G.R. No.

99308 November 13, 1992

STATE INVESTMENT HOUSE, INC., petitioner,
vs.
COURT OF APPEALS and SABINA VDA. DE CUENCA, respondents.
MELO, J.:
The Decision and Amended Decision of the Court of Appeals in CA-G.R. CV 24339, both reversing and
affirming in part the Decision of Branch 90 of the Regional Trial Court of Quezon City in "Sabina Vda. de
Cuenca vs. State Investment House, Inc." (Civil Case No. Q-42552), for declaration of nullity of the
foreclosure sale with an alternative prayer for redemption of the foreclosed property, are assailed in the
instant petition on questions of law.
As may be gleaned from the pleadings of the parties, the antecedent facts are as follows:
On February 13, 1979, private respondent Sabina Vda. de Cuenca (Cuenca) obtained a loan from
petitioner State Investment House, Inc. (SIHI) under a promissory note for P160,000.00, secured by a
mortgage on Cuenca's property at Tandang Sora, Quezon City.
On November 15, 1979, Cuenca obtained another loan of P500,000.00. This loan was secured by a real
estate mortgage executed by Cuenca on another property located along Timog, Quezon City, with
paragraph 6 of the contract expressly giving SIHI the option of extra-judicially foreclosing the mortgaged
property in the event of Cuenca's default in the payment of her indebtedness. Cuenca's unpaid balance of
P120,000.00 under the first loan was deducted from the proceeds of the second loan. The mortgage on
her property at Tandang Sora, Quezon City was cancelled.
Because of Cuenca's failure to pay on the maturity date of the loan, her account was restructured and
rolled over twelve times through the execution of various promissory notes. On November 29, 1982, the
maturity date of the twelfth promissory note, SIHI claimed that Cuenca's obligations, inclusive of interest,
service charges, and penalties, reached a total of P621,483.57. The loan was not anymore restructured
and SIHI, on December 2 and 15, 1982, made written demands on Cuenca for the payment of her
outstanding obligation.
Cuenca did not heed SIHI's demands for payment. SIHI thus initiated extra-judicial foreclosure of
Cuenca's mortgaged property for which the corresponding notice of sheriff's sale was issued on February
23, 1983, setting the auction sale on March 22, 1983. The scheduled foreclosure sale was, however,
deferred by SIHI on account of Cuenca's request to be given time to pay the loan. Although Cuenca did
make some payments, these were not enough to fully pay her outstanding obligation and as of July 28,
1983, SIHI claimed that Cuenca's outstanding loan amounted to P637,793.86. Consequently, SIHI
proceeded with the auction sale on August 8, 1983 where it was declared the highest bidder for
P742,181.55, Cuenca's outstanding debt at that time per SIHI's computation.
The certificate of sale was registered with the Register of Deeds of Quezon City on August 24, 1983.
On July 10, 1984, SIHI received a letter (Exhibit 54, p. 18, Vol. I, Record) from Cuenca requesting that
she be furnished a Statement of Account "before and after the foreclosure/auction sale" for her to be able
to redeem the foreclosed property from SIHI. This was followed by another letter (Exhibit 54-A; also

Exhibit J, p. 20, Vol. I, Record) from Cuenca on July 17, 1984 wherein she signified her intention to
redeem the property for P500,000.00, payable in the following manner:
1. P100,000.00 payable within thirty (30) days upon receipt of (SIHI's) approval of this
proposal.
2. The balance of P400,000.00 shall be paid in eight (8) monthly installments. Each
installment payment shall be due on the 30th day of each month, the first monthly
payment to be reckoned from the date the amount stated in No. 1 has been paid.
In a letter dated August 16, 1984 (Exhibit K, p. 22 Vol. I, Record), SIHI rejected Cuenca's offer to redeem,
reasoning that she should pay her total outstanding obligation amounting at that time to P870,739.36.
On August 23, 1984, Cuenca, through counsel, sent another letter to SIHI (Exhibit 54-B; also Exhibit L,
pp. 23-24, Vol. I, Record) and reiterated her offer to redeem the property by stating:
. . . we are now finally offering and tendering to you the full sum of P426,874.72 as the
redemption price of the property. This sum of P426,874.72 is the difference between the
redemption price of P870, 739.36 which you fixed in your letter of 16 August 1984, and
the sum of P441,312.76 which is the aggregate of the payment which our client made to
you on account of her loan of P500,000.00. . .
Without, however, waiting for SIHI's reply, Cuenca, on August 24, 1984, filed a complaint with the
Regional Trial Court of Quezon City seeking annulment of the foreclosure sale on the ground that she had
not defaulted in the payment of her loan to SIHI. Alternatively, Cuenca prayed that the trial court fix the
redemption price in the event it is found that she is still indebted to SIHI.
After the expiration of the one-year redemption period, the Register of Deeds issued a new title on the
foreclosed property in SIHI's name.
On October 19, 1989, Judge Abraham P. Vera, presiding judge of Branch 90 of the Regional Trial Court of
the National Capital Judicial Region stationed in Quezon City, promulgated his decision declaring the
foreclosure sale, as well as SIHI's title obtained in such sale, null and void.
In its decision, the trial court made the following essential findings: (a) that the filing of the petition for
extrajudicial foreclosure was valid because as of the date of the filing thereof, Cuenca was still indebted to
SIHI in the sum of P222,890.41 based on the trial court's own computation; and (b) that the foreclosure
sale held on August 8, 1983 was not valid because at that time, Cuenca no longer owed any amount to
SIHI, as in fact from the computations made by the trial court, Cuenca had made an overpayment to SIHI
in the amount of P27,054.14.
The dispositive portion of the trial court's decision stated:
ACCORDINGLY, judgment is hereby rendered:
(a) Declaring plaintiff to have fully paid her obligations under the promissory notes,
marked Exhs. 1 and 4, and all of those deriving their being from Exh. 4;

(b) Declaring the sale of the mortgaged property of plaintiff under the foreclosure
proceedings and of the resultant Certificate of Sale executed and issued by the
foreclosing Sheriff by reason of such foreclosure to be null and void;
(c) Directing the Register of Deeds of Quezon City to cancel Transfer Certificate of Title
No. 325372 (Exh. N) in the name of SIHI, and to reinstate Transfer Certificate of Title No.
T-12678 (Exh. B) in the name of plaintiff;
(d) Directing defendant SIHI to refund to plaintiff the sum of P27,054.14, which was the
overpayment she made on account of her loans with SIHI, with interest at 12% per
annum from the date of the filing of the complaint until the same is fully paid;
(e) Directing the defendant SIHI to pay to plaintiff the sums of P50,000.00 as moral
damages; P50,000.00 as exemplary damages; and P50,000.00, as attorney's fees;
(f) Directing defendant SIHI to pay [plaintiff the sum of P62,903.18 as a refund of the
penalties which it had collected from plaintiff, with interest thereon at 6% per annum from
date of this decision until the same is fully paid;
(g) Directing plaintiff to pay to defendant SIHI the sum of P14,645.00, in reimbursement
of SIHI's expenses in the foreclosure of the mortgaged property, which includes attorney's
fees, with interest thereon at 6% per annum from date of the decision until it is fully paid,
which amount shall, however, be offset by an equivalent amount for the amounts due
from SIHI to plaintiff; and
(h) Directing defendant SIHI to pay the costs of this suit.
All other claims which the parties may have against each other are hereby denied and
dismissed.
SIHI appealed the decision to the court of Appeals in CA-G.R. CV No. 24339. In its Original Decision, the
Court of Appeals (Campos [P], Lantin, Sempio-Diy, JJ) rectified several errors committed by the trial court
in its computation of Cuenca's account with SIHI, but nevertheless affirmed the trial court's finding that at
the time of the foreclosure sale, Cuenca had already paid in full her indebtedness so that the foreclosure
sale and the transmission of title to SIHI were null and void.
Both parties asked for a reconsideration of the appellate Court's ruling.
SIHI's Motion for Reconsideration contended that on the basis of the computations made by the trial court
and as corrected by the Court of Appeals in its decision, the net result showed that as of the date of the
foreclosure sale on August 8, 1983, Cuenca was still indebted to SIHI, and such being the case, the
foreclosure sale was valid.
In her Motion for Reconsideration, Cuenca asked the appellate court to reconsider its finding that she had
obtained a third loan from SIHI for P61,500.00. She further asked that she be credited two amounts which
were disallowed by respondent court.

