Credit Cases Mortgage- Suspends the Period of Redemption

8/12/2019 Credit Cases Mortgage- Suspends the Period of Redemption

1/42


2/42

After appropriate proceedings, said Court rendered in decision dismissing plaintiff' complaint and orderingthem to vacate the property in question, as well as to pay P100.00 a month to the Bank, from March 36, 1960,until said property is vacated by the plaintiffs, with costs. 1awphil.net plaintiffs appealed to the Court ofAppeals, which certified case to us. They maintain that the lower court erred:

1. In holding that the decision rendered in Civil Case 29306, Court of First Instance of Manila, entitled"Juan Sumerariz and Luisa Sumerariz vs. Development Bank of the Philippines and Sheriff of Manila"is a bar to the present case.

2. In holding that the filing of Civil Case No. 29306 in the Court of First Instance of Manila . . . did notsuspend the period of redemption of the property in question.

3. In not allowing the appellants to redeem the properties in question in accordance with themanifestation and willingness of the appellee Development Bank of the Philippines to allow theappellants to redeem their own properties.

4. In requiring the appellants to pay rents for the properties in question to the appellee DevelopmentBank of the Philippines from March 30, 1956 until appellants delivered the said properties to theappellee Bank.

It is urged that the present case is not barred by the decision in Case No. 29306 because there is, allegedly, noidentity, either of parties, or of subject-matter, or of cause of action, between the two cases. This contentioninasmuch manifestly untenable. 1awphil.net

Although not a party in the first case, the inclusion of the Surety Co. as defendant in the case at bar does notdetract from the legal identity of both cases, because, by buying the property from the Bank, the Surety Co.

became merely the Bank's success. 2 Neither does the absence, as party herein, of the sheriff, who was one of thedefendants in the first case, negate said identity, inasmuch as the sheriff was but a formal party in said previouscase, and is virtually a party in the present proceedings, although not explicitly mentioned as such therein. 3

As stated in Republic v. Planas :4

The inclusion of the surety as party defendant in Civil Case No. 51080, where it is not so named in CivilCase No. 49206, cannot be invoked to nullify the effect on the former case of the dismissal-order issuedin the latter proceeding. It has been ruled that where the one who is offering a judgment as an estoppeland the party against whom it is being offered were both parties to the action, in which such judgmentwas rendered, it is no objection that the action included some additional parties who are joined in thesecond case. 5 Conversely, the operation of the final judgment or order in a previous case is not altered

by the fact that somebody who was not a party in that first action has been impleaded in the second case.Otherwise, litigants can always renew any litigation by the mere expedient of including new parties .6

The subject-matter of both cases is, obviously, the same the property in question. There is, likewise, identityof the cause of action. In the first case, the issue was the validity of the auction sale in favor of the Bank, whichsale, plaintiffs contended, had been made in violation of their agreement with the Bank. In the case at bar,

plaintiffs maintain that the conveyance by the Bank to the Surety Co. is invalid, and this pretense is anchoredupon the predicate that, when it took place, the property did not belong to the Bank, the sale in its favor by thesheriff having been made in violation of the alleged agreement aforementioned, which predicate had beenrejected Court in the previous case. Similarly, the cause of in the first case was based upon the alleged right ofthe plaintiffs to the property in question, upon the ground that its sale to the Bank was illegal. This premise is,also, the cornerstone of plaintiffs' cause of action in the case at bar. 7


3/42

Moreover, the same evidence would have sufficed to support and establish the cause of action in both cases. In Abes, et al. vs. Rodil, et al .,8 it was held:

The test to determine the existence of res judicata is simply this: "Would the same evidence support andestablish both the present and the former cause of action?" 9 Here, the answer is in the affirmative. Theevidence both in the cadastral proceedings and in the present reconveyance case, is directed at thequestion of ownership. It was held that where the first case is one for reivindicacion and the other for

partition, the title of the case is unimportant. For the same evidence would support the one and theother. 10 A similar rule obtains where the former cases were reivindicatory in character and the secondare land registration proceedings. 11 Another example: The first case was for consolidation of title of theassignee in the land registration proceedings. This was objected to upon the ground that the deed ofassignment was invalid as pactum commissorium . The court gave due effect to said document andordered that assignor's titles be cancelled and new ones issued to the assignee. The second was an actionfor reformation upon the averment that the deed of assignment mentioned in the first case was anequitable mortgage. This Court declared that the issue in both suits is "whether the deed of assignmentvested in Monte de Piedad the ownership of the lots," and held that the second action was barred by

previous adjudication in the land registration case. 12 And where, as here, fraud was alleged in the firstcase and the same fraud was relied upon in the second, the judgment in former case operated as res

judicata .13

Again, the issue of ownership of the property in question was settled in the first case. Accordingly, it may nolonger be litigated in the case at bar.

Under the second assignment of error, plaintiffs maintain that the period of one (1) year to redeem the propertyin question was suspended by the institution of Case No. 29306, on March 26, 1956, or three (3) days before theexpiration of said period. We have not found, however, any statute or decision in support of this pretense.Moreover, up to now plaintiffs have not exercised the right of redemption. Indeed, although they have intimatedtheir wish to redeem the property in question, they have not deposited the amount necessary therefor. It may not

be amiss to note that, unlike Section 30 of Rule 39 of the Rules of Court, which permits the extension of the period of redemption of mortgaged properties, 14 Section 3 of Commonwealth Act No. 459, in relation to Section

9 of Republic Act No. 85, which governs the redemption of property mortgaged to the Bank, does not contain asimilar provision. 15 Again this question has been definitely settled by the decision in the previous casedeclaring that plaintiffs' right of redemption has already been extinguished in view of their failure to exercise itwithin the statutory period..

The third assignment of error is predicated upon an alleged willingness of the Bank to allow the plaintiffs tomake such redemption. The Bank denies, however, have agreed thereto. Besides, this question of fact was notraised by plaintiffs in the lower court. Hence, it cannot be entertained in this appeal. 16

The fourth assignment of error is premised on plaintiffs' alleged right of redemption, which was held, in the firstcase, to have expired already. It is thus clearly devoid of merit.

WHEREFORE the decision appealed from should be, as it is hereby, affirmed, with costs against plaintiffs-appellants. It is so ordered.

Reyes, J.B.L., Dizon, Makalintal, Bengzon, J.P., Zaldivar, Sanchez, Castro, Angeles and Fernando, JJ., concur.

Footnotes

1 G.R. No. L-16423.


4/42

2 Baguinguito vs. Rivera, 56 Phil. 423; Barretto vs. Cabangis, 37 Phil. 98; Fetalino vs. Sanz, 44 Phil.691; Clemente vs. Heacock Co., L-12786, October 29, 1959. See, also Republic vs. Planas, L-21224,September 27, 1966; Philippine Farming Corporation vs. Llanos L-21-14, August 14, 1965.

In Aguilar vs. Gamboa, L-10137, March 25, 1958, it was held:

"Where both the party offering a judgment as an estoppel and the party against whom it isoffered were parties to the action in which the judgment is rendered, it is no objectionthat the action included some additional parties who are not joined in the present action. .. ."

3 Bacaling vs. GSIS, L-20124, August 14, 1965.

4 L-21224, September 27, 1966.

5 Citing Aquino vs. Sanvictores, L-3397, July 27, 1951.

6 Citing Alzua vs. Johnson, 21 Phil. 308; Aquino vs. Sanvictores, supra ; Samahang Magsasaka vs. ChuaGuan, L-7252, February 25, 1955; Suarez vs. Giok Hong Que, L-7927, November 18, 1955.

7 Chua Tan vs. Del Rosario, 57 Phil. 411; Ma-ao Sugar Central Co. vs. Barrios, 79 Phil. 666; City ofOttumwa v. Nicholson, 143 N.W. 439, cited in 1 Moran 1963 ed., p. 91; Juan vs. Go Cotay 26 Phil. 328;Baquioro vs. Barrios, et al., 77 Phil. 120; Suarez vs. Municipality of Naujan, et al., L-22282, Nov. 21,1966; Angcao vs. Punzalan, L-20521, Dec. 28, 1964; Republic vs. Planas, supra ; PHHC, et al. vs.Mencias, etc., et al., L-24114, August 16, 1967; Abes, et al. vs. Rodil, et al., L-20996, July 30, 1966.

8 L-20996, July 30, 1966.

9 Citing Pealosa vs. Tuason, 22 Phil. 303, 322; Garcia vs. Court of Appeals, et al., L-19783, July 30,1965; Philippine Farming Corporation, Ltd., etc. vs. Llanes, et al., L-21014, August 14, 1965.

10 Citing De Leon Vda. de Lontok vs. Padua, 75 Phil. 548, 552, 553.

11 Citing Kidpalos, et al. vs. Baguio Gold Mining Co., L-19940 to L- 19944, August 14, 1965.

12 Franco, et al. vs. Monte de Piedad and Savings Bank, L-17610, April 22, 1963.

13 San Diego, etc. vs. Cardona, et al., 70 Phil. 281, 284.

14 Enage vs. Vda de Hijas de P. Escao, 38 Phil. 657.

15 Nepomuceno vs. Rehabilitation Finance Corporation, L-14897, November 23, 1960.

16 Rule 46, Sec. 18; Toribio vs. Decasa, 55 Phil. 461; Sanagustin vs. Barrios, 68 Phil. 475; Talento vs.Makiki, 93 Phil. 855; Traders Insurance & Surety Co. vs. Golangco, et al., L-6442, Sept. 24, 1954;Subido, et al. vs. Lacson, et al., 55 Off. Gaz. 8281. See, also, Remonte vs. Bonto, L-19900, Feb. 28,1966; Vaidehueza vs. Republic, L-21032, May 19, 1966; Republic vs. Venturanza, L-20417, May 30,1966; Pipero vs. Hechanova, L-22562, Oct. 22, 1966; City of Manila v. Garcia, L-26053, Feb. 21, 1967;Yu Kimteng Const. vs. MRR Co., et al., L-17027, March 3, 1967.


