FIRST DIVISION

[G.R. No. 70987. September 29, 1988.]

GREGORIO Y. LIMPIN, and ROGELIO M. SARMIENTO , petitioners, vs.INTERMEDIATE APPELLATE COURT and GUILLERMO PONCE ,respondents.

Danilo A. Basa for petitioner Gregorio Y. Limpin, Jr.

Angara, Abello, Concepcion, Regala & Cruz Law Offices for petitionerRogelio Sarmiento.

Sycip, Salazar, Hernandez & Gatmaitan Law Offices and Eugenio C. Lindofor respondent Guillermo Ponce.

SYLLABUS

1. CIVIL LAW; CIVIL CODE; CREDIT TRANSACTIONS; MORTGAGE RIGHT OFREDEMPTION EXISTS IN EXTRAJUDICIAL FORECLOSURE. — Under Act 3135, afteran extrajudicial foreclosure, a mortgager has the right of redemption which he mayexercise within one year from the registration of the sheriff's certificate of sale.

2. SPECIAL LAW; SPECIAL CIVIL ACTION; FORECLOSURE OF MORTGAGE; NORIGHT OF REDEMPTION EXISTS; EXCEPTION. — There is no right of redemption injudicial foreclosure, except where the mortgagee is the Philippine National Bank, ora bank or banking institution (Rule 68, Sec. 3, Rules of Court; Acts Nos. 2747 and2938; Republic Act No. 337).

3. ID.; ID.; ID.; ID.; EQUITY REDEMPTION, IN JUDICIAL FORECLOSURE; PERIODTO REDEEM. — While there is no right of redemption in judicial foreclosure, there isin favor of the mortgagor an equity of redemption. An equity of redemption is theright of the mortgagor to extinguish the mortgage and retain ownership of theproperty by paying the secured debt within the 90-day period after the judgmentbecomes final, in accordance with Rule 68, or even after the foreclosure sale butprior to its confirmation.

4. ID.; ID.; ID.; ID.; JUNIOR ENCUMBRANCES HAVE RIGHT OF EQUITY OFREDEMPTION. — The equity of redemption pertaining to the mortgagor is the sameright that may be exercised by the mortgagor's successor in interest or third personsacquiring rights over the mortgaged property subordinate to the mortgagee's lien.

5. ID.; ID.; ID.; ID.; ID.; UNFORECLOSED EQUITY OF REDEMPTION, RETAINED BYPARTIES NOT IMPLEADED. — Where a subsequent or junior lienholder is not

impleaded in the foreclosure proceedings, any judgment in favor of the mortgagee isnot binding upon him, he retains what is known as an unforeclosed equity ofredemption and a separate foreclosure proceeding should be brought to require himto redeem from the first mortgagee or the party acquiring title to the mortgagedproperty at the foreclosure sale within 90 days under penalty of losing saidprerogative.

6. ID.; ID.; ID.; EQUITY OF REDEMPTION; GRANT OF EXTENSION MUST BECLEAR AND UNEQUIVOCAL. — The fact that private respondent recognizedpetitioners' equity of redemption does not prevent the redemption from lapsingwhere such recognition was made when there was as yet no order confirming thesale and private respondent's equity of redemption still existed. Moreover, evenassuming that a period to redeem may be extended by the act of the party whowould have been benefited by the expiration, the grant of such extension must beclear and unequivocal.

7. CONSTITUTIONAL LAW; BILL OF RIGHTS; DUE PROCESS; PETITIONER WHOAPPEALED THE QUESTIONED DECISION CANNOT CLAIM DENIAL OF DUE PROCESS.— Since petitioner has appealed to this court the decision of the court of appealsordering the trial court to confirm the judicial foreclosure, he cannot now claim thathe was denied due process for alleged lack of notice. The denial of the appealsufficiently alerted him that confirmation could come at any time after the finalityof this Court's decision.

R E S O L U T I O N

NARVASA, J p:

Once again the parties are before this Court; this time, for a determination ofwhether or not the equity of redemption recognized in favor of petitioner Rogelio M.Sarmiento in this Court's judgment promulgated on January 30, 1987, still subsistsand may be exercised, more than a year after that judgment had become final andexecutory. LLjur

The proceedings concern two (2) lots, then covered by TCTs Nos. 92836 and 92837,which, together with two (2) others, were originally mortgaged in 1973 to hereinprivate respondent Ponce by their former owners, the Spouses Jose and MarcelinaAquino. These two lots were afterwards sold in 1978 by the same Aquino Spouses toButuan Bay Wood Export Corporation. Against this corporation herein petitionerLimpin obtained a money judgment in 1979; and to satisfy the judgment, the twolots were levied on and sold at public auction in 1980, Limpin being the highestbidder. Limpin later sold the lots to his co-petitioner, Sarmiento.

