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G.R. No. L-41811 November 10, 1986

GOVERNMENT SERVICE INSURANCE SYSTEM (GSIS), Petitioner, vs. THE HONORABLE COURTOF APPEALS, FELIPE T. ANG and EUFROCINA C. TOBY, Respondents.

FACTS:

The records disclose that from 1958 to 1971 private respondents Ang obtained from petitionerGSIS several loans secured by real estate mortgages constituted over five parcels of land registered inthe names of the spouses Ang. Upon the private respondents' failure to pay their loan on tune, the GSISforeclosed on their property extra-judicially. Seeking to obtain possession of the property it bought at theforeclosure sale, petitioner GSIS filed a petition for the issuance of a writ of possession.

ISSUE:

Whether or not GSIS is entitled, during the period of redemption, to the possession of theproperty it purchased at the foreclosure sale?

HELD:

This issue is hardly of first impression. We had occassion to rule on it in Marcelo Steel Corp. v.Court of Appeals, 54 SCRA 89, citing De Gracia v. San Jose, 94 Phil. 623, where this Court said:

As may be seen, the law expressly authorizes the purchase to petition for a writ of possessionduring the redemption period by filling an ex parte motion under oath for that purpose in thecorresponding registration or cadastral proceeding in the case of property with Torrens title, and upon thefiling of such motion and the approval of corresponding bond, the law also in express terms directs thecourt to issue the order for a writ of possession. The order for a writ of possession issues as a matter ofcourse upon the filing of the proper motion and the approval of the corresponding bond. No discretion is

left to the court. And any question regarding the regularity and validity of the sale (and the consequentcancellation of the writ) is left to be determined in a subsequent proceeding. Such question is not to beraised as a justification for opposing the issuance of the writ of possession, since, under the Act, theproceeding for this is ex parte.

In the present case the period of redemption had already long lapsed with no redemption havingbeen made. In fact, the titles to all the properties purchased at the auction sale were already transferredto and registered in the name of the GSIS. This being so, there is no justifiable ground whatsoever whythe Writ of Possession would not be issued.

G.R. No. 164036 October 19, 2007

SPOUSES SANTIAGO and MA. CONSUELO CARLOS, petitioners,vs.THE COURT OF APPEALS, REGIONAL TRIAL COURT, BRANCH 204, at Muntinlupa City, andLAND BANK OF THE PHILIPPINES, respondents.

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FACTS:

Respondent Land Bank of the Philippines foreclosed petitioner-spouses mortgaged properties fortheir failure to pay their obligation. Land Bank was the highest bidder at the foreclosure sale. After thelapse of the redemption period and the consolidation of the properties title in its name, Land Bank filedan Ex Parte Petition for Issuance of Writ of Possession with the RTC of Muntinlupa City. The trial court

issued an order requiring all interested parties to appear on the date of the hearing and to show causewhy the petition should not be granted. A copy of the order was sent to petitioners.

Petitioners filed a consolidated motion to intervene and to dismiss the petition on the grounds of lack ofjurisdiction and forum shopping. Petitioners alleged that there is a pending case for the declaration ofnullity of the mortgage and foreclosure sale.

The trial court denied the motion to intervene and to dismiss. It held that there was no forum shoppingbecause the resolution of the case would not amount to res judicata and that the petition for the issuanceof the writ of possession to Land Bank could proceed independently of any action for annulment of thesale. Petitioners moved for reconsideration but it was denied.

In the meantime, the trial court continued to hear the main petition. In the scheduled hearing Land Bank

failed to appear thus the trial court dismissed the petition. Land Bank moved for reconsideration, whichwas set for hearing. Petitioners received a copy of the motion on the day of the hearing. Petitionersopposed the motion for being a mere scrap of paper since it failed to comply with the three-day priornotice required. However, the trial court granted reconsideration citing the policy of the Court to set asidetechnical rules of procedure in the interest of substantial justice and because a petition for a writ ofpossession may be granted ex parte.

ISSUES:

Whether or not the ex-parte proceeding denied the petitioner of due process?

Whether or not the Rules on Motion and Service applicable to a proceeding for issuance of a writof possession filed after a foreclosure?

HELD:

Petitioners assert that they were denied due process of law when they were not given a three-dayprior notice, which is contrary to Section 1, Article III of the Constitution. Petitioners consider Land Banksmotion for reconsideration a mere scrap of paper and contend that the filing thereof did not toll therunning of the reglementary period. Hence, according to the petitioners, the denial of Land Banks petitionfor the issuance of a writ of possession had attained finality.

