DACION EN PAGO

Dacion en pago is the delivery and transmission of ownership of a thing by

the debtor to the creditor as an accepted equivalent of the performance of an
existing obligation. It is a special mode of payment where the debtor
offers another thing to the creditor who accepts it as equivalent to the
payment of an outstanding debt.[4] Fordacion en pago to exist, the
following elements must concur: (a) existence of a money obligation; (b) the
alienation to the creditor of a property by the debtor with the consent of the
former; and (c) satisfaction of the money obligation of the debtor

RIGHT OF REDEMPTION VS. EQUITY OF REDEMPTION

In Huerta Alba Resort, Inc. vs. Court of Appeals, we held that the
[7]

right of redemption is not recognized in a judicial foreclosure, thus:

The right of redemption in relation to a mortgageunderstood in the sense of

a prerogative to re-acquire mortgaged property after registration of the
foreclosure saleexists only in the case of theextrajudicial foreclosure of the
mortgage. No such right is recognized in a judicial foreclosure except only
where the mortgagee is the Philippine National bank or a bank or a
banking institution.

Where a mortgage is foreclosed extrajudicially, Act 3135 grants to the

mortgagor the right of redemption within one (1) year from the registration of
the sheriffs certificate of foreclosure sale.

Where the foreclosure is judicially effected, however, no equivalent right of

redemption exists. The law declares that a judicial foreclosure sale, when
confirmed by an order of the court, x x x shall operate to divest the rights of
all the parties to the action and to vest their rights in the purchaser, subject to
such rights of redemption as may be allowed by law. Such rights exceptionally
allowed by law (i.e., even after the confirmation by an order of the court) are
those granted by the charter of the Philippine National Bank (Act Nos. 2747
and 2938), and the General Banking Act (R.A.337). These laws confer on the
mortgagor, his successors in interest or any judgment creditor of the mortgagor,
the right to redeem the property sold on foreclosureafter confirmation by the
court of the foreclosure salewhich right may be exercised within a period of
one (1) year, counted from the date of registration of the certificate of sale in
the Registry of Property.
But, to repeat, no such right of redemption exists in case of judicial
foreclosure of a mortgage if the mortgagee is not the PNB or a bank or
banking institution. In such a case, the foreclosure sale, when confirmed by
an order of the court, x x x shall operate to divest the rights of all the
parties to the action and to vest their rights in the purchaser. There then
exists only what is known as the equity of redemption. This is simply the
right of the defendant 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, or
even after the foreclosure sale but prior to its confirmation.

xxx

This is the mortgagors equity (not right) of redemption which, as above

stated, may be exercised by him 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. After such
order of confirmation, no redemption can be effected any longer. (Italics
supplied)

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

foreclosure of mortgage. The only exemption is when the mortgagee is
the Philippine National Bank or a bank or a banking institution. 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, to reiterate, 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. However, instead of exercising this equity of redemption,
petitioners chose to delay the proceedings by filing several
manifestations with the trial court. Thus, they only have themselves to
blame for the consequent loss of their property.

WAIVER OF REDEMPTION

ACFLC next faults the CA for invalidating paragraph 14 of the real

estate mortgage which provides for the waiver of the mortgagors right of
redemption. It argues that the right of redemption is a privilege; hence,
respondents are at liberty to waive their right of redemption, as they did in
this case.
 Settled is the rule that for a waiver to be valid and effective, it must, in
the first place, be couched in clear and unequivocal terms which will leave
no doubt as to the intention of a party to give up a right or benefit which
legally pertains to him. Additionally, the intention to waive a right or an
advantage must be shown clearly and convincingly. [13] Unfortunately,
ACFLC failed to convince us that respondents waived their right of
redemption voluntarily.

As the CA had taken pains to demonstrate:

The supposed waiver by the mortgagors was contained in a

statement made in fine print in the REM. It was made in the form
and language prepared by [petitioner]ACFLC while the
[respondents] merely affixed their signatures or adhesion
thereto. It thus partakes of the nature of a contract of adhesion. It
is settled that doubts in the interpretation of stipulations in
contracts of adhesion should be resolved against the party that
prepared them. This principle especially holds true with regard to
waivers, which are not presumed, but which must be clearly and
convincingly shown. [Petitioner] ACFLC presented no evidence
hence it failed to show the efficacy of this waiver.

Moreover, to say that the mortgagors right of redemption may

be waived through a fine print in a mortgage contract is, in the last
analysis, tantamount to placing at the mortgagees absolute
disposal the property foreclosed. It would render practically
nugatory this right that is provided by law for the mortgagor for
reasons of public policy. A contract of adhesion may be struck
down as void and unenforceable for being subversive to public
policy, when the weaker party is completely deprived of the
opportunity to bargain on equal footing.[14]

In fine, when the redemptioner chooses to exercise his right of

redemption, it is the policy of the law to aid rather than to defeat his right.
[15]
Thus, we affirm the CA in nullifying the waiver of the right of
redemption provided in the real estate mortgage.