FORECLOSURE

GODFREY BOHANAN v. COURT OF APPEALS, L&R CORPORATION and Spouses ROSARIO &
DIONISIO CABRERA, JR.
G.R. No. 111654. April 18, 1996, J. Belosillo

FACTS:

Petitioner Godfrey Bohanan obtained a loan of P200,000.00 from L&R Corporation payable in 60 monthly
installments. To secure payment, petitioner mortgaged his two lots with the four-unit apartment building
in Sta. Ana, Manila. The deed provided that in case petitioner fails to pay any amortization, the overdue
amortization/s would draw monthly interest at 1-3/4% without prejudice to the right of L&R to declare
the whole indebtedness or the entire unpaid balance due and demandable.

Petitioner was remiss in his fourth amortization. Consequently, the remaining unpaid obligation (then
supposedly amounting to P194,169.15) became due and demandable. Petitioner was given a grace period
of ten days within which to pay but the latter failed. Thus, L&R sent a notice of foreclosure and filed a
petition in the Manila Sheriffs Office to commence extrajudicial foreclosure proceedings against him.
Accordingly, a notice of extrajudicial foreclosure sale under Act 3135, as amended, was made and copies
were sent to L&R and petitioner by the Deputy Sheriff. The notice was published in the August 20 and 27
and September 3 issues of The Metropolitan Mail per affidavit of its editor-publisher.

At the scheduled sale, L&R was the successful bidder and was issued a certificate of sale. Upon failure of
petitioner to redeem his property within one year, L&R executed an Affidavit of Consolidation of
Ownership leading to the issuance of new titles in its name and the cancellation of petitioner’s titles.
L&R’s titles were in turn cancelled to give way to Rosario Guanzon, married to Dionisio Cabrera Jr., who
bought the property from L&R for P200,000.00.

Petitioner filed a complaint against L&R Corporation and the spouses Cabrera Jr., for recovery of
property with preliminary injunction contending that the sale between the Cabreras and L&R was
undertaken in fraud of a contractual commitment to him. Subsequently, the complaint was amended to be
one for annulment of sale with injunction and damages, with petitioner asking that the sheriff’s
foreclosure sale held be declared void and that the foreclosed properties be returned to him upon his
payment of the mortgage obligation.

The trial court rendered judgment in favor of petitioner declaring null and void the Sheriff’s foreclosure
sale without prejudice to the foreclosure of the mortgage on said properties strictly in accordance with law;
annulling the Deed of Sale executed by L&R in favor of Guanzon as well as the TCTs issued; and,
ordering payment of damages in favor of petitioner.

The CA reversed the trial court. It concluded that there was no irregularity in the conduct of the
foreclosure sale and that the spouses Cabrera could not be considered buyers in bad faith since their act of
buying the properties direct from L&R, instead of through petitioner, did not automatically make them
so. Hence, this recourse by the petitioner.

ISSUE:

Whether or not the CA erred in concluding that there was a valid foreclosure sale.
RULING:

No, the records show no irregularity in the foreclosure sale.

Petitioner contends that the CA erred in concluding that there was a valid foreclosure sale despite the fact
that (1) he was not notified of the sale; (2) the deputy sheriff who conducted the sale did not submit a
certificate of posting to prove the alleged posting in three public places required under Act No. 3135; and,
(3) the Post Office and Finance buildings where the notice of sale was allegedly posted (in addition to the
City Hall) were not public places.

First, personal notice on the mortgagor is not required under Act No. 3135 as amended. All that is
required is that notice be given by posting notices of the sale for not less than twenty (20) days in at least
three (3) public places of the municipality or city where the property is situated, and publication once a
week for at least three (3) consecutive weeks in a newspaper of general circulation in the municipality or
city, if the property is worth more than four hundred pesos. Therefore, any discussion into the factual
issue of whether petitioner received a notice of foreclosure sale would be an exercise in futility since it
would not have any bearing at all on the alleged validity or invalidity of the foreclosure sale in question.

Second, a certificate of posting is not required, much less considered indispensable, for the validity of a
foreclosure sale either under Act 3135 or under the ruling in Tambunting v. CA (No. L-48278, 8 November
1988, 167 SCRA 16) cited by petitioner. A certificate of posting is not a statutory requirement. Rather, it is
significant only in the matter of proving compliance with the required posting of notice. And although we
said in Tambunting that [t]he presumption of compliance with official duty has been rebutted by the
failure to present proof of posting and publication of the notice of sale, this cannot be construed to mean
that a certificate of posting is indispensable without which a questioned foreclosure sale is automatically
deemed as invalid. For the fact alone that there is no certificate of posting attached to the sheriffs records
is not sufficient to prove the lack of posting. In Tambunting, the absence of the affidavit of publication
was considered fatal because no equally convincing and competent proof of compliance was offered to
compensate for its non-presentation. In the case at bench, however, although Deputy Sheriff Oscar
Domingo failed to present a certificate of posting because some records were lost when the sheriffs office
was transferred to the fifth floor of the City Hall building, he did declare under oath (when presented as
petitioners own witness) that he posted notices of the questioned sale on the bulletin boards of the City
Hall, the Post Office and Finance Buildings. We agree with the CA that such testimony suffices in lieu of
the customary certificate of posting and can properly be accorded the presumption of regularity of
performance having come from a public officer to whom no improper motive to testify has been
attributed.

As to the contention that the Post Office and Finance Buildings were not public places, besides merely
alleging the same (we do not even know which post office and what finance building petitioner was
referring to), petitioner did not question the validity of the foreclosure sale on any ground whatsoever
after its termination. On the contrary, his conduct afterwards even seems to indicate that he has no
objection whatsoever as to its validity. For petitioner even contends that he negotiated with L&R for the
return of the property by appealing to the latter’s benevolence. When he could not raise the winning bid
made by L & R in the foreclosure sale, petitioner agreed to look for a buyer who could afford the amount,
with the difference in price to be retained by him. However, upon learning who the legal owner of the
property was, the spouses chose to negotiate directly with the latter to save them the difference in price.
As the CA concluded, such act did not make the spouses in bad faith, more so when there is no indication
that they were privy to the agreement between petitioner and L&R, even assuming there was any.
 ATTY. LEO N. CAUBANG v. JESUS G. CRISOLOGO and NANETTE B. CRISOLOGO
G.R. No. 174581, February 4, 2015, J. Peralta

FACTS:

Sometime in 1993, spouses Crisologo obtained an Express Loan of ₱200,000.00 from PDCP Development
Bank Inc. In 1994, they acquired another loan from the same bank, a Term Loan of ₱1,500,000.00 covered
by a Loan Agreement. As security for both loans, the spouses mortgaged their property. They were given
2 promissory notes, for the amount of ₱500,000.00 and ₱1,000,000.00 respectively.

Under the promissory notes, the Spouses Crisologo agreed to pay the principal amount of the loan over a
period of 3 years in 12 equal quarterly amortizations. However, the spouses defaulted.

In 1996, the spouses received a list of their outstanding obligation. Finding the charges to be excessive,
they wrote a letter to the bank proposing to pay their loan in full. PDCP advised them to deposit their
obligation as manifestation of their intent to pay the loan. As a counter-offer, the spouses agreed to
deposit the amount but on the condition that the title over the mortgaged property should be returned
first. The bank did not reply until 1997, they sent a letter denying the counteroffer and demanding
payment of the loan already amounting to ₱2,822,469.90. A few months after the debt had ballooned to
₱3,041,287.00. For failure to settle the account, PDCP Bank filed a Petition for the Extrajudicial Foreclosure
of the Mortgage.

Leo Caubang, as Notary Public, prepared the Notices of Sale. He caused the posting of said notices in
three (3) public places: the Barangay Hall of Matina, City Hall of Davao, and Bangkerohan Public Market.
Publication was, likewise, made in the Oriental Daily Examiner, one of the local newspapers in Davao
City. Caubang conducted the auction sale of the mortgaged property, with the bank as the only bidder.
The bank bidded for ₱1,331,460.00, leaving a deficiency of ₱2,207,349.97. A Certificate of Sale in favor of
the bank was issued.

Spouses Crisologo were surprised to learn that their mortgaged property had already been sold. Thus,
they filed a Complaint for Nullity of Extrajudicial Foreclosure and Auction Sale and Damages.

RTC: rendered a Decision nullifying the extrajudicial foreclosure of the real estate mortgage for failure to
comply with the publication requirement.

CA: affirmed with modification

ISSUE: WON Caubang did not comply with the publication requirement.

HELD: YES

Under Section 3 of Act No. 3135: Section 3. Notice of sale; posting; when publication required.– Notice shall be
given by posting notices of the sale for not less than twenty days in at least three public places of the municipality or
city where the property is situated, and if such property is worth more than four hundred pesos, such notices shall
also be published once a week for at least three consecutive weeks in a newspaper of general circulation in the
municipality or city.
Caubang never made an effort to inquire as to whether the Oriental Daily Examiner was indeed a
newspaper of general circulation. Oriental Daily Examiner is not on the list of newspapers accredited to
publish legal notices. It also has no paying subscribers and it would only publish whenever there are
customers.

