Huerta Alba Resort Inc. v CA
GR No. 128567, September 1, 2000
FACTS:
Syndicated Management Group, Inc. (SMGI), as mortgagee-assignee, filed a complaint before the RTC for foreclosure of 4 parcels of land mortgaged by Huerta Alba Resort to Intercon Fund Resource (“Intercon”).
DECISION OF LOWER COURTS:
(a) RTC – granted the complaint
(b) CA – dismissed appeal due to late payment of docket fees (c) Supreme Court – dismissed petition for certiorari.
SMGI then filed with the trial court of origin a motion for execution of decision. Thus, a writ of execution was issued. Petitioner filed an urgent motion to quash and set aside the writ of execution. The dispute is principally is as to when the 150 period within which Huerta Alba may exercise its equity of redemption be counted.
DECISIONS:
(a) RTC – denied to urgent motion to quash.
Meanwhile, the auction sale proceeded with SMGI as the sole bidder.
(b) CA – held that the 150 periods should be computed from the date petitioner was notified of the Entry of Judgment but the same period has expired already.
Huerta Alba filed with the RTC a motion for clarification seeking clarification whether or not the 12 month period of redemption for ordinary execution should apply.
DECISIONS:
(1) RTC: redemption should be governed by the rule on the sale of judicially foreclosed property under Rule 68 of the Rules of Court
Huerta Alba again sought clarification with CA of the date of the commencement of the 1 year period for the redemption of the properties
(2) CA: Foreclosure in this case is judicial and as such mortgagor has only the equity and not the right or redemption. Even if under section 78 of RA 337 (General Banking Act), a mortgagor of a bank, banking or credit institution, whether the foreclosure was done judicially or extrajudicially, has a period of 1 year from the auction sale within which to redeem the foreclosed property, it was never raised whether SMGI is a bank or credit institution.
Upon motion for a writ of possession by SMGI, Huerta Alba then filed in opposition a motion to compel respondent to accept redemption, alleging for the first time his right under RA 337, theorizing that the original mortgagee being a credit institution, its assignment of mortgage credit did not remove the coverage of RA 337
DECISIONS:
(1) RTC: denied SMGI’s writ of possession.
(2) CA: set aside the RTC’s decision.
Hence, the present petition.
ISSUE:
Whether or not Huerta Alba has the one year right of redemption of subject properties under Section 78 of RA 337
RULING:
YES, however, this was not seasonably filed.
GR No. 128567, September 1, 2000
FACTS:
Syndicated Management Group, Inc. (SMGI), as mortgagee-assignee, filed a complaint before the RTC for foreclosure of 4 parcels of land mortgaged by Huerta Alba Resort to Intercon Fund Resource (“Intercon”).
DECISION OF LOWER COURTS:
(a) RTC – granted the complaint
(b) CA – dismissed appeal due to late payment of docket fees (c) Supreme Court – dismissed petition for certiorari.
SMGI then filed with the trial court of origin a motion for execution of decision. Thus, a writ of execution was issued. Petitioner filed an urgent motion to quash and set aside the writ of execution. The dispute is principally is as to when the 150 period within which Huerta Alba may exercise its equity of redemption be counted.
DECISIONS:
(a) RTC – denied to urgent motion to quash.
Meanwhile, the auction sale proceeded with SMGI as the sole bidder.
(b) CA – held that the 150 periods should be computed from the date petitioner was notified of the Entry of Judgment but the same period has expired already.
Huerta Alba filed with the RTC a motion for clarification seeking clarification whether or not the 12 month period of redemption for ordinary execution should apply.
DECISIONS:
(1) RTC: redemption should be governed by the rule on the sale of judicially foreclosed property under Rule 68 of the Rules of Court
Huerta Alba again sought clarification with CA of the date of the commencement of the 1 year period for the redemption of the properties
(2) CA: Foreclosure in this case is judicial and as such mortgagor has only the equity and not the right or redemption. Even if under section 78 of RA 337 (General Banking Act), a mortgagor of a bank, banking or credit institution, whether the foreclosure was done judicially or extrajudicially, has a period of 1 year from the auction sale within which to redeem the foreclosed property, it was never raised whether SMGI is a bank or credit institution.
