Pactum commisorium is not allowed under RP Laws. If you have a multiple security agreement (chattel mortgage, REM, pledge, assignment) for the same principal obligation, ALWAYS REMEMBER THAT FORECLOSURE OF THE PLEDGE SHOULD BE DONE LAST (As there's a prohibition to undergo other remedies under Article 2115)
-Sir was saying something about pledge of shares of stock and the argument that the situs is not Philippines but sir said that even if it be argued that situs not in RP, RP laws would still apply…basta sorry I don't know eh...
- No deficiency claim in a pledge
Art. 2115. The sale of the thing pledged shall extinguish the principal obligation, whether or not the proceeds of the sale are equal to the amount of the principal obligation, interest and expenses in a proper case. If the price of the sale is more than said amount, the debtor shall not be entitled to the excess, unless it is otherwise agreed. If the price of the sale is less, neither shall the creditor be entitled to recover the deficiency, notwithstanding any stipulation to the contrary.
In pledge, if there's a deficiency…
GR: Creditor cannot claim deficiency once foreclosure obtained
X: if stipulated
- Deficiency claim in a chattel mortgage; exception
Art. 1484. In a contract of sale of personal property
the price of which is payable in installments,
the vendor may exercise any of the following remedies:
...
(3) Foreclose the chattel mortgage on the thing sold, if one has been constituted, should the vendee's failure to pay cover two or more installments.
...In this case, he shall have no further action against the purchaser to recover any unpaid balance of the price. Any agreement to the contrary shall be void. (1454-A-a)
Review for Article 1484
General Rule: Creditor shall always be entitled to collect the deficiency judgement. (Ablaza v. Ignacio, ‘58).
State Investment House, Inc. v. CA (93)
When the proceeds of the sale are insufficient to cover the debts in an extra-judicial foreclosure of chattel mortgage, the mortgagee is entitled to claim the deficiency from the debtor.
Ratio: mortgages as accessory contracts serve only as securities and not for the satisfaction of the principal obligation
Prescriptive Period: Ten (10) years under Art, 1142 of the Civil Code. (DBP v. Tomeldan, ‘80).
- Exception: If the property was sold in installments, the mortgagee can no longer take any action against the purchaser to recover any unpaid balance of the price. Any agreement to the contrary is void. (Art. 1484, Civil Code, aka the Recto Law)
O. Recto Law
- The Recto law, which is now reflected in Articles 1484-1485 of the Civil Code, which provides that in a contract of sale of personal property, the price of which is payable in installments, the vendor may exercise any of the following remedies:
- Exact fulfillment of the obligation, should the vendee fail to pay (specific performance);
- Cancel the sale, should the vendee's failure to pay cover two or more installments (Note that this is not the same as rescission because here, the vendor gets back the object of the sale and retains the installments paid. However, this is not available in the absence of stipulation in the contract.);
- Foreclose the chattel mortgage on the thing sold, if one has been constituted, should the vendee's failure to pay cover 2 or more installments. In this case, he shall have no further action against the purchaser to recover any unpaid balance of the price. Any agreement to the contract is void.
- The principal object of this amendment was to remedy the abuses committed in connection with the foreclosure of chattel mortgages. This amendment prevents mortgagees from seizing the mortgaged property, buying it at foreclosure sale for a low price, and then bringing the suit against the mortgagor for a deficiency judgment. The almost invariable result of this procedure was that the mortgagor found himself minus the property and still owing practically the full amount of his original indebtedness.
Pacific Commercial Co. v. Dela Rama
These remedies are alternative, not cumulative.
Filipinas Investement v. Vitug (69)
When the creditor can no longer recover from the maker of the note with chattel mortgage because the deficiency is covered by the Recto Law, after the foreclosure of the mortgage, said creditor can still recover balance from the endorse who endorsed “with recourse”.
