FIRSTDIVISION

SPOUSESFRANCISCOD.YAPand G.R.No.171868
WHELMAS.YAP,
Petitioners,


versus


SPOUSES ZOSIMO DY, SR. and
NATIVIDAD CHIU DY, SPOUSES
MARCELINO MAXINO and
REMEDIOS L. MAXINO,
PROVINCIALSHERIFFOFNEGROS
ORIENTAL and DUMAGUETE
RURALBANK,INC.,Respondents.

xx
G.R.No.171991
DUMAGUETERURALBANK,INC.
(DRBI) herein represented by Mr. Present:
WilliamD.S.Dichoso,
Petitioners, CORONA,C.J.,
Chairperson,
LEONARDODECASTRO,
BERSAMIN,
versus DELCASTILLO,and
VILLARAMA,JR.,JJ.


SPOUSES ZOSIMO DY, SR. and
NATIVIDAD CHIU DY, SPOUSES Promulgated:
MARCELINO MAXINO and
REMEDIOS MAXINO, and July27,2011
SPOUSESFRANCISCOD.YAPand
WHELMAS.YAP,
Respondents.
xx

DECISION
VILLARAMA,JR.,J.:

May persons to whom several mortgaged lands were transferred without the knowledge
andconsentofthecreditorredeemonlyseveralparcelsifallthelandsweresoldtogetherfora
singlepriceattheforeclosuresale?Thisistheprincipalissuepresentedtousforresolutionin
[1]
thesetwopetitionsforreviewoncertiorariassailingtheMay17,2005Decision andMarch
[2]
15,2006Resolution oftheCourtofAppeals(CA)inCAG.R.C.V.No.57205.

Theantecedentsareasfollows:

The spouses Tomas Tirambulo and Salvacion Estorco (Tirambulos) are the registered
ownersofseveralparcelsoflandlocatedinAyungon,NegrosOriental,registeredunderTransfer
CertificateofTitle(TCT)Nos.T14794,T14777,T14780,T14781,T14783andT20301of
theRegistryofDeedsofNegrosOriental,andmoreparticularlydesignatedasfollows:

(1)TCTNo.T14777 Lot1ofPlanPcs11728 61,371sq.m.

(2)TCTNo.T20301 Lot3ofPlanPsu124376 17,373sq.m.
(3)TCTNo.T14780 Lot4ofPlanPcs11728 27,875sq.m.
(4)TCTNo.T14794 Lot5ofPlanPsu124376 2,900sq.m.
(5)TCTNo.T14781 Lot6ofPlanPcs11728 16,087sq.m.
(6)TCTNo.T14783 Lot8ofPlanPcs11728 39,888sq.m

TheTirambuloslikewiseownaparceloflanddenominatedasLot 846, covered by Tax

DeclarationNo.08109.

[3]
OnDecember3,1976,theTirambulosexecutedaRealEstateMortgage overLots1,4,
5, 6 and 8 in favor of the Rural Bank of Dumaguete, Inc., predecessor of Dumaguete Rural
Bank, Inc. (DRBI), to secure a P105,000 loan extended by the latter to them. Later, the
[4]
Tirambulos obtained a second loan for P28,000 and also executed a Real Estate Mortgage
overLots3and846infavorofthesamebankonAugust3,1978.

Subsequently,onOctober27,1979, the Tirambulos sold all seven mortgaged lots to the

spousesZosimoDy,Sr.andNatividadChiu(theDys)andthespousesMarcelinoC.Maxinoand
RemediosLasola(theMaxinos)withouttheconsentandknowledgeofDRBI.Thissale,which
 [5]
was embodied in a Deed of Absolute Sale, was followed by a default on the part of the
TirambulostopaytheirloanstoDRBI.Thus,DRBIextrajudiciallyforeclosedtheDecember3,
1976mortgageandhadLots1,4,5,6and8soldatpublicauctiononMarch31,1982.

At the auction sale, DRBI was proclaimed the highest bidder and bought said lots for
[6]
P216,040.93. The Sheriffs Certificate of Sale stated that the sale is subject to the rights of
redemptionofthemortgagor(s)oranyotherpersonsauthorizedbylawsotodo,withinaperiod
[7]
ofone(1)yearfromregistrationhereof. Thecertificateofsale,however,wasnotregistered
untilalmostayearlater,oronJune24,1983.

OnJuly6,1983,ortwelve(12)daysafterthesalewasregistered,DRBIsoldLots1,3and
6 to the spouses Francisco D. Yap andWhelma D. Yap (the Yaps) under a Deed of Sale with
[8]
AgreementtoMortgage. Itisimportanttonote,however,thatLot3wasnotamongthefive
propertiesforeclosedandboughtbyDRBIatpublicauction.

OnAugust8,1983,orwellwithintheredemptionperiod,theYapsfiledaMotionforWrit
[9]
ofPossession alleging that they have acquired all the rights and interests of DRBI over the
foreclosedpropertiesandareentitledtoimmediatepossessionofthesamebecausetheoneyear
redemptionperiodhaslapsedwithoutanyredemptionbeingmade.Saidmotion,however,was
[10]
ordered withdrawn on August 22, 1983 upon motion of the Yaps, who gave no reason
[11]
therefor. Threedayslater,oronAugust25,1983,theYapsagainfiledaMotionforWritof
[12] [13]
Possession. Thistimethemotionwasgranted,andaWritofPossession overLots1,3
and6wasissuedinfavoroftheYapsonSeptember5,1983.Theywereplacedinpossessionof
Lots1,3and6sevendayslater.

On May 22, 1984, roughly a month before the oneyear redemption period was set to
expire,theDysandtheMaxinosattemptedtoredeemLots1,3and6.Theytenderedtheamount
[14]
of P40,000.00 to DRBI and the Yaps, but both refused, contending that the redemption
should be for the full amount of the winning bid of P216,040.93 plus interest for all the
foreclosedproperties.
 Thus, on May 28, 1984, the Dys and the Maxinos went to the Office of the Sheriff of
NegrosOrientalandpaidP50,625.29(P40,000.00fortheprincipalplusP10,625.29forinterests
[15]
andSheriffsCommission)toeffecttheredemption. NoticingthatLot3wasnotincludedin
theforeclosureproceedings,BenjaminV.Diputado,ClerkofCourtandProvincialSheriff,issued
[16]
aCertificateofRedemption infavoroftheDysandtheMaxinosonlyforLots1and6,and
[17]
statedinsaidcertificatethatLot3isnotincludedintheforeclosureproceedings.Byletter of
evendate,Atty.DiputadoalsodulynotifiedtheYapsoftheredemptionofLots1and6bythe
DysandtheMaxinos,aswellasthenoninclusionofLot3amongtheforeclosedproperties.He
advisedtheYapstopersonallyclaimtheredemptionmoneyorsendarepresentativetodoso.