Since there was no proper publication of the notice of sale, the Spouses Crisologo, and the general public
were never informed that the mortgaged property was about to be foreclosed and auctioned. As a result,
PDCP Bank became the sole bidder. This allowed the bank to bid for a very low price (₱1,331,460.00) and
go after the spouses for a bigger amount as deficiency.

The principal object of a notice of sale in a foreclosure of mortgage is to inform the public generally of the
nature and condition of the property to be sold, and of the time, place, and terms of the sale. Statutory
provisions governing publication of notice of mortgage foreclosure sales must be strictly complied with
and slight deviations will invalidate the notice and render the sale. The statutory requirements of posting
and publication are mandated and imbued with public policy considerations. Failure to comply with the
statutory requirements constitutes a jurisdictional defect, and any substantial error in a notice of sale will
render the notice insufficient and will consequently vitiate the sale.
 Guillermina Baluyut v. Eulogio Poblete, Salud Poblete and the Hon. Court Of Appeals
G.R. No. 144435, February 6, 2007

FACTS:

On July 20, 1981, Guillermina Baluyut loaned from the spouses Eulogio and Salud Poblete the sum of
P850,000.00. As evidence of her indebtedness, Baluyut signed, on even date, a promissory note (PN) for
the amount borrowed. Under the PN, the loan shall mature in one month. To secure the payment of her
obligation, she conveyed to the Poblete spouses, by way of a real estate mortgage contract, a house and lot
she owns, located in the Province of Rizal. Upon maturity of the loan, Baluyut failed to pay her
indebtedness. The Poblete spouses subsequently decided to extrajudicially foreclose the real estate
mortgage, hence, the mortgaged property was sold on auction by the Provincial Sheriff of Rizal to the
Poblete spouses who were the highest bidders.

Baluyut failed to redeem the subject property within the period required by law prompting Eulogio
Poblete to execute an Affidavit of Consolidation of Title. But she remained in possession of the subject
property and refused to vacate the same. Subsequently, the trial court issued an order granting the writ of
possession. However, before Eulogio and the heirs of Salud could take possession of the property,
Baluyut filed an action for annulment of mortgage, extrajudicial foreclosure and sale of the subject
property, as well as cancellation of the title issued in the name of Eulogio and the heirs of Salud, plus
damages. In the meantime, Eulogio died and was substituted by his heirs.

Trial Court: Dismissed petitioner’s complaint.

Court of Appeals: Affirmed judgment of the trial court.

Petitioner’s Arguments: (1) That the issue of the real date of the maturity of the loan can be settled only by a
formal letter of demand indicating the sum due and the specific date of payment, that absent said letter of
demand, the loan may not be considered to have matured and as a consequence, the property given as a
collateral may not be foreclosed and the subsequent consolidation of title should be annulled.

(2) That under the law, the sheriff is required to submit an Affidavit of Posting of Notices to the clerk of
court and to the judge before he is allowed to schedule an auction sale; however, in here, there are no
records of the foreclosure proceedings involving the subject property.

(3) That despite the fact that she is entitled under the law to an Assessment Notice or Notice of
Redemption coming from the highest bidder 30 days before the expiration of the period to redeem
apprising her of the principal amount, the interest, taxes and other lawful fees due in case she opts to
exercise her right of redemption, she did not receive any notice of this kind.

Private Respondent’s Contention: That the conflict on the date of maturity of the loan and the question of
whether or not the sheriff who conducted the foreclosure proceedings complied with the legal
requirements of posting and publication are questions of fact, thus, the petition for review on certiorari
should be dismissed.

ISSUES: (1) W/N the sheriff should be presumed to have regularly performed his duty in conducting the
foreclosure proceedings despite the inability of the Office of the Provincial Sheriff to produce the records
of the foreclosure and show that there was compliance with the required posting of notices in three public
places and with the required publication;

(2) W/N it should be deemed that petitioner had waived her right to legal redemption under the law
because the she failed to invoke her right to be sent an Assessment Notice by the highest bidder before the
expiration of the right of legal redemption during the trial and on appeal.

RULING: (1) YES. In the absence of contrary evidence as to the alleged lack of posting of the notices in at
least three public places, the presumption prevails that the sheriff performed his official duty of posting
the notices of sale. The prevailing jurisprudence is that foreclosure proceedings have in their favor the
presumption of regularity and the burden of evidence to rebut the same is on the petitioner. Moreover, a
mortgagor who alleges absence of a requisite has the burden of establishing that fact. Petitioner failed in
this respect as she did not present any evidence. The fact that the records of the foreclosure proceedings
involving the subject property could not be found does not necessarily mean that the legal requirements
of posting and publication had not been complied with.

Private respondents were able to present the Affidavit of Publication executed by the publisher of Nuevo
Horizonte, a newspaper of general circulation, together with a clipping of the published notice attached
thereto, which now constitutes prima facie evidence of compliance with the required publication.

There was sufficient evidence to prove that notices of the foreclosure sale of the subject property were
published in accordance with law and that there was no allegation, much less proof, that the property was
sold for a price which is considerably lower than its value as to show collusion between sheriff and
private respondents. The ruling in Olizon v. CA, insofar as posting and publication requirements in
mortgage foreclosure sales are concerned, is instructive that even granting that the sheriff failed to post
the notices of foreclosure in at least three public places, such failure is not a sufficient basis in nullifying
the auction sale and the subsequent issuance of title in favor of private respondents. The publication of
the notice of sale in a newspaper of general circulation alone is more than sufficient compliance with the
noticeposting requirement of the law because by such, a reasonably wide publicity had been effected.

As to petitioner’s argument that the sheriff in charge of the auction sale is required to execute an affidavit
of posting of notices, the Court agrees with private respondents’ contention that petitioner’s reliance on
the provisions of Section 5, R.A. No. 720, as amended by R.A. No. 5939, as well as on the cases of Roxas v.
Court of Appeals, Pulido v. Court of Appeals and Tambunting v. Court of Appeals, is misplaced as the said
provision of law refers specifically and exclusively to the foreclosure of mortgages covering loans granted
by rural banks. In the present case, the contracts of loan and mortgage are between private individuals.
The governing law, insofar as the extrajudicial foreclosure proceedings are concerned, is Sec. 3, Act No.
3135, as amended by Act No. 4118.

Sec. 3. Notice shall be given by posting notices of the sale for not less than twenty days in at least three
public places of the municipality or city where the property is situated and if such property is worth more
than four hundred pesos, such notice shall also be published once a week for at least three consecutive weeks
in a newspaper of general circulation in the municipality or city.

Unlike in the amended provisions of Sec. 5, R.A. No. 720, nowhere in the above-quoted provision of Act
No. 3135, as amended, or in any Section thereof, is it required that the sheriff must execute an affidavit to
prove that he published notices of foreclosure in accordance with the requirements of law.

(2) YES. The the issue regarding petitioner’s right to receive a notice from private respondents as the
highest bidders during the auction sale was raised only in her Addendum to Motion for Reconsideration
of the Decision of the CA.

Besides, there is nothing under Act No. 3135 which requires the highest bidder or purchaser to furnish the
mortgagor or redemptioner an Assessment Notice or Notice of Redemption prior to the expiration of the
period of redemption. Even the pertinent provisions of Sec. 30, Rule 39 of the old Rules of Court, which
are the rules applicable in the present case, do not require that the mortgagor or redemptioner be
furnished by the purchaser notice of any assessments or taxes which the latter may have paid after the
purchase of the auctioned property.

The purpose for requiring the purchaser to furnish copies of the amounts of assessments or taxes which
he may have paid is to inform the mortgagor or redemptioner of the actual amount which he should pay
in case he chooses to exercise his right of redemption. If no such notice is given, the only effect is that the
property may be redeemed without paying such assessments or taxes. The fact remains, however, that
petitioner failed to redeem the subject property.

Further, as to the issue regarding the real date of maturity of the loan, it is a long-held cardinal rule that
when the terms of an agreement are reduced to writing, it is deemed to contain all the terms agreed upon
and no evidence of such terms can be admitted other than the contents of the agreement itself. In the
present case, the PN and the real estate mortgage are the law between parties. It is not disputed that
under the PN dated July 20, 1981, the loan shall mature in one month from date of the said PN.
 RECOVERY OF DEFICIENCY

PRUDENTIAL BANK v. RENATO M. MARTINEZ and VIRGINIA J. MARTINEZ

G.R. No. L-51768, September 14, 1990, J. Medialdea

FACTS:
A case for sum of money filed by plaintiff Prudential Bank against defendants Renato M. Martinez and
Virginia J. Martinez, seeking to recover a deficiency of P25,775.10 with daily interest thereon of P15.35.
Prudential Bank alleged that Spouses Martinez obtained a loan in the total sum of P48,000.00 and in
consideration thereof, the said defendants executed on said dates promissory notes in favor of the the
bank, promising to pay jointly and severally, the sum of P48,000.00 on or before January 27, 1971 with
interest of 12% per annum. Said loan is partially secured by a real estate mortgage.

The loan became due and demandable. Spouses Marinez defaulted. As a consequence, extrajudicially
foreclosed the mortgage. However, there still remained a balance of P25,775.10 due to bank, which the
bank now seeks to recover the said balance.