Land Bank counters that due process was more than complied with when the trial court, despite the exparte nature of the proceedings, allowed and entertained the petitioners. Land Bank contends that by thenature of the proceedings and the fact that the redemption period had lapsed, and that title over the

property had already been consolidated in its name, the issuance of the writ had become a ministerialduty on the part of the trial court.

This Court had consistently held that the pendency of a civil case for annulment of sale is not a sufficientground to deny the issuance of a writ of possession. The motion for issuance of a writ of possession canproceed independently and its issuance does not bar a separate case for annulment of mortgage andforeclosure sale.

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The law expressly authorizes the purchaser to petition for a writ of possession by filing an ex partemotion. That being so, there is no need for the Land Bank to notify the parties of the proceedings. Thetrial court correctly held that the motion for issuance of a writ of possession is an exception to the generalthree-day notice rule for motions. Nevertheless, the ex parte nature of the proceeding does not deny dueprocess to the petitioners because, to repeat, the issuance of the writ of possession does not bar aseparate case for annulment of mortgage and foreclosure sale.

G.R. No. 137566 February 28, 2001

ROBERTO G. ROSALES, as successor-in-interest of NAPOLEON S. ROSALES and LUISBUSTILLO,petitioners,vs.THE HON. COURT OF APPEALS and NATIONAL DEVELOMENT CORPORATION, as substitutedplaintiff and the successor-in-interest of CONTINENTAL BANK, respondents.

FACTS:

On April 12, 1966, the Continental Bank a complaint alleging that Atlas Timber Company, throughits Managing Partner Napoleon Rosales, and Luis Bustillo in his personal capacity, executed in favor of

Continental Bank a promissory note, in the amount of P1,000,000.00 and as security for the payment ofthe note, Bustillo executed in favor of the bank a real estate mortgage over forty-four (44) parcels of landand likewise, Rosales executed a real estate mortgage over forty-nine (49) parcels of land. Thedefendants failed and refused to pay the first amortization on the loan, thus rendering the whole principalamount thereof due and demandable. Plaintiff bank prayed that defendants be ordered to pay the amountwith interest and attorney's fees equivalent. In default thereof, that the real estate mortgages executed bydefendants Rosales and Bustillo in favor of the bank be judicially foreclosed.1wphi1.nt

After ascertaining that defendants have failed to pay the judgment debt within ninety (90) daysfrom January 25, 1975, when service of the decision on them was deemed completed, the court issuedthe Writ of Execution, commanding the Branch Deputy Sheriff to sell at public auction the lands.

At the foreclosure sale, Continental Bank was awarded the lands. Accordingly, the Branch Deputy

Sheriff executed the Officer's Deed of Sale on September 25, 1975, conveying to Consolidated Bank themortgaged parcels of land.

Petitioners argued that the lower court amended the decision in its Order dated April 22, 1975, byadding TCT No. T-11839 to the properties to be sold at public auction, without prior notice to petitioners(defendants therein). The amendment was substantial because it included property which was not statedin the original decision; hence, the ninety-day period for petitioners to pay the judgment debt should bereckoned not from the date of service of the original decision but from the date of service of theamendment thereto. Consequently, plaintiff's motion for execution filed on May 3, 1975, or barely elevendays after the Order amending the decision, was premature inasmuch as the thirty-day reglementaryperiod to appeal had not yet elapsed. More importantly, the lower court's Order for the issuance of a Writof Execution was null and void, since this was done before the expiration of the ninety-day period fordefendants to pay the judgment debt. Therefore, petitioners contend that they should be allowed another

period of ninety (90) days within which to pay the judgment debt.

Likewise, petitioners assail the validity of the order of confirmation issued by the lower court forhaving been issued without affording them notice and hearing. As mortgagors, they should have beenafforded a hearing and an opportunity to show cause why the sale should not be confirmed, as by proof ofirregularities therein or gross inadequacy of the price. The lack of such a notice vitiates the confirmationsale, which may be set aside anytime.

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Finally, petitioners accused Consolidated Bank of laches and prescription for its failure toconsolidate its title for twenty (20) years.