On April 30, 1991, respondent court promulgated its Amended Decision, reversed its earlier ruling and
held that in accordance with its own computations, Cuenca was still indebted to SIHI in the amount of
P279,963.42 as of the date of the foreclosure sale. The dispositive portion of this Amended Decision
reads:
The decision of this court is hereby modified as follows:
a) Plaintiff-appellee is ordered to pay defendant-appellant the sum of P279,963.42,
consisting of the unpaid balance of her outstanding obligation within 30 days from receipt
of this Amended Decision with payment of interest at the legal rate from date of this
decision until final judgment.
b) The foreclosure proceedings and the resultant Certificate of Sale executed and issued
by the foreclosing sheriff by reason of such foreclosure are rendered null and void.
c) Transfer Certificate of Title No. 324372 issued in the name of SIHI is declared null and
void and the Register of Deeds of Quezon City is ordered to reinstate Transfer Certificate
of Title No. 126578 in the name of plaintiff.
d) No pronouncement as to payment of damages and attorney's fees.
SO ORDERED. (p. 49, Rollo.)
Dissatisfied, SIHI filed the instant petition and as clarified in pages 4 and 5 of the petition, the appeal is
limited to the following aspects:
(i) The original Decision in C.A.-G.R. CV No. 24339, "Sabina Vda de Cuenca, plaintiffappellee v. State Investment House, Inc., defendant-appellant," promulgated by
respondent Court on 28 February 1991, only insofar as the decision voided the
foreclosure sale of the mortgaged property and SIHI's title acquired by virtue of such
foreclosure sale, the challenged part of the dispositive portion reading as follows:
(b) Declaring the sale of the mortgaged property of plaintiff under the
foreclosure proceedings and of the resultant Certificate of Sale executed
and issued by the foreclosing Sheriff by reason of such foreclosure to be
null and void;
(c) Directing the Register of Deeds of Quezon City to cancel Transfer
Certificate of Title No. 325372 (Exhibit N) in the name of SIHI, and to
reinstate Transfer Certificate of Title No. T-12678 (Exhibit B) in the name
of the plaintiff.
(ii) And the Amended Decision in the same appealed case, promulgated on 30 April 1991,
only insofar as it adjudicated as follows:
(a) Plaintiff-appellee is ordered to pay defendant-appellant the sum of
P279,963.42, consisting of the unpaid balance of her outstanding
obligation within 30 days from receipt of this Amended Decision with

payment of interest at the legal rate from date of this decision until final
judgment.
(b) The foreclosure proceedings and the resultant Certificate of Sale
executed and issued by the foreclosing Sheriff by reason of such
foreclosure are rendered null and void.
(c) Transfer Certificate of Title No. 324372 issued in the name of SIHI is
declared null and void and the Register of Deeds of Quezon City is
ordered to reinstate Transfer Certificate of Title No. 126578 in the name
of plaintiff.
(b) Petitioner is not appealing the rest of the dispositive portions of the Decision and
Amended Decision.
SIHI presents the following as grounds for its petition:
MAIN GROUND OF THE PETITION
RESPONDENT COURT MANIFESTLY ERRED AND MISAPPLIED THE LAW WHEN IT
REFUSED TO DECLARE THE FORECLOSURE PROCEEDINGS VALID DESPITE ITS
OWN DETERMINATION THAT RESPONDENT CUENCA WAS TRULY AND
GENUINELY INDEBTED TO PETITIONER WHEN THE FORECLOSURE
PROCEEDINGS WERE INSTITUTED.
ALTERNATIVE GROUND
SHOULD THE SUPREME COURT AFFIRM THE VOIDING OF THE FORECLOSURE
SALE AND OF PETITIONER'S TITLE, PETITIONER IS ENTITLED, IN LAW AND
EQUITY TO THE PAYMENT OF LEGAL INTEREST ON THE PRINCIPAL SUM OF
P279,963.42 (THE SUM ADJUDGED IN PETITIONER'S FAVOR BY RESPONDENT
COURT) COMPUTED FROM THE DATE OF THE FORECLOSURE SALE UP TO THE
DATE OF ACTUAL PAYMENT OF THE PRINCIPAL SUM. (pp. 15-16, Rollo)
On July 25 1991, shortly after she filed her Comment, Cuenca consigned with this Court Metro Bank
Cashier's Check No. CC-17743 in the sum of P279,963.42, representing the amount ordered by the Court
of Appeals (in its Amended Decision) to be paid to SIHI. Thereafter, SIHI filed its Reply on August 15,
1991, to which a Rejoinder was filed by Cuenca on August 27, 1991.
As correctly formulated by SIHI, the principal issue in this case is the effect upon the validity of the extrajudicial foreclosure proceedings of a judicial determination that the debtor-mortgagor (Cuenca), at the
time of the foreclosure, was still indebted and in default in the payment of the obligations to the creditormortgagee (SIHI).
Cuenca's loan with SIHI was restructured and rolled over twelve (12) times, with the last promissory note
indicating the maturity date of November 29, 1982. The recomputation (attached to the Amended
Decision) of the Court of Appeals shows, however, that on the said date Cuenca still had an outstanding
indebtedness of P416,188,08. SIHI, in its letters to Cuenca dated December 2 and 15, 1982 (Exhibits 36

and 36-A, pp. 435 and 436, Vol. I, Record) demanded the payment of this unpaid amount. Cuenca,
however, failed to make any payments and thus, even at that point in time, was already debtor in default
under Article 1168 of the New Civil Code.
The extra-judicial foreclosure instituted by SIHI in February 1983 was, therefore, valid as at that time,
Cuenca's loan being then already almost three (3) months overdue (Bonnevie vs. Court of Appeals, 125
SCRA 122 [1983]). Aside from the fact that Cuenca was already in default, the Real Estate Mortgage
executed by the parties expressly granted SIHI the option to foreclose when it provided that:
6. In the event that the Mortgagor/Debtor herein, should fail or refuse to pay any of the
sums of money secured by this mortgage, or any part thereof, in accordance with the
terms and conditions herein set forth or those stipulated in the correlative promissory
note(s), or should he/it fail to perform any of the conditions stipulated herein, or those in
the promissory note(s), then and in such case the Mortgagee shall have the right, at its
election, to foreclose this mortgage. . .
SIHI, however, deferred the auction sale when Cuenca subsequently asked for more time to pay her
obligation. Cuenca's account, however, was not restructured and she herself gave SIHI permission to
proceed with the auction sale on August 8, 1983 should she not be able to pay her account by then
(Exhibit 47, p. 457 Vol. I, Record). As of that date, the Court of Appeals computed Cuenca's unpaid
account with SIHI to be P279,963.42. It is worth noting that this computation is not challenged or
questioned by either SIHI or Cuenca and We find no reason to disturb the same.
The obvious implication is that, at the time of the foreclosure sale on August 8, 1983, Cuenca had
defaulted in the payment of P279,963.42. Thus, SIHI had the option under the aforequoted provision of
the Real Estate Mortgage, to foreclose on the mortgaged property. SIHI cannot be faulted for having
chosen that option.
The Court of Appeals, therefore, erred in concluding that despite Cuenca's default, the foreclosure sale
and the resultant issuance of the certificate of sale by the foreclosing Sheriff were null and void.
Foreclosure is valid where the debtor is in default in the payment of his obligation (Cf, Bicol Savings and
Loan Association vs. Court of Appeals, 171 SCRA 630 [1989]). In a real estate mortgage when the
principal obligation is not paid when due, the mortgagee has the right to foreclose the mortgage and to
have the property seized and sold with the view of applying the proceeds to the payment of the obligation
(Commodity Financing Co., Inc., vs. Jimenez, 91 SCRA 57 [1979]). Once the proceeds have been applied
to the payment of the obligation, the debtor cannot anymore be required to pay, unless, of course, there is
a deficiency between the amount of the loan and the foreclosure sale price, because the obligation has
already been extinguished.
We now come to the second issue posed by the parties: with the auction sale having been done on
August 8, 1992 and the certificate of foreclosure sale having been validly registered with the Register of
Deeds of Quezon City on August 24, 1983, was Cuenca able to redeem the property in the manner and
within the period provided by law?
With the aforequoted provision of the Real Estate Mortgage having expressly authorized SIHI to extrajudicially foreclose the mortgage in case of Cuenca's failure to comply with her obligation to pay, the law
governing the foreclosure is 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 (See Luna vs. Encarnacion, 91 Phil. 531 [1952]). Section 6 of the said Act states:
Sec. 6. In all cases in which an extrajudicial sale is made under the special power herein
before 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 . . . (Emphasis
supplied.)
In a long line of cases, We have consistently held that this 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 (Agbulos vs. Alberto, 5 SCRA 790 [1962]; Salazar vs. Meneses, 8 SCRA 495 [1963];
Reyes vs. Noblejas, 21 SCRA 1027 [1970]; Quimson vs. Philippine National Bank, 36 SCRA 26 [1970]).
In this case, therefore, the one-year redemption period should be reckoned from the time the certificate of
sale was registered on August 24, 1983(Bernardez vs. Reyes, 201 SCRA 648 [1991]).
Under Article 13 of the New Civil Code, a year is understood to be of three hundred sixty-five (365) days.
Thus, excluding the first day and counting from August 25, 1983 (under paragraph 3 of Article 13 of the
New Civil Code), and bearing in mind that 1984 was a leap year, Cuenca had only until August 23,
1984, the 365th day after registration of the sale on August 24, 1983, within which to redeem the
foreclosed property in accordance with law. It was thus already beyond the redemption period when
Cuenca filed her suit below on August 24, 1984.
It should be stressed in this regard that it is not proper to count, as Cuenca submits in her Rejoinder, the
period on the basis of 30 days per month. The law speaks of a "one year" period within which to redeem,
not twelve months as in the case of redemption by a judgment debtor under Section 30 of Rule 39.
Applying Article 13 of the Civil Code, the period of one year within which to redeem in the case at bar is to
count 365 days from August 24, 1983. Consequently, the last day to redeem would be and indeed fell
on August 23, 1984, said year being a leap year (Cf Go vs. Dizon, et al., G.R. No. 75915-16, Sept. 18,
1992).
Cuenca, however, was not able to exercise her right of redemption on or before August 23, 1984.
Although she wrote to SIHI twice on July 17 and August 23, 1984 and offered to redeem her property,
these offers were not accompanied by simultaneous bona fide tender or delivery of the redemption price
to SIHI. In Belisario vs. Intermediate Appellate Court (165 SCRA 101 [1988]), this Court, through Justice
Medialdea, held:
The general rule in redemption is that in making a repurchase, it is not sufficient that a
person offering to redeem make manifestation of his desire to repurchase; this statement
of intention must be accompanied by an actual and simultaneous tender of payment,
which constitutes the legal use of exercise of the right to repurchase (Angao vs. Clavano,
17 Phil. 152). Likewise, in several cases decided by this Court (Fructo vs. Fuentes, 15
Phil. 362; Retes vs. Suelto, 20 Phil. 394; Rosales vs. Reyes, et al., 98 Phil. 975) where
the right to repurchase was held to have been properly exercised, there was definite
finding of tender of payment having been made by the vendor. The tender of payment
must be for the full amount of the repurchase price, otherwise the offer to redeem will be
held ineffectual. (Rumbaoa vs. Arzaga, 84 Phil. 812). Bona fide redemption necessarily

