Oliva vs. Lamadrid

A holder of a homestead or free patent already covered by an issued Torrens title long before the rural-bank mortgage may repurchase foreclosed land within five years from conveyance under Section 119 of Commonwealth Act No. 141. The two-year redemption period in Section 5 of Republic Act No. 720, as amended by Republic Act No. 2670, was held inapplicable to such titled lands.

Laureano Oliva held a parcel in Daet, Camarines Norte under Homestead Patent No. 18863 and Original Certificate of Title No. 363 issued in 1932. Section 119 of Commonwealth Act No. 141 affords homesteaders and free-patent holders a five-year repurchase right, while Section 5 of Republic Act No. 720, as amended by Republic Act No. 2670, prescribes special foreclosure and redemption rules for loans granted by rural banks.

Laureano Oliva owned about 3.5258 hectares in sitio Pinagdamhan, barrio Lalawigan, Daet, Camarines Norte, covered by Homestead Patent No. 18863 and Original Certificate of Title No. 363 issued in his name on May 8, 1932. On October 2, 1958, he mortgaged the property to the Rural Bank of Daet as security for a P250.00 loan. After default, the mortgage was extrajudicially foreclosed and the property sold at public auction by the provincial sheriff to the Bank as sole bidder on February 4, 1961 for P188.00, representing P160.00 unpaid balance, P12.00 interest, and P16.00 attorney's fees. The sheriff's certificate of sale dated February 6, 1961 stated the property could be redeemed within two years from sale, or until February 4, 1963.

No redemption having been made within that stated two-year period, a deed of sale was executed in favor of the Bank on February 27, 1963, Original Certificate of Title No. 363 was cancelled, and Transfer Certificate of Title No. T-3968 was issued in the Bank's name. On March 2, 1963, the Bank sold the property to Nicolas V. Lamadrid for P350.00, whereupon Transfer Certificate of Title No. T-3968 was cancelled and Transfer Certificate of Title No. 3978 issued to Lamadrid.

Prior to May 31, 1963, Oliva offered to repurchase the property for the same P350.00, but the offer was refused. He therefore filed the present action on May 31, 1963 against Lamadrid and his wife Rosa L. Villaluz to compel reconveyance for P350.00, which he deposited with the Clerk of Court, invoking a five-year redemption period from February 4, 1961 under Section 119 of Commonwealth Act No. 141. The lower court factually traced the mortgage, auction sale, consolidation of title, and resale, and dismissed the complaint on the view that redemption had expired on February 4, 1963.

• Governing Redemption Period: Petitioner argued that as holder of a free patent and Torrens title he was entitled to redeem within five years from February 4, 1961, the date of the auction sale, pursuant to Section 119 of Commonwealth Act No. 141.
• Reduced Redemption Price: Petitioner maintained on appeal that he was bound to pay no more than P188.00, the foreclosure price paid by the Bank, rather than the P350.00 paid by Lamadrid and deposited as redemption price in the lower court.

• Governing Redemption Period: Respondents countered that the right of redemption expired on February 4, 1963 under Section 6 of Republic Act No. 720, as amended by Republic Act No. 2670, which they maintained was controlling over Section 119 of Commonwealth Act No. 141.

• Applicable Redemption Law: Whether the redemption period is governed by Section 119 of Commonwealth Act No. 141 or by Section 5 of Republic Act No. 720, as amended by Republic Act No. 2670.
• Scope of Section 119: Whether Section 119 of Commonwealth Act No. 141 refers only to voluntary conveyances, excluding foreclosure sales made under Republic Act No. 720.
• Redemption Price and Change of Theory: Whether petitioner, having litigated below on a P350.00 redemption price, may claim on appeal that only P188.00 is due.

• Applicable Redemption Law: Yes. Section 119 of Commonwealth Act No. 141 governs, giving five years from conveyance or foreclosure sale; the two-year period in Section 5 of Republic Act No. 720, as amended, is inapplicable to land already covered by an issued Torrens free-patent title.
• Scope of Section 119: No. Section 119 applies to foreclosure sales of lands covered by homestead or free patent, the law making no distinction between voluntary and involuntary conveyances.
• Redemption Price and Change of Theory: No. The P188.00 pretense cannot be entertained, being a substantial change of theory on appeal which is not permissible.

