GR 171201; (June, 2010) (Digest)
G.R. No. 171201 ; June 18, 2010
SPOUSES BENEDICT and MARICEL DY TECKLO, Petitioners, vs. RURAL BANK OF PAMPLONA, INC. represented by its President/Manager, JUAN LAS, Respondent.
FACTS
Spouses Roberto and Maria Antonette Co obtained a ₱100,000 loan from respondent Rural Bank of Pamplona, secured by a real estate mortgage over their property. The mortgage contract contained a stipulation that the property would also secure the mortgagors’ future loans. Pursuant to this, the Co spouses obtained a second ₱150,000 loan from the same bank. The mortgage for the first loan was duly annotated on the title, but the second loan was not separately annotated. Petitioners, spouses Dy Tecklo, later obtained a money judgment against the Co spouses and caused a writ of attachment to be annotated on the same title.
Upon default, the bank extrajudicially foreclosed the mortgage. Notably, in its petition for foreclosure, the bank sought satisfaction only of the first loan, not the second. The bank was the highest bidder at the auction. Petitioners, as successors-in-interest, sought to redeem the property. They tendered a redemption price based on the sheriff’s computation, which included only the bid price, interest, and expenses. The bank objected, insisting the redemption amount must also cover the second loan.
ISSUE
Whether the redemption price should include the second loan which was not included in the bank’s application for extrajudicial foreclosure.
RULING
No, the redemption price does not include the second loan. The Supreme Court ruled that a mortgagee who forecloses a mortgage is bound by the scope and contents of its own application for foreclosure. In this case, the respondent bank deliberately limited its foreclosure petition to the first loan only. Having made that election, it cannot later demand that the redemption price include other debts not stated in the foreclosure application. This is a matter of consistency and fairness, preventing a mortgagee from misleading interested parties about the extent of the obligation being enforced.
Furthermore, while the mortgage contract included a future advance clause, the second loan was not annotated on the title. As petitioners were attaching creditors and subsequent redemptioners, they are considered third parties who had no constructive notice of the unregistered second loan. The registration of the mortgage only provided notice of the security for the first loan. Therefore, petitioners correctly redeemed the property based on the obligation actually foreclosed. The Court reinstated the trial court’s computation, ordering petitioners to pay only the deficiency of ₱11,307.18 (representing the difference in interest calculation) plus interest, not the ₱150,000 second loan.