants were not notified of the foreclosure sale. 2. That furthermore, movants were not notified of the proceedings in this case and they were not able to participate and file their objections to the petition filed by the petitioner. That it will be noted that the Notice of Hearing dated October 4, 2012, sent to them stated that the hearing will be held on November 27, 2012 at 8:30 oclock in the morning, however, the decision of the case stated that the hearing was actually conducted a day after or on November 28, 2012. 3. That it will be noted that the Notice of Extra-Judicial Sale in Foreclosure Case No. F-1166 dated January 20, 2011 specifically stated that the mortgage indebtedness amounted to Two Hundred Seventy Thousand Pesos (P270,000.00) plus interests, attorneys fees and legal expenses. That in the Certificate of Sale dated March 23, 2011, the property was sold to the petitioner as the highest bidder in the amount of Seven Hundred Sixty One Thousand Pesos (P761,000.00) which is actually more than twice the amount of P270,000.00. The ballooned amount thus prevented the movant to redeem the property. That it will be noted that petitioner failed to present evidence to substantiate the allegations of interest, attorneys fees and legal expenses. That furthermore, petitioner failed to pay or return to the movant the difference between the purchase price and the amount of P270,000.00. The total amount of P491,000.00. That it will be noted that the excess purchase price must be given or delivered to the mortgagor of the property and in this case petitioner bank as the mortgagee failed to do. This might also lead to the incorrect payment of filing fees which is enough ground to invalidate the foreclosure sale and to have it set aside. 1

4. That in the case of Sulit vs. Court of Appeals, G.R. No. 119247. February 17, 1997], the Honorable Supreme Court 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. 5. That in the cited case of Sulit vs Court of Appeals, the surplus is only 40% then with more reason that the writ of possession in this case must be quashed as the surplus in this case is more than 100% of the amount of P270,000.00. 6. The Supreme Court in the cited case of Sulit vs. Court of Appeals further ruled:
Now, in forced sales low prices are generally offered and the mere inadequacy of the price obtained at the sheriffs sale, unless shocking to the conscience, has been held insufficient to set aside a sale. This is because no disadvantage is caused to the mortgagor. On the contrary, a mortgagor stands to gain with a reduced price because he possesses the right of redemption. When there is the right to redeem, inadequacy of price becomes immaterial since the judgment debtor may reacquire the property or sell his right to redeem, and thus recover the loss he claims to have suffered by reason of the price obtained at the auction sale. However, also by way of an exception, in Cometa, et al. vs. Intermediate Appellate Court, et al.[13] where the properties in question were found to have been sold at an unusually lower price than their true value, that is, properties worth at least P500,000.00 were sold for only P57,396.85, this Court, taking into consideration the factual milieu obtaining therein as well as the peculiar circumstances attendant thereto, decided to withhold the issuance of the writ of possession on the ground that it could work injustice because the petitioner might not be entitled to the same. The case at bar is quite the reverse, in the sense that instead of an inadequacy in price, there is due in favor of private respondent, as mortgagor, a surplus from the proceeds of the sale equivalent to approximately 40% of the total mortgage debt, which excess is indisputably a substantial amount. Nevertheless, it is our considered opinion, and we so hold, that equitable considerations demand that a writ of possession should also not issue in this case. Rule 68 of the Rules of Court provides: Sec. 4. Disposition of proceeds of sale. - The money realized from the sale of mortgaged property under the regulations hereinbefore prescribed shall, after deducting the costs of the sale, be paid to the person foreclosing the mortgage, and when there shall be any balance or residue, after paying off such mortgage or other incumbrances, the same shall be paid to the junior incumbrancers in the order of their priority, to be ascertained by the court, or if there be no such incumbrancers or there be a balance or residue after payment of such incumbrancers, then to the mortgagor or his agent, or to the person entitled to it. The application of the proceeds from the sale of the mortgaged property to the mortgagors obligation is an act of payment, not payment by dation; hence, it is the mortgagees duty