5/42

Republic of the PhilippinesSUPREME COURT

Manila

SECOND DIVISION

G.R. No. 109672 July 14, 1994

SPOUSES EDUARDO VACA and MA. LUISITA PILAR, petitioners,vs.THE COURT OF APPEALS and ASSOCIATED BANK, respondents.

Ramon Quisumbing, Jr. Law Office for petitioners.

Robles, Ricafrente & Aguirre Law Firm for private respondent.

R E S O L U T I O N

MENDOZA, J .:

This is a petition for review on certiorari of the decision of the Court of Appeals, granting private respondent Associated Bank's petition for certiorari andmandamus to annul two orders of the Regional Trial Court (Branch 95) of Quezon City dated June 11 and August 25, 1992.

The Facts of the case are:

On February 7, 1992, private respondent Associated Bank filed with the RTC of Quezon City a petition (docketed as LRC Case No. Q-5536-92) for the issuance ofa writ of possession of property covered by TCT No. 254504. The property, consisting of a 953-square meter lot and a residential house erected on it, is situated atNo. 18, Lovebird Street, Green Meadows Subdivision I, Quezon City. Private respondent alleged that for failure of petitioners Eduardo Vaca and Ma. Luisita Pilarto pay their mortgage obligation to private respondent, the mortgage was extrajudicially foreclosed and the mortgaged property was sold on October 30, 1990 toprivate respondent as the highest bidder; that the one-year period to redeem having expired, TCT No. 254504 was cancelled and TCT No. 52593 in privaterespondent's name was issued in lieu thereof; and that despite demands, petitioners refused to turn over possession of the property to private respondent.

Petitioner spouses filed an opposition alleging that there was a pending action (Civil Case No. Q-91-8285) in another court which the petitioners had filed for theannulment of the mortgage and its foreclosure.

On June 11, 1992, the RTC denied private respondent's petition for the issuance of a writ of possession, and on August 25, 1992, denied private respondent'smotion for reconsideration.

On certiorari the Court of Appeals annulled the orders and ordered the RTC to issue the writ of possession. Hence this petition.

Petitioners contend that the action for annulment of the mortgage(Civil Case No. Q-91-8285) constitutes a prejudicial question in LRC CaseNo. Q-5536-92 for issuance of a writ of possession and that it was error for the Court of Appeals to order the RTC to issue the writ of possession in favor of themortgagee (herein private respondent). They argue further that the rule that it is a ministerial duty of the court to issue a writ of possession after the one-yearperiod to redeem has expired is subject to certain exceptions, and this case falls within the exception.

Petitioners' contention has no merit. The question raised in this case has already been settled in Vda . de Jacob v . Court of Appeals ,1 in which it was held

that the pendency of a separate civil suit questioning the validity of the mortgage cannot bar the issuance of the writ of

possession, because the same is a ministerial act of the trial court after title on the property has been consolidated in themortgagee. The ruling was reiterated in Navarra v . Court of Appeals , 2 in which we held that as a rule any questionregarding the validity of the mortgage or its foreclosure cannot be a legal ground for refusing the issuance of a writ ofpossession.

Petitioners cite the cases of Cometa v . Intermediate Appellate Court , 3 and Barican v . Intermediate Appellate Court , 4 where we ordered the deferment of the issuance of the writ of possession notwithstanding the lapse of the one-yearperiod of redemption. The deferment, however, was due to the peculiar circumstances of those cases. In Cometa , whichactually involved execution under Rule 39, sec. 35, the properties were sold at an unusually lower price than their truevalue, while in Barican , the mortgagee bank took five years from the time of foreclosure on October 10, 1980 before filingthe petition for the issuance of a writ of possession on August 16, 1985. Earlier the property had been sold to third partieswho assumed the indebtedness of the mortgagor and took possession of the property so that at the time of the hearing on


6/42

the petition for a writ of possession, the original debtor was no longer in possession. Under these circumstances, it washeld that the obligation of the court to issue the writ of possession had ceased to be ministerial.

None of these equitable circumstances is present herein so as to justify making an exception to the rule that the issuanceof a writ of possession to a purchaser in an extrajudicial foreclosure, after the period of redemption, is a ministerialfunction of the court. In this case, there is no dispute that the property was not redeemed within one year from registrationof the extrajudicial foreclosure sale. Private respondent thus acquired the absolute right, as purchaser, to the issuance ofa writ of possession pursuant to Act No. 3135, sec. 7.

WHEREFORE, the resolution of October 18, 1993, giving due course to the petition for review on certiorari , isRECONSIDERED and RECALLED and the petition is DENIED for lack of merit for lack of showing of any reversible errorcommitted by the Court of Appeals.

SO ORDERED.

Narvasa, C.J., Padilla, Regalado, Puno and Mendoza, JJ., concur.

#Footnotes

1 G.R. Nos. 88602 and 89544, April 6, 1990, 184 SCRA 1990.

2 G.R. No. 86237, December 17, 1991, 204 SCRA 850.

3 G.R. No. 69294, June 30, 1987, 151 SCRA 563.

4 G.R. No. 79906, June 20, 1988, 162 SCRA 358.


7/42


Manila

SECOND DIVISION

G.R. No. 134068 June 25, 2001

UNION BANK OF THE PHILIPPINES , petitioner,vs.COURT OF APPEALS, APOLONIA DE JESUS GREGORIO, GONZALO VINCOY, married toTRINIDAD GREGORIO VINCOY , respondents.

DE LEON, JR., J .:

This is a motion for reconsideration of the resolution of this Court dated July 12, 1999 dismissing the petitionfor review on certiorari filed by petitioner Union Bank of the Philippines which assailed the decision of theCourt of Appeals (a) upholding the validity of the real estate mortgage executed by respondents Gonzalo andTrinidad Vincoy in favor of petitioner as security for a loan in the principal amount of Two Million Pesos

(P2,000,000,00.), and (b) fixing the redemption price of the property mortgaged at Three Million Two Hundred Ninety Thousand Pesos (P3,290,000.00) representing the purchase price of the said property at the foreclosuresale plus one percent (1%) monthly interest from April 19, 1991, the date of the foreclosure sale, until itsredemption pursuant to Section 30, Rule 39 of the Rules of Court.

The following are the factual antecedents.

On March 2, 1990, respondents-spouses Gonzalo and Trinidad Vincoy mortgaged their residence in favor of petitioner to secure the payment of a loan to Delco Industries (Phils.), Incorporated 1 in the amount of TwoMillion Pesos (P2,000,000.00). For failure of the respondents to pay the loan at its date of maturity, petitionerextrajudicially foreclosed the mortgage and scheduled the foreclosure sale on April 10, 1991.

The petitioner submitted the highest bid for Three Million Two Hundred Ninety Thousand Pesos(P3,290,000.OO) at the foreclosure sale. Accordingly, a certificate of sale was issued to petitioner and dulyannotated at the back of the Transfer Certificate of Title covering the property on May 8,1991. 2

Prior to the expiration of the redemption period on May 8,1992, the respondents filed a complaint for annulmentof mortgage with the lower court. In their complaint, respondents alleged that the subject property mortgaged to

petitioner had in fact been constituted as a family home as early as October 27, 1989. Among the beneficiariesof the said family home are the sisters of respondent Trinidad Vincoy, namely Apolonia and Luciana De JesusGregorio whose consent to the mortgage was not obtained. 3 Respondents thus assailed the validity of themortgage on the ground that Article 158 of the Family Code 4 prohibits the execution, forced sale, attachment or

any other encumbrance of a family home without the written consent of majority of the beneficiaries thereof oflegal age. 5 On the other hand, petitioner maintained that the mortgaged property of the respondents could not belegally constituted as a family home because its actual value exceeded Three Hundred Thousand Pesos(P300,000.00), the maximum value for a family home in urban areas as stipulated in Article 157 of the FamilyCode. 6

The lower court rendered judgment declaring the constitution of the family home void and the mortgageexecuted in favor of the petitioner valid. It held, among others, that Article 158 of the Family Code was notapplicable to respondents' family home as the value of the latter at the time of its alleged constitution exceededThree Hundred Thousand Pesos (P300,000.00). 7 It also respondent Gonzalo Vincoy and/or Delco Industries(Phils.), Inc. to pay petitioner his and/or its outstanding obligation as of February 15,1993 in the amount of Four


8/42

Million Eight Hundred Sixteen Thousand One Hundred Ninety-Four Pesos and Forty Four Centavos(p4,816,194.44) including such sums that may accrue by way of interests and penalties. 8

Aggrieved, respondents appealed to the Court of Appeals contending that the lower court erred in finding thattheir family home was not duly constituted, and that the mortgage in favor of petitioner is valid. Respondentsalso claimed that the correct amount sufficient for the redemption of their property as of February 15,1993 isTwo Million Seven Hundred Seventy Three Thousand Seven Hundred Twelve Pesos and Eighty SevenCentavos (P2,773,712.87) 9 and not Four Million Eight Hundred Sixteen Thousand One Hundred Ninety-FourPesos and Forty-Four Centavos (P4,816,194.44) as found by the lower court.

