SECOND DIVISION

[G.R. No. 222407. November 23, 2016.]

WHITE MARKETING DEVELOPMENT

CORPORATION, petitioner, vs. GRANDWOOD FURNITURE &
WOODWORK, INC., respondent.

DECISION

MENDOZA, J : p

This Petition for Review on Certiorari seeks to reverse and set aside
the June 22, 2015 Decision 1 and the December 28, 2015 Resolution 2 of
the Court of Appeals (CA) in CA-G.R. CV No. 103488, which reversed and
set aside the July 21, 2014 Decision 3 of the Regional Trial Court, Branch
166, Pasig City (RTC), in a case involving the issue on the applicable
redemption period.
On May 26, 1995, respondent Grandwood Furniture & Woodwork,
Inc. (Grandwood) obtained a loan in the amount of P40,000,000.00 from
Metropolitan Bank and Trust Company (Metrobank). The loan was secured
by a real estate mortgage over a parcel of land covered by Transfer
Certificate of Title (TCT) No. 63678. Metrobank eventually sold its rights
and interests over the loan and mortgage contract to Asia Recovery
Corporation (ARC). The latter then assigned the same rights and interests
to Cameron Granville 3 Asset Management, Inc. (CGAM3). 4
On July 24, 2013, after Grandwood failed to pay the loan which
already amounted to P68,941,239.46, CGAM3 initiated extrajudicial
foreclosure proceedings of the real estate mortgage. During the
September 17, 2013 Auction Sale, petitioner White Marketing
Development Corporation (White Marketing) was declared the highest
bidder and a certificate of sale was issued in its favor. 5
On September 30, 2013, the certificate of sale was registered and
annotated on TCT No. 63678. On November 21, 2013, White Marketing
received a letter from the sheriff informing it that Grandwood intended to
redeem the foreclosed property. In response, White Marketing sent a
letter informing the sheriff that Grandwood no longer had the right to
redeem. 6
Insisting on its right to redeem the property, Grandwood sent a
letter, dated December 3, 2013, to the Office of the Clerk of Court of the
RTC (OCC-RTC) insisting that it was the latter's ministerial duty to recognize
its right of redemption, to accept the tender of payment and to issue a
certificate of redemption. The OCC-RTC, however, refused to accept the
tender of payment on the ground that it was confronted with the
conflicting applicable laws on the matter of the redemption period. Thus,
Grandwood was prompted to file its Petition for
Consignation, Mandamus and Damages before the RTC. It reiterated its
right to redeem the property subject of the foreclosure sale under Act No.
3135 in relation to Republic Act (R.A.) No. 337 and Sections 27 and 28
of Rule 39 of the Rules of Court. 7
The RTC Decision
In its July 21, 2014 Decision, the RTC dismissed the petition
for mandamus. The trial court ruled that the redemption period applicable
in the mortgage between Metrobank and Grandwood was Section
47 8 of R.A. No. 8791 or the "General Banking Law of 2000." The RTC wrote
that by virtue of the said law, Grandwood should have redeemed the
property before the registration of the certificate of sale on September 30,
2013, which was an earlier date than December 17, 2013, or three months
after the foreclosure on September 17, 2013. It further stressed that
White Marketing acquired all the rights of Metrobank in the mortgage
contract, which was eventually assigned to CGAM3. The dispositive
portion of the RTC decision reads: AIDSTE