to return any surplus in the selling price to the mortgagor. Perforce, a mortgagee who exercises the power of sale contained in a mortgage is considered a custodian of the fund, and, being bound to apply it properly, is liable to the persons entitled thereto if he fails to do so. And even though the mortgagee is not strictly considered a trustee in a purely equitable sense, but as far as concerns the unconsumed balance, the mortgagee is deemed a trustee for the mortgagor or owner of the equity of redemption. Commenting on the theory that a mortgagee, when he sells under a power, cannot be considered otherwise than as a trustee, the vice-chancellor in Robertson vs. Norris (1 Giff. 421) observed: That expression is to be understood in this sense: that with the power being given to enable him to recover the mortgage money, the court requires that he shall exercise the power of sale in a provident way, with a due regard to the rights and interests of the mortgagor in the surplus money to be produced by the sale. The general rule that mere inadequacy of price is not sufficient to set aside a foreclosure sale is based on the theory that the lesser the price the easier it will be for the owner to effect the redemption. The same thing cannot be said where the amount of the bid is in excess of the total mortgage debt. The reason is that in case the mortgagor decides to exercise his right of redemption, Section 30 of Rule 39 provides that the redemption price should be equivalent to the amount of the purchase price, plus one per cent monthly interest up to the time of the redemption, together with the amount of any assessments or taxes which the purchaser may have paid thereon after purchase, and interest on such lastnamed amount at the same rate. Applying this provision to the present case would be highly iniquitous if the amount required for redemption is based on P7,000.000.00, because that would mean exacting payment at a price unjustifiably higher than the real amount of the mortgage obligation. We need not elucidate on the obvious. Simply put, such a construction will undeniably be prejudicial to the substantive rights of private respondent and it could even effectively prevent her from exercising the right of redemption. Where the redemptioner chooses to exercise his right of redemption, it is the policy of the law to aid rather than to defeat his right. It stands to reason, therefore, that redemption should be looked upon with favor and where no injury will follow, a liberal construction will be given to our redemption laws, specifically on the exercise of the right to redeem. Conformably hereto, and taking into consideration the facts obtaining in this case, it is more in keeping with the spirit of the rules, particularly Section 30 of Rule 39, that we adopt such interpretation as may be favorable to the private respondent. Admittedly, no payment was made by herein petitioner, as the highest bidder, to the notary public who conducted the extrajudicial foreclosure sale. We are not unmindful of the rule that it is not necessary for the mortgagee to pay cash to the sheriff or, in this case, the notary public who conducted the sale. It would obviously serve no purpose for the sheriff or the notary public 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. It bears stressing that the rule holds true only where the amount of the bid represents the total amount of the mortgage debt.

In case of a surplus in the purchase price, however, there is jurisprudence to the effect that while the mortgagee ordinarily is liable only for such surplus as actually comes into his hands, but he sells on credit instead of for cash, he must still account for the proceeds as if the price were paid in cash, and in an action against the mortgagee to recover the surplus, the latter cannot raise the defense that no actual cash was received. We cannot simply ignore the importance of surplus proceeds because by their very nature, surplus money arising from a sale of land under a decree of foreclosure stands in the place of the land itself with respect to liens thereon or vested rights therein. They are constructively, at least, real property and belong to the mortgagor or his assigns. Inevitably, the right of a mortgagor to the surplus proceeds is a substantial right which must prevail over rules of technicality. Surplus money, in case of a foreclosure sale, gains much significance where there are junior encumbrancers on the mortgaged property. Jurisprudence has it that when there are several liens upon the premises, the surplus money must be applied to their discharge in the order of their priority. A junior mortgagee may have his rights protected by an appropriate decree as to the application of the surplus, if there be any, after satisfying the prior mortgage. His lien on the land is transferred to the surplus fund. And a senior mortgagee, realizing more than the amount of his debt on a foreclosure sale, is regarded as a trustee for the benefit of junior encumbrancers. Upon the strength of the foregoing considerations, we cannot countenance the apparent paltriness that petitioner persistently accords the right of private respondent over the surplus proceeds. It must be emphasized that petitioner failed to present the receipts or any other proof of the alleged costs or expenses incurred by him in the foreclosure sale. Even the trial court failed or refused to resolve this issue, notwithstanding the fact that this was one of the grounds raised in the motion filed by private respondent before it to set aside the sale. Since it has never been denied that the bid price greatly exceeded the mortgage debt, petitioner cannot be allowed to unjustly enrich himself at the expense of private respondent.