In a decision promulgated on June 4, 1997, the Court of Appeals sustained the finding of the lower court thatthe alleged family home of the respondents did not fall within the purview of Article 157 of the Family Code asits value at the time of its constitution was more than the maximum value of Three Hundred Thousand Pesos(P300,000.00). Hence, the Court of Appeals upheld the validity of the mortgage executed over the said propertyin favor of the petitioner. 10 However, it found that the amount sufficient for the redemption of the foreclosed

property is Three Million Two Hundred Ninety Thousand Pesos (P3,290,000.00) equivalent to the purchase price at tile foreclosure sale plus one percent (1%) monthly interest from April 19, 1991 up to the date ofredemption 11 pursuant to Section 30, Rule 39 of the Rules of Court. 12

Dissatisfied with the ruling of the Court of Appeals, the petitioner filed a petition for review on certiorari withCourt submitting the following resolution:

I. The Court of Appeals resolves an issue of redemption which was not even directly raised by the parties and contrary to the evidence on record.

2. Assuming without admitting that respondents are entitled to redemption, the price set by the Court ofAppeals is not based on laws. 13

Petitioner contends, first of all, that in allowing the respondents to redeem the subject foreclosed property, theCourt of Appeals completely ignored that fact that neither respondents' complaint before the lower court nor

their brief filed before the Court of Appeals prayed for the redemption of the said property. On the contrary,respondents had consistently insisted on the nullity of the mortgage. Thus, to allow them to redeem the propertywould contradict that very theory of their case. 14

Petitioner also contends that the respondents had already lost their right to redeem the foreclosed property whenthey failed to exercise their right of redemption by paying the redemption price within the period provided bylaw. 15 In the event, however, that the Courts upholds the right of the respondents to redeem the said property,the petitioner claims that it is not Section 30, Rule 39 of the Rules of the Court that applies in determining theamount sufficient for redemption but Section 78 of the General Banking Act as amended by the PresidentialDecree No. 1828 16 which provides:

"xxx. In the event of foreclosure, whether judicially or extra judicially, of any mortgage on real estatewhich is security for any loan granted before the passage of this Act or under the provisions of this Act,the mortgagor or debtor whose real property has been sold at public auction, judicially or extrajudicially,

for the full or partial payment of an obligation to any bank, banking or credit institution, within the purview of this Act shall have the right, within one year after the sale of the real estate as a result of the foreclosure of the respective mortgage, to redeem the property by paying the amount fixed by the courtin the order of execution, or the amount due under the mortgage deed, as the case may be, with interestthereon at the rate specified in the mortgage, and all the costs, and judicial and other expenses incurred

by the bank or institution concerned by reason of the execution and sale and as a result of the custody ofthe said property less the income received from the property." [Italics supplied].


9/42

This Court dismissed the petition in a Resolution promulgated on July 12,1999 on the ground that the Court ofAppeals did not commit any reversible error and that the petition raises mere questions of fact already amply

passed upon by the appellate court. 17 Hence, the instant motion for reconsideration.

We are persuaded to reconsider.

First of all, it is important to note that this case was decided by the lower court on the basis only the pleadingssubmitted by the parties. No trial was conducted, thus, no evidence other than submitted with the pleadingscould be considered.

A careful scrutiny of the pleadings filed by the respondents before the lower court reveals that at no time did therespondents pray that they be allowed to redeem the subject foreclosed property. 18 On the other hand,respondents never wavered from the belief that the mortgage over the said property is, in the first place, void forhaving been executed over a duly constituted family home without the consent of the beneficiaries thereof.After upholding the validity of mortgage, the lower court ordered respondent Gonzalo Vincoy and/or DelcoIndustries, Inc. to pay petitioner the amount of Four Million Eight Hundred Sixteen Thousand One Hundred

Ninety-Four Pesos and Forty-Four Centavos (P4,816,194.44) plus interest and penalties representing Vincoy'sand/or Delco's outstanding obligation to petitioner as of February 15,1993. 19 There is no mention whatsoever ofrespondents right to redeem the property.

Respondents raised the issue of redemption for the first time only on appeal in contesting the amount ordered bythe lower court to be paid by respondents to the petitioner. Thus, the actuation of the Court of Appeals inallowing the respondents to redeem the subject foreclosed property is not legally permissible. In petitions forreview or appeal under Rule 45 of the Rules of Court, the appellate tribunal is limited to the determination ofwhether tile lower court committed reversible error. 20

It is settled jurisprudence that an issue which was neither averred in the complain nor raised during the trial inthe court below cannot be raised for the first time on appeal as it would be offensive to the basic rules of fair

play, justice and due process. 21 On this ground alone, the Court of Appeals should have completely ignored theissue of respondents' right to redeem the subject foreclosed property. In addition, a reason just as glaringly

obvious exists for declaring the respondents' right of redemption already non-existent one year after May8,1991, the date of the registration of the sale at public auction.

Pursuant to Section 78 of the General Banking Act, a mortgagor whose real property has been sold at a publicauction, judicially or extrajudicially, for the full or partial payment of an obligation to any bank, shall have theright, within one year after the sale of the real estate to redeem the property. The one-year period is actually to

be reckoned from the date of registration of the sale. 22 Clearly therefore, respondents had only until May 8,1992 to redeem the subject foreclosed property. Their failure to exercise the right of redemption by paying theredemption price within the period prescribed by the law effectively divested them of said right. It bearsreiterating that during the one year redemption period, respondents never attempted to redeem the subject

property but instead persisted in their theory that the mortgage is null and void. To allow them now to redeem

the same property would, as petitioner aptly puts it, be letting them have their cake and eat it too.

It cannot also be argued that the action for annulment of the mortgage filed by the respondents tolled therunning of the one year period of redemption. In the case of Sumerariz v. Development Bank of the

Philippines, 23 petitioners therein contented that the one-year period to redeem the property foreclosed byrespondent was suspended by the institution of an action to annul the foreclosure sale filed three (3) days beforethe expiration of the period. To this we ruled that:

"We have not found, however, any statute or decision in support of this pretense. Moreover. up to now plaintiffs have not exercised the right of redemption. Indeed. although they have intimated their wish toredeem the property in question, they have not deposited the amount necessary therefor. It may be not a


10/42

miss to note that, unlike Section 30 of Rule 39 of the Rules of Court, which permits the extension of the period of redemption of mortgaged properties. Section 3 of Commonwealth Act No. 459, in relation toSection 9 of Republic Act No. 85, which governs the redemption of property of mortgaged to the Bankdoes no contain a similar provision. Again this question has been definitely settled by the previous casedeclaring the plaintiffs' right of redemption has already been extinguished in view of their failure toexercise it within the statutory period." 24

Also, in the more recent case of, Vaca v. Court of Appeals, 25 we declared that the pendency of an actionquestioning the validity of a mortgage cannot bar the issuance of the writ of possession after title to the propertyhas been consolidated in the mortgagee. 26 The implication is clear: the period of redemption is not interrupted

by the filling of an action assailing the validity of the mortgage, so that at the expiration thereof, the mortgageewho acquires the property at the foreclosure sale can proceed to have the title consolidated in his name and awrit of possession issued in his favor.

To rule otherwise, and allow the institution of an action questioning the validity of a mortgage to suspend therunning of the one year period of redemption would constitute a dangerous precedent. A likely off shoot of sucha ruling is\ the institution of frivolous suits for annulment of mortgage intended merely to give the mortgagormore time to redeem the mortgaged property. 1wphi1.nt

As a final word, although the issue pertaining to the correct amount for the redemption of the subject foreclosed property has been rendered moot by the foregoing, a point of clarification should perhaps be made as toapplicable legal provision. Petitioner's contention that Section 78 of the General Banking Act governs thedetermination of the redemption price of the subject property is meritorious. In Ponce de Leon v. Rehabilitation

Finance Corporation, 27 this Court had occasion to rule that Section 78 of the General Banking Act had theeffect of amending Section 6 of Act 3135 28 insofar as the redemption price is concerned when the mortgagee

bank, as in this case, or a banking or credit institution. 29 The apparent conflict between the provisions of Act No. 3135 and the General Banking Act was, therefore, resolved in favor of the latter, being a special andsubsequent legislation. This pronouncement was reiterated in the case of.Sy v..Court of Appeals 30 where we heldthat the amount at which the foreclosed property is redeemable is the amount due under the mortgage deed, orthe outstanding obligation of the mortgagor plus interest and expense in accordance with Section 78 of the

General Banking Act.31

It was therefore manifest error on the part of the Court of Appeals to apply in the case at bar the provisions of Section 30 Rule 39 of the Rules of Court in fixing the redemption price of the subjectforeclosed property.

WHEREFORE , the motion for reconsideration is hereby GRANTED . This Court's Resolution dated July 12,1999 is MODIFlED insofar as respondents are found to have lost their right to redeem the subject foreclosed

property.

SO ORDERED.

Bellosillo, Mendoza, Quizumbing, and Buena, JJ. , concur.

Footnotes

1 CA Rollo, p. 17.

2 CA Rollo, p. 27.

3 CA Rollo, pp. 16-17.


11/42

4 Art. 158. The family home may be sold, alienated, donated, assigned or encumbered by the owner orowners thereof with the written consent of the person constituting the same, the latter's spouse and amajority of the beneficiaries of legal age. In case of conflict, the court shall decide.

5 Rollo, p. 8.

6 Art. 157. The actual value of the family home shall not exceed, at the time of its constitution, theamount of three hundred thousand pesos in urban areas, and two hundred thousand pesos in rural areas,or such amounts as may hereafter be fixed by law.

In any event, if the value of the currency changes after the adoption of this Code, the value mostfavorable for the constitution of a family home shall be the basis of the evaluation.

For purposes of this Article, urban areas are deemed to include chartered cities and municipalities whoseannual income at least equals that legally required for chartered cities. All others are deemed to be ruralareas.

7 CA Rollo. p. 28.

8 CA Rollo. pp. 29-30.

9 Computed as follows: P2,576,022.61, the outstanding obligation of Gonzalo Vincoy to petitioner as ofFebruary 6, 1991 less P300,000.00, total payment made plus one percent (1%) monthly interest from thedate of the auction sale on April 19, 1991 up to February 15, 1993. (CA Rollo, pp. 23-24.)

