Salazar vs. Meneses

The one-year period of redemption for an extrajudicial foreclosure sale of registered land begins to run only from the registration of the certificate of sale, not from the date of the auction sale. A deed of absolute sale executed by the mortgagee-purchaser before such registration does not take effect as a conveyance and may be annulled; the right of redemption subsists until the expiration of one year from registration.

Antonio Dizon, married to Teresa de los Reyes, was the registered owner of a parcel of land with improvements on M. Natividad Street, Manila, covered by Transfer Certificate of Title No. 76223. To secure a loan of P6,000, later increased to P7,000, he executed a real estate mortgage and a supplementary mortgage in favor of Flor de Lis Meneses in May and June 1950. Both mortgages contained an irrevocable special power of attorney authorizing the mortgagee, upon foreclosure, to sell the property and execute the corresponding deeds. Dizon defaulted, and Meneses extrajudicially foreclosed the mortgage. The property was sold at public auction on October 29, 1954 to Meneses as the highest bidder. The sheriff’s certificate of sale stated a redemption period of one year from October 29, 1954 to October 30, 1955, but it was registered only on May 26, 1956; the sheriff’s return was registered on May 30, 1956. Dizon died intestate on August 23, 1955. The Salazar spouses, claiming to be creditors, commenced intestate proceedings for his estate and obtained approval of their claim on August 3, 1956. On May 24, 1956, no redemption having been made, Meneses, as attorney-in-fact of the deceased mortgagor, executed an absolute deed of sale of the property in favor of herself and her husband, Avelino Sebastian. The deed was registered on May 26, 1956, cancelling TCT No. 76223 and issuing TCT No. 43748 in their names. The Salazars then filed suit to annul that deed and compel redemption.

• The Mortgages: Antonio Dizon, registered owner of a parcel of land with improvements on M. Natividad Street, Manila under TCT No. 76223, executed a real estate mortgage on May 29, 1950 in favor of Flor de Lis Meneses to secure a P6,000 loan. A supplementary mortgage for an additional P1,000 followed on June 6, 1950, raising the total secured amount to P7,000. Each mortgage contained an irrevocable special power of attorney empowering the mortgagee, in the event of foreclosure, to sell the property and execute all necessary deeds. Both mortgages were duly registered on June 1 and June 9, 1950, respectively.

• Foreclosure and Auction Sale: Dizon defaulted on the principal obligation. Meneses foreclosed the mortgage extrajudicially. At the public auction held on October 29, 1954, the Sheriff of Manila sold the property to Meneses as the highest bidder. The sheriff’s certificate of sale expressly fixed the one-year redemption period from October 29, 1954 to October 30, 1955, but it was presented for registration in the Registry of Deeds only on May 26, 1956. The sheriff’s return was registered on May 30, 1956.

• Death of Mortgagor and Creditors’ Claim: Antonio Dizon died intestate on August 23, 1955. On October 31, 1955, the spouses Ernesto Salazar and Soledad G. de Salazar, alleging they were creditors, instituted Special Proceedings No. 28021 for the settlement of Dizon’s estate in the Court of First Instance of Manila and filed their claim therein. The probate court approved the claim on August 3, 1956.

• Deed of Sale and Issuance of New Title: On May 24, 1956, no redemption having been made, Flor de Lis Meneses, acting as attorney-in-fact of the deceased mortgagor under the irrevocable special power of attorney, executed an absolute deed of sale of the foreclosed property in favor of herself and her husband, Avelino Sebastian. The deed was registered on May 26, 1956. Consequently, TCT No. 76223 was cancelled and TCT No. 43748 was issued in the names of the purchasers.

• Complaint to Annul and Compel Redemption: The Salazar spouses, as judgment creditors of the estate, contended that the redemption period had not yet expired because it commenced only upon registration of the certificate of sale on May 26, 1956. On October 1, 1956, they filed Civil Case No. 30767 against Flor de Lis Meneses, Avelino Sebastian, the heirs of Antonio Dizon, and the Philippine Trust Co. as administrator of the estate, praying for annulment of the deed of sale and an order compelling Meneses to permit redemption of the property.

• Commencement of Redemption Period: Appellants argued that under the Land Registration Act and pertinent rules, the period of redemption for registered land runs from the registration of the certificate of sale, not from the date of the auction sale. They maintained that the certificate of sale was registered only on May 26, 1956, and therefore the one-year redemption period had not expired when they filed their complaint on October 1, 1956; their right to redeem as judgment creditors of the deceased mortgagor was still subsisting.

• Invalidity of Deed of Sale: Appellants contended that the absolute deed of sale executed by Meneses on May 24, 1956 — before registration of the certificate of sale — was void, because no effective conveyance of registered land could occur prior to such registration. Until the certificate of sale was registered, the period of redemption did not commence, and no valid transfer of title could be made.

