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Union Bank vs.

CA (del Rosario) FACTS: Respondents, Spouses Vincoy, mortgaged their residence in favor of Union Bank, petitioner, to secure the payment of a loan to Delco Industries in the amount of P2,000,000. Spouses failed to pay. Union Bank extrajudicially foreclosed the mortgage and had a foreclosure sale wherein they won as highest bidder. Prior to the expiration of the redemption period on May 8, 1992, the respondents filed a complaint for annulment of mortgage with the lower court. Property was a family home as contemplated by Article 158 of the Family Code prohibiting execution, forced sale, and any other encumbrance. They assailed the validity of the mortgage. On the hand, petitioner maintained that the mortgaged property of respondents could not be legally 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 Family Code. Lower court ruled in favor of Union Bank since family home value exceeded P300,000. Court of Appeals upheld the validity of mortgage in favor of petitioner. However, CA also recognized right of redemption in favor of respondent. Petitioner filed a petition for review on certiorari with SC: 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. SC dismissed petition and ruled CA did not commit any error. Hence, this MR. ISSUE: Whether or not respondent have right to redeem. NOPE. We are persuaded to reconsider. HELD: A careful scrutiny of the pleadings filed by the respondents before the lower court reveals that at no time did the respondents pray that they be allowed to redeem the subject foreclosed property. On the other hand, respondents never wavered from the belief that the mortgage over the said property is, in the first place, void for having been executed over a duly constituted family home without the consent of the beneficiaries thereof. Respondents raised the issue of redemption for the first time only on appeal in contesting the amount ordered by the lower court to be paid by respondents to the petitioner. It is settled jurisprudence that an issue which was neither averred in the complaint nor raised during the trial in the 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. On this ground alone, the Court of Appeals should have completely ignored the issue 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 nonexistent one year after May 8, 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 public auction, judicially or extrajudicially, for the full or partial payment of an obligation to any bank, shall have the right, within one year after the sale of the real estate to redeem the property. It cannot also be argued that the action for annulment of the mortgage filed by the respondents tolled the running of the one-year period of redemption. Vaca vs. CA: the pendency of an action questioning the validity of a mortgage cannot bar the issuance of the writ of possession after title to the property has been consolidated in the mortgagee. The implication is clear: the period of redemption is not interrupted by the filing of an action assailing the validity of the mortgage, so that at the expiration thereof, the mortgagee who acquires the property at the foreclosure sale can proceed to have the title consolidated in his name and a writ of possession issued in his favor. WHEREFORE, the motion for reconsideration is hereby GRANTED. This Court's Resolution dated July 12, 1999 is MODIFIED insofar as respondents are found to have lost their right to redeem the subject foreclosed property.