10 Rollo, pp. 9-10.

11 Rollo, p. 10.

12 SEC. 30. Time and manner of, and amounts payable on, successive redemptions. Notice to be given

and filed. The judgment debtor, or redemptioner, may redeem the property from the purchaser, at anytime within twelve (12) months after the sale, on paying the purchaser the amount of his purchase withone per centum per month interest thereon in addition. up to the time of redemption, together with theamount of any assessments or taxes which the purchaser may have paid thereon after purchase, andinterest on such last-named amount at the same rate; xxx. [Underscoring supplied.]

13 Rollo, p. 24.

14 Rollo, p. 25.

15 Rollo, p. 26.

16 Rollo, p. 28.

17 Rollo, p. 135.

18 In their complaint filed before the lower court, the respondents prayed that judgment be rendered:

a. Annulling the mortgage executed between plaintiff GONZALO VINCOY in favor ofdefendant bank on March 2, 1990 described in Annex" A " of the Complaint;


12/42

b. During the pendency of this case and perpetually thereafter, a writ of preliminary injunction beissued after posting the required bond to prevent the defendant bank from consolidating itsCertificate of Title over the property described under TCT No. 128610 of the Register of Deedsof Pasay City covering the family home of plaintiff GONZALO VINCOY and his wifeTRINIDAD GREGORIO VINCOY, whose shelter plaintiff beneficiaries share; and

c. Requiring the defendant bank to pay the plaintiffs jointly and severally, by way of damages,the amounts of P100,000.00 as attorney's fees and costs of litigation; and another P100,000.00for moral and exemplary damages.

Plaintiffs likewise pray for other reliefs proper under the premises. (Records, p. 6.)

19 CA Rollo, p. 30.

20 Mendoza v. Court of Appeals, et al., 274 SCRA 527,539 (1997); Remman Enterprises, Inc. v. Courtof Appeals, et al., 268 SCRA 688, 702 (1997).

21 Roman Catholic Archbishop of Manila v. Court of Appeals, et al., 269 SCRA 145, 153 (1997);Gevero v. Intermediate Appellate Court, et al., 189 SCRA 201, 208 (1990); Matienzo v. Servidad, 107

SCRA 276, 283 (1981).

22 Regalado, Remedial Law Compendium. Volume I, 6 th ed., 1997, p. 455.

23 21 SCRA 1374 (1967).

24 lbid., pp. 1379-1380.

25 234 SCRA 146, (1994).

26 Ibid., p. 148.

27 146 SCRA 862 (1970).

28 SEC. 6. In all cases in which an extrajudicial sale is made under the special power hereinbeforereferred to, the debtor, his successors in interest or any judicial creditor or judgment creditor of saiddebtor, or any person having a lien on the property subsequent to the mortgage or deed of trust underwhich the property is sold, may redeem the same at any time within the term of one year from and afterthe date of sale; and such redemption shall be governed by the provisions of sections four hundred andsixty-four to four hundred and sixty-six, inclusive, of the Code of Civil Procedure ( now Secs. 29, 30and 34, Rule 39, Revised Rules of Court), insofar as these are not inconsistent with the provisions of thisAct.

29 See note 27, supra, p. 878.

30 172 SCRA 125 (1989).

31 Ibid., p. 134.


13/42


Manila

THIRD DIVISION

G.R. No. 99308 November 13, 1992

STATE INVESTMENT HOUSE, INC., petitioner,vs.COURT OF APPEALS and SABINA VDA. DE CUENCA, respondents.

MELO, J .:

The Decision and Amended Decision of the Court of Appeals in CA-G.R. CV 24339, both reversing and affirming in partthe Decision of Branch 90 of the Regional Trial Court of Quezon City in "Sabina Vda. de Cuenca vs. State InvestmentHouse, Inc." (Civil Case No. Q-42552), for declaration of nullity of the foreclosure sale with an alternative prayer forredemption of the foreclosed property, are assailed in the instant petition on questions of law.

As may be gleaned from the pleadings of the parties, the antecedent facts are as follows:

On February 13, 1979, private respondent Sabina Vda. de Cuenca (Cuenca) obtained a loan from petitioner StateInvestment House, Inc. (SIHI) under a promissory note for P160,000.00, secured by a mortgage on Cuenca's property atTandang Sora, Quezon City.

On November 15, 1979, Cuenca obtained another loan of P500,000.00. This loan was secured by a real estate mortgageexecuted by Cuenca on another property located along Timog, Quezon City, with paragraph 6 of the contract expresslygiving SIHI the option of extra-judicially foreclosing the mortgaged property in the event of Cuenca's default in thepayment of her indebtedness. Cuenca's unpaid balance of P120,000.00 under the first loan was deducted from theproceeds of the second loan. The mortgage on her property at Tandang Sora, Quezon City was cancelled.

Because of Cuenca's failure to pay on the maturity date of the loan, her account was restructured and rolled over twelvetimes through the execution of various promissory notes. On November 29, 1982, the maturity date of the twelfthpromissory note, SIHI claimed that Cuenca's obligations, inclusive of interest, service charges, and penalties, reached atotal of P621,483.57. The loan was not anymore restructured and SIHI, on December 2 and 15, 1982, made writtendemands on Cuenca for the payment of her outstanding obligation.

Cuenca did not heed SIHI's demands for payment. SIHI thus initiated extra-judicial foreclosure of Cuenca's mortgagedproperty for which the corresponding notice of sheriff's sale was issued on February 23, 1983, setting the auction sale onMarch 22, 1983. The scheduled foreclosure sale was, however, deferred by SIHI on account of Cuenca's request to begiven time to pay the loan. Although Cuenca did make some payments, these were not enough to fully pay heroutstanding obligation and as of July 28, 1983, SIHI claimed that Cuenca's outstanding loan amounted to P637,793.86.

Consequently, SIHI proceeded with the auction sale on August 8, 1983 where it was declared the highest bidder forP742,181.55, Cuenca's outstanding debt at that time per SIHI's computation.

The certificate of sale was registered with the Register of Deeds of Quezon City on August 24, 1983.

On July 10, 1984, SIHI received a letter (Exhibit 54, p. 18, Vol. I, Record) from Cuenca requesting that she be furnished aStatement of Account "before and after the foreclosure/auction sale" for her to be able to redeem the foreclosed propertyfrom SIHI. This was followed by another letter (Exhibit 54-A; also Exhibit J, p. 20, Vol. I, Record) from Cuenca on July 17,1984 wherein she signified her intention to redeem the property for P500,000.00, payable in the following manner:

1. P100,000.00 payable within thirty (30) days upon receipt of (SIHI's) approval of this proposal.


14/42

2. The balance of P400,000.00 shall be paid in eight (8) monthly installments. Each installment paymentshall be due on the 30th day of each month, the first monthly payment to be reckoned from the date theamount stated in No. 1 has been paid.

In a letter dated August 16, 1984 (Exhibit K, p. 22 Vol. I, Record), SIHI rejected Cuenca's offer to redeem, reasoning thatshe should pay her total outstanding obligation amounting at that time to P870,739.36.

On August 23, 1984, Cuenca, through counsel, sent another letter to SIHI (Exhibit 54-B; also Exhibit L, pp. 23-24, Vol. I,Record) and reiterated her offer to redeem the property by stating:

. . . we are now finally offering and tendering to you the full sum of P426,874.72 as the redemption priceof the property. This sum of P426,874.72 is the difference between the redemption price of P870, 739.36which you fixed in your letter of 16 August 1984, and the sum of P441,312.76 which is the aggregate ofthe payment which our client made to you on account of her loan of P500,000.00. . .

Without, however, waiting for SIHI's reply, Cuenca, on August 24, 1984, filed a complaint with the Regional Trial Court ofQuezon City seeking annulment of the foreclosure sale on the ground that she had not defaulted in the payment of herloan to SIHI. Alternatively, Cuenca prayed that the trial court fix the redemption price in the event it is found that she is stillindebted to SIHI.

After the expiration of the one-year redemption period, the Register of Deeds issued a new t itle on the foreclosed propertyin SIHI's name.

On October 19, 1989, Judge Abraham P. Vera, presiding judge of Branch 90 of the Regional Trial Court of the NationalCapital Judicial Region stationed in Quezon City, promulgated his decision declaring the foreclosure sale, as well asSIHI's title obtained in such sale, null and void.

In its decision, the trial court made the following essential findings: (a) that the filing of the petition for extrajudicialforeclosure was valid because as of the date of the filing thereof, Cuenca was still indebted to SIHI in the sum ofP222,890.41 based on the trial court's own computation; and (b) that the foreclosure sale held on August 8, 1983 was notvalid because at that time, Cuenca no longer owed any amount to SIHI, as in fact from the computations made by the trialcourt, Cuenca had made an overpayment to SIHI in the amount of P27,054.14.

The dispositive portion of the trial court's decision stated:

ACCORDINGLY, judgment is hereby rendered:

(a) Declaring plaintiff to have fully paid her obligations under the promissory notes, marked Exhs. 1 and 4,and all of those deriving their being from Exh. 4;

(b) Declaring the sale of the mortgaged property of plaintiff under the foreclosure proceedings and of theresultant Certificate of Sale executed and issued by the foreclosing Sheriff by reason of such foreclosureto be null and void;

(c) Directing the Register of Deeds of Quezon City to cancel Transfer Certificate of Title No. 325372 (Exh.N) in the name of SIHI, and to reinstate Transfer Certificate of Title No. T-12678 (Exh. B) in the name ofplaintiff;

(d) Directing defendant SIHI to refund to plaintiff the sum of P27,054.14, which was the overpayment shemade on account of her loans with SIHI, with interest at 12% per annum from the date of the filing of thecomplaint until the same is fully paid;

(e) Directing the defendant SIHI to pay to plaintiff the sums of P50,000.00 as moral damages; P50,000.00as exemplary damages; and P50,000.00, as attorney's fees;

(f) Directing defendant SIHI to pay [plaintiff the sum of P62,903.18 as a refund of the penalties which ithad collected from plaintiff, with interest thereon at 6% per annum from date of this decision until thesame is fully paid;


15/42

(g) Directing plaintiff to pay to defendant SIHI the sum of P14,645.00, in reimbursement of SIHI'sexpenses in the foreclosure of the mortgaged property, which includes attorney's fees, with interestthereon at 6% per annum from date of the decision until it is fully paid, which amount shall, however, beoffset by an equivalent amount for the amounts due from SIHI to plaintiff; and

(h) Directing defendant SIHI to pay the costs of this suit.