Cruz v. Filipinas Investment (68)
C sold to D a car payable on installments. The car was given as security by way of chattel mortgage to secure payment. In addition, the debtor put up a real estate mortgage as further security for the payment of the debt. D did not pay 2 or more installments and so C foreclosed the chattel mortgage. The proceeds therefrom were insufficient and so C wanted to get a deficiency judgment and satisfy it by foreclosing on the real estate mortgage.
The established rule is to the effect that the foreclosure and actual sale of a mortgaged chattel bars further recovery (whether by judicial or extra-judicial foreclosure) by the vendor, of any balance on the purchaser’s outstanding obligation not so satisfied by the public sale. To allow further recovery by the foreclosure of the real estate mortgage is contrary to public policy.
Northern Motors v. Sapinoso (70)
Northern Motors sold a car to Sapinoso on installments. A chattel mortgage was executed on the car sold. When S failed to pay 2 or more installments, NM sought to foreclose the chattel mortgage and asked the court for a writ of replevin. Meantime, S made several payments while the replevin suit was pending. The lower court ruled that NM, by bringing the suit, was barred from accepting any further payments from S and ordered NM to reimburse the amount collected.
The court a quo erred in concluding that the legal effect of the filing of the action for replevin was to bar NM from accepting further payments on the promissory note. That the ultimate objective of the action was for the foreclosure of the chattel mortgage is of no moment, for it is the fact of foreclosure “and” actual sale at public auction of the mortgaged chattel that bars further recovery by the vendor of any balance on the buyer’s outstanding obligation not satisfied by the sale.
Pascual v. Universal Motors (74)
When the seller imposes a double security by a chattel mortgage of the thing sold on installments and another mortgage on another property of the buyer, such is contrary to the public policy sought to be protected by the Recto Law, and the foreclosure of the chattel mortgage on the object of the sale bars recovery on any deficiency.
Ridad v. Filipinas Investment (83)
The precise purpose of the law is to prevent mortgagees from seizing the mortgaged property, buying it at foreclosure sale for a low price and then bringing suit against the mortgagor for a deficiency judgment, otherwise, the mortgagor-buyer would find himself without the property and still owing practically the full amount of his original indebtedness. The corporation elected to foreclose its mortgage upon default by the plaintiffs in the payment of the agreed installments. Having chosen to foreclose the chattel mortgage, and bought the purchased vehicles at the public auction as the highest bidder, it submitted itself to the consequences of the law as specifically mentioned.
Bicol Savings and Loan Asso. v. Guinhawa (90)
The prohibition under the Recto Law against recovery does not apply to foreclosure of chattel mortgage constituted to secure a loan and not originating from a sales transaction.
Differentiating Pledge and Chattel Mortgage
| Pledge | CM |
| In pledge, the pledgor cannot be made answerable for deficiency after foreclosure since the principal obligation is extinguished. Thus, foreclosure of pledge must be your last remedy. Possible Solution: Subject pledge to foreign law. | GR: Action for deficiency is allowed. (Chattel Mortgage Law, Garrido v. Tuason) Exception: Article 1484(3), Civil Code/ Recto Law.
|
GARRIDO V. TUASON (1968)
F: Pila Tuason executed a CM over her car for the sum of P1k which she owed to Jose Garrido. As she was unable to pay, Jose Garrido commenced a case for the foreclosure of the CM + atty's fees and costs (note: not for collection of the outstanding obligation!)
TC: pay P1k + interests + P100 + costs (even if Garrido prayed for foreclosure!)
-writ of execution issued, car of Tuason was sold at a public auction for P550 with Garrido as the highest bidder
-as there was still P450 left unsatisfied + P165 allegedly spend to carry out writ of execution and P1,290.58 as aggregate outstanding balance due under decision, Garrido filed motions (for alias writ of execution) which were both denied.