HELD:

Private respondent maintained that Napoleon Rosales was duly notified of all Orders of the trial

court. In fact, petitioners wrote several letters to private respondent wherein they requested that they beallowed to repurchase the properties, and that they failed to pay the real estate taxes on the lands orperform any act consistent with ownership thereof. Based on these, petitioners are estopped fromclaiming ownership over the properties

The Court of Appeals failed to address petitioners' primary argument that the issuance of the writof execution was null and void for failure to afford petitioners the full ninety-day period within which to paythe judgment debt and avoid the sale of their properties at public auction.

The court agree with petitioners that their period of appeal and the ninety days grace periodwithin which they could have paid the judgment debt should have been counted from service of the Orderdated April 22, 1975, which substantially amended the decision. Where a judgment is amended, the dateof the amendment should be considered the date of the decision in the computation of the period for

perfecting the appeal.

The records reflect that a copy of the amendatory Order was sent to defense counsel byregistered mail on April 23, 1975. Assuming there was constructive notice, service thereof must havebeen deemed completed sometime thereafter. Consequently, the motion for execution filed byContinental Bank on May 3, 1975 was premature, inasmuch as it was still within the reglementary periodfor petitioners to appeal, which under the Rules in force at that time was fixed at thirty days.

The ninety-day period within which petitioners could have paid the judgment debt and thusavoided the sale of their properties at public auction should have commenced a few days from April 23,1975. When the Writ of Execution was issued on July 14, 1975, the said ninety-day period had not yetexpired.

A judgment in an action for foreclosure of mortgage could only be executed in a mannerprescribed in the Rules. Where the order of execution was not in conformity with the Rules, the same isnull and void. The order for defendants to pay the judgment debt within ninety days, prior to the sale ofthe foreclosed properties at public auction, is a substantive requirement which cannot be omitted.

This 90-day period given in the rule is not a procedural requirement merely; it is a substantiveright granted to the mortgage debtor as the last opportunity to pay the debt and save hismortgaged property from final disposition at the foreclosure sale. It is one of the two stepsnecessary to destroy what in law is known as the mortgagor's equity of redemption, the otherbeing the sale. It may not be omitted. As the writ of execution or the order allowing the sale of themortgaged property was issued without granting the mortgage debtor said 90-day period, theorder for the sale of the property would be a denial of a substantial right and void.

The sale to Continental Bank of the subject real properties is likewise null and void because theaction or defense for the declaration of inexistence of a contract does not prescribe. The court also saidthat there is no dispute that mere inadequacy of the price per se will not set aside a judicial sale of realproperty.

In addressing the issue of laches, the court held that there is no absolute rule as to whatconstitutes laches or staleness of demand and each case is to be determined according to its particularcircumstances. The question of laches is addressed to the sound discretion of the court and since lachesis an equitable doctrine, its application is controlled by equitable considerations.

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affiliates of private respondent. Due to the default in the payment of the loan amortizations, BANTSA andthe corporate borrowers signed and entered into restructuring agreements. As additional security for therestructured loans, private respondent ARC as third party mortgagor executed two real estate mortgages.

Eventually, the corporate borrowers defaulted in the payment of the restructured loans promptingpetitioner BANTSA to file civil actions before foreign courts for the collection of the principal loan. In the

civil suits instituted before the foreign courts, private respondent ARC, being a third party mortgagor, wasnot impleaded as party-defendant.

Petitioner BANTSA filed before the Office of the Provincial Sheriff of Bulacan, Philippines, anapplication for extrajudicial foreclosure of real estate mortgage. After due publication and notice, themortgaged real properties were sold at public auction in an extrajudicial foreclosure sale.

Consequently, private respondent filed before the Pasig Regional Trial Court an action fordamages against the petitioner for foreclosing extrajudicially the real estate mortgages despite thependency of civil suits before foreign courts for the collection of the principal loan. In its answer petitioneralleged that the rule prohibiting the mortgagee from foreclosing the mortgage after an ordinary suit forcollection has been filed, is not applicable in the present case. Private respondent then filed a motion forsuspension of the redemption period and such was granted.

On 07 February 1994, ICCS, the purchaser of the mortgaged properties at the foreclosure sale,consolidated its ownership over the real properties in its name. After the consolidation of ownership in itsfavor, ICCS sold the real properties to Stateland Investment Corporation.

After trial, the lower court rendered a decision in favor of private respondent ARC. On appeal, theCourt of Appeals affirmed the assailed decision of the lower court prompting petitioner to file a motion forreconsideration which the appellate court denied.