Earlier however — or a day before levy was made on the two lots in execution ofthe judgment against Butuan Bay Wood Export Corporation — Ponce had initiatedjudicial proceedings for the foreclosure of the mortgage over said two (2) lots

(together with the two (2) others mortgaged to him). Judgment was rendered in hisfavor and became final; and at the ensuing foreclosure sale, the lots were acquiredby Ponce himself as highest bidder. Ponce then moved for confirmation of theforeclosure sale, but the Court confirmed the sale of only two lots, refusing to do soas regards the two which had been subject of the execution sale in Limpin's favor(i.e., those covered by TCTs Nos. 92836 and 92837).LLphil

It was to resolve the resulting dispute that Ponce instituted a special civil action inthe Intermediate Appellate Court, impleading Limpin and Sarmiento asindispensable parties respondents. That Court rendered judgment on February 28,1985 in Ponce's favor; Limpin and Sarmiento appealed; this Court denied theirappeal.

The judgment of this Court of January 30, 1987 dismissed Sarmiento's and Limpin'spetition for review on certiorari of the Appellate Court's decision of February 28,1985. It in effect affirmed the latter's decision which inter alia ordered the TrialCourt "to confirm the sale (of the lots formerly covered by TCT Nos. 92836 and92837) and issue a writ of possession to . . . (Guillermo Ponce) with respect to theaforesaid lots, subject to the equity of redemption of the respondent Rogelio V.Sarmiento," 1 Applying the doctrine laid down in Santiago v. Dionisio, a 1953decision of this Court, 2 the Intermediate Appellate Court's decision declared that"the sale to Ponce, as the highest bidder in the foreclosure sale of the two lots inquestion should have been confirmed, subject to Limpin's (and now Sarmiento's)equity of redemption."

This Court's aforesaid judgment also clearly and categorically sustained the exerciseby the Appellate Court of jurisdiction over the persons of Rogelio M. Sarmiento andGregorio Limpin. 3 There can thus be no question that the petitioners herein, saidRogelio Sarmiento and Gregorio Limpin, were affected and are bound by thedecision of the Intermediate Appellate Court, and that of this Court affirming it. cdrep

Rogelio M. Sarmiento, particularly, was aware that the Trial Court had theministerial duty to execute the Appellate Court's decision, i.e., to confirm the saleand issue a writ of possession as regards the aforesaid lots, subject to the equity ofredemption explicitly recognized in his favor in the decisions mentioned. He knewthat he had the prerogative to exercise his equity of redemption, if not from themoment that the judgment of this Court became final and executory, 4 at least untilthe Court a quo, presided over by Hon. Antonio Solano, subsequently confirmed thesale and issued a writ of possession in favor of Guillermo Ponce in June, 1987. 5

He did not try to exercise that right before, at or about the time of the confirmationof the foreclosure sale by Judge Solano. Instead, he instituted no less than two (2)actions in the same Regional Trial Court — which were assigned to another branch,presided over by Hon. Teodoro Beltran — attempting to relitigate precisely the sameissues which this Court and the Intermediate Appellate Court had already passedupon and resolved adversely to him. For doing so — for trifling with and abusing theprocesses of the courts, and thus unwarrantedly delaying execution of the final andexecutory judgment against him — he and his counsel were both found guilty of

contempt and correspondingly punished by this Court, by Resolution dated May 5,1988. The same resolution also decreed the dismissal of the complaints in bothcases and the nullification and setting aside of the restraining or injunctive orders ofJudge Beltran. LibLex

It was not until March 11, 1988 — nine months or so after entry of the judgmentrecognizing his equity of redemption as successor-in-interest of the originalmortgagors — that Sarmiento finally bestirred himself to attempt to exercise hisunforeclosed equity of redemption. On that day he filed a motion with the Courtpresided over by Hon. Judge Antonio Solano, manifesting that he would exercise theright and asked the Court to fix the redemption price. 6 The Court opined that "thisshould be the subject of the agreement between Ponce and Sarmiento." 7

