RAMON TORRES AND JESSIE BELARMINO, PETITIONERS, VS. SPOUSES VIHINZKY ALAMAG AND AIDA A. NGOJU, RESPONDENTS.

Torres versus Alamag

The Case

This is a petition for review on certiorari brought by Ramon Torres and Sheriff Jessie Belarmino against the spouses Vihinzky Alamag and Aida Ngoju. The respondents sued for redemption and injunction, asking the Regional Trial Court of Cebu City to declare them the rightful redeemers of two foreclosed lots and to compel the sheriff to issue a certificate of redemption in their favor. The petitioners countered that Torres, a judgment creditor whose levy was annotated on the titles, was himself a valid redemptioner and had already redeemed the property. The case matters because it fixes who may redeem under the Rules of Court, and it settles how strictly the redemption price must be computed when the purchaser never disclosed the taxes he paid.

Procedural History

The spouses Alamag and Ngoju filed their complaint for redemption and injunction with prayer for a temporary restraining order before the Regional Trial Court of Cebu City, Branch 8. The trial court ruled for the petitioners. It held that Torres, a creditor holding a lien by judgment subsequent to the lien under which the property was sold, was a valid redemptioner, dismissed the complaint, and ordered the respondents to pay 50,000 pesos as attorney's fees and litigation expenses. The respondents moved for reconsideration, which was denied, and then filed a notice of appeal. The petitioners moved to dismiss the appeal as belatedly filed, but the trial court denied the motion and gave the appeal due course.

The Court of Appeals reversed the trial court. It held that both Torres and the respondents had the right to redeem, but that the respondents were the first to tender the full redemption price, so the certificate of redemption issued to Torres was cancelled and the respondents were declared to have validly redeemed. The petitioners' motion for reconsideration was denied, so they came to the Supreme Court by petition for review on certiorari under Rule 45.

Facts

The respondents owned two parcels of land covered by separate transfer certificates of title. The property was extrajudicially foreclosed by the Bank of the Philippine Islands to satisfy a loan, and at the public auction the spouses Rudy and Dominica Chua were awarded the lots as highest bidders for 310,000 pesos. A certificate of sale was issued in July 1997 and registered in the Office of the Register of Deeds of Cebu City in January 1998.

Meanwhile, Ramon Torres had won an ejectment case against respondent Alamag before the Municipal Trial Court in Cities of Cebu City. That judgment became final and executory, and by virtue of a writ of execution a notice of levy was annotated on the respondents' titles in June 1998. These are the same properties involved in this case.

In December 1998, both sides asked the sheriff for the redemption price. On December 29, 1998, Torres redeemed the two lots by paying 402,993.60 pesos through the Office of the Clerk of Court. On January 7, 1999, respondent Alamag deposited 404,000 pesos as redemption money, but the clerk of court refused to issue her a certificate because Torres had already redeemed. The next day, Torres paid an additional 22,000 pesos for interest and taxes. On January 12, 1999, Sheriff Belarmino issued a certificate of redemption to Torres.

Issues

• Whether or not the Court of Appeals erred in giving due course to the respondents' appeal despite its alleged late filing.
• Whether or not the Court of Appeals erred in resolving who between the parties was entitled to redeem, instead of limiting itself to the issue of Torres' right to redeem.
• Whether or not the Court of Appeals erred in holding that Torres did not pay the full redemption price on December 29, 1998, and that the respondents therefore validly redeemed ahead of him.

Applicable Provisions

Section 27 of Rule 39 of the Rules of Court provides:

Section 27. Who may redeem real property so sold. Real property sold as provided in the last preceding section, or any part thereof separately, may be redeemed in the manner hereinafter provided, by the following persons: x x x x (b) A creditor having a lien by virtue of an attachment, judgment or mortgage on the property sold, or on some part thereof, subsequent to the lien under which the property was sold. Such redeeming creditor is termed a redemptioner.

This is the provision under which Torres claims the right to redeem, as a judgment creditor whose levy came after the foreclosure lien.

Ruling

On the first issue, the Court held that the appeal was timely. Under the rule in Neypes versus Court of Appeals, a party is allowed a fresh period of fifteen days to file a notice of appeal counted from receipt of the order denying a motion for reconsideration, and under Sumiran versus Damaso this procedural rule is given retroactive effect. Since the respondents received the denial on August 29, 2001, their notice of appeal filed on September 11, 2001 was well within the period.

On the second issue, the Court held that the Court of Appeals did not stray from the issue. The main prayer of the complaint was for a certificate of redemption in the respondents' favor, and the pre-trial order itself asked who had the right to redeem. The appellate court was therefore bound to determine who, as between Torres and Alamag, was entitled to the certificate.

On the third issue, the Court ruled for the petitioners. Both lower courts agreed that Torres was a redemptioner under Section 27(b), because his notice of levy was annotated only after the certificate of sale had been registered, making his lien subsequent to the foreclosure lien. The Court then rejected the appellate court's finding that Torres' December 29 payment was incomplete. That payment of 402,993.60 pesos already included the bid price, capital gains and documentary stamp taxes, registration fees, and interest for eighteen months. The only amounts omitted were the realty taxes and interest thereon, which the spouses Chua had never disclosed to the sheriff or to Torres until they showed him the official receipts on January 8, 1999, and he paid the 22,000 pesos that very day. Following Baluyut versus Poblete and Cayton versus Zeonnix Trading Corporation, the Court held that where the purchaser fails to furnish the redemptioner the amounts of assessments or taxes paid, the property may be redeemed without paying them, and payment of the full purchase price with interest is sufficient if the redemptioner immediately pays the additional amount once notified. This accords with the policy of the law to aid rather than defeat the right of redemption.

Doctrine

A creditor holding a lien by attachment, judgment, or mortgage on property sold at public auction, subsequent to the lien under which it was sold, is a redemptioner under Section 27(b) of Rule 39 and may redeem the property. For a valid redemption, the tender must include the full amount paid by the purchaser, interest thereon, and any assessments or taxes the purchaser paid, with interest. But the purchaser must first furnish the redemptioner the amounts of such assessments or taxes; absent that notice, the property may be redeemed without paying them, and payment of the full purchase price with interest suffices if the redemptioner pays the deficiency immediately upon being informed. The fifteen-day fresh period to appeal under Neypes is procedural and retroactive.

Disposition

The petition was granted; the Court of Appeals decision was reversed and set aside, and the decision of the Regional Trial Court of Cebu City, Branch 8 was reinstated, upholding Torres as the valid redemptioner.

Remember This

The line to memorize: a redemptioner who pays the full purchase price with interest, and promptly pays the taxes once notified, has validly redeemed, because the law aids rather than defeats the right of redemption. Examiners use this case on the requisites of redemption under Section 27 of Rule 39 and on the retroactive fresh-period rule of Neypes.