G.R. No.

L-29906 January 30, 1976

RODOLFO GENERAL and CARMEN GONTANG, petitioners,

vs.
LEONCIO BARRAMEDA, respondent.

Augusto A. Pardalis for petitioners.

E.V. Guevarra for respondent.

ESGUERRA, J.:

Petition for certiorari to review the decision of the Court of Appeals (Second Division) in CA-G.R. No.
38363-R, entitled "Leoncio Barrameda, plaintiff-appellant, vs. Development Bank of the Philippines
(Naga Branch, Naga City), Rodolfo General and Carmen Gontang, defendants-appellees," which
reversed the decision of the Court of First Instance of Camarines Sur in its Civil Case No. 5697,
"dismissing the complaint with costs against plaintiff".

Appellate Court's decision has the following dispositive portion:

We therefore find that the appealed judgment should be reversed and set aside and
another one entered declaring (1) null and void the sale executed on September 3,
1963, by defendant Development Bank of the Philippines in favor of its defendants
Rodolfo General and Carmen Gontang, (2) T.C.T. No. 5003 cancelled and (3) the
mortgaged property redeemed; and ordering the Clerk of the lower court to deliver
the amount of P7,271.22 deposited to defendants Rodolfo General and Carmen
Gontang and the Register of Deeds to issue a new Transfer Certificate of Title in the
name of plaintiff in lieu of T.C.T. No. 5003 upon payment by him of corresponding
fees; with costs against the defendants in both instances.

Undisputed facts are:

Plaintiff seeks to redeem the land formerly embraced in Transfer Certificate of Title
No. 1418, containing an area of 59.4687 hectares, situated in barrio Taban,
Minalabac Camarines Sur; to annul any and all contracts affecting said property
between the Development Bank of the Philippines (DBP) and Rodolfo General and
Carmen Gontang and to recover damages, attorney's fees and costs.

The land in dispute was mortgaged by plaintiff to the DBP to secure a loan of
P22,000.00. For failure of the mortgagor to pay in full the installments as they fall
due, the mortgagee foreclosed extrajudicially pursuant to the provisions of Act 3135.
On April 23, 1962, the provincial sheriff conducted an auction sale in which the
mortgagee, as the highest bidder, bought the mortgaged property for P7,271.22. On
May 13, 1963, the sheriff executed a final deed of sale in favor of the DBP (Exhibit 2)
and the DBP executed an affidavit of consolidation of ownership (Exhibit 3). Upon
registration of the sale and affidavit on September 2, 1963 (Exhibit 1), TCT No. 1418
in the name of plaintiff was cancelled and TCT No. 5003 issued to the DBP (Exhibit-
5) in its stead. On September 3, 1963, defendants Rodolfo General and Carmen
 Gontang purchased the land from their codefendant. The sale in their favor was
annotated on TCT No. 5003 on November 26, 1963 only.

Prior to the date last mentioned, or on November 20, 1963, plaintiff offered to redeem
the land. In view of the refusal of the DBP to allow the redemption, plaintiff
commenced this suit. The original complaint was filed in court on November 23,
1963. On August 12, 1964, plaintiff deposited with the clerk of court the sum of
P7,271.22, representing the repurchase price of the land.

The trial court held that the one-year period of redemption began to run on April 23,
1962, when the sale at public auction was held, and ended on April 24, 1963; that the
plaintiff's offer to redeem on November 20, 1963 and the deposit of the redemption
price on August 12, 1964 were made beyond the redemption period; and that
defendants Rodolfo General and Carmen Gontang 'are legitimate purchasers for
value.

Two principal issues raised are:

(1) In the interpretation and application of Section 31, Commonwealth Act 459 (Law
that created the Agricultural and Industrial Bank, now Development Bank of the
Philippines) which provides:

The Mortgagor or debtor to the Agricultural and Industrial Bank

whose real property was sold at public auction, judicially or extra-
judicially, for the full or partial payment of an obligation to said bank
shall, within one year from the date of' the auction sale, have the right
to redeem the real property ... (Emphasis supplied),

shall the period of redemption start from the date of auction sale or the date of the
registration of the sale in the register of deeds as the respondent Appellate Court
held?

(2) Were petitioners under obligation to look beyond what appeared in the certificate
of title of their vendor the Development Bank of the Philippines and investigate the
validity of its title before they could be classified as purchasers in good faith?