imports a reasonable and valid tender of the entire repurchase price. There is no cogent
reason for requiring the vendee to accept payment by installments from the redemptioner,
as it would ultimately result in an indefinite extension of the redemption period (Conejero,
et al. vs. Court of Appeals, et al., L-21812, April 29, 1966, 16 SCRA 775, 780).
The rule that tender of payment of the repurchase price is necessary to exercise in the
right of redemption finds support in civil law. Article 1616 of the Civil Code of the
Philippines, in the absence of an applicable provision in Commonwealth Act No. 141,
furnishes the guide, to wit: The vendor cannot avail himself of the right to repurchase
without returning to the vendee the price of the sale . . . (Uy Lee vs. Court of Appeals, L28126, November 28, 1975, 68 SCRA 196, 204). (at pp. 107-108.)
Cuenca's use of the phrase "offering and tendering" in her letter dated August 23, 1984 does not comply
with the ruling in Belisario. There is no showing whatsoever here that the redemption price was delivered
to SIHI. Redemption is not a matter of intent but involves making the proper payment or tender of the
price of the land within the specified period (De la Merced vs. De Guzman, 160 SCRA 87 [1988]).
Neither is Cuenca correct in contending that SIHI in effect extended the redemption period when it stated
in its letter dated August 16, 1984 that Cuenca had until August 24, 1984 within which to pay its
outstanding account in full. In Lazo vs. Republic Surety & Insurance Co., Inc., (31 SCRA 329 [1970]). We
held 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 by the parties into one of conventional redemption such that
it generates binding contracts when approved by the creditor. In the instant case, however, there is no
showing that Cuenca agreed to pay the redemption price on or before August 24, 1984, as set by SIHI.
On the contrary, Cuenca's filing of her complaint on August 24, 1984 principally seeking to declare the
nullity of the foreclosure sale is indicative of her refusal to pay the redemption price on the deadline
mistakenly set by SIHI.
Cuenca's complaint filed on August 24, 1984 (the 365th day from the registration of the certificate of sale,
having fallen on August 23, 1984), did not have the effect of a formal offer to redeem. In Belisario (supra),
We further explained.
This case is different from Uy Lee vs. Court of Appeals, supra where the action to compel
redemption was filed after the lapse of the period of redemption. Thus, the Court held in
said case, to wit:
It is clear that the mere sending of letters by vendor Simeon expressing
his desire to repurchase the property without an accompanying tender of
redemption price fell short of the requirements of law. Having failed to
properly exercise his right of redemption within the statutory five-year
period, the right is lost and the same can no longer be revived by the
filing of an action to compel redemption after the lapse of the period.
The same factual antecedent obtained in Conejero, et al. vs. Court of Appeals,
supra, where the complaint seeking to be declared entitled to redeem was filed after the
expiration of the statutory period of redemption. What was proper for determination then
in said cases was whether or not the right of redemption sans judicial action was validly

exercised. In said cases, the Court applied the general rule that bona fide redemption
necessarily imports a reasonable and valid tender of the entire purchase price. (at p. 109;
emphasis added.)
Thus, it is only when the complaint to enforce a repurchase is filed within the period of redemption will it
be equivalent to an offer to redeem and have the effect of preserving the right of redemption (Belisario,
supra, citingReoveros vs. Abel and Sandoval, 48 O.G. 5318). Where, as in this case, the complaint for
redemption was filed after the redemption period expired, the complaint is a useless exercise which can
not defeat the purchaser's right to have the title of the property transferred in his name. Cuenca's reliance
on the ruling in Hulganza vs. Court of Appeals (147 SCRA 77 [1987]) is without any basis. The doctrine
laid down in Hulganza finds no applicability to the instant case for unlike the complaint filed by Cuenca in
the case at bar, the action for redemption in Hulganza was filed within the period of redemption.
Moreover, it bears noting that Cuenca sent letters (dated July 17 and August 23, 1984) to SIHI within the
redemption period in which she offered to redeem her property. In her letter dated July 17, 1984, she
offered to pay her indebtedness according to an installment plan which, if carefully analyzed, had the
effect of extending the period of redemption beyond one year contrary to the policy of the law (Belisario,
supra). In her other letter dated August 23, 1984, she offered to pay the amount P426,874.72 in full
settlement of her obligation, althrough, as We earlier stated, this amount was never properly delivered to
SIHI in accordance with law. There is thus no proof at that time that Cuenca possessed the ability to pay
the redemption amount she was offering. This is especially true in the light of the fact that in her first letter
she merely offered to pay in installments.
If only to prove the veracity of her claim that at that time she was capable of paying SIHI the full amount of
what she thought was a reasonable redemption price, the least that Cuenca could have done was to
consign payment in court simultaneous with her filing of the action to redeem on August 24, 1992. In so
stating, We do not here depart from our consistent ruling that a formal offer to redeem, accompanied by a
bona fide tender of the redemption price, although proper, is not essential where the right to redeem is
exercised through the filing of a judicial action (Tolentino vs. Court of Appeals, 106 SCRA 513 [1981];
Tioseco vs. Court of Appeals, 143 SCRA 705 [1986]; Hulganza, supra; Beliserio, supra). As earlier stated,
this rule only holds where the action to redeem is filed within the redemption period. Where, as in the
instant case, the action is filed after the statutory period has expired, the determination of whether the
plaintiff consigned the redemption price with the court simultaneous with the filing of the action is
necessary to see if the right of redemption sans judicial action was validly exercised (Beliserio, supra).
Cuenca's consignation with this Court of the amount ordered by the Court of Appeals to be paid to SIHI
only eight (8) years after her action to redeem was filed in 1984 is a belated move which merely shows
that in 1984 she had no ability to pay SIHI the redemption price. Her filing of the action was a mere devise
and scheme to buy time to raise the amount needed to redeem her property. In Conejero, et al. vs. Court
of Appeals, et al. (16 SCRA 775 [1966]), We precisely stated that "a buyer can not be expected to
entertain an offer of redemption without attendant evidence that the redemptioner can, and is willing to
accomplish the repurchase immediately. A different rule would leave the buyer open to harassment by
speculators or crackpots, as well as to unnecessary prolongation of the redemption period, contrary to the
policy of the law. . . . Of course, consignation of the price would remove all controversy as to the
redemptioner's ability to pay at the proper time. (at pp. 781-782.)"
We further stated in Basbas vs. Entena (28 SCRA 665, 671 [1969]) that:

