[165] VILLARICA v.
COURT OF APPEALS ● On April 14, 1953, the spouses Villarica brought an action in the Court of
G.R. No. L-19196 | November 29, 1968 | Capistrano, J.
SUMMARY
The Spouses Villarica executed an instrument of absolute sale in favor of the
Spouses Consunji over a parcel of land that they owned in Davao. In return, the
spouses Consunji executed another public instrument granting the spouses Villarica
an option to buy the same property within the period of one year. The Consunjis then
obtained a TCT in their names, and subsequently sold the lot to Jovito Francisco. The
TCT in the name of the spouses Consunji was cancelled and another was issued in
the name of Francisco. The Spouses Villarica brought an action in the CFI of Davao
for reformation of the instrument of absolute sale into an equitable mortgage, alleging
that such was the real intention of the parties. Respondents, on the other hand,
contended that the parties actually intended an absolute sale. The Court ruled in favor
of the respondent, finding that the true intention of the parties was to enter into a
contract of sale, and that the spouses Villarica do not have the right to redeem the
property in question.
DOCTRINE
An option to buy is different and distinct from the right of repurchase which must be
reserved by the vendor, by stipulation to that effect, in the contract of sale (and not in
a separate instrument).
FACTS
● On May 19, 1951, the spouses Angel Villarica and Nieves Palma Gil de
Villarica sold to the spouses Gaudencio Consunji and Juliana Monteverde a
lot containing an area of 1,174 sq. meters, situated in the poblacion of the
City of Davao, for the price of P35,000.
● The instrument of absolute sale dated May 19, 1951 in the form of a
deed poll, drafted by Counselor Juan B. Espolong who had been appointed
by the Villaricas as their agent to sell the lot, was acknowledged on May 25,
1951, before the same Juan B. Espolong who was also a Notary Public.
● The public instrument of absolute sale and the vendors' TCT were delivered
to the vendees. On the same day, the spouses Consunji executed another
public instrument whereby they granted the spouses Villarica an option to
buy the same property within the period of one year for the price of P37,750.
● In July, same year, the spouses Consunji registered the absolute deed of
sale in consequence of which TCT in the names of the spouses Villarica was
cancelled and a new TCT was issued in the names of the spouses
Consunji.
● In February 1953, the spouses Consunji sold the lot to Jovito S.
Francisco for the price of P47,000 by means of a public instrument of sale.
● This public instrument of sale was registered in view of which the TCT in the
names of the spouse Consunji was cancelled and a new TCT in the name of
Jovito S. Francisco was issued.
First Instance of Davao against the spouses Consunji and Jovito S.
Francisco for the reformation of the instrument of absolute sale into an
equitable mortgage as a security for a usurious loan of P28,000 alleging
that such was the real intention of the parties.
● Spouses Villarica contended that it should be presumed as an equitable
mortgage on the grounds that
(1) the price of P35,000 was unusually inadequate’
(2) the vendors remained in possession of the property sold;
(3) the period of one year for repurchase granted in the instrument
was extended for one month; and
(4) the vendors pay the taxes on the land sold
● Defendants answered that the deed of absolute sale expressed the real
intention of the parties and they also alleged a counterclaim for sums of
money borrowed by the plaintiffs from the Consunjis which were then due
and demandable.
ISSUES/HELD/RATIO
1. Whether or not the public instrument between the spouses Villarica and Spouses
Consunji is one of absolute sale or equitable mortgage – ABSOLUTE SALE.
● The instrument thereof was one of absolute sale. The court found Spouses
Villarica’s contentions unmeritorious on the grounds that
a. the price was not inadequate;
b. Spouses Consunji do not remain in possession of the property
but instead were allowed to collect monthly rents;
c. the taxes paid were back taxes which a vendor has an
obligation to pay as they sell the land free from all liens; and
d. said option to buy is different and distinct from the right of
repurchase.
2. Whether or not the Sps Villarica have the right of redemption – NO.
● The Consunjis as new owners of the lot granted the Villaricas an option to
buy the property within the period of one year from May 25, 1951 for the
price of P37,750. Said option to buy is different and distinct from the
right of repurchase which must be reserved by the vendor, by
stipulation to that effect, in the contract of sale. This is clear from Article
1601 of the Civil Code, which provides
“Conventional redemption shall take place when the vendor
reserves the right to repurchase the thing sold, with the obligation
to comply with the provisions of article 1616 and other stipulation
which may have been agreed upon.”
● The right of repurchase is not a right granted the vendor by the vendee
in a subsequent instrument, but is a right reserved by the vendor in the
same instrument of sale as one of the contract.
 ○ Once the instrument of absolute sale is executed, the vendor can
no longer reserve the right to repurchase, and any right
thereafter granted the vendor by the vendee in a separate
instrument cannot be a right of repurchase but some other right like
the option to buy in the instant case.
○ The extension of the period of one year for the exercise of the
option by one month does not fall under No. 3, of Article 1602 of the
Civil Code, which provides that “When upon or after the expiration
of the right to repurchase another instrument extending the period
of redemption or granting a new period is executed.”

RULING
PREMISES CONSIDERED, the judgment of the Court of Appeals is hereby affirmed,
with costs against petitioners also in this instance.
[166] TORRES v. CA
FACTS:
G.R. No. 92248 | December 9, 1992
VICENCIO T. TORRES and SOCORRO S. TORRES, petitioners, vs. COURT OF
APPEALS, CEFERINO ILLUSCUPIDES, ARACELI ILLUSCUPIDES and EMILIO
OLORES, respondents.
G.R. No. 93390 December 9, 1992
CEFERINO ILLUSCUPIDES and ARACELI CAMACHO-ILLUSCUPIDES, petitioners,
vs. COURT OF APPEALS, VICENCIO T. TORRES and SOCORRO S. TORRES,
respondents.
SUMMARY
Araceli and Ceferino (Illuscupides) owned two adjoining parcels of land which were
mortgaged with the GSIS. They contracted Olores to construct an apartment on the
parcels of land. They failed to pay Olores the entire price they owed him so the latter
filed a suit against them. CFI ruled in favor of Olores and ordered them to pay the
remaining balance. While the appeal was pending in the CA, GSIS gave notice that it
was going to foreclose the mortgaged properties for failure to pay the loan. To stave
off the foreclosure, the properties were sold to Vicencio and Socorro (Torres). The
Illuscupideses and the Torreses also entered into an agreement where the latter
would “resell, retransfer, and reconvey” the apartment building to the former. When
Olores found out about the transaction and fearing that he might not get paid, he filed
a suit for rescission of the sale. The Illuscupideses filed a counter-claim arguing that
the sale was a pacto de retro sale. Meanwhile, the CA upheld the decision of the CFI
ordering Illuscupides’ to pay Olores the remaining balance they owed him. Eventually,
the trial court also dismissed the rescission case filed by Olores and also dismissed
the counter-claims of the Illuscupideses.
Upon appeal, the CA affirmed the dismissal of the rescission case filed by Olores but
reversed the dismissal of the counter-claims filed by the Illuscupideses. The CA held
that the sale was not a pacto de retro sale. However, since the parcels of land and
the apartment building were sold separately, and that only the parcels of land were
fully paid by the Torreses, it ordered the reconveyance of the apartment building to
the Illuscupideses. The SC affirmed the CA ruling that the sale was not pacto de
retro since the terms in the Deed of Sale was clear and that it did not provide
for the redemption of the property by the vendors.
DOCTRINE
The right of repurchase is not a right granted the vendor by the vendee in a
subsequent instrument, but is a right reserved by the vendor in the same instrument
of sale as one of the stipulations of the contract. Once the instrument of absolute
sale is executed, the vendor can no longer reserve the right to repurchase, and
any right thereafter granted the vendor by the vendee in a separate instrument cannot
be a right to repurchase but some other right like an option to buy in the instant case.
● Case involves two petitions for review on certiorari, both assailing the CA
decision regarding a sale between the Illuscupideses and the Torreses:
○ The first was filed by the Illuscupideses who are arguing that the
CA erred in ruling that the sale with the Torresses was not a pacto
de retro sale
○ The second was a petition by the Torreses who argued that the CA
erred in ruling that they should reconvey the apartment building that
they bought from the Illuscupideses. However, this was already
dismissed by the Court for their failure to show that the CA
committed reversible error. No MR was filed.
● Araceli and Ceferino (Illuscupides) owned two adjoining parcels of land
located in Dagupan City.
○ The properties were mortgaged to the GSIS.
● 1965 - Illuscupideses contracted Emilio Olores for the construction of a 9-
door apartment on the parcels of land for the sum of P79,000
○ While construction was ongoing, another door was added
increasing the cost to P97,000.
● Illuscupideses could only pay P54,390
○ This compelled Olores to sue them for the remaining balance
● CFI of Pangasinan ruled in favor of Olores and ordered the Illuscupideses to
pay the remaining balance.