WHEREFORE, premises considered, the petition for

consignation and mandamus is hereby DISMISSED, for lack of merit.
Petitioner's claim is DENIED, for lack of legal basis.
Private Respondent's counterclaims are likewise DENIED, for
lack of sufficient basis.
No pronouncement as to costs.
SO ORDERED. 9
Aggrieved, Grandwood moved for reconsideration but its motion
was denied by the RTC in the Order, 10 dated September 11, 2014. Hence,
it appealed before the CA.
The CA Decision
In its June 22, 2015 Decision, the CA reversed the RTC ruling and
remanded the case to the latter for the determination of the amount of
the redemption price. It ordered the OCC-RTC to accept the consigned
amount and to issue the corresponding certificate of redemption in
Grandwood's favor. It emphasized that Section 47 of R.A. No. 8791 applied
only in cases of foreclosure of real estate by a mortgagee bank in order to
provide sufficient legal remedies to banks in case of unpaid debts or
loans. As White Marketing was not privy to the contract of loan and the
accessory contract of mortgage, it considered the limitation on the right of
redemption on juridical persons as inapplicable. It was of the view that in
case of doubt on the issue of the right of redemption, it should be
resolved in favor of the mortgagor. Thus, the CA disposed:
WHEREFORE, premises considered, the instant appeal is
GRANTED. Accordingly, the Decision dated July 21, 2014 of the
Regional Trial Court of Pasig City, Branch 166, in SCA No. 3915, is
hereby REVERSED AND SET ASIDE and a new one is rendered by
allowing petitioner-appellant Grandwood Furniture & Woodwork,
Inc. to consign to the court a quo the amount corresponding to the
redemption of its foreclosed property covered by TCT No. 63678 of
the Register of Deeds of Pasig. Furthermore, the Court hereby
directs the following:
(a) remand this case to the court a quo and the latter is
ordered to reinstate SCA Case No. 3915 into its docket;
(b) for the court a quo to determine the entire amount of
redemption price together with interest and other legal fees;
(c) for the Office of the Clerk of Court and Ex-Officio Sheriff of
RTC Pasig City to forthwith accept the consigned amounts and issue
the corresponding Certificate of Redemption in favor petitioner-
appellant.
SO ORDERED. 11
White Marketing moved for reconsideration but the CA denied its
motion in the assailed December 28, 2015 Resolution.
Hence, this petition.
SOLE ISSUE
WHETHER OR NOT THE COURT OF APPEALS ERRED IN
REVERSING THE DECISION OF THE COURT A QUO WHEN IT
DECLARED THAT SEC. 47 of R.A. NO. 8791 OR THE GENERAL
BANKING LAW IS NOT APPLICABLE IN THE CASE AT BAR. 12
Petitioner White Marketing insisted that Grandwood's right of
redemption had lapsed because, under the mortgage contract, the parties
agreed that the same would be governed by R.A. No. 8791. It argued that
because the parties voluntarily stipulated on the governing law, the same
was binding on them. White Marketing asserted that when Metrobank
assigned its rights, its assignees acquired whatever rights the former had
under the Real Estate Mortgage.
It reiterated that Section 47 of R.A. No. 8791 was the applicable law
with regard to the period of redemption. For said reason, Grandwood
should have redeemed the foreclosed property before the registration of
the certificate of sale on September 30, 2013.
In its March 14, 2016 Resolution, 13 the Court resolved to deny the
petition. White Marketing moved for reconsideration. In its June 15, 2016
Resolution, 14 the Court granted the motion, reinstated the petition, and
required respondent Grandwood to file its comment.
In its Comment, 15 dated July 22, 2016, Grandwood argued that the
provisions of the real estate mortgage were pro forma as the original
mortgagee, Metrobank, was a banking institution; and so, the contract
would necessarily contain a provision indicating that the mortgagor would
be bound by R.A. No. 8791.
Grandwood, however, explained that White Marketing could not
enjoy the provision of R.A. No. 8791 on the redemption period because it
was not a banking institution. It asserted that its exercise of redemption
rights was not against Metrobank in accordance with the real estate
mortgage, but against White Marketing as the highest bidder in the
foreclosure sale.
Grandwood further reiterated that pursuant to the spirit and intent
of R.A. No. 8791, the shorter redemption period applied in favor of
banking institutions only. In its view, R.A. No. 8791 would apply only when
the mortgagee bank itself would foreclose the property and not when the
same had already assigned or conveyed its mortgage rights for a
consideration.
In its Reply, 16 dated August 10, 2016, White Marketing countered
that Grandwood was bound by the provisions of the real estate mortgage.
It added that the fact that Metrobank assigned its rights to CGAM3 neither
modified the terms of the mortgage contract nor excluded Grandwood
from the provisions thereof. Thus, it insisted that Grandwood was bound
by the redemption period under R.A. No. 8791 and should suffer the
consequences for its failure to redeem the mortgaged property within the
allotted time.
AaCTcI

The Court's Ruling

The Court finds merit in the petition.