. . . the right of legal redemption must be exercised within specified time limits: and the
statutory periods would be rendered meaningless and of easy evasion unless the
redemptioner is required to make an actual tender in good faith of what he believed to be
the reasonable price of the land sought to be redeemed. The existence of the right of
redemption operates to depress the market value of the land until the period expires, and
to render that period indefinite by permitting the tenant to file a suit for redemption, with
either party unable to foresee when final judgment will terminate the action, would render
nugatory the period of two years fixed by the statute for making the redemption and
virtually paralyze any efforts of the landowner to realize the value of his land. No buyer
can be expected to acquire it without any certainty as to the amount for which it may be
redeemed, so that he can recover at least his investment in case of redemption. In the
meantime, the landowner's needs and obligations cannot be met. It is doubtful if any such
result was intended by the statute, absent clear wording to that effect.
The situation becomes worse when as shown by the evidence in this case, the
redemptioner has no funds and must apply for them to the Land Authority, which, in turn,
must depend on the availability of funds from the Land Bank. It then becomes practically
certain that the landowner will not be able to realize the value of his property for an
indefinite time beyond the two years redemption period. (at pp. 671-672.)
WHEREFORE, the appealed portions of the Original Decision and the Amended Decision are
REVERSED and SET ASIDE and new judgment is hereby entered:
1) Declaring valid and effective the extrajudicial foreclosure of the mortgage of respondent Sabina Vda.
de Cuenca's property in Timog, Quezon City on August 8, 1983; and
2) Upholding and confirming the cancellation of Transfer Certificate of Title No. 126578 of the Register of
Deeds of Quezon City in the name of Sabina Vda. de Cuenca, as well as its replacement by Transfer
Certificate of Title No. 324372 in the name of State Investment House, Inc.
Neither party is to recover damages or costs.
SO ORDERED.

G.R. No. 73503 August 30, 1988

BENJAMIN BELISARIO, PACITA B. PINAR, VICTORIA BELISARIO, SILVERIO BELISARIO,
FRANCISCO BELISARIO, ANATOLIA B. JACULAN, FELIPE BELISARIO and TERESITA B.
ALKUINO petitioners,
vs.
THE INTERMEDIATE APPELLATE COURT, LOURDES CABRERA, VICENTE CABRERA, JR.,
ROBERTO CABRERA, MANUEL CABRERA and PNB, Cagayan de Oro Branch, respondents.
Abundio L. Okit for petitioners.
Maximo G. Rodriguez and Rufus B. Rodriguez for private respondents.

MEDIALDEA, J.:
This is a petition review on orari of a decision of the Intermediate Appellate Court (now the Court of
Appeals) in AC-GR No. 63407-R affirming the decision of the Court of First Instance of Bukidnon in Civil
Case No. 715 entitled, "Benjamin Belisario, et al., vs. Philippine National Bank, et al", dismissing herein
petitioners' complaint for Repurchase of Homestead.
The undisputed facts of the case are as follows:
The subject matter of this case is a piece of land originally covered by Original Certificate of Title No. 366,
pursuant to Homestead Patent No. 45183 issued in the names of Rufino Belisario and Felipa Lauga
located in Valencia, Bukidnon, and consisting of an area of 23, 2210 hectares.
On August 3, 1948, upon the death of Rufino Belisario, the ownership of the land was extra-judicially
settled among his children (petitioners herein), namely: Benjamin, Pacita, Victoria Silverio, Francisco,
Anatolia Felipe and Teresita, all surnamed Belisario and his widow, Felipa Lauga and in whose names
Transfer Certificate of Tittle No. T-124 was issued.
Sometime in 1950, on the strenght of a special power of attorney executed by some of the petitioners in
favor of petitioner, Benjamin Belisario, said land was mortgaged to the Philippine National Bank (PNB) to
secure a promissory note in the sum of P1,200.00.
Petitioners-mortgagors defaulted in the payment of the loan. Consequently, the mortgage was extrajudicially foreclosed and on January 31, 1963 the land was sold at public auction for P3,134.76 with
respondent PNB as the highest bidder.
On April 21, 1971, petitioners wrote to respondent PNB making known their "desire to redeem and/or
repurchase the said property for and in the same price as the auction sale, P3,134.76," and enclosed
therein a postal money order in the amount of P630.00 as partial payment, with the balance to be paid in
twelve equal monthly installments. At the time petitioners offered to redeem the subject property, the
Sheriff's Certificate of Sale covering the sale at public auction to the respondent PNB was not yet
registered.
Having been apprised of the non-registration, the respondent PNB caused the registration of the Sheriff's
Certificate of Sale with the Register of Deeds of Bukidnon on July 22, 1971 and Transfer Certificate of
Title No. T-6834 was later issued in the name of respondent bank.
On August 24, 1971, respondent PNB sent a reply letter to petitioners, refusing the tender of P630.00 as
partial payment of the total obligations of P7,041.41 due from petitioners (which included the amount of
P2,027.02 allegedly paid by respondent Vicente Cabrera to respondent PNB) and stating further that
under existing regulations of the bank, payment by way of redemption must be paid in full and not by
installments. It cannot, however, be determined from the records of the case why the amount of
P2,027.02 was received from respondent Cabrera by respondent PNB on December 12, 1967 and why
the same was included in the statement of accounts sent by respondent PNB to petitioners.

On February 8, 1973, respondent PNB sold the land in question to respondent Cabrera for P5,000.00 and
the corresponding TCT No. 7264 was issued in his name.
On November 20, 1974, respondent Cabrera filed an action for Recovery of Possession and Damages
against herein petitioners, together with their tenants, who were actual possessors of the land, with the
Court of First Instance (now Regional Trial Court) of Bukidnon and docketed as Civil Case No. 708. In
turn, petitioners filed on January 9, 1975, an action for Repurchase of Homestead against the
respondents PNB and Cabrera with the Court of First Instance of Bukidnon and docketed as Civil Case
715. Being interrelated, the two cases were heard jointly.
After pre-trial but before trial on the merits, respondent Cabrera (as defendant in Civil Case No. 715), filed
a Motion to Dismiss the petitioners' action for Repurchase of Homestead, Civil Case No. 715, on two (2)
grounds:
1. No tender ofpayment of the redemption price and/or consignation of the redemption
was made by plaintiff.
2. Complaint states no cause of action.
The petitioners herein (as plaintiffs in Civil Case No. 715) opposed the motion contending that they
offered to repurchase the property from respondent PNB (one of the defendants in the same Civil Case)
within the five-year redemption period and tendered payment which was, however, refused by the
respondent PNB. Petitioners also manifested that on August 1 and 4, 1917, they consigned with the Clerk
of Court of Bukidnon the amount of P5,000.00 as repurchase price.
On September 15, 1977, the trial court granted the Motion to Dismiss. After their motion for
reconsideration and/or new trial was denied by the trial court, petitioners appealed to the Intermediate
Appellate Court (now Court of Appeals), assigning the following errors:
I. The lower court erred in giving due course to the Motion to Dismiss, without receiving
evidence and/or in ignoring the tender of payment made by plaintiffs to defendant bank.
II. The lower court erred in declaring that because plaintiffs never bothered to attend to
that letter (letter of bank addressed to the plaintiffs) for a long time it was obliged to sell
the land to its codefendant Vicente Cabrera on February 8, 1973.
III. The lower court erred in holding that the plaintiffs made no pretense whatever in their
opposition to the motion that Vicente Cabrera disallowed the repurchase of the land and
in holding that tender of payment to defendant Cabrera was necessary to preserve their
right to repurchase.
IV. The lower court erred in holding that the consignation of the amount of P5,000.00 was
conceivably made to cure the deficiency of plaintiffs' position and was made beyond the
redemption period of five years.
V. The lower court erred in not considering the motion filed out of time and the conduct of
the defendants especially Atty. Cabrera a waiver of their right to a preliminary hearing on