○ Illuscupideses filed an appeal with the CA
● Meanwhile, the GSIS notified the Illuscupideses that it was going to
foreclose the mortgaged properties for their failure to pay the loan
● To stave off the foreclosure, the Illuscupideses sold the properties to
Vivencio Torres and Socorro Torres for P130,000.00
○ The vendees paid them P10,000, P6,000, and P3,000
○ The vendees also paid P51,498.97 to the GSIS
○ These payments were in accordance with the agreement of the
parties evidenced by a promissory note
○ The parties also executed on the same day an agreement whereby
the Torreses would "RESELL, RETRANSFER, and RECONVEY" to
the Illuscupideses "that certain building, more particularly
designated as a ten-door concrete apartment."
● Olores found out about the transaction and, fearing that he would not be
able to collect from the Illuscupideses, he filed a new case for rescission of
the sale
● The Illuscupideses filed a counterclaim and cross-claim against Olores and
the Torreses, alleging that the Deed of Sale was a pacto de retro sale.
● CA eventually upheld the CFI decision that ordered the Illuscupideses to pay
Olores the remaining balance they owed him
○ When the said judgment became final and executory, Olores tried
to execute the same but was unable to do so.
 ● Meanwhile, the trial in the rescission case rendered a judgement dismissing thereafter granted the vendor by the vendee in a separate
the complaint filed by Olores instrument cannot be a right to repurchase but some other right like
○ It also dismissed the counterclaim against Olores and the an option to buy in the instant case.
crossclaim against the Torreses ● [Secondary issue] Petitioners also argued that the CA should have ruled
○ Also, the Illuscupideses and/or the Torreses were ordered to upon the rentals collected by the Torreses. But the Court held that the CA
deliver the P41,000 withheld by them as part of the purchase price was correct in not ruling upon the issue since this contention was not raised
of the properties for the satisfaction of the claim of Olores in the original cross-claim.
● Upon appeal, the CA affirmed the trial court ruling in dismissing the
rescission complaint filed by Olores RULING
○ But it reversed the ruling which ordered the WHEREFORE, the decision appealed from is hereby AFFIRMED in toto. Costs
Illuscupideses/Torresses to pay Olores against petitioners Illuscupideses.
○ CA also ordered the Torreses to reconvey to the Illuscupideses the
apartment building SO ORDERED.
○ CA did not agree with the Illuscupideses that the sale was a pacto
de retro sale since the terms of the Deed of Sale did not provide
for the redemption of the property by the vendors.
○ However, the CA found that the apartment building and the parcels
of land were sold separately. Since only the parcels of land were
fully paid, it ordered the Torresses to reconvey the apartment
building to the Illuscupideses
● The Torreses and the Illuscupideses filed their petitions with the SC.
○ But the petition by the Torreses was already dismissed with finality
for their failure to file a timely motion for reconsideration.
○ The Illuscupideses are arguing that the CA erred in ruling that the
sale with the Torreses was not a pacto de retro sale

ISSUE/HELD
W/N the sale was a pacto de retro sale – NO.

RATIO
● The CA was correct in ruling that the sale was not pacto de retro.
● The Deed of Sale was an absolute sale inasmuch as the terms in their
agreement are clear on the matter.
● Argument of petitioners: CA should have taken into account the
circumstances surrounding the execution of the deed, particularly the fact
that an Agreement to resell the apartment was executed on the very same
day as the deed of sale.
● SC: The argument is unavailing. Even if this Court were to agree with the
Illuscupideses that parole evidence may be allowed to add to the terms of
the deed of sale, this Court has held that:
○ The right of repurchase is not a right granted the vendor by the
vendee in a subsequent instrument, but is a right reserved by the
vendor in the same instrument of sale as one of the stipulations of
the contract. Once the instrument of absolute sale is executed, the
vendor can no longer reserve the right to repurchase, and any right
[167] LUCIA TAN v. ARADOR VALDEHUEZA and REDICULO VALDEHUEZA
G.R. No. L-38745 | August 6, 1975 | Castro, J.
SUMMARY
The respondents executed 2 documents of deed of pacto de retro sale in favor of
Tan. After the execution of the Deed of Sale with right to repurchase, defendants
remained in the possession of the land. The 1st deed was not registered in the
Registry of Deeds while the 2nd deed was registered. The trial court treated the
registered deed of pacto de retro as an equitable mortgage but considered the
unregistered deed of pacto de retro "as a mere case of simple loan, secured by the
property thus sold under pacto de retro," on the ground that no suit lies to foreclose
an unregistered mortgage.
PROVISION
Art. 1603, NCC. In case of doubt, a contract purporting to be a sale with right to
repurchase shall be construed as an equitable mortgage.
Art. 1604, NCC. The provisions of Article 1602 shall also apply to a contract
purporting to be an absolute sale.
DOCTRINE
Under Art. 1875, OCC, registration was a necessary requisite for the validity of a
mortgage even as between the parties, but under Art. 2125, NCC this is no longer so.
If the instrument is not recorded, the mortgage is nonetheless binding between the
parties. The Valdehuezas having remained in possession of the land and the realty
taxes having been paid by them, the contracts which purported to be pacto de retro
transactions are presumed to be equitable mortgages, whether registered or not,
there being no third parties involved. Tan’s prayer for consolidation of ownership is
properly rejected, the contracts being equitable mortgages.
FACTS
● Decision of the CFI being appeal from (certified by CA to SC) is an action
instituted by the Lucia Tan against the Arador Valdehueza and Rediculo
Valdehueza for
○ (a) declaration of ownership and recovery of possession of the parcel of
land described in the first cause of action of the complaint, and
○ (b) consolidation of ownership of two portions of another parcel of
(unregistered) land described in the second cause of action of the
complaint, purportedly sold to the plaintiff in two separate deeds
of pacto de retro.
● For first cause of action
○ That the parcel of land described in the first cause of action was
a. the subject matter of the public auction sale held on May 6,
1955 at the Capitol Building in Oroquieta, Misamis Occidental,
b. wherein the plaintiff was the highest bidder
c. and as such a Certificate of Sale was executed by MR.
VICENTE D. ROA (then the Ex-Officio Provincial Sheriff) in
favor of LUCIA TAN
d. Due to the failure of defendant Arador Valdehueza to redeem
the said land within the period of one year as being provided
by law, MR. VICENTE D. ROA who was then the Ex-Officio
Provincial Sheriff executed an ABSOLUTE DEED OF SALE in
favor of the plaintiff LUCIA TAN.
● For second cause of action
○ The VALDEHUEZAS have executed two documents of DEED OF
PACTO DE RETRO SALE in favor of LUCIA TAN of two portions of
a parcel of land which is described in the second cause of action
with the total amount of P1,500.00
○ That from the execution of the Deed of Sale with right to repurchase
mentioned in the second cause of action, Valdehuezas remained in
the possession of the land; that land taxes to the said land were
paid by the same said defendants.
○ One of the deeds of pacto de retro sale was registered, the other was
not.
● There was also a civil case (Civil case 2002) involving the same parties.
○ It was a complaint for injunction filed by Tan on July 24, 1957 against
the Valdehuezas
 to enjoin them "from entering the above-described parcel of
land and gathering the nuts therein ...."
○ This complaint and the counterclaim were subsequently dismissed
for failure of the parties "to seek for the immediate trial thereof,
thus evincing lack of interest on their part to proceed with the
case.
● TC ruled:
○ 1st cause of action
 Declaring Lucia Tan the absolute owner of the property
described in the first cause of action of the amended complaint
○ 2nd cause of action
 treated the registered deed of pacto de retro as an equitable
mortgage but considered the unregistered deed of pacto de
retro "as a mere case of simple loan, secured by the property
thus sold under pacto de retro.
 For the registered
 Ordering the Valdehuezas jointly and severally to pay
to the plaintiff, Lucia Tan, the amount of P1,200, with
legal interest of 6% as of August 15, 1966, within 90
days to be deposited with the Office of the Court
within 90 days from the date of service of this
decision, and that in default of such payment the
 property shall be sold in accordance with the Rules of
Court for the release of the mortgage debt, plus costs;
 For the unregistered
 Valdehuezas are ordered to pay the plaintiff the
amount of P300 with legal interest of 6% from August
15, 1966, the said land serving as guaranty of the
said amount of payment;
ISSUES/HELD/RATIO
1. W/N the lower court erred in failing to adjudge on the first cause of action that
there exists res judicata – NO.
● Relying on Section 3 of Rule 17 of the Rules of Court which pertinently
provides that a dismissal for failure to prosecute "shall have the effect of an
adjudication upon the merits," the Valdehuezas submit that the dismissal of
civil case 2002 operated, upon the principle of res judicata, as a bar to the
first cause of action in civil case 2574.
