Tolentino vs. Court of Appeals

The Court held that a statutory right of redemption is a privilege, not a debt obligation, and therefore Article 1249 of the Civil Code on payment in legal tender does not strictly govern the exercise of that right. A judicial action for redemption filed within the statutory period, accompanied by consignation of the redemption price with the sheriff, satisfies the requirement of a valid offer to redeem, and a subsequent stop-payment order on the consigned check does not forfeit the right absent proof of bad faith. Furthermore, the Supreme Court will not disturb the factual findings of the lower courts regarding the service of a default judgment, as such determinations are conclusive and the judgment has attained finality.

Ceferino de la Cruz died in 1960, leaving a 131,705-square-meter homestead parcel to his widow and three children. The heirs sold the property to spouses Jose and Vicenta Tolentino in 1962, who subsequently mortgaged the homestead and two additional titled parcels to the Bank of the Philippine Islands and Philippine Banking Corporation. BPI foreclosed the mortgage, purchased the properties at a public auction in 1967, and registered the sheriff's certificate of sale in 1969. The De la Cruz heirs initiated a separate action to repurchase the homestead lot under Section 119 of the Public Land Act, while the Tolentinos later initiated a judicial action to redeem all three foreclosed properties from BPI after consigning a crossed check with the city sheriff and subsequently issuing a stop-payment order.

• Ceferino de la Cruz died in 1960, leaving a homestead parcel to his widow and three children as his sole heirs.
• The heirs sold the homestead to spouses Jose and Vicenta Tolentino in 1962, who secured a new transfer certificate of title.
• The Tolentinos mortgaged the homestead and two other titled parcels to BPI in 1963 and to Philippine Banking Corporation in 1964.
• BPI foreclosed the mortgage in 1967, became the highest bidder at the judicial foreclosure sale, and registered the certificate of sale on April 2, 1969.
• The De la Cruz heirs filed a repurchase action for the homestead under Section 119 of the Public Land Act in February 1967, naming the Tolentinos and the mortgagees as defendants.
• The trial court declared the Tolentinos in default for failing to file a timely answer, allowed the plaintiffs to present evidence ex parte, and ordered repurchase in March 1969.
• BPI executed a deed of conveyance to the De la Cruz heirs upon payment of P16,000, and possession was delivered in September 1969.
• In March 1970, the Tolentinos attempted to redeem all three foreclosed lots by consigning a crossed PNB check with the City Sheriff of Davao and filed a judicial action for redemption against BPI.
• The Tolentinos issued a stop-payment order on the consigned check the following day to prevent BPI from encashing it before returning all foreclosed properties.
• The trial court dismissed the redemption complaint, prompting appeals from both the Tolentinos and BPI to the Court of Appeals.
• The CA consolidated the appeals, affirmed the default judgment in the repurchase case as final, and dismissed the redemption case on the ground that a crossed check fails to satisfy Article 1249 of the Civil Code.

• Petitioners maintained that the statutory right of redemption is a privilege, not a debt obligation, and therefore Article 1249 of the Civil Code governing payment in legal tender does not apply to redemption proceedings.
• Petitioners argued that the filing of the redemption complaint within the reglementary period, coupled with the consignation of the redemption price with the sheriff, constituted a valid and bona fide exercise of the right.
• Petitioners contended that the subsequent stop-payment order did not forfeit their redemption right, as redemption is optional, the order was not issued in bad faith, and no compulsion exists to exercise the privilege.
• Petitioners asserted that the trial court abused its discretion in declaring them in default in the repurchase case and argued that the five-year period for repurchasing the homestead had already lapsed.

• Respondent BPI countered that a crossed check does not constitute legal tender under Article 1249 of the Civil Code, and the subsequent stop-payment order demonstrated bad faith and a lack of genuine intent to redeem.
• BPI argued that the default judgment in the repurchase case had become final and executory, as the lower courts found that petitioners were duly served with the judgment, rendering the issue factual and beyond Supreme Court review.
• Respondent De la Cruz heirs maintained that the default judgment was properly rendered and final, emphasizing that petitioners failed to demonstrate excusable negligence or a meritorious defense to justify relief from judgment.

• Procedural Issues: Whether the question of service of the default judgment in the repurchase case is factual or legal in nature, and whether the default judgment had attained finality precluding further review.
• Substantive Issues: Whether Article 1249 of the Civil Code governs the mode of payment for a statutory right of redemption; whether consignation of a crossed check with the sheriff, followed by a stop-payment order, constitutes a valid exercise of the right to redeem; and whether the filing of a judicial action within the redemption period suffices as a formal offer to redeem.