• Applicable Redemption Law: The two-year redemption grant in Section 5 of Republic Act No. 720, as amended, was construed to refer to lands not covered by a Torrens title, a homestead or free patent, or to owners without Torrens titles showing five years' possession, or to homestead or free-patent lands pending issuance of titles but already approved. Because Oliva's free patent and Torrens title had issued over 26 years before the bank mortgage, no conflict between the two statutes was found. Legislative history confirmed the result: the original ten-year redemption proposal in Senate Bill No. 172 and House Bill No. 1725 was abandoned as too long and discouraging to rural-bank lending, with the specific intent that homesteaders retain the five-year right under the general law, Commonwealth Act No. 141.
• Scope of Section 119: Settled precedent since 1951 established the applicability of Section 119 to foreclosure sales of homestead or free-patent lands, and expressly rejected the theory limiting it to voluntary conveyances. Having timely exercised the right and tendered payment long before February 4, 1966, five years from the February 4, 1961 sale, reconveyance by defendants was required.
• Redemption Price and Change of Theory: Independently of the amount due under Section 119, the belated claim for a lower P188.00 price was barred. Having offered P350.00 below, deposited that sum, and litigated on that theory, petitioner could not substantially shift position on appeal.

• Section 119 redemption extends to involuntary sales — Section 119 of Commonwealth Act No. 141, granting homesteaders and free-patent holders a five-year right to repurchase, applies to foreclosure sales, not only to voluntary conveyances, because the statute draws no distinction between the two kinds of conveyances. Applied here to sustain redemption after a rural-bank extrajudicial foreclosure.
• Limited scope of rural-bank two-year redemption — The two-year redemption period under Section 5 of Republic Act No. 720, as amended by Republic Act No. 2670, covers only lands without Torrens titles or homestead or free-patent lands with titles still pending issuance or approval, not lands already titled decades earlier. Applied here to hold the two-year limit inapplicable to Oliva's 1932-patented and titled land.
• Legislative intent preserves general five-year right — Where a special-law redemption proposal is deliberately withdrawn to avoid discouraging rural-bank loans, the general-law redemption right is retained. Applied here through the Senate deliberations showing abandonment of a ten-year period with the understanding that the five-year Public Land Act right would remain.
• Change of theory on appeal barred — A party may not substantially change on appeal the theory litigated in the lower court. Applied here to reject petitioner's shift from the P350.00 price offered and consigned below to a P188.00 foreclosure-price claim.

• "the law does not distinguish between the two kinds of conveyances." — States the basis for rejecting the limitation of Section 119 of Commonwealth Act No. 141 to voluntary conveyances and extending it to foreclosure sales.
• "which were issued over 26 years prior to the mortgage constituted in favor of the Bank" — Establishes the decisive factual predicate for holding the rural-bank two-year rule for untitled or pending-title lands inapplicable.
• "It is, therefore, our considered view that plaintiff herein has the right to repurchase the property in question within five (5) years from the date of the conveyance or foreclosure sale, or up to February 4, 1966, and that having exercised such right and tendered payment long before the date last mentioned, defendants herein are bound to reconvey said property to him." — Articulates the ratio decidendi fixing the deadline and the consequence of timely tender.
• "Independently of the amount due under section 119 of Commonwealth Act No. 141, we cannot entertain this pretense entailing as it does a substantial change of the theory under which plaintiff had litigated in the lower court, which is not permissible on appeal." — Defines the procedural bar against petitioner's reduced-price claim raised only on appeal.

• Cassion vs. Philippine National Bank, L-3540 — Cited as settling since July 30, 1951 that Section 119 of Commonwealth Act No. 141 applies to foreclosure sales of homestead or free-patent lands.
• Umengan vs. Butacan, L-16036 — Cited as explicitly rejecting on February 28, 1963 the theory that Section 119 refers exclusively to voluntary conveyances.
• Hautea vs. Magallon, L-20345; Northern Motors, Inc. vs. Prince Line, L-12884; Agoncillo vs. Javier, 48 Phil. 424; Molina vs. Somes, 24 Phil. 49 — Cited as authority that a substantial change of litigation theory is not permissible on appeal, barring the reduced-price claim.

• Section 119, Commonwealth Act No. 141 — Grants homestead and free-patent holders the right to repurchase within five years from conveyance; applied to allow redemption until February 4, 1966 from the February 4, 1961 foreclosure sale.
• Section 5, Republic Act No. 720, as amended by Republic Act No. 2670 — Governs rural-bank loans, foreclosure publication, and a two-year redemption right for lands not covered by Torrens title or for pending homestead or free-patent titles; construed as inapplicable to land already covered by an issued Torrens free-patent title.

Reyes, J.B.L., Dizon, Makalintal, Bengzon, J.P., Zaldivar, Sanchez, Castro, Angeles and Fernando, JJ., concur.