HUERTA ALBA RESORT, INC. v.

CA (2000)
(Right of Redemption)

Equity of redemption Right of redemption

Exists in judicial foreclosure GR: Exists only in the case of the
extrajudicial foreclosure of the mortgage

E: in a judicial foreclosure except only

where the mortgagee is the PNB or a bank
or banking institution
the right of the defendant mortgagor to grants to the mortgagor the right of
extinguish the mortgage and retain redemption within 1 year from the
ownership of the property by paying the registration of the sheriff's certificate of
secured debt within the 90-dayperiod foreclosure sale
after the judgment becomes final, in
accordance with Rule 68, or even after the
foreclosure sale but prior to its
confirmation.
Section 2, Rule 68, 1997 Rules of Civil Act 3135
Procedure
Section 78 of R.A. No. 337.

Judicial Foreclosure
The law declares that a judicial foreclosure sale 'when confirmed be an order of the
court. . . . shall operate to divest the rights of all the parties to the action and to vest
their rights in the purchaser, subject to such rights of redemption as may be allowed
by law.' Such rights exceptionally 'allowed by law' (i.e., even after confirmation by an
order of the court) are those granted by the charter of the PNB (Acts No. 2747 and
2938), and the General Banking Act (R.A. 337). These laws confer on the mortgagor,
his successors in interest or any judgment creditor of the mortgagor, the right to redeem
the property sold on foreclosure after confirmation by the court of the foreclosure
sale which right may be exercised within a period of one (1) year, counted from the
date of registration of the certificate of sale in the Registry of Property.

Equity of redemption
This is simply the right of the defendant mortgagor to extinguish the mortgage and
retain ownership of the property by paying the secured debt within the 90-day period
after the judgment becomes final, in accordance with Rule 68, or even after the
foreclosure sale but prior to its confirmation.

Section 2, Rule 68 provides that

'. . If upon the trial . . the court shall find the facts set forth in the complaint to be true, it
shall ascertain the amount due to the plaintiff upon the mortgage debt or obligation,
including interest and costs, and shall render judgment for the sum so found due and
order the same to be paid into court within a period of not less than ninety (90) days
 from the date of the service of such order, and that in default of such payment the
property be sold to realize the mortgage debt and costs.'

This is the mortgagor's equity (not right) of redemption which, as above stated, may be
exercised by him even beyond the 90-day period 'from the date of service of the
order,' and even after the foreclosure sale itself, provided it be before the
order of confirmation of the sale. After such order of confirmation, no redemption
can be effected any longer." (Emphasis supplied)

Held: Petitioner failed to seasonably invoke its purported right under Section 78 of R.A.
No. 337. The failure of petitioner to seasonably assert its alleged right under Section 78
of R.A. No. 337 precludes it from so doing at this late stage case. Verily, the petitioner
has only itself to blame for not alleging at the outset that the predecessor-in-interest of
the private respondent is a credit institution. Thus, when the trial court, and the CA
repeatedly passed upon the issue of WON petitioner had the right of redemption or
equity of redemption over subject properties in the decisions, resolutions and orders, it
was unmistakable that the petitioner was adjudged to just have the equity of redemption
without any qualification whatsoever, that is, without any right of redemption allowed
by law.

There then existed only what is known as the equity of redemption, which is simply
the right of the petitioner to extinguish the mortgage and retain ownership of the
property by paying the secured debt within the 90-day period after the judgment
became final. The confirmation of the sale and the issuance of the TCT covering the
subject properties to private respondent was then, in order. The trial court therefore,
has the ministerial duty to place private respondent in the possession of subject
properties.

SPOUSES RABAT v. PNB, 2012

(Conduct of Sale, Act. No. 3135, Sec. 4, Sec. 5, A.M. No. 99-10-05-0)

Inadequacy of bid price

Inadequacy of the bid price at a forced sale, unlike that in an ordinary sale,
is immaterial and does not nullify the sale; in fact, in a forced sale, a low price is
considered more beneficial to the mortgage debtor because it makes redemption of the
property easier.