-Garrido commenced a civil case vs. Pila Tuason, and now with her husband, for the recovery of the alleged balance in the earlier case. MTD filed by Tuason. TC for TUASON,
CFI: Affirmed dismissal of civil case in pursuance to Article 2115 of Civil Code:
Article 2115 provides:
". . . The sale of the thing pledged shall extinguish the principal obligation, whether or not the proceeds of the sale are equal to the amount of the principal obligation, interest and expenses in a proper case. If the price of the sale is more than said amount, the debtor shall not be entitled to the excess, unless it is otherwise agreed. If the price of the sale is less, neither shall the creditor be entitled to recover the deficiency, notwithstanding any stipulation to the contrary."
WON Garrido could still claim the deficiency?
NO, but based on res judicata, not because there was already foreclosure of the CM.
*Article 2115 of the Civil Code does not apply to Chattel Mortgage. Article 2115 is inconsistent with the provisions of the Chattel Mortgage Law, and that, accordingly, the chattel mortgage creditor may maintain an action for the deficiency.
-TC must have applied 2115 based on Article 2141 of CC which provides that provisions on pledge shall be applicable to chattel mortgages "insofar as they are not in conflict with the Chattel Mortgage Law". But as it does conflict, it should not be applied!
HOW CONFLICT? DI ko rin alam eh. Wehe. Eto sabi sa footnote sa case:
The last part of the second paragraph of Section 14 of Act No. 1508, provides:
SECTION 14. Sale of property at public
". . . The proceeds of such sale shall be applied to the payment, first, of the costs and expenses of keeping and sale, and then to the payment of the demand or obligation secured by such mortgage, and the residue shall be paid to persons holding subsequent mortgages in their order, and the balance, after paying the mortgages, shall be paid to the mortgagor or person holding under him on demand."
Pero hellurh, this contemplates a situation where there is excess in the proceeds of the sale, and not when there's a deficiency. So how does this conflict?
TC might have acted under the impression that the first case was for the foreclosure of a chattel mortgage. But the first case was an ordinary money judgment so no previous ruling on foreclosure
...(okay eto pagkagets ko a, since di pa naman judicially ordered ang foreclosure, pede pa magforeclosure on other properties to cover the deficiency of the money judgment. In this case, Garrido prayed for foreclosure and not payment but since the MTC ordered payment instead, no judicial order of foreclosure)
SC: Municipal court should have NOT DENIED plaintiff's motion for issuance of alias writ of execution
-but since instead of filing an appeal to the denial of his motion, the decision of the MC have been final and executory and thus binding and res judicata on the Civil Action he later filed.
NOTE: Why did CM arise? May sale ba or may utang lang? If may sale, A1484 would apply!
There's no explicit statement in the Chattel Mortgage law which provides that the creditor could recover deficiency. SC interpreted it and declared that there's such right WITHOUT EXPLAINING WHY… Sir said that in previous cases, the ruling was different but he didn't assign to us the said cases because it was not assigned to him when he was a student...
MAGNA FINANCIAL SERVICES GROUP VS. COLARINA
F: Colorina bought on installment from Magna Financial Services a Suzuki Multicab. He executed a PN for the balance of P229,284 and executed an integrated PN and deed of CM over the Multicab as security.
-Colorina failed to pay the monthly amortization, with accumulating unpaid balance of P131,607. Colorina still failed to pay inspite of demands so MAGNA filed a COMPLAINT FOR FORECLOSURE of CHATTEL MORTGAGE w/ REPLEVIN
-bond was filed by MAGNA, writ of replevin was issued
TC: Colarina pay the P131,607 plus penalty + atty's fees + costs. In case of nonpayment, multicab shall be sold at public auction
RTC: affrim
CA: complaint was for foreclosure of the chattel mortgage so wrong to order Colorina to pay the balance due
What is the true nature of a foreclosure of chattel mortgage under Article 1484(3)
YEY! Eto na ung sinasabi ni ma'am Chit!