the defense of lack of tender or that defendants are guilty of estoppel or bad faith. (Rollo,
p. 25.)
Respondent appellate court affirmed the lower court's decision in toto. Hence, the instant petition with the
petitioner assigning the following errors:
I. That the Honorable Intermediate Appellate Court cited in holding that appellants never
bothered to tender the payment of redemption and that the filing of judicial action to
redeem did not preserve appellants' right to redeem. It cited out of context the doctrine
enunciated in Tolentino vs. Court of Appeals, 106 SCRA 513.
II. The Honorable Intermediate Appellate Court erred in holding that appellants' posture
that they have offered to repurchase the property from the appellee bank and tendered
payment of redemption price within the redemption period is unmeritorious.
III. The Honorable Intermediate Appellate Court erred in considering long inaction or
laches in deciding the case, the said defense not having been raised in the answers of
defendants-appellees not even in the motion to dismiss or appellees' memoranda. (Rollo,
p. 9)
The subject piece of land was sold at public auction to respondent PNB on January 31, 1963. However,
the Sheriff's Certificate of Sale was registered only on July 22, 1971. The redemption period, for purposes
of determining the time when a formal Deed of Sale may be executed or issued and the ownership of the
registered land consolidated in the purchaser at an extrajudicial foreclosure sale under Act 3135, should
be reckoned from the date of the registration of the Certificate of Sale in the Office of the Register of
Deeds concerned and not from the date of public auction (PNB vs. CA et al., G.R. L-30831 and L-31176,
Nov. 21, 1979, 94 SCRA 357, 371). In this case, under Act 3135, petitioners may redeem the property
until July 22, 1972. In addition, Section 119 of Commonwealth Act 141 provides that every conveyance of
land acquired under the free patent or homestead patent provisions of the Public Land Act, when proper,
shall be subject to repurchase by the applicant, his widow or legal heirs, within the period of five years
from the date of conveyance. The five-year period of redemption fixed in Section 119 of the Public Land
Law of homestead sold at extrajudicial foreclosure begins to run from the day after the expiration of the
one-year period of repurchase allowed in an extrajudicial foreclosure. (Manuel vs. PNB, et al., 101 Phil.
968). Hence, petitioners still had five (5) years from July 22, 1972 (the expiration of the redemption period
under Act 3135) within which to exercise their right to repurchase under the Public Land Act.
The general rule in redemption is that in making a repurchase, it is not sufficient that a person offering to
redeem makes manifestation of his desire to repurchase; this statement of intention must be
accompanied by an actual and simultaneous tender of payment, which constitutes the legal use or
exercise of the right to repurchase (Angao vs. Clavano, 17 Phil. 152). Likewise, in several cases decided
by this Court (Fructo vs. Fuentes, 15 Phil. 362; Retes vs. Suelto, 20 Phil. 394; Rosales vs. Reyes, et al.,
25 Phil. 495, Canuto vs. Mariano, 37 Phil. 840; Dela Cruz, et al. vs Resurreccion, et al., 98 Phil. 975)
where the right to repurchase was held to have been properly exercised, there was a definite finding of
tender of payment having been made by the vendor. The tender of payment must be for the full amount of
the repurchase price, otherwise the offer to redeem will be held ineffectual. (Rumbaoa vs. Arzaga, 84 Phil.
812) Bona fide redemptio necessarily imports a reasonable and valid tender of the entire repurchase
price. There is no cogent reason for requiring the vendee to accept payment by installments from the

redemptioner, as it would ultimately result in an indefinite extension of the redemption period (Conejero, et
al. vs. Court of Appeals, et al., L-21812, April 29, 1966, 16 SCRA 775, 780).
The rule that tender of payment of the repurchase price is necessary to exercise the right of redemption
finds support is civil law. Articles 1616 of the Civil Code of the Philippines, in the absence of an applicable
provision in Commonwealth Act No. 141, fumishes the guide, to wit: "The vendor cannot avail himself of
the right to repurchase without returning to the vendee the price of the sale ... " (Uy Lee vs. Court of
Appeals, L-28126, November 28, 1975, 68 SCRA 196, 204).
However, the filing of a complaint to enforce repurchase within the period for redemption is equivalent to
an offer to redeem and has the effect of preserving the right to redemption (Reoveros vs. Abel and
Sandoval, 48 O.G. 5318). In the case of Tolentino vs. Court of Appeals, L-50405- 06, August 5, 1981, 106
SCRA 513, 526'), this Court expounded:
And in this connection, a formal offer to redeem, accompanied by a bona fide tender of
the redemption price, although proper, is not essential where, as in the instant case, the
right to redeem is exercised thru the filing of judicial action, which as noted earlier was
made simultaneously with the deposit of the redemption price within the period of
redemption. The formal offer to redeem, accompanied by a bona fide tender of the
redemption price within the period of redemption prescribed by law, is only essential to
preserve the right of redemption for future enforcement even beyond such period of
redemption. The filing of the act-on itself, within the period of redemption, is equivalent to
a formal offer to redeem. Should the court allow redemption, the redemptioners should
then pay the amount already adverted to.
In a later case, Tioseco vs. Court of Appeals, (G.R.-66597, August 29, 1986, 143 SCRA 705), this Court
reiterated the rule that the filing of the action itself, within the period of redemption, is equivalent to a
formal offer to redeem.
For purposes of determining whether petitioners exercised their right to repurchase effectively, We have
only to consider their filing of the action for Repurchase of Homestead on January 9,1975, against
respondent PNB and Cabrera, which was filed well within the five-year period to repurchase. The
question of timeliness of the tender of payment by petitioners on August 1 and 4, 1977 of the amount of
P5,000.00 had become insignificant in view of the filing of the action for Repurchase of Homestead which
has been held equivalent to an offer to redeem and has the effect by itself of preserving their right of
recovering the property.
This case is different from Uy Lee vs. Court of Appeals, supra where the action to compel redemption was
filed after the lapse of the period of redemption. Thus, the Court held in said case, to wit:
It is clear that the mere sending of letters by vendor Simeon expressing his desire to
repurchase the property without an accompanying tender of redemption price fell short of
the requirements of law. Having failed to properly exercise his right of redemption within
the statutory five-year period, the right is lost and the same can no longer be revived by
the filing of an action to compel redemption after the lapse of the period.
The same factual antecedent obtained in Conejero, et al. vs. Court of Appeals, supra where the complaint
seeking to be declared entitled to redeem wag filed after the expiration of the statutory period of

redemption. What was proper for determination then in said cases was whether or not the right of
redemption sans judicial action was validly exercised. In said cases, the Court applied the general rule
that bona fide redemption necessarily imports a reasonable and valid tender of the entire purchase price.
The respondent Court of Appeals thus erred in citing Tolentino vs. Court of Appeals out of context and in
applying the doctrine in Uy Lee vs. Court of Appeals, and Coneiero vs. Court of Appeals, supra where the
circumstances of said cases are different from the case at bar. The respondent Court of Appeals likewise
erred in holding that the action is barred by long inaction. The right of redemptiola under Commonwealth
Act 141 legally began to accrue only on June 22, 1972. Certainly, an action for Repurchase of Homestead
filed on January 9, 1975 cannot be held to be barred.
ACCORDINGLY, the decision of the Court of Appeals in the instant case is hereby REVERSED and SET
ASIDE. Judgment is hereby rendered authorizing petitioners to redeem the property subject matter
hereof, within thirty (30) days from entry of judgment, and ordering private respondent Cabrera to execute
a deed of absolute conveyance thereof in favor of the petitioners upon payment by the latter of the
purchase price thereof at the auction sale, with 1% per month interest thereon in addition, up to the time
of redemption, together with the amount of any taxes or assessments which respondent Cabrera may
have paid thereon after purchase, if any, minus the P5,000.00 consigned in the court a quo. No
pronouncement as to costs at this instance.
G.R. No. L-66597 August 29, 1986
LEONARDO TIOSECO, petitioner,
vs.
HONORABLE COURT OF APPEALS JOSE P. VILLANUEVA and TIMOTEA P.
VILLANUEVA, respondents.
Jose T. Sumat for petitioner.
Amado F. Nera for respondents.