Defendant Spouses Martinez raised an issue during pre-trial on whether the bank can recover the balance
despite extrajudicial foreclosure of mortgage.

TC: rendered judgment in favor of bank and ordered Spouses Martinez to pay the balance.
CA: affirmed TC

Spouses Martinez argue that no right is granted to a mortgagee the right to recover the deficiency arising
from an extrajudicial foreclosure of mortgage inasmuch as such recovery is not a natural right of the
mortgagee, hence, the need to expressly grant the same in a judicial foreclosure proceedings. if
mortgagees were allowed such right, the debtors would be at the mercy of their creditors considering the
summary nature of extrajudicial foreclosure proceedings.

ISSUE: Whether or not the bank has the right to recover deficiency in an extrajudicial foreclosure

RULING: Yes.

In extrajudicial foreclosure of mortgage, where the proceeds of the sale are insufficient to pay the debt, the
mortgagee has the right to recover the deficiency from the debtor.

Under the Rules of Court (Sec. 6, Rule 70), Upon the sale of any real property, under an order for a sale to
satisfy a mortgage or other encumbrance thereon, if there be a balance due to the plaintiff after applying
the proceeds of the sale, the court, upon motion, should render a judgment against the defendant for any
such balance for which, by the record of the case, he may be personally liable to the plaintiff, x x x. It is
true that this refers to a judicial foreclosure, but the underlying principle is the same, that the mortgage is
but a security and not a satisfaction of indebtedness.

Likewise in the event of the foreclosure of a chattel mortgage on the thing sold in installments he (the
vendor) shall have no further action against the purchaser to recover any unpaid balance of the price. Any
agreement to the contrary shall be void. (Article 1484, paragraph 3).
It is then clear that in the absence of a similar provision in Act No. 3135, as amended, it can not be
concluded that the creditor loses his right given him under the Mortgage Law and recognized in the Rules
of Court, to take action for the recovery of any unpaid balance on the principal obligation, simply because
he has chosen to foreclose his mortgage extra- judicially pursuant to a special power of attorney given
him by the mortgagor in the mortgage contract.

The fact that the mortgaged property is sold at an amount less than its actual market value should not
militate against the right to such recovery. We fail to see any disadvantage going for the mortgagor. On
the contrary, a mortgagor stands to gain with a reduced price because he possesses the right of
redemption. When there is the right to redeem, inadequacy of price should not be material, because the
judgment debtor recover the loss he claims to have suffered by the reason of the price obtained at the
auction sale.

However, the proceeds in that sale were insufficient to pay the debt contained in the appellant’s
promissory note. The appellee was, therefore, constrained to file a deficiency suit, an eventuality not
covered by the Deed of Real Estate Mortgage. Necessarily, the basis of this case is the promissory note
executed by the appellants. We find that the note itself shows that appellants obligated themselves to pay
the sum of ten percent as attorney’s fees whether incurred or not, exclusive of cost and other expenses of
collection.

ACCORDINGLY, the decision appealed from is hereby AFFIRMED. Costs against the appellants.
 BPI FAMILY SAVINGS BANK, INC. v. MA. ARLYN T. AVENIDO & PACIFICO A. AVENIDO
G.R. No. 175816, December 07, 2011, J. Leonardo-De Castro

FACTS:

On September 20, 2000, BPI Family filed with the RTC a Complaint for Collection of Deficiency of
Mortgage Obligation with Damages against the spouses Avenido.

BPI Family alleged in its Complaint that pursuant to a Mortgage Loan Agreement dated April 25, 1996,
the spouses Avenido obtained from the bank a loan in the amount of P2,000,000.00, secured by a real
estate mortgage on a parcel of land situated in Bais City.

The spouses Avenido failed to pay their loan obligation despite demand, prompting BPI Family to
institute before the Sheriff of Bais City extrajudicial foreclosure proceedings over the mortgaged property,
in accordance with Act No. 3135, otherwise known as an Act to Regulate the Sale of Property under
Special Powers Inserted in or Annexed to Real Estate Mortgages. At the public auction sale held on March
8, 1999, BPI Family was the highest bidder for the foreclosed property. The bid price of P2,142,616.00 of
BPI Family was applied as partial payment of the mortgage obligation of the spouses Avenido, which had
amounted to P2,917,381.43 on the date of the public auction sale, thus, still leaving an unpaid amount of
P794,765.43.

BPI Family prayed that the RTC order the spouses Avenido to pay the deficiency of their mortgage
obligation amounting to P794,765.43, plus legal interest thereon from the date of the filing of the
Complaint until full payment; 15% as contractual attorney’s fees; P50,000.00 as litigation expenses; and
costs of the suit

The spouses Avenido averred therein that they had already paid a substantial amount to BPI Family,
which could not be less than P1,000,000.00, but due to the imposition by BPI Family of unreasonable
charges and penalties on their principal obligation, their payments seemed insignificant. The spouses
Avenido’s indebtedness to BPI Family only amounted to less than P2,000,000.00, and such amount was
already fully covered when the foreclosed property was sold at the public auction for P2,142,616.00.

Alfred Rason (Rason), the Assistant Manager for Operation, who was in charge of keeping track and
collecting unpaid obligations of the bank. Rason testified that in the Petition for Extrajudicial Foreclosure,
BPI Family reported that the loan obligation of the spouses Avenido amounted to P1,918,722.47, inclusive
of interest, penalty charges, insurance, foreclosure expenses, and others, as of November 16, 1998.
However, as of the public auction sale of the foreclosed property on March 8, 1999, the total loan
obligation of the spouses Avenido already reached P2,937,381.43. The foreclosed property was awarded
to BPI Family as the highest bidder at the public auction sale for P2,142,616.00. The bid price was arrived
at by BPI Family following bank policy, i.e., total exposure of claim or 80% of the total appraised value of
the foreclosed property, whichever is lower. In a letter dated July 8, 2000, sent to the spouses Avenido
through registered mail, counsel for BPI family demanded payment of the deficiency balance of
P794,766.43 on the loan obligation of said spouses

When respondent Ma. Arlyn T. Avenido (Arlyn) took the witness stand, she admitted that she and her
husband, co-respondent Pacifico A. Avenido (Pacifico), obtained from BPI Family a Motor Vehicle Loan
in 1995 and a Home Mortgage Loan in 1996. The Home Mortgage Loan was for P2,000,000.00, payable in
15 years.

The spouses Avenido failed to make some payments in 1998. The spouses Avenido subsequently
deposited with their account at BPI Family branch in Bais City, Negros Occidental, the amount of
P250,000.00, which would have been sufficient to cover their arrears; as well as made arrangements with
Dumaguete City Rural Bank to buy out their loan from BPI Family. Yet, in February 1999, the spouses
Avenido learned of the foreclosure proceedings over their mortgaged property only from court personnel.
BPI Family never communicated with the spouses Avenido about the foreclosure proceedings except
when the former sent the latter a demand letter in July 2000 for the P700,000.00 deficiency. Counsel for the
spouses Avenido answered BPI Family through a letter dated August 2, 2000, stating that the demand of
the bank for deficiency was not only surprising, but lacked basis in fact and in law, for the mortgaged
property was already foreclosed and sold at the public auction for P2,142,616.00, which was more than the
P1,918,722.47 loan obligation of the spouses Avenido. Next thing the spouses Avenido knew, BPI Family
had filed Civil Case No. CEB-25629 against them. In addition, the spouses Avenido had already fully paid
their Motor Vehicle Loan in 1999, but BPI Family refused to release the Hi-Lux from the mortgage
constituted thereon. BPI Family attached the Hi-Lux to cover the deficiency of the spouses Avenido on
their home loan obligation. Due to the aforementioned acts of BPI Family, Arlyn suffered sleepless nights
and humiliation. Hence, she prayed for the award of moral and exemplary damages and attorney’s fees
and the release of the Hi-Lux.

More than just reducing the total loan obligation of the spouses Avenido to P2,598,452.80, the RTC, in the
end, denied the claim for deficiency of BPI Family based on the following ratiocination:

[T]he Court finds very significant the admission by [BPI Family’s] witness that the appraised
value of the foreclosed property is actually TWO MILLION SIX HUNDRED SEVENTY[-]EIGHT
THOUSAND TWO HUNDRED SEVENTY PESOS (P2,678,270.00) but [BPI Family] bidded only
for 80% of the value as a matter of bank policy (TSN Afredo Rason, Aug. 6, 2002, p. 17). In other
words, the actual market value of the property is more than the amount of TWO MILLION FIVE
HUNDRED NINETY[-]EIGHT THOUSAND FOUR HUNDRED FIFTY[-]TWO PESOS AND
EIGHTY CENTAVOS (P2,598,452.80). Under this circumstance, it would be inequitable to still
grant the [BPI Family’s] prayer for deficiency as it will be in effect allowing it to unjustly enrich
itself at the expense of the [spouses Avenido]

Aggrieved by the RTC judgment, BPI Family filed an appeal before the Court of Appeals. A careful
scrutiny of the arguments presented in the case at bar yields no substantial and convincing reason for us
to depart from the ruling found by the trial court

ISSUE: Whether or not BPI Family is still entitled to collect the deficiency mortgage obligation from the
spouses Avenido in the amount of P455,836.80, plus interest.