InalettertotheProvincialSheriffonMay31,1984,theYapsrefusedtotakedeliveryof
theredemptionpricearguingthatoneofthecharacteristicsofamortgageisitsindivisibilityand
thatonecannotredeemonlysomeofthelotsforeclosedbecausealltheparcelsweresoldfora
[18]
singlepriceattheauctionsale.

OnJune1,1984,theProvincialSheriffwrotetheDysandtheMaxinosinformingthemof
theYapsrefusaltotakedeliveryoftheredemptionmoneyandthatinviewofsaiddevelopment,
[19]
thetenderoftheredemptionmoneywasbeingconsideredasaconsignation.

OnJune15,1984,theDysandtheMaxinosfiledCivilCaseNo.8426withtheRegional
TrialCourtofNegrosOrientalforaccounting,injunction,declarationofnullity(withregardto
Lot 3) of the Deed of Sale with Agreement to Mortgage, and damages against the Yaps and
[20]
DRBI.Intheircomplaint, theyprayed

a) That the Deed of Sale With Agreement to Mortgage be declared null and void ab
initio

b)ThatdefendantYap[s]possessionofLotNo.3,TCTNo.T20301basedasitwasona
voidsale,bedeclaredillegalfromtheverybeginning

c)Thatdefendantsbeorderedtorendertoplaintiffsafairaccountingoftheharvestsand
income which defendants made from said Lot No. 3 and, in addition, be ordered to pay to
plaintiffsdamagesforwrongfullydeprivingplaintiffsoftheuseandenjoymentofsaidproperty

d)ThattheredemptionwhichplaintiffsmadeofLotNo.1,TCTNo.14777,andLotNo.
6, TCT No. 14781, through the Provincial Sheriff of Negros Oriental, be declared valid and
bindingonthedefendants,therebyreleasingandfreeingsaidparcelsoflandfromwhateverliens
orclaimsthatsaiddefendantsmighthaveonthem
 e) Thatdefendantsbelikewiseorderedtorendertoplaintiffsfullandfairaccountingof
alltheharvests,fruits,andincomethattheyoreitherofthemmighthavederivedfromsaidtwo
parcelsoflandstartingfromthetimedefendantYapfirsttookpossessionthereofandharvested
thecoconutsinSeptember,1983

f) That, after the accounting herein prayed for, defendants be required to deliver to
plaintiffs the net proceeds of the income from the three parcels of land subject of this case,
togetherwithinterestatthelegalrate

g)Thatforhisactsofmisrepresentationanddeceitinobtainingawritofpossessionover
the three parcels of land subject of this case, and for the highly irregular and anomalous
procedures and maneuvers employed by defendant Yap in securing said writ, as well as for
harvesting the coconuts even after knowing that plaintiffs had already fully redeemed the
propertiesinquestionand,withrespecttoLotNo.3,afterknowingthatthesamewasnotinfact
includedintheforeclosureand,therefore,couldnothavebeenvalidlysoldbythebanktohim,
saiddefendantYapbecondemnedtopayplaintiffsmoraldamagesintheamountofP200,000.00,
pluspunitiveandexemplarydamagesintheamountofP100,000.00

h) ThatforfalsifyingtheSheriffsCertificateofSaleandsellingunlawfullyLotNo.3,
TCT No. T20301, to its codefendant Yap, defendant DRBI be condemned to pay to plaintiffs
actualdamagesintheamountofP50,000.00moraldamagesintheamountofP200,000.00and
punitiveandexemplarydamagesintheamountofP100,000.00

i) That defendants be condemned to pay solidarily to plaintiffs attorneys fees in the

amountofP50,000.00otherlegitimateexpensesoflitigationintheamountofP30,000.00and
thecostsofsuit

j)Thatpendinghearingofthiscase,awritofpreliminaryinjunctionbeissuedenjoining
and restraining the defendants, particularly defendant Yap, from disturbing and interfering the
plaintiffspossessionandotherrightsofownershipoverthelandinquestion

k) That pending hearing of the petition for preliminary injunction, a temporary

restrainingorderbeissuedagainstthedefendants,particularlyagainstdefendantYap,toservethe
samepurposeforwhichthewritofpreliminaryinjunctionishereinprayedforand

l)That,afterhearingofthemaincase,saidpreliminaryinjunctionbemadepermanent.

Furthermore, plaintiffs pray for all other reliefs which may be just and equitable in the
[21]
premises.

Thereafter, on June 19, 1984, the Dys and the Maxinos consigned to the trial court an
additional sum of P83,850.50 plus sheriffs commission fee of P419.25 representing the
remainingbalanceofthepurchasepricethattheYapsstillowedDRBIbyvirtueofthesaleto
[22]
thembytheDRBIofLots1,3and6.

[23]
Meanwhile,byletter datedJune27,1984,theYapstoldDRBIthatnoredemptionhas
beenmadebytheTirambulosortheirsuccessorsininterestandrequestedDRBItoconsolidate
its title over the foreclosed properties by requesting the Provincial Sheriff to execute the final
deed of sale in favor of the bank so that the latter can transfer the titles of the two foreclosed
propertiestothem.

Onthesamedate,theYapsalsowrotetheMaxinosinformingthelatterthatduringthelast
harvestofthelotsboughtfromDRBI,theyexcludedfromtheharvestLot3toshowtheirgood
faith.Also,theytoldtheMaxinosthattheywereformallyturningoverthepossessionofLot3to
the Maxinos, without prejudice to the final determination of the legal implications concerning
Lot3.AstoLots1and6,however,theYapsstatedthattheyintendedtoconsolidateownership
overthemsincetherehasbeennoredemptionascontemplatedbylaw.Includedintheletterwas
aliquidationofthecopraproceedsharvestedfromSeptember7,1983toApril30,1984forLots
[24]
1,3and6.