7. That, it is clear that based from the numerous jurisprudence promulgated by the Supreme Court it is clear that there is a very great possibility that the mortgage and foreclosure proceedings will be declared null and void if ever herein movants will be allowed to participate in this petition so that movants can ventilate their side; 8. That, this Honorable Court can legally defer the issuance of the writ of possession conformably to the rulings of the Supreme Court in Cometa vs. IAC, 151 SCRA 563, and Barican vs. IAC, 162 SCRA 358, where the Supreme Court ordered the deferment of the issuance of the writ of possession. 9. That in the case of Barican, et al. vs. Intermediate Appellate Court, et al., (G.R. No. 79906, June 20, 1988, 162 SCRA 358, reiterated in Policarpio vs. Active Bank, G.R. No. 157125, 19 September 2008, 566 SCRA 27, 32, and cited in The Parents-Teachers Association (PTA) of St. Mathew Christian Academy vs. Metropolitan Bank and Trust Co., G.R. No. 176518, 2 March 2010, G.R. No. 177881, 13 October 2010) the Supreme Court ruled therein that under the circumstances, the obligation of a court to issue a writ of 4

possession in favor of the purchaser in a foreclosure of mortgage case ceases to be ministerial. Hence, supporting the view that a petition for issuance of a writ of possession is not ministerial if there is an opposition. The same ruling was applied in Cometa vs. Intermediate Appellate Court (G.R. No. 69294, June 30, 1987, 151 SCRA 563), wherein, it decided to withhold the issuance of the writ of possession on the ground that it could work injustice because the petitioner might not be entitled to the same. WHEREFORE, premises considered, it is respectfully prayed that the Writ of possession and the Amended Writ of Possession be set-aside and that the proceedings for the implementation of the same be held in abeyance in the interest of higher justice and for humanitarian reason. Further, that the Sheriff be restrained from implementing the writ of execution. Other reliefs, just and equitable are prayed for. Lumban, Laguna for Siniloan, Laguna, July 12, 2013.

Atty. Niccolo A. Paraiso Counsel for the movants Gaza Street, Brgy. Segunda Parang Lumban, Laguna Roll No. 42699 IBP Life No. 02433, 55-18-2001 MCLE No. III-0018038 PTR No. 1116728, 5-24-2013, Santa Cruz, Laguna NOTICE OF HEARING The Clerk of Court Regional Trial Court Branch 33 Siniloan, Laguna Greetings! Please submit the foregoing for hearing on July 19 2013 at 8:30 A.M. or immediately thereafter as counsel may be heard. NICCOLO A. PARAISO NOTICE OF HEARING Atty. Pablo M. Esguerra Pakil, Laguna Greetings! Please take notice that the undersigned will submit the foregoing for hearing on July 19, 2013 at 8:30 A.M. or immediately thereafter as counsel may be heard. NICCOLO A. PARAISO 5

CERTIFICATION I hereby certify that a copy of the foregoing was served to Atty. Pablo M. Esguerra by registered mail with return card due to distance and time constraint. NICCOLO A. PARAISO Copy furnished: Atty. Pablo M. Esguerra Pakil, Laguna Office of the Sheriff Siniloan, Laguna