HELD:
YES. It is settled that if “the proceeds of the sale are insufficient to cover the debt in an extrajudicial
foreclosure of mortgage, the mortgagee is entitled to claim the deficiency from the debtor. While Act No.
3135, as amended, does not discuss the mortgagee’s right to recover the deficiency, neither does it contain
any provision expressly or impliedly prohibiting recovery. If the legislature had intended to deny the
creditor the right to sue for any deficiency resulting from the foreclosure of a security given to guarantee
an obligation, the law would expressly so provide. Absent such a provision in Act No. 3135, as amended,
the creditor is not precluded from taking action to recover any unpaid balance on the principal obligation
simply because he chose to extrajudicially foreclose the real estate mortgage.”

BPI Family insists that it should be P2,142,616.00, its winning bid price for the foreclosed property at the
public auction sale, which, being less than the outstanding loan obligation of the spouses Avenido, will
still leave a deficiency collectible by BPI Family from the spouses Avenido in the amount of P455,836.80.
The spouses Avenido maintain that, as the RTC and the Court of Appeals ruled, it should be
P2,678,270.00, the fair market value of the foreclosed property, which, being more than the outstanding
loan obligation of the spouses Avenido, will already fully settle their indebtedness.

The spouses Avenido, the RTC, and the Court of Appeals may not have said it outright, but they actually
consider the winning bid of BPI Family for the foreclosed property at the public auction sale to be
insufficient. They took exception to the fact that the winning bid of BPI Family was equivalent to “only”
80% of the appraised value of the mortgaged property. The RTC and the Court of Appeals even went as
far as to refer to the amount of the winning bid of BPI Family as “nominal” and “unfair” and would
“unjustly enrich” the bank at the expense of the spouses Avenido. So the RTC and the Court of Appeals
disregarded the winning bid of BPI Family and applied instead the fair market value of the foreclosed
property against the outstanding loan obligation of the spouses Avenido.

According to Section 4 of Act No. 3135, an extrajudicial foreclosure sale of a mortgaged real property shall
be conducted as follows:

SEC. 4. Public Auction. – The sale shall be made at public auction, between the hours of nine in
the morning and four in the afternoon; and shall be under the direction of the sheriff of the
province, the justice or auxiliary justice of the peace of the municipality in which such sale has to
be made, or a notary public of said municipality, who shall be entitled to collect a fee of five
pesos for each day of actual work performed, in addition to his expenses.

Notably, the aforequoted provision does not mention any minimum bid at the public auction sale. There
is no legal basis for requiring that the bid should at least be equal to the market value of the foreclosed
property or the outstanding obligation of the mortgage debtor.

We have consistently held in previous cases that unlike in an ordinary sale, inadequacy of the price at a
forced sale is immaterial and does not nullify the sale. In fact, in a forced sale, a low price is more
beneficial to the mortgage debtor for it makes redemption of the property easier.

Section 6 of Act No. 3135 provides for the redemption of an extrajudicially foreclosed property within a
one-year period, to wit:

Sec. 6. Redemption. – 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; and such redemption shall be
governed by the provisions of sections four hundred and sixty-four to four hundred and sixty-
six, inclusive, of the Code of Civil Procedure, in so far as these are not inconsistent with the
provisions of this Act. (Emphasis ours.)

Republic Act No. 337, the General Banking Act, as amended, in force at the time of the herein transactions,
had a specific provision on the redemption of property extrajudicially foreclosed by banks, which reads:

Sec. 78. Loans against real estate security shall not exceed seventy percent (70%) of the appraised
value of the respective real estate security, plus seventy percent (70%) of the appraised value of
the insured improvements, and such loans shall not be made unless title to the real estate shall be
in the mortgagor. In the event of foreclosure, whether judicially or extrajudicially, of any
mortgage on real estate which is security for any loan granted before the passage of this Act or
under the provisions of this Act, the mortgagor or debtor whose real property has been sold at
public auction, judicially or extrajudicially, for the full or partial payment of an obligation to any
bank, banking or credit institution, within the purview of this Act shall have the right, within one
year after the sale of the real estate as a result of the foreclosure of the respective mortgage, to
redeem the property by paying the amount fixed by the court in order of execution, or the
amount due under the mortgage deed, as the case may be, with interest thereon at the rate
specified in the mortgage, and all the costs, and judicial and other expenses incurred by the bank
or institution concerned by reason of the execution and sale and as a result of the custody of said
property less the income received from the property. However, the purchaser at the auction sale
concerned in a judicial foreclosure shall have the right to enter upon and take possession of such
property immediately after the date of the confirmation of the auction sale by the court and
administer the same in accordance with law. (Emphasis ours.)

If the foreclosed property is registered, the mortgagor has one year within which to redeem the property
from and after registration of sale with the Register of Deeds.[

We explained in Prudential Bank v. Martinez that:

The fact that the mortgaged property is sold at an amount less than its actual market value
should not militate against the right to such recovery. We fail to see any disadvantage going for
the mortgagor. On the contrary, a mortgagor stands to gain with a reduced price because he
possesses the right of redemption. When there is the right to redeem, inadequacy of price should
not be material, because the judgment debtor may reacquire the property or also sell his right to
redeem and thus recover the loss he claims to have suffered by the reason of the price obtained at
the auction sale. Generally, in forced sales, low prices are usually offered and the mere
inadequacy of the price obtained at the sheriff’s sale unless shocking to the conscience will not be
sufficient to set aside a sale if there is no showing that in the event of a regular sale, a better price
can be obtained.

Gross inadequacy of price does not nullify an execution sale. In an ordinary sale, for reason of equity, a
transaction may be invalidated on the ground of inadequacy of price, or when such inadequacy shocks
one’s conscience as to justify the courts to interfere; such does not follow when the law gives the owner
the right to redeem as when a sale is made at public auction, upon the theory that the lesser the price, the
easier it is for the owner to effect redemption. When there is a right to redeem, inadequacy of price should
not be material because the judgment debtor may re-acquire the property or else sell his right to redeem
and thus recover any loss he claims to have suffered by reason of the price obtained at the execution sale.
Thus, respondent stood to gain rather than be harmed by the low sale value of the auctioned properties
because it possesses the right of redemption.

In line with the foregoing jurisprudence, we refuse to consider the question of sufficiency of the winning
bid price of BPI Family for the foreclosed property; and affirm the application of said winning bid in the
amount of P2,142,616.00 against the total outstanding loan obligation of the spouses Avenido by March 8,
1999 in the sum of P2,598,452.80, thus, leaving a deficiency of P455,836.80. BPI Family may still collect the
said deficiency without violating the principle of unjust enrichment, as opined by the Court of Appeals.

Consequently, we impose the legal interest of 12% per annum on the deficiency mortgage obligation
amounting to P455,836.80 from July 17, 2000 until the finality of this Decision. Thereafter, if the amount
adjudged remains unpaid, it will be subject to interest at the rate of 12% per annum computed from the
time the judgment became final and executory until fully satisfied.

WHEREFORE, the Petition is hereby GRANTED. The assailed Decision dated March 31, 2006 and
Resolution dated November 16, 2006 of the Court of Appeals in CA-G.R. CV No. 79008, affirming the
Decision dated November 13, 2002 of the Regional Trial Court, Branch 58 of Cebu City, in Civil Case No.
CEB-25629, is REVERSED and SET ASIDE. Respondent spouses Ma. Arlyn T. Avenido and Pacifico A.
Avenido are ORDERED to pay petitioner BPI Family Savings Bank, Inc. the deficiency of their mortgage
obligation in the amount of P455,836.80, plus legal interest of 12% per annum from July 17, 2000 until the
finality of this Decision. Thereafter, the amount adjudged shall be subject to legal interest of 12% per
annum from the finality of this Decision up to its satisfaction. No cost.
 REDEMPTION

SPOUSES FRANCISCO D. YAP and WHELMA S. YAP v. SPOUSES ZOSIMO DY, SR. and
NATIVIDAD CHIU DY, SPOUSES MARCELINO MAXINO and REMEDIOS L. MAXINO,
PROVINCIAL SHERIFF OF NEGROS ORIENTAL and DUMAGUETE RURAL BANK, INC.
G.R. No. 171868, July 27, 2011, J. Villarama, Jr.

DUMAGUETE RURAL BANK, INC. (DRBI) herein represented by Mr. William D.S. Dichoso v.
SPOUSES ZOSIMO DY, SR. and NATIVIDAD CHIU DY, SPOUSES MARCELINO MAXINO and
REMEDIOS MAXINO, and SPOUSES FRANCISCO D. YAP and WHELMA S. YAP
G.R. No. 171991, July 27, 2011, J. Villarama, Jr.

