Monday, February 20, 2012

Banco Filipino Savings and Mortgage Bank vs. CA

Facts: On Dec. 20, 1993, Santiago (Isabela) Memorial Park (SANTIAGO)filed a complaint for redemption and specific performance against Banco Filipino (BANK). SANTIAGO alleged that the BANK foreclosed the mortgage and became the highest bidder in the sale. The Certicate of Sale was inscribed at the back of the TCT on Jan. 21, 1991. On Aug. 6, 1991, SANTIAGO offered to repurchase the property at P700k which was the start of negotiation between the 2. SANTIAGO was given up to the end of March 1992 to negotiate and make special arrangement for any satisfactory plan of payment for the redemption. On Jan. 23, 1992, the Deputy Liquidator directed SANTIAGO to remit at least P50k to the BANK to manifest its willingness to redeem. On Jan. 20, 1993, SANTIAGO increased its offer to P1M.But the BANK demanded P5.8M.

Issue:  Whether or not SANTIAGO can redeem the property.

Held:  NO. SANTIAGO has no cause of action for redemption against petitioner. The right of redemption should be exercised within the specified time limit, which is one year from the date of registration of the certificate of sale. The redemptioner should make an actual tender in good faith of the full amount of the purchase price. In case of disagreement over the redemption price, the redemptioner may preserve his right of redemption through judicial action which in every case must be filed within the one-year period of redemption. The filing of the court action to enforce redemption, being equivalent to a formal offer to redeem, would have the effect of preserving his redemptive rights and “freezing” the expiration of the one-year period. In this case, the period of redemption expired on Jan. 21, 1992. The complaint was filed on Dec. 20, 1992. SANTIAGO should have filed the complaint before Jan. 21, 1992.

Moreover, while the complaint alleges that SANTIAGO made an offer to redeem the subject property within the period of redemption, it is not alleged in the complaint that there was an actual tender of payment of the redemption price as required by the rules. It was alleged that SANTIAGO merely made an offer of P700k as redemption price, which however, as stated in complaint, the redemption money was the total bank claim of P925,448.17 plus lawful interest and other allowable expenses incident to the foreclosure proceedings. Thus, the offer was even very much lower than the price paid by petitioner as the highest bidder in the auction sale.

Also, there was no categorical allegation in the complaint that the original period of redemption had been extended. Assuming arguendo that the period for redemption had been extended, i.e., up to end of March 1992, still private respondent failed to exercise its right within said period.

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