• Expiration of Redemption Period: Respondents maintained that the redemption period of one year explicitly stated in the sheriff’s certificate of sale — from October 29, 1954 to October 30, 1955 — had already expired when appellants attempted to redeem and filed suit. They argued that the certificate’s terms governed, and its subsequent registration did not restart or extend the period.

• Validity of Deed and Title: Respondents relied on the irrevocable special power of attorney in the mortgage, which authorized Meneses to sell the property and execute deeds after foreclosure. They argued that the deed of sale executed on May 24, 1956 as attorney-in-fact was lawful, and its registration on May 26, 1956 validly consolidated title in their names, thereby barring any belated claim to redeem.

• Commencement of Redemption Period: Whether the one-year period of redemption for an extrajudicial foreclosure sale of registered land commences on the date of the auction sale or on the date of registration of the certificate of sale.

• Commencement of Redemption Period: The one-year redemption period commences only upon registration of the certificate of sale. Section 50 of Act No. 496 provides that a deed, mortgage, lease, or other voluntary instrument affecting registered land does not take effect as a conveyance or bind the land until registered. Consistent with this principle, Section 24 of Rule 39 of the Rules of Court requires that the certificate of sale be filed and registered in the office of the register of deeds. In Garcia v. Ocampo and Agbulos vs. Alberto, the rule was settled that the twelve‑month redemption period under Section 26 of Rule 39 runs not from the date of the sale but from the time of registration of the certificate of sale. The same doctrine applies with equal force to extrajudicial foreclosure sales of registered land. Because the certificate of sale in this case was registered only on May 26, 1956, the period of redemption had not expired when appellants filed their complaint on October 1, 1956. The absolute deed of sale executed by the mortgagee‑purchaser on May 24, 1956 — before the certificate of sale was registered — was invalid and was accordingly annulled. Appellants were entitled to exercise the right of redemption.

• Redemption Period for Registered Land Runs from Registration — In extrajudicial foreclosure sales of registered land, the one-year period of redemption commences from the date of registration of the certificate of sale with the register of deeds, not from the date of the auction sale. The rule rests on Section 50 of Act No. 496, which ordains that no voluntary instrument affecting registered land takes effect as a conveyance or binds the land until its registration. The certificate of sale is such an instrument; it becomes effective as a conveyance only upon registration. Consequently, any deed of absolute sale or consolidation of title executed before registration of the certificate of sale is void insofar as it prejudices the right of redemption of interested parties. The doctrine applies to execution sales as well as extrajudicial foreclosure sales of registered property.

• “In Garcia v. Ocampo … we held that the twelve months period of redemption provided for in Sec. 26, Rule 39 of the Rules of Court ‘begins to run not from the date of the sale, but from the time of registration of the sale in the office of the register of deeds’.” — This passage states the controlling rule on when the redemption period commences for registered land.

• “The above ruling is squarely applicable to the present case which involves also registered land, inspite of the fact that the sale in question is not an execution sale but a foreclosure sale.” — This excerpt clarifies that the registration‑based commencement of the redemption period is not confined to execution sales but equally governs extrajudicial foreclosure sales of registered property.

• Agbulos vs. Alberto, G.R. No. L-17483, July 31, 1962 — Followed and applied as controlling authority; held that for registered land, the period of redemption under the Rules of Court runs from registration of the certificate of sale, not from the date of the auction sale.

• Garcia v. Ocampo, G.R. No. L-13029, June 30, 1959 — Cited and applied for the explicit holding that the twelve‑month redemption period under Section 26, Rule 39 begins to run only from the time of registration of the sale.

• Gonzales, et al. v. Philippine National Bank, et al., 48 Phil. 824 — Distinguished by analogy; where the redemption period under the PNB Charter was construed to run from confirmation of the foreclosure sale because the sale became valid only upon confirmation, the Court reasoned that, similarly, for registered land, the period runs from registration because the certificate of sale takes effect as a conveyance only upon registration.

• Section 50, Act No. 496 (Land Registration Act) — Provides that no deed, mortgage, lease, or other voluntary instrument shall take effect as a conveyance or bind the land until registered. Applied to hold that the sheriff’s certificate of sale in an extrajudicial foreclosure sale takes effect as a conveyance only upon registration, and hence the redemption period commences from that date.

• Sections 24 and 26, Rule 39 of the Rules of Court — Section 24 requires the filing and registration of the sheriff’s certificate of sale. Section 26 grants a one‑year redemption period. Construed together with Section 50 of Act No. 496, the redemption period under Section 26 begins to run from the registration of the certificate of sale.

Bengzon, C.J., Padilla, Bautista Angelo, Labrador, Concepcion, Reyes, J.B.L., Barrera, Paredes, Regala, and Makalintal, JJ., concurred.