Sta. Ignacia Rural Bank, Inc. v. Court of Appeals
REITERATIONFacts
The Antecedents: Spouses Conrado Pablo and Juanita Gonzales obtained a loan from Sta. Ignacia Rural Bank, Inc. (SIRBI) secured by a Real Estate Mortgage over their residential house and two lots covered by Free Patent Title. The spouses defaulted, leading SIRBI to extra-judicially foreclose the mortgage. The property was sold at public auction on July 28, 1981, with SIRBI as the highest bidder. The Certificate of Sale was registered on November 5, 1981. Ownership was consolidated in favor of SIRBI via a final deed of sale on November 5, 1983. Subsequently, SIRBI sold the property to spouses Alberto Lucas and Nelia Rico on December 19, 1984, and new Transfer Certificates of Title were issued in their names. Procedural History: The spouses Pablo filed a complaint for repurchase, annulment of title, and damages on March 20, 1986. The Regional Trial Court (RTC) dismissed the complaint, ruling that the two-year redemption period under the Rural Banks Act had expired, considering it a special law that prevails over the five-year period under the Public Land Act. The Court of Appeals (CA) reversed the RTC decision, holding that the five-year repurchase period under the Public Land Act was applicable and had not yet expired. SIRBI's motion for reconsideration was denied. The Petition: SIRBI filed a petition for certiorari with the Supreme Court, arguing that the CA erred in applying the five-year repurchase period of the Public Land Act over the two-year redemption period of the Rural Banks Act.
Issue(s)
Whether the five-year repurchase period under Section 119 of Commonwealth Act No. 141 (Public Land Act) prevails over the two-year redemption period under Section 5 of Republic Act No. 720, as amended (Rural Banks Act). Whether the private respondents' right to repurchase the property had already prescribed at the time they filed their action.
Ruling
The petition is DISMISSED, and the decision of the Court of Appeals is AFFIRMED. The private respondents are allowed to repurchase the subject house and lots from petitioner Sta. Ignacia Rural Bank, Inc. for an amount corresponding to the principal obligation and accumulated interests up to the time of actual repurchase.
Ratio Decidendi
On whether the five-year repurchase period under the Public Land Act prevails over the two-year redemption period under the Rural Banks Act: The Supreme Court reiterated that the policy behind homestead and free patent laws is to preserve the land for the homesteader and his family. Section 119 of Commonwealth Act No. 141 provides a five-year period for repurchase of lands acquired under free patent or homestead provisions. While Section 5 of Republic Act No. 720, as amended, provides a two-year redemption period for lands foreclosed by rural banks, this provision does not repeal or modify Section 119 of the Public Land Act. The Court clarified that the two-year period under the Rural Banks Act is a liberalization of the redemption period in extra-judicial foreclosure sales, extending the one-year period under Act 3135 for lands acquired under free patent and homestead statutes. However, this does not negate the subsequent right to repurchase under Section 119 of the Public Land Act. The Court cited Oliva v. Lamadrid and Rural Bank of Davao City, Inc. v. Court of Appeals, emphasizing that Section 119 of C.A. 141 prevails over shorter redemption periods in other laws when dealing with lands acquired under free patent or homestead statutes. The five-year repurchase period commences after the expiration of the redemption period provided by the specific law governing the foreclosure. On whether the private respondents' right to repurchase had already prescribed: The Certificate of Sale was registered on November 5, 1981. Under Section 5 of the Rural Banks Act, as amended, the private respondents had two years from this date, or until November 5, 1982, to redeem the property. Following the ruling in Belisario v. Intermediate Appellate Court, they had an additional five years from the expiration of the redemption period (November 5, 1982) to repurchase the property under Section 119 of the Public Land Act, which would be until November 5, 1987. The private respondents filed their action for repurchase on March 20, 1986, which was well within the five-year repurchase period. The Court also noted that the filing of the action to repurchase is equivalent to an offer to redeem and preserves their right. Therefore, their right to repurchase had not prescribed.
Main Doctrine
The five-year period for repurchase under Section 119 of Commonwealth Act No. 141 (Public Land Act) applies to lands acquired under free patent, even when mortgaged to a rural bank, and this period commences after the expiration of the two-year redemption period provided under Section 5 of the Rural Banks Act (Republic Act No. 720, as amended).