In the case at bench, it is undisputed that Metrobank assigned its
rights in the mortgage to ARC, which later assigned the same to CGAM3.
After Grandwood defaulted in its loan obligation, CGAM3 foreclosed the
mortgaged property. As earlier stated, White Marketing emerged as the
winning bidder in the foreclosure sale. Thus, White Marketing,
stepped into the shoes of Metrobank.
In Fort Bonifacio v. Fong, 17 the Court explained the effects of
assignment of credit, to wit:
The reason that a contracting party's assignees, although
seemingly a third party to the transaction, remain bound by the
 original party's transaction under the relativity principle further lies
in the concept of subrogation, which inheres in assignment.
Case law states that when a person assigns his credit to
another person, the latter is deemed subrogated to the rights
as well as to the obligations of the former. By virtue of the
Deed of Assignment, the assignee is deemed subrogated to the
rights and obligations of the assignor and is bound by exactly
the same conditions as those which bound the assignor.
Accordingly, an assignee cannot acquire greater rights than those
pertaining to the assignor. The general rule is that an assignee of a
non-negotiable chose in action acquires no greater right than what
was possessed by his assignor and simply stands into the shoes of
the latter. [Emphasis and underlining supplied]
In an assignment of credit, the assignee is subrogated to the rights
of the original creditor, such that he acquires the power to enforce it, to
the same extent as the assignor could have enforced it against the
debtor. 18 Through the assignment of credit, the new creditor is entitled
to the rights and remedies available to the previous creditor,
and includes accessory rights such as mortgage or
pledge. 19 Consequently, ARC acquired all the rights, benefits and
obligations of Metrobank under its mortgage contract with Grandwood.
The same could be said for subsequent assignees or successors-in-
interest after ARC like White Marketing.
The mortgage between Grandwood and Metrobank, as the original
mortgagee, was subject to the provisions of Section 47 of R.A. No. 8791.
Section 47 provides that when a property of a juridical person is sold
pursuant to an extrajudicial foreclosure, it "shall have the right to redeem
the property in accordance with this provision until, but not after, the
registration of the Certificate of foreclosure sale with the applicable
Register of Deeds which in no case shall be more than three (3) months
after foreclosure, whichever is earlier."
Applied in the present case, Grandwood had three months from the
foreclosure or before the certificate of foreclosure sale was registered to
redeem the foreclosed property. This holds true even when Metrobank
ceased to be the mortgagee in view of its assignment to ARC of its credit,
because the latter acquired all the rights of the former under the
mortgage contract — including the shorter redemption period. The
shorter redemption period should also redound to the benefit of White
Marketing as the highest bidder in the foreclosure sale as it stepped into
the shoes of the assignee-mortgagee.
Measured by the foregoing parameters, the Court finds that
Grandwood's redemption was made out of time as it was done after the
certificate of sale was registered on September 30, 2013. Pursuant to
Section 47 of R.A. No. 8791, it only had three (3) months from foreclosure
or before the registration of the certificate of foreclosure sale, whichever
came first, to redeem the property sole in the extrajudicial sale.
Such interpretation is in harmony with the avowed purpose of R.A.
No. 8791 in providing for a shorter redemption period for juridical
persons. In Goldenway Merchandising Corporation v. Equitable PCI
Bank, 20 the Court explained that the shortened period under Section 47
of R.A. No. 8791 served as additional security for banks to maintain their
solvency and liquidity, to wit:
The difference in the treatment of juridical persons and
natural persons was based on the nature of the properties
foreclosed — whether these are used as residence, for which the
more liberal one-year redemption period is retained, or used for
industrial or commercial purposes, in which case a shorter term is
deemed necessary to reduce the period of uncertainty in the
ownership of property and enable mortgagee-banks to dispose
sooner of these acquired assets. It must be underscored that
the General Banking Law of 2000 , crafted in the aftermath of
the 1997 Southeast Asian financial crisis, sought to reform
the General Banking Act of 1949 by fashioning a legal
framework for maintaining a safe and sound banking system.
In this context, the amendment introduced by Section 47
embodied one of such safe and sound practices aimed at
ensuring the solvency and liquidity of our banks. It cannot
therefore be disputed that the said provision amending the
redemption period in Act 3135 was based on a reasonable
classification and germane to the purpose of the law. [Emphasis
supplied]
To adopt Grandwood's position that Section 47 of R.A. No. 8791 no
longer applies would defeat its very purpose to provide additional security
to mortgagee-banks. The shorter redemption period is an incentive which
mortgagee-banks may use to encourage prospective assignees to accept
the assignment of credit for a consideration. If the redemption period
under R.A. No. 8791 would be extended upon the assignment by the bank
of its rights under a mortgage contract, then it would be tedious for banks
to find willing parties to be subrogated in its place. Thus, it would
adversely limit the bank's opportunities to quickly dispose of its hard
assets, and maintain its solvency and liquidity. EcTCAD

