G

ROLANDO ROBLES, v. FERNANDO FIDEL YAPCINCO

G. No. 169568, October 22, 2014

Facts: The dispute involves the ownership of a judicially-foreclosed parcel of land sold at a publicauction, but which sale was not judicially confirmed. The petitioner is the successor in interest of thepurchaser in the public auction, and, on the other, the heirs of the mortgagor, who never manifestedinterest in redeeming the property from the time of the foreclosure.

The property in litis was originally registered in the name of Fernando F. Yapcinco. Yapcincoconstituted a mortgage on the property in favor of Jose C. Marcelo to secure the performance of hisobligation. In turn, Marcelo transferred his rights as the mortgagee to Apolinario Cruz. WhenYapcinco did not pay the obligation, Apolinario Cruz brought an action for judicial foreclosure of theadministratrix of the estate of Yapcinco, to pay Apolinario Cruz the indebtedness secured by themortgage plus interest; and in case of the failure to pay after 90 days from the date of the decision,the property would be sold at a public auction.

Apolinario Cruz was adjudged the highest bidder in the public auction. He was then issued thecertificate of absolute sale but he did not register the certificate of sale; nor was a judicialconfirmation of sale issued.

On September 5, 1972, Apolinario Cruz donated the property to his grandchildren: ApolinarioBernabe, among others. Apolinario Bernabe falsified a deed of absolute sale. As a consequence, theRegister of Deeds cancelled Yapcinco's TCT No. 20458 and issued TCT No. 243719 in their names asco-vendees, purportedly releasing and cancelling the mortgage.

On January 2, 2000, the respondents, all heirs of the Spouses Yapcinco, instituted an action againstApolinario Bernabe and his co-vendees in the Regional Trial Court for the annulment of TCT No.243719, document restoration, reconveyance and damages. They claimed that although the propertyhad been mortgaged, the mortgage had not been foreclosed, judicially or extra-judicially; that theproperty was released from the mortgage per Entry No. 32-2182 in the Memorandum ofIncumbrances; and that the deed of absolute sale between Fernando Yapcinco and Bemabe, etaL. was void and ineffectual because the Spouses Yapcinco had already been dead as of the date ofthe sale.

TCT No. 243719 was cancelled, and TCT No. 20458 in the name of Yapcinco was restored.

On December 17, 2002, the petitioner filed an action for the nullification of document, cancellation oftitle, reconveyance and damages against the respondents. He averred that the heirs of Yapcinco hadacted in bad faith in causing the issuance of TCT No. 354061 because they had known fully well thatthe property had long been excluded from the estate of Yapcinco by virtue of the CFI decision datedJuly 27, 1956, and which the CA affirmed on April 25, 1958; that a certificate of absolute sale wasissued in the name of Apolinario Cruz as early as 1959; and that he had a vested right in theproperty pursuant to the deed of donation executed on September 5, 1972 by Apolinario Cruz in hisfavor, among others.

The respondents countered that TCT No. 20458 contained an annotation to the effect that theproperty had been released from the mortgage by virtue of an instrument dated August 28, 2001;and that, in any case, the certificate of absolute sale and the deed of donation relied upon by thepetitioner were not even inscribed in TCT No. 20458.

The RTC rendered judgment in favor of the plaintiff by declaring that they could not argue that theywere not bound by the foreclosure of the mortgage due to the nonregistration of the certificate ofsale because as between the parties registration was not a requisite for the validity of theforeclosure; and that they did not redeem the property until the present.

On appeal, the CA reversed the judgment of the RTC, and holding that due to the nonregistration ofthe certificate of sale, the period of redemption did not commence to run. It also held that ApolinarioCruz never acquired title to the property and could not have conveyed and transferred ownershipover the same to his grandchildren through the deed of donation.

The petitioner insists that the rules and principles relied upon by the CA were applicable only toextra-judicial foreclosure, not to a judicial foreclosure like the one herein; that the importance ofregistration of the certificate of sale was true only in extrajudicial sale where it would be thereckoning point for the exercise of the right of redemption, that the non-registration of the certificate

of sale did not affect the title acquired by Apolinario Cruz as the purchaser in the judicial foreclosureof mortgage.