Upon motion for a writ of possession by SMGI, Huerta Alba then filed in opposition a motion to compel respondent to accept redemption, alleging for the first time his right under RA 337, theorizing that the original mortgagee being a credit institution, its assignment of mortgage credit did not remove the coverage of RA 337
DECISIONS:
(1) RTC: denied SMGI’s writ of possession.
(2) CA: set aside the RTC’s decision.
Hence, the present petition.
ISSUE:
Whether or not Huerta Alba has the one year right of redemption of subject properties under Section 78 of RA 337
RULING:
YES, however, this was not seasonably filed.
The claim that it is entitled to the beneficial provisions of RA 337 – since SMGI’s
predecessor-in-interest is a credit institution – is in a nature of a compulsory
counterclaim which should have been averred in its answer to the complaint for
judicial foreclosure.
The failure of petitioner to seasonably assert its right under RA 337 precludes it from so doing at this late stage case. Estoppel may be successfully invoked if the party fails to raise the question in the early stages in proceeding.
The sale of the properties, as confirmed by the court, operated to divest Huerta Alba of its right of redemption. There then existed only what is known as equity of redemption, which is simply the right of the petitioner to extinguish the mortgage and retain ownership of the property by paying the secured debt within the 90 day period after the judgment became final. However, redemption can no longer be effected since petitioner failed to exercise its equity of redemption within the prescribed period.
“The equity of redemption is, to be sure, different from and should not be confused with the right of redemption.
RIGHT OF REDEMPTION
General Rule:
The right of redemption in relation to a mortgage – understood in the sense of a prerogative to re-acquire mortgaged property after registration of the foreclosure sale – exists only in the case of the extrajudicial foreclosure of the mortgage.
Exception:
No such right is recognized in a judicial foreclosure except only where the mortgagee is the Philippine National Bank or a bank or banking institution.
I. Extrajudicial foreclosure –right of redemption
Where a mortgage is foreclosed extrajudicially, Act 3135 grants to the mortgagor the right of redemption within one (1) year from the registration of the sheriff’s certificate of foreclosure sale.
II. Judicial foreclosure
Where the foreclosure is judicially effected, however, no equivalent right of redemption exists. The law declares that a judicial foreclosure sale, ‘when confirmed by an order of the court, x x shall operate to divest the rights of all the parties to the action and to vest their rights in the purchaser, subject to such rights of redemption a may be allowed by law.’
Such rights exceptionally “allowed by law’ (i.e. even after confirmation by an order of the court) are those granted by the charter of the Philippine National Bank (Acts No. 2747 and 2938), and the General Banking Act (R.A. 337). These laws confer on the mortgagor, his successors in interest or any judgment creditor of the mortgagor, the right to redeem the property sold on foreclosure – after confirmation by the court of the foreclosure sale – which may be exercised within a period of one (1) year, counted from the date of registration of the certificate of sale in the Registry Property.
But, to repeat, no such right of redemption exists in case of judicial foreclosure of a mortgage if the mortgagee is not the PNB or a bank or banking institution. In such a case, the foreclosure sale, ‘when confirmed by an order of the court. x x shall operate to divest the rights of all the parties to the action and to vest their rights in the purchaser.’
EQUITY OF REDEMPTION
There then exists only what is known as the equity of redemption. This is simply the right of the defendant mortgagor to extinguish the mortgage and retain ownership of the property by paying the secured debt:
The failure of petitioner to seasonably assert its right under RA 337 precludes it from so doing at this late stage case. Estoppel may be successfully invoked if the party fails to raise the question in the early stages in proceeding.