The National Loan and Investment Board v. Meneses:

As to the inadequacy of the price of the sale, this court has repeatedly held that the
fact that a property is sold at public auction for a price lower than its alleged value, is
not of itself sufficient to annul said sale, where there has been strict
compliance with all the requisites marked out by law to
1. obtain the highest possible price, and
2. where there is no showing that a better price is obtainable.
 Ratio: When there is a right to redeem, inadequacy of price should not be material
because the judgment debtor may re-acquire the property or else sell his right to redeem
and thus recover any loss he claims to have suffered by reason of the price obtained at
the execution sale. Thus, respondent stood to gain rather than be harmed by the low sale
value of the auctioned properties because it possesses the right of redemption.

Act No. 3135, as amended, reveals nothing to the effect that there should be a
minimum bid price or that the winning bid should be equal to the appraised value of the
foreclosed property or to the amount owed by the mortgage debtor.

Claim of deficiency
Right to recover the deficiency amount:
xxx it is settled that if the proceeds of the sale are insufficient to cover the debt in an
extrajudicial foreclosure of the mortgage, the mortgagee is entitled to claim the
deficiency from the debtor. For when the legislature intends to deny the right of a
creditor to sue for any deficiency resulting from foreclosure of security given to
guarantee an obligation it expressly provides as in the case of pledges [Civil Code, Art.
2115] and in chattel mortgages of a thing sold on installment basis [Civil Code, Art.
1484(3)]. Act No. 3135, which governs the extrajudicial foreclosure of mortgages, while
silent as to the mortgagees right to recover, does not, on the other hand, prohibit
recovery of deficiency. Accordingly, it has been held that a deficiency claim arising from
the extrajudicial foreclosure is allowed.

GOLDENWAY MERCHANDISING CORP v. EQUITABLE PCIBANK, (2013)

(Right of Redemption, Act No 3135, Sec. 6 A.M. No. 99-10-05-0)
Facts: Petitioner corporation executed a REM in favor of respondent bank. Petitioner
failed to settle its loan obligation hence the respondent extrajudicially foreclosed the
mortgage on December 13, 2000 and the property was sold to the respondent.
Accordingly, a Certificate of Sale was issued to respondent on January 26, 2001. On
March 8, 2001, petitioner offered to redeem the foreclosed properties but was told that
such redemption is no longer possible because the certificate of sale had already
been registered. Petitioner also verified with the Registry of Deeds that title to the
foreclosed properties had already been consolidated in favor of respondent and that new
certificates of title were issued in the name of respondent on March 9, 2001.

Sec. 47, RA 8791 Act 3135

General law pertaining to the banking Special law governing REM and
industry foreclosure
shortens the period of redemption for 1 year redemption period
juridical persons:
Juridical persons have the right to
redeem the property
1. Until no more than three (3) months
after foreclosure
2. but not after the registration of the
certificate of foreclosure sale with the
 Register of Deedswhichever is earlier.

1. Act No. 3135, as amended by Act No. 4118. Section 6 thereof provides:
SEC. 6. In all cases in which an extrajudicial sale is made under the special power
hereinbefore referred to, the debtor, his successors-in-interest or any judicial creditor or
judgment creditor of said debtor, or any person having a lien on the property
subsequent to the mortgage or deed of trust under which the property is sold, may
redeem the same at any time within the term of one year from and after the date of the
sale; and such redemption shall be governed by the provisions of sections four hundred
and sixty-four to four hundred and sixty-six, inclusive, of the Code of Civil Procedure, in
so far as these are not inconsistent with the provisions of this Act.

The one-year period of redemption is counted from the date of the registration of the
certificate of sale. In this case, the parties provided in their real estate mortgage contract
that upon petitioners default and the latters entire loan obligation becoming due,
respondent may immediately foreclose the mortgage judicially in accordance with the
Rules of Court, or extrajudicially in accordance with Act No. 3135, as amended.
2. Section 47 of R.A. No. 8791 otherwise known as "The General Banking Law of
2000" which took effect on June 13, 2000, amended Act No. 3135. Said provision reads:

