MELECIO ROSARIO AND ROMEO C. RAMIREZ, PLAINTIFFS-APPELLEES, VS. TAYUG RURAL BANK, INC., ET AL., DEFENDANTS, TAYUG RURAL BANK, INC., DEFENDANT-APPELLANT.

This case was certified to us by the Court of Appeals pursuant to
section 17 of Republic Act 296, as amended, be­cause the appellant raises only
questions of law.

At the threshold is the principal question of whether the period
for redemption of property sold at public auction by virtue of an extrajudicial
foreclosure under Act 3135, as amended, is to be reckoned from the date the
sheriff executes the certificate of sale or from the date the certificate of
sale is recorded in the Registry of Deeds.

The antecedent facts are not disputed.  Romeo C. Ramirez borrowed P440 from the Tayug Rural Bank, to secure which Me­lecio
Rosario mortgaged in favor of the bank his 15,000-square meter land covered by
TCT 9562. Ramirez made several payments on the loan so that on maturity date (February 15, 1955), his remaining
indebtedness was only P170.  But because
he failed to settle his obligation in full, the bank, after giving the required
notices, extrajudicially foreclosed the
mortgage.  The provincial sheriff, on July 21, 1961, sold the land at
public auction for the unpaid amount of P208.53 in favor of the bank, to which
the corresponding certificate of sale was issued on the same day.  The certificate of sale was, however,
recorded in the Registry of Deeds only on November 16, 1962. Five days thereafter, or on November 21, 1962, the bank sold the
land to the defendant Nenita Vergara
for P1,600.

In the meantime, or on August
22, 1962, Ramirez re­mitted the sum of P100 to the bank as a
deposit for redemption.  And on November 7, 1963, he wrote the bank,
offering to redeem the property by paying the unpaid balance toge­ther with
interests and expenses.  He enclosed a
money or­der for P108.53; this sum plus what he had previously de­posited
amounted to P208.53.  The bank, however,
refused to accept the offer, contending that the one-year redemp­tion period
began to run on July 21, 1961
and, therefore, had already slipped away. 
Hence, Melecio Rosario and Romeo Ramirez sued
the bank and Nenita Vergara,
to compel these two defendants to accept payment and to reconvey
the pro­perty.  Nenita
Vergara defaulted.

On the basis of the stipulation of facts and documen­tary
evidence submitted by the parties, the lower court ren­dered judgment as
follows:

“IN VIEW OF THE FOREGOING, judgment is hereby rendered in
favor of plaintiffs, particularly Me­lecio Rosario,
the registered owner of the land in question under Transfer Certificate of
Title No. 9562, ordering the Tayug Rural Bank and
defendant Nenita Vergara to
permit Melecio Rosario to redeem the property in
question by paying the amount of in­debtedness remaining on July 21, 1961, plus
inte­rests at the rate of 1% a month from said date until the day of
redemption.  And the redemption shall
have to be done within thirty (30) days from the time the present decision
shall have become final and executory.

“The Tayug Rural Bank and defendant Nenita Ver­gara are also
sentenced to pay the plaintiffs by way of attorney’s fees and litigation
expenses the amount of P100.00.

“Defendants, besides, shall pay the costs.”

Hence, the present recourse by the bank.

The judgment a quo must be affirmed.

This Court has already spelled out with sufficient clarity its
position on this matter.^[1]
And in the most re­cent case of Arsenio
Reyes vs. Antonio Noblejas, G.R. No. L-23691, November 25, 1967, 1967D PHILD 520,
we rejected the very same theory now espoused by the appellant.  There, we expli­citly and emphatically stated
that the redemption period should be reckoned from the date of registration of
the certificate of sale and not from the date of the auction sale.

In that case, the provincial sheriff, on the strength of an
extrajudicial foreclosure under Act 3135, sold at public auction, on February 6, 1963, certain properties
mortgaged to the Philippine National Bank. 
The corresponding certificate of sale was issued to the highest bidder
on February 21, 1963, which
certificate fixed the date of the auction sale as the starting point of the
one-year redemption period.  The certi­ficate
of sale was not, however, recorded in the office of the Register of Deeds.  When the affidavit of consolidation of
ownership was sought to be registered on February 10,1963, the Register of
Deeds refused for the reason that the redemp­tion period had not yet
expired.  The Land Registration Com­mission
sustained the Register of Deeds.