PARAS, J.:
A petition for review by certiorari of the decision of the respondent Intermediate Appellate Court in ACG.R. CV No. 68888 promulgated on December 27, 1983, as well as of the Resolution of said appellate
court promulgated on February 13, 1984 denying the Motion for Reconsideration of the aforesaid
decision.
The facts of this case are as follows: The respondent spouses Jose P. Villanueva and Timotea P.
Villanueva mortgaged to the Tarlac Branch of the Philippine National Bank three lots described in OCT
No. C-542 issued by the Register of Deeds of Tarlac to secure payment of a loan of EIGHT THOUSAND
SIX HUNDRED (P8,600.00) PESOS. When they failed to comply with the mortgage contract, the
Philippine National Bank petitioned the Provincial Sheriff of Tarlac to foreclose upon the properties
extrajudicially. The Provincial Sheriff in the public auction he conducted on March 7, 1977 sold the lots to
Leonardo Tioseco, herein petitioner, as the highest bidder for the amount of EIGHTEEN THOUSAND
NINE HUNDRED AND SEVENTY FIVE (P18,975.00) PESOS.

The certificate of sale dated March 7, 1977 issued by the Provincial Sheriff to Tioseco was registered in
the Office of the Register of Deeds of Tarlac on March 8, 1977. Tioseco's ownership over the properties
was consolidated, the title of the spouses Villanueva was cancelled and TCT No. 141194 was issued to
Tioseco by the Register of Deeds on March 7, 1978.
It is claimed by Tioseco that sometime before March 9, 1978 respondents Villanueva visited him in his
house and offered to pay the amount he had paid for the three lots auctioned off on March 7, 1977.
Tioseco told them that they could redeem the three lots by paying to him the amount he paid at the
auction sale plus interest. The respondents promised to return, but never did.
Upon the other hand, it is claimed by the respondents that they offered to redeem the three lots within the
period of redemption but Tioseco allegedly demanded TWENTY TWO THOUSAND SIX HUNDRED
FORTY ONE PESOS AND EIGHT CENTAVOS (P22,641.08) as redemption price. Finding the amount
demanded excessive, the respondents Villanueva filed a suit on March 7, 1978 to annul the sale in favor
of Tioseco on the ground that it was irregular and to require both the Philippine National Bank and
Tioseco to determine the amount they should pay to be able to redeem the three lots.
The Philippine National Bank stated in its answer that at the time of the auction sale of the three lots on
March 7, 1977 the amount of EIGHTEEN THOUSAND NINE HUNDRED SEVENTY FIVE (P18,975.00)
PESOS was due from the respondents. The amount included the principal of the loan, accrued interest,
service charges, expenses of foreclosure, and attorney's fees. The answer also stated that the auction
sale conducted by the Provincial Sheriff was in accordance with the formalities and other requirements
prescribed by law.
In his answer, Tioseco denied having demanded the sum of TWENTY TWO THOUSAND SIX HUNDRED
FORTY ONE PESOS AND EIGHT CENTAVOS (P22,641-08) from the respondents.
After trial the lower court rendered its decision, the dispositive portion of which readsWHEREFORE, the plaintiffs are allowed to redeem the properties covered by TCT No.
141194 of the Register of Deeds of Tarlac by the payment to the defendant Tioseco of the
amount of EIGHTEEN THOUSAND NINE HUNDRED SEVENTY FIVE (P 18,975.00)
PESOS plus 1% per month interest thereon in addition from the time of the sale on March
7, 1977 to the time of redemption, plus any assessment for taxation which defendant
Tioseco may have paid thereon and the interest on such amount at the same rate and all
other expenses specified in Sec. 30, Rule 39 of the Rules of Court within 30 days from
the finality of this judgment, without pronouncement as to costs,
On appeal by petitioner, the Intermediate Appellate Court affirmed in toto the decision of the lower court.
With the denial of his motion for reconsideration, the petitioner filed this petition for review of the decision
of the appellate court.
Petitioner made the following assignment of errors:
I

THE TRIAL COURT ERRED IN HOLDING THAT DEFENDANT LEONARDO TIOSECO

PUT UP AN AMOUNT BIGGER THAN WHAT WAS PROPER TO PREVENT THE
PLAINTIFFS FROM EXERCISING THEIR RIGHTS OF REDEMPTION.
II
THE TRIAL COURT ERRED IN HOLDING THAT THE FAILURE OF THE PLAINTIFFS
TO MAKE A VALID TENDER AND TO CONSIGN THE AMOUNT IN COURT ASSUMES
SUBORDINATE IMPORTANCE AND THE PLAINTIFFS DESPITE SUCH FAILURE TO
COMPLY BY THE STATUTORY REQUIREMENTS FOR LEGAL REDEMPTION, ARE
STILL ENTITLED TO MAKE THE REDEMPTION.
III
THE TRIAL COURT ERRED IN ALLOWING THE PLAINTIFFS TO REDEEM THE
PROPERTIES COVERED BY TCT NO. 141194 OF THE REGISTER OF DEEDS OF
TARLAC AFTER TIOSECO'S OWNERSHIP TO THE PROPERTIES WAS
CONSOLIDATED. (pp. 9-10, Rollo).
We prescind from the assignment of errors raised and proceed directly to the question presented before
this Court: Have the respondents exercised their right of redemption effectively? We answer in the
affirmative.
There is no question that the respondents have the right to redeem the subject property in view of the
provision of Section 25, P.D. No. 694 (Revised Charter of PNB):
SEC. 25. Right of redemption of property-Right of possession during redemption period.
Within one year from the registration of the foreclosure sale of real estate, the
mortgagor shall have the right to redeem the property by paying all claims of the Bank
against him on the date of the sale including all the costs and other expenses incurred by
reason of the foreclosure sale and custody of the property, as well as charges and
accrued interests.
xxx xxx xxx
When the respondents chose to enforce their right of redemption thru a court action on March 7, 1978
they were well within their right as the action was filed within one year from the registration of the
foreclosure sale of the real estate on March 9, 1977. P.D. No. 694 is silent as to any formal tender of
repurchase price as a pre-condition to a valid exercise of the right of redemption. It does not even require
any previous notice to the vendee, nor a meeting between him and the redemptioner, much less a
previous formal tender before any action is begun in court to enforce the right of redemption. In any case,
the lack of funds which may render the right inefficacious cannot affect the existence of the right. In fact,
the filing of the action itself, within the period of redemption, is equivalent to a formal offer to redeem (see
Reoveros v. Abel and Sandoval, 48 O.G. 5318). And in this connection, a formal offer to redeem,
accompanied by a bona fide tender of the redemption price, altho proper, is not even essential where, as
in the instant case, the right to redeem is exercised thru the filing of judicial action.

In the instant case, the ends of justice would be better served by affording the respondents the
opportunity to redeem the subject property. This ruling is in obedience to the policy of the law to aid rather
than to defeat the right of redemption. (Javellana v. Mirasol and Nunez, 40 Phil. 761).
WHEREFORE, the petition for certiorari is DENIED and the judgment appealed from is AFFIRMED. Costs
against the petitioner.
SO ORDERED.
G.R. Nos. L-50405-06 August 5, 1981
VICENTA P. TOLENTINO and JOSE TOLENTINO, petitioners,
vs.
COURT OF APPEALS, BANK OF THE PHILIPPINE ISLANDS, CONSUELO B. DE LA CRUZ, et
al., respondents.
Ceferino de la Cruz, the owner of a homestead land, died in 1960; his heirs sold the land to the Tolentino
spouses in 1962. In 1967, the de la Cruzes filed an action with the Court of First Instance in Davao to
repurchase the land, since the law allows a five year period for repurchase of homestead lots. They said
they had tried to repurchase the land several times extrajudicially, but the Tolentinos refused.
By that time, however, the Tolentinos had taken two mortgages on the land. When the first mortgage with
BPI fell due, the land was auctioned, with BPI as the highest bidder. In 1969, it was registered to BPI.
However, the lower court decided in favor of the de la Cruzes, and they were allowed to repurchase the
land from BPI for P16,000, and eventually acquired possession of the land in Sept. 1969.
Issue: In the case of a mortgage, is consignation necessary or is tender of payment enough? May a
check be used for tender of payment and if so, when is the obligation extinguished? When the check is
filled out or when it is encashed?
Facts of the case: After a homestead lot they had bought and mortgaged were ordered re-sold to the
original owners by the court, Vicenta Tolentino went to BPI with a check for P16,000, trying to redeem the
land. She was told that it was sold a year ago, when the court decision became final. However, the
Tolentinos were told they could still redeem two other lots they had mortgaged with BPI after paying
P75,995.07, the balance of the loan after the de la Cruzes had paid P16,000 for the homestead lot.
Instead of redeeming the two other lots, Vicenta consigned payment to the court, giving a crossed PNB
check for P91,995.07, for the redemption of the three lots, including the homestead lot. However, she
ordered payment stopped on the check the following day, upon advice of counsel and to protect her
rights, she said. She said this was to prevent BPI from encashing the check without returning all the
foreclosed properties. Then she filed a redemption case against BPI, imputing bad faith for failing to
return all the foreclosed properties.
The complaint was dismissed. On appeal, one of the issues raised was the mode of consignation. Art.
1249 says that debts should be paid in the currency stipulated or, if it is not specified, then in legal tender.
Since a check is not legal tender, BPI was not compelled to accept it.
Ratio: The court ruled that Art. 1249 does not apply in this case because the Tolentinos debt was
extinguished when the property was foreclosed and sold to satisfy the debt. What remained was their
right to redeem said properties, which is not an obligation but a privilege. Once they exercise the right to