ISSUE:

Does a mortgage-creditor waive its remedy to foreclose the real estate mortgage constituted overa third party mortgagors property situated in the Philippines by filing an action for the collection of theprincipal loan before foreign courts?

HELD:

Petitioner submits that a waiver of the remedy of foreclosure requires the concurrence of tworequisites: an ordinary civil action for collection should be filed and subsequently a final judgment becorrespondingly rendered therein.

In the absence of express statutory provisions, a mortgage creditor may institute against themortgage debtor either a personal action for debt or a real action to foreclose the mortgage. In otherwords, he may pursue either of the two remedies, but not both. By such election, his cause of action canby no means be impaired, for each of the two remedies is complete in itself. Thus, an election to bring a

personal action will leave open to him all the properties of the debtor for attachment and execution, evenincluding the mortgaged property itself. And, if he waives such personal action and pursues his remedyagainst the mortgaged property, an unsatisfied judgment thereon would still give him the right to sue for adeficiency judgment, in which case, all the properties of the defendant, other than the mortgagedproperty, are again open to him for the satisfaction of the deficiency. In either case, his remedy iscomplete, his cause of action undiminished, and any advantages attendant to the pursuit of one or theother remedy are purely accidental and are all under his right of election. On the other hand, a rule thatwould authorize the plaintiff to bring a personal action against the debtor and simultaneously orsuccessively another action against the mortgaged property, would result not only in multiplicity of suitsso offensive to justice (Soriano vs. Enriques, 24 Phil. 584) and obnoxious to law and equity (Osorio vs.

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San Agustin, 25 Phil., 404), but also in subjecting the defendant to the vexation of being sued in the placeof his residence or of the residence of the plaintiff, and then again in the place where the property lies.

In Danao vs. Court of Appeals, reiterating jurisprudence enunciated in Manila Trading and SupplyCo. vs. Co Kim and Movido vs. RFC, invariably held:

The rule is now settled that a mortgage creditor may elect to waive his security and bring, instead,an ordinary action to recover the indebtedness with the right to execute a judgment thereon on all the

properties of the debtor, including the subject matter of the mortgage, subject to the qualification that if hefails in the remedy by him elected, he cannot pursue further the remedy he has waived.

Anent real properties in particular, the Court has laid down the rule that a mortgage creditor mayinstitute against the mortgage debtor either a personal action for debt or a real action to foreclose themortgage. In our jurisdiction, the remedies available to the mortgage creditor are deemed alternative andnot cumulative. Notably, an election of one remedy operates as a waiver of the other. A remedy isdeemed chosen upon the filing of the suit for collection or upon the filing of the complaint in an action forforeclosure of mortgage, pursuant to the provision of Rule 68 of the 1997 Rules of Civil Procedure. As toextrajudicial foreclosure, such remedy is deemed elected by the mortgage creditor upon filing of thepetition not with any court of justice but with the Office of the Sheriff of the province where the sale is to

be made, in accordance with the provisions of Act No. 3135, as amended by Act No. 4118.

Private respondent ARC constituted real estate mortgages over its properties as security for thedebt of the principal debtors. By doing so, private respondent subjected itself to the liabil ities of a thirdparty mortgagor. Under the law, third persons who are not parties to a loan may secure the latter bypledging or mortgaging their own property.

In Cerna vs. Court of Appeals, we agreed with the petitioner in said case, that the filing of acollection suit barred the foreclosure of the mortgage:

A mortgagee who files a suit for collection abandons the remedy of foreclosure of the chattelmortgage constituted over the personal property as security for the debt or value of the promissory notewhen he seeks to recover in the said collection suit.

When the mortgagee elects to file a suit for collection, not foreclosure, thereby abandoning thechattel mortgage as basis for relief, he clearly manifests his lack of desire and interest to go after themortgaged property as security for the promissory note.

Contrary to petitioners arguments that the mere act of filing of an ordinary action for collectionoperates as a waiver of the mortgage-creditors remedy to foreclose the mortgage. By the mere filing ofthe ordinary action for collection against the principal debtors, the petitioner in the present case isdeemed to have elected a remedy, as a result of which a waiver of the other necessarily must arise.Corollarily, no final judgment in the collection suit is required for the rule on waiver to apply.