○ SC: this contention is untenable as the causes of action in the two
cases are not identical.
○ Case 2002 was for injunction against the entry into and the
gathering of nuts from the land, while case 2574 seeks to "remove
any doubt or cloud of the plaintiff's ownership ..." with a prayer for
declaration of ownership and recovery of possession.
● Applying the test of absence of inconsistency between prior and subsequent
judgments
○ the failure of Tan, in case 2002, to secure an injunction against the
Valdehuezas to prevent them from entering the land and gathering nuts
is not inconsistent with her being adjudged, in case 2574, as owner of
the land with right to recover possession thereof.
○ Case 2002 involved only the possession of the land and the fruits
thereof, while case 2574 involves ownership of the land, with
possession as a mere attribute of ownership.
○ The judgment in the first case could not and did not encompass
the judgment in the second, although the second judgment would
encompass the first. Moreover, the new Civil Code provides that
suitors in actions to quiet title "need not be in possession of said
property.
2. W/N the lower court erred in making a finding on the second cause of action that
the transactions between the parties were simple loan, instead, it should be
declared as equitable mortgage – YES.
● The trial court treated the registered deed of pacto de retro as an equitable
mortgage but considered the unregistered deed of pacto de retro "as a mere
case of simple loan, secured by the property thus sold under pacto de retro,"
on the ground that no suit lies to foreclose an unregistered mortgage.
● It would appear that the trial judge had not updated himself on law and
jurisprudence; he cited, in support of his ruling, article 1875 of the old
Civil Code and decisions of this Court circa 1910 and 1912.
● Under article 1875 of the Civil Code of 1889, registration was a
necessary requisite for the validity of a mortgage even as between the
parties,
○ but under article 2125 of the new Civil Code (in effect since August
30,1950), this is no longer so.
 If the instrument is not recorded, the mortgage is nonetheless
binding between the parties. (Article 2125, 2nd sentence).
● The Valdehuezas having remained in possession of the land and the realty
taxes having been paid by them, the contracts which purported to be pacto
de retro transactions are presumed to be equitable mortgages, whether
registered or not, there being no third parties involved.
3. W/N the Valdehuezas answer to the complaint affirmed that they gave the
proceeds of the harvest to the plaintiff – NO.
● The Valdehuezas claim that their answer to the complaint of the plaintiff
affirmed that they remained in possession of the land and gave the proceeds
of the harvest to the plaintiff; it is thus argued that they would suffer double
prejudice if they are to pay legal interest on the amounts stated in the pacto
de retro contracts, as the lower court has directed, and that therefore the
court should have ordered evidence to be adduced on the harvest.
● SC: The record does not support this claim. Nowhere in the original and the
amended complaints is an allegation of delivery to the plaintiff of the harvest
from the land involved in the second cause of action. Hence, the defendants'
answer had none to affirm.
● In submitting their stipulation of facts, the parties prayed "for its approval
and maybe made the basis of the decision of this Honorable Court. "
○ The court did. It cannot therefore be faulted for not receiving evidence
on who profited from the harvest.
4. W/N the imposition of legal interest on the amount subject of the equitable
mortgages was proper – NO.
● The imposition of legal interest on the amounts subject of the equitable
mortgages, P1,200 and P300, respectively, is without legal basis, for, "No
interest shall be due unless it has been expressly stipulated in writing."
(Article 1956, new Civil Code)
● Furthermore, the plaintiff did not pray for such interest; her thesis was a
consolidation of ownership, which was properly rejected, the contracts being
equitable mortgages.
RULING
The judgment a quo is hereby MODIFIED, as follows: (a) the amounts of P1,200 and
P300 mentioned in Annexes E and D shall bear interest at six percent per annum
from the finality of this decision; and (b) the parcel of land covered by Annex D shall
be treated in the same manner as that covered by Annex E, should the defendants
fail to pay to the plaintiff the sum of P300 within 90 days from the finality of this
decision. In all other respects the judgment is affirmed. No costs.
[168] ARROFO v. QUIÑ O
GR No. 145794 | 26 January 2005 | Carpio, J.
Petitioner: Lourdes S. Arrofo
Respondent: Pedro Quino ̃
TOPIC: Extinguishment of Sale > Conventional Redemption > Distinguished from
equitable mortgage
SUMMARY
Quiño executed 2 Deeds of Absolute Sale of his property in favor of Renato Mencias
over the same property. The first excluded the house therein while the latter did not
mention it at all. Subsequently, Renato executed a Deed of Absolute Sale of the
property in favor of Arrofo. A year after, Quiño filed an action for Reconveyance of
Property with Annulment of Deeds of Sale and Damages against Renato, his wife
Myrna, and Arrofo. Quiño claimed that his transaction with Renato was a mortgage
and not an absolute sale. According to him, he borrowed 15K from Renato and the
subject property was a security for the loan. Allegedly, their agreement was that
Renato would only register the Deed of Absolute Sale with the Register of Deeds if
Quiño failed to pay said loan + interests. RTC dismissed the action declaring the sale
valid. CA reversed RTC, finding the transaction one of mortgage not sale and that
Arrofo was not a buyer in good faith. Upon motion to the SC, the Court ruled that the
transaction between Quiño and Renato was an equitable mortgage. (see doctrine)
DOCTRINE
While the SC has ruled that there is no conclusive test to determine whether a
deed purporting to be an absolute sale on its face is in reality a loan secured by
mortgage, the Court ruled that the overall intention and action of the parties
would show the real purpose of the agreement. Looking at the totality of the acts
of the parties, the Court found that what Quiño and Renato intended was a loan
secured by a mortgage. Also, SC found that Arrofo failed to act as a prudent buyer.
Lastly, the Court found the interest of the loan unconscionable and reduced it to 18%
per annum.
PROVISIONS
Art. 1602. The contract shall be presumed to be an equitable mortgage, in any of the
following cases:
(1) When the price of a sale with right to repurchase is unusually inadequate;
(2) When the vendor remains in possession as lessee or otherwise;
(3) When upon or after the expiration of the right to repurchase another
instrument extending the period of redemption or granting a new period is
executed;
(4) When the purchaser retains for himself a part of the purchase price;
(5) When the vendor binds himself to pay the taxes on the thing sold;
(6) In any other case where it may be fairly inferred that the real intention of the
parties is that the transaction shall secure the payment of a debt or the
performance of any other obligation.
In any of the foregoing cases, any money, fruits, or other benefit to be received by the
vendee as rent or otherwise shall be considered as interest which shall be subject to
the usury laws.
Art. 1604. The provisions of Article 1602 shall also apply to a contract purporting to
be an absolute sale.
FACTS
● Quiño executed a Deed of Absolute Sale in favor of Renato Mencias over
his 166sq.m. land situated in Basak, Mandaue City, Cebu. Said Deed
expressly excluded the house standing thereon.
● Another Deed of Absolute Sale was executed by Quiño covering the same
property but this time with no mention of the house.
● A TCT over the property was issued in favor of Renato. Subsequently, he
sold the property to Arrofo. A TCT was also issued to her.
● A year after, Quiño filed an action in the RTC of Mandaue City claiming that
the agreemeent he had with Renato was a loan secured by a mortgage over
the said property and not an absolute sale.
● Allegedly, their agreement was that Renato would only register the Deed of
Absolute Sale with the Register of Deeds if Quiño failed to pay said loan +
interests. The loan was 15K with interest of 7% PER MONTH within 5years
from execution of first deed.
● RTC dismissed the action declaring the agreement as a valid absolute sale.
● CA reversed the decision, finding the transaction one of mortgage not sale
and that Arrofo was not a buyer in good faith.
● Hence, SC.
ISSUES/HELD
1. W/N the transaction between the Quiño and Renato was an absolute sale or an
equitable mortgage – EQUITABLE MORTGAGE.
2. WON Arrofo was a buyer in good faith – NO.
RATIO
1. It was an equitable mortgage.
● While the SC has ruled that there is no conclusive test to determine
whether a deed purporting to be an absolute sale on its face is in
reality a loan secured by mortgage, the Court ruled that the overall
intention and action of the parties would show the real purpose of the
agreement.
 ● Under Art. 1602, in relation to 1604 (see provisions), the presence of any of
the circumstances enumerated is sufficient for a contract to be deemed an
equitable mortgage.
● Aside from that, the Court looked at the totality of the acts of the parties, the
Court found that what Quiño and Renato intended was a loan secured by a
mortgage.
o First, Renato and Myrna (the wife) did not take possession of the
property after the execution of the 1st Deed. In fact, a lessee of
Quiño testified during trial that he had been paying rentals to Quiño
and not Renato. It was only after almost 3yrs (from 1st Deed) did the
lessee learned of the ‘sale’. Since the lessee continued paying to
Quiño the Court treated this as him retaining possession of the
property.
o Second, neither Deeds reflected true intention of the parties. The
fiscal who drafted the initial contract testified that the parties were in
agreement that the contract will only be registered with the Registry
of Deeds in the even that Quiño failed to pay the loan. In addition,
Quiño was an illiterate man and in need of money badly. The Court
appreciated these facts and declared that Quiño only signed the
Deeds because he was in dire need.
o Third, the consideration paid to Quiño was unusually inadequate.
