G.R. No. 195540 ; March 13, 2013
Goldenway Merchandising Corporation, Petitioner, vs. Equitable PCI Bank, Respondent.

FACTS

Petitioner Goldenway Merchandising Corporation executed a Real Estate Mortgage in 1985 in favor of respondent Equitable PCI Bank to secure a loan. The mortgage was extrajudicially foreclosed in December 2000, and the properties were sold to the respondent as the highest bidder. The Certificate of Sale was registered on February 16, 2001. In March 2001, petitioner attempted to redeem the properties by tendering a check, but respondent refused, stating redemption was no longer possible as title had already been consolidated in its name.
Petitioner filed a complaint for specific performance, arguing that the one-year redemption period under Act No. 3135 , not the shorter period for juridical entities under Section 47 of the General Banking Law ( R.A. No. 8791 ), should govern. It contended that applying the new law to the 1985 mortgage would impair its vested contractual right to a one-year redemption period. The trial court and the Court of Appeals dismissed the complaint, ruling the foreclosure was governed by R.A. No. 8791 .

ISSUE

Whether Section 47 of R.A. No. 8791 , providing a shortened redemption period for juridical persons, applies to a real estate mortgage executed in 1985 but foreclosed after the law’s effectivity.

RULING

Yes. The Supreme Court affirmed the lower courts’ decisions. The legal logic is anchored on the distinction between substantive and procedural laws, and the nature of the right of redemption. The right of redemption is not a vested right arising from the contract’s execution but is a statutory privilege contingent upon the law in force at the time of foreclosure. Act No. 3135 , which petitioner invokes, is a procedural law governing the foreclosure process. As a rule, statutes are presumed to be prospective, but procedural laws may be applied to pending actions.
The foreclosure sale occurred in December 2000, after R.A. No. 8791 took effect in June 2000. Consequently, the redemption period applicable is the one provided by the law existing at the time of the foreclosure sale. Section 47 of R.A. No. 8791 , which mandates a redemption period of only until the registration of the certificate of sale for juridical persons, therefore governs. The registration occurred on February 16, 2001, and petitioner’s attempt to redeem in March 2001 was indisputably late. The application of the new law does not constitute an impairment of contracts, as the alteration pertains to a procedural remedy, not a substantive contractual obligation. The change was a valid exercise of police power to address economic concerns by facilitating the flow of capital.