GR 97872; (March, 1994) (Digest)
G.R. No. 97872 March 1, 1994
STA. IGNACIA RURAL BANK, INC., petitioner, vs. THE HONORABLE COURT OF APPEALS and SPS. CONRADO PABLO and JUANITA GONZALES, respondents.
FACTS
On January 14, 1980, spouses Conrado Pablo and Juanita Gonzales (private respondents) obtained a loan from Sta. Ignacia Rural Bank, Inc. (petitioner) secured by a real estate mortgage over their residential house and two lots covered by Free Patent Title (OCT No. P-7941). Upon default, the bank extrajudicially foreclosed the mortgage. The property was sold at public auction on July 28, 1981, with the bank as the highest bidder. The Certificate of Sale was registered on November 5, 1981. Ownership was consolidated in favor of the bank on November 5, 1983. Subsequently, on December 19, 1984, the bank sold the property to spouses Alberto Lucas and Nelia Rico. On March 20, 1986, the private respondents filed a complaint for repurchase, annulment of title, and damages. The trial court dismissed the complaint, ruling that the right to redeem under Section 5 of R.A. No. 720 (Rural Banks Act), as amended, provided only a two-year redemption period from the registration of the certificate of sale, which had already expired. The Court of Appeals reversed the trial court.
ISSUE
Whether the private respondents are entitled to repurchase the foreclosed property under Section 119 of Commonwealth Act No. 141 (Public Land Act), and if so, whether their action was filed within the prescribed period.
RULING
Yes. The Supreme Court affirmed the decision of the Court of Appeals. The applicable law is Section 119 of Commonwealth Act No. 141 , not Section 5 of R.A. No. 720 , as amended. Section 119 grants a five-year period to repurchase lands acquired under free patent from the date of conveyance. Following the ruling in Oliva v. Lamadrid, there is no conflict between the two laws; Section 5 of R.A. No. 720 applies to lands not covered by a Torrens title, homestead, or free patent, or to lands pending issuance of such titles. Since the subject property was covered by a Free Patent Title, Section 119 governs.
The redemption period under Act No. 3135 (governing extrajudicial foreclosure) is one year from the registration of the certificate of sale (November 5, 1981 to November 5, 1982). Following Belisario v. Intermediate Appellate Court, the five-year repurchase period under the Public Land Act begins to run from the expiration of the redemption period under Act No. 3135 . Thus, the private respondents had until November 5, 1987, to repurchase. Their filing of the action on March 20, 1986, was within this period. The filing of the action itself is equivalent to an offer to redeem. Therefore, the private respondents are entitled to repurchase the property from the petitioner bank by paying the principal obligation and accumulated interest up to the time of actual repurchase. The subsequent sale to third parties is annulled.