Arrofo tried to refute this by saying that during the ‘sale’ between
Quiño and Renato this was the market price. But the Court didn’t
buy it (hehe). Renato sold the lot to Arrofo for 50K. If it were true
that 15K was its market price, in a span of 3yrs, the value of it
should not have increased that much. Therefore, 15K was
inadequate to begin with.

2. No.
● SC found that Arrofo failed to act as a prudent buyer. The law does not
require a person dealing with registered land to inquire further than what the
Torrens Title on its face indicates. However, this rule is not absolute.
● Arrofo conducted an ocular inspection of the property yet she did not bother
to inquire about the occupants of the house on the lot.
o Such inquiry would have led her to discover that the lessee therein
was still paying the rentals to Quiño.
● Lastly, the Court found the interest of the loan unconscionable which already
amunted to 84% PER ANNUM during the proceedings in the SC and
reduced it to 18% per annum.

RULING
Petition DENIED. CA decision AFFIRMED with modification.
[169] ROBERTS v. PAPIO
G.R. No. 166714. | February 9, 2007 | Callejo, Sr., J.
SUMMARY
Sps Papio mortgaged house and lot to AIC, failed to pay loan, AIC moved for
extrajudicial foreclosure; to prevent this, Papios executed Deed of Absolute Sale of
the house and lot to Amelia Roberts, who paid them 85k, and of that money, they
used P59k to fully pay AIC loan. Martin became Amelia’s lessee, and paid rentals
from May 1, 1982 to May 1, 1984, and thereafter, for another year. He then failed to
pay, but he and his family remained in possession of property for 13 years. Long back
and forth of Amelia demanding that Martin pay, Martin refusing to, until Amelia made
final demand for payment of owed rentals, and for Papio family to vacate. Martin still
ignored this final demand. Amelia filed Complaint for unlawful detainer and damages
against Martin before MeTC. MeTC ruled in favor of Amelia. Papio said that he didn’t
owe Amelia anything, bec he had actually repurchased the house and lot from her
already, by giving his payments to her agent, Perlita Venture. Papio argued that he
should be the one suing Amelia, to get her to execute Deed of Absolute Sale to give
back the house and lot to him. Papio said the only reason why Amelia was suing him
is bec Perlita ‘stole’ 39k of the total 250k he paid to her, to repurchase house and lot
fr Amelia. Case at SC. 1) WON MeTC had jurisdiction in action for unlawful detainer
to resolve issue of who is owner of property and entitled to de facto possession.
Answer: CA ruling (which upheld jurisdiction of MeTC to resolve issue of who
between petitioner or respondent is lawful owner of property, and is thus entitled to
material or de facto possession thereof) is correct. 2) WON transaction between
parties under Deed of Absolute Sale and Contract of Lease is an equitable mortgage.
Answer: Ruling of CA, that contract between petitioner and respondent was an
equitable mortgage, is incorrect. It was absolute contract of sale, without stipulation
that Martin can repurchase house and lot from Amelia. Also, after deed of absolute
sale putting house and lot under Amelia’s ownership, no such contract was ever
perfected bet. her and Martin, w/c would’ve given property back to Martin.
DOCTRINE
An equitable mortgage is one that, although lacking in some formality, form or words,
or other requisites demanded by a statute, nevertheless reveals the intention of the
parties to change a real property as security for a debt and contain nothing impossible
or contrary to law. A contract between the parties is an equitable mortgage if the
following requisites are present: (a) the parties entered into a contract denominated
as a contract of sale; and (b) the intention was to secure an existing debt by way of
mortgage. The decisive factor is the intention of the parties.
In an equitable mortgage, the mortgagor retains ownership over the property but
subject to foreclosure and sale at public auction upon failure of the mortgagor to pay
his obligation. In contrast, in a pacto de retro sale, ownership of the property sold is
immediately transferred to the vendee a retro subject only to the right of the vendor a
retro to repurchase the property upon compliance with legal requirements for the
repurchase. The failure of the vendor a retro to exercise the right to repurchase within
the agreed time vests upon the vendee a retro, by operation of law, absolute title over
the property.
FACTS
 Sps Martin and Lucina Papio owned residential lot (TCT S-44980).
Mortgaged it for a P59k loan from Amparo Investments Corp. Failed to pay
loan, corp filed petition for extrajudicial foreclosure of mortgage. Since
couple needed money to redeem property and prevent foreclosure, they
executed Deed of Absolute Sale over property in favor of Martin’s cousin,
Amelia Roberts. Of P85k purchase price, P59k paid to Amparo. P26k
retained by sps. Papio. Amparo returned owner’s duplicate of TCT No. S-
44980, which was then delivered to Amelia. Amelia as lessor and Martin as
lessee, executed 2-yr contract of lease. Contract subject to renewal or
extension for a like period at option of lessor, lessee waiving benefits of
implied new lease. Monthly rentals of P800 deposited in lessor’s account at
Bank of America. TCT S-44980 cancelled, TCT 114478 issued in name of
Amelia as owner. Martin paid rentals from May 1, 1982 to May 1, 1984, and
thereafter, for another year. He then failed to pay, but he and his family
remained in possession of property for 13 years.
 Amelia, through counsel, reminded Papio that he failed to pay rental of
P2.5k (Jan 1, 1986 to Dec 31, 1997) and P10k (Jan 1, 1998 to May 31,
1998); total liability P410k She demanded Papio vacate property within 15
days from receipt of letter in case he failed to settle amount. He refused to
pay. Papio received another letter from Roberts, demanding, for last time,
that he and his family vacate property. Papio refused to leave the premises.
 Amelia, through atty-in-fact, Matilde Aguilar, filed Complaint for unlawful
detainer and damages against Martin before MeTC. She alleged:
○ She purchased house and lot from Martin. Upon his pleas to
continue staying, they executed 2-yr lease contract, commenced on
May 1, 1982. Monthly rental P800.00. TCT No. 114478 issued in
her favor and she paid all realty taxes due on property. When term
of lease expired, she still allowed Papio and his family to continue
leasing. However, he took advantage of her absence and stopped
payment beginning Jan 1986, and refused to pay despite repeated
demands. In June 1998, she sent demand letter requiring him to
pay rentals from January 1986 up to May 1998 and to vacate
leased property. Accumulated arrears in rental: (a) P360k from Jan
1, 1986 to December 31, 1997 at P2.5k/mo; and (b) P50k from Jan
1, 1998 to May 31, 1998 at P10k/mo. She came to Philippines but
all efforts at amicable settlement proved futile. She sent final
demand letter directing him and his family to pay and immediately
vacate.
 Answer with counterclaim: Papio alleged:
 ○ He executed deed of absolute sale and contract of lease. Roberts,
his cousin who is a resident of California, arrived in Philippines and
offered to redeem property. Believing that she had made offer for
purpose of retaining his ownership over property, he accepted. She
remitted P5k to mortgagor for his account, after which mortgagee
cancelled real estate mortgage. He was alarmed when she had
deed of absolute sale over property prepared (for P83k
consideration) and asked him to sign. She demanded he turn over
owner’s duplicate of TCTNo. S44980. He then believed that if he
signed the deed, Roberts would acquire ownership over property.
He asked her to allow him to redeem property at any time for
reasonable amount. When she agreed, he signed deed. Pursuant
to right toredeem, he purchased property for P250k. In July 1985,
since Roberts was back in USA, he remitted to her authorized
representative, Perlita Ventura, P150k as partial payment for
property. Again remitted P100k through Ventura. Both payments
evidenced by receipts signed by Ventura. Roberts declared she
would execute deed of absolute sale, surrender title to property. But
Ventura misappropriated P39k out of P250k that she had received;
Roberts demanded that Papio pay P39k before executing deed.
Despite Papio’s demands, Roberts refused to execute deed. Papio
posited that Amelia had no cause of action to demand payment of
rental and eject him.
 Affidavit and Position Paper: Roberts averred:
○ She had paid real estate taxes on property after she had purchased
it; Papio’s initial right to occupy property was terminated when
original lease period expired; and his continued possession was
only by mere tolerance. Deed of Sale states on its face that
conveyance of the property was absolute and unconditional. Any
right to repurchase property must appear in public document. Since
no such document exists, Martin’s supposed real interest over
property could not be enforced without violating the Statute of
Frauds. Her Torrens title to the property was an “absolute and
indefeasible evidence of her ownership of the property which is
binding and conclusive upon the whole world.” Admitted that she
demanded P39k from Papio. Amount represented his back rentals.
