GR 53466; (November, 1980) (Digest)
G.R. No. L-53466 November 10, 1980
RURAL BANK OF OROQUIETA (MIS. OCC.), INC., petitioner, vs. COURT OF APPEALS, Eighth Division; JUDGE MELECIO A. GENATO, Court of First Instance of Misamis Occidental, Oroquieta Branch I; PROCOPIO SERRANO and MARIA CUEME, respondents.
FACTS
The Rural Bank of Oroquieta foreclosed a mortgage on a parcel of land owned by spouses Procopio Serrano and Maria Cueme. The trial court rendered a judgment of foreclosure, which became final. The spouses failed to pay, leading to a sheriff’s auction where the bank was the sole bidder. After the one-year redemption period under the General Banking Law expired without redemption, the sheriff issued a final certificate of sale. The bank subsequently sold the property to a third party, Eufemia Mejos. Later, the trial court, upon motion by the mortgagor-spouses, issued an order directing the issuance of a writ of possession but also ordering the bank to accept payment for redemption of the loan.
The bank moved for reconsideration, informing the court that the property had already been sold to Mejos and that a separate case (Civil Case No. 3265) for annulment of the foreclosure sale had been filed by the Serrano spouses. The trial court denied the motion. The bank appealed, but the trial court dismissed the appeal as interlocutory. The Court of Appeals sustained this dismissal. The bank then elevated the case to the Supreme Court.
ISSUE
Whether the trial court and the Court of Appeals erred in not giving due course to the bank’s appeal from the order allowing redemption.
RULING
The Supreme Court held that the trial court and the Court of Appeals correctly refused to give due course to the appeal, primarily because the order was interlocutory. More importantly, the Court found the trial court’s order allowing redemption to be premature and issued without considering supervening complexities. The property was no longer owned by the bank but by Eufemia Mejos, a third-party purchaser who was not a party to the foreclosure case and was entitled to be heard. The Court emphasized that the foreclosure sale had not yet been judicially confirmed. Prior to confirmation, the mortgagor retains an equity of redemption, and the court may grant an opportunity to pay the debt and prevent confirmation. However, this right must be balanced against the rights of a subsequent purchaser.
The Supreme Court set aside the trial court’s order allowing redemption. It directed the consolidation of the foreclosure case (Civil Case No. 2988) with the separate annulment case (Civil Case No. 3265) filed by the Serrano spouses. The consolidated proceedings would allow the trial court to properly adjudicate the conflicting claims of the mortgagors, the bank, and the third-party purchaser, following the guidelines established in jurisprudence regarding the equity of redemption before confirmation of a foreclosure sale.