redeem, they would then have an obligation to pay, but that obligation would be extinguished only when
the check is encashed.
Since the formal offer to redeem was made during the period of redemption prescribed by law, the
Tolentinos may redeem the two other properties mortgaged to BPI.
They were not allowed to redeem the homestead lot because the decision of the lower court was already
final and there was no finding of grave abuse of jurisdiction that would justify a reversal of the decision.
Judgment: Tolentinos allowed to redeem the properties within 30 days from entry of judgment, plus 1%
per month interest up to the time of redemption, together with taxes or assessments BPI may have paid
after purchase.

[G.R. No. 138978. September 12, 2002]

HI-YIELD REALTY, INC., petitioner, vs. COURT OF APPEALS, HONORABLE MAURICIO RIVERA AS
PRESIDING JUDGE OF THE REGIONAL TRIAL COURT, ANTIPOLO CITY, BRANCH 73 AND
NOLI FRANCISCO, respondents.

Facts: Respondents entered into a loan contract amounting to PHP100,000 with Petitioner thereby
mortgaging a parcel of land located in Lumang Dayap, Cainta, Rizal. Upon respondent's failure to pay the
loan upon demand petitioner, thereafter moved for the extrajudicial foreclosure of the said property and
a new TCT was transferredin its name.Respondent claims that he made an offer to pay twice during the
redemption period but was refused by petitioner hence, on the last day of redemption period he filed an
action to the court. When all the interest andother charges were fixed. The court asks respondent to
pay the redemption price to petitioner on a specified date(On or before April 8, 1994) but petitioner
instead thereafter seeks the extension of 45days for it has no sufficientmoney. At first the court denied the
extension but in another order contradicting its previous order it allowedrespondent the extension to pay
within 45 days.Frustrated, petitioner seeks this court to review the decision of the trial court.
Issue: whether or not the extension of the redemptive period by the trial court was well within
privaterespondents preserved right to redeem?
Held:It was serious error to make
the final redemption of the foreclosed property dependent on the financial condition of private respondent.
It may have been difficult for private respondent to raise the money to redeemthe property but financial
hardship is not a ground to extend the period of redemption. The opportunity toredeem the subject
property was never denied to private respondent. His timely formal offer through judicialaction to redeem
was likewise recognized. But that is where it ends. The court cannot sanction and grant everysucceeding
motion or petition specially if frivolous or unreasonable filed by him because this wouldmanifestly
and unreasonably delay the final resolution of ownership of the subject property.As a result of the trial
courts grant of a 45-day extended period to redeem, almost nine (9) years haveelapsed with both parties
claims over the property dangling in limbo, to the serious impairment of petitionersrights. This court calls
the trial courts attention to the prejudice it has wittingly or unwittingly caused the petitioner. It was really
all too simple. The trial court should have seen, as in fact it had already initially seen,that the 45-day
extension sought by private respondent on April 8, 1994 was just a play to cover up his lack of funds to
redeem the foreclosed property.The right of redemption should be exercised within the specified
time limit,
which is one year from thedate of registration of the certificate of sale.
Moreover, the redemptioner should make an
actual tender in good faith

of the full amount of the purchase price as provided above, which means the auction price of
the property plus the creditors other legitimate expenses like taxes, registration fees, etc.Redemptioners
option when the redemption period is about to expire and the redemption cannot take place on account of
disagreement over the redemption price: may preserve his right of redemptionthrough
judicial action
which in every case must be filed within the one-year period of redemption. The filingof the court action
to enforce redemption, being equivalent to a formal offer to redeem, would have the effect of preserving
his redemptive rights and freezing the expiration of the one-year period provided the action is filedon
time and in good faith, the redemption price is finally determined and paid within a reasonable time, and
therights of the parties are respected.Three critical dimensions:(1)timely redemption or redemption by
expiration date (or, as what happened in this case, the redemptioner was forced to resort to judicial action
to freeze the expiration of the redemption period);(2)good faith as always, meaning, the filing of the
private respondents action on August 13, 1993 musthave been for the sole purpose of determining the
redemption price and not to stretch the redemptive period indefinitely; and(3)once the redemption price is
determined within a reasonable time, the redemptioner must make prompt payment in full.

G.R. No. L-52831 July 29, 1983

MANUEL R. DULAY, petitioner,
vs.
HON. JUDGE GLICERIO V. CARRIAGA, Judge of the Court of First Instance of Cotabato, and
EUSEBIO C. TANGHAL, respondents.
Fructuoso S, Villarin for petitioner.
Miguel B. Albar for private respondent.

CONCEPCION JR., J.:

Petition for certiorari, with preliminary injunction, to annul and set aside the order of the
respondent judge which annulled the redemption of several parcels of land levied upon and
sold at an execution sale.
In Civil Case No. 2152 of the Court of First Instance of Cotabato, an action for the recovery of
a sum of money, the trial court rendered a decision ordering the defendant, Manuel R. Dulay,
the petitioner herein, to pay the plaintiff, Eusebio C. Tanghal, the herein private respondent,
the sum of P143,980.00. Seventeen (17) parcels of land belonging to the defendant were,
consequently, levied upon then sold at a public auction sale to the plaintiff, as the highest
bidder thereof, at prices profferred and fixed for each parcel, for the sum of

Within the reglementary period for redemption, the defendant

redeemed eight (8) of the levied properties by paying the prices at which
they were actually sold in the auction sale, for the sum of P17,017.00,
and was issued a Certificate of Redemption. Upon motion of the
plaintiff, however, the trial court citing the case of Development Bank of
P82,598.00. 1

the Philippines vs. Dionisio Mirang, declared the redemption as null and
void on the ground that piece-meal redemption is not allowed by law and
that for redemption to be valid, the judgment debtor should pay the
entire judgment debt and not the purchase price. Hence, this petition
for certiorari with preliminary injunction, to annul and set aside the order
of the respondent judge. As prayed for, the Court issued a temporary
restraining order, restraining the respondents from enforcing the
questioned order.
3

There is merit in the petition. In the redemption of properties sold at an execution sale, the
amount payable is no longer the judgment debt, but the purchase price. In the case
of Castillo vs. Nagtalon, 6

the Court said:

The procedure for the redemption of properties sold at execution sale is

prescribed in Sec. 26, Rule 39 of the Rules of Court. Thereunder, the judgment
debtor or redemptioner may redeem the property from the purchaser within 12
months after the sale, by paying the purchaser the amount of his purchase,
with I % per month interest thereon up to the time of redemption, together with
the taxes paid by the purchaser after the purchase, if any. In other words, in
the redemption of properties sold at an execution sale, the amount payable is
no longer the judgment debt but the purchase price. Considering that appellee
tendered payment only of the sum of P317.44, whereas the 3 parcels of land
she was seeking to redeem were sold for the sums of P1,240.00, P24.00 and
P30.00, respectively, the aforementioned amount of P317.44 is insufficient to
effectively release the properties. However, as the tender of payment was
timely made and in good faith, in the interest of justice We incline to give the
appellee opportunity to complete the redemption purchase of the 3 parcels as
provided in Sec. 26, Rule 39 of the Rules of Court, within 15 days from the time
this decision becomes final and executory.
Should appellee fail to complete the redemption price, the sheriff may either
release to appellee the 2 smaller lots and return the entire deposit without
releasing any of the 3 lots, as the appellee may elect.
The case of DBP vs. Mirang, relied upon by the respondent judge, wherein the Court ruled
that the mortgagor whose property has been sold at public auction, either judicially or
extrajudicially, shall have the right to redeem the property by paying an the amounts owed to
the mortgage on the date of the sale, with interest thereon at the rate specified in the contract
and not the amount for which the property was acquired at the foreclosure sale is not
controlling because of different factual settings. The Mirang case involves the redemption of
mortgaged property sold at a foreclosure sale and the mortgagor was ordered to pay his
entire indebtedness to the mortgagee, plus the agreed interests thereon, before redemption
can be effected, because the charter of the mortgagee (DBP) required the payment of such
amount. The Court said:

The third issue has likewise been resolved by this Court in a similar case. The
issue posed there involved the price at which the mortgagor should redeem
his property after the same had been sold at public auction whether the
amount for which the property was sold, as contended by the mortgagor, or
the balance of the loan obtained from the banking institution, as contended by
the mortgagee RFC. Cited in that case was Section 31 of Com. Act No. 459,
which was the special law applicable exclusively to properties mortgaged with
the RFC, as follows:
The mortgagor or debtor to the Agricultural and Industrial Bank whose real
property has been sold at public auction, judicially or extra-judicially, for the
full or partial payment of an obligation to said Bank, shall, within one year from
the date of the auction sale, have the right to redeem the real property by
paying to the Bank an the amount he owed the latter on the date of the sale,
with interest on the total indebtedness at the rate agreed upon in the obligation
from said date, unless the bidder has taken material possession of the
property or unless this has been delivered to him, in which case the proceeds
of the property shall compensate the interest. ...
The same provision applies in the instant case. The unavoidable conclusion is
that the appellant, in redeeming the foreclosed property, should pay the entire
amount he owed to the Bank on the date of the sale, with interest thereon at
the rate agreed upon.
The instant case, on the other hand, involves the redemption of property levied upon and
sold at public auction to satisfy a judgment and, unlike the Mirang case, there is no charter
that requires the payment of sums of money other than those provided for in Section 30 of
Rule 39, Revised Rules of Court.
Redemption of properties mortgaged with the Philippine National Bank and the Development
Bank of the Philippines and foreclosed either judicially or extrajudicially are governed by
special laws which provide for the payment of all the amounts owed by the debtor. This
special protection given to government lending institutions is not accorded to judgment
creditors in ordinary civil actions,
WHEREFORE, the writ prayed for is GRANTED and the order issued on January 11, 1978
should be, as it is hereby, ANNULLED and SET ASIDE. The temporary restraining order
heretofore issued is hereby. made permanent. With costs against the private respondent
Eusebio C. Tanghal.
SOORDERED.

[G.R. No. 134330. March 1, 2001]

SPOUSES ENRIQUE M. BELO and FLORENCIA G. BELO, petitioners, vs.

PHILIPPINE NATIONAL BANK and SPOUSES MARCOS and
ARSENIA ESLABON, respondents.
Sps BELO VS PNB & Sps ESLABON

Facts:
Eduarda Belo owned an agricultural land which she leased a portion to Sps
Eslabon in connection with the said spouses sugar plantation business.
To finance their business venture, respondents spouses Eslabon obtained a loan
from PNB secured by a real estate mortgage on their own four (4) residential
houses located in Roxas City, as well as on the land owned by Eduarda Belo. SPA
was issued by Eduarda Belo as to the mortgage of her property
Sps Eslabon failed to pay mortgages and thereafter extrajudicial foreclosure
proceedings against the mortgaged properties were instituted by PNB. PNB was
the highest bidder at the auction sale (P447,632.00).
PNB appraised Eduarda Belo of the sale at public auction of her agricultural land.
She had one-year period to redeem the land.
Eduarda Belo sold her right of redemption to petitioner Sps Belo under a deed of
absolute sale of proprietary and redemption rights.
Sps Belo tendered payment for the redemption of the agricultural land for
(P484,482.96), which includes the bid price of respondent PNB, plus interest and
expenses as provided under Act No. 3135.
PNB rejected payment contending that redemption price should be the total claim
of the bank on the date of the auction sale and custody of property plus charges
accrued and interests (P2,779,978.72).

 Sps Belo filed action to annul the mortgage, with an alternative cause of action to
compel PNB to accept offer of spouses Belo which is based on the winning bid
price of PNB (P447,632.00) plus interest and expenses.
RTC: Granted alternative cause of action of Sps Belo P447,632.00, plus interest
and other charges
CA: Modified TC ruling that the petitioners should pay the entire amount due to
PNB under the mortgage deed at the time of the foreclosure sale plus interest,
costs and expenses. As assignees of Eduarda Belos right of redemption, the
appellees succeed to the precise right of Eduarda including all conditions attendant
to such right. Moreover, the indivisible character of a contract of mortgage (Article
2089, Civil Code) will extend to apply in the redemption stage of the mortgage.

Issue:
1. WON SPA, real estate mortgage contract, the foreclosure proceedings and the
subsequent auction sale involving Eduarda Belos property are valid. YES
2. WON the petitioners are required to pay, as redemption price, the entire claim of
respondent PNB (P2,779,978.72) NO

Held:
1. YES.The subject SPA, the real estate mortgage contract, the foreclosure
proceedings and the subsequent auction sale of Eduarda Belos property are valid and
legal.
The findings of trial courts which are factual in nature must not be disturbed.
It is stipulated in paragraph three (3) of the SPA that Eduarda Belo appointed the
Eslabon spouses as her agents. The accommodation real estate mortgage over her
property is merely an accessory contract.

 An accommodation mortgage is not necessarily void simply because the

accommodation mortgagor did not benefit from the same. The validity of an
accommodation mortgage is allowed under Article 2085 of the New Civil Code
which provides that (t)hird persons who are not parties to the principal obligation
may secure the latter by pledging or mortgaging their own property.
The letter of Eduarda Belo addressed to respondent PNB manifesting her intent to
redeem the property is a waiver of her right to question the validity of the SPA, etc.

2. NO. This Court finds the petitioners position on that issue to be meritorious.
There is no doubt that Eduarda Belo, assignor of the petitioners, is an
accommodation mortgagor. Mortgagor in Section 25 of P.D. No. 694 pertains
only to a debtor-mortgagor and not to an accommodation mortgagor.

Respondent PNB maintains that Section 25 of Presidential Decree No. 694 (right to
redeem the property by paying all claims of the Bank against him on the date of the
sale)
Petitioners assert to follow Section 6 of Act No. 3135 & Section 28 of Rule 39 of the
Rules of Court (by paying the purchaser the amount of his purchase plus interest &
other expenses)
The interpretation accorded by respondent PNB to Section 25 of P.D. No. 694 is
unfair and unjust to accommodation mortgagors and their assignees. Forcing an
accommodation mortgagor like Eduarda Belo to pay for what the principal debtors
(Eslabon spouses) owe to respondent bank is to punish her for the accommodation
and generosity she accorded to the Eslabon spouses. Also, PNBs application for
extrajudicial foreclosure and public auction sale of Eduarda Belos mortgaged
property[30] was filed under Act No. 3135 and none of the proceedings thereafter
mentioned P. D. No. 694 as the basis for redemption.
Similar rulings:

Sy v. Court of Appeals and other case

The General Banking Act and P.D. No. 694 shall prevail over Act No. 3135 with
respect to the redemption price. accommodation mortgagors as such are not in anyway
liable for the payment of the loan or principal obligation of the debtor/borrower. The
liability of the accommodation mortgagors extends only up to the loan value of their
mortgaged property and not to the entire loan itself.
While the petitioners, as assignees of Eduarda Belo, are not required to pay the
entire claim of respondent PNB against the principal debtors, spouses Eslabon, they
can only exercise their right of redemption with respect to the parcel of land belonging
to Eduarda Belo, the accommodation mortgagor. Thus, they have to pay the bid price
less the corresponding loan value of the foreclosed four (4) residential lots of the
spouses Eslabon.
PNB contends to allow petitioners to redeem only the property belonging to their
assignor, Eduarda Belo, would violate the principle of indivisibility of mortgage
contracts (Art 2089). The indivisibility concept does not apply to the right of
redemption of an accommodation mortgagor and her assignees.
Indivisibility arises only when there is a debt, that is, there is a debtor-creditor
relationship. But, this relationship is wanting in the case at bar in the sense that
petitioners are assignees of an accommodation mortgagor and not of a debtormortgagor. Hence, it is fair and logical to allow the petitioners to redeem only the
property belonging to their assignor, Eduarda Belo.
Redemption only extends to the subject property of Eduarda Belo for the reason
that the notice of the sale limited the redemption to said property.

Petition is partially granted: Petitioner Sps Belo are allowed to redeem only the
property of Eduarda Belo, by paying only the bid price less the corresponding loan
value of the foreclosed four (4) residential lots of the respondents Sps Eslabon,
consistent with the RTC