SPOUSES FRANCISCO D. YAP and WHELMA S.

YAP, petitioners, -versus-

A debtor who has paid a part of the debt cannot ask for the proportionate
extinguishment of the mortgage as long as the debt is not completely satisfied.
However, this rule does not apply where the aggregate number of the lots which
comprise the collaterals for the mortgage had already been foreclosed and sold at
public auction.

Nothing in the law prohibits the piecemeal redemption of properties sold at one
foreclosure proceeding. Clearly, the Dys and Maxinos can effect the redemption of
even only two of the five properties foreclosed. And since they can effect a partial
redemption, they are not required to pay the P216,040.93 considering that it is the
purchase price for all the five properties foreclosed.

FACTS:

The spouses Tomas Tirambulo and Salvacion Estorco (Tirambulos) are the
registered owners of several parcels of land (herein referred to as Lot 1, 3, 4, 5, 6, 8
and 846) located in Ayungon, Negros Oriental. Tirambulos executed a Real Estate
Mortgage over Lots 1, 3, 4, 5, 6, 8 and 846 in favor of the Rural Bank of
Dumaguete, Inc., predecessor of Dumaguete Rural Bank, Inc. (DRBI), to secure
the two loans extended to them by the bank. Subsequently, the Tirambulos sold all
seven mortgaged lots to the spouses Zosimo Dy, Sr. and Natividad Chiu (the Dys)
and the spouses Marcelino C. Maxino and Remedios Lasola (the Maxinos) without
the consent and knowledge of DRBI and this sale was embodied in a Deed of
Absolute Sale. The Tirambulos failed to pay their loan and this prompted DRBI to
extrajudicially foreclose the mortgages and had Lots 1, 4, 5, 6 and 8 sold at public
auction. DRBI emerged as the highest bidder. It later on sold some of the lots to the
spouses Francisco D. Yap and Whelma D. Yap (the Yaps) under a Deed of Sale
with Agreement to Mortgage.

Roughly a month before the one-year redemption period was set to expire, the Dys
and the Maxinos attempted to redeem Lots 1, 3 and 6. They tendered the amount of
P40,000.00 to DRBI and the Yaps, but both refused. Thus, the Dys and the
Maxinos went to the Office of the Sheriff of Negros Oriental and paid P50,625.29
to effect the redemption. The Clerk of Court and Provincial Sheriff, issued a
Certificate of Redemption in favor of the Dys and the Maxinos only for Lots 1 and
6, and stated in said certificate that Lot 3 is not included in the foreclosure
proceedings.

The Yaps refused to take delivery of the redemption price. Thus, the Dys and the
Maxinos instead tender the redemption money as a consignation. Meanwhile, the
Yaps requested DRBI to consolidate 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 properties to
them. Consequently, the Yaps filed Civil Case for consolidation of ownership,
annulment of certificate of redemption, and damages against the Dys, the Maxinos,
the Provincial Sheriff of Negros Oriental and DRBI.
The RTC held that the Dys and the Maxinos failed to exercise their rights of
redemption properly and timely. On appeal, the CA reversed the amended decision
of the RTC. It ruled that the redemption made by Spouses Dy and Spouses Maxino
with regards to Lot No 1 and 6 as valid. Hence, the consolidated petitions assailing
the appellate court’s decision.

ISSUE:

Whether the Dys and Maxinos validly redeem Lots 1 and 6. (YES)

RULING:

The requisites of a valid redemption are present in the case at bar. The requisites
for a valid redemption are: (1) the redemption must be made within twelve (12)
months from the time of the registration of the sale in the Office of the Register of
Deeds; (2) payment of the purchase price of the property involved, plus 1% interest
per month thereon in addition, up to the time of redemption, together with the
amount of any assessments or taxes which the purchaser may have paid thereon
after the purchase, also with 1% interest on such last named amount; and (3)
written notice of the redemption must be served on the officer who made the sale
and a duplicate filed with the Register of Deeds of the province.

There is no issue as to the first and third requisites. It is undisputed that the Dys
and the Maxinos made the redemption within the 12-month period from the
registration of the sale. The Dys and
Maxinos effected the redemption on May 24, 1984, when they deposited
P50,373.42 with the Provincial Sheriff, and on June 19, 1984, when they deposited
an additional P83,850.50. Both dates were well within the one-year redemption
period reckoned from the June 24, 1983 date of 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 redemption money
after both DRBI and the Yaps refused to accept it.

The second requisite, the proper redemption price, is the main subject of contention
of the opposing parties. The Court did not subscribe to the Yaps’ argument on the
doctrine of indivisibility of the mortgage since the same does not apply once the
mortgage is extinguished by a complete foreclosure thereof as in the instant case.
Furthermore, under Article 2089, it is apparent that what the law proscribes is the
foreclosure of only a portion of the property or a number of the several properties
mortgaged corresponding to the unpaid portion of the debt where before
foreclosure proceedings partial payment was made by the debtor on his total
outstanding loan or obligation. This also means that the debtor cannot ask for 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 that there has been a partial fulfillment of the obligation.

Hence, it is provided that the debtor who has paid a part of the debt cannot ask for
the proportionate extinguishment of the mortgage as long as the debt is not
completely satisfied. 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 collaterals for the mortgage had already
been foreclosed and sold at public auction. There is no partial payment nor partial
extinguishment of the obligation to speak of. The aforesaid doctrine, which is
actually intended for the protection of the mortgagee, specifically refers to the
release of the mortgage which secures the satisfaction of the indebtedness and
naturally presupposes that the mortgage is existing. Once the mortgage is
extinguished by a complete foreclosure thereof, said doctrine of indivisibility
ceases to apply since, with the full payment of the debt, there is nothing more to
secure.

Nothing in the law prohibits the piecemeal redemption of properties sold at one
foreclosure proceeding. Clearly, the Dys and Maxinos can effect the redemption of
even only two of the five properties foreclosed. And since they can effect a partial
redemption, they are not required to pay the P216,040.93 considering that it is the
purchase price for all the five properties foreclosed.