FACTS: The Tirambulos are the registered owners of several parcels of land located in Ayungon, Negros
Oriental and more particularly designated as LOT 1, 3, 4, 5, 6, 8 and 846. In 1976, the Tirambulos executed
a Real Estate Mortgage over Lots 1, 4, 5, 6 and 8 in favor of the Rural Bank of Dumaguete, Inc.,
predecessor of Dumaguete Rural Bank, Inc. (DRBI), to secure a P105,000 loan extended by the latter to
them. Later, the Tirambulos obtained a second loan for P28,000 and also executed a Real Estate Mortgage
over Lots 3 and 846 in favor of the same bank on August 3, 1978.

Subsequently, the Tirambulos sold all seven mortgaged lots to the the Dys and the Maxinos without the
consent and knowledge of DRBI. This sale, which was embodied in a Deed of Absolute Sale, was followed
by a default on the part of the Tirambulos to pay their loans to DRBI. Thus, DRBI extrajudicially
foreclosed the mortgage and had Lots 1, 4, 5, 6 and 8 sold at public auction.,DRBI was proclaimed the
highest bidder and bought said lots for P216,040.93. The Sheriffs Certificate of Sale stated that the sale is
subject to the rights of redemption of the mortgagor (s) or any other persons authorized by law so to do,
within a period of one (1) year from registration hereof. The certificate of sale, however, was not
registered until almost a year later.

Twelve days after the sale was registered, DRBI sold Lots 1, 3 and 6 to theYaps under a Deed of Sale with
Agreement to Mortgage. It is important to note, however, that Lot 3 was not among the five properties
foreclosed and bought by DRBI at public auction.

On August 8, 1983, or well within the redemption period, the Yaps filed a Motion for Writ of Possession
alleging that they have acquired all the rights and interests of DRBI over the foreclosed properties and are
entitled to immediate possession of the same because the one-year redemption period has lapsed without
any redemption being made. Said motion, however, was ordered withdrawn. Three days later the Yaps
again filed a Motion for Writ of Possession. This time the motion was granted, and a Writ of Possession
over Lots 1, 3 and 6 was issued in favor of the Yaps.

Roughly a month before the one-year redemption period was set to expire, the Dys and the Maxinos
attempted to redeem Lots 1, 3 and 6. They tendered the amount of P40,000.00 to DRBI and the Yaps, but
both refused, contending that the redemption should be for the full amount of the winning bid
of P216,040.93 plus interest for all the foreclosed properties.

Thus, the Dys and the Maxinos went to the Office of the Sheriff of Negros Oriental and paid P50,625.29
(P40,000.00 for the principal plus P10,625.29 for interests and Sheriffs Commission) to effect the
redemption. Noticing that Lot 3 was not included in the foreclosure proceedings, Atty. Diputado, Clerk of
Court and Provincial Sheriff, issued a Certificate of Redemption in favor of the Dys and the Maxinos only
for Lots 1 and 6, and stated in said certificate that Lot 3 is not included in the foreclosure proceedings.
Atty. Diputado also duly notified the Yaps of the redemption of Lots 1 and 6 by the Dys and the Maxinos,
as well as the non-inclusion of Lot 3 among the foreclosed properties. He advised the Yaps to personally
claim the redemption money or send a representative to do so.

In a letter to the Provincial Sheriff, the Yaps refused to take delivery of the redemption price arguing that
one of the characteristics of a mortgage is its indivisibility and that one cannot redeem only some of the
lots foreclosed because all the parcels were sold for a single price at the auction sale.

The Provincial Sheriff wrote the Dys and the Maxinos informing them of the Yaps refusal to take delivery
of the redemption money and that in view of said development, the tender of the redemption money was
being considered as a consignation.

The Dys and the Maxinos filed a case with the Regional Trial Court of Negros Oriental for accounting,
injunction, declaration of nullity (with regard to Lot 3) of the Deed of Sale with Agreement to Mortgage,
and damages against the Yaps and DRBI. Thereafter, the Dys and the Maxinos consigned to the trial court
the remaining balance of the purchase price that the Yaps still owed DRBI by virtue of the sale to them by
the DRBI of Lots 1, 3 and 6.

Meanwhile, the Yaps told DRBI that no redemption has been made by the Tirambulos or their successors-
in-interest and requested DRBI to consolidate its title over the foreclosed properties by requesting the
Provincial Sheriff to execute the final deed of sale in favor of the bank so that the latter can transfer the
titles of the two foreclosed properties to them. On the same date, they wrote the Maxinos that they were
formally turning over the possession of Lot 3 to the Maxinos, and informed them that they intended to
consolidate ownership over Lots 1 and 6 since there was no redemption as contemplated by law. Included
in the letter was a liquidation of the copra proceeds harvested for Lots 1, 3 and 6.

Later, the Yaps filed a case for consolidation of ownership, annulment of certificate of redemption, and
damages against the Dys, the Maxinos, the Provincial Sheriff and DRBI.

Both cases were tried jointly. The trial court rendered judgment in favor of the Yaps, declaring them as the
exclusive owners of Lot 1 and 6, for failure of the Dys and the Maxinos to redeem the properties within 1
year from the auction sale; and directing the provincial sheriff to execute the Final Deed of Sale in favor of
the bank, and the latter to transfer the subject properties to the Yaps.

Upon motion of the DRBI, the trial court amended the aforesaid decision declaring as null and void the
Certificate of Redemption, the Deed of Sale made by Tirambulo and Estorco in favor of the Dys and the
Maxinos covering all the 7 parcels of land in question; and declaring the Yaps as the exclusive owners of
Lot 1 and 6, for failure of the Dys and the Maxinos to redeem the properties within 1 year from the
auction sale.

Aggrieved by the above ruling, the Dys and the Maxinos elevated the case to CA, which reversed
the amended decision of the trial court, holding that the sale with respect to Lot 3 was null and void; the
redemption made by the Dys and the Maxinos as valid; ordering the Yaps to deliver possession and
ownership to the Dys and Maxinos and to tender and deliver the corresponding amount of income out of
the 3 parcels until finality of judgment; and for DRBI to pay damages to the Dys and the Maxinos.
Further, the CA also ruled that there is no necessity in discussing the validity of the redemption. It found
that the bank was in bad faith and therefore cannot insist on the protection of the law regarding the need
for compliance with all the requirements for a valid redemption while estoppel and unjust enrichment
operate against the Yaps who had already withdrawn the redemption money.

On MR of the Yaps, the CA amended its decision deleting the delivery of possession and ownership to the
Dys and the Maxinos, and the tendering of corresponding amount of income from the said parcels of
land. Hence, the consolidated petitions assailing the appellate court’s decision.

ISSUES: (1) Is Lot 3 among the foreclosed properties? (2) To whom should the payment of redemption
money be made? (3) Did the Dys and Maxinos validly redeem Lots 1 and 6? (4.) MAIN Issue: May
persons to whom several mortgaged lands were transferred without the knowledge and consent of the
creditor redeem only several parcels if all the lands were sold together for a single price at the foreclosure
sale?

(1) Is Lot 3 among the foreclosed properties? Lot 3 was not among the properties foreclosed it was
merely inserted by the bank in the Sheriffs Certificate of Sale. As Atty. Diputado, the Provincial Sheriff,
testified, the application for foreclosure was only for five parcels of land, namely, Lots 1, 4, 5, 6 and
8. Accordingly, only said five parcels of land were included in the publication and sold at the foreclosure
sale. When he was shown a copy of the Sheriffs Certificate of Sale consisting of three pages, he testified
that it was altered because Lot 3 and Lot 846 were included beyond the xxx that marked the end of the
enumeration of the lots foreclosed. Also, a perusal of DRBIs application for foreclosure of real estate
mortgage shows that it explicitly refers to only one deed of mortgage to settle the Tirambulos
indebtedness amounting to P216,040.93. The foreclosure sale refers only to Lots 1, 4, 5, 6 and 8 is clear from
the fact that Lots 1, 4, 5, 6 and 8 and Lot 3 are covered by two separate real estate mortgages. DRBI failed to
refute these pieces of evidence against it.

(2) To whom should the payment of redemption money be made? As to the second issue regarding the
question as to whom payment of the redemption money should be made, Section 31, Rule 39 of the Rules
of Court then applicable provides:

SEC. 31. Effect of redemption by judgment debtor, and a certificate to be delivered and
recorded thereupon. To whom payments on redemption made.If the judgment debtor redeem, he
must make the same payments as are required to effect a redemption by a redemptioner,
whereupon the effect of the sale is terminated and he is restored to his estate, and the
person to whom the payment is made must execute and deliver to him a certificate of
redemption acknowledged or approved before a notary public or other officer authorized to
take acknowledgments of conveyances of real property. Such certificate must be filed and
recorded in the office of the registrar of deeds of the province in which the property is
situated, and the registrar of deeds must note the record thereof on the margin of the record
of the certificate of sale. The payments mentioned in this and the last preceding sections
may be made to the purchaser or redemptioner, or for him to the officer who made the
sale.

Here, the Dys and the Maxinos complied with the above-quoted provision. Well within the redemption
period, they initially attempted to pay the redemption money not only to the purchaser, DRBI, but also to
the Yaps. Both DRBI and the Yaps however refused, insisting that the Dys and Maxinos should pay the
whole purchase price at which all the foreclosed properties were sold during the foreclosure sale. Because
of said refusal, the Dys and Maxinos correctly availed of the alternative remedy by going to the sheriff
who made the sale. As held in Natino v. Intermediate Appellate Court, the tender of the redemption money
may be made to the purchaser of the land or to the sheriff. If made to the sheriff, it is his duty to accept the
tender and execute the certificate of redemption.

