Tuesday, November 29, 2011

Spouses Basilio and Norma Hilaga vs. Rural Bank of Isulan, etc., G.R. No. 179781. April 7, 2010.

Rural Banks Act; redemption of mortgaged lands. Section 5 of Republic Act No. 720, as amended by Republic Act Nos. 2670 and 5939, specifically provides for the redemption period for lands foreclosed by rural banks. It provides in part as follows: “Loans may be granted by rural banks on the security of lands without Torrens titles where the owner of private property can show five years or more of peaceful, continuous and uninterrupted possession in the concept of an owner; x x x or of homesteads or free patent lands pending the issuance of titles but already approved, the provisions of any law or regulations to the contrary notwithstanding: Provided, That when the corresponding titles are issued the same shall be delivered to the register of deeds of the province where such lands are situated for the annotation of the encumbrance: x x x Provided, That when a homestead or free patent land is foreclosed, the homesteader or free patent holder, as well as their heirs shall have the right to redeem the same within two years from the date of foreclosure in case of a land not covered by a Torrens title or two years from the date of the registration of the foreclosure in case of a land covered by a Torrens title x x x.” 

In Sta. Ignacia Rural Bank, Inc. v. Court of Appeals, we summarized the rules on redemption in the case of an extrajudicial foreclosure of land acquired under our free patent or homestead statutes as follows. If the land is mortgaged to a rural bank under Republic Act No. 720, as amended, the mortgagor may redeem the property within two (2) years from the date of foreclosure or from the registration of the sheriff’s certificate of sale at such foreclosure if the property is not covered or is covered, respectively, by a Torrens title. If the mortgagor fails to exercise such right, he or his heirs may still repurchase the property within five (5) years from the expiration of the two (2)-year redemption period pursuant to Section 119 of the Public Land Act (C.A. No. 141). If the land is mortgaged to parties other than rural banks, the mortgagor may redeem the property within one (1) year from the registration of the certificate of sale pursuant to Act No. 3135. If he fails to do so, he or his heirs may repurchase the property within five (5) years from the expiration of the redemption period also pursuant to Section 119 of the Public Land Act. 

In the present case, petitioners admit that when the property was mortgaged, only the tax declaration was presented. Although a free patent title was subsequently issued in their favor on August 4, 1976, petitioners failed to inform the creditor rural bank of such issuance. As a result, the certificate of sale was not registered or annotated on the free patent title. Petitioners are estopped from redeeming the property based on the free patent title which was not presented during the foreclosure sale nor delivered to the Register of Deeds for annotation of the certificate of sale as required under Section 5 of Republic Act No. 720, as amended. Estoppel in pais arises when one, by his acts, representations or admissions, or by his own silence when he ought to speak out, intentionally or through culpable negligence, induces another to believe certain facts to exist and such other rightfully relies and acts on such belief, so that he will be prejudiced if the former is permitted to deny the existence of such facts. 

Petitioners cannot fault respondent for the non-registration of the certificate of sale because petitioners did not inform the respondent bank that a Torrens title had already been acquired by them on August 4, 1976. By their silence and inaction, petitioners misled the respondent bank to believe that their only proof of ownership was the tax declaration. Thus, the two (2)-year redemption period shall be reckoned from the date of the foreclosure. For the same reason, petitioners’ assertion that they will have five (5) years from the date of registration of the sale to redeem the foreclosed property under Section 119 of the Public Land Act has no merit, the reckoning period for the redemption period being properly from the date of sale. But even assuming arguendo that petitioners can avail of the five (5)-year redemption period provided under Section 119 of the Public Land Act, they still failed to exercise their right of redemption within the reglementary period provided by law. 

As mentioned earlier, Section 119 of said Act expressly provides that where the land involved is acquired as a homestead or under a free patent, if the mortgagor fails to exercise the right of redemption, he or his heirs may still repurchase the property within five (5) years from the expiration of the two (2)-year redemption period. The auction sale having been conducted on April 20, 1977, petitioners had until April 20, 1984 within which to redeem the mortgaged property. Since petitioner only filed the instant suit in 1999, their right to redeem had already lapsed. It took petitioners twenty-two (22) years before instituting an action for redemption. The considerable delay in asserting one’s right before a court of justice is strongly persuasive of the lack of merit in petitioners’ claim, since it is human nature for a person to enforce his right when the same is threatened or invaded. Spouses Basilio and Norma Hilaga vs. Rural Bank of Isulan, etc., G.R. No. 179781. April 7, 2010.

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