Case Summary (G.R. No. 167420)
Factual Background
On February 19, 1996, Ruperto Jose H. Mateo obtained a loan of PHP 950,000 from Allied Banking Corporation and executed a real estate mortgage over a titled parcel under TCT No. 236351 and a promissory note in like amount. Following Mateo’s default, petitioner proceeded with extrajudicial foreclosure. The property sold at public auction for PHP 1,531,474.53, with petitioner as sole and highest bidder, and a Certificate of Sale was registered on July 21, 1999. Mateo, through his attorney-in-fact, faxed several letters expressing a desire to redeem and purportedly tendered PHP 1.1 million. On the last day of the statutory redemption period, July 21, 2000, Mateo filed a judicial action for legal redemption with prayer for injunctive relief. Petitioner consolidated ownership and obtained TCT No. 311043 in its name on March 2, 2001.
Trial Court Proceedings
The parties agreed to submit the case for summary judgment after the pre-trial conference on September 18, 2002, during which Mateo offered to redeem for PHP 1,531,474.53 and petitioner refused. The RTC, by Decision dated October 21, 2004, held for the plaintiff (Mateo) and allowed redemption upon payment of PHP 1,531,474.53 plus one percent interest for one month, ordered petitioner to accept tender and deliver a certificate of redemption, and awarded plaintiff PHP 30,000 as attorney’s fees and costs. The RTC found that Mateo had the right to redeem because the one-year period had not expired when he filed suit, that his prior faxed offers demonstrated sincere intent, and that his exercise of the right commenced on August 10, 1999, invoking Section 28, Rule 39 to fix the redemption price. Petitioner’s motion for reconsideration was denied by order dated February 10, 2005.
Issues Presented on Review
Petitioner sought review by certiorari, raising primarily: (1) whether the lower court erred in treating prior offers and a consignation of PHP 1.1 million as sufficient tender to effect redemption; and (2) whether the RTC erred in applying Section 28, Rule 39 and Act No. 3135 in computing the redemption price instead of applying Section 78 of the General Banking Act (and, as argued, its successor provision, Section 47 of RA 8791).
Parties’ Contentions
Allied Banking Corporation argued that a valid tender for redemption must be for the full purchase price plus the interest specified in the mortgage, and that consignation in Land Bank was insufficient because consignation must be made in court; petitioner maintained that the redemption price must be determined under Section 78 of the General Banking Act. Ruperto Jose H. Mateo countered that the petition raised factual questions unsuitable for Rule 45 review, that he had offered the auction purchase amount of PHP 1,531,474.53 during pre-trial, that judicial action filed within the redemption period sufficed to preserve redemption rights even without prior consignation, and that tenders and consignations are only procedural adjuncts and not essential where timely judicial action is filed.
Threshold Procedural Ruling
The Court rejected respondent’s contention that the petition raised only factual issues. The Court noted that the parties had stipulated that Mateo offered PHP 1.1 million before suit and that the contested question concerned the legal sufficiency of that offer to effect redemption. The Court held that the question was one of law—the correct application of statutory provisions and jurisprudence on redemption—and therefore properly cognizable under Rule 45.
Legal Framework for Redemption
The Court reviewed the statutory scheme governing redemption. It recited Section 6 of Act No. 3135, which preserved the one-year redemption right after an extrajudicial sale and incorporated Sections 464–466 of the old Code of Civil Procedure insofar as consistent. The Court then held that where the mortgagee is a bank, the determination of the redemption price is governed by Section 78 of the General Banking Act, which specifies that the mortgagor may redeem within one year by paying the amount fixed in the execution order or the amount due under the mortgage with interest at the rate specified therein, plus costs and expenses incurred by the bank and less income received from the property. The Court relied on prior rulings, including Union Bank of the Philippines v. Court of Appeals, Ponce de Leon v. Rehabilitation Finance Corporation, and Sy v. Court of Appeals, to conclude that the General Banking Act governs redemption price computation when a bank is the mortgagee.
Requirement of Valid Tender and Consignation
The Court reiterated established doctrine that mere pronouncement of intent to redeem is insufficient; a bona fide redemption requires an unequivocal tender of the full repurchase price. The tenders must cover the outstanding obligation plus interest and expenses as mandated by Section 78 when a bank is involved. Consignation, when relied upon to show good faith, must be validly made in court. The Court cited BPI Family Savings Bank, Inc. v. Veloso and related jurisprudence to underscore that an incomplete or undervalued tender circumvents the statutory redemption period and is ineffective.
Application to the Present Case
Applying the law to the stipulated facts, the Court found that Mateo’s prior offer of PHP 1.1 million was inadequate because it was below the auction purchase price of PHP 1,531,474.53 and did not include the interest and costs required by Section 78. The Court observed that petitioner had alleged a then-current redemption computation of PHP 2,058,825.73 in its answer, demonstrating that the amounts sought by petitioner exceeded the sums offered by Mateo. At pre-trial Mateo offered only the auction price and still omitted interest. Mateo never consigned the full amount in court to demonstrate good faith. Consequently, the Court concluded that the judicial actio
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Case Syllabus (G.R. No. 167420)
Parties and Procedural Posture
- Allied Banking Corporation filed a petition for review on certiorari from the RTC Decision and Order in SCA No. 35-0145, Santiago City.
- Ruperto Jose H. Mateo, represented by Warlita Mateo, as Attorney-in-Fact instituted an action for legal redemption with prayer for temporary restraining order and preliminary injunction.
- The RTC, Branch 35, Santiago City, rendered judgment allowing redemption upon payment of P1,531,474.53 plus one percent interest for one month and awarded P30,000.00 attorney’s fees.
- The RTC denied petitioner’s Motion for Reconsideration and Allied Banking Corporation sought relief under Rule 45 by filing the present petition for review on certiorari.
Key Factual Allegations
- Respondent obtained a loan of P950,000.00 from petitioner on February 19, 1996 and executed a real estate mortgage over land under TCT No. 236351.
- Respondent defaulted, prompting extrajudicial foreclosure and a public auction at which petitioner was sole and highest bidder at P1,531,474.53.
- A Certificate of Sale was registered on July 21, 1999 and petitioner consolidated ownership with TCT No. 311043 issued in its name on March 2, 2001.
- Respondent, through Warlita Mateo, sent several faxed letters offering redemption for P1.1 million and filed the action for legal redemption on July 21, 2000, assertedly within the one-year redemption period.
- At pre-trial on September 18, 2002, respondent offered to redeem for P1,531,474.53 but did not consign that amount in court.
Issues Presented
- Whether respondent retained the right to redeem the foreclosed property.
- Whether Section 78 of the General Banking Act governs the computation of the redemption price when the mortgagee is a bank.
- Whether the offers and consignation made by respondent constituted a valid and good faith tender sufficient to effect redemption.
Contentions of the Parties
- Petitioner asserted that the amounts offered by respondent prior to suit were legally insufficient, that consignation was improperly made outside of court, and that the redemption price should be computed under Section 47 of RA 8791 (formerly Section 78 of the General Banking Act).
- Respondent argued that the petition raised factual issues unsuitable for Rule 45 review, that prior offers and a P1.1 million consignation evidenced his intention to redeem, and that judicial action filed within the redemption year preserved his right to redeem.
Statutory Framework
- Act No. 3135, Section 6, provides the general statutory right of redemption within one year from date of sale and refers to the procedure in sections now embodied in Section 28, Rule 39.
- Section 78 of the General Banking Act prescribes that when the mortgagee is a bank the redeemable amount is the amount due under the mortgage deed with interest a