ROSA QUIMSON, SONIA QUIMSON AND FRANCIS­CO QUIMSON, HEIRS OF THE LATE DR. FRANCISCO QUIMSON, PLAINTIFFS-APPELLANTS, VS. PHILIPPINE NATIONAL BANK, THRU ITS SPE­CIAL ASSETS DEPART…

Appeal from the order of the Court of First Instance of Rizal, Branch IV, dismissing its Civil Case No. 8300 after
trial on the merits, holding that under the charter of the Philippine National
Bank the right to redeem property sold in a judicial foreclosure sale of real
estate mortgage to said Bank can be exercised only within one year from the
date of the judicial confirmation thereof and not from the date of its
registration, without passing on the question raised in the pleadings before it
as to whether in an instance where the property sought to be repurchased is
only one of se­veral properties separately mortgaged by the same mortga­gor to
the said Bank at different times but sold in a single foreclosure proceeding
together with the others because the separate deeds of mortgage commonly
provide that each shall be security for all obligations of the mortgagor to the
Bank, as in this case, should be the a­mount of the particular loan for which
the property be­ing redeemed was mortgaged or the total of all the loans
covered by all the mortgages involved in the said fore­closure.

The trial court’s judgment of dismissal was pre­dicated thus:

“Francisco Quimson during his
lifetime mortgaged several proper­ties with the Philippine National Bank among
which was a parcel of land situated in San Juan,
Rizal, having an area of 465 square meters and
covered by Transfer Certificate of Title No. 47769 of the Land Re­cords of Rizal.  The property
was mortgaged for P2,500.00.  Because of the failure of said Francisco Quimson to pay the mortgage loans, the Philippine National
Bank filed foreclosure proceedings in the Court of First Instance of Nueva Ecija.

“On December 1, 1956,
a Writ of Execution was issued by the said Court of First Instance and the Pro­vincial
Sheriff of Rizal was direct­ed by the said Court to
sell at pub­lic auction the property in question covered by Transfer
Certificate of Title No. 47769.  The
property was sold to the Philippine National Bank, it being the highest bidder.

“On January 10, 1957,
the Provin­cial Sheriff of Rizal issued a certi­ficate
of sale in favor of the Philippine National Bank which certificate of sale was
given judicial confirmation on September
27, 1957.

“On April 24, 1959,
the Branch Manager of the Philippine National Bank wrote a letter to
plaintiff’s son, Francisco Quimson, Jr. who is
occupying the property, informing him that the property in question was sold by
the bank to Ricardo S. Mendoza for the sum of P7,763.36.

“The certificate of sale dated January 10, 1957 as well as the ju­dicial confirmation of the court were
registered only with the Re­gister of Deeds of Rizal
on Septem­ber 19, 1963.

“Plaintiffs who are the heirs of the late Francisco Quimson want to redeem the property from the Philippine
National Bank.  Defend­ant Philippine
National Bank, how­ever, refused alleging that the period of redemption which
is to be counted from the date of judicial confirmation has already expired and
that the property has already been sold to Ricardo S. Mendoza.

“Plaintiffs argued that the pe­riod of redemption should be
count­ed from the date that the sale and the judicial confirmation were re­gistered
on September 19, 1963.  In support of their argument, plain­tiffs
cited the case of Ernesto Sa­lazar, et al. vs. Flor
de Lis Mene­ses, et al., G.
R. No. 15378, which was decided and promulgated by the Supreme Court on July
31, 1963.

“The court cannot sustain the argument of the plaintiffs.  The above cited case, ‘Ernesto Salazar, et
al. vs. Flor de lis Meneses, et al.’ refers to an extrajudicial foreclosure and
does not apply to the case at bar.  The
rule in judicial foreclosure is different in that the period of redemption is
counted from the time of judicial confirmation. 
This is a well set­tled rule enunciated by the Supreme Court in the case
of Ernesto Gonzales vs. Philippine Nation­al Bank, 48 Phil. 824 as well as in
the very case cited by the plaintiffs.”