(3) Did the Dys and Maxinos validly redeem Lots 1 and 6? Yes, the Dys and the Maxinos validly
redeemed Lots 1 and 6. The requisites for a valid redemption are: (1) the redemption must be made within
twelve months from the time of the registration of the sale in the Office of the Register of Deeds; (2)
payment of the purchase price of the property involved, plus 1% interest per month thereon in addition,
up to the time of redemption, together with the amount of any assessments or taxes which the purchaser
may have paid thereon after the purchase, also with 1% interest on such last named amount; and (3)
written notice of the redemption must be served on the officer who made the sale and a duplicate filed
with the Register of Deeds of the province.

There is no issue as to the first and third requisites. It is undisputed that the Dys and the Maxinos made
the redemption within the 12-month period from the registration of the sale. The Dys and Maxinos
effected the redemption on May 24, 1984, when they deposited P50,373.42 with the Provincial Sheriff, and
on June 19, 1984, when they deposited an additional P83,850.50. Both dates were well within the one-year
redemption period reckoned from the June 24, 1983 date of registration of the foreclosure sale. Likewise,
the Provincial Sheriff who made the sale was properly notified of the redemption since the Dys and
Maxinos deposited with him the redemption money after both DRBI and the Yaps refused to accept it.

The second requisite, the proper redemption price, is the main subject of contention of the opposing
parties.

4.) MAIN Issue: May persons to whom several mortgaged lands were transferred without the
knowledge and consent of the creditor redeem only several parcels if all the lands were sold together
for a single price at the foreclosure sale?

The Yaps argue that P40,000.00 cannot be a valid tender of redemption since the amount of the auction
sale was P216,040.93. They further contend that the mortgage is indivisible so in order for the tender to
be valid and effectual, it must be for the entire auction price plus legal interest.

We cannot subscribe to the Yaps argument on the indivisibility of the mortgage. As held in the case
of Philippine National Bank v. De los Reyes, the doctrine of indivisibility of mortgage does not apply once
the mortgage is extinguished by a complete foreclosure thereof as in the instant case. The Court held:

The parties were accordingly embroiled in a hermeneutic disparity on their aforesaid

contending positions. Yet, the rule on the indivisibility of mortgage finds no application to
the case at bar. The particular provision of the Civil Code referred to provides:

Art. 2089. A pledge or mortgage is indivisible, even though the debt may be
divided among the successors in interest of the debtor or of the creditor.

Therefore, the debtors heir who has paid a part of the debt cannot ask for the
proportionate extinguishment of the pledge or mortgage as long as the debt is
not completely satisfied.

Neither can the creditors heir who received his share of the debt return the
pledge or cancel the mortgage, to the prejudice of the other heirs who have
not been paid.
 From these provisions is excepted the case in which, there being several
things given in mortgage or pledge, each one of these guarantees only a
determinate portion of the credit.

The debtor, in this case, shall have a right to the extinguishment of the pledge
or mortgage as the portion of the debt for which each thing is specially
answerable is satisfied.

From the foregoing, it is apparent that what the law proscribes is the foreclosure of only a
portion of the property or a number of the several properties mortgaged corresponding to
the unpaid portion of the debt where before foreclosure proceedings partial payment was
made by the debtor on his total outstanding loan or obligation. This also means that the
debtor cannot ask for the release of any portion of the mortgaged property or of one or
some of the several lots mortgaged unless and until the loan thus, secured has been fully
paid, notwithstanding the fact that there has been a partial fulfillment of the obligation.
Hence, it is provided that the debtor who has paid a part of the debt cannot ask for the
proportionate extinguishment of the mortgage as long as the debt is not completely
satisfied.

That the situation obtaining in the case at bar is not within the purview of the
aforesaid rule on indivisibility is obvious since the aggregate number of the lots which
comprise the collaterals for the mortgage had already been foreclosed and sold at public
auction. There is no partial payment nor partial extinguishment of the obligation to speak
of. The aforesaid doctrine, which is actually intended for the protection of the mortgagee,
specifically refers to the release of the mortgage which secures the satisfaction of the
indebtedness and naturally presupposes that the mortgage is existing. Once the mortgage
is extinguished by a complete foreclosure thereof, said doctrine of indivisibility ceases to
apply since, with the full payment of the debt, there is nothing more to
secure.[45] (Emphasis supplied.)

Nothing in the law prohibits the piecemeal redemption of properties sold at one foreclosure proceeding.
In fact, in several early cases decided by this Court, the right of the mortgagor or redemptioner to redeem
one or some of the foreclosed properties was recognized.

Clearly, the Dys and Maxinos can effect the redemption of even only two of the five properties foreclosed.
And since they can effect a partial redemption, they are not required to pay the P216,040.93 considering
that it is the purchase price for all the five properties foreclosed.

So what amount should the Dys and Maxinos pay in order for their redemption of the two properties be
deemed valid considering that when the five properties were auctioned, they were not separately valued?

Contrary to the Yaps contention, the amount paid by the Dys and Maxinos within the redemption
period for the redemption of just two parcels of land was not only P40,000.00 but totaled
to P134,223.92 (P50,373.42 paid on May 28, 1984 plus P83,850.50 paid on June 19, 1984). That is more
than 60% of the purchase price for the five foreclosed properties, to think the Dys and Maxinos were
only redeeming two properties. We find that it can be considered a sufficient amount if we were to base
the proper purchase price on the proportion of the size of Lots 1 and 6 have a total area of 77,458 square
meters or roughly 52% of the total area of the foreclosed properties. Even with this rough approximation,
we rule that there is no reason to invalidate the redemption of the Dys and Maxinos since they tendered
60% of the total purchase price for properties constituting only 52% of the total area. However, there is a
need to remand the case for computation of the pro-rata value of Lots 1 and 6 based on their true values at
that time of redemption for the purposes of determining if there is any deficiency or overpayment on the
part of the Dys and Maxinos.
 REDEMPTION

SPOUSES JOSE O. GATUSLAO and ERMILA LEONILA LIMSIACO-GATUSLAO v. LEO RAY V.

YANSON
G.R. No. 191540, January 21, 2015, J. Del Castillo

FACTS:
Petitioner Ermila Leonila Limsiaco-Gatuslao is the daughter of the late Felicisimo Limsiaco (Limsiaco)
who died intestate on February 7, 1989. Limsiaco was the registered owner of two parcels of land with
improvements in the City of Bacolod.

Limsiaco mortgaged the said lots along with the house standing thereon to Philippine National Bank
(PNB). Upon Limsiaco’s failure to pay, PNB extrajudicially foreclosed on the mortgage and caused the
properties’ sale at a public auction on June 24, 1991 where it emerged as the highest bidder. When the
one-year redemption period expired without Limsiaco’s estate redeeming the properties, PNB caused the
consolidation of titles in its name. Ultimately, the Registry of Deeds of Bacolod City cancelled TCT Nos. T-
33429 and T-24331 and in lieu thereof issued TCT Nos. T-3088186 and T-3088197 in PNB’s name on
October 25, 2006.

On November 10, 2006, a Deed of Absolute Sale8 was executed by PNB conveying the subject properties
in favor of respondent. As a consequence thereof, the Registry of Deeds of Bacolod City issued TCT Nos.
T-3111259 and T-31112610 in respondent’s name in lieu of PNB’s titles.

Then, as a registered owner in fee simple of the contested properties, respondent filed with the RTC an
Ex-Parte Motion for Writ of Possession11 pursuant to Section 7 of Act No. 3135,12 as amended by Act No.
4118 (Act No. 3135, as amended),13 docketed as Cad. Case No. 09-2802.

In their Opposition, petitioners argued that the respondent is not entitled to the issuance of an ex-parte
writ of possession under Section 7 of Act No. 3135 since he was not the buyer of the subject properties at
the public auction sale and only purchased the same through a subsequent sale made by PNB. Not being
the purchaser at the public auction sale, respondent cannot file and be granted an ex parte motion for a
writ of possession. Petitioners also asserted that the intestate estate of Limsiaco has already instituted an
action for annulment of foreclosure of mortgage and auction sale affecting the contested properties. They
argued that the existence of the said civil suit bars the issuance of the writ of possession and that
whatever rights and interests respondent may have acquired from PNB by virtue of the sale are still
subject to the outcome of the said case.

ISSUE(s):

1. Whether or not, the pending action for annulment of foreclosure of mortgage and the corresponding
sale at public auction of the subject properties operates as a bar to the issuance of a writ of possession.

2. Whether or not respondent, a mere purchaser of the contested properties by way of a negotiated sale
between him and PNB, may avail of a writ of possession pursuant to Section 7 of Act No. 3135, as
amended, as he is not the purchaser at the public auction sale.
HELD:

1. No, the pending action for annulment of foreclosure of mortgage and the corresponding sale at public
auction of the subject properties does not operate as a bar to the issuance of a writ of possession.