Although it is true that, generally, redemption is liberally construed

in favor of the mortgagor, the rule cannot be applied in the present case.
In City of Davao v. The Intestate Estate of Amado S. Dalisay, 21 the Court
eruditely explained that the liberal construction of the redemption period
is not a panacea readily invoked by mortgagors whose right to redeem
had been justifiably defeated, viz.:
 The Court need not belabor the existence of this rule in
jurisprudence. In a long line of cases, the Court has indeed been
copious in its stance to allow the redemption of property where in
doing so, the ends of justice are better realized. . . .
Nonetheless, the Court's agreement with the CA decision
ends here. The above rulings now beget a more important question
for the resolution of this case: Does a simplistic application of the
liberal construction of redemption laws provide a just resolution of
this case? The Court answers this question in the negative.
While it is a given that redemption by property owners is
looked upon with favor, it is equally true that the right to
redeem properties remains to be a statutory
privilege. Redemption is by force of law, and the purchaser at
public auction is bound to accept it. Further, the right to redeem
property sold as security for the satisfaction of an unpaid
obligation does not exist preternaturally. Neither is it predicated on
proprietary right, which, after the sale of the property on execution,
leaves the judgment debtor and vests in the purchaser. Instead, it
is a bare statutory privilege to be exercised only by the persons
named in the statute.
In other words, a valid redemption of property must
appropriately be based on the law which is the very source of
this substantive right. It is, therefore, necessary that
compliance with the rules set forth by law and jurisprudence
should be shown in order to render validity to the exercise of
this right. Hence, when the Court is beckoned to rule on this
validity, a hasty resort to elementary rules on construction proves
inadequate. Especially so, when there are deeper underpinnings
involved, not only as to the right of the owner to take back his
property, but equally important, as to the right of the purchaser to
acquire the property after deficient compliance with statutory
requirements, including the exercise of the right within the period
prescribed by law.
The Court cannot close its eyes and automatically rule in
favor of the redemptioner at all times. The right acquired by the
purchaser at an execution sale is inchoate and does not become
absolute until after the expiration of the redemption period
without the right of redemption having been exercised. "But
inchoate though it be, it is, like any other right, entitled to
protection and must be respected until extinguished by
redemption." Suffice it to say, the liberal application of
redemption laws in favor of the property owner is not an
austere solution to a controversy, where there are remarkable
factors that lead to a more sound and reasonable
interpretation of the law. Here, the proper focus of the CA should
have been the just and fair interpretation of the law, instead of an
 automatic and constricted view on its liberal application.
[Emphases supplied]
To reiterate, the shortened period of redemption provided in
Section 47 of R.A. No. 8791 serves as additional security and protection to
mortgagee-banks in order for them to maintain a solvent and liquid
financial status. The period is not extended by the mere fact that the bank
assigned its interest to the mortgage to a non-banking institution because
the assignee merely steps into the shoes of the mortgagee bank and
acquires all its rights, interests and benefits under the mortgage —
including the shortened redemption period. Moreover, to extend the
redemption period would prejudice the ability of the banks to quickly
dispose of its hard assets to maintain solvency and liquidity.