The sale of the properties, as confirmed by the court, operated to divest Huerta Alba of its right of redemption. There then existed only what is known as equity of redemption, which is simply the right of the petitioner to extinguish the mortgage and retain ownership of the property by paying the secured debt within the 90 day period after the judgment became final. However, redemption can no longer be effected since petitioner failed to exercise its equity of redemption within the prescribed period.
“The equity of redemption is, to be sure, different from and should not be confused with the right of redemption.
RIGHT OF REDEMPTION
General Rule:
The right of redemption in relation to a mortgage – understood in the sense of a prerogative to re-acquire mortgaged property after registration of the foreclosure sale – exists only in the case of the extrajudicial foreclosure of the mortgage.
Exception:
No such right is recognized in a judicial foreclosure except only where the mortgagee is the Philippine National Bank or a bank or banking institution.
I. Extrajudicial foreclosure –right of redemption
Where a mortgage is foreclosed extrajudicially, Act 3135 grants to the mortgagor the right of redemption within one (1) year from the registration of the sheriff’s certificate of foreclosure sale.
II. Judicial foreclosure
Where the foreclosure is judicially effected, however, no equivalent right of redemption exists. The law declares that a judicial foreclosure sale, ‘when confirmed by an order of the court, x x shall operate to divest the rights of all the parties to the action and to vest their rights in the purchaser, subject to such rights of redemption a may be allowed by law.’
Such rights exceptionally “allowed by law’ (i.e. even after confirmation by an order of the court) are those granted by the charter of the Philippine National Bank (Acts No. 2747 and 2938), and the General Banking Act (R.A. 337). These laws confer on the mortgagor, his successors in interest or any judgment creditor of the mortgagor, the right to redeem the property sold on foreclosure – after confirmation by the court of the foreclosure sale – which may be exercised within a period of one (1) year, counted from the date of registration of the certificate of sale in the Registry Property.
But, to repeat, no such right of redemption exists in case of judicial foreclosure of a mortgage if the mortgagee is not the PNB or a bank or banking institution. In such a case, the foreclosure sale, ‘when confirmed by an order of the court. x x shall operate to divest the rights of all the parties to the action and to vest their rights in the purchaser.’
EQUITY OF REDEMPTION
There then exists only what is known as the equity of redemption. This is simply the right of the defendant mortgagor to extinguish the mortgage and retain ownership of the property by paying the secured debt:
1. within the 90-day period after the judgment becomes final, in accordance
with Rule 68, or
2. even after judgment becomes final, in accordance with Rule 68, or
3. even after the foreclosure sale but prior to its confirmation.
Section 2, Rule 68 provides that – ‘xx If upon the trial xx the court shall find the facts set forth in the complaint to be true, it shall ascertain the amount due to the plaintiff upon the mortgage debt or obligation, including interest and costs, and shall render judgment for the sum so found due and order the same to be paid into court within a period of not less than ninety (90) days from the date of the service of such order, and that in default of such payment the property be sold to realize the mortgage debt and costs.’ This is the mortgagor’s equity (not right) of redemption which, as above stated, may be exercised by him even beyond the 90-day period ‘from the date of service of the order,’ and even after the foreclosure sale itself, provided it be before the order of confirmation of the sale. After such order of confirmation, no redemption can be effected any longer.”
2. even after judgment becomes final, in accordance with Rule 68, or
3. even after the foreclosure sale but prior to its confirmation.
Section 2, Rule 68 provides that – ‘xx If upon the trial xx the court shall find the facts set forth in the complaint to be true, it shall ascertain the amount due to the plaintiff upon the mortgage debt or obligation, including interest and costs, and shall render judgment for the sum so found due and order the same to be paid into court within a period of not less than ninety (90) days from the date of the service of such order, and that in default of such payment the property be sold to realize the mortgage debt and costs.’ This is the mortgagor’s equity (not right) of redemption which, as above stated, may be exercised by him even beyond the 90-day period ‘from the date of service of the order,’ and even after the foreclosure sale itself, provided it be before the order of confirmation of the sale. After such order of confirmation, no redemption can be effected any longer.”
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