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25 - Paray & Espleta V Rodriguez - Peralta
25 - Paray & Espleta V Rodriguez - Peralta
25 - Paray & Espleta V Rodriguez - Peralta
RODRIGUEZ
Facts:
Respondents were the owners, in their respective personal capacities, of shares
of stocks in a corporation known as Quirino-Leonor-Rodriguez Realty Inc. They
secured by way of pledge of some of their shares of stock to petitioners the
payment of certain loan obligations.
When the petitioners attempted to foreclose the pledges on account of
respondents failure to pay their loans, the latter filed complaints with the RTC
seeking the declaration of nullity of the pledge agreements, among others.
The RTC ruled in favor of petitioners and allowed the foreclosure and sale at
public auction of the various pledges. This decision eventually attained finality.
Respondents then received Notices of Sale, which indicated that the pledged
shares were to be sold at public auction. Before the scheduled sale, they
consigned amounts with the RTC claiming that they had attempted to tender
these amounts to the petitioners, but they refused to accept. However, the public
auction still took place as scheduled, where petitioner Espeleta successfully won
the bid for the pledged shares.
Respondents filed a complaint seeking the declaration of the nullity of the
auction, arguing that their tender of payment and consignation extinguished their
loan obligations and discharged the pledge contracts. Petitioners countered that
such were made long after their obligations had fallen due.
RTC dismissed the complaint, agreeing with the petitioners position. In addition,
it held that the proper remedy was for the petitioners to have participated in the
auction sale. The CA reversed on appeal, ruling that the consignation
extinguished the loan obligation. The basis for such ruling was an imputed policy
of the law that favored redemption and mandated a liberal construction of
redemption laws. Also, the CA held that the shares of stock should have beem
sold individually since they belonged to different pledgers.
Hence, the instant petition.
Ruling:
Petition granted.