The question upon which the case turned was: In an ex­trajudicial
foreclosure of real estate mortgage under Act 3135, when does the period of
redemption of the auctioned property start? 
We resolved this question in this wise:

“It is the theory of petitioner that in sales of property at
public auction pursuant to an extra­judicial foreclosure of real estate
mortgage under Act 3135, as amended by Act No. 4118, the period of redemption
should be reckoned from the date of the auction sale which, he contends, is the
express mandate of Section 6 of Act No. 3135:

‘Section 6. In all cases in which the
extrajudicial sale is made under the special power hereinbefore referred to,
the debtor, his successors in interest, or any judicial creditor or judgment
creditor of said debtor, or any person having a lien on the property subsequent
to the mortgage or deed of trust under which the property is sold, may
redeem the same at any time within the term of one year from and after the date
of sale; and such redemption shall be governed by the pro­visions of
sections 464 to 466, inclusive, of the Code of Civil Procedure, insofar as
these are not inconsistent with the provisions of this Act.’

“On the other hand, the Land Registration Com­missioner is of
the opinion that the above-quoted provision is not the only pertinent and
controlling law on the matter, especially when it is taken into consideration
that the land involved is registered land under the Torrens
system.  He maintains, and so held in the
resolution appealed from, that Section of Act 3135 should be applied to the
present case to­gether with: (1) sections 30 to 35 of Rule 39 of the Revised
Rules of Court with regard to redemption; (2) Section 27, Rule 39 of the said
Rules and Section 71 of Act 496 with regard to the filing (registration) of the
sheriff’s certificate of sale; and (3) Section 50 of Act 496, with regard to
the registration of the certificate of sale so as to consider the land con­veyed
and affected under the Land Registration Act.

“The ruling of the Land Registration Commis­sioner must be
sustained. Section 27, Rule 39 of the Revised Rules of Court provides that the
certi­ficate of sale executed by the sheriff in at public auction sale must be
filed (registered) in the Of­fice of the Register of Deeds of the province
where the land is situated.  This is a
mandatory require­ment.  Failure to
register the certificate of sale violates the said provision of law and,
construed in relation with Section 50 of the Land Registration Law (Act 496),
shall not take effect as conveyance or bind the land covered by a torrens title because ‘the act of registration is the
operative act to con­vey and affect the land.’ So the redemption period, for
purposes of determining the time when a final deed of sale may be executed or
issued and the owner­ship of the registered land consolidated in the purchaser
at an extrajudicial foreclosure sale under Act 3135, should be reckoned from
the date of registration of the certificate of sale in the office of the regis­ter
of deeds concerned and not from the date of the public auction sale.”

The appellant in the case at bar argues, however, that ac­tual
notice is equivalent to registration, and that as between the immediate parties
registration is not necessary to give ef­fect to the deed of sale since
registration is intended only to protect the buyer from claims of third persons
who subse­quently acquire the property. 
This argument does not bail out the appellant. We have examined the
cases cited, and we note that hey involved voluntary transactions such as
contract of sale,^[2] pacto de retro,^[3]
quitclaim,^[4]
and not forced transfers such as execution or foreclosure sales.

This argument was embellished in Reyes vs. Noblejas, supra, but this Court was not
impressed. Thus,

