In the case of Herminio M. De Guzman v. Tabangao Realty Incorporated, the Supreme Court addressed the rights of a buyer in an execution sale when the original owner fails to redeem the property within the prescribed period. The Court affirmed that upon the expiration of the redemption period, the purchaser is legally substituted and acquires all rights, title, interest, and claim of the original owner to the property. This decision reinforces the importance of adhering to prescribed timelines in property redemption and protects the rights of purchasers who have legally acquired property through execution sales.

From Debtor to Owner: When Does a Certificate of Sale Become Absolute?

This case arose from a complaint filed by the heirs of Serafin and Amelia de Guzman, who sought to quiet the title of a property that had been sold in an execution sale to Tabangao Realty Incorporated. The De Guzmans had failed to pay their debts to Filipinas Shell Petroleum Corporation (FSPC), leading to a judgment against them and the subsequent levy and sale of their property. The heirs argued that the Sheriff’s Certificate of Sale was invalid due to alleged irregularities in the execution sale process and that Tabangao Realty had not taken steps to consolidate its ownership, thus allowing the heirs to claim the property. The central legal question was whether the heirs had any remaining rights to the property despite their predecessors’ failure to redeem it within the statutory period.

The Supreme Court emphasized the nature of an action for quieting of title, explaining that it is a remedy to remove any cloud or uncertainty regarding the title to real property. The Civil Code specifies that such an action requires the plaintiff to have a legal or equitable title to the property and that the claim casting a cloud on the title must be invalid. In this instance, the petitioners, the De Guzman heirs, failed to demonstrate they possessed a valid title to the property. They inherited the property from their parents, but this was after their parents lost the right of redemption.

The Court highlighted that the failure to redeem the property within one year from the registration of the Sheriff’s Certificate of Sale had significant legal consequences. According to Rule 39, Section 33 of the 1997 Rules of Court:

SEC. 33. Deed and possession to be given at expiration of redemption period; by whom executed or given. – If no redemption be made within one (1) year from the date of the registration of the certificate of sale, the purchaser is entitled to a conveyance and possession of the property; or, if so redeemed whenever sixty (60) days have elapsed and no other redemption has expired, the last redemptioner is entitled to the conveyance and possession; but in all cases the judgment obligor shall have the entire period of one (1) year from the date of the registration of the sale to redeem the property. The deed shall be executed by the officer making the sale or by his successor in office, and in the latter case shall have the same validity as though the officer making the sale had continued in office and executed it.

Upon the expiration of the right of redemption, the purchaser or redemptioner shall be substituted to and acquire all the rights, title, interest and claim of the judgment obligor to the property as of the time of the levy. The possession of the property shall be given to the purchaser or last redemptioner by the same officer unless a third party is actually holding the property adversely to the judgment obligor.

Building on this principle, the Court clarified that Tabangao Realty had already been substituted and acquired all rights, title, interest, and claim of the Spouses De Guzman to the subject property on April 13, 1989, when the one-year redemption period expired. Therefore, upon the death of the Spouses De Guzman, they had no remaining rights to pass on to their heirs. The Court addressed the petitioner’s argument that the old rule should apply.

The petitioners argued against the retroactive application of Rule 39, Section 33 of the 1997 Rules of Court, claiming that the previous rule, Section 35 of the 1964 Rules of Court, should govern. The 1964 Rules stated that the purchaser shall be substituted to and acquire all the right, title, interest, and claim of the judgment debtor to the property only after execution and delivery of the deed of conveyance. However, the Supreme Court has consistently held that procedural laws are applied retroactively to cases pending and undetermined at the time of their passage, unless vested rights are impaired.

This approach contrasts with a strictly prospective application, which would only apply the new rules to cases filed after their enactment. The Court cited Calacala v. Republic of the Philippines, where it was held that the failure of a buyer in a foreclosure sale to secure a Certificate of Final Sale within ten years does not restore ownership to the original owner. The issuance of a final deed of sale is merely a formality confirming the title already vested in the purchaser. The Court in Calacala stated:

Quite the contrary, Section 33, Rule 39 of the 1997 Rules of Civil Procedure explicitly provides that “[u]pon the expiration of the right of redemption, the purchaser or redemptioner shall be substituted to and acquire all the rights, title, interest and claim of the judgment obligor to the property as of the time of the levy.”

With the rule that the expiration of the 1-year redemption period forecloses the obligor’s right to redeem and that the sale thereby becomes absolute, the issuance thereafter of a final deed of sale is at best a mere formality and mere confirmation of the title that is already vested in the purchaser.