All other claims which the parties may have against each other are hereby denied and dismissed.

SIHI appealed the decision to the court of Appeals in CA-G.R. CV No. 24339. In its Original Decision, the Court of Appeals (Campos [P], Lantin, Sempio-Diy, JJ ) rectified several errors committed by the trial court in its computation ofCuenca's account with SIHI, but nevertheless affirmed the trial court's finding that at the time of the foreclosure sale,Cuenca had already paid in full her indebtedness so that the foreclosure sale and the transmission of title to SIHI werenull and void.

Both parties asked for a reconsideration of the appellate Court's ruling.

SIHI's Motion for Reconsideration contended that on the basis of the computations made by the trial court and ascorrected by the Court of Appeals in its decision, the net result showed that as of the date of the foreclosure sale on

August 8, 1983, Cuenca was still indebted to SIHI, and such being the case, the foreclosure sale was valid.

In her Motion for Reconsideration, Cuenca asked the appellate court to reconsider its finding that she had obtained a thirdloan from SIHI for P61,500.00. She further asked that she be credited two amounts which were disallowed by respondentcourt.

On April 30, 1991, respondent court promulgated its Amended Decision, reversed its earlier ruling and held that inaccordance with its own computations, Cuenca was still indebted to SIHI in the amount of P279,963.42 as of the date ofthe foreclosure sale. The dispositive portion of this Amended Decision reads:

The decision of this court is hereby modified as follows:

a) Plaintiff-appellee is ordered to pay defendant-appellant the sum of P279,963.42, consisting of theunpaid balance of her outstanding obligation within 30 days from receipt of this Amended Decision withpayment of interest at the legal rate from date of this decision until final judgment.

b) The foreclosure proceedings and the resultant Certificate of Sale executed and issued by theforeclosing sheriff by reason of such foreclosure are rendered null and void.

c) Transfer Certificate of Title No. 324372 issued in the name of SIHI is declared null and void and theRegister of Deeds of Quezon City is ordered to reinstate Transfer Certificate of Title No. 126578 in thename of plaintiff.

d) No pronouncement as to payment of damages and attorney's fees.

SO ORDERED. (p. 49, Rollo .)

Dissatisfied, SIHI filed the instant petition and as clarified in pages 4 and 5 of the petition, the appeal is limited to thefollowing aspects:

(i) The original Decision in C.A.-G.R. CV No. 24339, "Sabina Vda de Cuenca, plaintiff-appellee v. StateInvestment House, Inc., defendant-appellant," promulgated by respondent Court on 28 February 1991,only insofar as the decision voided the foreclosure sale of the mortgaged property and SIHI's titleacquired by virtue of such foreclosure sale, the challenged part of the dispositive portion reading asfollows:

(b) Declaring the sale of the mortgaged property of plaintiff under the foreclosureproceedings and of the resultant Certificate of Sale executed and issued by theforeclosing Sheriff by reason of such foreclosure to be null and void;


16/42

(c) Directing the Register of Deeds of Quezon City to cancel Transfer Certificate of TitleNo. 325372 (Exhibit N) in the name of SIHI, and to reinstate Transfer Certificate of TitleNo. T-12678 (Exhibit B) in the name of the plaintiff.

(ii) And the Amended Decision in the same appealed case, promulgated on 30 April 1991, only insofar asit adjudicated as follows:

(a) Plaintiff-appellee is ordered to pay defendant-appellant the sum of P279,963.42,consisting of the unpaid balance of her outstanding obligation within 30 days from receipt

of this Amended Decision with payment of interest at the legal rate from date of thisdecision until final judgment.

(b) The foreclosure proceedings and the resultant Certificate of Sale executed and issuedby the foreclosing Sheriff by reason of such foreclosure are rendered null and void.

(c) Transfer Certificate of Title No. 324372 issued in the name of SIHI is declared null andvoid and the Register of Deeds of Quezon City is ordered to reinstate Transfer Certificateof Title No. 126578 in the name of plaintiff.

(b) Petitioner is not appealing the rest of the dispositive portions of the Decision and Amended Decision.

SIHI presents the following as grounds for its petition:

MAIN GROUND OF THE PETITION

RESPONDENT COURT MANIFESTLY ERRED AND MISAPPLIED THE LAW WHEN IT REFUSED TODECLARE THE FORECLOSURE PROCEEDINGS VALID DESPITE ITS OWN DETERMINATION THATRESPONDENT CUENCA WAS TRULY AND GENUINELY INDEBTED TO PETITIONER WHEN THEFORECLOSURE PROCEEDINGS WERE INSTITUTED.

ALTERNATIVE GROUND

SHOULD THE SUPREME COURT AFFIRM THE VOIDING OF THE FORECLOSURE SALE AND OFPETITIONER'S TITLE, PETITIONER IS ENTITLED, IN LAW AND EQUITY TO THE PAYMENT OF

LEGAL INTEREST ON THE PRINCIPAL SUM OF P279,963.42 (THE SUM ADJUDGED INPETITIONER'S FAVOR BY RESPONDENT COURT) COMPUTED FROM THE DATE OF THEFORECLOSURE SALE UP TO THE DATE OF ACTUAL PAYMENT OF THE PRINCIPAL SUM. (pp. 15-16, Rollo )

On July 25 1991, shortly after she filed her Comment, Cuenca consigned with this Court Metro Bank Cashier's Check No.CC-17743 in the sum of P279,963.42, representing the amount ordered by the Court of Appeals (in its AmendedDecision) to be paid to SIHI. Thereafter, SIHI filed its Reply on August 15, 1991, to which a Rejoinder was filed by Cuencaon August 27, 1991.

As correctly formulated by SIHI, the principal issue in this case is the effect upon the validity of the extra-judicialforeclosure proceedings of a judicial determination that the debtor-mortgagor (Cuenca), at the time of the foreclosure, wasstill indebted and in default in the payment of the obligations to the creditor-mortgagee (SIHI).

Cuenca's loan with SIHI was restructured and rolled over twelve (12) times, with the last promissory note indicating thematurity date of November 29, 1982. The recomputation (attached to the Amended Decision) of the Court of Appealsshows, however, that on the said date Cuenca still had an outstanding indebtedness of P416,188,08. SIHI, in its letters toCuenca dated December 2 and 15, 1982 (Exhibits 36 and 36-A, pp. 435 and 436, Vol. I, Record) demanded the paymentof this unpaid amount. Cuenca, however, failed to make any payments and thus, even at that point in time, was alreadydebtor in default under Article 1168 of the New Civil Code.

The extra-judicial foreclosure instituted by SIHI in February 1983 was, therefore, valid as at that time, Cuenca's loan beingthen already almost three (3) months overdue (Bonnevie vs. Court of Appeals, 125 SCRA 122 [1983]). Aside from the factthat Cuenca was already in default, the Real Estate Mortgage executed by the parties expressly granted SIHI the optionto foreclose when it provided that:


17/42

6. In the event that the Mortgagor/Debtor herein, should fail or refuse to pay any of the sums of moneysecured by this mortgage, or any part thereof, in accordance with the terms and conditions herein setforth or those stipulated in the correlative promissory note(s), or should he/it fail to perform any of theconditions stipulated herein, or those in the promissory note(s), then and in such case the Mortgageeshall have the right, at its election, to foreclose this mortgage. . .

SIHI, however, deferred the auction sale when Cuenca subsequently asked for more time to pay her obligation. Cuenca'saccount, however, was not restructured and she herself gave SIHI permission to proceed with the auction sale on August8, 1983 should she not be able to pay her account by then (Exhibit 47, p. 457 Vol. I, Record). As of that date, the Court of

Appeals computed Cuenca's unpaid account with SIHI to be P279,963.42. It is worth noting that this computation is notchallenged or questioned by either SIHI or Cuenca and We find no reason to disturb the same.

The obvious implication is that, at the time of the foreclosure sale on August 8, 1983, Cuenca had defaulted in thepayment of P279,963.42. Thus, SIHI had the option under the aforequoted provision of the Real Estate Mortgage, toforeclose on the mortgaged property. SIHI cannot be faulted for having chosen that option.

The Court of Appeals, therefore, erred in concluding that despite Cuenca's default, the foreclosure sale and the resultantissuance of the certificate of sale by the foreclosing Sheriff were null and void. Foreclosure is valid where the debtor is indefault in the payment of his obligation (Cf, Bicol Savings and Loan Association vs. Court of Appeals, 171 SCRA 630[1989]). In a real estate mortgage when the principal obligation is not paid when due, the mortgagee has the right toforeclose the mortgage and to have the property seized and sold with the view of applying the proceeds to the payment ofthe obligation (Commodity Financing Co., Inc., vs. Jimenez , 91 SCRA 57 [1979]). Once the proceeds have been applied

to the payment of the obligation, the debtor cannot anymore be required to pay, unless, of course, there is a deficiencybetween the amount of the loan and the foreclosure sale price, because the obligation has already been extinguished.