Sarmiento then wrote to Ponce on March 23, 1988 offering "P2.6 million asredemption price for the two lots originally covered by TCTs Nos. 92836 and 92837,now 307100 and 307124." 8 Ponce's answer, dated March 25, 1988, rejected theoffer and averred "that the period within which x x (Sarmiento) could haveexercised such right . . . (had) lapsed." 9 Sarmiento reacted by filing a motion withthe Solano Court, dated March 29, 1988, asking it to "fix the redemption price . . .and that the implementation of the writ of possession be provisionally deferred." 10An opposition was promptly filed by Ponce under date of May 4, 1988 11 in which heargued that "Sarmiento's right to exercise his equity of redemption over those lotshad long expired," the opportunity to exercise it having presented itself but notavailed of "(i) after . . . default in the performance of the conditions of the mortgageand (ii) before the Sheriff's sale of the property and the judicial confirmationthereof" According to Ponce, "from October 17, 1982, . . . (when) Sarmiento'spredecessors-in-interest defaulted in their obligations over the mortgagedproperties, up to June 17, 1987, when this . . . (Trial) Court confirmed the auctionsale of those properties, Sarmiento could (and should) have exercised his 'equity ofredemption.'" Judge Solano did not share this view, and ruled accordingly. 12

The issue has been brought to this Court for resolution by Ponce's "Motion forClarification" dated May 27, 1988 and "Supplemental Motion . ." dated June 13,1988, as to which Sarmiento has submitted a Comment dated June 17, 1988. Tothe comment a reply has been presented by Ponce under date of August 3, 1988.

Ponce states 13 that the term, equity of redemption, means "the right of themortgagor to redeem the mortgaged property after his default in the performanceof the conditions of the mortgage but before the sale of the property or the (judicial)confirmation of the (Sheriff's) sale," citing Top Rate International Services, Inc. v.I.A.C., 142 SCRA 473 [1976], or "the right to redeem mortgaged property by payingthe amount ordered by the court within a period of ninety days, or, even thereafterbut before the confirmation of the sale, invoking Sun Life Assurance Co. of Canadav. Diez, 52 Phil. 275 [1928]. 14 On this premise, he postulates that "from October17, 1982, the date Sarmiento's predecessors-in-interest defaulted in theirobligations over the mortgaged properties, up to June 17, 1987, when the lower

court confirmed the auction sale of those properties, Sarmiento could haveexercised his 'equity of redemption." Not having done so within that time, hisequity of redemption had been extinguished; indeed, by opting to file "new suitsagainst Ponce . . . seeking to annul Ponce's titles over those properties" instead ofredeeming the same, he had "waived his equity of redemption (assuming such rightexisted at the time the suits were commenced)."

It is Sarmiento's position, on the other hand, 15 that the "17 June 1987confirmation of the sale of the two lots could not have cut off . . . (his) equity ofredemption;" in fact, "Ponce himself, in his 'Urgent Motion' dated 1 June 1987,precisely prayed for the issuance of a writ of possession 'subject to the equity ofredemption of Rogelio M. Sarmiento' thereby recognizing Sarmiento's equity ofredemption beyond confirmation date," 18

The equity of redemption is, to be sure, different from and should not be confusedwith the right of redemption. 19

The right of redemption in relation to a mortgage — understood in the sense of aprerogative to re-acquire mortgaged property after registration of the foreclosuresale — exists only in the case of the extrajudicial foreclosure of the mortgage. Nosuch right is recognized in a judicial foreclosure except only where the mortgagee isthe Philippine National Bank or a bank or banking institution.

Where a mortgage is foreclosed extrajudicially, Act 3135 grants to the mortgagorthe right of redemption within one (1) year from the registration of the sheriff'scertificate of foreclosure sale. 20

Where the foreclosure is judicially effected, however, no equivalent right ofredemption exists. The law 21 declares that a judicial foreclosure sale, "whenconfirmed by an order of the court, . . . shall operate to divest the rights of all theparties to the action and to vest their rights in the purchaser, subject to such rightsof redemption as may be allowed by law." 23 These laws confer on the mortgagor,his successors in interest or any judgment creditor of the mortgagor, the right toredeem the property sold on foreclosure — after confirmation by the court of theforeclosure sale — which right may be exercised within a period of one (1) year,counted from the date of registration of the certificate of sale in the Registry ofProperty. LLphil

But, to repeat, no such right of redemption exists in case of judicial foreclosure of amortgage if the mortgagee is not the PNB or a bank or banking institution. In such acase, the foreclosure sale, "when confirmed by an order of the court . . . shalloperate to divest the rights of all the parties to the action and to vest their rights inthe purchaser." There then exists only what is known as the equity of redemption.This is simply the right of the defendant mortgagor to extinguish the mortgage andretain ownership of the property by paying the secured debt within the 90-dayperiod after the judgment becomes final, in accordance with Rule 68, or even afterthe foreclosure sale but prior to its confirmation.

