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Rural Bank of Davao City v Hon.

CA
Topic: right of redemption in cases if the land is mortgaged to a rural bank (see:
NOTE)
Facts:
Private respondents Gabriel Abellano and Francisca Sequitan obtained a loan in the amount
of 45k from petitioner, rural bank. As a security for the loan, private respondents mortgaged
with petitioner bank a parcel of land.
National Housing Authority filed with the CFI a complaint for the expropriation of
several parcels of land to carryout its Slum Improvement and Resettlement Program; said
action was directed against private respondents, including the mortgaged property, and 15
others. As mortgagee, petitioners were allowed to intervene.
Failure to pay their obligations the property was extra judicially foreclosed and petitioner
being the highest bidder acquired the land
A certificate of sale was registered in RD. petitioner failed to redeem the foreclosed property
within the period of 2years as provided by Rural Banks Act.
CFI issued an order requiring NHA to pay for the properties expropriated. Private
respondents notified petitioner on its desire to repurchase pursuant to Public Land Act
CA.141 but as a defense the right to repurchase had become moot and academic. Private
respondent amended the complaint since it is impossible to reacquire the property by reason
of expropriation justice demands that the said payment 490K must be given to them in lieu
of the property expropriated.
TC favored plaintiff, CA affirmed
CA in its decision stated that Rural Banks Act did not reduce the period of redemption of
homestead land from 5years prescribed by CA 141.
ISSUE: WON CA 141 superseded Rural Banks Act
Held: the court ruled that when the property was expropriated the property still belongs to
the plaintiff due to the 2years redemption period.
On the basis of CA 141 and Rural Banks Act in regards to the year of redemption between 5
years or 2 years).Since the mortgaged property is a homestead covered by a Torrens title,
the 5 year period should apply. Also sec. 119 prevails over statutes which provide for a
shorter period of redemption in extra judicial foreclosure sales
Note: the rules on redemption in the case of an extrajudicial foreclosure of land acquired
under free patent or homestead statutes: If the land is mortgaged to a rural bank under R.A.
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.