Later, on July 5, 1984, the Yaps filed Civil Case No. 8439 for consolidation of ownership,
annulment of certificate of redemption, and damages against the Dys, the Maxinos, the
[25]
ProvincialSheriffofNegrosOrientalandDRBI.Intheircomplaint, theYapsprayed

1. That[they]bedeclaredtheexclusiveownersofLotNo.1coveredbyTCTNo.T
14777andLotNo.6coveredbyTCTNo.T14781forfailureonthepartofdefendantsZosimo
Dy,Sr.,andMarcelinoMaxinotoredeemthepropertiesinquestionwithinone(1)yearfromthe
auctionsale.

2.Thatdefendantsbe[declared]solidarilyliabletopaymoraldamagesintheamountof
ONE HUNDRED THOUSAND PESOS (P100,000.00), THIRTY[]FIVE THOUSAND PESOS
(P35,000.00) as attorneys fees and FIFTEEN THOUSAND PESOS (P15,000.00) as exemplary
damages

3.ThattheProvincialSheriffberequiredtoexecutethefinalDeedofSaleinfavorofthe
bankandthebankbeinturnrequiredtotransferthepropertytotheplaintiffsinaccordancewith
theDeedofSalewithMortgage.

4. Thatthecourtgrantsuchotherreliefasmaybedeemedjustandequitableunderthe
[26]
premises.

CivilCaseNos.8426and8439weretriedjointly.

OnOctober24,1985,theYaps,bycounsel,filedamotiontowithdrawfromtheprovincial
[27]
sheriff the redemption money amounting to P50,373.42. Said motion was granted on
October28,1985afteraSpecialPowerofAttorneyexecutedbyFranciscoYapinfavorofhis
brother Valiente Yap authorizing the latter to receive the P50,373.42 redemption money was
[28]
presentedincourt.

[29]
OnFebruary12,1997,thetrialcourtrendereddecision infavoroftheYaps.Thefallo
reads:

WHEREFORE,judgmentisherebyrenderedasfollows:

1. DismissingthecomplaintofDyandMaxinospousesinCivilCaseNo.8426aswell
asthebankandtheYapspousescounterclaimforlackoffactualandlegalbasis

2.InCivilCaseNo.8439:

a) DeclaringtheYapspouses,plaintiffstherein,theexclusiveownersofLotNo.1
covered by TCT No. T14777 and Lot No. 6 covered by TCT No. T14781 for
failure on the part of the Dy and Maxino spouses, defendants therein, to redeem
thepropertiesinquestionwithinone(1)yearfromtheauctionsale.

b) DirectingtheProvincialSheriffofNegrosOrientaltoexecutetheFinalDeedof
SaleinfavorofthebankandthelattertotransferthesubjectpropertiestotheYap
spousesinaccordancewiththeDeedofSaleWithMortgage.

[30]
SOORDERED.

OnMarch7,1997,thetrialcourtamendedtheabovedispositiveportionuponmotionof
DRBI,asfollows:

Wherefore,judgmentisherebyrenderedasfollows:

1. TheCertificateofRedemptionissuedbytheProvincialSheriff(Exh.M)isherebydeclared
nullandvoid

2.TheProvincialSheriffofNegrosOrientalisherebyorderedtoexecuteaFinalDeedofSaleof
the foreclosed properties in favor of the defendant Dumaguete Rural Bank, Inc., subject to the
rightsoftheYapspousesacquiredinaccordancewiththeDeedofSalewithMortgage

3. TheDeedofSaledated[October]27,1979,madebyTirambuloandEstorcoinfavorofthe
DysandMaxinoscoveringalltheseven(7)parcelsoflandinquestion,isherebydeclarednull
andvoid

4. In Civil Case No. 8439, declaring the Yap Spouses, the exclusive owners of Lot No. 1,
coveredbyTCTNo.T14777,andLotNo.6,coveredbyTCTNo.T14781,forfailureonthepart
oftheDyandMaxinoSpouses,toredeemsaidpropertieswithinone(1)yearfromthedateofthe
registrationoftheauctionsale

5.Allotherclaimsandcounterclaimsareherebydismissedforlackofmerit.

[31]
SOORDERED.
 ThetrialcourtheldthattheDysandtheMaxinosfailedtoformallyoffertheirevidence
hence,thecourtcouldnotconsiderthesame.ItalsoupheldtheDeedofSalewithAgreementto
MortgagebetweentheYapsandDRBI,rulingthatitsgenuinenessanddueexecutionhasbeen
admittedbytheDysandtheMaxinosandthatitisnotcontrarytolaw,morals,goodcustoms,
publicpolicyorpublicorder.Thus,ownershipofLots1,3and6wastransferredtotheYaps.

ThetrialcourtfurtherheldthattheDysandtheMaxinosfailedtoexercisetheirrightsof
redemption properly and timely. They merely deposited the amount of P50,625.29 with the
Sheriff,whereastheamountdueonthemortgagedeedisP216,040.93.

Aggrieved by the above ruling, the Dys and the Maxinos elevated the case to the CA.
Theyarguedthatthetrialcourterredin:

1) ... failing to consider plaintiffs evidence [testimonial, including the testimony of the
ProvincialSheriffofNegrosOriental(AttorneyBenjaminV.Diputado)andplaintiffAttorney
MarcelinoC.Maxino]anddocumentary[ExhibitsAthroughTT(admittedunderOrderof3
March1995)]

2)failingtodeclarevoidorannulthepurportedcontractofsalebyDumagueteRuralBank,Inc.
toFranciscoD.YapandWhelmaS.YapofLots1,3,and6,duringtheredemptionperiod[the
purported seller (bank) not being the owner thereof, and Lot 3 not being included in the
foreclosure/auctionsaleandcouldnothavebeenacquiredbytheBankthereat]

3) notholdingthattheparcelsoflandhadbeenproperlyandvalidlyredeemedingoodfaith,
defendantYap,theProvincialSheriff,theClerkofCourt,andMr.MarioDy,havingaccepted
redemption/consignation(or,innotfixingtheredemptionpriceandallowingredemption)

4) notholdingthatbywithdrawingtheredemptionmoneyconsigned/depositedbyplaintiffsto
the Court, and turning over possession of the parcels of land to plaintiffs, defendants Yap
accepted, ratified, and confirmed redemption by plaintiffs of the parcels of land acquired at
foreclosure/auctionsalebytheBankandpurportedlysoldbyittoandpurchasedbyYap

