Cayton v. Zeonnix Trading
REITERATIONFacts
The Antecedents: Spouses Mañosca mortgaged their property to Family Savings Bank (FSB). Subsequently, a levy on attachment in favor of Zeonnix Trading Corporation (Zeonnix) was annotated on the property's title. The Mañoscas then executed a Deed of Absolute Sale with Assumption of Mortgage in favor of Spouses Cayton, wherein the Caytons assumed payment of the mortgage amortizations and agreed to pay the balance to the Mañoscas. The Caytons failed to register the deed as the owner's duplicate title was with FSB. The Mañoscas defaulted on their loan, leading to the extrajudicial foreclosure of the property. The Caytons were the highest bidders at the foreclosure sale. Zeonnix, as a judgment creditor, offered to redeem the property by tendering the purchase price and interest. The Caytons filed a case to quiet title, arguing Zeonnix had no right of redemption. Zeonnix later tendered an additional amount for real estate taxes paid by the Caytons, which the Caytons argued was made beyond the redemption period. Procedural History: The Regional Trial Court (RTC) ruled in favor of the Caytons, declaring them the legitimate owners and holding that Zeonnix had no right of redemption. The Court of Appeals (CA) reversed the RTC's decision, granting Zeonnix's appeal, ordering the dismissal of the complaint, and directing the sheriff to accept Zeonnix's redemption payment, reasoning that the prior annotation of Zeonnix's levy on attachment created constructive notice and the Caytons' unregistered sale could not prejudice Zeonnix's rights. The Petition: The Caytons filed a petition for review on certiorari, assailing the CA's decision and resolution, arguing they, as successors-in-interest, had a preferential right over Zeonnix, a redemptioner, and that Zeonnix's payment of an insufficient redemption price did not perfect its right of redemption.
Issue(s)
Whether the Caytons, as successors-in-interest through an unregistered sale, have a preferential right over Zeonnix, a redemptioner with a prior recorded levy on attachment. Whether Zeonnix's tender of an insufficient redemption price, later supplemented, constituted a valid redemption.
Ruling
The petition is denied. The Supreme Court affirmed the Court of Appeals' decision, holding that Zeonnix Trading Corporation has a valid right of redemption over the property.
Ratio Decidendi
On the issue of preferential right between successor-in-interest and redemptioner: The Court held that the Caytons, despite being successors-in-interest by virtue of the deed of absolute sale with assumption of mortgage, could not assert a preferential right over Zeonnix. Their right was based on an unregistered sale, which, under the law, cannot affect third persons. It is the registration that is the operative act to convey or affect registered land concerning third parties. The levy on attachment in favor of Zeonnix was duly recorded on the Transfer Certificate of Title (TCT) No. S-90836, creating a constructive notice to all persons from the time of its registration. This constructive notice charges all persons dealing with the land with knowledge of its contents, and this presumption is irrefutable. Therefore, the unregistered sale to the Caytons could not prejudice the right of redemption granted by law to Zeonnix, whose lien was properly registered. On the validity of Zeonnix's redemption: The Court found that Zeonnix's tender of payment, while initially insufficient for failing to include the real estate taxes paid by the Caytons, substantially complied with the requirements for redemption. The Court noted that Zeonnix immediately paid the amount of taxes when apprised of the deficiency. Citing jurisprudence, the Court relaxed the strict rules on the redemptioner's failure to pay taxes paid by the purchaser when such information was not properly furnished or when the law's policy is to aid rather than defeat the right of redemption. The Court emphasized that Zeonnix had a right to redeem the property by virtue of the writ of attachment levied on the property, which created a lien. The subsequent tender of the purchase price and interest, coupled with the prompt payment of the taxes, was deemed sufficient to perfect its right of redemption, aligning with the policy of upholding the right to redeem.
Main Doctrine
An unregistered sale cannot prejudice the right of redemption granted by law in favor of a redemptioner whose lien was duly recorded, as registration constitutes constructive notice to all persons from the time of such registration.