Petitioners' principal contentions are: that Section 31 of Commonwealth Act No. 459 which created
the Agricultural and Industrial Bank, predecessor of the Rehabilitation Finance Corporation and the
Development Bank of the Philippines, clearly provides that the right to redeem the real property sold
at public auction judicially or extra-judicially may only be exercised "within one year from the date of
the auction sale"; that there is no provision in Commonwealth Act No. 459 expressly stating that the
redemption period of one year shall start from the registration of the certificate of sale in the register
of deeds; that Sec. 31 of C. A. 459 is a specific provision of law which governs redemption of real
property foreclosed by the Agricultural and Industrial Bank (now the Development Bank of the
Philippines), and prescribes the redemption period for both judicial and extra-judicial foreclosures of
mortgage; that insofar as foreclosures of mortgage by banking and financial institutions are
concerned, the period of redemption applicable must be the one prescribed in their respective
charters as, in the case at bar, Section 31, C.A. No. 459; that the ruling in the case of Agbulos vs.
Alberto, G.R. No. L-17483, July 31, 1962, cited by respondent Appellate Court as a basis for its
decision, is not applicable to the case at bar because this Court based its Agbulos ruling on Section
26 (now Sec. 90) of Rule 39 of the Rules of Court, wherein it is not clear when the period of
redemption should start (date when execution sale was conducted, or when the certificate of sale
was executed by sheriff, or when the certificate of sale was registered in the registry of deeds), and
this Court ruled that as the land involved in that case is registered under the Torrens system, the
date of redemption should begin to run from the date of registration, unlike in the case at bar where
Section 31 of Commonwealth Act 459 specifically and clearly provides that the running of the
redemption period shall start from the date of the auction sale; and that the ruling of this Court
in Gonzales vs. P.N.B., 48 Phil. 824, also invoked by respondent Appellate Court as a basis for its
decision, is likewise not applicable to the case at bar because the provisions on the matter of the
P.N.B. Charter, Act No. 2938, are different from that of Commonwealth Act 459. Section 32 of Act
2938, which is now Section 20 of R.A. No. 1300 (PNB Charter) provides that the mortgagor shall
have the right to redeem within one year the sale of the real estate. This is Identical to the provision
appearing in Sec. 26, now Sec. 30, Rule 39, Rules of Court, while under Sec. 31 of Commonwealth
Act 459, the period of redemption should star, on the date of the auction sale, and the latter
provision is applicable specifically and expressly to the case at bar.

It is also petitioners' principal argument that the ruling in Metropolitan Insurance Company,
substituted by spouses Loreto Z. Marcaida and Miguel de Marcaida vs. Pigtain 101 Phil. 1111, 1115-
1116, wherein this Court, in construing Sec. 6 of Act No. 3135, categorically stated that the one year
redemption period shall start from the date of sale and not from the report of the sale or the
registration of the sale certificate in the office of the Register of Deeds, is more applicable to the
present case. The pertinent portion of the decision in the Marcaida case follows:

But again the appellants claim that in this particular case, the statutory redemption
period of one year should begin from December 17, 1954, when the auction sale was
actually recorded in the office of the Register of Deeds of Manila and not from
December 15, 1953, when the sale at public auction of the properties in question
took place. We find its contention to be also untenable in view of the clear provision
of the aforesaid Section 6 of Act No. 3135 to the effect that the right of redemption
should be exercised within one year from the date of the sale. It should not be
overlooked that the extrajudicial sale in question was for foreclosure of a mortgage
and was not by virtue of an ordinary writ of execution in a civil case. ... And since the
appeallants had failed to redeem the land in question within the time allowed by
Section 6 of Act 3135, the appellee has perfect right to require the cancellation of the
attachment lien in question. (Emphasis supplied)

Notwithstanding the impressive arguments presented by petitioners, the crucial issue to determine is
the choice of what rule to apply in determining the start of the one year redemption period, whether
from the date of the auction sale or from that of the registration of the sale with the registry of deeds.
In other words it is whether a literal interpretation of the provision of Section 31 of Commonwealth
Act 459 — that the period of redemption shall start from the date of the auction sale — shall govern,
or whether the words, "auction sale" shall be considered in their ordinary meaning or in the same
sense that site is used in the texts of Section 26, now 30, of Rule 39 of the Rules of Court, and
Section 26 of Act 2938, now Section 20, R.A. 1300 (Charter of PNB). Stated differently, should the
word "sale" used in the above indicated provisions of the Rules of Court and the PNB Charter, under
whichWe ruled that the redemption period shall start from the registration of the sale in the registry of
deeds be applied to foreclosure sales for the DBP and give to the words auction sale" in its charter
the same meaning of "sale" as used in connection with registered land?

