G.R. No. 101083
METROPOLITAN BANK AND TRUST COMPANY, petitioner, vs. HON. COURT OF APPEALS AND SPOUSES FORTUNATO AND VIRGINIA VITAL, respondents.

July 8, 1996

FACTS

Spouses Fortunato and Virginia Vital obtained a loan from Metropolitan Bank and Trust Company (Metrobank) secured by a real estate mortgage over their property. They defaulted. Metrobank extrajudicially foreclosed the mortgage, and the property was sold at a public auction where Metrobank was the highest bidder. A Certificate of Sale was issued and registered. Before the expiration of the one-year redemption period, the Vital spouses offered to redeem the property by tendering payment to Metrobank. Metrobank refused the tender, claiming the amount was insufficient as it did not include accrued interest and other charges. The Vital spouses consigned the redemption money with the court. The trial court ordered Metrobank to accept the payment and execute a deed of redemption. The Court of Appeals affirmed. Metrobank appealed, arguing that the redemption price should include interest and other charges.

ISSUE

Whether the redemption price in an extrajudicial foreclosure of a real estate mortgage under Act No. 3135 includes interest, penalties, and other charges beyond the purchase price, registration fees, and taxes.

RULING

No. The Supreme Court affirmed the decision of the Court of Appeals. The redemption price is limited to the amount paid by the purchaser at the foreclosure sale, with interest thereon at the rate of one percent per month, plus any assessments or taxes paid by the purchaser after the purchase, with interest on such last-named amounts at the same rate. The law ( Act No. 3135 , as amended) does not include unpaid interest, penalties, and other charges accruing after the foreclosure sale as part of the redemption price. The mortgagor’s right of redemption is a statutory privilege, and the terms for its exercise are strictly construed. Since the statute specifies the components of the redemption price, no additional amounts can be imposed. The tender and consignation made by the Vital spouses, covering the bid price plus the required interest and taxes, were valid and effected the redemption. Metrobank was ordered to accept the payment and execute the corresponding deed of redemption.