5) notfindingandholdingthatalltheparcelsoflandcoveredbytheforeclosedmortgageheld
by Dumaguete Rural Bank had been acquired by and are in the possession of plaintiffs as
ownersandthatdefendantsbankandYaphaddisposedofand/orlosttheirrightsandinterests
and/oranycauseofactionandtheirclaimshadbeenextinguishedandmootedorotherwise
settled,waivedand/ormergedinplaintiffsappellants

6) notholdingthatdefendantsYaphavenocauseofactiontoquiettitleastheyhadnotitleor
possession of the parcels of land in question and in declaring defendants Yap spouses the
exclusiveownersofLotNo.1coveredbyTCTNo.T14777andLotNo.6coveredbyTCT
No.T14781andindirectingtheProvincialSherifftoexecutethefinaldeedofsaleinfavorof
thebankandthelattertotransferthesubjectpropertiestotheYapspousesinaccordancewith
theDeedofSalewithMortgagewhichincludedLotNo.3whichwasnotforeclosedbythe
Sheriff and was not included in the certificate of sale issued by him and despite their
acceptance, ratification, and confirmation of the redemption as well as acknowledgment of
possessionoftheparcelsoflandbyplaintiffs
 7)issuinganamendeddecisionafterperfectionofplaintiffsappealandwithoutwaitingfortheir
comment(declaringtheCertificateofRedemptionissuedbytheProvincialSheriff(Exh.M)
nullandvoidorderingtheProvincialSheriffofNegrosOrientaltoexecuteaFinalDeedof
Sale of the foreclosed properties in favor of the defendant Dumaguete Rural Bank, Inc.,
subject to the rights of the Yap spouses acquired in accordance with the Deed of Sale with
Mortgage (Exh. BMaxino and Dy Exh. 1 Yap) declaring null and void the Deed of Sale
datedOct[ober]27,1979,madebyTirambuloandEstorcoinfavoroftheDysandMaxinos
coveringalltheseven(7)parcelsoflandinquestioninCivilCaseNo.8439,declaringthe
Yapspouses,theexclusiveownersofLotNo.1,coveredbyTCTNo.T14777,andLotNo.6,
coveredbyTCTNo.T14781,forfailureonthepartoftheDyandMaxinospouses,toredeem
saidpropertieswithin(1)yearfromthedateofregistrationoftheauctionsale)afterplaintiffs
hadperfectedappealofthe12February1997decision,withouthearingorawaitingplaintiffs
comment,andinthefaceoftherecordsshowingthattheissueswereneverraised,muchless
litigated,insofarasTirambulo,aswellinthefaceoftheforegoingcircumstances,especially
dismissalofdefendantsclaimsandcounterclaimsandacquisitionofownershipandpossession
oftheparcelsoflandbyplaintiffsaswellasdispositionand/orlossofdefendantsrightsand
interests and cause of action in respect thereof and/or settlement, waiver, and/or
extinguishmentoftheirclaims,andmergerinplaintiffsappellants,andwithoutstatingclearly
thefactsandthelawuponwhichitisbased[and]

8) not finding, holding and ruling that defendants acted in bad faith and in an abusive and
[32]
oppressivemanner,ifnotcontrarytolawandinnotawardingplaintiffsdamages.

On May 17, 2005, the CA rendered a decision reversing the March 7, 1997 amended
decisionofthetrialcourt.ThedispositiveportionoftheassailedCAdecisionreads:

INLIGHTOFTHEFOREGOING,thisappealisGRANTED.Thedecisionaswellasthe
amendeddecisionoftheRegionalTrialCourtisREVERSEDANDSETASIDE.Inlieuthereof[,]
judgmentisherebyrenderedasfollows:

1. Declaring the sale made by Dumaguete Rural Bank Inc. to Sps. Francisco and
WhelmaYapwithrespecttoLotNo.3underTCTNo.T20301asnullandvoid

2. DeclaringtheredemptionmadebySpousesDyandSpousesMaxinowithregardsto
LotNo.6underTCTNo.T14781andLotNo.1underTCTNo.[T]14777asvalid

3.Orderingdefendants,Sps.Yap,todeliverthepossessionandownershipthereoftoSps.
DyandSps.Maxinotogiveafairaccountingoftheproceedsofthesethreeparcelsoflandandto
tenderanddeliverthecorrespondingamountofincomefromOctober24,1985untilthefinality
ofthisjudgment[and]

4. CondemningthedefendantbanktopaydamagestoSpousesDyandSpousesMaxino
the amount of P20,000.00 as moral damages and P200,000.00 as exemplary damages and
attorneysfeesintheamountofP50,000.00.

Allotherclaimsaredismissed.

Costsagainsttheappellees.

[33]
SOORDERED.
TheCAheldthatthetrialcourterredinrulingthatitcouldnotconsidertheevidencefortheDys
and the Maxinos allegedly because they failed to formally offer the same. The CA noted that
although the testimonies ofAttys. Marcelino C. Maxino and Benjamin V. Diputado were not
formallyoffered,theprocedurallapsewascuredwhentheopposingcounselcrossexaminedsaid
witnesses. Also, while the original TSNs of the witnesses for the plaintiffs in Civil Case No.
8426wereburned,thelatterscounselwhohadcopiesthereof,furnishedtheYapscopiesfortheir
scrutiny and comment. The CA further noted that the trial court also admitted all the
documentary exhibits of the Dys and the Maxinos on March 3, 1995. Unfortunately, however,
thetrialcourtsimplyfailedtolocatethepertinentdocumentsinthevoluminousrecordsofthe
cases.

On the merits, the CA ruled that the Dys and the Maxinos had proven their cause of action
sufficiently.TheCAnotedthattheirclaimthatLot3wasnotamongthepropertiesforeclosed
wasdulycorroboratedbyAtty.Diputado,theProvincialSheriffwhoconductedtheforeclosure
sale. The Yaps also failed to rebut their contention regarding the formers acceptance of the
redemptionmoneyandtheirdeliveryofthepossessionofthethreeparcelsoflandtotheDysand
theMaxinos.TheCAalsonotedthatnotonlydidtheYapsdeliverpossessionofLot3totheDys
and the Maxinos, they also filed a Motion to Withdraw the Redemption Money from the
ProvincialSheriffandwithdrewtheredemptionmoney.