She neither authorized Ventura to sell property nor to receive
purchase price. She merely authorized her to receive rentals from
Papio and to deposit them in her account. She did not know that
Ventura had received P250,000.00 from Papio, and had signed
receipts therefor. It was only on February 11, 1998 that she
became aware of the receipts when she received Papio’s letter to
which were appended the said receipts. She and her husband
offered to sell property to Papio in 1984 for US$15,000.00 on a
“take it or leave it” basis when they arrived in Philippines in May
1984. Papio refused offer. Sps offered to sell property anew on Dec
20, 1997, for P670k inclusive of back rentals. Papio offered to settle
his account with the spouses. Again, the offer came on Jan 11,
1998, but was rejected. Papio insisted that he had already
purchased property in July 1985 for P250,000.00. Roberts insisted
that Papio’s claim of right to repurchase, as well as his claim of
payment, is belied by his own letter in which he offered to settle
Amelia’s claim for back rentals. Even assuming that purchase price
had been paid through Ventura, Papio did not adduce proof to
show Ventura had been authorized to sell property or to accept any
payment. Any payment to Ventura could have no binding effect on
her since she was not privy to the transaction. Papio’s own inaction
belies his claim of ownership: 1) he failed cause any notice or
annotation to be made on Register of Deed’s copy of TCT No.
114478 to protect his supposed adverse claim; 2) he did not
institute action against Roberts to compel execution of necessary
deed of transfer of title in his favor; and 3) defense of ownership
over property was raised only after Roberts demanded him to
vacate the property.
 MeTC: in favor of Roberts. Roberts tolerated stay of Papio after expiration of
contract of lease; she had cause of action against him since only elements in
unlawful detainer action are fact of lease and expiration of its term. Papio as
tenant cannot controvert her title or assert right adverse thereto or set up
any inconsistent right to change existing relation between them. She need
not prove her ownership over property, evidence of ownership can be
admitted only for determining character and extent of possession, and
amount of damages arising from detention. Papio made no denials as to
existence and authenticity of Roberts’ title. Torrens title, “which enjoys strong
presumption of regularity and validity, is generally a conclusive evidence of
ownership of the land referred to therein.” As to Papio’s claim that transfer of
property was one with right of repurchase, bereft of merit; Deed of Sale is
termed as “absolute and unconditional.” Right to repurchase not right
granted to seller by buyer in a subsequent instrument but rather, a right
reserved in same contract of sale. Once deed of absolute sale is executed,
seller can no longer reserve right to repurchase; any right thereafter granted
in a separate document cannot be a right of repurchase but some other
right. As to receipts of payment signed by Ventura, court gave credence to
Roberts’s declaration that she authorized Ventura only to collect rentals from
Papio, and not to receive repurchase price. Papio’s letter, which called her
attention to fact that she had been sending people without written authority
to collect money since 1985, bolstered finding that payment, if at all intended
for the supposed repurchase, never redounded to benefit of sps Roberts.
 Papio: Roberts had no cause of action for eviction as she ceded her right
thereto when she allowed him to redeem property upon payment of P250k to
Ventura, her duly authorized representative. Roberts’s claim that authority of
 Ventura is limited only to collection of rentals and not of purchase price was
mere afterthought, since her appended Affidavit was executed in Oct 1999
when proceedings in MeTC had already started.
 Roberts filed Motion for Issuance Writ of Execution. Court granted motion.
Writ of Execution pending appeal was issued. Sheriff Melvin M. Alidon
enforced writ and placed Roberts in possession of property.
 Papio filed complaint with RTC, for specific performance with damages
against Roberts. Papio claimed that he entered into contract of sale with
pacto de retro with Roberts, and prayed that the latter be ordered to execute
Deed of Sale over the property in his favor and transfer title over property to
and in his name.
 RTC affirmed MeTC
 Papio filed petition for review in CA. CA granted petition: Although MeTC
and RTC were correct in holding that MeTC had jurisdiction over complaint
for unlawful detainer, they erred in ignoring Papio’s defense of equitable
mortgage, and in not finding that transaction covered by deed of absolute
sale by and between parties was one of equitable mortgage under NCC
1602. Papio retained ownership of property and its peaceful possession;
MeTC should have dismissed complaint without prejudice to outcome of Civil
Case No. 01-851 relative to his claim of ownership over property.
ISSUES/HELD/RATIO
1. WON MeTC had jurisdiction in action for unlawful detainer to resolve issue
of who is owner of property and entitled to de facto possession.
● 1st Issue: CA ruling (which upheld jurisdiction of MeTC to resolve issue of
who between petitioner or respondent is lawful owner of property, and is
thus entitled to material or de facto possession thereof) is correct.
○ Section 18, Rule 70, Rules of Court: when defendant raises
defense of ownership in his pleadings and question of possession
cannot be resolved without deciding issue of ownership, ownership
shall be resolved only to determine possession. Judgment rendered
in an action for unlawful detainer shall be conclusive with respect to
possession only and shall not bind title or affect ownership of land
or building. Judgment would not bar action between same parties
respecting title to land or building.
○ Sole issue for resolution in action for unlawful detainer: material or
de facto possession. Even if defendant claims juridical possession
or ownership over property based on claim that his transaction with
plaintiff relative to property is merely equitable mortgage, or that he
had repurchased property from plaintiff, MeTC may still delve into
and take cognizance of case and make initial or provisional
determination of who between plaintiff and defendant is owner and,
in the process, resolve who is entitled to possession. MeTC, in
unlawful detainer case, decides ownership only if it is intertwined
with and necessary to resolve possession.
● Resolution of MeTC on ownership of property is merely provisional or
interlocutory. Any question involving ownership should be raised and
resolved in separate action brought specifically to settle the question with
finality, in this case, Civil Case No. 01-851 which respondent filed before the
RTC.
2. WON transaction between parties under Deed of Absolute Sale and
Contract of Lease is an equitable mortgage.
 2nd Issue: Ruling of CA, that contract between petitioner and respondent
was an equitable mortgage, is incorrect.
 Respondent intransigently alleged in his answer, and even in his affidavit
and position paper, that petitioner had granted him right to redeem or
repurchase property at any time and for a reasonable amount; and that, he
had, in fact, repurchased it in July 1985 for P250k which he remitted to
petitioner through an authorized representative who signed receipts therefor;
he had reacquired ownership and juridical possession of property after his
repurchase; and consequently, petitioner was obliged to execute a deed of
absolute sale over the property in his favor.
 Respondent alleged that he was given right to reacquire property in 1982
within 2yrs upon payment of P53k plus petitioner’s airfare for her trip to PH
from USA and back; petitioner promised to sign deed of absolute sale. He
even filed complaint against petitioner in RTC (Civil Case No. 01-851), for
specific performance with damages to compel petitioner to execute deed of
absolute sale presumably on NCC 1357 and 1358. Certainly then, his claim
that petitioner had given him right to repurchase is antithetical to equitable
mortgage.
 Equitable mortgage: although lacking in some formality, form or words, or
other requisites demanded by a statute, nevertheless reveals intention of the
parties to change real property as security for debt and contain nothing
impossible or contrary to law. Requisites: (a) parties entered into contract
denominated as contract of sale; and (b) intention was to secure existing
debt via mortgage. Decisive factor is intention of parties. Mortgagor retains
ownership over property but subject to foreclosure and sale at public auction
upon failure of mortgagor to pay.
 Pacto de retro sale: ownership of property sold is immediately transferred to
vendee a retro subject only to right of vendor a retro to repurchase upon
compliance with legal requirements for repurchase. Failure of vendor a retro
to exercise right to repurchase within agreed time vests upon vendee a retro,
by law, absolute title over property.
 By insisting that he had repurchased property, respondent thereby admitted
that the deed of absolute sale executed by him and petitioner on April 13,
1982 was, in fact and in law, a deed of absolute sale and not equitable
mortgage; hence, he had acquired ownership over property based on said
deed. Respondent is, thus, estopped from asserting that contract under
deed of absolute sale is equitable mortgage unless there is allegation and
 evidence of palpable mistake on the part of respondent; or fraud on part of
petitioner.
 Respondent made no allegation in his pleadings, affidavit. He maintained
that petitioner had sold property to him in July 1985 and acknowledged
receipt of purchase price thereof except the P39 retained by Ventura.
Respondent is thus bound by his admission of petitioner’s ownership of the
property and is barred from claiming otherwise.
 Respondent’s admission that petitioner acquired ownership under the April
13, 1982 deed of absolute sale is buttressed by his admission in Contract of
Lease dated April 15, 1982 that petitioner was owner, and that he had paid
the rentals for duration of contract of lease and even until 1985 upon its
extension. Respondent obliged to prove his defense that petitioner had given
him right to repurchase, and that petitioner obliged herself to resell property
for P250k when they executed the April 13, 1982 deed of absolute sale.
