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503 Phil. 723


[ G.R. NO. 133079, August 09, 2005 ]




Herein petitioners, the spouses Maximo Landrito, Jr. and Pacita Landrito, have come to this Court via this petition for review on certiorari under Rule 45 of the Rules of Court to seek the reversal and setting aside of the decision dated 12 December 1997[1] and resolution dated 10 March 1998[2] of the Court of Appeals in CA-G.R. CV No. 48896, affirming an earlier order of the Regional Trial Court at Makati City which granted the motion to dismiss filed by the herein private respondents, the spouses Benjamin San Diego and Carmencita San Diego, in its Civil Case No. 94-2950, a complaint for annulment of extrajudicial foreclosure and auction sale, thereat commenced by them against the San Diegos, the ex-officio sheriff and the Register of Deeds of Makati City.

The facts:

In July 1990, petitioners obtained a loan of P350,000.00 from respondent Carmencita San Diego. To secure payment thereof, petitioners executed on 02 August 1990 in favor of the same respondent a deed of real estate mortgage over their parcel of land located at Bayanan, Muntinlupa, Rizal and registered in their names under Transfer Certificate of Title No. (432281) S-21000.

After making substantial payments, petitioners again obtained and were granted by Carmencita San Diego an additional loan of One Million Pesos (P1,000,000.00). To secure this additional loan, the parties executed on 13 September 1991 an "Amendment of Real Estate Mortgage", whereunder they stipulated that the loan shall be paid within six (6) months from 16 September 1991, and if not paid within said period, the mortgagee shall have the right to declare the mortgage due and may immediately foreclose the same judicially or extrajudicially, in accordance with law.

It appears that petitioners defaulted in paying their loan and continuously refused to comply with their obligation despite repeated demands therefor, prompting respondent Carmencita San Diego to send them on 27 April 1993, a final notice of demand requiring them to settle their financial obligation which, by then, already amounted to P1,950,000.00.

On 30 June 1993, after her efforts to collect proved futile, respondent Carmencita San Diego filed with the Office of the Clerk of Court and Ex-Officio Sheriff of RTC-Makati, a petition for the extrajudicial foreclosure of the mortgage.

On 06 July 1993, said office sent to the parties a Notice of Sheriff's Sale, therein announcing that petitioners' mortgaged property will be sold in a public auction to be conducted on 11 August 1993 at 10:00 o'clock in the morning, copies of which notice were posted in several conspicuous places within the sheriff's territorial jurisdiction.

As announced, on 11 August 1993, at 10:00 o'clock in the morning, the public auction sale was held and the mortgaged property sold to respondent Carmencita San Diego as the highest bidder for P2,000,000.00, as evidenced by the Sheriff's Certificate of Sale issued in her favor on 07 October 1993.

On 29 October 1993, respondent San Diego caused the registration of the same sheriff's certificate of sale with the Office of the Register of Deeds, Makati City, and duly inscribed on the same date at the dorsal side of the petitioners' TCT No. (432281) S-21000.

With the petitioners having failed to redeem their property within the 1-year redemption period from the date of inscription of the sheriff's certificate of sale, as provided for in Act No. 3135, as amended, the San Diegos caused the consolidation of title over the foreclosed property in their names.

Then, on 09 November 1994, before the Regional Trial Court at Makati City, petitioners filed their complaint for annulment of the extrajudicial foreclosure and auction sale, with damages. In their complaint, thereat docketed as Civil Case No. 94-2950, petitioners alleged that (1) said foreclosure and auction sale were null and void for failure to comply with the requirements of notice and publication, as mandated by Act 3135, as amended; (2) the mortgaged property was illegally foreclosed in the light of the settled rule that an action to foreclose a mortgage must be limited to the amount mentioned in the mortgage document, in this case, P1,000,000.00, which amount was allegedly bloated by respondent Carmencita San Diego to P1,950,000.00; and (3) the San Diegos' application for consolidation of title was premature because the husband, Benjamin San Diego, allegedly granted them an extension of the period of redemption up to 11 November 1994.