Astothequestionwhethertheredemptionwasvalidornot,theCAfoundnoneedtodiscussthe
issue.Itfoundthatthebankwasinbadfaithandthereforecannotinsistontheprotectionofthe
law regarding the need for compliance with all the requirements for a valid redemption while
estoppel and unjust enrichment operate against the Yaps who had already withdrawn the
redemptionmoney.

UponmotionforreconsiderationoftheYaps,however,theCAamendeditsdecisiononMarch
15,2006asfollows:

INLIGHTOFTHEFOREGOING,thisappealisGRANTED.Thedecisionaswellasthe
amendeddecisionoftheRegionalTrialCourtisREVERSEDANDSETASIDE.Inlieuthereof[,]
judgmentisherebyrenderedasfollows:

1.DeclaringthesalemadebyDumagueteRuralBankInc.toSps.FranciscoandWhelma
YapwithrespecttoLotNo.3underTCTNo.T20301nullandvoid

2.DeclaringtheredemptionmadebySpousesDyandSpousesMaxinowithregardstoLot
No.6underTCTNo.T14781andLotNo.1underTCTNo.[T]14777asvalid
 3.CondemningthedefendantbanktopaydamagestoSpousesDyandSpousesMaxino
the amount of P20,000.00 as moral damages and P200,000.00 as exemplary damages and
attorneysfeesintheamountofP50,000.00.

Allotherclaimsaredismissed.
Costsagainsttheappellees.
[34]
SOORDERED.

Hence,theconsolidatedpetitionsassailingtheappellatecourtsdecision.

The Yaps argue in the main that there is no valid redemption of the properties extrajudicially
foreclosed.TheycontendthattheP40,000.00cannotbeconsideredavalidtenderofredemption
since the amount of the auction sale is P216,040.93. They also argue that a valid tender of
payment for redemption can only be made to DRBI since at that time, their rights were
subordinatetothefinalconsolidationofownershipbythebank.

DRBI,asidefrominsistingthatallsevenmortgagedproperties(whichthusincludesLot3)were
validlyforeclosed,argues,foritspart,thattheappellatecourterredinsustainingtheredemption
madebytheDysandMaxinos.ItanchorsitsargumentonthefactthatthesaleoftheTirambulos
totheDysandMaxinoswaswithoutthebanksconsent.TheDysandMaxinosthereforecould
not have assumed the character of debtors because a novation of the contract of mortgage
betweentheTirambulosandDRBIdidnottakeplaceassuchanovationisproscribedbyArticle
1293oftheCivilCode. And there being no valid redemption within the contemplation of law
and DRBI being the highest bidder during the auction sale, DRBI has become the absolute
ownerofthepropertiesmortgagedwhentheredemptionperiodexpired.

DRBIfurtherarguesthatitwasunfairandunjustforthemtobeheldliablefordamages
forsupposedlywrongfullyforeclosingonLot3,deprivingtheDysandtheMaxinosoftheuseof
the land, and registering the Certificate of Sale which included Lot 3 when it should have
excluded the same. DRBI argues that as a juridical person, it only authorized and consented,
through its Board of Directors, to lawful processes. The unlawful acts of the Sheriff, who is
consideredasanagentofthebankintheforeclosureproceedings,cannotbindDRBI.Moreover,
DRBIcannotbeliablefordamagesonthebasisofanaffidavitthatwassubmittedonlybefore
theCAasthebankhadnochancetocrossexaminetheaffiantanddeterminetheveracityand
proprietyofthestatementsnarratedinsaidaffidavit.
Thus,theissuestoberesolvedintheinstantcaseareessentiallyasfollows:(1)IsLot3among
theforeclosedproperties?(2)Towhomshouldthepaymentofredemptionmoneybemade?(3)
DidtheDysandMaxinosvalidlyredeemLots1and6?and(4)IsDRBIliablefordamages?

Astothefirstissue,wefindthattheCAcorrectlyruledthattheDysandMaxinoswereableto
prove their claim that Lot 3 was not among the properties foreclosed and that it was merely
insertedbythebankintheSheriffsCertificateofSale.AsAtty.Diputado,theProvincialSheriff,
testified,theapplicationforforeclosurewasonlyforfiveparcelsofland,namely,Lots1,4,5,6
and8.Accordingly,onlysaidfiveparcelsoflandwereincludedinthepublicationandsoldatthe
foreclosure sale. When he was shown a copy of the Sheriffs Certificate of Sale consisting of
threepages,hetestifiedthatitwasalteredbecauseLot3andLot846wereincludedbeyondthe
[35]
xxxthatmarkedtheendoftheenumerationofthelotsforeclosed. Also,aperusalofDRBIs
[36]
applicationforforeclosureofrealestatemortgage showsthatitexplicitlyreferstoonlyone
deed of mortgage to settle the Tirambulos indebtedness amounting to P216,040.93. This is
consistent with the Notice of Extrajudicial Sale of Mortgaged Property, published in the
[37]
Dumaguete Star Informer on February 18, 25 and March 4, 1982, announcing the sale of
Lots1,4,5,6and8forthesatisfactionoftheindebtednessamountingtoP216,040.93.Itisalso
consistentwiththefactthatLots1,4,5,6and8arecoveredbyonlyonerealestate mortgage,
[38]
the Real Estate Mortgage dated December 3, 1976. Indeed, that the foreclosure sale refers
onlytoLots1,4,5,6and8isclearfromthefactthatLots1,4,5,6and8andLot3arecovered
bytwoseparaterealestatemortgages.DRBIfailedtorefutethesepiecesofevidenceagainstit.