Hence, in Caltex Philippines, Inc. vs. Intermediate Appellate Court, a case relied upon by

petitioner, supposedly to buttress its contention, this Court had occasion to rule that the mere actof filing a collection suit for the recovery of a debt secured by a mortgage constitutes waiver of the otherremedy of foreclosure.

Petitioner BANTSA only has one cause of action which is non-payment of the debt. Nevertheless,alternative remedies are available for its enjoyment and exercise. Petitioner then may opt to exercise onlyone of two remedies so as not to violate the rule against splitting a cause of action.

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In the present case, however, we shall not follow this rule to the letter but declare that it is thecollection suit which was waived and/or abandoned. It is of no moment that the collection suit was filedahead, what is determinative is the fact that the foreclosure proceedings ended even before the decisionin the collection suit was rendered.

This argument shows desperation on the part of petitioner to rivet its crumbling cause. Philippine

law shall apply notwithstanding the evidence presented by petitioner to prove the English law on thematter.

In a long line of decisions, this Court adopted the well-imbedded principle in our jurisdiction thatthere is no judicial notice of any foreign law. A foreign law must be properly pleaded and proved as afact. Thus, if the foreign law involved is not properly pleaded and proved, our courts will presume that theforeign law is the same as our local or domestic or internal law. This is what we refer to as the doctrine ofprocessual presumption.

Thus, when the foreign law, judgment or contract is contrary to a sound and established publicpolicy of the forum, the said foreign law, judgment or order shall not be applied.

Additionally, prohibitive laws concerning persons, their acts or property, and those which have for

their object public order, public policy and good customs shall not be rendered ineffective by laws orjudgments promulgated, or by determinations or conventions agreed upon in a foreign country.

The public policy sought to be protected in the instant case is the principle imbedded in our jurisdiction

G.R. No. 160479 June 8, 2005

SPOUSES GODOFREDO V. ARQUIZA and REMEDIOS D. ARQUIZA, petitioners,vs.COURT OF APPEALS and EQUITABLE PCIBANK, respondents.

FACTS:

The petitioners, spouses Godofredo V. Arquiza and Remedios D. Arquiza, obtained a loan fromprivate respondent Equitable PCIBank and to secure the payment thereof, the petitioners executed aReal Estate Mortgage over their parcel of land.

When the spouses defaulted in the payment of their loan, the private respondent filed a petitionfor extrajudicial foreclosure of the real estate mortgage. A public auction was held during which themortgaged property, together with all the improvements existing thereon, was sold to the privaterespondent as the highest bidder. Accordingly, a Certificate of Sale over the property was issued in favorof the private respondent and was registered subsequently.

Following the expiry date of the redemption period without the petitioners having exercised theirright to redeem the property, the private respondent consolidated its ownership over the subject property.As a consequence, the Registry of Deeds issued a new one in the name of the private respondent,canceling the petitioners former title.

The petitioners filed a complaint against the private respondent and the sheriffs for thedeclaration of the nullity of the promissory note, real estate mortgage and the foreclosure sale anddamages with a plea for injunctive relief for the suspension redemption period.

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The private respondent demanded that the petitioners vacate and surrender possession of thesubject property, but the latter refused to do so. This compelled the private respondent to file an ExParte Petition for Issuance of a Writ of Possession.

On February 22, 2002, the trial court rendered a Decision granting the petition for Issuance of aWrit of Possession.

The petitioners appealed the decision to the CA and the CA affirmed the judgment rendered.

ISSUES:

Firstly, is it right, proper and just for the Court below to completely ignore and disregard a relatedprior and pending action between the same parties where the very basis of the right of possession overthe subject property sought to be enforced as a result of the foreclosure of a "mortgage" is being assailedin court for being null and void ab initio or inexistent?

Secondly, is it right, proper and just for the Court below to summarily close its eyes to the patent andobvious flaw or irregularity of the "mortgage" in the appreciation of the evidence offered in support of theEx-Parte Petition For the Issuance of a Writ of Possession?

Thirdly, does the application of Section 7 of Act 3135, as amended by Act 4118, as the Court below did,exclude or preclude the effectivity or applicability of the mandate against forum shopping, of therequirement for certification in pleadings against forum shopping, of the principle of "litis pendentia," andof due process of law?