Sec. 47. Foreclosure of Real Estate Mortgage. In the event of foreclosure, whether
judicially or extrajudicially, of any mortgage on real estate which is security for any loan
or other credit accommodation granted, the mortgagor or debtor whose real property
has been sold for the full or partial payment of his obligation shall have the right within
one year after the sale of the real estate, to redeem the property by paying the amount
due under the mortgage deed, with interest thereon at the rate specified in the
mortgage, and all the costs and expenses incurred by the bank or institution from the
sale and custody of said property less the income derived therefrom. However, the
purchaser at the auction sale concerned whether in a judicial or extrajudicial foreclosure
shall have the right to enter upon and take possession of such property immediately
after the date of the confirmation of the auction sale and administer the same in
accordance with law. Any petition in court to enjoin or restrain the conduct of
foreclosure proceedings instituted pursuant to this provision shall be given due course
only upon the filing by the petitioner of a bond in an amount fixed by the court
conditioned that he will pay all the damages which the bank may suffer by the enjoining
or the restraint of the foreclosure proceeding.

Notwithstanding Act 3135, juridical persons whose property is being sold pursuant to an
extrajudicial foreclosure, shall have the right to redeem the property in accordance with
this provision until, but not after, the registration of the certificate of foreclosure sale
with the applicable Register of Deeds which in no case shall be more than three (3)
months after foreclosure, whichever is earlier. Owners of property that has been sold in
a foreclosure sale prior to the effectivity of this Act shall retain their redemption rights
until their expiration.

Constitutionality of Sec. 47, RA 8791

1. Did not violate the non-impairment clause: Section 47 did not divest juridical
persons of the right to redeem their foreclosed properties but only modified the time for
the exercise of such right by reducing the one-year period originally provided in Act No.
3135.
2. Did not violate the eual protection clause: The legislature clearly intended to
shorten the period of redemption for juridical persons whose properties were foreclosed
and sold in accordance with the provisions of Act No. 3135. The difference in the
treatment of juridical persons and natural persons was based on the nature of the
properties foreclosed whether these are used as residence, for which the more liberal
one-year redemption period is retained, or used for industrial or commercial
purposes, in which case a shorter term is deemed necessary to reduce the period of
uncertainty in the ownership of property and enable mortgagee-banks to dispose sooner
of these acquired assets; for maintaining a safe and sound banking system.

Having ruled that the assailed Section 47 of R.A. No. 8791 is constitutional, we find no
reversible error committed by the CA in holding that petitioner can no longer exercise
the right of redemption over its foreclosed properties after the certificate of sale in favor
of respondent had been registered.

Spouses Yap vs Spouses Dy[G.R. No. 171868, July 27, 2011]

FACTS:
The subject parcels of land designated as lot 1, 3, 4, 5, 6, 8 as well as lot 846 are originally owned by spouses
Tirambulos. They executed a REM over Lots 1,4, 5,6, and 8 in favour of the Rural Bank of
Dumaguete, predecessor of Dumaguete Rural Bank Inc. (DRBI).Later, Lots 3 and 8446 were also mortgaged in
favour of the same bank. Subsequently, the Tirambulos sold all & mortgaged lots to spouse Dy without consent
and knowledge of DRBI. Tirambulos failed to pay their loans so DRBI foreclosed lots 1, 4, 5, 6,and 8 and sold at
public auction. DRBI was the highest bidder.Later, DRBI sold lots 1, 3, and 6 to spouses Yap.

ISSUE: Is Lot 3 among the foreclosed properties?May persons to whom several mortgaged lands were transferred
without the knowledgeand consent of the creditor redeem only several parcels if all the lands were sold together
for asingle price at the foreclosure sale?

RULING:We cannot subscribe to the Yaps' argument on the indivisibility of the mortgage. As heldin the case of
Philippine National Bank v. De los Reyes the doctrine of indivisibility of mortgage does not apply once the
mortgage is extinguished by a complete foreclosure thereof asin the instant case. The Court held:The parties were
accordingly embroiled in a hermeneutic disparity on their aforesaid contendingpositions. Yet, the rule on the
indivisibility of mortgage finds no application to the case at bar.The particular provision of the Civil Code referred
to provides:Art. 2089. A pledge or mortgage is indivisible, even though the debt may be divided among
thesuccessors in interest of the debtor or of the creditor.Therefore, the debtor's heir who has paid a part of the debt
cannot ask for the proportionateextinguishment of the pledge or mortgage as long as the debt is not completely
satisfied