Redemption Rights in Foreclosure: Consignation of Redemption Price Is Mandatory

The Supreme Court’s 2009 ruling in Tolentino v. Shenton Realty Corp. clarifies a critical point for property owners facing extrajudicial foreclosure: filing a court action for judicial redemption does not, by itself, stop the issuance of a writ of possession. To protect possession rights, the redemption price must actually be paid or consigned with the court.

The Facts of the Case

In 1996, Dr. Marylou Tolentino obtained a ₱3.7 million loan from Bank of Southeast Asia, secured by a real estate mortgage over her property. After she defaulted, the bank foreclosed extrajudicially under Act 3135, as amended. At the public auction on 24 September 1999, Shenton Realty Corp. purchased the property for ₱3,958,539.92 as the highest bidder. The Certificate of Sale was issued on 5 October 1999 and annotated on the title on 7 February 2001.

On 6 February 2002, Tolentino filed a complaint for judicial redemption. She later sought to intervene in Shenton’s separate petition for a writ of possession. The trial court denied her intervention and ordered the writ issued. Tolentino appealed to the Supreme Court.

The Issue

The central question was whether the trial court erred in issuing the writ of possession despite Tolentino’s pending action for judicial redemption.

The Ruling

The Supreme Court denied Tolentino’s petition and upheld the writ of possession. The Court found two key defects in her position.

First, the redemption was not perfected. Under Section 6 of Act 3135, the debtor may redeem the property within one year from the date of registration of the Certificate of Sale. Since the annotation occurred on 7 February 2001, Tolentino had until 7 February 2002 to redeem. Although she filed her judicial redemption complaint on 6 February 2002, the records showed she never paid or consigned the redemption price with the trial court—neither at the time of filing nor at any point thereafter.

Second, filing an action is not enough. Citing Tolentino v. Court of Appeals, the Court emphasized that judicial redemption requires three elements: (1) timely filing of the action; (2) good faith—meaning the action is filed solely to determine the redemption price, not to stretch the redemptive period indefinitely; and (3) prompt payment in full once the price is determined. Mere filing, without payment or consignation, does not preserve possession rights.

The Court reasoned that between a debtor who has not paid or consigned the redemption price and a purchaser who bought the property at auction, the purchaser is more entitled to possession. The debtor cannot gain possession merely by filing an action for judicial redemption without ever paying or consigning the redemption price with the court.

The Consignation Requirement

The ruling underscores that consignation—depositing the redemption price with the court—is mandatory to perfect redemption. Under Section 28, Rule 39 of the Rules of Civil Procedure, redemption requires paying the purchaser the purchase price, plus one percent monthly interest, and any taxes or assessments the purchaser paid. Without such payment or consignation, the right to redeem remains unexercised.

The Court also addressed a procedural point: a corporate officer who signs the verification of a motion must be authorized by the board of directors. Here, although the officer initially failed to show authority, the corporation later submitted a Secretary’s Certificate confirming his authorization. The Court allowed this as substantial compliance in the interest of justice.

Practical Takeaways

• Pay or consign promptly. Filing a judicial redemption action is not a substitute for paying the redemption price. Consignation with the court is required to perfect the right.
• Watch the one-year deadline. The redemption period runs one year from registration of the Certificate of Sale, not from the auction date. Track this date carefully.
• Act in good faith. Courts will not allow redemption actions used merely to delay possession. The action must be filed to determine the price, and payment must follow within a reasonable time.
• Possession follows ownership. Once the redemption period lapses without payment, the purchaser is entitled to a writ of possession as a matter of course.
• Corporate authorizations matter. If a corporation files motions in foreclosure proceedings, ensure the signing officer has board authority, and be ready to prove it with a Secretary’s Certificate.

This article is general information and not legal advice. For your specific situation, consult a lawyer or ask ASG Legal AI.