We are of the view that a correct solution to the foregoing issue must entail not merely trying to
determine the meaning of the words auction sale" and "sale" in different legislative enactments, but,
more importantly, a determination of the legislative intent which is quite a task to achieve as it
depends more on a determination of the purpose and objective of the law in giving mortgagors a
period of redemptiom of their foreclosed properties. Mortgagors whose properties are foreclosed and
are purchased by the mortgagee as highest bidder at the auction sale are decidedly at a great
disadvatage because almost invariably mortgagors forfeit their properties at a great loss as they are
purchased at nominal costs by the mortgagee himself who ordinarily bids in no more than his credit
or the balance threof at the auction sale. That is the reason why the law gives them a chance to
redeem their properties within a fixed period. It cannot be denied that in all foreclosures of
mortgages and sale of property pursuan to execution, whether judicial or extrajudicial in nature,
under different legislative enactments, a public auction sale is a indispensable pre-requisite to the
valid disposal of properties used as collateral for the obligation. So that whether the legislators in
different laws used as collateral for the obligation. So that whether the legislators in different laws
used the term "sale" or "auction sale" is of no moment, since the presumption is that when they used
those words "sale" and "auction sale" interchangeable in different laws they really referred to only
one act — the sale at public auction indispensably necessary in the disposition of mortgaged
properties and those levied upon to pay civil obligations of their owners.

In the case of Ernesto Salazar, et al. vs. Flor De Lis Meneses, et al.,G.R. No.
L-15378, promulgated July 31, 1963, this Court stated:

The issue decisive of this appeal is the one raised by appellants in their third
assignment of error, which is to this effect: that the lower court erred in not holding
that the period of redemption in this case, as far as appellants are concerned, started
only on May 26, 1956, registered. Should We rule to this effect, it is clear that hen
appellants attempted to exercise their right to redeem, as judgment creditors of the
deceased mortgagor by judgment subsequent to the extrajudicial foreclosure sale,
and when they initiated the present action on October 1, 1956, the period of
redemption had not yer expired.

We find appellants' contention to be meritorious. In the case of Agbulos vs.

Alberto, G.R. No. L-17483, promulgated on July 31, 1962, We held:

The property involved in the present case is registered land. It is the

law in this jurisdiction that when property brought under the operation
of the Land Registration Act sold, the operative act is the registration
of the deed of conveyance. The deed of sale does not take effect this
a conveyance or bind the land it is registered. (Section 50, Act 496;
Tuason vs. Raymundo, 28 Phil. 635; Sikatuna vs. Guevara, 43 Phil.
371; Worcester vs. Ocampo, 34 Phil. 646) (Emphasis supplied)

We find no compelling reason to deviate from the aforequoted ruling and not apply the same to the
present case. To Us petitioners' main contention that there is a great deal of difference in legislative
intent in the use of the words 94 auction sale" in Sec. 31 of Commonwealth Act 459 and the word
"sale" in See. 32 of Act 2938, and See. 30 of Rule 39 of the Rules of Court, pales into insignificance
in the light of Our stand that those words used interchangeably refer to one thing, and that is the
public auction sale required by law in the disposition of properties foreclosed or levied upon. Our
stand in the Salazar case and in those mentioned therein (Garcia vs. Ocampo, G.R. No. L-13029,
June 30, 1959; Gonzales et al. vs. Philippine National Bank et al. 48 Phil. 824) is firmly planted on
the premise that registration of the deed of conveyance for properties brought under the Torrens
System is the operative act to transfer title to the property and registration is also the notice to the
whole world that a transaction involving the same had taken place.

To affirm the previous stand this Court has taken on the question of when the one year period of
redemption should start (from the time of registration of the sale) would better serve the ends of
justice and equity especially in this case, since to rule otherwise would result in preventing the
respondent-mortgagor from redeeming his 59.4687 hectares of land which was acquired by the
Development Bank of the Philippines as the highest bidder at the auction sale for the low price of
only P7,271.22 which was simply the unpaid balance of the mortgage debt of P22,000.00 after the
respondent-mortgagor had paid the sum of P14,728.78. As it is, affirmance of the Appellate Court's
decision would not result in any loss to petitioners since the amount of P7,271.22 they paid to the
Bank will be returned to 'them. What further strengthen's Our stand is the fact found by the
respondent Appellate Court that respondent Barrameda has always been in possession of the
disputed land.

IN THE LIGHT OF THE FOREGOING, We find it no longer necessary to determine whether the
petitioners are purchasers in good faith of the land involved, since the respondent Barrameda
redeemed the mortgaged property within the legal period of redemption and, consequently the sale
of the property executed on September 3, 1963, by the Development Bank of the Philippine in favor
of the petitioners is null and void.

WHEREFORE, the decision of the respondent Appellate Court is affirmed, with costs against
petitioners.