BACHRACH MOTOR CO. VS. MILLAN: “Undoubtedly the principal object of the above amendment (referring to Act 4122 amending Art. 1454, Civil Code of 1889) was to remedy the abuses committed in connection with the foreclosure of chattel mortgages. This amendment prevents mortgagees from seizing the mortgaged property, buying it at foreclosure sale for a low price and then bringing the suit against the mortgagor for a deficiency judgment. The almost invariable result of this procedure was that the mortgagor found himself minus the property and still owing practically the full amount of his original indebtedness.”
-HERE: MAGNA PRAYED BOTH FOR PAYMENT OF THE OBLIGATION AND FORECLOSURE OF THE CHATTEL. However, by praying for the foreclosure of the chattel, Magna renounced whatever claim it may have under the PN.
-Art 1484(3) PROHIBITS OTHER ACTION TO RECOVER ANY UNPAID BALANCE OF THE PURCHASE PRICE AFTER FORECLOSURE. In other words, in all proceedings for the foreclosure of chattel mortgages executed on chattels which have been sold on the installment plan, the mortgagee is limited to the property included in the mortgage.
-NATURE OF CONTRACT OF CHATTEL MORTGAGE: conditional sale of personal property given as security for the payment of a debt, or the performance of some other obligation specified therein, the condition being that the sale shall be VOID UPON THE SELLER PAYING OR PERFORMING THE OBLIGATION SPECIFIED.
-if condition performed: mortgage and sale immediately become void, mortgagee divested of title
-if nonpayment: foreclosure one of the remedies under A1484
…may either be judicial or extrajudicial
*** Since the petitioner has undeniably elected a remedy of foreclosure under Article 1484(3) of the Civil Code, it is bound by its election and thus may not be allowed to change what it has opted for nor to ask for more. On this point, the Court of Appeals correctly set aside the trial court’s decision and instead rendered a judgment of foreclosure as prayed for by the petitioner.
WON there has been an actual foreclosure of the vehicle
Not yet, but since the vehicle is with Magna already and Magna consistently avowed that it elects the remedy of foreclosure, CA correctly directed the foreclosure of the vehicle.
SC: A contract of chattel mortgage is the nature of a conditional sale of personality. WITHOUT EXPLAINING WHY IT WAS SO EVEN AFTER SAYING IT WAS INACCURATE, IN CERRA V. RODRIGUEZ. SIR: The characterization of CM as conditional sale has been abandoned since the enactment of Civil Code (A2141 of NCC).
(pause)………."Did you notice that my pauses are getting longer and longer?…" (pause)…
- Dacion en pago with repurchase (as an alternative to foreclosure of mortgage)
This set-up is used to do away with foreclosure proceeding
Dacion en Pago: mode of extinguishing an obligation whereby the debtor alienates in favor of the creditor property for the satisfaction of monetary debt; extinguish up to amount of property unless w/ contrary stipulation; A special form of payment because 1 element of payment is missing: IDENTITY
-result is the same, in the sense that the mortgagor ends up with the property but no foreclosure proceeding…
Is this a circumvention of pactum commisorium?
YES. Precisely, the mortgage is set aside. NO mortgage to speak of in the first place as it's substituted with another contractual arrangement. But valid as it is under the freedom of the parties to contract.
- Effect of "stay order" on enforcement of security
In Petition for Rehabilitation, the Court may issue a stay order which works as a standstill order prohibiting creditors to enforce their securities.