Section 2, Rule 68 provides that —

". . . If upon the trial . . . the court shall find the facts set forth in thecomplaint to be true, it shall ascertain the amount due to the plaintiff uponthe mortgage debt or obligation, including interest and costs, and shallrender judgment for the sum so found due and order the same to be paidinto court within a period of not less than ninety (90) days from the date ofthe service of such order, and that in default of such payment the propertybe sold to realize the mortgage debt and costs." 24

This is the mortgagor's equity (not right) of redemption which, as above stated, maybe exercised by him even beyond the 90-day period "from the date of service of theorder," and even after the foreclosure sale itself, provided it be before the order ofconfirmation of the sale. 25 After such order of confirmation, no redemption can beeffected any longer.

It is this same equity of redemption that is conferred by law on the mortgagor'ssuccessors-in-interest, or third persons acquiring rights over the mortgaged propertysubsequent, and therefore subordinate, to the mortgagee's lien. 26 If thesesubsequent or junior lien-holders be not joined in the foreclosure action, thejudgment in the mortgagor's favor is ineffective as to them, of course. In that case,they retain what is known as the "unforeclosed equity of redemption," and aseparate foreclosure proceeding should be brought to require them to redeem fromthe first mortgagee, or the party acquiring title to the mortgaged property at theforeclosure sale, within 90 days, 27 under penalty of losing that prerogative toredeem. In the case at bar, however, there is no occasion to speak of any"unforeclosed equity of redemption" in Sarmiento's favor since he was properlyimpleaded in the judicial proceeding where his and Ponce's rights over themortgaged property were ventilated and specifically adjudicated. prcd

Under the circumstances obtaining in this case, the plain intendment of theIntermediate Appellate Court was to give to Sarmiento, not the unforeclosed equityof redemption pertaining to a stranger to the foreclosure suit, but the same equityof redemption possessed by the mortgagor himself. The judgment cannot beconstrued as contemplating or requiring the institution of a separate suit by Ponceto compel Sarmiento to exercise his unforeclosed equity of redemption, or asgranting Sarmiento the option to redeem at any time that he pleases, subject onlyto prescription. This would give rise to that multiplicity of proceedings which the laweschews. The judgment plainly intended that Sarmiento exercise his option toredeem, as successor of the mortgagor.

Upon the facts on record, Sarmiento cannot be heard to complain of denial of dueprocess for alleged lack of notice of any motion or hearing for confirmation of sale.The Decision of the Intermediate Appellate Court which he and his predecessor,Limpin, had appealed to this Court specifically ordered the Trial Court to confirm 28the judicial foreclosure sale in favor of Ponce over the two lots, in these terms: 29

"WHEREFORE, the orders dated October 16, 1983 and December 19, 1983of the respondent court, so far as they deny the confirmation of the sale ofthe lots formerly covered by TCT Nos. 92836 and 92837, are SET ASIDE,and the respondent court is hereby ORDERED to confirm the sale and issue

a writ of possession to the petitioner with respect to the aforesaid lots,subject to the equity of redemption of the respondent Rogelio V. Sarmiento.Without costs."

Given the fact that said appealed orders of the Trial Court had been issued uponmotion for confirmation earlier made by Ponce — which was duly served and heard— the aforecited Decision of the Intermediate Appellate Court can be construed inno wise than as a peremptory command to the Trial Court to confirm the sale asdirected, motu proprio, and without the need of any further motion or other actionon the part of Ponce. The rejection by this Court of Sarmiento's and Limpin's appealin its own Decision of January 30, 1987, which imported nothing less than a totalaffirmance of the Decision of the Appellate Court, should therefore have sufficientlyalerted Sarmiento that confirmation could come at any time after this Court'sDecision became final, with or without any action from Ponce. He cannot, in thecircumstances, claim unfair surprise. He should, upon being notified of this Court'sDecision, have taken steps to redeem the properties in question or, at the veryleast, served the Trial Court and Ponce with notice of his intention to exercise hisequity of redemption. There was certainly time enough to do this — the orderconfirming the foreclosure sale issuing only on June 17, 1987 — had he not occupiedhimself with the fruitless maneuverings to re-litigate the issues already recounted.Indeed, had he made an attempt to redeem, even belatedly but within a reasonableperiod of time after learning of the order of confirmation (the record shows he didlearn of it within three [3] days after its issuance), 30 he might perhaps have giventhe Court some reason to consider his bid on equitable grounds. He did not. He letnine (9) months pass, to repeat, in carrying out improper (and contumacious)stratagems to negate the judgments against him, before making any such move. LLpr

