Landrito vs. Court of Appeals

The right to redeem foreclosed property must be exercised within one year from the registration of the sheriff's certificate of sale, and failure to make a valid offer to redeem coupled with a tender of the redemption price within this period extinguishes the mortgagor's interest in the property, precluding a subsequent action to annul the foreclosure.

In July 1990, petitioners obtained a ₱350,000 loan from respondent Carmencita San Diego, secured by a real estate mortgage over their land in Muntinlupa. After making partial payments, petitioners obtained an additional ₱1,000,000 loan in September 1991, secured by an "Amendment of Real Estate Mortgage" stipulating a six-month payment period and granting the mortgagee the right to foreclose upon default.

• The Loans and the Mortgage: Petitioners borrowed ₱350,000 from respondent Carmencita San Diego in July 1990, secured by a real estate mortgage. After partial payments, an additional loan of ₱1,000,000 was granted in September 1991, secured by an "Amendment of Real Estate Mortgage" allowing extrajudicial foreclosure upon default.
• Default and Foreclosure: Petitioners defaulted, prompting a final demand on April 27, 1993, for ₱1,950,000. Respondent filed for extrajudicial foreclosure on June 30, 1993. Notice of the sheriff's sale was sent on July 6, 1993, and the property was sold at public auction on August 11, 1993, to respondent for ₱2,000,000.
• Registration and Consolidation: The Sheriff’s Certificate of Sale was registered on October 29, 1993. Petitioners failed to redeem the property within the one-year period, leading respondents to consolidate title in their names.
• The Belated Complaint: On November 9, 1994, eleven days after the redemption period expired, petitioners filed a complaint to annul the foreclosure and auction sale, alleging failure to comply with notice requirements, an illegally bloated foreclosure amount, and a purported extension of the redemption period granted by respondent's husband.

• Validity of Foreclosure: Petitioner argued that the extrajudicial foreclosure was invalid because the amount in the petition for foreclosure (₱1,950,000) doubled the amount stipulated in the mortgage document (₱1,000,000), violating the rule that foreclosure must be limited to the amount mentioned in the mortgage.
• Nature of the Action: Petitioner maintained that the Court of Appeals erred in treating the complaint as an action for redemption rather than an action for nullity of the foreclosure ab initio.
• Premature Evaluation of Evidence: Petitioner argued that the Court of Appeals incorrectly resolved the admissibility and probative value of the statement of account during the motion to dismiss stage, prior to the presentation of evidence.
• Laches and Redemption Price: Petitioner contended that laches was wrongly applied because their failure to redeem was caused by the illegal 100% increase of the original obligation, which bloated the redemption price from ₱2,000,000 to ₱3,491,225.98.

• Failure to State a Cause of Action: Respondent countered that the complaint failed to state a cause of action because no primary right of the petitioners was violated; they simply failed to exercise their right of redemption within the one-year statutory period.
• Laches and Waiver: Respondent argued that petitioners' inaction constituted laches and waiver, as they took no action to stall the running of the redemption period, leaving them with no further right or interest in the property.

• Validity of Foreclosure: Whether the extrajudicial foreclosure was invalid for being based on an amount exceeding that stipulated in the mortgage document.
• Laches: Whether petitioners were barred by laches from questioning the foreclosure due to their failure to attend the foreclosure sale or exercise their right of redemption within the statutory period.
• Redemption Period and Tender: Whether an alleged extension of the redemption period excuses the lack of a valid offer to redeem coupled with a tender of the redemption price within the statutory one-year period.

• Validity of Foreclosure: While a mortgage may be foreclosed only for the amount appearing in the mortgage document, petitioners were barred by laches from raising this issue, having slept on their rights by failing to attend the foreclosure sale or raise objections despite due notice and publication.
• Laches: Laches was properly applied because petitioners failed to assert their rights during the foreclosure proceedings and only filed their complaint eleven days after the one-year redemption period expired. The appellate court did address the issue of the bloated foreclosure amount, but correctly ruled that petitioners were barred by laches from raising it.
• Redemption Period and Tender: The one-year redemption period is counted from the registration of the sheriff's certificate of sale (October 29, 1993), giving petitioners until October 29, 1994, to redeem. Because October 29, 1994, fell on a Saturday, the deadline was extended to October 31, 1994. Even assuming an extension was granted to November 11, 1994, no valid offer to redeem coupled with a tender of payment was ever made. Filing a complaint to annul the sale instead of offering to redeem indicates refusal to pay. The redemption period is a condition precedent, not a prescriptive period, and its lapse extinguishes the right to redeem; the period is not suspended by the institution of an action to annul the foreclosure sale.

• Laches — 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 that the right has been abandoned or declined. Applied because petitioners failed to attend the foreclosure proceedings or object to the bloated amount despite notice, and only filed suit after the redemption period lapsed.
• Legal Redemption Period in Extrajudicial Foreclosure — The debtor has one year from the registration of the sheriff's certificate of sale to redeem the property. The period is not suspended by the institution of an action to annul the foreclosure sale. If the period lapses before the right is exercised, an action to enforce redemption will not prosper.
• Conventional Redemption — Arises when there is a voluntary agreement of extensions of the redemption period followed by a commitment by the debtor to pay the redemption price at a fixed date. Without an agreement to pay, legal redemption is not converted to conventional redemption.

• "The period of redemption is not a prescriptive period but a condition precedent provided by law to restrict the right of the person exercising redemption."
• "If a person exercising the right of redemption has offered to redeem the property within the period fixed, he is considered to have complied with the condition precedent prescribed by law and may thereafter bring an action to enforce redemption."
• "The period within which to redeem the property sold at a sheriff’s sale is not suspended by the institution of an action to annul the foreclosure sale."

• Lazo v. Republic Surety & Insurance Co., Inc., 31 SCRA 329 (1970) — Followed. Established that legal redemption is converted to conventional redemption only where there is a voluntary agreement of extensions followed by a commitment by the debtor to pay the redemption price at a fixed date.

• Section 6, Act No. 3135 (as amended by Republic Act No. 4118) — Provides that the debtor may redeem the property at any time within one year from and after the date of the sale. Applied to determine the one-year redemption period.
• Article 13, New Civil Code — Provides that a year is understood to have 365 days, and in computing a period, the first day is excluded and the last day included. Applied to compute the exact expiration of the redemption period.

Panganiban (Chairman), Sandoval-Gutierrez, and Carpio-Morales.