HELD:

The certification against forum shopping is required only in a complaint or other initiatorypleading. The ex parte petition for the issuance of a writ of possession filed by the respondent is not aninitiatory pleading. Although the private respondent denominated its pleading as a petition, it is,nonetheless, a motion. What distinguishes a motion from a petition or other pleading is not its form or the

title given by the party executing it, but rather its purpose. The office of a motion is not to initiate newlitigation, but to bring a material but incidental matter arising in the progress of the case in which themotion is filed. A motion is not an independent right or remedy, but is confined to incidental matters in theprogress of a cause. It relates to some question that is collateral to the main object of the action and isconnected with and dependent upon the principal remedy. An application for a writ of possession is amere incident in the registration proceeding. Hence, although it was denominated as a "petition," it was insubstance merely a motion. Thus, the CA correctly made the following observations:

Such petition for the issuance of a writ of possession is filed in the form of an exparte motion, inter alia, in the registration or cadastral proceedings if the property is registered. Apropos,as an incident or consequence of the original registration or cadastral proceedings, the motion or petitionfor the issuance of a writ of possession, not being an initiatory pleading, dispels the requirement of aforum-shopping certification. Axiomatic is that the petitioner need not file a certification of non-forum

shopping since his claims are not initiatory in character (Ponciano vs. Parentela, Jr., 331 SCRA 605[2000])

SEC. 7. In any sale made under the provisions of this Act, the purchaser may petition the Court ofFirst Instance of the province or place where the property or any part thereof is situated, to give himpossession thereof during the redemption period, furnishing bond in an amount equivalent to the use ofthe property for a period of twelve months, to indemnify the debtor in case it be shown that the sale wasmade without violating the mortgage or without complying with the requirements of this Act. Such petitionshall be made under oath and filed in form of an ex parte motion in the registration or cadastralproceedings if the property is registered, or in special proceedings in the case of property registered

http://www.lawphil.net/judjuris/juri2000/may2000/gr_133284_2000.htmlhttp://www.lawphil.net/judjuris/juri2000/may2000/gr_133284_2000.html

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under the Mortgage Law or under Sec. 194 of the Administrative Code, or of any other real propertyencumbered with a mortgage duly registered in the office of any register of deeds in accordance with anyexisting law, and in each case the clerk of court shall, upon the filing of such petition, collect the feesspecified in par. 11 of Sec. 114 of Act No. 496, and the court shall, upon the filing of the bond, order thata writ of possession issue, addressed to the sheriff of the province in which the property is situated, whoshall execute said order immediately.

Indeed, it is well-settled that an ordinary action to acquire possession in favor of the purchaser atan extrajudicial foreclosure of real property is not necessary. There is no law in this jurisdiction wherebythe purchaser at a sheriffs sale of real property is obliged to bring a separate and independent suit forpossession after the one-year period for redemption has expired and after he has obtained the sheriffsfinal certificate of sale. The basis of this right to possession is the purchasers ownership of the property.The mere filing of an ex parte motion for the issuance of the writ of possession would suffice, and nobond is required.

The Court rejects the contention of the petitioners that the RTC erred in not dismissing thepetition of the private respondent on the grounds of forum shopping and litis pendentia.

As heretofore ruled by the Court, the petition of the private respondent for a writ of possession

was not an ordinary action. After the consolidation of title in the buyers name for failure of the mortgagorto redeem, the writ of possession becomes a matter of right. Its issuance to a purchaser in anextrajudicial foreclosure is merely a ministerial function. The issuance of the writ of possession being aministerial function, and summary in nature, it cannot be said to be a judgment on the merits, but simplyan incident in the transfer of title. Hence, a separate case for annulment of mortgage and foreclosure salecannot be barred by litis pendentia or res judicata.

G.R. No. 128567 September 1, 2000

HUERTA ALBA RESORT INC., petitioner,vs.

COURT OF APPEALS and SYNDICATED MANAGEMENT GROUP INC., respondents.

FACTS:

In a complaint for judicial foreclosure of mortgage with preliminary injunction filed by hereinprivate respondent, they seek the foreclosure of four (4) parcels of land mortgaged by petitioner toIntercon Fund Resource, Inc. ("Intercon").

Private respondent instituted an action as mortgagee-assignee of a loan obtained by petitionerfrom Intercon, in whose favor petitioner mortgaged the aforesaid parcels of land as security for the saidloan. Later on, the trial court rendered its decision in favor of the private respondent.

Petitioner appealed the decision of the trial court to the Court of Appeals which dismissed thecase on the ground of late payment of docket fees. Petitioner's motion for reconsideration of the dismissalof its petition denied with. A second motion for reconsideration was filed to submit the case for hearing bythe Court en banc was filed, but to no avail. The Court resolved to deny the same.

