PHILIPPINE NATIONAL BANK, PETITIONER, VS. BERNARDO P. LANDETA AND COURT OF APPEALS, RESPONDENTS.

Appeal by certiorari taken by the Philippine National Bank –
hereinafter referred to simply as the Bank – from the decision of the
Court of Appeals of October 31, 1962 in C.A.-G.R. No. 24335-R entitled
“Bernardo P. Landeta vs. Philippine National Bank and Doroteo Yabes”,
as amended by its resolution of November 29 of the same year.

Bernardo P. Landeta, owner of a parcel of agricultural land situated
in barrio Jurisdiction, municipality of Lallo, Cagayan, which he had
acquired as a homestead (Original Certificate of Title No. 3291),
mortgaged it to the Bank to secure payment of a loan of P600.00 on
March 19, 1948. Due to his failure to pay the loan at maturity, the
Bank foreclosed the mortgage and acquired the property at the
corresponding foreclosure sale on July 22, 1952. It was only on June
17, 1954, however, that title to the property was issued in favor of
the Bank, upon previous cancellation of Landeta’s title.

On September 27, 1954, the Bank sent Landeta a letter giving him a
last opportunity to repurchase the property within ten days from
receipt, as otherwise, the Bank would entertain an offer of another to
buy the same for not less than P1,200.00. In his letter of October 3,
1954, Landeta informed the Bank of his desire to repurchase the
property but requested that he be given until May 1955 to do it. This
notwithstanding, the Bank informed Landeta subsequently that it had
sold all its rights, title and interest in the property to Doroteo
Yabes for P3,000.00 on January 6, 1955, and that he could exercise his
right to redeem the property from Yabes within five years. As a result
of this sale, the Bank’s title was cancelled and in lieu thereof
Transfer Certificate of Title No. 2305 was issued in the name of Yabes.
It also appears that on March 3, 1955, in a tax delinquency sale of the
said property, Yabes paid P199.54 as delinquent taxes due on the
property.

On November 7, 1956, Landeta commenced an action in the Court of
First Instance of Cagayan (Civil Case No. 857-A) against the Bank and
Yabes to enforce his right to repurchase under the provisions of
Section 119 of the Public Land Act (Commonwealth Act No. 141, as
amended) and to recover from them attorney’s fees and the costs of suit.

The Bank alleged in its answer to the complaint that it did not know
that the property was originally a homestead grant to Landeta, and
therefore, had acted in good faith when it sold the property to Yabes,
and that, at any rate, Landeta was not divested of his right to
repurchase the same from Yabes.

For his part, Yabes claimed that he was a purchaser of the property
in good faith, first, from the Bank and, subsequently, from the
provincial treasurer of Cagayan in the aforementioned realty estate tax
delinquency sale. He also presented a counterclaim against plaintiff
Landeta for recovery of possession of the land in question and damages,
and a cross-claim against co-defendant Philippine National Bank for
reimbursement of all expenses in the event that judgment be rendered
against him in favor of the plaintiff.

After trial, the court rendered the following judgment:

“WHEREFORE, judgment is hereby rendered:

‘(a)
Sentencing the defendant Doroteo Yabes to resell the property in
question to the plaintiff Bernardo P. Landeta for the sum of P3,414.03;

‘(b)
In the event that the defendant Doroteo Yabes fails to resell the land
in controversy within fifteen (15) days from the time the decision
becomes final, the Deputy Clerk of Court is hereby ordered to execute
the corresponding deed of sale in favor of the plaintiff pursuant to
the provisions of Section 10 of Rule 39 of the Rules of Court;

‘(c) Dismissing the complaint against the defendant Philippine National Bank; and

‘(d) Without pronouncement as to costs.’”

Upon appeal taken by Landeta the Court of Appeals rendered judgment reversing that of the lower court as follows:

“WHEREFORE, the decision appealed from is hereby reversed, and in its stead judgment is rendered –

“Annulling
the sale made by the defendant-appellee Philippine National Bank of the
property subject matter of the present litigation to and in favor of
defendant Doroteo Yabes as well as the entry of said sale in the
records of the Register of Deeds of Cagayan;

“Ordering said
defendant-appellee Philippine National Bank to allow
plaintiff-appellant to repurchase the property aforesaid for such
amount as may correspond to the principal obligation and the
accumulated interests up to and including July 22, 1952, when the
property was sold to Yabes; and

“Insofar as the cross-claim
of defendant-appellee Doroteo Yabes is concerned, sentencing the
Philippine National Bank to return to said Doroteo Yabes the purchase
price of the land in question including all the expenses incident
thereto.

“On the counterclaim of defendant-appellee Doroteo
Yabes, the plaintiff-appellant is hereby ordered to pay to
defendant-appellee Doroteo Yabes the sum of P247.32 representing the
total delinquency realty estate taxes on the subject property which the
latter had paid, with interest at the legal rate from March 3, 1955,
the date when Yabes made such payments to the provincial treasurer of
Cagayan, until the whole amount is fully paid.

“No findings
as to damages and attorney’s fees;-and costs in both instances to be
paid in equal shares by both defendants-appellees, the Philippine
National Bank and Doroteo Yabes.”

The above decision was amended by the Court’s resolution of November 29, 1962, as follows:

“x x x insofar as the repurchase price is concerned, the dispositso
that the same should be for such amount as may correspond to the
principal obligation and the accumulated interests up to and including
the time of actual repurchase; in all respects, the judgment
hereinbefore rendered remains.ive portion of the decision is hereby amended, ”

There is no question that Landeta, within the period of five years
from the time of the foreclosure sale of his property, offered to
repurchase it from the Bank. Indeed, the latter does not deny Landeta’s
right, for even after conveying its rights and interests in the
property to Yabes it advised Landeta that he could redeem the property
from the latter.

The real issue to be determined in this case, considering the
assignment of errors made in petitioner’s brief, is whether Landeta
should repurchase his property from the Bank or from Yabes because the
amount to be paid by him as consideration for the repurchase would
depend upon whether he should repurchase from the former or from the
latter. Upon this question the Court of Appeals held that Landeta is
entitled to repurchase his property from the Bank and that the
consideration therefore should be only “such amount as may correspond
to the principal obligation and the accumulated interests up to and
including the time of actual repurchase”. We find this to be correct
for, otherwise, it would be easy for the Bank in this case and in
similar cases to render nugatory the right of repurchase granted by law
to the owner who acquired the property under the Public Land Act, by
making conveyances of the property for amounts beyond the capacity of
said owner to pay.

It must be noted further that the sale by the Bank in favor of Yabes
was made before the expiration of the period of five years within which
Landeta was entitled to repurchase the property, and it has been held
that this right of repurchase may be exercised irrespective of whether
or not the Bank had subsequently conveyed the property to some other
party (Villaflor vs. Barreto, G. R. No. L-5045, November 26, 1952; 48
O. G. p. 4825).

WHEREFORE, the decision appealed from is affirmed, with costs.

Concepcion, C.J., Reyes, J.B.L., Regala, Makalintal, Bengzon, J.P., Zaldivar, Sanchez, and Ruiz Castro, JJ., concur.
Barrera, J., no part.