G.R. No. 99308 November 13, 1992
STATE INVESTMENT HOUSE, INC., petitioner, vs. COURT OF APPEALS and SABINA VDA. DE CUENCA, respondents.

FACTS

On February 13, 1979, respondent Sabina Vda. de Cuenca obtained a loan from petitioner State Investment House, Inc. (SIHI) for P160,000.00, secured by a mortgage on her property in Tandang Sora, Quezon City. On November 15, 1979, she obtained another loan of P500,000.00, secured by a real estate mortgage on a different property along Timog, Quezon City, with the unpaid balance of the first loan deducted from its proceeds. Due to Cuenca’s failure to pay upon maturity, her account was restructured and rolled over twelve times. SIHI claimed that by November 29, 1982, her obligations totaled P621,483.57. After written demands for payment went unheeded, SIHI initiated extrajudicial foreclosure. The auction sale, initially set for March 22, 1983, was deferred at Cuenca’s request but was eventually held on August 8, 1983, with SIHI as the highest bidder for P742,181.55. The certificate of sale was registered on August 24, 1983. Within the one-year redemption period, Cuenca sent letters to SIHI requesting a statement of account and offering to redeem the property, first for P500,000.00 payable in installments, and later for P426,874.72 as a lump sum. SIHI rejected these offers, insisting on the full outstanding obligation of P870,739.36. On August 24, 1984, Cuenca filed a complaint seeking annulment of the foreclosure sale, alleging she had not defaulted, and alternatively praying for the court to fix the redemption price. After the redemption period expired, a new title was issued in SIHI’s name. The Regional Trial Court declared the foreclosure sale and SIHI’s title null and void, finding that Cuenca had overpaid her loan. The Court of Appeals, in its Original Decision, affirmed the nullity of the sale but corrected the trial court’s computations. Upon motions for reconsideration, the Court of Appeals promulgated an Amended Decision, finding Cuenca still indebted to SIHI in the amount of P279,963.42 as of the foreclosure sale date, but still declaring the foreclosure sale null and void and ordering the reinstatement of Cuenca’s title. SIHI filed the instant petition, assailing the portions of the appellate court’s decisions that voided the foreclosure sale and SIHI’s title.

ISSUE

Whether the extrajudicial foreclosure sale of the mortgaged property and the consequent transfer of title to SIHI are valid.

RULING

Yes. The Supreme Court reversed the appealed portions of the Court of Appeals’ Original and Amended Decisions. The Court held that the extrajudicial foreclosure of the mortgage on August 8, 1983, was valid and effective. It upheld and confirmed the cancellation of Transfer Certificate of Title No. 126578 in the name of Sabina Vda. de Cuenca and its replacement by Transfer Certificate of Title No. 324372 in the name of State Investment House, Inc. The Court found that Cuenca’s offers to redeem the property were not valid tenders of payment. Her first offer was conditional and payable in installments, which was not a valid mode of redemption requiring full payment. Her second offer, while for a lump sum, was based on her own unilateral computation of the redemption price, which was substantially lower than the amount claimed by SIHI. The Court ruled that a redemptioner must make a valid tender of the full redemption price as a condition precedent to demanding a statement of account or filing a suit for redemption. Since Cuenca failed to make a valid tender, she did not effectively exercise her right of redemption. Consequently, the foreclosure sale stood valid, and SIHI’s title acquired after the expiration of the redemption period was upheld.