In appellants’ brief, they have assigned two al­leged errors, the
first one being:

“THE LOWER COURT ERRED IN HOLDING THAT THE ONE-YEAR PERIOD OF
REDEMPTION GRANTED BY SECTION 20, REPUBLIC ACT 1300, CHARTER OF THE PHILIPPINE
NATIONAL BANK, IN FAVOR OF THE PLAINTIFFS-APPELLANTS IN THIS CASE SHOULD BE
COUNTED FROM SEPTEMBER 27, 1957, THE DATE OF THE JUDICIAL CONFIRMATION OF THE
SHERIFF’S CERTIFICATE OF SALE DATED JANUARY 10, 1957, INSTEAD OF FROM SEPTEMBER
19, 1963, THE DATE WHEN THE CERTIFICATE OF SALE AND THE DECREE OF CONFIRMATION
OF THE SAME BY THE COURT WERE REGISTERED WITH THE OFFICE OF THE REGISTER OF
DEEDS FOR THE PROVINCE OF RIZAL, AND THAT, CONSE­QUENTLY, THE PERIOD OF REDEMP­TION
AS FAR AS PLAINTIFFS-APPELLANTS ARE CONCERNED HAD AL­READY EXPIRED.”

In their discussion of this alleged error of the trial court,
appellants rely on the firm and uniform rulings of this Court that the period
of redemption of real property with Torrens title and
sold in an execution sale under Sections 24 and 30 of Rule 39 must be computed
from the date of registration.  Cited by
them is this Court’s holding in Agbulos v. Alberto, 5
SCRA 790, 792 that:

“The property involved in the present case is registered
land.  It is the law in this jurisdiction
that when property brought under the operation of the Land Registration Act is
sold, the operative act is the registra­tion of the deed of conveyance.  The deed of sale does not ‘take effect as a
conveyance, or bind the land’ until it is registered (Section 50, Act No. 496; Tuason v. Raymundo, 28 Phil. 635;
Sika­tuna v. Guevara, 43 Phil. 371; Worecester v. Ocampo, 34 Phil.
646).  Undoubtedly, to be in con­sonance
with this well settled rule, Section 24, Rule 39 of the Rules of Court,
provides that a duplicate of the certificate of sale given by the sheriff who
made the auction sale to the pur­chaser must be filed (registered) in the
office of the register of deeds of the province where the property is situated.

“In Garcia v. Ocampo,
G. R. No. L-13029, June 30,
1959, 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.’ The entry or annotation made on the back of the certifi­cate
of title of the property in question on July 18, 1959 (supra) was in accordance
with this rul­ing when it provided that the exe­cution sale was ‘subject to re­demption
within one(1) year from registration hereof.’

“A case similar to the present is that of Gonzales, et al. v.
Philippine National Bank, et al., 48 Phil. 824, where we held that the
provision of Section 32, Act 2938 (Charter of the Philippine National Bank)
providing for a right of redemption in favor of the bank’s mortgagor ‘within
one year after the sale of the real estate as a result of the foreclosure’
should be construed to mean one year after the confirmation of the foreclosure
sale, because the sale becomes valid only after confirma­tion.  Along the same line we may say in this case
that the period of one year after the sale must likewise start only from
the date of regis­tration of the certificate of sale, because it is only then
that the certificate takes ‘effect as a con­veyance’ in accordance with Act
496.”

It is true that this case of Agbulos v.
Alberto in­volved a sale on an ordinary execution and not a foreclo­sure sale,
but it must be borne in mind that exactly one year after Agbulos,
in Salazar v. Meneses, 8 SCRA 495, this Court
speaking again thru Mr. Justice Arsenio Dizon who penned Agbulos, after
quoting the above portions thereof, held that:

“The above ruling is squarely applicable to the present case
which involves also registered land, in spite of the fact that the sale in
question is not an execution sale but a foreclosure sale.”

We reiterated this ruling in all
subsequent cases having similar factual circumstances:  Reyes v. Noblejas,
21 SCRA 1027; Rosario v. Tayug Rural Bank, Inc. 22
SCRA 1220; and Reyes v. Manas, 29
SCRA 736.  Even the dissent­ing opinion
of Mr. Justice Teehankee in Lazo
vs. Republic Surety & Insurance Co., 31 SCRA 329 emphasized Our unbro­ken
adherence to it.

