G.R. No. 101083
METROPOLITAN BANK AND TRUST COMPANY, petitioner, vs. HON. COURT OF APPEALS AND SPOUSES FORTUNATO and VIRGINIA VENERACION, respondents.

July 13, 1994

FACTS

Spouses Fortunato and Virginia Veneracion obtained a loan from Metropolitan Bank and Trust Company (Metrobank) secured by a real estate mortgage over their property. They defaulted. Metrobank extrajudicially foreclosed the mortgage, and the property was sold at a public auction where Metrobank was the highest bidder. A certificate of sale was issued and registered. Before the expiration of the one-year redemption period, the Veneracions offered to redeem the property by tendering payment to Metrobank. Metrobank refused the tender, claiming the redemption price was insufficient as it did not include accrued interest and other charges. The Veneracions consigned the amount with the trial court and filed an action for consignation and to compel Metrobank to accept redemption. The trial court ruled in favor of the Veneracions, ordering Metrobank to accept the redemption. The Court of Appeals affirmed. Metrobank appealed, arguing that the redemption price should include interest and other charges.

ISSUE

Whether the redemption price in an extrajudicial foreclosure of a real estate mortgage under Act No. 3135 includes interest, penalties, and other charges accruing after the foreclosure sale and during the redemption period.

RULING

No. The Supreme Court affirmed the decision of the Court of Appeals. The redemption price under Act No. 3135 , as amended, is fixed by Section 6 of the Act and Section 30 of Rule 39 of the Rules of Court (now Section 28, Rule 39). It consists of: (1) the purchase price at the foreclosure sale, (2) interest thereon at the rate of one percent per month up to the time of redemption, (3) any assessments or taxes paid by the purchaser, and (4) any necessary payments for prior liens. The law does not include interest, penalties, and other charges that accrued on the original loan obligation after the foreclosure sale. The right of redemption is purely statutory, and the redemptioner need only pay the amount specified by the governing statute. To require payment of post-foreclosure interest and charges on the original loan would impose a condition not authorized by law and would effectively nullify the right of redemption. Therefore, the Veneracions validly exercised their right of redemption by tendering the amount computed in accordance with the statutory formula.