-court needs to see if the petition is sufficient in form and substance
"Cram down" clause
- Foreclosure of Real Estate Mortgage
Sir's book:
REM may be foreclosed Judicially or extrajudicially:
|
**If the mortgagee = bank - follow Section 47
*if mortgagee=bank >>> there's always right of redemption, regardless if judicial or extrajudicial
---w/n 1 year counted from the date of registrationof the certificate of sale in the Registry of Property (Huerta vs. CA)
…but period shortened under GBL if JURIDICAL PERSON: 3 months from extrajudicial foreclosure
…foreign banks may not benefit from the 2nd paragraph of Section 47 since it may not be able to resort to extrajudicial foreclosure and therefore, will be unable to benefit from the 2nd paragraph of A67
SECTION 47. Foreclosure of Real Estate Mortgage. —
In the event of foreclosure,
whether judicially or extrajudicially,
of any mortgage on real estate which is security for any loan or other credit accommodation granted,
the mortgagor or debtor whose real property has been sold for the full or partial payment of his obligation shall have the right within one year after the sale of the real estate, to redeem
the property
by paying the amount due under the mortgage deed, with interest thereon at the rate
specified in the mortgage, and all the costs and expenses incurred by the bank or institution from the sale and custody of said property less the income derived therefrom. (RIGHT TO REDEEM PROPERTY W/N 1 YEAR FROM DATE OF REGISTRATION OF THE CERTIFICATE OF SALE IN THE REGISTRY OF PROPERTY)
However, the purchaser at the auction sale concerned whether in a judicial or extrajudicial foreclosure shall have the right to enter upon and take possession of such property immediately after the date of the confirmation of the auction sale and administer the same in accordance with law. (RIGHT OF THE PURCHASER TO ENTER PROPERTY AFTER SALE - HUERTA VS. CA)
Any petition in court to enjoin or restrain the conduct of foreclosure proceedings instituted pursuant to this provision shall be given due course only upon the filing by the petitioner of a bond in an amount fixed by the court conditioned that he will pay all the damages which the bank may suffer by the enjoining or the restraint of the foreclosure proceeding.
Notwithstanding Act 3135,
juridical persons whose property is being sold pursuant to an extrajudicial foreclosure,
shall have the right to redeem the property in accordance with this provision
until, but not after, the registration of the certificate of foreclosure sale with the applicable Register of Deeds
which in no case shall be more than three (3) months after foreclosure,
whichever is earlier.
Owners of property that has been sold in a foreclosure sale prior to the effectivity of this Act shall retain
their redemption rights until their expiration. (78a)
Sec. 1. Any provision of law to the contrary notwithstanding,
private real property may be mortgaged for a period not exceeding five years,
renewable for another five,
in favor of any individual, corporation, or association,
but the mortgagee or his successor in interest,
if disqualified to acquire or hold lands of the public domain in the Philippines,
shall not bid or take part in any sale of such real property as a consequence of such mortgage.
Sir: foreign banks can be mortgagees but cannot acquire the property in a foreclosure sale…only entitled to proceeds of the sale
Note however that RA 133 specifies judicial foreclosure, not extrajudicial foreclosure
(okay, I can't find it anywhere in RA 133…wala namang nakaspecify kung judicial or extrajudicial basta as a consequence of such mortgage)
See page 156…
REGISTER OF DEEDS VS. CHINA BANKING CORPORATION
Facts: Pangilinan and Chua were charged and convicted of qualified theft for P275k from China Banking Corporation. In furtherance of the judgment, Pangilinan executed in favor of China Banking Corporation a public instrument entitled DEED OF TRANSFER whereby he ceded and transferred to CBC a parcel of land located in Manila.
-When CBC presented the document to the Registrar of Deeds, Registrar denied it because CBC was alien-owned and as such, barred from acquiring lands in the Philippines
-CBC submitted matter to the Land Registration Commission for Resolution.
LRC: unregistrable
HELD: CBC cannot register the property in their name
-Section 25, RA 337 par © and (d) ARE NOT APPLICABLE TO ALIEN BANKS!
ON PAR ©:
"Sec. 25. Any commercial bank may purchase, hold, and convey real estate for the following purposes:
(c)Such as shall be conveyed to it in satisfaction of debts previously contracted in the course of its dealings;
-the "debts" referred to are ONLY THOSE RESULTING FROM PREVIOUS LOANS AND OTHER SIMILAR TRANSACTIONS MADE OR ENTERED INTO BY A COMMERCIAL BANK IN THE ORDINARY COURSE OF ITS BUSINESS AS SUCH
-"CIVIL LIABILITY" arising from a criminal offense WAS NOT A DEBT RESULTING FROM A LOAN OR A SIMILAR TRANSACTION HAD BETWEEN TWO PARTIES IN THE ORDINARY COURSE OF BANKING BUSINESS
ON PAR (D)
"Sec. 25. Any commercial bank may purchase, hold, and convey real estate for the following purposes:
(d) Such as it shall purchase at sales under judgments, decrees, mortgages, or trust deeds held by it and such as it shall purchase to secure debts due to it.
