Goldenway v.

Equitable
GR no. 195540
March 13, 2013
FACTS:
Before the Court is a petition for review on certiorari which seeks to reverse and set aside
the decision of the Court of Appeals, affirming the decision of the Regional Trial Court,
dimissing the complaint in the Civil Case.
Goldenway Merchandising Corporation executed a Real Estate Mortgage in favor of
Equitable PCI Bank over its real properties situated in Valenzuela, Bulacan, securing for the P
2,000,000 million pesos loan granted by respondent to petitioner. When petitioner failed to settle
its loan obligation respondent extrajudicially foreclosed the mortgage, selling to respondent for P
3,500,000. Petitioner intended to redeem the foreclosed properties by tendering a check in the
amount of P 3,500,000, however he was told that the redemption is no longer possible because
the certificate of sale had already been registered. According to the Registry of Deeds, new
certificates of title were already issued in favor of the respondent. On December 7, 2001,
petitioner filed a complaint for specific performance and damages against the respondent,
arguing that the one-year period of redemption under Act No. 3135 should apply and not the
shorter redemption period provided in RA 8791. He asserted that applying the latter statute
would result in the impairment of the obligation of contracts and a violation of the equal
protection clause. He added that he was not apprised of the assessment and fees incurred by
respondent, depriving him to exercise his right of redemption prior to the registration of the
certificate of sale. Respondent argues that petitioner had all the time to redeem the foreclosed
properties from the time when it received the letter of demand and notice of sale, and as for the
check tendered, it was not for the amount required.
RTC dismissed the complaint, stating that the attempt to redeem was already too late and
the redemption was not validly done because Atty. Judy Ann Abat-Vera who talked to the
respondent bank, was not properly authorized by petitioners Board of Directors to transact for
and in its behalf; it was only the alleged President of petitioner corporation, who gave instruction
to Atty. Abat-Vera to redeem the foreclosed properties. The CA affirmed the RTCs decision
stating that RA 8791 specifically intends to shorten the period of redemption for juridical
persons. The motion for reconsideration was likewise denied, thus this petition.
ISSUE(S):
1. Whether or not applying RA 8791 would result in a violation of the non-impairment
clause of the Constitution.
HELD:
1. No.
Petitioner contends that RA 8791 is inapplicable for the contracting parties expressly stipulated
in the Deed of Real Estate Mortgage that Act No. 3135 should apply to the foreclosure of the
mortgage. It is argued then that applying RA 8791 would be a substantial impairment of its
vested right of redemption under the real estate mortgage contract. The Court ruled that the law
governing cases of extrajudicial foreclosure of mortgage is Act No. 3135, which states that
redemption must be done within one year counted form the date of registration of the certificate
of sale. However RA 8791 took effect on June 13, 2000 stating that juridical persons whose
Prepared by: Jo-Anne D. Coloquio

property is being sold pursuant to an extrajudicial foreclosure, shall have the right to redeem only
before the registration of the certificate of foreclosure sale with the Register of Deeds which in
no case shall be more than three months after foreclosure, whichever is earlier, but owners of
property that has been sold in a foreclosure sale prior to the effectivity of the Act shall retain
their redemption rights. As understood from the provision, an exception is made in case of
juridical persons. RA 8791 is already applicable to the case at bar for mortgage was foreclosed
when it was already in effect.
The contention of petitioner that RA 8791 violates the constitutional proscription against
impairment of the obligations of contract has no basis. The purpose of the non-impairment clause
is to safeguard the integrity of contracts against unwarranted interference of a state. Contracts
should not be tampered with by subsequent laws that would change or modify the rights and
obligations of the parties. RA 8791 did not divest juridical persons of the right to redeem, but
only modified the time for the exercise of the right by reducing the one-year period originally in
Act No. 3135. There is no retroactive application for RA 8791 exempts those properties
foreclosed prior to its effectivity. Likewise, the statute does not violate the equal protection
clause for the latter permits reasonable classification. The difference in the treatment of juridical
persons and natural persons was based on the nature of the properties foreclosed if these are used
as residence (for which the more liberal one-year redemption period is retained), or used for
industrial or commercial purposes (a shorter term is necessary to reduce the period of uncertainty
in the ownership of property and enable mortgagee-banks to dispose sooner of these acquired
assets). RA 8791 is aimed to ensure the solvency and liquidity of our banks.

Prepared by: Jo-Anne D. Coloquio