To the complaint, respondents interposed a Motion to Dismiss, therein alleging that said complaint failed to state a cause of action as no primary right of the petitioners had been violated since they actually failed to exercise their right of redemption within the one-year redemption period, adding that petitioners never took any action which may stall the running of the same period, thereby leaving them no further right or interest in the property in question.

In an order dated 13 January 1995, the trial court granted respondents' motion to dismiss and accordingly dismissed petitioners' complaint, saying that the latter's cause of action, if any, is already barred by laches on account of their failure or neglect for an unreasonable length of time to do that which, by exercising due diligence, could or should have been done earlier. Further, the trial court ruled that petitioners' inaction constituted a waiver on their part.

Therefrom, petitioners went on appeal to the Court of Appeals in CA-G.R. CV No. 48896.

As stated at the outset hereof, the appellate court, in its decision of 12 December 1997, dismissed petitioners' appeal and affirmed in toto the trial court's order of dismissal. With their motion for reconsideration having been denied by the same court in its resolution of 10 March 1998,[3] petitioners are now with us via the present recourse, faulting the Court of Appeals, as follows:
  1. The Court of Appeals gravely erred in avoiding to resolve in the assailed Decision and in the questioned Resolution the basic issue as to whether or not the extra-judicial foreclosure and public auction sale of the subject parcel of land are valid and lawful when the amount stated in letter-request or the petition for extra-judicial foreclosure and in the notice of sheriff sale doubled the amount stipulated in the Amendment of Real Estate Mortgage;

  2. The Court of Appeals has similarly committed serious error in considering that the complaint of the petitioner is a complaint for redemption when in the caption; in the body; and in the prayer of the complaint, petitioner spouses have sought the nullity as void ab initio the extra-judicial foreclosure and auction sale of the subject property;

  3. The respondent Appellate Court likewise incredulously erred to have resolved the admissibility and probative value of the statement of account attached as Annex "E" of the complaint when it was not yet presented in evidence; because the stage of the case at the time the assailed dismissal order was issued, was yet in the period of pleadings;

  4. The Court of Appeals has grievously erred in affirming the assailed dismissal order by declaring petitioner spouses to have been guilty of laches in failing to redeem during the legal period of redemption the foreclosed parcel of land; when the cause of the failure to redeem was the illegal increase by 100% of the original obligation, stated in the Amendment of Real Estate Mortgage and bloating of the redemption price from Two Million Pesos (P2,000,000.00) to Three Million Four Hundred Ninety One Thousand Two Hundred Twenty Five & 98/100 Pesos (P3,491,225.98).

The records indubitably show that at the time of the foreclosure sale on 11 August 1993, petitioners were already in default in their loan obligation to respondent Carmencita San Diego.

Much earlier, or on 27 April 1993, a final notice of demand for payment had been sent to them, despite which they still failed to pay. Hence, respondent Carmencita San Diego's resort to extrajudicial foreclosure, provided no less in the parties' "Amendment of Real Estate Mortgage".

The rule has been, and still is, that in real estate mortgage, when the principal obligation is not paid when due, the mortgagee has the right to foreclose on the mortgage and to have the mortgaged property seized and sold with the view of applying the proceeds thereof to the payment of the obligation.[4]

Here, the validity of the extrajudicial foreclosure on 11 August 1993 was virtually confirmed by the trial court when it dismissed petitioners' complaint, and rightly so, what with the fact that petitioners failed to exercise their right of redemption within the 1-year period therefor counted from the registration of the sheriff's certificate of sale.

It is petitioners' main submission, however, that the very reason why they did not avail of their redemption right is because Mrs. San Diego bloated their original loan of P1,000,000.00 to P1,950,000.00, an issue supposedly not considered and/or addressed by the appellate court in the decision under review. In this regard, petitioners argue that the Court of Appeals, in sustaining the extrajudicial foreclosure proceedings, thereby go against the established jurisprudence that an action for foreclosure must be limited to the amount mentioned in the mortgage document, P1,000,000.00 in this case.