But no such bank shall hold the possession of any real estate under mortgage or trust deed, or the title and possession of any real estate purchased to secure any debt due to it, for a longer period than five years."
-the deed of transfer ≠ sale made by virtue of judgment, decree, mortgage, or trust deed held by CBC
-real property in question was not purchased by CBC to secure debts due it
-debts: refer only to such debts as may become payable to appellant bank as a result of a banking transaction.
ON Argument that consti prohibition should be liberally construed to be limited to PERMANENT ACQUISITION OF REAL ESTATE BY ALIENS
the consti prohibition is ABSOLUTE IN TERMS. Smith Bell & Co Case not applicable because what was allowed to be registered there was a 50-year LEASE which does not involve transfer of dominion over the land
This is the case when SYCIP lost (SYCIP's dad was one of the founders of China Bank)
SECTION 25 = SEC 52 of the NEW LAW
SECTION 52. Acquisition of Real Estate by Way of Satisfaction of Claims. —
Notwithstanding the limitations of the preceding Section, a bank may acquire, hold or convey real
property under the following circumstances:
52.1. Such as shall be mortgaged to it in good faith by way of security for debts;
52.2. Such as shall be conveyed to it in satisfaction of debts previously contracted in the course of
its dealings; or
52.3. Such as it shall purchase at sales under judgments, decrees, mortgages, or trust deeds held
by it and such as it shall purchase to secure debts due it.
Any real property acquired or held under the circumstances enumerated in the above paragraph
shall be disposed of by the bank within a period of five (5) years or as may be prescribed by the
Monetary Board: Provided, however, That the bank may, after said period, continue to hold the property
for its own use, subject to the limitations of the preceding Section. (25a)
See sir's annotation of the section! "1st paragraph of my annotation… it took me hours to put up this paragraph"
El Hobar Filipino: Bank made some effort in GF to sell the property w/n 5 years. So substantial compliance with Section 52.
Now there are online sales of the ROPA!
Facts: MICC obtained a loan from Banco Filipino Savings and Mortgage Bank and executed REM over 21 parcels of land, including 2 parcels of land in Pque which MICC sold though unregistered.
-since MICC defaulted in their obligation, Banco Filipino filed PETITION FOR THE EXTRAJUDICIAL FORECLOSURE of MICC's Mortgage (question: if extrajudicial, bakit may petition?).
-Auction Sale: BF declared the highest bidder. Certificate of Sale issued in favor of BF.
-NO REDEMPTION W/N REGLEMENTARY PERIOD so BF filed a petition for issuance of writ of possession of foreclosed properties which was granted. Notice to vacate served on spouses who bought 2 lands from MICC. Spouses (petitioners) fiiled petition before CA - dismissed for lack of merit.
- WON spouses have superior right over BF (alleging Buyers in GF)
NO. Sale occurred AFTER MORTGAGE in favor of BF registered. A real right or lien in favor of BF had already been established, subsisting over the properties until the discharge of the principal obligation, WHOEVER POSSESSOR OF THE LAND MAY BE.
- WON Spouses have right to redeem
YES. But right already prescribed.
-as successors-in-interest of MICC, they have right to redeem 1 year FROM THE DATE OF REGISTRATION OF THE CERTIFICATE OF SALE W/ THE REGISTRY OF DEEDS. That is, from July 29, 1985 (thus, UNTIL JULY 29, 1986)
But since they failed to redeem within said period, right prescribed. Ownership of the subject properties was thus consolidated in favor of BF
- WON there was a binding AGREEMENT FOR REPURCHASE
NO.