Neither can Sarmiento acceptably claim that Ponce, by moving for a writ ofpossession subject to his (Sarmiento's) equity of redemption, recognized theexistence and enforceability of that prerogative beyond the prescribed cut-off dateof confirmation of the sale. Such an interpretation of the motion is totallyunwarranted, given the fact that said motion was made at a time (June 1, 1987)when there was as yet no order confirming the sale and, since Sarmiento's equity ofredemption then still unquestionably existed, there was hardly occasion or for thatmatter, any reason as far as Ponce was concerned, to provide against its lapsing.Moreover, assuming for the sake of argument that a resolutory period fixed by lawmay be extended by act of the party in whose favor its expiration would operate,that act must bespeak a clear and unequivocal intent to grant such an extension. Nosuch clear grant can be inferred from the terms of Ponce's motion, which can, and infact should be, read as a mere affirmation that there existed at the time an equityof redemption in Sarmiento's favor. LexLib

WHEREFORE, the Court hereby rules that the equity of redemption claimed andinvoked by Rogelio M. Sarmiento over the properties originally covered by TransferCertificates of Title Nos. 92836 and 92837 (now by TCTs Numbered 307100 and307124), Registry of Deeds of Quezon City, subject of this case, lapsed and ceased toexist without having been properly exercised, on June 17, 1987, with the issuance

by the Trial Court of the Order confirming the sheriff's sale (on judicial foreclosure)of said, properties in favor of Guillermo Ponce.

SO ORDERED.

Cruz, Gancayco, Griño-Aquino and Medialdea, JJ., concur.

Footnotes

1. At p. 1; emphasis supplied.

2. 92 Phil. 495.

3. At pp. 7-8; and p. 4, Resolution, May 5, 1988.

4. The petitioners' motion for reconsideration of the judgment was denied with finalityby the Court's Resolution dated April 27, 1987 (Rollo, p. 363), and entry ofjudgment was made on June 1, 1987 (Rollo, p. 364).

5. The writ of possession was issued, more precisely, on June 17, 1987 (Rollo, p.386).

6. "Motion (Ex Abundanti Cautela)," Annex 1 of Sarmiento's Comment dated 17 June1988.

7. Order, March 17, 1988, Annex 2 of same Comment.

8. Annex 3 of Sarmiento Comment.

9. Annex 4, id.

10. Annex 6, id.

11. Annex 7, id.

12. In his Order of April 8, 1988, he declared that Ponce's theory "would rendernugatory and empty the decision of the Appellate Court on this issue" (Annex 8,Comment of June 17, 1988, supra); and in his Order dated July 8, 1988, His Honordenied Ponce's motion for reconsideration dated May 4, 1988.

13. Reply to Comment, Aug. 3, 1988.

14. Drawing attention, too, to Quimson v. PNB, 36 SCRA 265; Villar v. Javier dePaderanga, 97 Phil. 604; Anderson v. Reyes, 54 Phil. 944.

15. Comment, June 17, 1988.

16. Emphasis supplied.

17. Citing Tiglao v. Botones, 90 Phil. 275.

18. Invoking Pascua v. Perez , 10 SCRA 198; Doronila v. Basquez, 72 Phil. 572; deCastro v. Olondriz, 50 Phil. 725; La Urbana v. Belando, 54 Phil. 930.

19. Top Rate International Services v. IAC, et al., 142 SCRA 467, supra.

20. Salazar v. Meneses, 8 SCRA 495; General v. Barrameda, 69 SCRA 182; Gorospev. Santos, 69 SCRA 191; PNB v. CA, 94 SCRA 357.

21. Sec. 3, Rule 68, Rules of Court.

22. Emphasis supplied.

23. SEE Moran, Comments on the Rules, 1970 ed., Vol. 3, p. 273, citing Gonzales v.PNB, 48 Phil. 824, 828; and Martin, Rules of Court, etc., 3rd ed., Vol. 3, p. 289,citing Villar v. Javier de Paderanga, 97 Phil. 64; Piano v. Cayanong, 7 SCRA 397.

24. Emphasis supplied.

25. Anderson v. Reyes , 54 Phil. 944; Grimalt v. Velasquez , 36 Phil. 936; La Urbana v.Belando, 54 Phil. 930; Villar v. Paderanga, 51 O.G. 5162, cited in Moran, op cit., atp. 273.

26. E.g., by second mortgage or subsequent attachment or judgment.

27. The period fixed in Section 2, Rule 68 for the mortgagor himself to redeem.

28. Something which it had earlier refused to do.

29. Rollo, p. 26.

30. Rollo, p. 382.