G.R. No. 168088; April 3, 2007
SAN FERNANDO RURAL BANK, INC., Petitioner vs. PAMPANGA OMNIBUS DEVELOPMENT CORPORATION and DOMINIC G. AQUINO, Respondents.

FACTS

Pampanga Omnibus Development Corporation (PODC) obtained loans from San Fernando Rural Bank, secured by a real estate mortgage. Upon PODC’s default, the bank extrajudicially foreclosed the property and was the winning bidder at the auction sale on April 23, 2001. The Certificate of Sale was registered on June 7, 2001, starting the one-year redemption period. Petitioner did not seek a writ of possession during this period. Before the period expired, PODC, through its President Eliza Garbes (who also had authority from the bank’s board), executed a Deed of Assignment on May 11, 2002, assigning its right of redemption to respondent Dominic Aquino.
Aquino attempted to redeem the property, but the bank rejected his tender, demanding a significantly higher amount that included a separate loan of the Garbes spouses. Aquino instead tendered payment to the Ex-Officio Sheriff based on her computation under relevant banking laws. The Sheriff issued a Certificate of Redemption on June 7, 2002. The bank, however, executed an Affidavit of Consolidation on June 10, 2002, alleging no redemption occurred, and filed it with the Register of Deeds. The bank subsequently filed a petition for a writ of possession, which the RTC granted. The CA reversed the RTC, prompting the bank’s appeal to the Supreme Court.

ISSUE

Whether the redemption by respondent Aquino, through a Deed of Assignment from the mortgagor PODC, was valid, thereby negating the bank’s right to consolidate ownership and obtain a writ of possession.

RULING

The Supreme Court DENIED the petition and AFFIRMED the CA, holding the redemption was valid. The legal logic centers on the nature of the right of redemption. During the statutory redemption period, the mortgagor retains an equitable right of redemption, which is a substantive privilege that can be validly assigned or transferred to another party. The Deed of Assignment executed by PODC President Eliza Garbes in favor of Aquino was executed within the redemption period and was binding. The Court found that Garbes acted with the bank’s knowledge and implicit consent, as she was also authorized by a resolution of the bank’s board of directors. Consequently, Aquino validly stepped into the shoes of PODC.
The tender of the redemption price to the Ex-Officio Sheriff, as the officer who conducted the sale, constituted a valid redemption that effectively cut off the bank’s rights as auction purchaser. The Sheriff’s issuance of a Certificate of Redemption was proper. Therefore, the subsequent Affidavit of Consolidation executed by the bank was invalid, as consolidation of ownership only becomes proper if no redemption is made within the period. Since a valid redemption occurred, the bank was not entitled to consolidate title or to a writ of possession. The writ of possession is a consequential remedy to consolidation of ownership; with no right to consolidate, the right to possess fails.