SPS. YAN VS. SPS. DY, GR NO. 171911 & 171868, 27 JULY 2011

SPS. YAN VS. SPS. DY,

GR NO. 171911 & 171868, 27 JULY 2011

TOPIC/DOCTRINE

The doctrine of indivisibility of mortgage does not apply once the mortgage is extinguished by a complete foreclosure thereof as in the instant case.

FACTS

The subject parcels of land designated as lot 1, 3, 4, 5, 6, 8 including Lot 846 are originally owned by Spouses Tirambulos. They executed a REM over Lots 1,4, 5,6, and 8 in  favour of the Rural Bank of Dumaguete, predecessor of Dumaguete Rural Bank Inc. (DRBI).  Later, Lots 3 and 8446 were also mortaged in favour of the same bank. Subsequently, the Tirambulos sold all & mortgaged lots to spouse Dy without consent and knowledge of DRBI. Tirambulos failed to pay their loans so DRBI foreclosed lots 1, 4, 5, 6, and 8 and sold at public auction. DRBI was the highest bidder. Later, DRBI sold lots 1, 3, and 6 to spouses Yap.

Roughly a month before the one-year redemption period was set to expire, the Dys and the Maxinos attempted to redeem Lots 1, 3 and 6. They tendered the amount of P40,000.00 to DRBI and the Yaps. Spouses Yap refused arguing that one of the characteristics of a mortgage is its indivisibility and that one cannot redeem only some of the lots foreclosed because all the parcels were sold for a single price at the auction sale. Therefore, the Spouses Dy and Maximo went to the Sheriff’s Office to deposit P40,000.00 for the principal plus P10,625.29 for interests and Sheriff’s Commission to effect the redemption. The Spouses Yap were duly notified of this redemption, yet they still refused to recognize the redemption. The RTC ruled in favor of Yaps. CA reversed the RTC’s decision. Hence this petition.

ISSUE

Can a person redeem only several parcels if all the lands were sold for a single price at the foreclosure sale.

RULING

Yes.

The court held that the doctrine of indivisibility of mortgage does not apply once the mortgage is extinguished by a complete foreclosure thereof as in the instant case.

 

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