The Court also dismissed the petitioners’ allegations of irregularities in the execution sale. The petitioners claimed that no execution sale was conducted on June 30, 1983, as the levy and execution sale could not have occurred on the same day. They also alleged lack of notice and publication. The Court, however, pointed out that the Sheriff’s Certificate of Sale indicated that the levy was made on June 30, 1983, and the sale occurred later, as evidenced by the annotations on the Transfer Certificate of Title. The Court emphasized that the Sheriff’s Certificate of Sale had been executed and signed by the proper officers of the RTC. It is presumed that these officers have regularly performed their official duties.

Furthermore, the Court rejected the petitioners’ charge of bad faith and fraud against Tabangao Realty for delaying the consolidation of title. The Court noted that such allegations were merely opinions and legal conclusions unsupported by factual premises. The Court also emphasized that such claims would have no bearing on the validity of the Sheriff’s certificate.

Finally, the Court clarified that Tabangao Realty was not required to institute a separate action for the execution of the final deed of sale. There is no prescriptive period for seeking recourse from the courts if the Sheriff refuses to execute the deed. The Court also cited Ching v. Family Savings Bank, which affirmed the bank’s right to obtain a final deed of conveyance and writ of possession even after a significant delay. The Supreme Court held that:

Verily, the Bank’s “Motion to Retrieve Records, for Issuance of Final Deed of Conveyance, to Order the Register of Deeds of Makati City to Transfer Title and for Writ of Possession” was merely a consequence of the execution of the summary judgment as the judgment in Civil Case No. 142309 had already been enforced when the lot was levied upon and sold at public auction, with the Bank as the highest bidder.

The Supreme Court found that the petitioners’ complaint was properly dismissed for failing to state a cause of action. The petitioners could not prove that they had a legal or equitable title to the property, nor could they prove the invalidity of the sheriff’s certificate.

FAQs

What was the key issue in this case?	The key issue was whether the heirs of a property owner who failed to redeem the property after an execution sale had any legal basis to quiet the title against the purchaser. The court addressed whether the heirs could claim the property due to alleged irregularities in the sale and delays in consolidating ownership.
What is an action to quiet title?	An action to quiet title is a legal remedy to remove any cloud or uncertainty regarding the title to real property. It aims to ensure that the owner’s rights are clear and free from adverse claims, allowing them to use and develop the property without fear of legal challenges.
What are the requisites for an action to quiet title to prosper?	For an action to quiet title to prosper, the plaintiff must have a legal or equitable title to the property. Additionally, the deed, claim, encumbrance, or proceeding that casts a cloud on their title must be shown to be invalid or inoperative.
What happens when a property owner fails to redeem the property after an execution sale?	If the property owner fails to redeem the property within the redemption period (typically one year from the registration of the certificate of sale), the purchaser acquires all the rights, title, interest, and claim of the judgment obligor to the property as of the time of the levy. The failure to redeem divests the original owner of their rights.
Does the 1997 Rules of Civil Procedure apply retroactively?	Yes, the Supreme Court has held that procedural laws, such as the 1997 Rules of Civil Procedure, apply retroactively to cases pending and undetermined at the time of their passage. This includes provisions regarding the rights of purchasers after the expiration of the redemption period.
What is the effect of the issuance of a final deed of sale?	The issuance of a final deed of sale is considered a mere formality that confirms the title already vested in the purchaser. It serves as official evidence of the purchaser’s ownership, especially after the expiration of the redemption period without the property being redeemed.
What should a property owner do if they want to challenge the validity of an execution sale?	A property owner who wants to challenge the validity of an execution sale must present clear and convincing evidence to overcome the presumption of regularity in the performance of official duties by the sheriff or other officers involved. Allegations of fraud or irregularities must be supported by specific facts.
What is the significance of the Ching v. Family Savings Bank case?	The Ching v. Family Savings Bank case illustrates that the purchaser at an execution sale retains the right to obtain a final deed of conveyance and writ of possession even after a significant delay. This case supports the principle that the purchaser’s rights are not diminished by the passage of time alone.

The Supreme Court’s decision in this case clarifies and reinforces the rights of purchasers in execution sales when original owners fail to redeem their property within the prescribed period. It underscores the importance of complying with legal timelines and the finality of property transfers when redemption rights are not exercised.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: HERMINIO M. DE GUZMAN v. TABANGAO REALTY INCORPORATED, G.R. No. 154262, February 11, 2015