Topic: Redemption Period

Alan Limso vs. PNB

Doctrine: Act No. 3135 provides that the period of redemption is one (1) year after the sale. On
the other hand, Republic Act No. 8791 provides a shorter period of three (3) months to redeem in
cases involving juridical persons.
Facts:

In 1993, Spouses Limso and Davao Sunrise took out a loan secured by real estate mortgages
from Philippine National Bank. Spouses Limso and Davao Sunrise encountered financial
difficulties and despite the restructuring of their loan, they were still unable to pay even when
PNB sent demand letters. On August 21, 2000, PNB filed a Petition for Extrajudicial Foreclosure
of Real Estate Mortgage. An auction sale was held and PNB was declared the highest bidder.
After the foreclosure sale, but before the Sheriff could issue the Provisional Certificate of
Sale, Spouses Limso and Davao Sunrise filed a Complaint for Reformation or Annulment of
contract against PNB. In view of the dissolution of the writ of preliminary injunction the
Sheriff’s Provisional Certificate of Sale dated February 4, 2002 was issued. However, the
Sheriff’s Provisional Certificate of Sale did not state the applicable redemption period and the
redemption price payable by the mortgagor or redemptioner.

Issue:
Whether or not the redemption period is one (1) year under Act No. 3135 or a shorter period of
three (3) months under R.A. 8791
Ruling:

We rule that the period of redemption for this case should be not more than three (3) months in
accordance with Section 47 of Republic Act No. 8791. The mortgaged properties are all owned
by Davao Sunrise and Section 47 of Republic Act No. 8791 states: "the mortgagor or debtor
whose real property has been sold" and "juridical persons whose property is being sold[.]"
Clearly, the law itself provides that the right to redeem belongs to the owner of the property
mortgaged. As the mortgaged properties all belong to Davao Sunrise, the shorter period of three
(3) months is the applicable redemption period.

The difference in the treatment of juridical persons and natural persons was based on the nature
of the properties foreclosed—whether these are used as residence, for which the more liberal
one-year redemption period is retained, or used for industrial or commercial purposes, in which
case a shorter term is deemed necessary to reduce the period of uncertainty in the ownership of
property and enable mortgagee-banks to dispose sooner of these acquired assets.