GOLDENWAY MERCHANDISING CORP., VS. EQUITABLE PCI BANK, GR. NO. 195540, 13 MARCH

GOLDENWAY MERCHANDISING CORP., VS. EQUITABLE PCI BANK,

GR. NO. 195540, 13 MARCH

TOPIC/DOCTRINE

The right of redemption being statutory, it must be exercised in the manner prescribed by the statute, and within the prescribed time limit, to make it effective.

FACTS

On November 29, 1985, Goldenway Merchandising Corporation executed a Real Estate Mortgage in favor of Equitable PCI Bank over three parcels of land. The mortgage secured the Two Million Pesos (P2,000,000.00) loan granted to petitioner. Petitioner failed to settle its loan obligation, so respondent extrajudicially foreclosed the mortgage on December 13, 2000. Accordingly, a Certificate of Sale was issued to respondent on January 26, 2001. On February 16, 2001, the Certificate of Sale was registered.

In a letter dated March 8, 2001, petitioner’s counsel offered to redeem the foreclosed properties by tendering a check. However, petitioner was told that such redemption is no longer possible because the certificate of sale had already been registered and consolidated in favor of respondent March 9, 2001.

Petitioner filed a complaint for specific performance and damages contending that the 1-year period of redemption under Act 3135 should apply, and not the shorter redemption period under RA 8791 as applying RA 8791 would result in the impairment of obligations of contracts and would violate the equal protection clause under the constitution.

ISSUE

Whether or not the redemption period should be the 1-year period provided under Act 3135, and not the shorter period under RA 8791 as the parties expressly agreed that foreclosure would be in accordance with Act 3135.

RULING

The shorter period applies.

The court held that amending Act no. 3135 is Sec 47 of RA 8791, which stated an exception made in the case of juridical persons who are allowed to exercise the right of redemption only “until, but not after, the registration of the certificate of foreclosure sale” and in no case more than three (3) months after a foreclosure, whichever comes first. The legislature clearly intended to shorten the period of redemption for juridical persons whose properties were foreclosed and sold in accordance with the provisions of Act No. 3135. The right of redemption being statutory, it must be exercised in the manner prescribed by the statute, and within the prescribed time limit, to make it effective. Furthermore, the freedom to contract is not absolute; all contracts and all rights are subject to the police power of the State and not only may regulations which affect them be established by the State, but all such regulations must be subject to change from time to time, as the general the well-being of the community may require, or as the circumstances may change, or as experience may demonstrate the necessity.

 

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