Development Bank of the Philippines v. Asok
REITERATIONFacts
The Antecedents: Spouses Dionesio and Matea Asok were the original owners of a parcel of land in Misamis Oriental covered by Original Certificate of Title (OCT) No. P-4272, a free patent issued on July 19, 1967. Upon their deaths, their son Denison Asok inherited the property through an extrajudicial settlement, leading to the cancellation of the OCT and the issuance of Transfer Certificate of Title (TCT) No. T-9626 in his name on November 17, 1987. On August 31, 1989, Denison and his wife, Ella Gagarani Asok, mortgaged the lot to the Development Bank of the Philippines (DBP) to secure a P100,000 loan. Following a default, DBP extrajudicially foreclosed the mortgage under Act No. 3135, emerging as the highest bidder. Procedural History: A certificate of sale was issued to DBP on November 28, 1991, and registered on December 24, 1992. Denison died in 1993, and DBP consolidated its ownership in 1998. On May 15, 1998, the respondents (Denison's widow and children) filed a complaint for repurchase under Section 119 of CA 141. The Regional Trial Court (RTC) dismissed the complaint, ruling that the five-year period should be reckoned from the expiration of the redemption period starting from the date of sale (November 28, 1991), making the 1998 filing late. The Court of Appeals (CA) reversed this, holding that the period should be reckoned from the registration of the certificate of sale (December 24, 1992), thus the complaint was timely. The Petition: DBP filed a petition for review on certiorari under Rule 45, arguing that Section 119 of CA 141 is inapplicable because the land was no longer covered by a free patent but by a TCT. DBP further contended that the respondents were not 'legal heirs' of the original patentees as they were merely the daughter-in-law and grandchildren. Finally, DBP asserted that the right to repurchase had prescribed, insisting the period should be counted from the date of the auction sale rather than the date of registration.
Issue(s)
Whether Section 119 of Commonwealth Act No. 141 (CA 141) applies to land originally acquired via free patent but subsequently transferred to an heir under a Transfer Certificate of Title (TCT). Whether the widow and children of the patentee's son qualify as 'legal heirs' entitled to the right of repurchase under Section 119 of CA 141. Whether the five-year period for repurchase under Section 119 of CA 141 is reckoned from the date of the auction sale or from the date of registration of the certificate of sale.
Ruling
The petition is DENIED. The Court of Appeals' decision is AFFIRMED. DBP is ordered to execute a deed of reconveyance in favor of respondents upon payment of the redemption price.
Ratio Decidendi
On Issue 1: The Court ruled that Section 119 of Commonwealth Act No. 141 (CA 141) remains applicable. The plain intent of the law is to give the patentee every chance to preserve the land within the family as a reward for the labor of cultivating it. The fact that the land was inherited by the patentee's son and a new Transfer Certificate of Title (TCT) was issued does not remove the property from the purview of Section 119. Applying Ferrer v. Mangente, the Court emphasized that the law's protection does not stop with the individual applicant but extends to those closely related to him by legal succession. Therefore, the issuance of a TCT in the name of an heir does not extinguish the right of repurchase inherent in public land grants. On Issue 2: The Court held that the respondents are indeed 'legal heirs' within the meaning of the law. Rejecting a restrictive definition, the Court cited Madarcos v. de la Merced, stating that 'legal heirs' is used in a generic sense to cover anyone called to succession by will or by operation of law. The term is broad enough to include both testate and intestate heirs. Furthermore, following the precedent in Salenillas v. CA, a daughter-in-law is considered a legal heir for purposes of Section 119 to better serve the purpose of the law. The Court reiterated that between two statutory interpretations, the one that fulfills the law's salutary purpose of keeping the land in the family must prevail. On Issue 3: The Court clarified that the right to repurchase had not prescribed. In extrajudicial foreclosures under Act No. 3135, the one-year redemption period is reckoned from the date of registration of the certificate of sale, not the date of the auction sale. Applying Rural Bank of Davao City, Inc. v. CA, the five-year period fixed in Section 119 of CA 141 begins to run only from the expiration of that one-year redemption period. In this case, the certificate of sale was registered on December 24, 1992; thus, the redemption period expired on December 24, 1993. Consequently, the respondents had until December 24, 1998, to exercise their right to repurchase. The complaint filed on May 15, 1998, was therefore well within the prescriptive period.
Main Doctrine
The right to repurchase land acquired via free patent or homestead under Section 119 of Commonwealth Act No. 141 (CA 141) persists even if the original patent has been cancelled and replaced by a Transfer Certificate of Title (TCT) in the name of an heir. The term 'legal heirs' is construed in a generic sense to include any person called to succession by law or will, including a daughter-in-law, to fulfill the state's policy of keeping the land within the family. For extrajudicial foreclosures, the five-year repurchase period is counted from the expiration of the one-year redemption period, which commences only upon the registration of the certificate of sale in the Registry of Deeds.