 Respondent failed to adduce competent and credible evidence to prove his
claim. From the April 13, 1982 deed, right of respondent to repurchase
property is not incorporated therein. Contract is one of absolute sale and not
one with right to repurchase.
 Right of repurchase is not a right granted vendor by vendee in subsequent
instrument, but is right reserved by vendor in same instrument of sale as one
of stipulations of contract. Once instrument of absolute sale is executed,
vendor can no longer reserve right to repurchase, and any right thereafter
granted vendor by vendee in separate instrument cannot be right of
repurchase but some other right like option to buy.
 Agreement to repurchase becomes promise to sell when made after sale
because when sale is made without such agreement purchaser acquires
thing sold absolutely; and, if he afterwards grants vendor right to repurchase,
it is a new contract entered into by purchaser as absolute owner. Option to
buy or promise to sell is different and distinct from right of repurchase that
must be reserved by means of stipulations to that effect in the contract of
sale.
 No evidence that, on or before July 1985, petitioner agreed to sell her
property to respondent for P250k. Neither is there any documentary
evidence showing that Ventura was authorized to offer for sale or sell
property for and in behalf of petitioner for P250k, or to receive said amount
from respondent as purchase price of the property. Rule is that when sale of
land or any interest therein is through agent, authority of latter shall be in
writing; otherwise, sale shall be void and cannot produce any legal effect as
to transfer property from its lawful owner. Being inexistent and void from
beginning, said contract cannot be ratified.
 Any contract entered into by Ventura for and in behalf of petitioner relative to
sale of property is void and cannot be ratified by the latter.
 Respondent also failed to prove that negotiations between him and petitioner
has culminated in his offer to buy property for P250k, and that they later on
agreed to sale of property for same amount. He likewise failed to prove that
he purchased and reacquired property in July 1985. Evidence shows that
petitioner had offered to sell property for US$15k on a “take it or leave it”
basis in May 1984 upon expiration of Contract of Lease—an offer that was
rejected by respondent—which is why on Dec 30, 1997, petitioner and her
husband offered again to sell property to respondent for P670k inclusive of
back rentals and purchase price of property under April 13, 1982 Deed of
Absolute Sale. Offer was again rejected by respondent. Final offer appears
to have been made on Jan 11, 1998 but again, no contract was perfected
between parties.
 There was no contract of sale entered into by parties based on the Receipts
dated July 1985 and June 16, 1986, signed by Ventura and letter of
petitioner to respondent dated July 25, 1986. Respondent’s reliance on
petitioner’s letter to him dated July 25, 1986 is misplaced. We have carefully
considered letter of Ventura, dated July 18, 1986, and letter of Eugene,
dated July 25, 1986, where Ventura admitted having used money of
petitioner amounting to P39k without the latter’s knowledge for plane fare of
Ventura’s parents. Ventura promised to refund it, inclusive of interests, within
one year. Eugene berated her and called her a thief for stealing his and
petitioner’s money and that of respondent’s wife, Ising, who allegedly told
petitioner that she, Ising, loaned the money to her parents for their plane fare
to the USA. Neither Ventura nor Eugene Roberts declared in their letters that
Ventura had used the P250k which respondent gave to her.
 Petitioner in her letter to respondent did not admit, either expressly or
impliedly, having received P211k from Ventura. Moreover, in her letter to
petitioner, only a week earlier, or on July 18, 1986, Ventura admitted having
spent the P39,000.00 and pleaded that she be allowed to refund the amount
within one (1) year, including interests. It is incredible that Ventura was able
to remit to petitioner P211k before July 25, 1986 when only a week earlier,
she was pleading to petitioner for a period of one year within which to refund
the P39,000.00 to petitioner.
 It would have bolstered his cause if respondent had submitted an affidavit of
Ventura stating that she had remitted P211k out of the P25k she received
from respondent in July 1985 and June 20, 1986.
RULING
Petition is GRANTED. CA Decision REVERSED. MeTC Decision, affirmed with
modification by RTC, is AFFIRMED.
[170] ADIARTE v. TUMANENG
G.R. No. L-3031 | March 15, 1951 | Padilla, J.
Plaintiff-appellee: AMANDA MADAMBA VDA. DE ADIARTE
Defendant-appellant: EMILIANA TUMANENG
TOPIC: Distinguished from Option to Buy
SUMMARY
Amanda Madamba Vda de Adiarte, the owner of 2 parcels of land in Ilocos Norte,
sold the said land to spouses Cirilio Agutong and Emilliana Tumangeng, reserving her
right to repurchase them within 10 years. The vendees registered the said land in the
office of the Registrar of Deeds. After some time, Adiarte called on the vendees and
offered to repurchase the land. Cirilio refused at first, but later on agreed to resell the
land and executed a document stating his promise. Cirilio died so Adiarte went to the
wife to offer to repurchase. However, the wife refused, prompting Adiarte to institute
this action to compel the wife to accept the payment and execute a deed of sale.
The Supreme Court ruled that after the lapse of the 10-year period agreed upon for
the repurchase, the vendees became the absolute owners of the land. Thus, the
promise to sell cannot be regarded as a promise to resell the land by virtue of the
right to repurchase because the said right was already lost. The promise to sell made
by Cirilo Agudong not only binds him and his estate, now that he is dead, but also his
wife because in the absence of proof that one-half of the purchase price was
paraphernal, the presumption is that it was conjugal. The promise referred to, not
being contrary to law, morals, or public order or policy, is lawful, valid and enforceable
DOCTRINE
● The promise to sell and convey the two parcels of land made by Cirilo
Agudong, after he and his wife had become absolute owners thereof, cannot
be regarded as a promise to resell the parcels of land by virtue of the right to
repurchase reserved by the vendor, because that right was lost to the latter
after the expiration of ten years agreed upon without making the repurchase
of the two parcels of land.
● The original contract of sale with the right to repurchase reserved by the
vendor no longer existed at the time the promise to sell was made by the
purchaser — who had become the absolute owner after the lapse of the
period of time for repurchase — to the seller — who had lost all her right to
the property sold, because of her failure to repurchase it within the time
agreed upon.
● The promise to sell made by Cirilo Agudong not only binds him and his
estate, now that he is dead, but also his wife, the appellant herein, because
in the absence of proof that one-half of the purchase price was paraphernal,
the presumption is that it was conjugal, and the property acquired with the
conjugal funds also be conjugal, and the contract made by the husband as
regards conjugal property binds the wife.
● The promise referred to, not being contrary to law, morals, or public order or
policy, is lawful, valid and enforceable.
PROVISIONS
Art 1508 CC.
FACTS
● Amanda Madamba Vda. de Adiarte was the owner of two parcels of land
situated in the barrio of Tabtabagan, municipality of Banna, Ilocos Norte
o The first comprising an area of 3,296 square meters and the
second, of 6,592 square meters, assessed at P220 and P350,
respectively more particularly described in the second paragraph of
the complaint filed in this case.
● 25 February 1929: for and in consideration of P1,100, the owner sold the
two parcels of land to the spouses Cirilio Agudong and Emilliana
Tumaneng reserving for her the right to repurchase them within ten
years.
● 29 February 1944: the vendees presented for registration under and
pursuant to the provisions of Act 3344 the deed of sale with the right to
repurchase in the office of the Registrar of Deeds in and for the Province of
Ilocos Norte.
● 6 April 1944: the vendor called on the vendees at their residence in the
municipality of Sarrat, offering to repurchase the two parcels of land.
o At first Crilio Agudong refused to resell, but later on, at about noon
of that day, he called on the vendor, who was taking lunch in the
house of Lorenzo Pasion, and told her that he had changed his
mind and that he was then decided to resell the parcels of land
on condition that he would have them in his possession for
the following two years.
o To show his good faith he wrote in Ilocano dialect a document
which translated into Spanish. (Below is the English translation acc
to Google Translate haha)
I, Cirilo Agudong, of legal age, married and resident in this
neighborhood No. 15, I declare that today April 6, 1944
came Mrs. Amanda Cristobal, owner of the land located in
Sineg-guep, Cabaruan, Banna, which I bought with a pact
of retro and that has expired years ago and that the deed
granted is already registered and it meant his desire to
buy it back and how he wants it to be expressed in terms
precise and respectful recognizing my right could convince
me and me I agree to allow her to buy back her land but
we have agreed that I will work even for two agricultural
 years or two years and after two years I will receive the
amount with which it sold me and it will be when the
registration is canceled That was done - in my favor.
"In witness whereof, I sign this today on April 6, 1944.
"(Signed)
AGUDONG CIRIL
● October 1944: Cirilio Agudong died.