The trial court, where the application for a writ of possession is filed, does not need to look into the
validity of the mortgage or the manner of its foreclosure. The purchaser is entitled to a writ of possession
without prejudice to the outcome of the pending annulment case.

This is in line with the ministerial character of the possessory writ. To stress the ministerial character of
the writ of possession, the Court has disallowed injunction to prohibit its issuance, just as it has held that
its issuance may not be stayed by a pending action for annulment of mortgage or the foreclosure itself.

Clearly then, until the foreclosure sale of the property in question is annulled by a court of competent
jurisdiction, the issuance of a writ of possession remains the ministerial duty of the trial court. The same is
true with its implementation; otherwise, the writ will be a useless paper judgment – a result inimical to
the mandate of Act No. 3135 to vest possession in the purchaser immediately.

2. Yes, respondent may avail of a writ of possession pursuant to Section 7 of Act No. 3135.

Section 7 of Act No. 3135, sets forth the procedure in the availment of and issuance of a writ of possession
in cases of extrajudicial foreclosures:

SECTION 7. In any sale made under the provisions of this Act, the purchaser may petition the
Court of First Instance (Regional Trial Court) of the province or place where the property or any
part thereof is situated, to give him possession thereof during the redemption period, furnishing
bond in an amount equivalent to the use of the property for a period of twelve months, to
indemnify the debtor in case it be shown that the sale was made without violating the mortgage
or without complying with the requirements of this Act. Such petition shall be made under oath
and filed in form of an ex parte motion in the registration or cadastral proceedings if the property
is registered, or in special proceedings in the case of property registered under the Mortgage Law
or under section one hundred and ninety-four of the Administrative Code, or of any other real
property encumbered with a mortgage duly registered in the office of any register of deeds in
accordance with any existing law, and in each case the clerk of the court shall, upon the filing of
such petition, collect the fees specified in paragraph eleven of section one hundred and fourteen
of Act Numbered Four hundred and ninety-six, as amended by Act Numbered Twenty-eight
hundred and sixty-six, and the court shall, upon approval of the bond, order that a writ of
possession issue, addressed to the sheriff of the province in which the property is situated, who
shall execute said order immediately.

Although the above provision clearly pertains to a writ of possession availed of and issued within the
redemption period of the foreclosure sale, the same procedure also applies to a situation where a
purchaser is seeking possession of the foreclosed property bought at the public auction sale after the
redemption period has expired without redemption having been made. Theonly difference is that in the
latter case, no bond is required
 SPOUSES FELIPE YULIENCO and FLORA YULIENCO v. HON. COURT OF APPEALS and
ADVANCE CAPITAL CORPORATION
G.R. No. 141365, November 27, 2002, J. Quisumbing
FACTS: Petitioner spouses Felipe and Flora Yulienco were the owners of a residential house and lot
located in Sta. Mesa Heights, Quezon City. On June 29, 1990, petitioners obtained a loan of P20,000,000
from private respondent Advance Capital Corporation (ACC) with interest at 24 percent per annum and
evidenced by a promissory note. To secure the loan, deeds of real estate mortgage were executed on their
properties in Makati City, Benguet, and Quezon City. When petitioners failed to pay the loan in full, ACC
filed on July 2, 1993 a petition for extrajudicial foreclosures of the properties with the Ex-Officio Sheriff of
Quezon City, pursuant to the authority provided in the deed of real estate mortgage. Auction sale of the
properties was scheduled on July 30, 1993 and notice of the sale was published in the Times Record on July
7, 14, and 21, 1993.
To forestall the foreclosure of their properties, petitioners filed on July 26, 1993 a petition for injunction,
reformation, and damages with prayer for temporary restraining order and/or preliminary injunction
against ACC with the Regional Trial Court of Makati City, Branch 61. In their complaint, petitioners
questioned the validity of the promissory notes and real estate mortgages. They alleged that their true
agreement with ACC was to pay the loan from the proceeds of the sale of their shares of stock in PHESCO
which were then subject of a pending case in the Securities and Exchange Commission. They also assailed
the Notice of Sheriffs Sale in Makati and Quezon City because it was not published in newspapers of
general circulation in Metro Manila.
On July 28, 1993, or two days before the scheduled sale, the Makati RTC issued an order ]enjoining private
respondent and the sheriffs of Makati, Quezon City, and Benguet from proceeding with the foreclosure of
petitioners properties. The auction sale of petitioners Quezon City property scheduled on July 30, 1993
was likewise cancelled.
The public auction was held on September 27, 1993 and petitioners Quezon City property was sold to
ACC as the highest bidder. A year later, petitioners filed a second amended and supplemental petition in
the case pending before the RTC of Makati. On September 26, 1994, the RTC issued a temporary
restraining order enjoining ACC from exercising its right of consolidation of ownership of the foreclosed
property in Quezon City.
Thereafter, when petitioners failed to redeem the foreclosed property, ACC caused the consolidation of its
ownership and paid the necessary taxes with the Bureau of Internal Revenue to effect transfer of the title
to its name.
Petitioners continued to occupy the house and lot over the property so, in a letter dated May 3, 1999, ACC
made a formal and final demand on petitioners to vacate the subject house and lot within five days from
receipt of the letter. ACC also demanded P1,080,000 corresponding to rental arrearages from October 1994
to the date of the letter, at P20,000 per month. ACC likewise filed with the RTC of Quezon City, Branch 96,
a petition for the issuance of a writ of possession over the subject property. The case was docketed as
Land Registration Case No. Q-11564 (99).
RTC granted the petition for writ of possession.
CA issued a temporary restraining order enjoining the implementation of the writ of possession issued by
the RTC of Quezon City. The appellate court confined its discussion to the validity of the trial courts
issuance of the writ of possession, finding the same neither a capricious nor a whimsical exercise of
judgment that could amount to grave abuse of discretion. In the same decision, the CA likewise lifted the
temporary restraining order it issued. Hence, this petition.
ISSUE: whether the Court of Appeals committed reversible error in affirming the RTC decision granting
the writ of possession to respondent corporation.

HELD: NO.

In the present case, petitioners cannot anchor their case on the purported interest they have, as owners,
over the land and the improvements thereon. They have been stripped of their rights over the property
when, as mortgagors, they failed to redeem it after foreclosure took place. A mortgagor has only one year
after registration of sale with the Register of Deeds within which to redeem the foreclosed real estate.
After that one-year period, he loses all his interests over it. This is in consonance with Section 78 of
Republic Act 337, otherwise known as the General Banking Act, which provides:

SEC. 78. In the event of foreclosure, whether judicially or extrajudicially, of any mortgage on real
estate which is security for any loan granted before the passage of this Act or under the
provisions of this Act, the mortgagor or debtor whose real property has been sold at public
auction, judicially or extrajudicially, for the full or partial payment of an obligation to any bank,
banking, or credit institution, within the purview of this Act, shall have the right, within one
year after the sale of the real estate as a result of the foreclosure of the respective mortgage, to
redeem the property by paying the amount fixed by the court in the order of execution
(Emphasis supplied.)

Likewise, Section 6 of Act 3135 states:

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; (Emphasis supplied.)

Well established is the rule that after the consolidation of title in the buyers name, for failure of the
mortgagor to redeem, the writ of possession becomes a matter of right.[ Its issuance to a purchaser in an
extrajudicial foreclosure is merely a ministerial function. The writ of possession issues as a matter of
course upon the filing of the proper motion and the approval of the corresponding bond. The judge
issuing the writ following these express provisions of law neither exercises his official discretion nor
judgment.[ As such, the court granting the writ cannot be charged with having acted without jurisdiction
or with grave abuse of discretion.
Petitioners cite the 1987 case of Cometa vs. IAC, to bolster their argument that a writ of possession should
not be granted in the light of a pending case for annulment of the foreclosure sale wherein the properties
were sold at an unusually low price. We note that petitioners reliance thereon is as flawed as their citation
thereof. In said case, there was a pending action where the validity of the levy and sale of the properties in
question were directly put in issue, which is not the case here. Special Civil Case No. 93-2521 pending
before the Makati RTC for reformation of instrument is not the pending case as contemplated
in Cometa because (1) the sale and levy of the property are not directly put in issue, and (2) the Makati
RTC could not have taken cognizance of the foreclosure proceedings of the Quezon City property for lack
of jurisdiction. A direct action for annulment of the foreclosure sale of the subject property should have
been filed in the RTC of Quezon City where the property is located.
More instructive is the 1997 case of Arcega vs. CA, where we held that the purchaser in a foreclosure sale is
entitled to possession of the property:
Respondent banks right to possess the property is clear and is based on its right of ownership as a
purchaser of the properties in the foreclosure sale to whom title has been conveyed.Under Section 7 of Act
No. 3135 and Section 35 [now Section 33] of Rule 39, the purchaser in a foreclosure sale is entitled to
possession of the property. The bank in this case has a better right to possess the subject property
because of its title over the same. (Emphasis supplied.)

