Summary, analysis of Sulit v. CA

In Sulit v. Court of Appeals,[1] the Supreme Court held that the failure of the mortgagee to return to the mortgagor the surplus proceeds of the foreclosure sale carves out an exception to the general rule that a writ of possession should issue as a matter of course. To have a better grasp of the reasons for the Court’s ruling in said case, below is a brief summary and analysis.

The case of Sulit v. CA stemmed from the extra-judicial foreclosure conducted by the notary public where Sulit (creditor-mortgagee) emerged as the highest bidder for the amount of P7,000,000.00. It appears that Sulit failed to deliver the sale price’s surplus equivalent to at least 40% of the mortgage debt to the notary public. Instead, he credited it to the satisfaction of the P4,000,000.00 debt. During redemption period, he petitioned for the issuance of a writ of possession which the trial court granted. From the order of the court, the debtor-mortgagor filed a petition for certiorari with the CA. The CA granted the writ of certiorari and directed Sulit to remit to the debtor the excess amount of his bid price.

When the case reached the Supreme Court, Sulit’s failure to deliver the surplus proceeds of the foreclosure sale was considered as an exception to the general rule that it is ministerial upon the court to issue a writ of possession even during the period of redemption upon the filing of a bond. The Court found that such failure was a sufficient justification for the non-issuance of the writ. The Court also ruled that equitable considerations demanded the deferment of the issuance of the writ as it would be highly unfair for the mortgagor, who as a redemptioner might choose to redeem the foreclosed property, to pay the equivalent amount of the bid clearly in excess of the total mortgage debt. The Court said:
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 [percent] 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 last-named 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.”
The said ruling cannot be applied to the case of PBCom v. Yeung. A proper appreciation and analysis of Sulit show that it cannot be cited in Yeung's case because the factual milieu obtaining is different.

What is the difference between Sulit and the case of Philippine Bank of Communications v. Yeung (G.R. No. 179691, December 04, 2013)?

The one year redemption period in Sulit had not yet expired when the purchaser petitioned the trial court for the issuance of a writ of possession. In the PBCom v. Yeung, the redemption period had already expired and the title over the property had already been consolidated in the petitioner’s name. In Sulit, the inequity the court perceived to justify the deferment of the issuance of a writ of possession was present because the mortgagor, who at that time still had the right to exercise his right of redemption, was prevented from doing so. No such inequity appears in this case inasmuch as the mortgagor no longer has a right of redemption. In Sulit, the policy of the law to aid the redemptioner can still be upheld. The policy is no longer relevant in PBCom v. Yeung since the mortgagee herself, allowed the redemption period to lapse without exercising her right.

The Supreme Court has emphasized that for the Sulit exception to apply, the evil sought to be prevented must be present and the reason behind the exception should clearly exist. It should not be carelessly applied in cases where the reasons that justified it do not appear, more so where the factual milieu is different. As discussed above, the Sulit reasons and circumstances are not present here. The resulting injustice that the Court tried to avoid in Sulit does not exist. In the absence of any justification for the exception, the general rule should apply.

[1] G.R. No. 119247, February 17, 1997, 268 SCRA 441, 452.

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