We now come to the second issue posed by the parties: with the auction sale having been done on August 8, 1992 andthe certificate of foreclosure sale having been validly registered with the Register of Deeds of Quezon City on August 24,1983 , was Cuenca able to redeem the property in the manner and within the period provided by law?

With the aforequoted provision of the Real Estate Mortgage having expressly authorized SIHI to extra-judicially foreclosethe mortgage in case of Cuenca's failure to comply with her obligation to pay, the law governing the foreclosure isRepublic Act No. 3135 (An Act To Regulate The Sale of Property Under Special Powers Inserted In Or Annexed To RealEstate Mortgages), as amended by Republic Act No. 4118 ( See Luna vs. Encarnacion, 91 Phil. 531 [1952]). Section 6 ofthe said Act states:

Sec. 6. In all cases in which an extrajudicial sale is made under the special power herein before referredto, the debtor, his successors in interest or any judicial creditor or judgment creditor of said debtor, or anyperson having a lien on the property subsequent to the mortgage or deed of trust under which theproperty is sold, may redeem the same at any time within the term of one year from and after the date ofthe sale . . . (Emphasis supplied.)

In a long line of cases, We have consistently held that this one-year redemption period should be counted not from thedate of foreclosure sale, but from the time the certificate of sale is registered with the Register of Deeds (Agbulos vs.

Alberto , 5 SCRA 790 [1962]; Salazar vs. Meneses , 8 SCRA 495 [1963]; Reyes vs. Noblejas , 21 SCRA 1027 [1970];Quimson vs. Philippine National Bank , 36 SCRA 26 [1970]). In this case, therefore, the one-year redemption periodshould be reckoned from the time the certificate of sale was registered on August 24, 1983 (Bernardez vs. Reyes , 201SCRA 648 [1991]).

Under Article 13 of the New Civil Code, a year is understood to be of three hundred sixty-five (365) days. Thus, excludingthe first day and counting from August 25, 1983 (under paragraph 3 of Article 13 of the New Civil Code), and bearing inmind that 1984 was a leap year, Cuenca had only until August 23, 1984, the 365th day after registration of the sale on

August 24, 1983, within which to redeem the foreclosed property in accordance with law. It was thus already beyond theredemption period when Cuenca filed her suit below on August 24, 1984 .

It should be stressed in this regard that it is not proper to count, as Cuenca submits in her Rejoinder, the period on thebasis of 30 days per month. The law speaks of a "one year" period within which to redeem, not twelve months as in thecase of redemption by a judgment debtor under Section 30 of Rule 39. Applying Article 13 of the Civil Code, the period ofone year within which to redeem in the case at bar is to count 365 days from August 24, 1983. Consequently, the last dayto redeem would be and indeed fell on August 23, 1984, said year being a leap year (Cf Go vs. Dizon, et al., G.R. No.75915-16, Sept. 18, 1992).


18/42

Cuenca, however, was not able to exercise her right of redemption on or before August 23, 1984. Although she wrote toSIHI twice on July 17 and August 23, 1984 and offered to redeem her property, these offers were not accompanied bysimultaneous bona fide tender or delivery of the redemption price to SIHI. In Belisario vs. Intermediate Appellate Court(165 SCRA 101 [1988]), this Court, through Justice Medialdea, held:

The general rule in redemption is that in making a repurchase, it is not sufficient that a person offering toredeem make manifestation of his desire to repurchase; this statement of intention must be accompaniedby an actual and simultaneous tender of payment, which constitutes the legal use of exercise of the rightto repurchase (Angao vs. Clavano, 17 Phil. 152). Likewise, in several cases decided by this Court (Fructo

vs. Fuentes, 15 Phil. 362; Retes vs. Suelto, 20 Phil. 394; Rosales vs. Reyes, et al., 98 Phil. 975) wherethe right to repurchase was held to have been properly exercised, there was definite finding of tender ofpayment having been made by the vendor. The tender of payment must be for the full amount of therepurchase price, otherwise the offer to redeem will be held ineffectual. (Rumbaoa vs. Arzaga, 84 Phil.812). Bona fide redemption necessarily imports a reasonable and valid tender of the entire repurchaseprice. There is no cogent reason for requiring the vendee to accept payment by installments from theredemptioner, as it would ultimately result in an indefinite extension of the redemption period (Conejero,et al. vs. Court of Appeals, et al., L-21812, April 29, 1966, 16 SCRA 775, 780).

The rule that tender of payment of the repurchase price is necessary to exercise in the right of redemptionfinds support in civil law. Article 1616 of the Civil Code of the Philippines, in the absence of an applicableprovision in Commonwealth Act No. 141, furnishes the guide, to wit: The vendor cannot avail himself ofthe right to repurchase without returning to the vendee the price of the sale . . . (Uy Lee vs. Court of

Appeals, L-28126, November 28, 1975, 68 SCRA 196, 204). (at pp. 107-108.)

Cuenca's use of the phrase "offering and tendering" in her letter dated August 23, 1984 does not comply with the ruling inBelisario. There is no showing whatsoever here that the redemption price was delivered to SIHI. Redemption is not amatter of intent but involves making the proper payment or tender of the price of the land within the specified period (De laMerced vs. De Guzman , 160 SCRA 87 [1988]).

Neither is Cuenca correct in contending that SIHI in effect extended the redemption period when it stated in its letter dated August 16, 1984 that Cuenca had until August 24, 1984 within which to pay its outstanding account in full. In Lazo vs.Republic Surety & Insurance Co., Inc., (31 SCRA 329 [1970]). We held that it is only where, by voluntary agreement of theparties, consisting of extensions of the redemption period, followed by commitment by the debtor to pay the redemptionprice at a fixed date, will the concept of legal redemption be converted by the parties into one of conventional redemptionsuch that it generates binding contracts when approved by the creditor. In the instant case, however, there is no showing

that Cuenca agreed to pay the redemption price on or before August 24, 1984, as set by SIHI. On the contrary, Cuenca'sfiling of her complaint on August 24, 1984 principally seeking to declare the nullity of the foreclosure sale is indicative ofher refusal to pay the redemption price on the deadline mistakenly set by SIHI.

Cuenca's complaint filed on August 24, 1984 (the 365th day from the registration of the certificate of sale, having fallen on August 23, 1984 ), did not have the effect of a formal offer to redeem. In Belisario (supra ), We further explained.

This case is different from Uy Lee vs. Court of Appeals, supra where the action to compel redemption wasfiled after the lapse of the period of redemption. Thus, the Court held in said case, to wit:

It is clear that the mere sending of letters by vendor Simeon expressing his desire torepurchase the property without an accompanying tender of redemption price fell short ofthe requirements of law. Having failed to properly exercise his right of redemption within

the statutory five-year period, the right is lost and the same can no longer be revived bythe filing of an action to compel redemption after the lapse of the period .

The same factual antecedent obtained in Conejero, et al. vs. Court of Appeals, supra, where thecomplaint seeking to be declared entitled to redeem was filed after the expiration of the statutory period ofredemption. What was proper for determination then in said cases was whether or not the right ofredemption sans judicial action was validly exercised. In said cases, the Court applied the general rulethat bona fide redemption necessarily imports a reasonable and valid tender of the entire purchase price.(at p. 109; emphasis added.)

Thus, it is only when the complaint to enforce a repurchase is filed within the period of redemption will it be equivalent toan offer to redeem and have the effect of preserving the right of redemption ( Belisario, supra, citing Reoveros vs. Abel


19/42

and Sandoval , 48 O.G. 5318). Where, as in this case, the complaint for redemption was filed after the redemption periodexpired, the complaint is a useless exercise which can not defeat the purchaser's right to have the title of the propertytransferred in his name. Cuenca's reliance on the ruling in Hulganza vs. Court of Appeals (147 SCRA 77 [1987]) is withoutany basis. The doctrine laid down in Hulganza finds no applicability to the instant case for unlike the complaint filed byCuenca in the case at bar, the action for redemption in Hulganza was filed within the period of redemption.

Moreover, it bears noting that Cuenca sent letters (dated July 17 and August 23, 1984) to SIHI within the redemptionperiod in which she offered to redeem her property. In her letter dated July 17, 1984, she offered to pay her indebtednessaccording to an installment plan which, if carefully analyzed, had the effect of extending the period of redemption beyond

one year contrary to the policy of the law ( Belisario, supra ). In her other letter dated August 23, 1984, she offered to paythe amount P426,874.72 in full settlement of her obligation, althrough, as We earlier stated, this amount was neverproperly delivered to SIHI in accordance with law. There is thus no proof at that time that Cuenca possessed the ability topay the redemption amount she was offering. This is especially true in the light of the fact that in her first letter she merelyoffered to pay in installments.

If only to prove the veracity of her claim that at that time she was capable of paying SIHI the full amount of what shethought was a reasonable redemption price, the least that Cuenca could have done was to consign payment in courtsimultaneous with her filing of the action to redeem on August 24, 1992. In so stating, We do not here depart from ourconsistent ruling that a formal offer to redeem, accompanied by a bona fide tender of the redemption price, althoughproper, is not essential where the right to redeem is exercised through the filing of a judicial action (Tolentino vs. Court of

Appeals, 106 SCRA 513 [1981]; Tioseco vs. Court of Appeals, 143 SCRA 705 [1986]; Hulganza, supra; Beliserio, supra ). As earlier stated, this rule only holds where the action to redeem is filed within the redemption period. Where, as in theinstant case, the action is filed after the statutory period has expired, the determination of whether the plaintiff consignedthe redemption price with the court simultaneous with the filing of the action is necessary to see if the right of redemptionsans judicial action was validly exercised ( Beliserio, supra ).

