Nine months ago, my land was foreclosed and auctioned off after I failed to pay my outstanding loan. I wanted to recover my property so I raised the money to pay my outstanding obligation, but the buyer refuses to accept my payment. May I know my rights under the circumstances?
Based on your statement, you wish to redeem your foreclosed real property from the buyer. The right of redemption is a right granted by law to the debtor, his successor-in-interest, any judicial creditor of said debtor or any person having a subsequent lien on the property, to redeem or buy back the property within a period of one (1) year from the date of the sale (Sec. 6, Republic Act 3135 as amended by RA 4118). In a long line of cases, the Supreme Court has declared that this one-year period starts from the date of registration of the sale. The right affords the mortgagor to recover the property he or she lost through foreclosure. The right of redemption, however, does not exist in all cases of foreclosure.
There are two types of foreclosure in our country, to wit: judicial and extra-judicial foreclosure. Judicial foreclosure, which is detailed under Rule 68 of the Rules of Court, is a special civil action or suit filed in court by the mortgagee-creditor against the mortgagor-debtor or any other persons claiming subordinate interest in the property intended to secure performance of the principal obligation by directly going after the mortgaged property. On the other hand, extra-judicial foreclosure is a remedy provided under RA 3135 initiated by merely filing a petition with the executive judge, through the clerk of court, also the ex-officio sheriff (A.M. No. 99-10-05-0, August 7, 2001).
In general, the right of redemption exists only in extra-judicial foreclosure of mortgage. In judicial foreclosure, the mortgagor-debtor is only granted what is called “equity of redemption.” This right merely entitles the mortgagor-debtor to pay the secured debt within the 90-day period after the judgment becomes final, or even after the foreclosure sale but prior to its confirmation (Huerta Alba Resort, Inc. vs. Court of Appeals, 339 SCRA 534). An exception to the latter rule is found in the General Banking Act, which provides that in case the mortgagee is a bank, the mortgagor-debtor is given the right to redeem the property judicially foreclosed within one year after the sale of the real property (Sec. 47, RA 8791). Thus, there is right of redemption in case of judicial foreclosure if the mortgagee is a bank.
Applying the foregoing to your case, it is necessary to determine the mode of foreclosure availed of by your creditor. If the foreclosure was extra-judicially made, you have the right to redeem the real property within one year from the registration of the sale of the property. On the other hand, if the foreclosure was judicially made, then your right would depend on whether the mortgagee is a bank. If the mortgagee is a bank, you can redeem the property within one year from the registration of the sale. If not, you only have equity of redemption or the right to pay the debt before the confirmation of the sale.
Note, however, that the amount you need to pay to redeem the property will not be equal to your unpaid obligation. In extra-judicial foreclosure, you may redeem the property by paying the purchase price paid by the buyer and any assessments or taxes that the buyer may have paid on the property after the purchase, with interest of one percent per month in accordance with Sec. 30, Rule 39 of the Rules of Court (PNB vs. Court of Appeals, 140 SCRA 360). In case of judicial foreclosure by a bank, you may redeem the property by paying the amount due under the mortgage deed, with interest at the rate specified in the mortgage, and all the costs and expenses incurred by the bank or institution from the sale and custody of said property less the income derived therefrom (Sec. 47, RA 8791).
We hope you find our opinion informative and useful. Please bear in mind that this opinion is based on the facts you narrated and our appreciation of the same. Our opinion may vary should actual circumstances change.
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