ISSUE:

Whether or not the defendant lost its right of redemption by virtue of the assignment of itsmortgage debt by Intercon to plaintiff, which is not a bank or credit institution?

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HELD:

"It is undisputed that Intercon is a credit institution from which defendant obtained a loan securedwith a real estate mortgage over four (4) parcels of land. Assuming that the mortgage debt hadnot been assigned to plaintiff, there is then no question that defendant would have a right ofredemption in case of foreclosure, judicially or extrajudicially, pursuant to Section 78 of RA 337,

as amended.

However, the pivotal issue here is whether or not the defendant lost its right of redemption byvirtue of the assignment of its mortgage debt by Intercon to plaintiff, which is not a bank or creditinstitution. The issue is resolved in the negative. The right of redemption in this case is vested bylaw and is therefore an absolute privilege which defendant may not lose even though plaintiff-assignee is not a bank or credit institution (Tolentino versus Court of Appeals, 106 SCRA 513).Indeed, a contrary ruling will lead to a possible circumvention of Section 78 because all that maybe needed to deprive a defaulting mortgagor of his right of redemption is to assign his mortgagedebt from a bank or credit institution to one which is not. Protection of defaulting mortgagors,which is the avowed policy behind the provision, would not be achieved if the ruling wereotherwise. Consequently, defendant still possesses its right of redemption which it may exerciseup to October 21, 1995 only, which is one year from the date of registration of the certificate of

sale of subject properties (GSIS versus Iloilo, 175 SCRA 19, citing Limpin versus IAC, 166 SCRA87).

Since the period to exercise defendant's right of redemption has not yet expired, the cancellationof defendant's transfer certificates of title and the issuance of new ones in lieu thereof in favor ofplaintiff are therefore illegal for being premature, thereby necessitating reconveyance.

From the various decisions, resolutions and orders a quo it can be gleaned that what petitioner has beenadjudged to have was only the equity of redemption over subject properties. On the distinction betweenthe equity of redemption and right of redemption, the case of Gregorio Y. Limpin vs. IntermediateAppellate Court, comes to the fore. Held the Court in the said case:

"The equity of redemption is, to be sure, different from and should not be confused with the right

of redemption.

The right of redemption in relation to a mortgage understood in the sense of a prerogative to re-acquire mortgaged property after registration of the foreclosure sale exists only in the case of theextrajudicial foreclosure of the mortgage. No such right is recognized in a judicial foreclosureexcept only where the mortgagee is the Philippine National Bank or a bank or banking institution.

Where a mortgage is foreclosed extrajudicially, Act 3135 grants to the mortgagor the right ofredemption within one (1) year from the registration of the sheriff's certificate of foreclosure sale.

Where the foreclosure is judicially effected, however, no equivalent right of redemption exists.The law declares that a judicial foreclosure sale when confirmed be an order of the court shalloperate 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 'allowedby law, and the General Banking Act (R.A. 337). These laws confer on the mortgagor, hissuccessors in interest or any judgment creditor of the mortgagor, the right to redeem the propertysold on foreclosure after confirmation by the court of the foreclosure sale which right may beexercised within a period of one (1) year, counted from the date of registration of the certificate ofsale in the Registry of Property.

But, to repeat, no such right of redemption exists in case of judicial foreclosure of a mortgage ifthe mortgagee is not the PNB or a bank or banking institution. In such a case, the foreclosure

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sale, when confirmed by an order of the court shall operate to divest the rights of all the parties tothe action and to vest their rights in the purchaser. There then exists only what is known as theequity of redemption. This is simply the right of the defendant mortgagor to extinguish themortgage and retain ownership of the property by paying the secured debt within the 90-dayperiod after the judgment becomes final, in accordance with Rule 68, or even after the foreclosuresale 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 shallascertain the amount due to the plaintiff upon the mortgage debt or obligation, including interestand costs, and shall render judgment for the sum so found due and order the same to be paidinto court within a period of not less than ninety (90) days from the date of the service of suchorder, and that in default of such payment the property be sold to realize the mortgage debt andcosts.'

This is the mortgagor's equity (not right) of redemption which, as above stated, may be exercisedby him even beyond the 90-day period 'from the date of service of the order,' and even after theforeclosure 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."