As to the second issue regarding the question as to whom payment of the redemption money
[39]
shouldbemade,Section31, Rule39oftheRulesofCourtthenapplicableprovides:

SEC.31. Effect of redemption by judgment debtor, and a certificate to be delivered and

recordedthereupon.Towhompaymentsonredemptionmade.If thejudgmentdebtor redeem, he
must make the same payments as are required to effect a redemption by a redemptioner,
whereupontheeffectofthesaleisterminatedandheisrestoredtohisestate,andthepersonto
whom the payment is made must execute and deliver to him a certificate of redemption
acknowledged or approved before a notary public or other officer authorized to take
acknowledgmentsofconveyancesofrealproperty.Suchcertificatemustbefiledandrecordedin
the office of the registrar of deeds of the province in which the property is situated, and the
registrar of deeds must note the record thereof on the margin of the record of the certificate of
sale.The payments mentioned in this and the last preceding sections may be made to the
purchaserorredemptioner,orforhimtotheofficerwhomadethesale.(Emphasissupplied.)
Here, the Dys and the Maxinos complied with the abovequoted provision. Well within the
redemption period, they initially attempted to pay the redemption money not only to the
purchaser,DRBI,butalsototheYaps.BothDRBIandtheYapshoweverrefused,insistingthat
theDysandMaxinosshouldpaythewholepurchasepriceatwhichalltheforeclosedproperties
were sold during the foreclosure sale. Because of said refusal, the Dys and Maxinos correctly
availedofthealternativeremedybygoingtothesheriffwhomadethesale.AsheldinNatinov.
[40]
Intermediate Appellate Court, the tender of the redemption money may be made to the
purchaserofthelandortothesheriff.Ifmadetothesheriff,itishisdutytoacceptthetender
andexecutethecertificateofredemption.

ButweretheDysandMaxinosentitledtoredeemLots1and6inthefirstplace?Weruleinthe
affirmative.

TheDysandtheMaxinoshavelegalpersonalityto
redeemthesubjectproperties.

Contrary to petitioners contention, the Dys and Maxinos have legal personality to redeem the
subject properties despite the fact that the sale to the Dys and Maxinos was without DRBIs
[41]
consent. In Litonjua v. L & R Corporation, this Court declared valid the sale by the
mortgagorofmortgagedpropertytoathirdpersonnotwithstandingthelackofwrittenconsent
by the mortgagee, and likewise recognized the third persons right to redeem the foreclosed
property,towit:

ComingnowtotheissueofwhethertheredemptionofferedbyPWHASonaccountofthe
spouses Litonjua is valid, we rule in the affirmative. The sale by the spouses Litonjua of the
mortgaged properties to PWHAS is valid. Therefore, PWHAS stepped into the shoes of the
spousesLitonjuaonaccountofsuchsaleandwasineffect,theirsuccessorininterest.Assuch,it
had the right to redeem the property foreclosed by L & R Corporation. Again, Tambunting,
supra,clarifiesthat

xxx.TheacquisitionbytheHernandezesoftheEscuetasrightsoverthepropertycarried
with it the assumption of the obligations burdening the property, as recorded in the
Registry of Property, i.e., the mortgage debts in favor of the RFC (DBP) and the
Tambuntings.TheHernandezes,bysteppingintotheEscuetasshoesasassignees,hadthe
obligationtopaythemortgagedebts,otherwise,thesedebtswouldandcouldbeenforced
againstthepropertysubjectoftheassignment.Statedotherwise,theHernandezes,bythe
assignment, obtained the right to remove the burdens on the property subject thereof by
payingtheobligationstherebysecuredthatistosay,theyhadtherightofredemptionas
regardsthefirstmortgage,tobeexercisedwithinthetimeandinthemannerprescribedby
lawandthemortgagedeedandasregardsthesecondmortgage,soughttobejudicially
foreclosedbutyetunforeclosed,theyhadthesocalledequityofredemption.
 The right of PWHAS to redeem the subject properties finds support in Section 6 of Act
3135itselfwhichgivesnotonlythemortgagordebtortherighttoredeem,butalsohissuccessors
ininterest.Asvendeeofthesubjectproperties,PWHASqualifiesassuchasuccessorininterest
[42]
ofthespousesLitonjua.

Likewise,werulethattheDysandtheMaxinosvalidlyredeemedLots1and6.

Therequisitesofavalidredemptionarepresent

Therequisitesforavalidredemptionare:(1)theredemptionmustbemadewithintwelve
(12)monthsfromthetimeoftheregistrationofthesaleintheOfficeoftheRegisterofDeeds
(2)paymentofthepurchasepriceofthepropertyinvolved,plus1%interestpermonththereon
inaddition,uptothetimeofredemption,togetherwiththeamountofanyassessmentsortaxes
whichthepurchasermayhavepaidthereonafterthepurchase,alsowith1%interestonsuchlast
namedamountand(3)writtennoticeoftheredemptionmustbeservedontheofficerwhomade
[43]
thesaleandaduplicatefiledwiththeRegisterofDeedsoftheprovince.

Thereisnoissueastothefirstandthirdrequisites.ItisundisputedthattheDysandtheMaxinos
madetheredemptionwithinthe12monthperiodfromtheregistrationofthesale.TheDysand
Maxinos effected the redemption on May 24, 1984, when they deposited P50,373.42 with the
ProvincialSheriff,andonJune 19, 1984, when they deposited an additional P83,850.50. Both
dateswerewellwithintheoneyearredemptionperiodreckonedfromtheJune24,1983dateof
registration of the foreclosure sale. Likewise, the Provincial Sheriff who made the sale was
properly notified of the redemption since the Dys and Maxinos deposited with him the
redemptionmoneyafterbothDRBIandtheYapsrefusedtoacceptit.

The second requisite, the proper redemption price, is the main subject of contention of the
opposingparties.

TheYapsarguethatP40,000.00cannotbeavalidtenderofredemptionsincetheamountofthe
auctionsalewasP216,040.93.Theyfurthercontendthatthemortgageisindivisiblesoinorder
forthetendertobevalidandeffectual,itmustbefortheentireauctionpricepluslegalinterest.

WecannotsubscribetotheYapsargumentontheindivisibilityofthemortgage.Asheldinthe
[44]
caseofPhilippineNationalBankv.DelosReyes, thedoctrineofindivisibilityofmortgage
does not apply once the mortgage is extinguished by a complete foreclosure thereof as in the
instantcase.TheCourtheld:

The parties were accordingly embroiled in a hermeneutic disparity on their aforesaid

contending positions. Yet, the rule on the indivisibility of mortgage finds no application to the
caseatbar.TheparticularprovisionoftheCivilCodereferredtoprovides:

Art.2089.Apledgeormortgageisindivisible,eventhoughthedebtmay
bedividedamongthesuccessorsininterestofthedebtororofthecreditor.

