G.R. No. L-9796 July 31, 1957.
LEON C. SANTOS, petitioner-appellant, vs. REHABILITATION FINANCE CORPORATION, ET AL., oppositors-appellees.

FACTS

Prior to 1947, a property in Manila (Lot No. 12-f, Block 2255, San Lazaro Estate) was declared for taxation in the names of Juana de la Cruz, Francisco de la Cruz, and Eustaquia B. Vda. de la Cruz, but the Transfer Certificate of Title No. 12185 was only in the names of Juana and Francisco. On September 26, 1948, the property was mortgaged to the Rehabilitation Finance Corporation (R.F.C.), and the mortgage was annotated on the title. Due to delinquency in real estate taxes for 1948 and 1949, the property was advertised for sale and sold at public auction by the City Treasurer on October 29, 1949. Leon C. Santos was the highest bidder, purchasing it for P509.20. The City Treasurer issued a certificate of sale to Santos on September 9, 1950, but this certificate was never registered with the Register of Deeds, and no memorandum was made on the title. The registered owners were notified of the sale on August 26, 1950, and had until October 29, 1950, to redeem. On June 20, 1951, Juana and Francisco deposited P1,014.65 with the City Treasurer for payment of real estate taxes from 1948 to 1951. On November 12, 1951, the City Treasurer executed a deed of sale in favor of Santos, which was registered and annotated on the title on February 15, 1952. The mortgage debt to R.F.C. remained, though reduced by payments. Santos filed a petition in the Court of First Instance of Manila on October 16, 1954, seeking cancellation of the old title and issuance of a new one in his name, which was opposed by Juana, Francisco, and R.F.C. The trial court denied the petition, and Santos appealed.

ISSUE

The main issue is whether the registered owners, Juana and Francisco de la Cruz, validly exercised their right of redemption within the prescribed period, considering the non-registration of the certificate of sale.

RULING

The Supreme Court affirmed the trial court’s order denying Santos’s petition. The Court held that under Section 77 of Act No. 496 (the Land Registration Act), the sale of registered land for taxes must be registered to affect the land, and the period of redemption does not begin to run until such registration. Since the certificate of sale issued to Santos on September 9, 1950, was never registered, the one-year redemption period did not commence from the date of the auction sale (October 29, 1949). The period could only start from either the date the registered owners had actual knowledge of the sale (August 26, 1950) or the date the final deed of sale was registered (February 15, 1952). In either case, the deposit of P1,014.65 made by Juana and Francisco on June 20, 1951, constituted a valid exercise of their right of redemption, as it was made within one year from either potential starting date. The Court distinguished the cases cited by Santos (Valbuena and Paguio) as dealing only with the validity of tax sales, not the redemption period, and found the Metropolitan Water District and Tolentino cases controlling on the registration requirement. The City Treasurer’s classification of the deposit as a “trust fund” did not invalidate the redemption.