● On or after 6 April 1946: the vendor offered to repurchase the two
parcels of land from the widow of the late Cirilo Agudong, as promised
by the latter during his lifetime in the document quoted above, but the
widow of the deceased refused to receive the sum of P1,100 tendered to
her by the vendor and to resell the two parcels of land.
o In view thereof, this action was brought to compel the widow of
the late Cirilo Agudong to accept the sum of P1,100 tendered by
the plaintiff and to execute in favor of the latter a deed of sale of
two parcels of land. The plaintiff prays also for damages and for
costs.
● In her answer the defendant denies knowledge of any agreement entered
into by and between her late husband and the plaintiff, as alleged by the
latter in her complaint.
TC: rendered judgment as prayed for, but without pronouncement as to damages and
costs.
● MR denied
● Defendant appealed
CA: found only questions of law are involved in the appeal, and for that reason it
certified the appeal to this Court.
ISSUES
1. W/N Adiarte has the right to conventional redemption – NO.
2. W/N the promise to sell signed by the late Cirilio Agudong during his lifetime is
lawful and valid – YES.
3. W/N the TC correctly ordered the appellant to accept the sum of P1,100 tendered
by the appellee without the three heirs of the deceased Cirilo Agudong having
been made party defendants – NO.
HELD
1. No.
● There can be no controversy that after the lapse of the ten-year period
agreed upon in the deed of sale with the right to repurchase executed by the
appellee, as vendor, the appellant and her husband, as vendees, became
the absolute owners of the two parcels of land sold to them by the
appellee.
● The promise to sell and convey the two parcels of land made by Cirilo
Agudong, after he and his wife had become absolute owners thereof,
cannot be regarded as a promise to resell the parcels of land by virtue
of the right to repurchase reserved by the vendor, because that right
was lost to the latter after the expiration of ten years agreed upon
without making the repurchase of the two parcels of land.
● Hence there is no room for the application of the provisions of article
1508 of the Civil Code which prohibit an agreement or stipulation for
redemption of the property sold beyond ten years from the date of the
contract.
2. Yes.
● The term "recomprar" (repurchase) was used for lack of better term
available or known to Cirilo Agudong, taking into consideration his degree of
instruction.
● It is usual and ordinary to refer to a sale or conveyance of real or
personal property, as a resale or repurchase, if the vendee had been
the former owner thereof.
o It is not improper for the former owner to say that he is
repurchasing what he had sold and for the purchaser to say that he
is reselling to the former owner what he had bought from him.
● For the same reasons, the promise to sell, upon which the appellee rests her
right to demand the specific performance thereof, cannot be deemed a
novation.
o The latter cannot be brought about without existing contract which
is substituted or replaced by another either by the change of the
subject matter, or by substantial alterations of the terms, of the
original contract, or by substitution of another for the debtor, or by
subrogation of another to the rights of the creditor.
● In this case, the original contract of sale with the right to repurchase
reserved by the vendor no longer existed at the time the promise to sell
was made by the purchaser — who had become the absolute owner after
the lapse of the period of time for repurchase — to the seller — who had lost
all her right to the property sold, because of her failure to repurchase it within
the time agreed upon.
● The promise to sell made by Cirilo Agudong not only binds him and his
estate, now that he is dead, but also his wife, the appellant herein,
because in the absence of proof that one-half of the purchase price was
paraphernal, the presumption is that it was conjugal, and the property
acquired with the conjugal funds also be conjugal, and the contract made
by the husband as regards conjugal property binds the wife.
● The promise referred to, not being contrary to law, morals, or public
order or policy, is lawful, valid and enforceable.
3. No. [NOT RELATED TO TOPIC]
● The point raised by the appellant is well taken. But there seems to be no
defense which may be pleaded or set up by the children and heirs of the late
 Cirilo Agudong, who are bound by such acts of their late father as they affect
his estate, except the one set up by the appellant, the widow of the
deceased and mother of the said children.
● Therefore, to expedite the disposition of this case without resort to
technicalities, the appellee is directed to amend her complaint by
impleading the children and heirs of the late Cirilo Agudong, who, if
under age, will be represented by the appellant, their mother, as guardian ad
litem to be appointed by the trial court.
● Upon the filing of the amended complaint, the appellee will serve a copy
thereof upon the appellant, as guardian ad litem of the new party defendants
who are minors, or copies thereof upon the children and heirs of the late
Cirilo Agudong, if already of age
o If within 15 days from service of a copy or copies of the amended
complaint, no answer be filed, or if an answer be filed by said
guardian ad litem or by the children and heirs of the late Cirilo
Agudong, if of age, setting up no other defense than the one
already set up by their mother, the appellant herein, and passed
upon by the trial court and this Court, then the judgment appealed
from is affirmed, with costs against the appellant.
o If the answer or answers filed by the new party defendants, if of
age, or by their guardian ad litem, if under age, set up a new valid
defense, then the judgment appealed from is set aside, without
costs, and the trial court is directed to hear such evidence as the
new party defendants may desire to present, and after hearing to
render judgment in the case.
RULING [FROM B2020]
An option to buy or a promise to sell is distinct from a right to repurchase. The former
is an expression of the intention of the owner of the land to sell, and the latter is the
seller’s right to repurchase what it had sold.
DISSENTING OPINIONS
Pablo, J., [written in Spanish; below is the Google translated ratio]
● The Exhibit "A" clearly demonstrates the agreement of the parties: to allow
the repurchase by the seller in the exercise of her right of redemption under
another additional term. If the agreement was a promise of sale, Agudong
would have said so. It is not a promise of sale
● The first is the right reserved by the seller to repurchase the thing sold within
the stipulated time and price. The purchase option is right granted by
another person who promises to sell a thing for some conderacion.
o In the present case, there is no consideration if Exhibit "A" is said to
be a sale promise. The retraction is a condition of the sale.
o In a promise of sale, there is no prior sale: it is a new contract, not
preceded by any other.
o In the present case, as the same document Exhibit "A" expresses,
Agudong allowed the repurchase of the land, not by simple
generosity, but in the belief that he was bound to it because he had
obtained it in purchase with a retro pact.
o Because both parties acted under that belief, compliance with the
provisions of the document, which is prohibited by Article 1508 of
the Civil Code, must not be allowed.
● The seller does not claim purchase option or fulfillment of the sale promise -
a mere contract - but the salvage of the lands sold with a retro pact in
accordance with the new term established in Exhibit "A." If this document
contains a promise of sale, the plaintiff would not have "tried several times to
rescue" the land.
● Having concluded a contract for the sale of a property, with a retroactive
agreement for ten years, the stipulation that the heirs of the seller with the
buyer made in the sense that said right of retraction can not be exercised
until after fourteen years, is not a promise of sale, as an independent
contract, but a mere modification of the retro pact regarding its exercise.
o In such case said stipulation violates Article 1508, paragraph 2, of
the Civil Code, and the retraction can and should and must be
exercised within ten years from the conclusion of the sales contract.
● Because of this - says Scaevola - the Resolution of May 27, 1879 teaches
us that although it is true that from the moment the buyer consents to
retrovent the property object of the original contract of sale, despite having
expired the deadline, there is a true novation of the same that harms no one,
and that is valid in law according to the principle of freedom of the
contracting parties, for which the writing that in this case is found is
recordable, this must always be understood that before being granted and
upon the expiration of the term stipulated for the withdrawal, the buyer has
been requested and obtained the registration in the Registry of the definitive
acquisition of the domain of the property, because the seller has not used
his right to withdraw within said period.
● In the present case, the buyers did not claim in the Office of the Title
Registrar the final consolidation of the sale: they only registered the deed of
sale with retro pact on February 29, 1944, more than fifteen years after the
granting, which It shows that the buyers did not consider themselves to be
absolute owners, but simply retro buyers.
o The concession of another term of retraction until April 7, 1946 -
which in total reaches seventeen years, one month and twelve days
- is contrary to the state policy that informs paragraph 2 of article
1508 of the Civil Code: that "the term may not exceed ten years. "
● The retro pact implies in a certain sense a suspension of the right of property
on the land or property in question. We are of opinion that it was the
intention of the legislator to limit the continuance of this legal status in order
to define definitively and in a concerted manner the property right of the
property, since it is, in the opinion of the legislator contrary to public order, to
 allow a situation So uncertain about the real estate domain continue for
more than ten years.
● Conducting sales promises, as a new contract, the Exhibit "A," instead of a
promise of resale under the right of retraction of the seller, in a performance
that she claims the repurchase of the land sold to retro, is, in my humble
opinion, a legal heresy: it is contrary to the spirit and letter of Article 1508 of
the Civil Code. Vote for the reversal of the decision appealed.
