Lopez, Raffy D.

2-A
Credit Transaction

SPOUSES RICARDO ROSALES and ERLINDA SIBUG, vs. SPOUSES ALFONSO and
LOURDES SUBA, THE CITY SHERIFF OF MANILA,
[G.R. No. 137792. August 12, 2003]

DOCTRINE: Clearly, as a general rule, there is no right of redemption in a judicial foreclosure of

mortgage. Since the mortgagee in this case is not one of those mentioned, no right of redemption exists
in favor of petitioners. They merely have an equity of redemption, which is simply their
right, as mortgagor, to extinguish the mortgage and retain ownership of the property by paying the
secured debt prior to the confirmation of the foreclosure sale.

FACTS:
The spouses Ricardo Rosales and Erlinda Sibug were indebted to a certain Felicisimo
Macaspac. Later, Macaspac sued the spouses for their failure to pay. During trial, it was found out that
there existed an equitable mortgage between the spouses and Macaspac. The court ordered the
spouses to pay Macaspac and if they fail to do so, their property shall be foreclosed.

The spouses failed to pay Macaspac hence the court ordered the sale at a public auction of their land
in May 1998. The highest bidder was the spouses Alfonso and Lourdes Suba. In June 1998, the trial
court issued an order confirming the sale made to the spouses Suba. The spouses Rosales then filed
a motion for reconsideration. The trial court ruled against their motion as it ruled that there is no right
of redemption in judicial foreclosures. The Court of Appeals affirmed the decision of the
trial court.

ISSUE:
Whether or not the debtor-mortgagor can exercise the right of redemption in
judicial foreclosure.

HELD:
No. There is no right of redemption in judicial foreclosure. What can be exercised is equity of
redemption. Equity of redemption is simply the right of the mortgagor to extinguish the mortgage and
retain ownership of the property by paying the secured debt within the 90-day period after the judgment
becomes final, in accordance with Rule 68 of the Rules of Court, or even after the
foreclosure sale but prior to its confirmation by the court (prior to the court’s confirmation
of the sale). In this case, unfortunately, the spouses Rosales never exercised their equity of
redemption. When can equity of redemption be exercised? The mortgagor may exercise his equity of
redemption even beyond the 90-day period ‘from the date of service of the order,’ and even after the
foreclosure sale itself, provided it be before the order of confirmation of the sale.

Are there any exceptions to the rule that “there is no right of redemption in judicial foreclosure”?

Yes, the only exemption is when the mortgagee is the Philippine National Bank or a bank or a banking
institution. In such cases, the mortgagor can exercise the right of redemption.