8. SANTIAGO V. DIONISIO L-4008 January 15, 1953 by Kristel Descallar FACTS: In 1935, Roman San Diego sold a land to Apolonia Santiago, and the sale was recorded in the Register of Deeds of Bulacan, in accordance with Revised Administrative Code. However, prior to the sale, Roman had already mortgaged the land to Eulalia Resurreccion. Since the mortgage was also registered pursuant to the Administrative Code, the mortgage to Eulalia had precedence over the sale. Roman defaulted in his debt, so Eulalia foreclosed the mortgage and the land was sold at public auction to Angela Dionisio as the highest bidder. Upon discovery of the sale of the same land to Dionisio, Santiago brought an action to annul the sale to Dionisio, and Santiago also intervened for the confirmation of the sale and filed her opposition thereto. The lower court confirmed the sale to Dionisio without prejudice to the rights of Santiago. Judge Roldan, in Santiago’s action for annulment, ruled that the sale of the land in favor of Dionisio was null and void, since Santiago was not included as a party to the foreclosure proceedings, but the ownership of Santiago over the land is subject to the mortgage in favor of Eulalia. In 1936, Santiago filed an application for registration of the land under her name, and among the oppositors was Dionisio, who claimed title to the land as purchaser in a foreclosure. Judge Potenciano Pecson ruled that the foreclosure sale did not affect the rights of the applicant Santiago, who had not been made a party to the proceedings, and decreed the registration of the land in her favor. So, Dionisio filed the present appeal. ISSUES: 1. Whether or not the sale of land to Dionisio was valid, despite Santiago not being impleaded to the foreclosure proceedings. 2. Whether or not the land should be registered in the name of Santiago. 1. YES, insofar as to the parties to the suit, but not to Santiago. Dionisio argued that Santiago intervened in the foreclosure suit, thus she is bound by its results. But, the Court found that Santiago’s intervention consisted merely in opposing the confirmation of the sale. This is not the same as being a party to the suit to the extent of being bound by the judgment. That judgment had already been rendered and was already in the process of execution when Santiago intervened. Though the sale was confirmed, the court said that the confirmation was to be without prejudice to the rights of Santiago. Judge Roldan did not declare the foreclosure sale entirely void, but only "with regards to the rights of Apolonia Santiago". This means that the foreclosure was ineffective as against Santiago, although it may be valid as between the parties to the suit (Eulalia and Dionisio). Also, the sale is subject to Santiago's unforeclosed equity of redemption. While it is true that Santiago’s interest in the land was subordinate to that of the mortgagee, Eulalia, the rule of procedure in force at the time the foreclosure was section 255 of Act 190, which required that in an action for foreclosure "all persons having or claiming an interest in the premises subordinate in right to that of the holder of the mortgage . . . be made defendants in the action." This rule applied not only to a subordinate lienholder, but also to a purchaser of real property already mortgaged to another. Failure to implead a subordinate lienholder or subsequent purchaser renders the foreclosure ineffective as against them. Therefore, there remains in their favor the "unforeclosed equity of redemption." But the foreclosure is valid as between the parties to the suit.
2. NO. Santiago’s application for registration of the land under her name should be denied. The unforeclosed equity of Santiago still exists and must be recognized in either of the following ways: 1) to register the land in the name of Santiago but subject to the mortgage in favor of Eulalia; 2) to register the land in the name of the oppositor Dionisio subject to redemption by Apolonia Santiago. The Court’s preference is the second method, which was already ruled in the case of De la Paz, et al. vs. McCondray & Co., Inc., supra, where the Court granted the registration applied for but subject to the prior purchasers' equitable right of redemption. It is the previous purchaser, Santiago, who has applied for the registration of the land. However, both by statute and by jurisprudence, registration may be decreed in favor of an oppositor (Dionisio in this case) whose ownership has been established. More so, in the present case, the record shows that the opposition of Dionisio prays for the registration of the land in her favor by asking that she be substituted in place of Apolonia Santiago in the application for registration. Registration of the land in the name of Dionisio, the herein oppositor, is proper, subject to Apolonia Santiago's equitable right of redemption. Registration of the land in the name of Santiago, who does not become its owner until she has exercised her right to redeem, would be subject to the objection that it is premature, if not altogether anomalous. But, Santiago’s equity of redemption is registerable, but only as an encumbrance on a registered title of ownership. The judgment appealed from is revoked and another one entered, decreeing the registration of the land in the name of Angela Dionisio, but subject to Apolonia Santiago's equitable right of redemption, which right should be exercised by her within three months from the date this decision becomes final.
