G.R. No. 78687. January 31, 1989.
ELENA SALENILLAS AND BERNARDINO SALENILLAS, petitioners, vs. HONORABLE COURT OF APPEALS and HONORABLE RAYMUNDO SEVA, JUDGE OF BRANCH 38 OF THE REGIONAL TRIAL COURT OF CAMARINES NORTE and WILLIAM GUERRA, respondents.

FACTS

The property, originally a homestead covered by OCT No. P-1248 issued to spouses Florencia H. de Enciso and Miguel Enciso, was sold to petitioners Elena (daughter of the Encisos) and Bernardino Salenillas in 1970. Petitioners subsequently mortgaged the land to the Philippine National Bank (PNB). Due to loan default, the mortgage was extrajudicially foreclosed, and the property was sold at public auction to private respondent William Guerra on February 27, 1981. A Sheriff’s Final Deed was executed in Guerra’s favor on July 12, 1983.
Upon the sheriff’s attempt to place Guerra in possession, petitioners refused to vacate and instead offered to repurchase the property under Section 119 of the Public Land Act. The trial court, however, granted Guerra’s motion for an alias writ of possession. The Court of Appeals dismissed petitioners’ certiorari petition, ruling their right to repurchase had prescribed. It held the five-year period under Section 119 began from the date of the mortgage contract in 1975, not from the foreclosure sale.

ISSUE

Whether petitioners’ right to repurchase the homestead under Section 119 of the Public Land Act had already prescribed.

RULING

The Supreme Court granted the petition, reversing the appellate and trial courts. It held that the five-year repurchase period under Section 119 for a homestead sold at public auction pursuant to Act No. 3135 (foreclosure) commences from the date of the execution of the final deed of sale after the redemption period expires, not from the date of the mortgage contract. The Court clarified that a mortgage is merely an encumbrance and not a “conveyance” or “alienation” that triggers the repurchase period under the Public Land Act. The period begins only when ownership is conclusively transferred via a final deed following a foreclosure sale.
Here, the Sheriff’s Final Deed was issued on July 12, 1983. Petitioners’ first offer to repurchase on November 17, 1983, and formal offer on August 31, 1984, were both well within the five-year statutory period. The Court distinguished the cited case of Monge v. Angeles, which involved a voluntary sale, not a foreclosure. Applying Paras v. Court of Appeals and Manuel v. PNB, the Court ruled petitioners timely exercised their right. The redemption price must reimburse Guerra the auction price plus 1% monthly interest and any taxes paid, pursuant to Section 30, Rule 39 of the Rules of Court.