GR 123817; (December, 1999) (Digest)
G.R. No. 123817 December 17, 1999
Ibaan Rural Bank Inc., petitioner, vs. The Court of Appeals and Mr. and Mrs. Ramon Tarnate, respondents.
FACTS
Spouses Cesar and Leonila Reyes mortgaged three lots to Ibaan Rural Bank. With the bank’s knowledge and consent, the Reyes spouses sold these lots to spouses Ramon Tarnate, who assumed the mortgage. The Tarnates defaulted, prompting the bank to extrajudicially foreclose the mortgage. The Provincial Sheriff conducted a public auction, awarding the lots to the bank. The Certificate of Sale, registered on October 16, 1979, stated a two-year redemption period. No notice of foreclosure was given to the Tarnates.
On September 23, 1981, the Tarnates offered to redeem the properties by tendering the redemption price. The bank refused, asserting it had consolidated title and that the one-year statutory redemption period under Act No. 3135 had already lapsed from the sale’s registration. The Tarnates filed a complaint to compel redemption, arguing the foreclosure was void for lack of notice and that their tender was within the two-year period indicated in the Certificate of Sale.
ISSUE
(1) Was the applicable redemption period one year under Act No. 3135 or two years as stated in the Certificate of Sale? (2) Was the award of attorney’s fees to the Tarnates proper?
RULING
The Supreme Court ruled the two-year period applied, and the Tarnates validly exercised their right of redemption. The bank, upon receiving the Certificate of Sale, had actual knowledge of its two-year redemption clause. By remaining silent and not objecting for two years, the bank misled the Tarnates into believing they had that extended period. The bank was thus estopped from asserting the shorter one-year period. The Court emphasized that redemption laws are liberally construed in favor of the original owner to recover property. Furthermore, as a banking institution vested with public interest, the bank was expected to exercise a high degree of diligence in reviewing the certificate and rectifying any error promptly. On the second issue, the award of attorney’s fees was deleted. The general rule is that attorney’s fees are not recoverable merely because a party was compelled to litigate. The Court of Appeals’ decision was affirmed with the modification deleting the attorney’s fees.