We do not take issue with petitioners' submission that a mortgage may be foreclosed only for the amount appearing in the mortgage document, more so where, as here, the mortgage contract entered into by the parties is evidently silent on the payment of interest.

However, contrary to petitioners' claim, the appellate court did pass upon the legal issue raised by them, albeit ruling that petitioners had been barred by laches from raising the same. We quote from the challenged decision:
[Petitioners] next argued that the mortgaged property was illegally foreclosed since it is a well settled rule that an action to foreclose a mortgage must be limited to the amount mentioned in the mortgage.

The argument is without merit.

It appears from the evidence on record that despite due notice and publication of the same in a newspaper of general circulation (Exhs. "5", "5-A" and "5-B", pp. 53-55, Record), [petitioners] did not bother to attend the foreclosure sale nor raise any question regarding the propriety of the sale. It was only on November 9, 1994, or more than one year from the registration of the Sheriff's Certificate of Sale, that [petitioners] filed the instant complaint. Clearly, [petitioners] had slept on their rights and are therefore guilty of laches, which is defined as the failure or neglect for an unreasonable or explained length of time to do that which, by exercising due diligence, could or should have been done earlier, failure of which gives rise to the presumption that the person possessed of the right or privilege has abandoned or has declined to assert the same. (Words in bracket added.)
For sure, in the very petition they filed in this case, petitioners have not offered any valid excuse why, despite notice to them of the petition for extrajudicial foreclosure filed by the respondents, they failed to attend the proceedings and there voiced out what they are now claiming. Truly, laches has worked against them.

The law on redemption of mortgaged property is clear. Republic Act No. 3135 (An Act to Regulate the Sale of Property Under Special Powers Inserted In Or Annexed to Real Estate Mortgages), as amended by Republic Act No. 4118, provides in Section 6 thereof, thus:
"Sec. 6. In all cases in which an extrajudicial sale is made under the special power hereinbefore referred to, the debtor, his successors in interest or any judicial creditor or judgment creditor of said debtor, or any person having a lien on the property subsequent to the mortgage or deed of trust under which the property is sold, may redeem the same at any time within the term of one year from and after the date of the sale; xxx" (Emphasis supplied)
In a long line of cases[5], this Court has consistently ruled that the one-year redemption period should be counted not from the date of foreclosure sale, but from the time the certificate of sale is registered with the Register of Deeds. Here, it is not disputed that the sheriff's certificate of sale was registered on 29 October 1993.

And under Article 13 of the New Civil Code[6], a year is understood to have three hundred sixty-five (365) days each. Thus, excluding the first day and counting from 30 October 1993 (under paragraph 3 of Article 13 of the New Civil Code), and bearing in mind that 1994 was a leap year, petitioners had only until 29 October 1994, the 365th day after registration of the sheriff's certificate of sale on 29 October 1993, within which to redeem the foreclosed property in accordance with law. And since 29 October 1994 fell on a Saturday, petitioners had until the following working day, 31 October 1994, within which to exercise their right of redemption.

From the foregoing, it is clear as day that even the complaint filed by the petitioners with the trial court on 09 November 1994 was instituted beyond the 1-year redemption period. In fact, petitioners no less acknowledged that their complaint for annulment of extrajudicial foreclosure and auction sale was filed about eleven (11) days after the redemption period had already expired on 29 October 1994[7]. They merely harp on the alleged increase in the redemption price of the mortgaged property as the reason for their failure to redeem the same. However, and as already pointed out herein, they chose not, despite notice, to appear during the foreclosure proceedings.

Of course, petitioners presently insist that they requested for and were granted an extension of time within which to redeem their property, relying on a handwritten note allegedly written by Mrs. San Diego's husband on petitioners' statement of account, indicating therein the date 11 November 1994 as the last day to pay their outstanding account in full. Even assuming, in gratia argumenti, that they were indeed granted such an extension, the hard reality, however, is that at no time at all did petitioners make a valid offer to redeem coupled with a tender of the redemption price.