Appellees insist that the said ruling
cannot apply to this case because, according to them, what is here involved is
a sale resulting from judicial foreclosure of real estate mortgage and not, as
in those cases, one by virtue of an extrajudicial foreclosure under Act 3135 as
amended by Act 4118.  It is pointed out
that in judicial foreclosures under Rule 68 (formerly 70) of the Rules of
Court, a mortgage debtor has no right of redemption after the judicial confirmation
of the sale of the mortgaged property, all that he has being the equity of
redemp­tion which must be exercised within ninety days from the finality of the
judgment, and that it is only by virtue of the Charter of the Philippine
National Bank that such a right of redemption after the foreclosure sale is
recognized as regards properties mortgaged to said Bank.  In this connection, appellees
cite the de­cision of this Court in the case of Gonzales v. Philip­pine
National Bank, 48 Phil. 824, the same case refer­red to by Justice Dizon in Agbulos, wherein We held:

“The sales of real property by the Philippine National Bank
under foreclosure proceedings are more or less sui
generis. 
Strange as it may seem, the question of re­demption in such cases is
separate and distinct from, and unlike, that of any other foreclosure pro­ceeding.

“The law in question was enact­ed for a special reason, and
should not be construed to defeat its purpose and intent.  Giving it a liberal construction, it is ap­parent
that in this class of cases, the words ‘within one year after the sale of real
estate, etc.’ should be construed to mean within one year after the
confirmation of the sale.  It is the
confirmation only which consummates the sale. 
Prior to that, the purchaser’s bid is nothing more than an executory contract, which may or may not be executed
depending upon the confir­mation of the sale. 
That is the spirit and intent of the law in question.”

and they argue that this is the ruling
that should con­trol in the case at bar, hence the period of redemption of
appellants should be considered as having started on September 27, 1957 when
the public auction sale in ques­tion to the appellee
Bank was confirmed.

We do not agree.  The
property herein involved is registered land. 
While, indeed, sales on foreclosure of properties mortgaged to the
Philippine National Bank may partake of being sui
generis, they need not depart from the sound
principles governing registration of transactions concerning lands coming under
the Land Re­gistration Act or the Torrens system.  As already stated, this Court has uniformly
ruled that redemption from exe­cution sales under ordinary judgments pursuant
to Sec­tion 30, Rule 39 of the Rules of Court should be made within twelve (12)
months from the registration of the same and We have
as uniformly applied the same rule to sales upon extrajudicial foreclosure of
registered lands.  We see no valid reason
why the rule in foreclosure of mortgages of registered real estate where the
mortgagee is the Philippine National Bank should not be the same.

Section 32 of Act 2938 (now Section 20 of Republic Act 1300), the
Bank’s charter, provides:

“SEC. 20.  Right of Redemption of property
foreclosed.  – The mortgagor shall have
the right, within the year after the sale of real estate as a result of the
foreclosure of a mortgage, to redeem the property by paying the amount fixed by
the court in the order of execution, with interest thereon at the rate specified
in the mortgage, and all the costs and other judicial expenses incurred by the
bank by reason of the execution and for the custody of said property.”

This is practically the same language as that of Section 6 of Act
3135 governing redemption in extraju­dicial foreclosures and Section 30 of Rule
39 govern­ing redemption from sales on execution of ordinary judgments.  Nothing said in the Gonzales case relied upon
by appellees precludes the desirability and pro­priety
of having a uniform procedure to govern matters or transactions of the same
nature or in pari materia.  It is
to be noted that nowhere in the Gonzales case does it appear that what was
involved therein was re­gistered land. 
Of course, it is understandable that with regard to unregistered land,
the most natural date from which the period of redemption should be computed
should be that of the judicial confirmation of the sale as it is only then
that, in the language of Section 3 of Rule 68, the sale “operates to
divest the rights of all the parties to the action and to vest their rights in
the purchaser.” Withal, the qualification contained in the same Section 3
of Rule 68 to the effect that the vesting of the rights of all the parties to
the foreclo­sure in the purchaser is “subject to such rights of re­demption
as may be authorized by law” verily implies that the applicable rules of
redemption, particularly as to the period thereof, must be premised on the
character of finality imparted by the judicial confirmation upon the sale but
it need not be computed from the date thereof but, rather, according to what
the particular applicable law providing for the right of redemption may ordain
or specify.  It is thus clear that it is
preferable that even in foreclosure of mortgage of registered real pro­perty by
the Philippine National Bank by virtue of its charter, the period of redemption
should start from the registration of the deed of sale conducted by the sheriff
and not from the date of confirmation thereof, and We so hold. 