WHEREFORE, the June 22, 2015 Decision of the Court of Appeals

and its December 28, 2015 Resolution, in CA-G.R. CV No. 103488
are REVERSED and SET ASIDE. The July 21, 2014 Decision of the Regional
Trial Court, Branch 166, Pasig City is REINSTATED.
SO ORDERED.
Carpio, Brion, Del Castillo and Leonen, JJ., concur.

Footnotes

1. Penned by Associate Justice Franchito N. Diamante with Associate Justice

Japar B. Dimaampao and Associate Justice Carmelita Salandanan
Manahan, concurring; rollo, pp. 392-404.
2. Id. at 420-422.
3. Penned by Presiding Judge Rowena de Juan-Quinagoran; id. at 207-215.
4. Id. at 393.
5. Id. at 5.
6. Id. at 5-6.
7. Id. at 6-7.
8. Sec. 47. Foreclosure of Real Estate Mortgage. — In the event of foreclosure,
whether judicially or extra-judicially, of any mortgage on real estate
which is security for any loan or other credit accommodation granted,
the mortgagor or debtor whose real property has been sold for the full
or partial payment of his obligation shall have the right within one year
after the sale of the real estate, to redeem the property by paying the
amount due under the mortgage deed, with interest thereon at 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. However, the purchases at the auction
sale concerned whether in a judicial or extra-judicial foreclosure shall
 have the right to enter upon and take possession of such property
immediately after the date of the confirmation of the auction sale and
administer the same in accordance with law. Any petition in court to
enjoin or restrain the conduct of foreclosure proceedings instituted
pursuant to this provision shall be given due course only upon the filing
by the petitioner of a bond in an amount fixed by the court conditioned
that he will pay all the damages which the bank may suffer by the
enjoining or the restraint of the foreclosure proceeding.
Notwithstanding Act 3135, juridical persons whose property is being sold
pursuant to an extrajudicial foreclosure, shall have the right to
redeem the property in accordance with this provision until, but
not after, the registration of the certificate of foreclosure sale with
the applicable Register of Deeds which in no case shall be more
than three (3) months after foreclosure, whichever is
earlier. Owners of property that has been sold in a foreclosure sale
prior to the effectivity of this Act shall retain their redemption rights
until their expiration. [Emphasis supplied]

9. Rollo, p. 215.
10. Id. at 224.
11. Id. at 403.
12. Id. at 8.
13. Id. at 425.
14. Id. at 440.
15. Id. at 441-454.
16. Id. at 455-461.
17. G.R. No. 209370, March 25, 2015, 754 SCRA 544.
18. Ledonio v. Capitol Development Corporation, 553 Phil. 344 (2007).
19. Metropolitan Bank & Trust Company v. G & P Builders, Incorporated, G.R. No.
189509, November 23, 2015.
20. 706 Phil. 427 (2013).
21. G.R. No. 207791, July 15, 2015.

(White Marketing Development Corp. v. Grandwood Furniture & Woodwork,

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Inc., G.R. No. 222407, [November 23, 2016], 800 PHIL 845-859)