REYES V. SPOUSES HAMADA 14 SCRA 215 (1965)

 FACTS: Spouses Hamada owned several properties in Baguio which were mortgaged to PNB. As a result of nonpayment, an extrajudicial foreclosure proceeding was instituted by PNB over the said properties.

1.    The subject properties were sold at a public auction in February 11, 1960 with Arsenio Reyes as the highest bidder.

2.    On the evening of February 10, 1961 (the last day of redemption), the spouses Hamada delivered to the city sheriff checks to cover for the redemption amount which was accepted by the said official

3.    However, the purchaser Reyes refused to recognize the validity of such redemption and thereafter demanded the delivery of possession of the properties which remained with the spouses Hamada

4.    Upon refusal of the spouses Hamada to do the same, Reyes filed a civil case before CFI (Civil Case no. 1025) for the declaration of ownership and right to possession of the subject properties by reason of his purchase thereof at the auction sale in February 1960

5.    During the pendency of the case, Reyes filed another complaint (Civil Case no. 1041) for the recovery of the rentals paid by the tenants of the subject properties on the ground that under Sec 30 of Rule 30 ROC (Old Rules of Court), Reyes as purchaser of the properties, was entitled to the rentals receivable from the tenants which were paid to the mortgagors during and after the period of redemption

6.    CFI dismissed the complaint by reason of the pendency of another action involving the same parties over the same properties.

ISSUE: WON petitioner Reyes is entitled to the rentals received from the subject properties pending the case involving the redemption of the same

HELD: No.  

Petitioner Reyes anchors his argument on Sec 30 Rule 39 where if the properties are being occupied by paying tenants, the right to the rentals thereof is granted to the purchaser of the properties.

In Chan v. Espe, the SC held that the said provision is clear that if the period of redemption the judgment-debtor is in possession of the property sold, he is entitled to retain it and receive its fruits, the purchaser not being entitled to its possession; but if the property is in the possession of a tenant, it is only then that the purchaser is entitled to receive its rents or the reasonable value of its use and occupation. In such case, the purchaser is accountable for the amount received to the judgment-debtor when he effects the redemption.

In short, before the expiration of the 1-year period within which the judgment-debtor or mortgagor may redeem the property, the purchaser thereof is not entitled, as a matter of right, the possession of the same. While it is true that the Rules of Court allow the purchaser to receive the rentals from the tenants, the rentals received do not belong to the purchaser but still pertain to the debtor or mortgagor. The rationale for the rule is to secure for the benefit of the debtor or mortgagor the payment of the redemption amount and the consequent return to him of his properties sold at public auction.

In the present case, the question to be resolved in Civil Case no. 1025 is the proper and timely redemption of the properties sold at public auction. It is clear that the right to the rentals during the period of redemption is necessarily included in the issued of timeliness and adequacy of the redemption made or exercised by the mortgagors Hamada.