G.R. No. 27180 , September 24, 1927
TEODORO DE CASTRO, JR., plaintiff-appellant, vs. MARINO OLONDRIZ and ALFONSO ESCUDERO, defendants-appellees.

FACTS

Teodoro de Castro, Jr., the legitimate son and heir of the deceased mortgagor Teodoro de Castro Marcial, filed a complaint. He alleged that after a foreclosure sale where the Philippine National Bank (PNB) purchased the mortgaged properties, PNB sold its rights to defendant Marino Olondriz. The deed of sale to Olondriz expressly bound him to respect the mortgagor’s right of redemption under Section 32 of Act No. 2747 (as amended by Act No. 2938 ). Subsequently, the plaintiff redeemed the properties directly from PNB by paying the redemption price. PNB then executed a deed of sale in favor of the plaintiff, canceling its prior sale to Olondriz. Despite demands, the defendants refused to deliver possession of the properties to the plaintiff. The defendants filed a general demurrer, arguing the complaint failed to state a cause of action. The trial court sustained the demurrer and dismissed the complaint, holding that the statutory right of redemption granted to the “mortgagor” was personal and did not survive to the mortgagor’s heirs.

ISSUE

Whether the right of redemption granted to a mortgagor under Section 32 of Act No. 2747 (the charter of the Philippine National Bank), as amended by Act No. 2938 , is transmissible to the mortgagor’s heirs upon the mortgagor’s death.

RULING

YES. The Supreme Court reversed the trial court’s order sustaining the demurrer and dismissing the complaint. The Court held that the statutory right of redemption in favor of the mortgagor under the PNB charter is transmissible to the mortgagor’s heirs.

The Court rejected a narrow, literal interpretation that would limit the right solely to the living mortgagor. It emphasized the need to ascertain and give effect to the legislative intent. The purpose of the redemption provision was to favor and extend the right of redemption for agricultural loans secured by mortgages to the PNB. To hold that the right dies with the mortgagor would lead to an absurd and unjust result, effectively extinguishing the right if the mortgagor died before the foreclosure sale. The word “mortgagor” in the statute should be construed to include the estate of the deceased mortgagor or his heirs. The right to redeem can be exercised by the estate’s administrator or, failing that, by the legal heirs acting on behalf of the deceased mortgagor. Consequently, the plaintiff, as an heir, had the legal right to redeem the properties. The case was remanded to the trial court for further proceedings.