(apparently there were negotiations entered by the Spouses with BF. However, the correspondence failed to show that the parties agreed to the valuation of the properties and that any of the parties agreed to the redemption on a fixed price)
Court held that the correspondence between the parties reveals absence of DEFINITE OFFER AND ABSOLUTE ACCEPTANCE OF THE DEFINITE OFFER.
- WON house should have been excluded from the auction sale
NO. Article 448, NCC does not apply
-The houses purchased by the spouses from MICC are improvements on the properties subjected to the REM, thus covered by the REM as improvements are deemed part of real property
- WON writ of possession could still be enforced after 8 years from promulgation
YES. Right of applicant/subsequent purchaser to request for the issuance of a writ of possession of land NEVER PRESCRIBES
If you register your REM and have it annotated to the back of your title, subsequent buyers of the land are bound by the REM
BANCO FILIPINO SAVINGS AND MORTGAGE BANK VS. CA
Facts: Santiago Memorial Park obtained a loan with BF and executed a REM over a parcel of lot. Because of default, BF foreclosed REM and certificate of sale was issued in favor of BF.
-Santiago manifested its interest to exercise its right to redemption and offered as payment P700k (loan was for P500k). Deputy liquidator gave Santiago until end of March 1992 to negotiate payment. Santiago remitted P50k to manifest willingness to redeem property. Santiago later offered P1M for the property. Senior VP demanded later P5,830,000 as purchase price of property.
-Santiago filed a complaint for redemption and specific performance with RTC vs. BF
-BF Filed MTD: no redemption effected w/n 1 year from date of registration.
*RTC: dismissed redemption complaint
- NO DEFINITE REDEMPTION (offer was not coupled with tender of the price)
- Complaint did not state that Santiago tendered correct redemption price w/n redemption period
*CA: reversed TC: sustained complaint for redemption
- Complaint alleged that as eary as August 6, 1991 (6 months before the expiration of the statutory period for redemption), Santiago exerted earnest efforts to effect redemption
- Santiago did deposit the price which they believed was the agreed redemption price, with the belief that BF was negotiating in GF
- Granted that Santiago is barred, as the parties entered into a new contract extending period w/n which to purchase property, Santiago could still purchase property
---Santiago tendered payment and consigned amount of P1,300,987.96 in accordance with CA deci
HELD: for BF. NO COA for redemption. Regardless if Santiago was diligent in asserting its willingness to pay, REDEMPTION W/N THE PERIOD ALLOWED BY LAW IS NOT A MATTER OF INTENT BUT A QUESTION OF PAYMENT OR VALID TENDER OF FULL REDEMPTION PRICE W/N SAID PERIOD.
*Banco Filipino v. CA (2005): The right of redemption must be exercised within the specified time limit, which is one (1) year from date of registration of certificate of sale. In case of disagreement over the redemption price, the redemptioner may preserve his right of redemption through judicial action which in every case must be filed within the same one (1) year.
Note: Redemption amount as provided in Section 47 of GBL is different from that in Rules of Court. This is to insure that the bank will not incur losses.
*Provisions of GBL are juxtaposed with ROC provisions.
| If non bank | Bank |
| Redemption price: foreclosure sale | Redemption price: mortgage deed + interest |
e.g. loan P1M, REM, foreclosed, sold for only P500k
What the mortgagor would do to redeem the property is to give you back
P500k:: if non-bank
P1M+ interests :: if bank
RURAL BANKING OF CALINOG VS. CA
Facts: To pay the redemption price for the mortgaged property, the owner of the subject property obtained another loan with Rural Banking of Calinog. The mortgagor died, thus, the spouses who were successors of interest of the mortgagor, paid the bank to satisfy the loan with Rural Banking of Calinog (and alleged they paid the whole obligation). However, Rural Bank of Calinog initiated foreclosure proceedings for the said property, claiming the loan was unpaid. Even after the spouses demanded the accounting of the accounts, the bank still proceeded with the foreclosure sale.