Incidentally, appellee Mendoza contends
that if the above rule of registration is to be followed, and not the Gonzales
ruling regarding the date of confirmation, this Court should also apply as to
him the familiar rule, with respect to registered land, that actual knowledge is
equi­valent to registration, and since it appears that appel­lants were
notified by the appellee Bank on April 24, 1959 that
the property in question had been sold to him on April 16, 1959 yet, he
maintains that appellants’ period of redemption should be computed from the
date of said no­tice, April 24, 1959. 
The contention is not correct.  We
have already held in Reyes v. Manas, supra,
that “Of course, appellant maintained that the said ruling is good for
third parties but should not apply to a case ‘where no third party to the sale
is involved’.  This contention, however,
overlooks that the rule laid down is precisely for the person entitled to
exercise the right of redemp­tion, who necessarily is the owner of the property
sold and not any third party.” In other words, when it comes to the period
of redemption of registered real estate sold on execution, whether in
foreclosure proceedings or in ordinary cases, actual notice of the sale by the
judgment debtor or redemptioner is immaterial, the
period must always be computed from the date of registration of the
corresponding auction sale.

Accordingly, We hold that appellants’
first assign­ment of error is well taken and, therefore, appellants’ period of
redemption should be computed from September
19, 1963.  It may be stated,
however, that since the record is not very clear as to what concrete steps have
been ta­ken by appellants towards the actual redemption in con­troversy,
outside of the letter they have written to appellee
Bank on June 17, 1964 “requesting information as to proper steps to be
taken in order to repurchase the (subject) property”, We are not in a
position to hold now whether or not appellants’ right to make the said redemp­tion
may be considered as still subsisting.

In view, therefore, of the possibility that appel­lants might
still be able to exercise the redemption in question, We
have to consider the second alleged error which they have assigned in their
brief, to wit:

“AS A LOGICAL CONSEQUENCE OF THE FOREGOING ERROR, THE LOWER COURT
ERRED IN NOT DECLARING THAT THE SALE MADE BY DEFENDANT-APPELLEE PHILIPPINE
NATIONAL BANK IN FAVOR OF ITS CO-DEFENDANT-APPELLEE RICARDO MENDOZA ON APRIL
16, 1959, IS NULL AND VOID, AND IN NOT FIXING THE AMOUNT OF THE REDEMPTION
PRICE FOR THE PRO­PERTY INVOLVED IN THIS CASE.”

To start with, since, as already stated, We are not now in a
position to decide whether or not appellants’ pretended right of redemption
herein in controversy may still be exercised because it is not clear whether or
not they have made within one year after registration of the sale the
appropriate tender to the proper party, it fol­lows that We cannot now also
pass upon the question of whether or not the sale of the subject property to appel­lee Mendoza by appellee
Bank on April 16, 1959 is null and void. 
All that we can rule upon in connection with appel­lants’ second
assignment of error just quoted is the question of how much they should pay as
principal repurchase price, on the assumption that they can still make such re­purchase.  Appellants contend that the amount that they
should be made to pay should be only P6,045.00, the
amount for which appellee Bank acquired the subject
property at the foreclosure sale of January
10, 1957.  On the other hand,
both appellees maintain that such principal amount
should be P64,400.73, the amount stated in the writ of
exe­cution under which the mortgaged properties of appellants’ predecessor in
interest were sold at the foreclosure sale.

Appellees are right.  Although nothing is said about it in the decision
of the trial court, it is nevertheless clear in the stipulation of facts and
its annexes, which were submitted at the trial and which are the only
evidentiary matters appellants have incorporated in their record on appeal,
that the foreclosure judgment under which the land herein involved was sold was
not solely for the loan and mortgage over said land but for all the other
several indebtedness and mortgages, that Francisco Quimson,
predecessor of appellants, had incurred and executed in favor of appellee bank, all of which had already matured and had not
been paid, and, what is more important, that in each and everyone of the deeds
covering the said fore­closed mortgages, beginning with the very one hereby di­rectly
affected, there is the common stipulation worded thus:

