Title
Huerta Alba Resort Inc. vs. Court of Appeals
Case
G.R. No. 128567
Decision Date
Sep 1, 2000
Petitioner failed to timely assert a right of redemption under the General Banking Act, retaining only an equity of redemption, which expired, affirming the foreclosure sale and granting the mortgagee a writ of possession.

Case Summary (G.R. No. L-44640)

Key Dates

Material dates include: complaint for judicial foreclosure filed October 19, 1989; RTC decision granting foreclosure April 30, 1992; initial CA appeal dismissed June 29, 1993; Supreme Court denial of certiorari December 13, 1993 (entry of judgment March 14, 1994); execution proceedings July–September 1994 with sheriff’s sale held September 6, 1994 and certificate of sale registered October 21, 1994; RTC confirmation of sale February 10, 1995; petitioner’s first invocation of Section 78 asserted May 2, 1995; RTC Order recognizing one-year redemption July 21, 1995 (denial of reconsideration September 4, 1995); Court of Appeals set aside those RTC orders November 14, 1996 (resolution denying reconsideration March 11, 1997); Supreme Court decision denying petition and affirming the Court of Appeals September 1, 2000.

Applicable Law and Doctrines

Central statutory provision: Section 78 of R.A. No. 337 (General Banking Act), which grants a mortgagor a one-year right of redemption in cases of foreclosure in favor of a bank, banking or credit institution, whether judicial or extrajudicial. Other controlling legal authorities and rules invoked include Rule 68 of the Rules of Court (judicial foreclosure procedures and the mortgagor’s equity of redemption), and jurisprudence distinguishing the mortgagor’s equity of redemption from the one-year statutory right of redemption (notably the Court’s decision in Gregorio Y. Limpin v. Intermediate Appellate Court and related decisions cited in the record). Procedural doctrines pertinent to the disposition include counterclaim rules, law of the case, estoppel for failure to timely assert a defense or claim, and the effect of confirmation of judicial sale in divesting parties’ rights.

Facts Material to the Dispute

Petitioner borrowed P8.5 million from Intercon and mortgaged four parcels of land as security. Intercon assigned its mortgage to private respondent Syndicated Management Group, Inc. (SMGI), which instituted judicial foreclosure (as assignee). The RTC entered judgment ordering payment within not less than 150 days and, in default, sale of the property. Appeal and subsequent collateral proceedings ensued; execution was initiated and the sheriff’s sale occurred September 6, 1994, with SMGI declared highest bidder and a certificate of sale later registered. Sale confirmation and issuance of transfer certificates of title followed after various appellate rulings.

Procedural History and Petitioner’s Litigation Strategy

Petitioner appealed the foreclosure judgment but the appeal was dismissed for late docket fees; Supreme Court denied certiorari, making the judgment final and executory. Execution proceeded despite petitioner’s motions contesting premature issuance of the writ. After the sheriff’s sale and registration of the certificate of sale, petitioner intermittently sought clarification of the redemption period and, only on May 2, 1995, first expressly invoked Section 78 of R.A. No. 337 by filing a Motion to Compel Private Respondent to Accept Redemption. The RTC then denied writ of possession and ordered acceptance of redemption up to one year from registration; the Court of Appeals set aside those RTC orders and the Supreme Court ultimately affirmed the Court of Appeals.

Issues Presented

The petition raised three principal issues: (1) whether the Court of Appeals in an earlier proceeding (CA-G.R. SP No. 35086) had finally resolved that petitioner possessed only an equity of redemption, not the one-year statutory right; (2) whether petitioner nonetheless possessed the one-year right of redemption under Section 78 of R.A. No. 337; and (3) whether private respondent was properly entitled to a writ of possession over the subject property.

Trial Court’s Ruling on Redemption

The RTC (Judge Napoleon Inoturan) concluded that Intercon was a credit institution and that the assignment of the mortgage to a non-bank assignee did not divest petitioner of the statutory right attached to a mortgage originally held by a credit institution. The RTC therefore denied issuance of writ of possession, directed plaintiff to accept redemption on or before October 21, 1995 (one year from registration of the certificate of sale), and ordered reconveyance or related entries to reflect the mortgagor’s redemption right until that date.

Court of Appeals’ and Supreme Court’s Overriding Reasoning

Both the Court of Appeals and the Supreme Court found that petitioner failed to timely and seasonably assert its entitlement to Section 78 protections at the appropriate stages of the proceedings. The appellate courts emphasized that: (a) the question whether the predecessor-in-interest (Intercon) was a credit institution and thus whether Section 78 applied was a factual matter that should have been raised early and squarely; (b) such a claim operates as a compulsory counterclaim or affirmative matter that must be pleaded and litigated at the earliest opportunity; (c) petitioner repeatedly omitted to make the necessary averments in its answer to the foreclosure complaint and in subsequent timely motions or pleadings before the Court of Appeals, and therefore effectively waived the claim; (d) the Court of Appeals had already noted that the issue of whether SMGI was a bank or credit institution “was never brought before us squarely,” reflecting petitioner’s failure to contest or raise the matter when opportunity existed; and (e) allowing petitioner to raise the statutory right belatedly before the trial court would nullify earlier appellate findings, upset finality, and run afoul of the law of the case and estoppel doctrines.

Distinction Between Equity of Redemption and Statutory One-Year Right

The Court reiterated controlling jurisprudence distinguishing the equity of redemption (the mortgagor’s ability to redeem by paying the debt within a limited period provided by Rule 68, typically ninety days from service of order or the applicable judicial periods, and sometimes within 150 days specified by the judgment) from the statutory one-year right granted by Section 78 of R.A. No. 337, which applies only when the mortgagee is a bank, banking or credit institution. Where a judicial foreclosure sale is confirmed by court order and the mortgagee is not a bank or credit institution, no statutory one-year right exists and the sale divests the parties of their rights in favor of the purchaser; only the equity of redemption remains in the limited judicial sense. The Court concluded that, because petitioner failed to timely invoke Section 78, the correct characterization under the law of the case and prior rulings was that petitioner possessed only an equity of redemption and had failed to exercise it within the prescribed period.

Procedural and Evid

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