Decision: Ibaan Rural Bank, Inc. v Court of Appeals, G. R. No. 123817, December 17, 1999

Essentially, two issues are raised for resolution. What was the period of redemption: two years as unilaterally fixed by the sheriff in the contract, or one year as fixed by law? May respondent court properly award attorney's fees solely on the basis of the refusal of the bank to allow redemption?

We now resolve these issues.

When petitioner received a copy of the Certificate of Sale registered in the Office of the Register of Deeds of Lipa City, it had actual and constructive knowledge of the certificate and its contents. For two years, it did not object to the two-year redemption period provided in the certificate. Thus, it could be said that petitioner consented to the two-year redemption period specially since it had time to object and did not. When circumstances imply a duty to speak on the part of the person for whom an obligation is proposed, his silence can be construed as consent. By its silence and inaction, petitioner misled private respondents to believe that they had two years within which to redeem the mortgage. After the lapse of two years, petitioner is estopped from asserting that the period for redemption was only one year and that the period had already lapsed. Estoppel in pais arises when one, by his acts, representations or admissions, or by his own silence when he ought to speak out, intentionally or through culpable negligence, induces another to believe certain facts to exist and such other rightfully relies and acts on such belief, so that he will be prejudiced if the former is permitted to deny the existence of such facts. 

In affirming the decision of the trial court, the Court of Appeals relied on Lazo vs. Republic Surety and Insurance Co., Inc., where the court held that the one year period of redemption provided in Act No. 3135 is only directory and can be extended by agreement of the parties. True, but it bears noting that in Lazo the parties voluntarily agreed to extend the redemption period. Thus, the concept of legal redemption was converted by the parties in Lazo into conventional redemption. This is not so in the instant case. There was no voluntary agreement. In fact, the sheriff unilaterally and arbitrarily extended the period of redemption to two (2) years in the Certificate of Sale. The parties were not even privy to the extension made by the sheriff. Nonetheless, as above discussed, the bank can not after the lapse of two years insist that the redemption period was one year only.

Additionally, the rule on redemption is liberally interpreted in favor of the original owner of a property. The fact alone that he is allowed the right to redeem clearly demonstrates the solicitousness of the law in giving him another opportunity, should his fortune improve, to recover his lost property. 

Lastly, petitioner is a banking institution on whom the public expects diligence, meticulousness and mastery of its transactions. Had petitioner diligently reviewed the Certificate of Sale it could have easily discovered that the period was extended one year beyond the usual period for redemption. Banks, being greatly affected with public interest, are expected to exercise a degree of diligence in the handling of its affairs higher than that expected of an ordinary business firm. 

On the second issue, the award of attorney's fees must be disallowed for lack of legal basis. The fact that private respondents were compelled to litigate and incur expenses to protect and enforce their claim does not justify the award of attorney's fees. The general rule is that attorney's fees cannot be recovered as part of damages because of the public policy that no premium should be placed on the right to litigate. 11 The award of attorney's fees must be deleted where the award of moral and exemplary damages are eliminated. 

WHEREFORE, the decision of the Court of Appeals in CA-G.R. CV No. 32984 is AFFIRMED, with the MODIFICATION that the award of attorney's fees is deleted. No pronouncement as to costs.

SO ORDERED.