SC: Extrajudicial demand not required before judicial foreclosure

The Supreme Court (SC) said Friday an extrajudicial demand, or a request of payment made outside of a court, is not required for judicial demand, unless specified by a law or agreed upon by the parties involved.

In a 14-page decision, the SC Second Division granted the petition filed by a condominium corporation against Hsieh Hsiu-Ping, a unit owner, and Edward Lim, who later came to possess the unit through bidding.

"Clearly, unless otherwise stipulated by law or by the terms of the contract, an extrajudicial demand is not required before a judicial demand can be resorted to," it said.

The SC said that a creditor also has the right to initiate foreclosure as well as to demand payment either through the court (judicially) or outside of court (extrajudicially) once a debt is due.

"As soon as a debt becomes due, the creditor gains not only the right to demand—judicially or extrajudicially—its payment or fulfillment from the debt. In addition, the creditor becomes entitled to the right to initiate foreclosure of the security as payment," it said.

The case stemmed from Ping's failure to pay P4.6 million in associate dues to the condominium, which resulted in San Juan City levying the unit.

The property was sold to Lim, the highest bidder, in 2012. After Ping failed to redeem the unit within the one-year redemption period, the local government issued a deed transferring the property to the bidder.

Meanwhile, the condominium filed a judicial foreclosure with the regional trial court, saying that Lim assumed Ping's dues.

The RTC ruled in favor of the condominium but the CA reversed the ruling.

For its part, the SC affirmed the RTC's decision.

"Foreclosure is just an alternative remedy to the collection for sum of money to enforce the debtor's payment of the obligation," it said. — VDV, GMA Integrated News