In contrast, the respondents maintain that they were lawfully entitled to the property in litis becausethere was no registration of the certificate of sale or confirmation from the court; that even the deedof donation executed by Apolinario Cruz was not registered, that the issue revolved on whether ornot there was a valid transfer of ownership; and that with the release of mortgage being validlyregistered in the Office of Registry of Deeds of Tarlac on February 11, 1992, thereby rendering thetitle free from any lien and encumbrances, they already had the right to transfer the property in theirnames.

Issue : Whether the non-registration of the certificate of sale did not affect the title acquired byApolinario Cruz as the purchaser in the judicial foreclosure of mortgage

Held : The petition for review is meritorious.

Before anything more, the Court clarifies that the failure of Apolinario Cruz to register the certificateof sale was of no consequence in this adjudication. The registration of the sale is required only inextra-judicial foreclosure sale because the date of the registration is the reckoning point for theexercise of the right of redemption. In contrast, the registration of the sale is superfluous in judicialforeclosure because only the equity of redemption is granted to the mortgagor, except in mortgageswith banking institutions. The equity of redemption is the right of the defendant mortgagor toextinguish the mortgage and retain ownership of the property by paying the secured debt within the90-day period after the judgment becomes final, or even after the foreclosure sale but prior to theconfirmation of the sale. In this light, it was patent error for the CA to declare that: "By ApolinarioCruz's failure to register the 18 March 1958 Certificate of Absolute Sale in the Office of the Registerof Deeds, the period of redemption did not commence to run."

The records show that no judicial confirmation of the sale was made despite the lapse of more than40 years since the date of the sale. Hence, it cannot be said that title was fully vested in ApolinarioCruz.

However, the Court will not be dispensing true and effective justice if it denies the petition for reviewon the basis alone of the absence of the judicial confirmation of the sale. Although procedural rulesare not to be belittled or disregarded considering that they insure an orderly and speedyadministration of justice, it is equally true that litigation is not a game of technicalities.To better serve the ends of justice, the Court holds that the real issue to consider and resolve is whobetween the parties had the better right to the property, not whether there was a valid transfer ofownership to Apolinario Cruz.

It was not denied that Fernando F. Yapcinco, as the mortgagor, did not pay his obligation, and thathis default led to the filing of the action for judicial foreclosure against him, in which he activelyparticipated in the proceedings, and upon his death was substituted by the administratrix of hisestate. In the end, the decision in the action for judicial foreclosure called for the holding of thepublic sale of the mortgaged property. Due to the subsequent failure of the estate of Fernando F.Yapcinco to exercise the equity of redemption, the property was sold at the public sale, andApolinario Cruz was declared the highest bidder. Under the circumstances, the respondents as thesuccessors-in-interest of Fernando F. Yapcinco were fully bound by that decision and by the result ofthe ensuing foreclosure sale.

The petitioner did not tender any explanation for the failure of Apolinario Cruz to secure the judicialconfirmation of the sale. File reminds only that Apolinario Cruz and his successors-in-interest andrepresentatives have been in actual, notorious, public and uninterrupted possession of the propertyfrom the time of his purchase at the foreclosure sale until the present.

The effect of the failure of Apolinario Cruz to obtain the judicial confirmation was only to prevent thetitle to the property from being transferred to him. For sure, such failure did not give rise to any rightin favor of the mortgagor or the respondents as his successors-in-interest to take back the propertyalready validly sold through public auction. Nor did such failure invalidate the foreclosureproceedings. To maintain otherwise would render nugatory the judicial foreclosure and foreclosuresale, thus unduly disturbing judicial stability. The non-transfer of the title notwithstanding, ApolinarioCruz as the purchaser should not be deprived of the property purchased at the foreclosure sale. Withthe respondents having been fully aware of the mortgage, and being legally bound by the judicialforeclosure and consequent public sale, and in view of the unquestioned possession by ApolinarioCruz and his successors-in-interest (including the petitioner) from the time of the foreclosure saleuntil the present, the respondents could not assert any better right to the property. It would be theheight of inequity to still permit them to regain the property on the basis alone of the lack of judicial