-Spouses filed complaint for nullification of the sale. MTD filed by Rural Bank, arguing that since the mortgagor has already died, the payments made by the spouses were irrelevant as they were not parties to the mortgage.
RTC: for bank
CA: For the spouses. They had a COA and irrelevant if they were not parties to the mortgage as they were successors-in-interest
HELD: for the spouses!
-the spouses had COA: spouses sufficiently alleged that they made payments to discharge the obligation of Carmen Cerbo under the mortgage and that the bank failed to make an accounting of the payments made even after demand of the spouses and that if accounting was indeed made, it would show that the spouses has already discharged of the obligation with the Rural Bank. Whether these allegations entitle private respondents to the reliefs prayed for is a question which can best be resolved after trial on the merits at which each party can present evidence to prove their respective allegations and defenses.
-BANK ALREADY FILED ANSWER ADMITTING THAT RESPONDENT GREGORIO CERBANA MADE DEPOSITS AS INITIAL PAYMENT OF REDEMPTION PRICE AND THAT GREGORIO PAID A TOTAL OF P101K, therefore acknowledging that it was Gregorio who was making payments on the loan obligation, even referred to Gregorio as the REDEMPTIONER of the foreclosed property.
-ON RELEVANCE OF THE FACT THAT SPOUSES WERE NOT PARTIES TO THE MORTGAGE CONTRACT: SPOUSES' COA MAY BE DIFFERENT FROM THAT OF CARMEN. While the death of Carmen Cerbo certainly extinguished whatever cause of action she had against petitioner, private respondents’ cause of action, based on the allegations in the complaint, was not thereby similarly extinguished. Indeed, assuming the allegations of the complaint to be true, private respondents, having paid the redemption price, have the right to demand an accounting, to be refunded for whatever excess payments they made, and even to redeem the property. Correlatively, petitioner, having accepted payment from private respondents, has the obligation to account for such payment, to return the excess, if any, and to allow redemption.
This case is more of a civpro case!
BUKIDNON DOCTOR'S HOSPITAL VS. METROBANK
Facts: Bukidnon Doctor's Hospital obtained a P25M loan from MBTC for the construction of its hospital. It also constituted a REM over the lands over which the hospital would be built as a security. As the Bukidnon Doctor's defaulted, MBTC foreclosed the REM and then was able to buy it. No redemption made by Bukidnon Doctors so MBTC consolidated ownership over the properties.
---however, it was apparent that before the end of the redemption period, Bukidnon Doctor's and MBTC had a lease agreement so that the operation of the hospital erected on the lands mortgaged would not be disrupted.
…but after the consolidation of the ownership over the properties, MBTC asked Bukidnon Doctors to vacate the property. Bukidnon Doctors refused, invoking the lease agreement
-MBTC filed EX PARTE MOTION FOR WRIT OF POSSESSION w/ RTC
RTC: granted
WON MBTC ENTITLED TO WRIT OF POSSESSION AS A MATTER OF RIGHT DESPITE THE LEASE AGREEMENT BETWEEN ITSELF AND THE FORMER MORTGAGOR-SELLER?
NO
where a lease agreement, whether express or implied, is subsequently entered into by the mortgagor and the mortgagee after the expiration of the redemption period and the consolidation of title in the name of the latter, a case for ejectment or unlawful detainer, not a motion for a writ of possession, is the proper remedy in order to evict from the questioned premises a mortgagor-turned-lessee. The rationale for this rule is that a new relationship between the parties has been created. What applies is no longer the law on extrajudicial foreclosure, but the law on lease. And when an issue arises, as in the case at bar, regarding the right of the lessee to continue occupying the leased premises, the rights of the parties must be heard and resolved in a case for ejectment or unlawful detainer under Rule 70 of the Rules of Court.
Bukidnon Doctors v. MetroBank: In extrajudicial foreclosure, a writ of possession shall be issued as a matter of course upon proper motion after expiration of redemption period without the mortgagor exercising his right of redemption.
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