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CANQUE v. VS.CA

FACTS:

341 Phil. 738

Spouses Marcelino Canque and Felicidad Canque were the registered owners of a parcel of land under Original Certificate of Title No. P-(20559)-3409, issued by the Register of Deeds of Davao del Sur through Free Patent No. 40336. This property measured 2 hectares, 43 ares, and 58 centares. On May 21, 1976, the Canque spouses sold a 750-square-meter portion of this land to the Iglesia ni Kristo Church, resulting in the issuance of a new Transfer Certificate of Title No. T-8730 to them. On October 12, 1977, the Canque spouses secured a loan of Fifteen Thousand Pesos (P15,000.00) from the defendant bank by mortgaging the remaining parcel of land under TCT No. T-8730. The loan was eventually satisfied, evidenced by the full repayment.

Felicidad Canque passed away on February 2, 1980, and a subsequent loan of Twenty-Five Thousand Pesos (P25,000.00) was obtained by Marcelino Canque alone on March 7, 1980, using the same property as collateral. The defendant bank considered this second loan an extension of the first since the mortgage from the initial loan remained uncancelled. Due to Marcelino's failure to repay the second loan, the bank extrajudicially foreclosed on the mortgage and emerged as the highest bidder during the public auction. The Sheriff’s Certificate of Sale was registered on September 9, 1983. On October 18, 1985, the bank executed an affidavit consolidating ownership and a deed of absolute sale, leading to the issuance of TCT No. T-18357 in the bank's name on December 23, 1985.

Approximately seven years later, on September 7, 1990, Marcelino Canque and his children attempted to redeem the foreclosed property, but the bank refused. Consequently, they filed a complaint in the lower court on the same date. After a thorough hearing process, the lower court initially issued a partial judgment on January 8, 1992, affirming the validity of the mortgage and allowing the plaintiffs to exercise their redemption rights under section 119 of Commonwealth Act No. 141 (Public Land Act). Subsequently, on August 24, 1992, the court issued an amended decision modifying specific parts of the partial judgment. The plaintiffs appealed this decision to the Court of Appeals. The appellate court ruled that the plaintiffs' right of redemption had already prescribed as of September 9, 1988, five years following the registration of the Sheriff’s Certificate of Sale. Nonetheless, the Court of Appeals clarified that the bank's right only applied to 50% of the property because the second mortgage, executed solely by Marcelino Canque after Felicidad's death, did not lawfully include Felicidad’s hereditary share.

ISSUES:

  1. Whether the period to repurchase foreclosed lands issued through free patent by rural banks is only five (5) years.

  2. Whether the Real Estate Mortgage is a continuing mortgage securing future loans by the husband after the wife’s death.

RULING:

  1. Issue on Repurchase Period

    The Supreme Court ruled that the mortgagor of titled real estate acquired under the Public Land Act and foreclosed by a rural bank may redeem the property within two (2) years from the registration of the sheriff's certificate of sale. If the mortgagor fails to exercise this right, the mortgagor or their heirs may repurchase the property within five (5) years from the expiration of the two-year redemption period. Thus, the petitioners’ right to redeem had not expired when they filed suit.

  2. Issue on Continuing Mortgage

    The Supreme Court deferred to the trial court’s factual finding that the Canque spouses and the bank entered into a real mortgage under a continuing credit/mortgage arrangement intended to cover future loans. This arrangement implied that loans subsequently availed by the husband after the wife’s death could also be secured by the original mortgage.

PRINCIPLES:

  1. Redemption and Repurchase Period

    • Mortgagors of real estate to rural banks under the Public Land Act (C.A. No. 141) have two years to redeem from the registration of the sheriff's certificate of sale and an additional five years to repurchase the property.

    • Section 119 of Commonwealth Act 141.

    • The operative act of registration determines the start of the redemption period.

  2. Mandatory Judicial Notice

    • Courts are required to take judicial notice of and apply the latest rulings of the Supreme Court as they form part of the legal system.

  3. Continuing Credit/Mortgage Arrangement

    • A continuing mortgage arrangement allows the mortgaged property to secure initial and subsequent loans, even if the amount equals the mortgage at a specific point.

    • Factual findings of trial courts concerning the parties' intentions in contractual agreements are generally upheld unless there is a significant oversight.