De Castro v. Intermediate Appellate Court
REITERATIONFacts
1. The Antecedents: Spouses Patricio and Angelina Reyes mortgaged their residential property in Pasay City to Pasay City Development Bank. They subsequently sold this property to petitioners Juan, Paraluman, Pastor, and Cristina de Castro, and Lourdes de Castro-General, who assumed the mortgage. The deed of sale with assumption of mortgage was not annotated on the title or registered. Petitioners made mortgage payments, but when they failed to fully pay the loan, the property was extrajudicially foreclosed and sold at public auction to Alfredo Garcia. 2. Procedural History: Petitioners attempted to redeem the property by depositing the purchase price, interest, and sheriff's fees with the City Sheriff. However, the City Sheriff and the Pasay City Development Bank refused to issue a certificate of redemption and deed of conveyance. Petitioners filed a petition for mandamus with the Regional Trial Court (RTC) of Pasay City, seeking to compel the sheriff and bank to issue the redemption documents. Alfredo Garcia intervened in the case. The RTC denied the petition, ruling that petitioners were not legal redemptioners as their transfer of interest was not annotated on the title. The Intermediate Appellate Court affirmed the RTC's decision. This led to the present petition for review on certiorari. 3. The Petition: Petitioners seek review of the Intermediate Appellate Court's decision, arguing they are successors-in-interest with the right to redeem the foreclosed property. They contend that their unregistered deed of sale with assumption of mortgage, coupled with the mortgagee bank's knowledge and consent to the transfer, makes them valid redemptioners. They assert that actual registration of the deed is not necessary to establish their right as successors-in-interest, citing jurisprudence that the right of redemption follows the person and not the land, and that unregistered transfers affecting registered land are binding between the parties. They also argue that their tender of redemption money was sufficient and that no damage was caused to the respondents by their failure to register the deed.
Issue(s)
Whether petitioners, as transferees of the property via an unregistered deed of sale with assumption of mortgage, qualify as "successors-in-interest" or "redemptioners" under Act No. 3135 and the Rules of Court; and the effect of the unregistered deed on their right of redemption. Whether damage was caused to the respondent bank and Alfredo Garcia by the petitioners' attempt to redeem the property; and the sufficiency of the redemption tender.
Ruling
The appealed decision is SET ASIDE. The Sheriff of Pasay City is ordered to issue the certificate of redemption in favor of petitioners, and private respondents are ordered to deliver TCT No. 7600 or the subsequent certificate of title covering the property to the petitioners.
Ratio Decidendi
On whether petitioners are successors-in-interest and the effect of unregistered deed: The Court held that petitioners, by virtue of the "deed of sale with assumption of mortgage," are successors-in-interest of the original debtors. The right of redemption is statutory and can be exercised by the debtor, his successor-in-interest, or any judicial creditor or person with a subsequent lien. The deed, though unregistered, was a perfected sale, effectively transferring the original debtors' rights, including the right to redeem, to the petitioners. Actual notice is equivalent to registration. An unregistered contract affecting registered land is still a perfected executory contract between the parties. The petitioners "stepped into the shoes" of the original debtors, inheriting all their rights and interests, including the right to redeem. The transfer of the right of redemption, even if unregistered, is of "miniscule significance" if no damage is caused to the other parties. The purchaser at the foreclosure sale acquired an inchoate right that was subject to the right of redemption. Public policy favors allowing the original debtor or their successor-in-interest to redeem a foreclosed property. On whether damage was caused and the sufficiency of redemption tender: The Court found that the petitioners' deposit of the redemption money with the City Sheriff was sufficient to effect payment of the redemption price, and there was no need to resort to consignation in court when the tender was refused. The Court also found no need to discuss the allegations of laches and the propriety of the mandamus action, given the conclusions reached on the right of redemption. The Court's decision in Medina vs. The Court of Appeals was distinguished.
Main Doctrine
A deed of sale with assumption of mortgage, though unregistered, is binding and effective between the original owners-debtors and the transferees, who are considered successors-in-interest with the right to redeem the foreclosed property. Actual notice of the transfer is equivalent to registration for the purpose of establishing the right of redemption.