Spouses Medina v. Court of Appeals
REITERATIONFacts
1. The Antecedents: Spouses Crisostomo and Aurora Medina mortgaged a lot to the Rural Bank of Masantol, Inc. to secure a loan. Upon failure to pay, the bank foreclosed the mortgage. The property was sold at auction to the bank as the sole bidder. The sheriff's Certificate of Sale was issued, with the redemption period expiring one year after its registration in the Registry of Deeds. 2. Procedural History: The petitioners allege they attempted to redeem the property within the statutory period, but the bank refused. The bank denies this, stating the petitioners failed to exercise their right of redemption before the period expired, leading to the consolidation of ownership in the bank's name. Subsequently, the bank sold the property to respondents Remigio and Aida Lobo. The petitioners filed an action for annulment of the consolidation of ownership and redemption, which was dismissed by the trial court. The Court of Appeals affirmed this dismissal. 3. The Petition: The petitioners seek review of the Court of Appeals' decision, primarily arguing that the sale of the foreclosed property by the bank to the Lobos was void for lack of notice to the former owners, as required by Section 222 of the Central Bank's Revised Rules and Regulations. They contend this notice, along with a public auction and posting of sale notices, is mandatory. The petitioners also claim they were assured by a bank manager that they could redeem the property, despite the expiration of the statutory period.
Issue(s)
Whether the petitioners may still redeem their foreclosed property from the respondent Rural Bank or the subsequent vendees despite the expiration of the statutory redemption period. Whether the sale of the foreclosed property by the Bank to the spouses Lobo was void for lack of notice to the former owners, as provided in the Central Bank's Revised Rules and Regulations.
Ruling
The petition for review is denied. The Supreme Court affirmed the decision of the Court of Appeals, upholding the sale of the foreclosed property to the spouses Lobo.
Ratio Decidendi
On the issue of redemption after the expiration of the redemption period: The Court held that the petitioners' claim to redeem the property after the expiration of the statutory redemption period was without merit. The Court gave credence to the findings of the trial court and the Court of Appeals that Aurora Medina's alleged offer to redeem on August 11, 1979, was merely a request for a computation of the redemption amount, not a valid tender of payment. If she were ready with the redemption money, she should have tendered it or filed an action for consignation when the Bank allegedly refused to accept it. Furthermore, any alleged assurance by the bank manager to extend the redemption period was uncorroborated and self-serving, and such an agreement involving immovable property would require a written memorandum under the Statute of Frauds. On the issue of the validity of the sale for lack of notice: The Court ruled that while the Bank's non-compliance with the Central Bank's Revised Rules and Regulations regarding notice to the former owner was admitted, this omission did not invalidate the sale to the spouses Lobo. The Court emphasized that the subject property was registered land. As former owners, the petitioners had the right to annotate an adverse claim or memorandum of their right to notice on the Bank's title. Their failure to do so meant that the buyers, spouses Remigio and Aida Lobo, acquired the property free from any claims except statutory ones. They were considered purchasers in good faith and for value, and the indefeasibility of the title they acquired was not affected by the Bank's procedural lapse.
Main Doctrine
The failure of former owners to annotate an adverse claim or memorandum of their right to notice of any intended disposition of foreclosed property on the bank's title renders the subsequent sale to a good faith purchaser for value indefeasible, notwithstanding the bank's non-compliance with Central Bank regulations regarding notice to the former owner.