Cuenca's consignation with this Court of the amount ordered by the Court of Appeals to be paid to SIHI only eight (8)years after her action to redeem was filed in 1984 is a belated move which merely shows that in 1984 she had no ability topay SIHI the redemption price. Her filing of the action was a mere devise and scheme to buy time to raise the amountneeded to redeem her property. In Conejero, et al. vs. Court of Appeals, et al. (16 SCRA 775 [1966]), We precisely statedthat "a buyer can not be expected to entertain an offer of redemption without attendant evidence that the redemptionercan, and is willing to accomplish the repurchase immediately. A different rule would leave the buyer open to harassmentby speculators or crackpots, as well as to unnecessary prolongation of the redemption period, contrary to the policy of thelaw. . . . Of course, consignation of the price would remove all controversy as to the redemptioner's ability to pay at theproper time. (at pp. 781-782.)"

We further stated in Basbas vs. Entena (28 SCRA 665, 671 [1969]) that:

. . . the right of legal redemption must be exercised within specified time limits: and the statutory periodswould be rendered meaningless and of easy evasion unless the redemptioner is required to make anactual tender in good faith of what he believed to be the reasonable price of the land sought to beredeemed. The existence of the right of redemption operates to depress the market value of the land untilthe period expires, and to render that period indefinite by permitting the tenant to file a suit forredemption, with either party unable to foresee when final judgment will terminate the action, wouldrender nugatory the period of two years fixed by the statute for making the redemption and virtuallyparalyze any efforts of the landowner to realize the value of his land. No buyer can be expected toacquire it without any certainty as to the amount for which it may be redeemed, so that he can recover atleast his investment in case of redemption. In the meantime, the landowner's needs and obligations

cannot be met. It is doubtful if any such result was intended by the statute, absent clear wording to thateffect.

The situation becomes worse when as shown by the evidence in this case, the redemptioner has nofunds and must apply for them to the Land Authority, which, in turn, must depend on the availability offunds from the Land Bank. It then becomes practically certain that the landowner will not be able torealize the value of his property for an indefinite time beyond the two years redemption period. (at pp.671-672.)

WHEREFORE, the appealed portions of the Original Decision and the Amended Decision are REVERSED and SET ASIDE and new judgment is hereby entered:


20/42

1) Declaring valid and effective the extrajudicial foreclosure of the mortgage of respondent Sabina Vda. de Cuenca'sproperty in Timog, Quezon City on August 8, 1983; and

2) Upholding and confirming the cancellation of Transfer Certificate of Title No. 126578 of the Register of Deeds ofQuezon City in the name of Sabina Vda. de Cuenca, as well as its replacement by Transfer Certificate of Title No. 324372in the name of State Investment House, Inc.

Neither party is to recover damages or costs.

SO ORDERED.

Gutierrez, Jr., Bidin, Davide, Jr. and Romero, JJ., concur .


21/42


Manila

FIRST DIVISION

G.R. No. 73503 August 30, 1988

BENJAMIN BELISARIO, PACITA B. PINAR, VICTORIA BELISARIO, SILVERIO BELISARIO,FRANCISCO BELISARIO, ANATOLIA B. JACULAN, FELIPE BELISARIO and TERESITA B.ALKUINO petitioners,vs.THE INTERMEDIATE APPELLATE COURT, LOURDES CABRERA, VICENTE CABRERA, JR.,ROBERTO CABRERA, MANUEL CABRERA and PNB, Cagayan de Oro Branch, respondents.

Abundio L. Okit for petitioners.

Maximo G. Rodriguez and Rufus B. Rodriguez for private respondents.

MEDIALDEA, J .:

This is a petition review on orari of a decision of the Intermediate Appellate Court (now the Court of Appeals) in AC-GRNo. 63407-R affirming the decision of the Court of First Instance of Bukidnon in Civil Case No. 715 entitled, "BenjaminBelisario, et al., vs. Philippine National Bank, et al", dismissing herein petitioners' complaint for Repurchase ofHomestead.

The undisputed facts of the case are as follows:

The subject matter of this case is a piece of land originally covered by Original Certificate of Title No. 366, pursuant to

Homestead Patent No. 45183 issued in the names of Rufino Belisario and Felipa Lauga located in Valencia, Bukidnon,and consisting of an area of 23, 2210 hectares.

On August 3, 1948, upon the death of Rufino Belisario, the ownership of the land was extra-judicially settled among hischildren (petitioners herein), namely: Benjamin, Pacita, Victoria Silverio, Francisco, Anatolia Felipe and Teresita, allsurnamed Belisario and his widow, Felipa Lauga and in whose names Transfer Certificate of Tittle No. T-124 was issued.

Sometime in 1950, on the strenght of a special power of attorney executed by some of the petitioners in favor ofpetitioner, Benjamin Belisario, said land was mortgaged to the Philippine National Bank (PNB) to secure a promissorynote in the sum of P1,200.00.

Petitioners-mortgagors defaulted in the payment of the loan. Consequently, the mortgage was extra-judicially foreclosedand on January 31, 1963 the land was sold at public auction for P3,134.76 with respondent PNB as the highest bidder.

On April 21, 1971, petitioners wrote to respondent PNB making known their "desire to redeem and/or repurchase the saidproperty for and in the same price as the auction sale, P3,134.76," and enclosed therein a postal money order in theamount of P630.00 as partial payment, with the balance to be paid in twelve equal monthly installments. At the timepetitioners offered to redeem the subject property, the Sheriff's Certificate of Sale covering the sale at public auction to therespondent PNB was not yet registered.

Having been apprised of the non-registration, the respondent PNB caused the registration of the Sheriff's Certificate ofSale with the Register of Deeds of Bukidnon on July 22, 1971 and Transfer Certificate of Title No. T-6834 was later issuedin the name of respondent bank.


22/42

On August 24, 1971, respondent PNB sent a reply letter to petitioners, refusing the tender of P630.00 as partial paymentof the total obligations of P7,041.41 due from petitioners (which included the amount of P2,027.02 allegedly paid byrespondent Vicente Cabrera to respondent PNB) and stating further that under existing regulations of the bank, paymentby way of redemption must be paid in full and not by installments. It cannot, however, be determined from the records ofthe case why the amount of P2,027.02 was received from respondent Cabrera by respondent PNB on December 12,1967 and why the same was included in the statement of accounts sent by respondent PNB to petitioners.

On February 8, 1973, respondent PNB sold the land in question to respondent Cabrera for P5,000.00 and thecorresponding TCT No. 7264 was issued in his name.

On November 20, 1974, respondent Cabrera filed an action for Recovery of Possession and Damages against hereinpetitioners, together with their tenants, who were actual possessors of the land, with the Court of First Instance (nowRegional Trial Court) of Bukidnon and docketed as Civil Case No. 708. In turn, petitioners filed on January 9, 1975, anaction for Repurchase of Homestead against the respondents PNB and Cabrera with the Court of First Instance ofBukidnon and docketed as Civil Case 715. Being interrelated, the two cases were heard jointly.

After pre-trial but before trial on the merits, respondent Cabrera (as defendant in Civil Case No. 715), filed a Motion toDismiss the petitioners' action for Repurchase of Homestead, Civil Case No. 715, on two (2) grounds:

1. No tender ofpayment of the redemption price and/or consignation of the redemption was made byplaintiff.

2. Complaint states no cause of action.

The petitioners herein (as plaintiffs in Civil Case No. 715) opposed the motion contending that they offered to repurchasethe property from respondent PNB (one of the defendants in the same Civil Case) within the five-year redemption periodand tendered payment which was, however, refused by the respondent PNB. Petitioners also manifested that on August 1and 4, 1917, they consigned with the Clerk of Court of Bukidnon the amount of P5,000.00 as repurchase price.

On September 15, 1977, the trial court granted the Motion to Dismiss. After their motion for reconsideration and/or newtrial was denied by the trial court, petitioners appealed to the Intermediate Appellate Court (now Court of Appeals),assigning the following errors:

I. The lower court erred in giving due course to the Motion to Dismiss, without receiving evidence and/orin ignoring the tender of payment made by plaintiffs to defendant bank.

II. The lower court erred in declaring that because plaintiffs never bothered to attend to that letter (letter ofbank addressed to the plaintiffs) for a long time it was obliged to sell the land to its codefendant VicenteCabrera on February 8, 1973.

III. The lower court erred in holding that the plaintiffs made no pretense whatever in their opposition to themotion that Vicente Cabrera disallowed the repurchase of the land and in holding that tender of paymentto defendant Cabrera was necessary to preserve their right to repurchase.

IV. The lower court erred in holding that the consignation of the amount of P5,000.00 was conceivablymade to cure the deficiency of plaintiffs' position and was made beyond the redemption period of fiveyears.

V. The lower court erred in not considering the motion filed out of time and the conduct of the defendantsespecially Atty. Cabrera a waiver of their right to a preliminary hearing on the defense of lack of tender orthat defendants are guilty of estoppel or bad faith. (Rollo, p. 25.)

Respondent appellate court affirmed the lower court's decision in toto . Hence, the instant petition with the petitionerassigning the following errors:

I. That the Honorable Intermediate Appellate Court cited in holding that appellants never bothered totender the payment of redemption and that the filing of judicial action to redeem did not preserveappellants' right to redeem. It cited out of context the doctrine enunciated in Tolentino vs. Court of

Appeals, 106 SCRA 513.


23/42

II. The Honorable Intermediate Appellate Court erred in holding that appellants' posture that they haveoffered to repurchase the property from the appellee bank and tendered payment of redemption pricewithin the redemption period is unmeritorious.