“That for and in consideration of certain loans-overdrafts and
other cre­dit accommodations obtained from the Mortgagee, and to secure the
payment of the same and those that may hereafter be obtained the principal of
all which is hereby fixed at – TWO THOUSAND FIVE HUNDRED – (P2,500.00) Pesos,
Philippine currency, as well as those that the Mortgagee may extend to the
Mortgagor, including interest and expenses or any other obligation owing to the
Mortgagee whether direct or indirect, principal or secondary, as appears in the
accounts, books, and records of the Mortgagee, the Mortgagor, does hereby
transfer and convey by way of mortgage unto the mortgagee, its successors or
assigns, the parcels of land which are described in the list inserted on the
back of this document together with all the buildings and improvements now
exist­ing or which may hereafter be erected or constructed thereon, of which
the Mortgagor declares that he is the abso­lute owner free from all liens and incumbrances.” (p. 64, Rec. on Appeal)

In other words, it is undisputed and
plainly obvious from the real evidence in the record that, contrary to the im­pression
given by appellants in their brief, the judgment against them or their
predecessor for which the subject property was sold, together with their other
properties, was for more than P64,400.73 and that is
the amount that appears in the writ of execution.  In such circumstances, We have no alternative
but to apply the pertinent provision of Section 20 of the appellee
bank’s charter, aforequoted, the language of which is
unmistakable and unequivocal – “The mortgagor shall have the right, …. to redeem the property by paying the amount
fixed by the court in the order of execution, with interest thereon at the rate
spe­cified in the mortgage, and all the costs and other judi­cial expenses
incurred by the Bank by reason of the execu­tion and sale and for the custody
of said property.”

That, indeed, the property in question was the subject of a
separate and distinct earlier mortgage from the others involved in the
foreclosure, the said mortgage being on a loan of only P2,500.00 and it was
purchased by appellee bank at the execution sale for
only P6,045.00 and was later on sold by it to appellee
Mendoza for only P6,500.00, payable in five years, cannot alter the fact that
in the very deed of mortgage relied upon by them, appellants’ predecessor
agreed to make the same property a security not only for the P2,500.00 loan
already ob­tained by him but for all other obligations he may sub­sequently
have to the appellee bank and subsequently, he did
incur other such obligations, all amounting to over P64,000.00, albeit secured
by other mortgages.  Appellee
bark must have had its reasons for imposing such a con­dition and from all that
is extant in the records, appel­lants’ predecessor agreed to it.  Such being the case, We can only say that
this Court is without power to alter or modify the terms and conditions of contractual
obli­gations freely agreed upon by the parties on a mere plea of the obligator
that he is without means to fully comply with it or that he feels the same to
be inequitable.  Besides, if it is
considered that it is possible that the other collaterals given by appellants’
predecessor may not yield enough to cover the full amount of his indebted­ness
secured thereby, the justification for the all-inclu­sive provision can easily
be perceived.  After all, as long as all
the properties mortgaged are returned to appellants upon their payment of the
full amount of over P64,000.00 appellees
are insisting upon, We cannot see any inequity in the posture of appellee Bank.

As already stated, We are aware that the lower court made no
findings, whether of fact or of law on the point under discussion, but in
instances like the one at bar where in the appeal before Us both parties have
joined issues in their briefs on a matter not touched upon by the trial court
because it is inconsistent with the theory on which the decision is premised,
but which may be a necessary alternative in the event of reversal or modi­fication
of the trial court’s theory, and the relevant and material facts are undisputed
or indisputable, by stipulation of the parties or as found by the court from
indubitable evidence, and are incorporated in the record on appeal, We hold
that it is within the prerogative of this Court in the pursuit of substantial
justice to con­sider such matter and thus avoid the necessity, other­wise, of
returning the case to the trial court for fur­ther proceedings, with
concomitant added expenses and loss of time for the parties.

Accordingly, We hold that the amount which appel­lants should pay
for the redemption of the property in question must be the one fixed in the
writ of execution under which it was sold, which as stated above is more than
P64,000.00.

IN VIEW OF ALL THE
FOREGOING, the decision of the lower court is modified in the sense that
the appel­lants may be allowed to redeem the subject property af­ter this
decision has become final, if they have taken the proper steps to enable them
to exercise their right thereto by having made within one (1) year from the re­gistration
of the execution sale the appropriate tender to the proper party, and provided
that they pay the full amount fixed in the writ of execution of over
P64,000.00, without pronouncement as to costs.

Concepcion, C.J., Reyes, J.B.L., Dizon, Zaldivar, Fernando, and Teehankee, JJ., concur.

Ruiz Castro, J., reserves his
vote.

Makalintal and Villamor, JJ.,
took no part.

Makasiar, J., on official leave of absence.