General vs. Barrameda

The one-year redemption period under Section 31 of Commonwealth Act No. 459 for property foreclosed by the DBP runs from the date of registration of the sale in the registry of deeds, not from the date of the auction sale, because the terms "sale" and "auction sale" as used interchangeably in various redemption statutes refer to the same public auction sale, and for registered land, registration is the operative act that transfers title and constitutes notice to the whole world.

Leoncio Barrameda was the registered owner of a 59.4687-hectare parcel of land in Minalabac, Camarines Sur, covered by Transfer Certificate of Title No. 1418. He mortgaged the property to the Development Bank of the Philippines (DBP) to secure a loan of P22,000.00. The DBP's charter, Commonwealth Act No. 459 (originally creating the Agricultural and Industrial Bank), contains in Section 31 a provision granting the mortgagor the right to redeem foreclosed property "within one year from the date of the auction sale." Rodolfo General and Carmen Gontang subsequently purchased the foreclosed property from the DBP, and the dispute centers on whether Barrameda's exercise of the right of redemption was within the statutory period.

Leoncio Barrameda was the registered owner of a 59.4687-hectare parcel of land in Barrio Taban, Minalabac, Camarines Sur, covered by Transfer Certificate of Title No. 1418. He mortgaged the property to the Development Bank of the Philippines (DBP) to secure a loan of P22,000.00. After Barrameda failed to pay the installments as they fell due, the DBP extrajudicially foreclosed the mortgage pursuant to Act No. 3135.

On April 23, 1962, the provincial sheriff conducted a public auction sale at which the DBP, as the highest bidder, purchased the mortgaged property for P7,271.22 — merely the unpaid balance of the mortgage debt after Barrameda had already paid P14,728.78. On May 13, 1963, the sheriff executed a final deed of sale in favor of the DBP, and the DBP executed an affidavit of consolidation of ownership. Upon registration of the sale and the affidavit on September 2, 1963, TCT No. 1418 in Barrameda's name was cancelled and TCT No. 5003 was issued to the DBP.

The following day, September 3, 1963, Rodolfo General and Carmen Gontang purchased the land from the DBP. However, the sale in their favor was annotated on TCT No. 5003 only on November 26, 1963. Prior to that date, on November 20, 1963, Barrameda offered to redeem the land. The DBP refused to allow the redemption, prompting Barrameda to file suit on November 23, 1963. On August 12, 1964, Barrameda deposited with the clerk of court the sum of P7,271.22, representing the repurchase price.

The trial court held that the one-year redemption period began on April 23, 1962, the date of the auction sale, and ended on April 24, 1963, rendering Barrameda's November 20, 1963 offer to redeem and his August 12, 1964 deposit untimely. The Court of Appeals reversed, holding that the redemption period should commence from the date of registration of the sale, thereby making Barrameda's redemption timely. The appellate court further found that Barrameda had always been in possession of the disputed land.

• Statutory Text of Section 31, CA 459: Petitioners argued that Section 31 of Commonwealth Act No. 459 clearly and specifically provides that the right to redeem may be exercised "within one year from the date of the auction sale," and that there is no provision in the charter stating that the redemption period shall start from the registration of the certificate of sale.
• Specificity of CA 459 Over General Rules: Petitioners maintained that Section 31 of CA 459 is a specific provision governing redemption of property foreclosed by the DBP (formerly the Agricultural and Industrial Bank), and prescribes the redemption period for both judicial and extrajudicial foreclosures, such that the general rule in Rule 39 of the Rules of Court should not override the specific charter provision.
• Inapplicability of Agbulos vs. Alberto: Petitioners contended that the ruling in Agbulos vs. Alberto was inapplicable because that case was decided under Section 26 (now Section 90) of Rule 39, where the statute was ambiguous as to when the redemption period begins, whereas Section 31 of CA 459 specifically and clearly states that the period starts from the date of the auction sale.
• Inapplicability of Gonzales vs. PNB: Petitioners argued that Gonzales vs. PNB was likewise inapplicable because the PNB Charter (Act No. 2938, Section 32) uses different language — "within one year the sale of the real estate" — which is identical to Rule 39, unlike CA 459's explicit reference to "the date of the auction sale."
• Applicability of Marcaida vs. Pigtain: Petitioners invoked Marcaida vs. Pigtain, where the Court construed Section 6 of Act No. 3135 and categorically stated that the one-year redemption period starts from the date of sale and not from the registration of the sale certificate, as more applicable to the present case.

• Commencement of Redemption Period: Whether the one-year redemption period under Section 31 of Commonwealth Act No. 459 starts from the date of the auction sale or from the date of registration of the sale in the registry of deeds.
• Good Faith of Purchasers: Whether petitioners were under obligation to look beyond what appeared in the certificate of title of their vendor, the DBP, and investigate the validity of its title before they could be classified as purchasers in good faith.

• Commencement of Redemption Period: Yes, the redemption period starts from the date of registration of the sale in the registry of deeds. The terms "sale" and "auction sale" as used interchangeably in various redemption statutes refer to the same public auction sale, and for registered land, registration is the operative act that transfers title and constitutes notice to the whole world.
• Good Faith of Purchasers: N/A — the Court found it unnecessary to determine whether petitioners were purchasers in good faith, since Barrameda validly redeemed the property within the legal period, rendering the sale to petitioners null and void.

