Case Summary (G.R. No. 171868)
Key Dates
• December 3, 1976 – First mortgage over Lots 1, 4, 5, 6 and 8
• August 3, 1978 – Second mortgage over Lots 3 and 846
• October 27, 1979 – Sale by mortgagors (Tirambulos) to Dy and Maxino spouses without bank consent
• March 31, 1982 – Foreclosure auction of five lots; DRBI highest bidder
• June 24, 1983 – Registration of sheriff’s certificate of sale
• May–June 1984 – Dy/Maxino spouses tender redemption payments
• February 12, 1997 – Trial court decision favoring Yap spouses
• May 17, 2005 & March 15, 2006 – Court of Appeals decisions reversing trial court
• July 27, 2011 – Supreme Court decision
Applicable Law
• 1987 Philippine Constitution
• Rule 39, Sec. 29 of the Rules of Court (extrajudicial foreclosure and redemption)
• Civil Code provisions on mortgage indivisibility (Art. 2089) and damages (Arts. 21, 2208, 2219, 2229)
Mortgage and Subsequent Sale
Tomas Tirambulo and Salvacion Estorco mortgaged five lots in 1976 to secure a ₱105,000 loan, and two additional lots in 1978 for ₱28,000. In 1979 they sold all seven lots to the Dy and Maxino spouses without DRBI’s consent.
Foreclosure Proceedings and Auction Sale
Following default, DRBI extrajudicially foreclosed the 1976 mortgage and purchased Lots 1, 4, 5, 6 and 8 at public auction (₱216,040.93). The sale certificate warned of a one‐year redemption period but was registered only on June 24, 1983.
Dispute Over Inclusion of Lot 3
Lot 3 was never subject of the 1976 foreclosure. DRBI nevertheless sold Lots 1, 3 and 6 to the Yap spouses on July 6, 1983, prompting the core dispute over whether Lot 3 was erroneously included in the sale and whether the successors‐in‐interest to the mortgagors could redeem individual lots.
Redemption Attempts by Dy and Maxino Spouses
Between May 22 and June 19, 1984, the Dy and Maxino spouses tendered a total of ₱134,223.92 in redemption payments to DRBI and to the sheriff, seeking to redeem Lots 1 and 6 alone. The Yap spouses refused these partial tenders, invoking mortgage indivisibility.
Trial Court Proceedings and Decisions
In Civil Cases 8426 and 8439 the Dy/Maxino spouses sought (inter alia) nullification of the sale of Lot 3, recognition of their redemption of Lots 1 and 6, accounting and damages. The Yap spouses counterclaimed for consolidation of ownership. The trial court (1997) held the Dy/Maxino evidence inadmissible and affirmed the Yap spouses’ exclusive title to Lots 1 and 6.
Court of Appeals Findings
The CA (May 2005, amended March 2006) reversed. It ruled that:
- Lot 3 was not foreclosed and the sale to the Yaps was void.
- The Dy/Maxino spouses validly redeemed Lots 1 and 6 within the one-year period.
- DRBI acted in bad faith in falsifying the certificate of sale.
- Moral and exemplary damages (₱20,000; ₱200,000) plus attorney’s fees (₱50,000) were proper.
Issues for Resolution
- Whether Lot 3 was included in the foreclosure sale
- To whom redemption payments must be made
- Validity of the partial redemption of Lots 1 and 6
- Liability of DRBI for damages
Supreme Court’s Analysis on Lot 3
Testimony of Sheriff Diputado and the foreclosure application and notices confirmed that only Lots 1, 4, 5, 6 and 8 were advertised and sold. DRBI failed to rebut that Lot 3’s inclusion in the sale certificate was fraudulent.
Supreme Court’s Analysis on Redemption Mechanics
Under Rule 39, Sec. 29, redemption may be tendered to the purchaser or the sheriff. The Dy/Maxino spouses properly deposited payment with the sheriff after DRBI and the Yaps refused it, entitling them to a certificate of redemption.
Supreme Court’s Ruling on Partial Redemption and Pro Rata Computation
The 1989 Philippine National Bank v. De los Reyes doctrine dispels
...continue readingCase Syllabus (G.R. No. 171868)
Facts
- The Tirambulos owned seven parcels in Ayungon, Negros Oriental (TCT Nos. T-14794, T-14777, T-14780, T-14781, T-14783, T-20301, and Lot 846 under Tax Dec. No. 08109).
- On December 3, 1976, they mortgaged Lots 1, 4, 5, 6 and 8 to Rural Bank of Dumaguete, Inc. for ₱105,000; on August 3, 1978, they mortgaged Lots 3 and 846 for ₱28,000.
- On October 27, 1979, they sold all seven lots to the Dy and Maxino spouses without the bank’s knowledge or consent.
- After default, DRBI foreclosed the December 3, 1976 mortgage and purchased Lots 1, 4, 5, 6 and 8 at public auction on March 31, 1982 (₱216,040.93). The certificate of sale (registered June 24, 1983) erroneously included Lot 3.
- On July 6, 1983, DRBI sold Lots 1, 3 and 6 to the Yaps under a Deed of Sale with Agreement to Mortgage.
- Within the redemption period, the Dys and Maxinos tendered redemption money (₱40,000; refused) then paid ₱50,625.29 to the Sheriff on May 28, 1984; sheriff issued Certificate of Redemption for Lots 1 and 6 only.
- The Yaps declined the redemption money, asserting the mortgage’s indivisibility and insisting on full payment of the auction price for all foreclosed lands.
- Dy/Maxino filed Civil Case No. 8426 for accounting, injunction, nullity (Lot 3), redemption validation, damages; later consigned an additional ₱83,850.50.
- The Yaps filed Civil Case No. 8439 for consolidation of ownership, annulment of the redemption certificate, and damages.
Procedural History
- Trial court (February 12, 1997) ruled in favor of the Yaps, dismissed Dy/Maxino complaints, declared Lots 1 and 6 exclusively owned by Yaps, upheld Deed of Sale with Agreement to Mortgage, and voided Dy/Maxino deed.
- Amended trial decision (March 7, 1997) declared redemption certificate null, ordered final deed of sale to DRBI, voided Tirambulo–Dy/Maxino sale, reaffirmed Yaps’ exclusive ownership of Lots 1 and 6.
- Dy/Maxino