Facts:

The case involves Banco Filipino Savings and Mortgage Bank as the petitioner and Santiago (Isabela) Memorial Park, Inc. as the respondent. The proceedings began with the filing of a complaint by the private respondent on December 20, 1993, against the petitioner in the Regional Trial Court of Santiago, Isabela, Branch 21. The respondent alleged that in February 1981, it mortgaged a property in favor of the petitioner to secure a loan of ₱500,000. Due to the default in payment, the petitioner foreclosed on the mortgage, leading to the issuance of a Sheriff's Certificate of Sale dated October 9, 1990, which was registered on January 21, 1991. Following the foreclosure, the respondent expressed an interest in redeeming the property by sending a letter on August 6, 1991, offering ₱700,000 for the redemption, to which the petitioner responded with a demand for a higher amount. The respondent attempted to negotiate for the redemption, making partial payments, including ₱50,000 on

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Facts:

Initiation of Legal Action

• On December 20, 1993, Santiago (Isabela) Memorial Park, Inc. (private respondent) filed a complaint for redemption and specific performance before the Regional Trial Court (RTC) of Santiago, Isabela, Branch 21 against Banco Filipino Savings and Mortgage Bank (petitioner).
• The complaint set forth that in February 1981, the respondent had mortgaged the property to secure a loan of P500,000.00 from the petitioner, and due to the respondent’s failure to pay, the petitioner foreclosed the mortgage.
• The foreclosure was executed by issuing a Sheriff’s Certificate of Sale on October 9, 1990, which was subsequently inscribed on the back of Transfer Certificate of Title (TCT) T-128647 on January 21, 1991.

Allegations on Redemption and Negotiations

• The respondent alleged that, prior to the expiration of the redemption period, it manifested its intent to redeem the property through various communications:
• A letter dated August 6, 1991 from the respondent’s President, offering a redemption price of P700,000.00, thereby initiating negotiations.
• A subsequent letter from the petitioner’s Deputy Liquidator on January 23, 1992, providing respondent with until the end of March 1992 to negotiate and propose a satisfactory payment arrangement.
• A letter dated March 12, 1992, directing the respondent to remit at least P50,000.00 as a demonstration of its willingness to redeem, which the respondent complied with on March 24, 1992.
• On January 20, 1993, a revised offer was made by the respondent—increasing the offer to P1,000,000.00 and including a payment plan—which was followed by further negotiations until November 1993 when petitioner’s Senior Vice President, through a letter dated November 5, 1993, unilaterally raised the redemption price to P5,830,000.00.

Petitioner's Motion to Dismiss and Arguments

• The petitioner filed a motion to dismiss the complaint on the ground that it did not state a cause of action.
• Key points in petitioner’s argument included:
• The actual act of redemption did not occur within the statutory one-year period from the registration of the Sheriff’s Certificate of Sale (January 21, 1991), as the required period ended on January 21, 1992.
• The letter dated August 6, 1991 was characterized merely as an offer to redeem and not accompanied by the tender of money.
• Letters from January 23, 1992 and March 12, 1992 were interpreted as steps toward negotiation and postponement of consolidation rather than definitive acts of redemption.
• The deposit of P50,000.00 was argued to be only a manifestation of interest and not a complete, valid tender of the redemption price.

Trial Court Decision

• On May 10, 1994, the RTC rendered an Order dismissing the complaint for redemption and specific performance.
• The RTC’s reasoning included:
• The respondent’s offer (P700,000.00) lacked the essential element of tendering the actual sum.
• The correct redemption price—being either the bank’s claim of P925,448.17 plus 12% interest and foreclosure expenses or the appraised value—was not met.
• Under Section 6 of Act 3135, the redemption must be effected within one year from the date of the registration of the sale certificate, which in this case expired on January 21, 1992.
• The complaint did not show that the respondent tendered the correct redemption price in line with the requirements of Section 30 of Rule 39 of the Rules of Court.

Appeal and the Court of Appeals (CA) Decision

• Dissatisfied with the RTC ruling, the respondent filed an appeal with the Court of Appeals.
• The CA reversed the trial court’s decision by ruling that:
• The allegations in the complaint were sufficient to establish a cause of action, highlighting that the respondent had consistently shown a willingness to redeem, well within the statutory period.
• Based on negotiations and the deposit given, the CA allowed that the respondent was entitled to repurchase the foreclosed property within 30 days upon paying a repurchase price of P925,448.17 less the P50,000.00 deposit, with associated legal interest from March 24, 1992.
• The CA inferred good faith on the part of the respondent, in light of the series of letters indicating mutual negotiations between the parties.

Petition for Review on Certiorari

• Petitioner subsequently filed a petition for review on certiorari with the Supreme Court, challenging the CA’s decision.
• The petitioner contended that:
• The complaint failed to allege the actual and requisite tender of the correct redemption price, thereby not establishing a cause of action.
• The series of negotiations and remittances did not culminate in the perfection of a contract of sale, as there was no meeting of minds between the parties.
• Consequently, any extension of the redemption period purported by the CA (based on subsequent negotiations) was not legally supported.

Issue:

Whether the respondent’s complaint for redemption and specific performance stated a cause of action against the petitioner.

• Did the allegations in the complaint amount to a valid exercise of the right to redeem, specifically by tendering the proper redemption price in accordance with statutory requirements?
• Can preliminary negotiations and a mere deposit substitute for the actual tender of the full price as mandated by law?

Whether the respondent was entitled to repurchase the foreclosed property at the stipulated price based on alleged negotiations and correspondence.

• Was there a valid extension of the redemption period or a formation of a new contract arising from the subsequent negotiations?
• Does the evidence of letters and remittances indicate a binding contract of sale, or were they merely preliminary attempts without legal effect?

Ruling:

• (Subscriber-Only)

Ratio:

• (Subscriber-Only)

Doctrine:

• (Subscriber-Only)