Cenas v. Santos
REITERATIONFacts
The Antecedents: Spouses Jose and Iluminada Pulido mortgaged their land to Pasay City Savings and Loan Association, Inc. (PCSLAI) to secure a P10,000.00 loan. Subsequently, the same land was levied upon and sold at an execution sale to Josefina B. Cenas (petitioner) as the highest bidder. PCSLAI later assigned its mortgage rights to petitioner Cenas. Dra. Rosario M. Santos (private respondent) redeemed the property as a successor in interest of the judgment debtor. Petitioner Cenas, as assignee of the mortgage, then filed for extra-judicial foreclosure. Procedural History: Private respondents filed a Petition for Prohibition with Preliminary Injunction to stop the auction sale, arguing that redemption extinguished the mortgage. The trial court ruled in favor of the private respondents, enjoining the auction sale and holding that the redemption wiped out the mortgage. The trial court denied the motion for reconsideration. The Petition: Petitioner Cenas filed a petition for review on certiorari seeking to annul the trial court's decision and order.
Issue(s)
Whether the redemption of the property sold on execution extinguished the pre-existing mortgage obligation. Whether the private respondents were the real parties in interest.
Ruling
The Supreme Court reversed and set aside the decision of the trial court. It ruled that the redemption did not extinguish the mortgage obligation and allowed petitioner Cenas to proceed with the foreclosure after private respondents fail to settle the mortgage debt within thirty (30) days from finality of the decision.
Ratio Decidendi
On the issue of whether the redemption extinguished the pre-existing mortgage obligation: The Court held in the negative. Under Section 30, Rule 39 of the Rules of Court, a redemptioner must pay the purchaser the purchase price plus interest, taxes, and any prior lien the purchaser may have. In this case, petitioner Cenas was both the purchaser at the execution sale and the assignee of the prior mortgage lien. The redemption by private respondents, as successors in interest, did not extinguish this prior mortgage. Article 2126 of the Civil Code states that a mortgage directly and immediately subjects the property to the fulfillment of the obligation, creating a real right enforceable against the whole world, even if the property is sold or its possession transferred. Therefore, the acceptance of the redemption amount by petitioner Cenas without demanding payment of her prior mortgage lien did not extinguish the mortgage obligation. The property remained subject to the mortgage. On the issue of whether the private respondents were the real parties in interest: The Court found that there was no question that the Santos spouses were the real parties in interest. Under Section 29, Rule 39 of the Rules of Court, a judgment debtor or his successor in interest can redeem the property. Dra. Rosario M. Santos, as an assignee of the judgment debtor's right of redemption, validly redeemed the property as a "successor in interest." The judgment debtor did not object, and petitioner Cenas acceded to the redemption.
Main Doctrine
The redemption of a property sold in an execution sale by a successor in interest does not extinguish a pre-existing mortgage lien on the property if the purchaser at the execution sale is also the assignee of the mortgage, as the mortgage creates a real right enforceable against the whole world.