“But it is further argued by the petitioner that the rules
could not be applied to this case where there are no third parties
involved.  He cites a number of
authorities * * * to the ef­fect that as between the parties, registration is
not necessary to bind the immediate parties to a transaction involving
registered land.  He would then conclude
that since the only purpose of registration is to protect the buyer from third
party claims, it stands to reason that when as in this case, there are no third
party claimants to the land, registration is not ne­cessary and the sale
between the parties should be made to take effect from the date of the auc­tion
sale.  We are not impressed by the
argument.  Apparently, herein petitioner
failed to see the ‘other side of the coin’ and overlooked the doc­trine, also
well settled, that the registration required by Section 50 of the Land
Registration Law is intended primarily for the protection of innocent third
persons, i.e. persons who, without knowledge of the sale and in good faith,
have ac­quired rights to the property. * * * The same pro­tection to third
parties is obviously one of the objects of Section 27, Rule 39 of the Revised
Rules of Court in requiring that the certificate of sale issued by the sheriff
in the auction sale be registered in the office of the register of deeds, for
the purpose of the legislature in pro­viding far our present system of
registration is to afford some means of publicity so that persons dealing with
real property may reach the records and thereby acquire security against
instruments the execution of which has not been revealed.  Re­demption is not the concern merely of the
auction-vendee and the mortgagor, but also of the latter’s successors in
interest or any judicial creditor or judgment creditor of said mortgagor, or
any per­son having a lien on the property subsequent to the mortgage under
which the property has been sold.  It is
precisely for this reason that the certificate of sale should be registered,
for only upon such re­gistration may it legally be said that proper notice,
though constructive, has been served unto possible redemptioners
contemplated in the law.  We have to
conclude, therefore, that the date of sale mentioned in Section 6 of Act 3135,
as amended, should be con­strued to mean the date of registration of the certi­ficate
of sale in the office of the Register of Deeds concerned.  Only after the lapse of the twelve-month
redemption period from the date of registration of the certificate of sale and in
the absence of any redemptioner within the said
period, may the deed of final sale be executed in favor of the pur­chaser who
may then consolidate the title of the property in his favor.  Consequently, we have to declare that the
Land Registration Commis­sioner was right in ordering the Register of Deeds of Rizal to deny the registration of the deed of sale and the
affidavit of consolidation of ownership, the simultaneous registration of which
documents was sought by herein petitioner even before the certificate of sale
issued by the sheriff was registered.”

Finally, the appellant bank objects to the
redemption on the ground that the amount tendered is inadequate to meet
the redemption price. Considering, however, that the sum ten­dered was the
amount of the purchase price paid at the auc­tion sale and that the tender was
timely made and in good faith, we believe that the ends of justice would be
better served by affording the appellees the
opportunity to redeem the property by paying the bank the auction purchase
price plus 1% interest per month thereon up to the time of redemp­tion.  This Court laid down the correct formula in Castillo
vs. Nagtalon, G.R. No. L-17079, January 29, 1962, as follows:

“The procedure for the redemption of proper­ties sold at
execution sale is prescribed in Sec­tion 26, Rule 39, of the Rules of
Court.  Thereunder,
the judgment debtor or redemptioner may redeem the
property from the purchaser, within 12 months after the sale, by paying the
purchaser, the amount of his purchase with 1% per month interest thereon up to
the time of redemption, to­gether with the taxes paid by the purchaser after
the purchase, if any.  In other words, in
the re­demption of properties sold at an execution sale, the amount payable is
no longer the judgment debt but the purchase price.  Considering that appellee
tendered payment only of the sum of P317.44, where­as the three parcels of land
she was seeking to redeem were sold for the sums of P1,240.00, P21,00, and
P30,00, respectively, the aforementioned amount of P317.44 is insufficient to
effectively release the properties. 
However, the tender of payment was timely made and in good faith; in the
interest of justice we incline to give the appellee
opportu­nity to complete the redemption purchase of the three parcels, as
provided in Section 26, Rule 39 of the Rules of Court, within fifteen (15) days
from the time this decision becomes final and exe­cutory.  In this wise, justice is done to the appellee who had been made to pay
more than her share in the judgment, without doing an injustice to the
purchaser who shall get the corresponding interest of 1% per month on the
amount of his purchase up to the time of redemption.”

ACCORDINGLY, the judgment a quo affirmed at
appel­lant’s cost.

Reyes, Acting C.J., Dizon, Makalintal, Bengzon, Zaldivar, Sanchez, Angeles, and
Fernando, JJ., concur.

Concepcion, C.J., on leave.

^[1] Garcia vs. Ocampo, G.R. No.
L-13029, June 30, 1959; Agbulos vs. Alberto, G.R. No. L-17483, July 31, 1962; Salazar vs.
Flor de Lis Meneses, G.R. No. L-15378, July 31, 1963

^[2] Evangelista
vs. Montano et al, 93 Phil. 275 (1953); Carillo
vs. Salak de Paz,
et. al,
91–Phil. 265 (1962); Sao vs. Fabiana, G.R.
No. L-11285, May 16, 1958.

^[3] Galanza vs.
Nuesa, 95 Phil. 713 (1954).

^[4] Casica vs.
Villesca et al, G.R. No. L-9590,
April 30, 1957.