• Commencement of Redemption Period: The Court rejected a purely literal reading of the phrase "from the date of the auction sale" in Section 31 of CA 459, reasoning that the crucial inquiry is legislative intent rather than the precise wording used in different enactments. The Court observed that legislators used the terms "sale" and "auction sale" interchangeably across different laws — Rule 39 of the Rules of Court, the PNB Charter (Act No. 2938), and CA 459 — and that in all cases they referred to one and the same act: the sale at public auction indispensably necessary in the disposition of foreclosed or levied properties. The Court then applied the established doctrine that for registered land under the Torrens system, the operative act that transfers title is the registration of the deed of conveyance, and registration also serves as notice to the whole world. Relying on Agbulos vs. Alberto and Salazar vs. Meneses, the Court held that the redemption period should begin from the date of registration. This interpretation better serves the ends of justice and equity, particularly here where Barrameda stood to lose 59.4687 hectares purchased by the DBP for only P7,271.22 — the unpaid balance after he had already paid P14,728.78 on a P22,000.00 debt — while affirming the appellate decision would cause no loss to the petitioners since their P7,271.22 would be returned. The Court further noted that Barrameda had always been in possession of the disputed land.
• Good Faith of Purchasers: Because Barrameda's redemption was held timely, the sale by DBP to General and Gontang on September 3, 1963 was declared null and void, making the question of whether the petitioners were purchasers in good faith moot. The Court expressly stated it found it "no longer necessary to determine whether the petitioners are purchasers in good faith."

• Registration as the Operative Act Under the Torrens System — For property brought under the Land Registration Act (Act No. 496), the deed of sale does not take effect as a conveyance or bind the land until it is registered. Registration is the operative act that transfers title and constitutes notice to the whole world. The Court applied this doctrine to hold that the redemption period for foreclosed registered land begins from the date of registration of the sale, not from the date of the auction sale, even where the charter provision (Section 31, CA 459) uses the phrase "from the date of the auction sale."
• Interchangeability of "Sale" and "Auction Sale" in Redemption Statutes — The terms "sale" and "auction sale" as used in various redemption statutes (Rule 39 of the Rules of Court, Act No. 2938/PNB Charter, Commonwealth Act No. 459/DBP Charter, and Act No. 3135) refer to one and the same act — the sale at public auction required by law in the disposition of foreclosed or levied properties. The Court relied on this principle to harmonize the different statutory formulations and apply the registration-based commencement rule uniformly to registered land.
• Equitable Rationale for Redemption Rights — Mortgagors whose properties are foreclosed and purchased by the mortgagee as highest bidder are at a great disadvantage because they forfeit their properties at a great loss, the property typically being acquired for no more than the mortgagee's credit. The law grants a redemption period to mitigate this disadvantage, and the Court construed the redemption period in a manner that better serves justice and equity.

• "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)" — This passage, quoted from Agbulos vs. Alberto, articulates the foundational Torrens principle that registration is the operative act of conveyance, which the Court applied to determine the commencement of the redemption period.
• "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." — This passage states the Court's rationale for harmonizing the different statutory terms and applying the registration-based rule uniformly.
• "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" — This passage articulates the equitable basis for the Court's choice of interpretation, emphasizing the protective purpose of redemption rights.

• Agbulos vs. Alberto, G.R. No. L-17483, July 31, 1962 — Controlling precedent followed. Held that for registered land, the redemption period begins from the date of registration of the sale, because registration is the operative act that transfers title under the Torrens system. The Court found no compelling reason to deviate from this ruling.
• Salazar vs. Meneses, G.R. No. L-15378, July 31, 1963 — Followed. Held that the redemption period for judgment creditors starts from the date of registration of the sale, reinforcing the registration-based commencement rule.
• Gonzales vs. Philippine National Bank, 48 Phil. 824 — Cited as part of the line of authority establishing that registration of the deed of conveyance for Torrens property is the operative act to transfer title. Petitioners argued it was distinguishable on the basis of the different charter language, but the Court found the distinction immaterial.
• Marcaida vs. Pigtain, 101 Phil. 1111 — Cited by petitioners for the proposition that under Section 6 of Act No. 3135, the redemption period starts from the date of sale, not from registration. The Court effectively subordinated this ruling by holding that the interchangeable use of "sale" and "auction sale" refers to the same act and that the registration principle governs for registered land.
• Garcia vs. Ocampo, G.R. No. L-13029, June 30, 1959 — Cited within the Salazar line of authority supporting the registration-based commencement rule.

• Section 31, Commonwealth Act No. 459 — The DBP charter provision granting the mortgagor the right to redeem foreclosed property "within one year from the date of the auction sale." The Court interpreted "auction sale" as referring to the same act as "sale" in other redemption statutes and held that for registered land, the redemption period commences from registration of the sale.
• Section 6, Act No. 3135 — Governs extrajudicial foreclosure of mortgages. Petitioners invoked Marcaida's construction that the redemption period starts from the date of sale, but the Court applied the registration principle for Torrens land.
• Section 50, Act No. 496 (Land Registration Act) — Provides that the deed of sale does not take effect as a conveyance or bind the land until registered. The Court relied on this provision as the statutory basis for the registration-as-operative-act doctrine.
• Section 26 (now Section 90), Rule 39, Rules of Court — Governs redemption after execution sale. The Court noted that the ambiguity in this provision as to when the redemption period begins was resolved in Agbulos by reference to the Torrens registration principle.
• Section 32, Act No. 2938 (now Section 20, R.A. No. 1300, PNB Charter) — Provides the mortgagor the right to redeem "within one year the sale of the real estate." Petitioners argued this language differs from CA 459, but the Court held the terms are used interchangeably and refer to the same act.

Teehankee (Chairman), Makasiar, Muñoz Palma, and Martin, JJ., concurred.