Even on this score, petitioners' case must fall.

For, in Lazo v. Republic Surety & Insurance Co., Inc.[8], this Court has made it clear that it is only where, by voluntary agreement of the parties, consisting of extensions of the redemption period, followed by commitment by the debtor to pay the redemption price at a fixed date, will the concept of legal redemption be converted into one of conventional redemption.

Here, there is no showing whatsoever that petitioners agreed to pay the redemption price on or before 11 November 1994, as allegedly set by Mrs. San Diego's husband. On the contrary, their act of filing their complaint on 09 November 1994 to declare the nullity of the foreclosure sale is indicative of their refusal to pay the redemption price on the alleged deadline set by the husband. At the very least, if they so believed that their loan obligation was only for P1,000,000.00, petitioners should have made an offer to redeem within one (1) year from the registration of the sheriff's certificate of sale, together with a tender of the same amount. This, they never did.

It must be remembered that the period of redemption is not a prescriptive period but a condition precedent provided by law to restrict the right of the person exercising redemption. Correspondingly, if a person exercising the right of redemption has offered to redeem the property within the period fixed, he is considered to have complied with the condition precedent prescribed by law and may thereafter bring an action to enforce redemption. If, on the other hand, the period is allowed to lapse before the right of redemption is exercised, then the action to enforce redemption will not prosper, even if the action is brought within the ordinary prescriptive period. Moreover, the period within which to redeem the property sold at a sheriff's sale is not suspended by the institution of an action to annul the foreclosure sale.[9] It is clear, then, that petitioners have lost any right or interest over the subject property primarily because of their failure to redeem the same in the manner and within the period prescribed by law. Their belated attempts to question the legality and validity of the foreclosure proceedings and public auction must accordingly fail.

WHEREFORE, the instant petition is DENIED and the challenged decision and resolution of the Court of Appeals AFFIRMED.

No pronouncement as to costs.


Panganiban, (Chairman), Sandoval-Gutierrez, and Carpio Morales, JJ., concur.
Corona, J., on official leave.

[1] Penned by then, now a member of this Court, Associate Justice Consuelo Ynares-Santiago, with then Associate Justices Bernardo Ll. Salas and Demetrio G. Demetria, concurring.

[2] Rollo, p. 28.

[3] Ibid.

[4] State Investment House, Inc. v. Court of Appeals, 215 SCRA 734 [1992] citing Commodity Financing Co., Inc. v. Jimenez, 91 SCRA 57 [1979] and Bicol Savings and Loan Association v. Court of Appeals, 171 SCRA 630 [1989].

[5] Agbulos v. Alberto, 5 SCRA 790, [1962]; Salazar v. Meneses, 8 SCRA 495 [1963]; Reyes v. Noblejas, 21 SCRA 1027 [1970]; Quimson v. Philippine National Bank, 36 SCRA 26 [1970]; Gregorio Limpin v. Intermediate Appellate Court, 166 SCRA 87 [1988]; Eastman Chemical Industries, Inc. v. Court of Appeals, 174 SCRA 619 [1989]; Bernardez v. Reyes, 201 SCRA 648 [1991]; and Union Bank of the Philippines v. Court of Appeals, 357 SCRA 12 [2001].

[6] Article 13. When the law speaks of years, months, days or nights, it shall be understood that years are of three hundred sixty-five days each; months, of thirty days; days, of twenty-four hours; and nights from sunset to sunrise.
If months are designated by their name, they shall be computed by the number of days which they respectively have.
In computing a period, the first day shall be excluded, and the last day included.

[7] Memorandum for the Petitioners dated 26 February 1999.

[8] 31 SCRA 329 [1970].

[9] Fundamentals of Redemption in Extra-Judicial Foreclosures, 140 SCRA 368 [1985], citing De Connejero, et al. v. Court of Appeals, et al., L-21812; Castillo v. Samonte, L-13146, 30 June 1960; Daga v. Tomacruz, 58 Phil 414; and Sumerariz v. Development Bank of the Philippines, 21 SCRA 1374.

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