UNION BANK OF THE PHILIPPINES vs.

COURT OF APPEALS, et al
G.R. No. 134068. June 25, 2001

DE LEON, JR., J.:

FACTS:
Private respondents-spouses Gonzalo and Trinidad Vincoy executed a real estate
mortgage in favor or petitioner Union Bank of the Philippines as security for a loan amounting to
P2 Million. The said loan is said to be payment to a loan for Delco Industries Philippines.
The mortgaged was eventually extrajudicially foreclosed by petitioner on private
respondents’ failure to pay the loan upon its maturity. Petitioner ended as the highest bidder at
the foreclosure sale and was issued a certificate of sale and a duly annotated Transfer Certificate
of Title for the property on May 8, 1991.
Respondents then filed a complaint to annul the mortgage prior to the expiration of the
property’s redemption period. Respondents alleged that the property in question is a family home
and is for the benefit of the sisters of Trinidad Vincoy whose consent was not obtained upon the
property’s mortgage. They further cited that the Family Code prohibits such forced sale,
attachment or any encumbrance on a family home without the consent of the majority of the
beneficiaries.
Petitioners averred that the property is not a family home because the value exceeds
P300,000, the maximum value of a family home as stipulated in the same provision in the Family
Code.
The trial court ruled in favor of petitioners ruling that the property is not a family home
as it exceeds the maximum value stipulated by law and that the mortgage made in favor of
petitioners was valid. The trial court further ordered respondents to pay petitioner their
outstanding obligation valued at around P4.8 Million.
Respondents appealed to the CA the trial court’s decision, and further contended that the
redemption value of the property is P2.8 Million and not P4.8 Million as found by the trial court.
The CA affirmed the trial court’s ruling. However, it modified the redemption price of the
property to P3.3 Million, the purchase price at the foreclosure sale including one percent interest
from the date of the auction sale until the date of redemption.
Petitioner filed a petition with the SC alleging that the CA erred in allowing respondents
to redeem the property in question when respondents never prayed for it and instead insisted on
the nullity of the property’s mortgage. Petitioner further claimed that respondents can no longer
exercise their right to redeem the foreclosed property due to their failure to pay the redemption
price within the redemption period. If they are to be allowed to redeem the property, petitioner
claims that Section 78 General Banking Act prevails instead of the CA’s pursuance of Section
30, Rule 39 of the Rules of Court in determining the redemption period and price, which
provides that “xxx 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, or the amount due
under the mortgage deed, as the case may be, with interest thereon at the rate specified in the
mortgage, xxx”
The SC dismissed the petition, hence this motion for reconsideration.
ISSUE:
Whether or not private respondents Gonzalo and Trinidad Vincoy have lost their right of
redemption of their property.
RULING:
Yes, private respondents lost their right of redemption due to their failure to exercise the
right within the prescribed period under Section 78 of the General Banking Act.
Pursuant to Section 78 of the General Banking Act, a mortgagor whose real property has
been sold at a public auction, judicially or extrajudicially, for the full or partial payment of an
obligation to any bank, shall have the right, within one year after the sale of the real estate to
redeem the property. The one-year period is actually to be reckoned from the date of the
registration of the sale. therefore, respondents had only until May 8, 1992 to redeem the subject
foreclosed property. Their failure to exercise that right of redemption by paying the redemption
price within the period prescribed by law effectively divested them of said right.
In this case, during the one-year redemption period, respondents never attempted to
redeem the subject property but instead persisted in their theory that the mortgage is null and
void.
Further, as ruled by the Supreme Court in the case of Sumerariz vs. Development Bank
of the Philippines, “unlike Section 30 of Rule 39 of the Rules of Court, which permits the
extension of the period of redemption of mortgaged properties, Section 3 of Commonwealth Act
No. 459, in relation to Section 9 of Republic Act No. 85, which governs the redemption of
property mortgaged to the Bank does not contain a similar provision.”
Also, in the more recent case of Vaca v. Court of Appeals, the SC declared that the
pendency of an action questioning the validity of a mortgage cannot bar the issuance of the writ
of possession after title to the property has been consolidated in the mortgagee. Therefore, the
period of redemption is not interrupted by the filing of an action assailing the validity of the
mortgage, so that at the expiration thereof, the mortgagee who acquires the property at the
foreclosure sale can proceed to have the title consolidated in his name and a writ of possession
issued in his favor.
WHEREFORE, the motion for reconsideration is hereby GRANTED. This Court’s
Resolution dated July 12, 1999 is MODIFIED insofar as respondents are found to have lost their
right to redeem the subject foreclosed property. SO ORDERED.