Metropolitan Bank and Trust Co. v. Tan, GR 178449, Oct.

17, 2008

FACTS:

In 1974, the company co-owned by Tan, acquired a P250k loan from Metrobank. In
1976, the same company acquired another P150k loan from Metrobank. In 1979, it
again got a P600k loan from Metrobank. These 3 loans were secured by a mortgage
executed by spouses See in favor of Metrobank. See was not part of Tan’s company not
until 1979 but they’ve been securing the loans. The loans were consolidated as a P1
Million loan in 1980 payable at P125k in 8 quarterly payments until fully paid.

Meanwhile, Tan had a separate unsecured loan of P970k owed from Metrobank which
it failed to pay. Metrobank won a collection suit against Tan for said sum of money.
Loan was still unpaid.

In 1984, Tan defaulted from paying the P1 M loan. Metrobank foreclosed the property
of See located in Paco, Manila (June 1984). Metrobank was the highest bidder at P1.7M.
The Sale was registered same month/year.

In December 1984, See assailed the foreclosure averring that the P1M loan is no longer
covered by the mortgage for the same was novated when the 3 loans were consolidated.
The CA ruled the foreclosure to be valid but proceeds therefrom should only cover the
P1M loan, excess has to be returned.

While pending on appeal before SC, Tan offered to pay P2M: P600k as downpayment
and the rest payable in 2 years w/o interest in order to release the foreclosed mortgaged
property. This was denied by the bank.

Tan and See then petitioned that Metrobank allow them to redeem the property at
P1.6M. This was in 1997.

SC’s decision (G.R. 118585) finally went out and made final CA’s ruling that the
foreclosure is valid. This was interpreted later by the RTC and the CA as giving the right
to Tan to repurchase the property.

ISSUE: Whether or not Tan may redeem the said property?

HELD: No. The decision of the SC in GR 118585 did not give the right to redeem way
past the period of redemption. This was an error in the RTC and the CA.

Tan was clearly in default hence Metrobank had the right to foreclose which it did in
’85. Tan had a year to redeem. Though See was the registered owner, Tan had the right
of redemption because they were the actual mortgagors. But Tan never redeemed the
property within the redemption period of 1 year.

The filing of a civil suit did not forestall the period of redemption though said suit drag
for more than ten years until a decision was laid down in ’97.

Though Tan made offers and proposals to redeem property, Tan did not make
simultaneous payments (which is required in redemption) which further bolstered the
fact that he did not make valid offers of redemption (considering arguendo).

After the 1 year redemption period, the right has already vested in Metrobank, hence it
could provide for any purchase price i.e. P11M offer to sell property to spouses See.