III. The Honorable Intermediate Appellate Court erred in considering long inaction or laches in decidingthe case, the said defense not having been raised in the answers of defendants-appellees not even in themotion to dismiss or appellees' memoranda. (Rollo, p. 9)

The subject piece of land was sold at public auction to respondent PNB on January 31, 1963. However, the Sheriff's

Certificate of Sale was registered only on July 22, 1971. The redemption period, for purposes of determining the timewhen a formal Deed of Sale may be executed or issued and the ownership of the registered land consolidated in thepurchaser at an extrajudicial foreclosure sale under Act 3135, should be reckoned from the date of the registration of theCertificate of Sale in the Office of the Register of Deeds concerned and not from the date of public auction (PNB vs. CA etal., G.R. L-30831 and L-31176, Nov. 21, 1979, 94 SCRA 357, 371). In this case, under Act 3135, petitioners may redeemthe property until July 22, 1972. In addition, Section 119 of Commonwealth Act 141 provides that every conveyance ofland acquired under the free patent or homestead patent provisions of the Public Land Act, when proper, shall be subjectto repurchase by the applicant, his widow or legal heirs, within the period of five years from the date of conveyance. Thefive-year period of redemption fixed in Section 119 of the Public Land Law of homestead sold at extrajudicial foreclosurebegins to run from the day after the expiration of the one-year period of repurchase allowed in an extrajudicial foreclosure.(Manuel vs. PNB, et al., 101 Phil. 968). Hence, petitioners still had five (5) years from July 22, 1972 (the expiration of theredemption period under Act 3135) within which to exercise their right to repurchase under the Public Land Act.

The general rule in redemption is that in making a repurchase, it is not sufficient that a person offering to redeem makesmanifestation of his desire to repurchase; this statement of intention must be accompanied by an actual and simultaneoustender of payment, which constitutes the legal use or exercise of the right to repurchase (Angao vs. Clavano, 17 Phil.152). Likewise, in several cases decided by this Court (Fructo vs. Fuentes, 15 Phil. 362; Retes vs. Suelto, 20 Phil. 394;Rosales vs. Reyes, et al., 25 Phil. 495, Canuto vs. Mariano, 37 Phil. 840; Dela Cruz, et al. vs Resurreccion, et al., 98 Phil.975) where the right to repurchase was held to have been properly exercised, there was a definite finding of tender ofpayment having been made by the vendor. The tender of payment must be for the full amount of the repurchase price,otherwise the offer to redeem will be held ineffectual. (Rumbaoa vs. Arzaga, 84 Phil. 812) Bona fide redemptio necessarilyimports a reasonable and valid tender of the entire repurchase price. There is no cogent reason for requiring the vendeeto accept payment by installments from the redemptioner, as it would ultimately result in an indefinite extension of theredemption period (Conejero, et al. vs. Court of Appeals, et al., L-21812, April 29, 1966, 16 SCRA 775, 780).

The rule that tender of payment of the repurchase price is necessary to exercise the right of redemption finds support is

civil law. Articles 1616 of the Civil Code of the Philippines, in the absence of an applicable provision in Commonwealth ActNo. 141, fumishes the guide, to wit: "The vendor cannot avail himself of the right to repurchase without returning to thevendee the price of the sale ... " (Uy Lee vs. Court of Appeals, L-28126, November 28, 1975, 68 SCRA 196, 204).

However, the filing of a complaint to enforce repurchase within the period for redemption is equivalent to an offer toredeem and has the effect of preserving the right to redemption (Reoveros vs. Abel and Sandoval, 48 O.G. 5318). In thecase of Tolentino vs. Court of Appeals, L-50405- 06, August 5, 1981, 106 SCRA 513, 526'), this Court expounded:

And in this connection, a formal offer to redeem, accompanied by a bona fide tender of the redemptionprice, although proper, is not essential where, as in the instant case, the right to redeem is exercised thruthe filing of judicial action, which as noted earlier was made simultaneously with the deposit of theredemption price within the period of redemption. The formal offer to redeem, accompanied by a bonafide tender of the redemption price within the period of redemption prescribed by law, is only essential to

preserve the right of redemption for future enforcement even beyond such period of redemption. The filingof the act-on itself, within the period of redemption, is equivalent to a formal offer to redeem. Should thecourt allow redemption, the redemptioners should then pay the amount already adverted to.

In a later case, Tioseco vs. Court of Appeals, (G.R.-66597, August 29, 1986, 143 SCRA 705), this Court reiterated therule that the filing of the action itself, within the period of redemption, is equivalent to a formal offer to redeem.

For purposes of determining whether petitioners exercised their right to repurchase effectively, We have only to considertheir filing of the action for Repurchase of Homestead on January 9,1975, against respondent PNB and Cabrera, whichwas filed well within the five-year period to repurchase. The question of timeliness of the tender of payment by petitionerson August 1 and 4, 1977 of the amount of P5,000.00 had become insignificant in view of the filing of the action for


24/42

Repurchase of Homestead which has been held equivalent to an offer to redeem and has the effect by itself of preservingtheir right of recovering the property.

This case is different from Uy Lee vs. Court of Appeals, supra where the action to compel redemption was filed after thelapse of the period of redemption. Thus, the Court held in said case, to wit:

It is clear that the mere sending of letters by vendor Simeon expressing his desire to repurchase theproperty without an accompanying tender of redemption price fell short of the requirements of law. Havingfailed to properly exercise his right of redemption within the statutory five-year period, the right is lost and

the same can no longer be revived by the filing of an action to compel redemption after the lapse of theperiod.

The same factual antecedent obtained in Conejero, et al. vs. Court of Appeals, supra where the complaint seeking to bedeclared entitled to redeem wag filed after the expiration of the statutory period of redemption. What was proper fordetermination then in said cases was whether or not the right of redemption sans judicial action was validly exercised. Insaid cases, the Court applied the general rule that bona fide redemption necessarily imports a reasonable and validtender of the entire purchase price. The respondent Court of Appeals thus erred in citing Tolentino vs. Court of Appeals out of context and in applying the doctrine in Uy Lee vs. Court of Appeals , and Coneiero vs. Court of Appeals , suprawhere the circumstances of said cases are different from the case at bar. The respondent Court of Appeals likewise erredin holding that the action is barred by long inaction. The right of redemptiola under Commonwealth Act 141 legally beganto accrue only on June 22, 1972. Certainly, an action for Repurchase of Homestead filed on January 9, 1975 cannot beheld to be barred.

ACCORDINGLY, the decision of the Court of Appeals in the instant case is hereby REVERSED and SET ASIDE.Judgment is hereby rendered authorizing petitioners to redeem the property subject matter hereof, within thirty (30) daysfrom entry of judgment, and ordering private respondent Cabrera to execute a deed of absolute conveyance thereof infavor of the petitioners upon payment by the latter of the purchase price thereof at the auction sale, with 1% per monthinterest thereon in addition, up to the time of redemption, together with the amount of any taxes or assessments whichrespondent Cabrera may have paid thereon after purchase, if any, minus the P5,000.00 consigned in the court a quo . Nopronouncement as to costs at this instance.

SO ORDERED.

Narvasa, Cruz, Gancayco and Aquino, JJ., concur.


25/42


Manila

SECOND DIVISION

G.R. No. L-66597 August 29, 1986

LEONARDO TIOSECO, petitioner,vs.HONORABLE COURT OF APPEALS JOSE P. VILLANUEVA and TIMOTEA P. VILLANUEVA,respondents.

Jose T. Sumat for petitioner.

Amado F. Nera for respondents.

PARAS, J .:

A petition for review by certiorari of the decision of the respondent Intermediate Appellate Court in AC-G.R. CV No. 68888 promulgated on December 27, 1983, as well as of the Resolution of saidappellate court promulgated on February 13, 1984 denying the Motion for Reconsideration of theaforesaid decision.

The facts of this case are as follows: The respondent spouses Jose P. Villanueva and Timotea P.Villanueva mortgaged to the Tarlac Branch of the Philippine National Bank three lots described inOCT No. C-542 issued by the Register of Deeds of Tarlac to secure payment of a loan of EIGHTTHOUSAND SIX HUNDRED (P8,600.00) PESOS. When they failed to comply with the mortgagecontract, the Philippine National Bank petitioned the Provincial Sheriff of Tarlac to foreclose upon theproperties extrajudicially. The Provincial Sheriff in the public auction he conducted on March 7, 1977sold the lots to Leonardo Tioseco, herein petitioner, as the highest bidder for the amount ofEIGHTEEN THOUSAND NINE HUNDRED AND SEVENTY FIVE (P18,975.00) PESOS.

The certificate of sale dated March 7, 1977 issued by the Provincial Sheriff to Tioseco was registeredin the Office of the Register of Deeds of Tarlac on March 8, 1977. Tioseco's ownership over theproperties was consolidated, the title of the spouses Villanueva was cancelled and TCT No. 141194was issued to Tioseco by the Register of Deeds on March 7, 1978.

It is claimed by Tioseco that sometime before March 9, 1978 respondents Villanueva visited him in

his house and offered to pay the amount he had paid for the three lots auctioned off on March 7,1977. Tioseco told them that they could redeem the three lots by paying to him the amount he paid atthe auction sale plus interest. The respondents promised to return, but never did.

Upon the other hand, it is claimed by the respondents that they offered to redeem the three lots withinthe period of redemption but Tioseco allegedly demanded TWENTY TWO THOUSAND SIXHUNDRED FORTY ONE PESOS AND EIGHT CENTAVOS (P22,641.08) as redemption price.Finding the amount demanded excessive, the respondents Villanueva filed a suit on March 7, 1978 toannul the sale in favor of Tioseco on the ground that it was irregular and to require both the PhilippineNational Bank and Tioseco to determine the amount they should pay to be able to redeem the threelots.


26/42

The Philippine National Bank stated in its answer that at the time of the auction sale of the three lotson March 7, 1977 the amount of EIGHTEEN THOUSAND NINE HUNDRED SEVENTY FIVE(P18,975.00) PESOS was due from the respondents. The amount included the principal of the loan,accrued interest, service charges, expenses of foreclosure, and attorney's fees. The answer alsostated tha

Documents

Credit Cases Mortgage- Suspends the Period of Redemption