Landrito v. San Diego
REITERATIONFacts
The Antecedents: Petitioners, Spouses Maximo Landrito, Jr. and Pacita Landrito, obtained a loan of ₱350,000.00 from respondent Carmencita San Diego in July 1990, secured by a real estate mortgage. They later obtained an additional loan of ₱1,000,000.00, secured by an "Amendment of Real Estate Mortgage" executed on September 13, 1991. This amendment stipulated that the loan was payable within six months from September 16, 1991, and failure to pay would give the mortgagee the right to foreclose judicially or extrajudicially. Petitioners defaulted on their loan obligation and refused to pay despite repeated demands. By April 27, 1993, their outstanding obligation amounted to ₱1,950,000.00. On June 30, 1993, respondent Carmencita San Diego filed a petition for extrajudicial foreclosure. A Notice of Sheriff’s Sale was issued on July 6, 1993, announcing the auction sale for August 11, 1993. The mortgaged property was sold to respondent Carmencita San Diego as the highest bidder for ₱2,000,000.00 on August 11, 1993, evidenced by a Sheriff’s Certificate of Sale issued on October 7, 1993. The certificate of sale was registered on October 29, 1993. Petitioners failed to redeem the property within the one-year redemption period. Consequently, title was consolidated in the names of the San Diegos. Procedural History: On November 9, 1994, petitioners filed a complaint with the Regional Trial Court (RTC) of Makati City for annulment of the extrajudicial foreclosure and auction sale, with damages. They alleged non-compliance with notice and publication requirements under Act 3135, illegal foreclosure due to a bloated loan amount (₱1,950,000.00 instead of the stipulated ₱1,000,000.00), and premature consolidation of title, claiming Benjamin San Diego had granted them an extension of the redemption period until November 11, 1994. Respondents filed a Motion to Dismiss, arguing the complaint failed to state a cause of action as petitioners had lost their rights by failing to exercise their redemption right within the period. The RTC granted the motion to dismiss on January 13, 1995, citing laches and waiver. Petitioners appealed to the Court of Appeals (CA). The CA, in its decision dated December 12, 1997, affirmed the RTC's order of dismissal. A motion for reconsideration was denied by the CA on March 10, 1998. The Petition: Petitioners filed a petition for review on certiorari with the Supreme Court, seeking reversal of the CA decision and resolution.
Issue(s)
Whether the Court of Appeals erred in not resolving the basic issue of the validity and lawfulness of the extra-judicial foreclosure and public auction sale, considering the alleged doubling of the amount stipulated in the mortgage amendment. Whether the Court of Appeals erred in considering the complaint as one for redemption when it was clearly for the nullity of the foreclosure and auction sale. Whether the Court of Appeals erred in resolving the admissibility and probative value of an attached statement of account which was not yet presented in evidence. Whether the Court of Appeals erred in affirming the dismissal order by declaring petitioners guilty of laches for failing to redeem within the legal period, when the cause was the alleged illegal increase in the obligation and redemption price.
Ruling
The petition is denied, and the challenged decision and resolution of the Court of Appeals are affirmed. Petitioners have lost any right or interest over the subject property due to their failure to redeem the same within the period prescribed by law.
Ratio Decidendi
On the validity of the foreclosure and the alleged bloated loan amount: The Court found that the petitioners were in default in their loan obligation, prompting the extrajudicial foreclosure as provided in the mortgage amendment. While acknowledging the rule that a mortgage can only be foreclosed for the amount stated in the mortgage document, the Court found that the petitioners were barred by laches from raising this issue. The appellate court noted that despite due notice and publication of the foreclosure sale, the petitioners did not attend the sale nor raise any question regarding its propriety. Their complaint was filed more than one year after the registration of the Sheriff’s Certificate of Sale, clearly indicating they had "slept on their rights." The Court emphasized that laches is the failure or neglect for an unreasonable length of time to do that which, by exercising due diligence, could or should have been done earlier, giving rise to the presumption of abandonment or declination to assert the right. The petitioners offered no valid excuse for their failure to attend the proceedings and voice their claims earlier. On the nature of the complaint: The Court found that regardless of how the petitioners characterized their complaint, the core issue revolved around their failure to exercise their right of redemption within the statutory period. The complaint for annulment was filed long after the redemption period had expired, and the underlying reason for their inaction, as alleged by them, was the discrepancy in the loan amount and the redemption price, which they failed to address promptly. On the admissibility of the statement of account: The Court did not directly address this issue in its main ruling, as the case was dismissed on the ground of laches and failure to redeem within the period. The focus remained on the procedural and substantive failures of the petitioners to assert their rights within the prescribed time. On the finding of laches and failure to redeem: The Court reiterated that the one-year redemption period, as provided by Act No. 3135, as amended, is counted from the date of the registration of the sheriff’s certificate of sale. In this case, the certificate was registered on October 29, 1993. Calculating 365 days, and considering that 1994 was a leap year, the redemption period expired on October 29, 1994. The petitioners filed their complaint on November 9, 1994, eleven days after the redemption period had expired. Even if they claimed an extension until November 11, 1994, they failed to make a valid offer to redeem coupled with a tender of the redemption price. The Court clarified that a mere request for an extension, without a commitment to pay the redemption price at a fixed date, does not convert legal redemption into conventional redemption. Their filing of a complaint to nullify the sale, instead of tendering payment, further indicated their refusal to redeem. The Court stressed that the period of redemption is a condition precedent, and failure to exercise it within the period results in the loss of the right, irrespective of the institution of an action to annul the foreclosure sale.
Main Doctrine
Failure to exercise the right of redemption within the statutory period, coupled with inaction despite notice of foreclosure proceedings, constitutes laches, barring any subsequent challenge to the validity of the foreclosure sale.