Therefore,thedebtorsheirwhohaspaidapartofthedebtcannotaskfor
theproportionateextinguishmentofthepledgeormortgageaslongasthedebtis
notcompletelysatisfied.

Neithercanthecreditorsheirwhoreceivedhisshareofthedebtreturnthe
pledge or cancel the mortgage, to the prejudice of the other heirs who have not
beenpaid.

From these provisions is excepted the case in which, there being several
things given in mortgage or pledge, each one of these guarantees only a
determinateportionofthecredit.

The debtor, in this case, shall have a right to the extinguishment of the
pledge or mortgage as the portion of the debt for which each thing is specially
answerableissatisfied.

Fromtheforegoing,itisapparentthatwhatthelawproscribesistheforeclosureofonlya
portion of the property or a number of the several properties mortgaged corresponding to the
unpaidportionofthedebtwherebeforeforeclosureproceedingspartialpaymentwasmadebythe
debtoronhistotaloutstandingloanorobligation.Thisalsomeansthatthedebtorcannotaskfor
the release of any portion of the mortgaged property or of one or some of the several lots
mortgaged unless and until the loan thus, secured has been fully paid, notwithstanding the fact
thattherehasbeenapartialfulfillmentoftheobligation.Hence,itisprovidedthatthedebtorwho
has paid a part of the debt cannot ask for the proportionate extinguishment of the mortgage as
longasthedebtisnotcompletelysatisfied.

That the situation obtaining in the case at bar is not within the purview of the aforesaid
rule on indivisibility is obvious since the aggregate number of the lots which comprise the
collateralsforthemortgagehadalreadybeenforeclosedandsoldatpublicauction.Thereisno
partialpaymentnorpartialextinguishmentoftheobligationtospeakof.Theaforesaiddoctrine,
whichisactuallyintendedfortheprotectionofthemortgagee,specificallyreferstothereleaseof
themortgagewhichsecuresthesatisfactionoftheindebtednessandnaturallypresupposesthatthe
mortgageisexisting. Once the mortgage is extinguished by a complete foreclosure thereof,
saiddoctrineofindivisibilityceasestoapplysince,withthefullpaymentofthedebt,thereis
[45]
nothingmoretosecure. (Emphasissupplied.)

Nothing in the law prohibits the piecemeal redemption of properties sold at one foreclosure
proceeding. In fact, in several early cases decided by this Court, the right of the mortgagor or
redemptionertoredeemoneorsomeoftheforeclosedpropertieswasrecognized.
 [46]
In the 1962 case of Castillo v. Nagtalon, ten parcels of land were sold at public auction.
Nagtalon, who owned three of the ten parcels of land sold, wanted to redeem her properties.
Thoughtheamountshetenderedwasfoundasinsufficienttoeffectivelyreleaseherproperties,
the Court held that the tender of payment was made timely and in good faith and thus, in the
interestofjustice,Nagtalonwasgiventheopportunitytocompletetheredemptionpurchaseof
threeofthetenparcelsoflandforeclosed.

[47]
Also, in the later case of Dulay v. Carriaga, wherein Dulay redeemed eight of the
seventeen parcels of land sold at public auction, the trial court declared the piecemeal
redemptionofDulayasvoid.Saidorder,however,wasannulledandsetasidebytheCourton
certiorariandtheCourtupheldtheredemptionoftheeightparcelsoflandsoldatpublicauction.

Clearly,theDysandMaxinoscaneffecttheredemptionofevenonlytwoofthefiveproperties
foreclosed. And since they can effect a partial redemption, they are not required to pay the
P216,040.93consideringthatitisthepurchasepriceforallthefivepropertiesforeclosed.

SowhatamountshouldtheDysandMaxinospayinorderfortheirredemptionofthetwo
propertiesbedeemedvalidconsideringthatwhenthefivepropertieswereauctioned,theywere
notseparatelyvalued?

Contrary to the Yaps contention, the amount paid by the Dys and Maxinos within the
redemption period for the redemption of just two parcels of land was not only P40,000.00
buttotaledtoP134,223.92(P50,373.42paidonMay28,1984plusP83,850.50paidonJune19,
1984). That is more than 60% of the purchase price for the five foreclosed properties, to
think the Dys and Maxinos were only redeeming two properties. We find that it can be
consideredasufficientamountifweweretobasetheproperpurchasepriceontheproportionof
the size of Lots 1 and 6 with the total size of the five foreclosed properties, which had the
followingrespectivesizes:
Lot1 61,371squaremeters
Lot6 16,087squaremeters
Lot5 2,900squaremeters
Lot4 27,875squaremeters
Lot8 39,888squaremeters
TOTAL 148,121squaremeters
The two subject properties to be redeemed, Lots 1 and 6, have a total area of 77,458 square
meters or roughly 52% of the total area of the foreclosed properties. Even with this rough
approximation, we rule that there is no reason to invalidate the redemption of the Dys and
Maxinos since they tendered 60% of the total purchase price for properties constituting only
52%ofthetotalarea.However,thereisaneedtoremandthecaseforcomputationofthepro
ratavalueofLots1and6basedontheirtruevaluesatthattimeofredemptionforthepurposes
ofdeterminingifthereisanydeficiencyoroverpaymentonthepartoftheDysandMaxinos.

AstotheawardofdamagesinfavoroftheDysandMaxinos,weagreewiththeappellatecourt
forgrantingthesame.

TheCAcorrectlyobservedthattheactofDRBIinfalsifyingtheSheriffsCertificateofSaleto
include Lots 3 and 846, even if said additional lots were not among the properties foreclosed,
wastheproximatecauseofthepecuniarylosssufferedbytheDysandMaxinosintheformof
lostincomefromLot3.

Likewise,theCAalsocorrectlyawardedmoraldamages.Paragraph10,Article2219oftheCivil
Codeprovidesthatmoraldamagesmayberecoveredincaseofactsandactionsreferredtoin
Article21ofthesameCode.Article21reads:

ART.21Anypersonwhowillfullycauseslossorinjurytoanotherinamannerthatiscontraryto
morals,goodcustomsorpublicpolicyshallcompensatethelatterforthedamage.

As previously discussed, DRBIs act of maliciously including two additional properties in the
SheriffsCertificateofSaleeveniftheywerenotincludedintheforeclosedpropertiescausedthe
DysandMaxinospecuniaryloss.Hence,DRBIisliabletopaymoraldamages.