If only to stress the writs ministerial character, we have, in a case more recent than Cometa, disallowed
injunction prohibiting its issuance,] just as we have held that its issuance may not be stayed by a pending
action for annulment of mortgage or the foreclosure itself.
Guided by the foregoing principles, until the foreclosure sale of the property in question is annulled by a
court of competent jurisdiction, petitioners are bereft of valid title and right to prevent the issuance of a
writ of possession to respondent corporation. Until then, it is the trial courts ministerial function to grant
the possessory writ to said corporation. No error could be attributed to the respondent appellate court for
affirming the trial courts order in favor of private respondent, Advance Capital Corporation.
GREEN ASIA CONSTRUCTION AND DEVELOPMENT CORPORATION AND SPS. RENATO AND
DELIA LEGASPI v. THE HONORABLE COURT OF APPEALS AND PCI LEASING AND FINANCE,
INC.
G.R. No. 163735, November 24, 2006

FACTS: Green Asia Construction and Development Corporation (GACDC), represented by its president,
petitioner Renato Legaspi, obtained a loan of P2,600,000 from private respondent PCI Leasing and
Finance, Inc. (PCILFI).

As security, GACDC, represented by petitioner spouses Renato and Delia Legaspi, executed a real estate
mortgage forP450,000 in favor of PCILFI.

When GACDC failed to pay the loan on maturity, the mortgage was foreclosed extrajudicially. PCILFI
was the highest bidder at the foreclosure sale. A certificate of sale was accordingly issued to PCILFI and
duly registered with the Registry of Deeds of Angeles City.

PCILFI filed a petition for the issuance of a writ of possession ith the Regional Trial Court of Angeles City.
On the same case, petitioner prayed for the setting aside of the certificate of sale, cancellation of the writ
of possession, and the suspension of the implementation of the said writ of possession.

RTC: issued the first assailed order denying for lack of merit the aforesaid motion. GACDC’s motion for
reconsideration was also denied.

CA: affirmed the assailed orders of the trial court.

ISSUE: WON is an appropriate remedy in actions for the issuance of writ of possession pursuant to the
provisions of RA3135, as amended

HELD: NO. An original action is not necessary to acquire possession in favor of the purchaser at an
extrajudicial foreclosure of real property. The right to possession is based simply on the purchaser’s
ownership of the property.

Section 8 of Act No. 3135 states:

SEC. 8. The debtor may, in the proceedings in which possession was requested, but not later
than thirty days after the purchaser was given possession, petition that the sale be set aside and
the writ of possession cancelled, specifying the damages suffered by him, because the mortgage
was not violated or the sale was not made in accordance with the provisions hereof, and the
court shall take cognizance of this petition in accordance with the summary procedure provided
for in section one hundred and twelve of Act Numbered Four hundred and ninety-six; and if it
finds the complaint of the debtor justified, it shall dispose in his favor of all or part of the bond
furnished by the person who obtained possession. Either of the parties may appeal from the order
of the judge in accordance with section fourteen of Act Numbered Four hundred and ninety-six;
but the order of possession shall continue in effect during the pendency of the appeal. (Emphasis
supplied.)

Clearly, the remedy of petitioners from the assailed Orders of the trial court was to file a petition to set
aside the sale and cancel the writ of possession. Under the aforequoted provision, the aggrieved party
may thereafter appeal from any disposition by the court on the matter.
It should be noted that petitioners filed with the trial court were an urgent omnibus motion and a
supplement to the urgent omnibus motion to set aside the sale and cancel the writ of possession. In the
said motions, petitioners alleged there was no basis for the extrajudicial foreclosure because the mortgage
was void.

Note that the nullity of the mortgage is not covered by the remedy outlined under Section 8 of Act No.
3135. The said provision specifically lists the following exclusive grounds for a petition to set aside the
sale and cancel the writ of possession: (1) that the mortgage was not violated; and (2) that the sale was not
made in accordance with the provisions of Act No. 3135.

Any question regarding the validity of the mortgage or its foreclosure cannot be a legal ground for
refusing the issuance of a writ of possession. Indeed, regardless of whether or not there is a pending suit
for annulment of the mortgage or the foreclosure itself, the purchaser is entitled to a writ of possession.

Petitioners should have filed a separate and independent action for annulment of the mortgage or the
foreclosure. The remedy under Section 8 of Act No. 3135 is inapplicable in this case.
 SPOUSES RUBEN SANTIAGO and INOCENCIA SANTIAGO v. MERCHANTS RURAL BANK OF
TALAVERA, INC.
G.R. No. 147820. March 18, 2005, J. Callejo, Sr.

FACTS:

Merchants Rural Bank of Talavera (Merchants) filed an Ex Parte Petition with the RTC or the issuance of a
writ of possession over the two parcels of land. It alleged that Ruben and Inocencia Santiago (Spouses
Santiago) executed a Real Estate Mortgage, in its favor over said properties and all the improvements
thereon, as security for the payment of their loans amounting to P500,000.00 and P120,000.00, separately.
When the Spouses Santiago failed to pay their loan, Merchants foreclosed the mortgage extraudicially and
was deemed the highest bidder at the public auction. The sheriff then executed separate certificates of sale
over the properties which were registered in the Register of Deeds. Later on, Spouses Santiago failed to
redeem said properties and was consolidated in Merchants’ favor.

The Spouses Santiago requested Merchants for more time to repurchase said properties instead of filing
their comment. During trial, the parties negotiated for the repurchase of said properties but the petition
should be submitted for the Court’s resolution since a considerable amount of time has lapsed since its
filing. Despite the foregoing, Spouses Santiago failed to repurchase said properties.

RTC: Granted the petition and issued a writ of possession in Merchants’ favor.

During execution, the sheriff requested the Spouses to vacate the property but the latter refused to do so.
Instead, the filed a petition for Certiorari with prayer for injunctive relief before the CA.

CA: Dismissed the petition and their MR.

Thus prompted the Spouses to resort to the SC. They averred that respondent failed to formally offer any
documentary and testimonial evidence to support its petition for a writ of possession; hence, the RTC
committed grave abuse of its discretion amounting to excess or lack of jurisdiction in granting the same.
Such act, according to the Spouses, violated their right to due process.

ISSUE(s):

1.) WON petition for certiorari with injunctive relief is the proper remedy of a party assailing an order
for writ of possession issued by the RTC.
2.) WON evidence, documentary or testimonial, must be offered to support a petition for a writ of
possession.

HELD:

1.) No, it is not the proper remedy.

Under Section 8 of Act No. 3135, the remedy of the petitioners from the assailed order of the RTC was to
file a petition to set aside the sale and the cancellation of the writ of possession. The aggrieved party may
thereafter appeal from any disposition by the court on the matter.

The petitioners recourse to Rule 65 of the Revised Rules of Court in the CA was inappropriate even
though the Sheriff had demanded that they vacate the property. Section 8 of Act No. 3135 mandates that
even if an appeal is interposed from an order granting a petition for a writ of possession, such order shall
continue to be in effect during the pendency of an appeal.

The general rule is that for a writ of certiorari to issue, the petitioners must establish that they had no
remedy of appeal or any plain, adequate and speedy remedy in the ordinary course of law. Appeal and
certiorari are mutually exclusive. In the present case, the petitioners had the right to file a petition to set
aside the sale and writ of possession issued by the court and to appeal from an adverse ruling. The
petitioners failed to file the said petition and opted to file their petition for certiorari in the CA. Hence,
they were barred from filing a petition for certiorari from the assailed order of the trial court and the writ
of possession issued by it.

2.) No, it is not needed.

The proceeding in a petition for a writ of possession is ex parte and summary in nature. It is a judicial
proceeding brought for the benefit of one party only and without notice by the court to any person
adverse of interest. It is a proceeding wherein relief is granted without an opportunity for the person
against whom the relief is sought to be heard.

Petitioner’s contention: A petition for a writ of possession may be granted only if the respondent offers in
evidence a new TCT in its name. Citing the case of F. David Enterprises, Inc. v. Insular Bank of Asia and
America, it relied on a statement of the court therein which says: “that upon proper application and proof
of title, the issuance of a writ of possession becomes a ministerial duty of the court”.

The reliance on the statement is misplaced. Section 7 of Act No. 3135 merely requires that a petition for
the issuance of a writ of possession shall be in the form of an ex parte motion. Upon the filing of the said
petition, the payment of the requisite fees therefor, and the approval of the trial court if such petition is
filed during the period for the redemption of the property, the court shall order that a writ of possession
be issued.

The law does not require that a petition for a writ of possession may be granted only after documentary
and testimonial evidence shall have been offered to and admitted by the court. As long as the verified
petition states the facts sufficient to entitle the petitioner to the relief requested, the court shall issue the
writ prayed for.

In F. David Enterprises, Inc. case, the Court did not rule that a petition for a writ of possession shall be
granted only after the trial court admits in evidence a Torrens title over the property subject of the
petition in the name of the respondent. The Court merely held that the respondent therein was issued a
new certificate of title in its name.

Case law has it that after the consolidation of title in the name of the respondent as the buyer of the
property, upon failure of the mortgagor to redeem the property, the writ of possession becomes a matter
of right. Its issuance to the purchaser is merely a ministerial function. As such, the court neither exercises
its discretion nor judgment.

IN LIGHT OF ALL THE FOREGOING, the petition is DENIED for lack of merit. Costs against the
petitioners.