• Procedural: The Court ruled that the question of whether the default judgment was duly served requires calibration of evidence and is therefore factual in character. Because the Supreme Court's jurisdiction on certiorari is limited to reviewing errors of law, it will not re-evaluate the lower courts' factual findings on service. The Court affirmed that the default judgment had attained finality, and public policy precludes reopening the issue absent a showing of grave abuse of discretion.
• Substantive: The Court held that Article 1249 of the Civil Code does not apply to statutory redemption, as redemption is an absolute privilege rather than a debt obligation, and the relationship between the auction purchaser and the redemptioner is not that of creditor and debtor. The Court ruled that filing a judicial action for redemption within the reglementary period constitutes a valid formal offer to redeem, and simultaneous consignation of the redemption price with the sheriff is sufficient, even if effected via a crossed check. The Court further held that the subsequent stop-payment order does not invalidate the redemption, as the right is optional and no bad faith was established, but explicitly excluded the homestead lot from redemption due to the final default judgment in the separate repurchase case.

• Statutory Right of Redemption as a Privilege — The Court defined the right of redemption not as a debt obligation but as an absolute privilege vested by law in the mortgagor, the exercise of which depends entirely on the redemptioner's discretion. Because no legal obligation to redeem exists, the law should be construed liberally to favor redemption, and the creditor-debtor framework governing debt payment does not apply.
• Finality of Factual Findings — The Court reiterated the settled rule that findings of fact by the Court of Appeals are generally conclusive and binding on the Supreme Court. The Court emphasized that its jurisdiction is limited to reviewing errors of law, and questions requiring evaluation of the probative value of evidence, such as the validity of service of process, are factual and not subject to re-examination absent exceptional circumstances.
• Judicial Action as Equivalent to Formal Offer — The Court established that a formal extrajudicial offer to redeem accompanied by a bona fide tender is not strictly essential when the right to redeem is exercised through the filing of a judicial action within the reglementary period. The filing of the complaint itself, coupled with consignation of the redemption money with the executing sheriff, satisfies the legal requirement of a valid offer to redeem.

• "This right of redemption is an absolute privilege, the exercise of which is entirely dependent upon the will and discretion of the redemptioners. There is, thus, no legal obligation to exercise the right of redemption. Said right, can in no sense, be considered an obligation, for the Tolentinos are under no compulsion to exercise the same." — The Court invoked this principle to distinguish statutory redemption from ordinary debt payment, thereby justifying the inapplicability of Article 1249 of the Civil Code.
• "The filing of the action itself, within the period of redemption, is equivalent to a formal offer to redeem." — The Court relaxed the requirement of a prior extrajudicial offer when redemption is pursued judicially within the statutory period, emphasizing that the complaint and simultaneous consignation suffice to preserve the right.
• "For a question to be one of law, it must involve no examination of the probative value of the evidence presented by the litigants or any of them. The query here presented, necessarily invites calibration of the evidence to determine whether or not there was really such service. As such, the question must be deemed to be factual in character and content." — The Court delineated the boundary between questions of law and fact to justify non-interference with the lower courts' conclusive findings on service of the default judgment.

• Golez v. Camara — Cited to support the principle that the right to redeem is a statutory privilege rather than a debt obligation.
• Reyes v. Tolentino — Cited to establish that the relationship between the purchaser at auction and the redemptioner is not that of creditor and debtor, and to validate tender of redemption money to the sheriff.
• Javellana v. Mirasol and Nuñez — Cited for the policy of favoring redemption and for recognizing the established commercial usage of checks as a valid medium of payment in judicial consignation.
• Chan v. Court of Appeals, Tapas v. Court of Appeals, Baptista v. Carillo, Vda. de Catindig v. Heirs of Catalino Roque — Cited collectively to reinforce the rule that factual findings of the Court of Appeals are conclusive and not reviewable by the Supreme Court.
• De Jesus v. Court of Appeals — Cited to support the ruling that a withdrawal or stop-payment order on consigned redemption money does not automatically forfeit the statutory right to redeem.

• Article 1249 of the New Civil Code — Cited by the Court of Appeals to require payment in legal tender; the Supreme Court held it inapplicable to statutory redemption because redemption is a privilege, not a debt payment.
• Section 119 of Commonwealth Act No. 141 (Public Land Act) — Governs the five-year right of repurchase for homestead lands, forming the statutory basis for the De la Cruz heirs' separate repurchase action.
• Section 31, Rule 39 of the Rules of Court — Cited to expressly authorize the tender of redemption money to the sheriff who conducted the sale, thereby validating the petitioners' consignation.