The award of exemplary damages is similarly proper. Exemplary or corrective damages are
imposed, by way of example or correction for the public good, in addition to the moral,
[48]
temperate,liquidatedorcompensatorydamages. Wecannotagreemorewiththefollowing
ratiooftheappellatecourtingrantingthesame:

Additionally,whatisalarmingtothesensibilitiesoftheCourtisthedeceptionemployedbythe
bankinaddingotherpropertiesinthecertificateofsaleunderpublicauctionwithoutthembeing
included in the public auction conducted. It cannot be overemphasized that being a lending
institution, prudence dictates that it should employ good faith and due diligence with the
propertiesentrustedtoit.Itwasthebankwhichsubmittedthepropertiesoughttobeforeclosedto
thesheriff.Itonlysubmittedfive(5)propertiesforforeclosure.Yet,itcausedtheregistrationof
 the Certificate of Sale under public auction which listed more properties than what was
[49]
foreclosed.Onthisaspect,exemplarydamagesintheamountofP200,000.00areinorder.

Therebeinganawardofexemplarydamages,theawardofattorneysfeesislikewiseproperas
providedinparagraph1,Article2208oftheCivilCode.

WHEREFORE,thepetitionsforreviewoncertiorariareDENIEDforlackofmerit.The
DecisiondatedMay17,2005andResolutiondatedMarch15,2006oftheCourtofAppealsin
CAG.R.C.V.No.57205areherebyAFFIRMEDwiththeMODIFICATIONthatthecaseis
REMANDEDtotheRegionalTrialCourtofNegrosOriental,Branch44,DumagueteCity,for
the computation of the prorata value of properties covered by TCT No. T14777 (Lot 1) and
TCTNo.T14781(Lot6)oftheRegistryofDeedsofNegrosOrientalatthetimeofredemption
todetermineifthereisadeficiencytobesettledbyoroverpaymenttoberefundedtorespondent
SpousesZosimoDy,Sr.andNatividadChiuandSpousesMarcelinoC.MaxinoandRemedios
Lasolawithregardtotheredemptionmoneytheypaid.

Withcostsagainstthepetitioners.

SOORDERED.




MARTINS.VILLARAMA,JR.
AssociateJustice

WECONCUR:

RENATOC.CORONA
ChiefJustice
Chairperson

TERESITAJ.LEONARDODECASTRO LUCASP.BERSAMIN
 AssociateJustice AssociateJustice

MARIANOC.DELCASTILLO
AssociateJustice

CERTIFICATION

PursuanttoSection13,ArticleVIIIofthe1987Constitution,Icertifythattheconclusionsinthe
aboveDecisionhadbeenreachedinconsultationbeforethecasewasassignedtothewriterof
theopinionoftheCourtsDivision.

RENATOC.CORONA
ChiefJustice

[1]
Rollo (G.R. No. 171991), pp. 2741.Penned byAssociate Justice Pampio A. Abarintos with Associate Justices Mercedes Gozo
DadoleandSesinandoE.Villonconcurring.
[2]
Id. at 5361. Penned by Associate Justice Pampio A. Abarintos with Associate Justices Enrico A. Lanzanas and Apolinario D.
Bruselas,Jr.concurring.
[3]
Records(CivilCaseNo.8439),Vol.1,p.9.
[4]
Id.at10.
[5]
Id.at1417.
[6]
Id.at1820.
[7]
Id.at20.
[8]
Records(CivilCaseNo.8426),Vol.I,pp.2325.
[9]
Id.at2628.
[10]
Id.at30.
[11]
Id.at29.
[12]
Id.at3133.
[13]
Id.at3435.
[14]
Id.at3637.
[15]
Id.at3839.
[16]
Id.at4345.
[17]
Id.at46.
[18]
Id.at4748.
[19]
Id.at50.
[20]
Id.at117.
[21]
Id.at1516.
[22]
Id.at5658.
[23]
Records(CivilCaseNo.8439),p.32.
[24]
Id.at3334.
[25]
Id.at28.
[26]
Id.at78.
[27]
Records(CivilCaseNo.8426),Vol.I,pp.346347.
[28]
Id.at348.
[29]
Rollo(G.R.No.171991),pp.93109.
[30]
Id.at108109.
[31]
Id.at110111.
[32]
CArollo,pp.4548.
[33]
Rollo(G.R.No.171991),pp.4041.
[34]
Id.at61.
[35]
TSN,August30,1985,pp.46.
[36]
Records(CivilCaseNo.8426),Vol.I,p.245.
[37]
Id.at246248.
[38]
Records(CivilCaseNo.8439),Vol.I,p.9.
[39]
NowSection29,Rule39ofthe1997RulesofCivilProcedure,asamended.Section29providesasfollows:
SEC.29.Effectofredemptionbyjudgmentobligor,andacertificatetobedeliveredandrecordedthereupontowhompaymentson
redemptionmade.Ifthejudgmentobligorredeems,hemustmakethesamepaymentsasarerequiredtoeffectaredemptionbya
redemptioner, whereupon, no further redemption shall, be allowed and he is restored to his estate. The person to whom the
redemptionpaymentismademustexecuteanddelivertohimacertificateofredemptionacknowledgedbeforeanotarypublicor
otherofficerauthorizedtotakeacknowledgmentsofconveyancesofrealproperty.Suchcertificatemustbefiledandrecordedin
theregistryofdeedsoftheplaceinwhichthepropertyissituated,andtheregistrarofdeedsmustnotetherecordthereofonthe
marginoftherecordofthecertificateofsale.Thepaymentsmentionedinthisandthelastprecedingsectionsmaybemadetothe
purchaserorredemptioner,orforhimtotheofficerwhomadethesale.
[40]
G.R.No.73573,May23,1991,197SCRA323,332.
[41]
G.R.No.130722,December9,1999,320SCRA405.
[42]
Id.at418419.
[43]
Rosalesv.Yboa,No.L42282,February28,1983,120SCRA869,874.
[44]
G.R.Nos.4689899,November28,1989,179SCRA619.
[45]
Id.at625627.
[46]
No.L17079,January29,1962,4SCRA48,54.
[47]
No.L52831,July29,1983,123SCRA794.
[48]
Article2229,CIVILCODEOFTHEPHILIPPINES.
[49]
Rollo(G.R.No.171991),pp.3940.