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SPS. MAXIMO LANDRITO v. CA

FACTS:

The Landritos obtained a loan from Carmencita San Diego and executed a deed of real estate mortgage to secure it. An "Amendment of Real Estate Mortgage" was later made which stated the terms of the loan and the consequences of default. The Landritos failed to settle their financial obligation and San Diego filed a petition for extrajudicial foreclosure of the mortgage. The mortgaged property was sold through a public auction and San Diego emerged as the highest bidder. The Landritos did not redeem the property within the redemption period, leading to the consolidation of title in San Diego's name. The Landritos filed a complaint to annul the extrajudicial foreclosure and auction sale, alleging non-compliance with notice and publication requirements, an increase in the mortgage amount, and premature application for consolidation of title. The trial court dismissed the complaint on the grounds of failure to state a cause of action and laches. The Court of Appeals affirmed the trial court's decision. The Landritos then filed a petition for review before the Supreme Court.

ISSUES:

  1. Whether the court erred in resolving the admissibility and probative value of the statement of account attached to the complaint when it was not yet presented in evidence.

  2. Whether the Court of Appeals erred in affirming the dismissal order on the ground of laches.

  3. Whether the complaint for annulment of extrajudicial foreclosure and auction sale filed by the petitioners was instituted beyond the 1-year redemption period.

  4. Whether the handwritten note indicating an alleged extension of time for redemption granted by Mrs. San Diego's husband is valid.

  5. Whether petitioners made a valid offer to redeem the property.

RULING:

  1. The court did not err in resolving the admissibility and probative value of the statement of account attached to the complaint when it was not yet presented in evidence. At the time the dismissal order was issued, the case was still in the period of pleadings, and the court has the authority to evaluate the allegations and evidence presented in the pleadings.

  2. The Court of Appeals erred in affirming the dismissal order on the ground of laches. The failure to redeem the foreclosed parcel of land was not due to laches on the part of the petitioners but was caused by the illegal increase in the original obligation and the bloating of the redemption price. Thus, the dismissal order was denied.

  3. Yes, the complaint for annulment of extrajudicial foreclosure and auction sale was instituted beyond the 1-year redemption period. The complaint was filed eleven days after the redemption period had already expired.

  4. No, the handwritten note is not valid because there was no showing that petitioners agreed to pay the redemption price on or before the alleged deadline set by Mrs. San Diego's husband.

  5. No, petitioners did not make a valid offer to redeem the property. They never made an offer to redeem within the one-year redemption period together with a tender of the same amount.

PRINCIPLES:

  • In real estate mortgage, when the principal obligation is not paid when due, the mortgagee has the right to foreclose on the mortgage and seize and sell the mortgaged property to apply the proceeds to the payment of the obligation.

  • A mortgage may only be foreclosed for the amount mentioned in the mortgage document.

  • Laches is the failure or neglect for an unreasonable or unexplained length of time to do what could have been done earlier, giving rise to the presumption of abandonment or declination of the right or privilege.

  • The redemption period for a foreclosed property is one year from the date of the sale, which is counted from the registration of the sheriff's certificate of sale.

  • The period of redemption is a condition precedent provided by law to restrict the right of the person exercising redemption. If the person offers to redeem the property within the period fixed, they are considered to have complied with the condition precedent prescribed by law and may bring an action to enforce redemption. If the period is allowed to lapse before the right of redemption is exercised, the action to enforce redemption will not prosper, even if brought within the ordinary prescriptive period.

  • 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.

  • An extension of the redemption period, followed by the debtor's commitment to pay the redemption price at a fixed date, will convert the concept of legal redemption into one of conventional redemption.