Montemayor, J., dissenting:
● It is almost unnecessary to state that the period of 10 years agreed upon by
the parties for repurchase, in the year 1929 when the plaintiff Amanda
Madamba sold the land to Cirilo Agudong and his wife Emilliana Tumaneng,
had long expired in April, 1944, when said plaintiff conceived the idea and
had the effrontery to demand that despite the expiration of the ten-year
period, she be allowed to repurchase the land.
● This took place about the second quarter of the year 1944 when the
Japanese military notes had already depreciated in value. According to the
Ballantyne schedule of which this Court has taken judicial notice and which it
had applied in several cases, in April, 1944, the ratio between genuine
Philippine currency and the Japanese military notes, was 1-9, that is to say,
one Philippine peso was equivalent to nine pesos, Japanese military notes.
o It was therefore natural for Agudong to flatly reject as he did the
preposterous proposition of the plaintiff to redeem the land.
o Now, what made or impelled Agudong almost immediately or a few
hours after making the outright rejection to change his mind, go to
the house where Amanda was stopping and then, in a manner and
tone by no means condescending but rather humble and contrite,
take back all that he had said, and agree to resell the property in
question? It could not have been remorse for morally and legally he
was justified in turning down belated and unreasonable demand for
repurchase.
● It is unfortunate that Agudong could not give us the reason and explanation
of his sudden change of attitude, at the trial because he was then already
dead, but we could well and easily guess at or imagine the reason. But such
mental effort on our is unnecessary for his widow gives the explanation in
her testimony during the hearing.
● Asked if Amanda said anything to her husband when he repeatedly refused
to resell the land, the widow said: "To my said that Doña Amanda Madamba,
before leaving the house, said, "if you do not like to let me redeem this land,
it is up to you, I will report the matter to the Japanese.'"
o Q. Do you remember if Cirilo Agudong told you of his consent to the
redemption of the two parcels of land in question after two
agricultural years? — A. He said that after two years they would
come to redeem the land, but in fact I did not like, but only
consented, because I was still fearing of the then prevailing
situation.
o Q. Why were you afraid of the prevailing situation, when Doña
Amanda Madamba did not frighten you? — A. Yes, because
according to my husband, Doña Amanda Madamba threatened him
in the sense that if he would not consent to the redemption of the
land he would bring the matter to the Japanese.
● The plaintiff Amanda did not on rebuttal, take the witness stand to deny the
threat imputed to her, and to my mind there is every reason to believe that
the consent of Cirilo of the repurchase of the land was the result of said
threat and the fear of being reported to the Japanese for he must have
realized the consequences.
o For this reason alone, namely, that the consent of Agudong was
obtained through threath and intimiditation, and consequently, there
was no real consent, the agreement evidenced by the document
Exhibit A-1 should be declared void and of no effect.
● But there is another reason for declaring Exhibit A-1 null and void. It is in
violation of article 1508 of the Civil Code which prohibits any agreement to
repurchase beyond ten years as the parties here did or attempted to do. Not
only this, but said parties attempted to make the extention after the period of
redemption had long expired.
● As Manresa correctly observes, if the extention is made after the expiration
of the period, then it is void and of no effect because there is nothing to
extend.
● But the majority opinion goes around this legal difficulty and formulates and
goes on the theory that since the parties could not legally extend the period
of redemption beyond that fixed by the law, then the parties should be held
to have entered into an entirely new and independent agreement, namely,
that of a promise to sell on the part of Cirilo Agudong.
o To bolster this theory the majority indulges in an explanation of the
popular meaning attached to the words "resell" and
"repurchaseThis theory and proposition of the majority finds no
support in the document Exhibit A-1. In fact, it runs counter to and
does violence to it.
▪ In no part of said document can we see any word or
expression of intention to sell on the part of Cirilo, or
desire to buy on the part of plaintiff Amanda.
▪ The fact of the previous sale with pacto de retro of the
land, and the intention to permit its repurchase by the
former owner, permeate and control the entire instrument
Exhibit A-1. Cirilo does not say in that document that he
would sell the land but rather that he was permitting or he
would permit Amanda to repurchase the land (me
conformo en permitirla a recomprar su terreno).
● in the very complaint of the plaintiff, she speaks of her desire and her vain
attempts to repurchase the land. In other words, she was referring to a
supposed right to repurchase, born and contained in the original deed of
sale executed in 1929, the period for whose exercise was said to have been
extended by Exhibit A-1, and not a new right based on a new and
independent agreement Exhibit A-1, containing a supposed promise to sell
or an option to buy.
● Moreover, Exhibit A-1 can in no manner be construed as an option to buy or
a promise to sell for such a contract must necessarily contain a description
of the property to be sold or purchased, the condition or conditions of the
sale, and the price, independent of any other agreement, so that it could
stand alone. But such is not the case here. Exhibit A-1 to described the land
has to refer to the parcel that Cirilo had brought "comprado con pacto de
retro", instead of fixing and stating the price in pesos, it has to refer to the
price at which it was sold to him "la cantidad con que me vendio." In other
words, Exhibit A-1 without reference to the original contract of sale with right
repurchase executed in 1929, cannot stand alone and would be
unintelligible.
● Furthermore, my idea of a promise to sell, that is to say, an agreement
wherein the owner of real estate promises to sell it to another party, is a
short term contract popularly called "option to buy."
o A, owner of a parcel, in consideration of the sum of say P300 paid
by B as earnest money, promises to sell it to B, for a period of say
sixty days, for the sum of P5,000; should B exercise his option to
buy within the sixty days, the earnest money of P300 is to be
credited to the sales price, but if he failed to buy the land, the P300
is to be forfeited.
● Such a contract must necessarily be of short duration for otherwise it will
undully tie up and freeze the parcel to the prejudice of the owner who may
miss other opportunities to sell. Furthermore, if the term is long, say, several
years, the value of the property may greatly fluctuate in the meantime.
● The way I interprete the document Exhibit A-1, considering the
circumstances that surrounded its execution, the parties, ignorant of the
pertinent provisions of the law, extended or attempted to extend the period
of redemption or repurchase by at least two years, Cirilo agreeing to the
extention reluctantly and because of fear of being denounced to the
Japanese and being accused of non-cooperation and refusal to accept the
Japanese military currency. I maintain that for the two reasons already
stated, namely, lack of consent and violation of article 1508 of the Civil
Code, the agreement contained in Exhibit A-1 should be declared void, and
that consequently, the decision appealed from should be reversed and the
complaint dismissed.
[171] HEIRS OF ARCHES v. MARIA B. VDA. DE DIAZ
GR No. L-21736 | Makalintal, Actg. CJ
SUMMARY
Vda. De Diaz executed a sale with pacto de retro in favor of Jose Arches. Jose filed a
petitioner to consolidate ownership over the lot, but it was denied on the ground that
the contract was actually an equitable mortgage. The petitioners, since Jose died,
wanted to collect from respondent the price paid and the expenses incurred by their
father. The trial court dismissed the complaint as it was barred by res judicata. The
Court did not agree; the dismissal by the TC declaring the contract as an equitable
mortgage is not a bar to the right of the petitioner to collect the indebtedness
DOCTRINE
The plaintiff had the right "within sixty days after final judgment, for a failure to pay the
amount due and owing him, to foreclose his mortgage in a proper proceeding and sell
all or any part of the ten parcels of land to satisfy his debt."
FACTS
 Jan. 21, 1954: Vda. De Diaz executed in favor of Jose A. Arches a deed of
sale with pacto de retro over a parcel of land of the Cadastral Survey of
Capiz for and in consideration of P12,500.00
o 1-yr period, pacto de retro to expire on Jan. 21, 1955
 Nov. 20, 1958: Jose filed a petition to consolidate ownership over the lot
o Respondent opposed: the true intention of the parties was to constitute
mortgage on the proper security for a loan, not sale with pacto de retro
(the 12.5k was a loan, and the land was the mortgage)
o TC:1 denied the petition; the contract was an equitable mortgage
o SC: dismissed petition; issues involved were factual
● Became final and executory on August 29, 1965
 Jose Arches died without being reimbursed for the price he paid and the
expenses he incurred
 May 31, 1966: Jose’s heirs demanded from respondent the P12.5k +
P1,543.70
o Payment for the sale + real estate taxes paid and expenses for the
reconstitution of the title in the name of the vendor
o Respondent refused to pay
 Complaint: respondent be ordered to pay plus damages
 MTD filed by res: the first cause of action recovery of the sum of P12,500.00
was barred by the statute limitations
o Second cause of action not within the jurisdiction of the trial court
 CFI: 1st cause of action: not barred by prescription
o 10-yr period commenced on 1965, when the Court’s decision became
final and executory, not on 1955 when the period for repurchase expired
1
Affirmed by CA
 MR: alleged res judicata and multiplicity of suits as additional grounds
 CFI: dismissed the complain stating that it is barred by res judicata
o Jose had to choices: (a) to consolidate title and ownership, and (b) to
foreclose in the event the deed of sale a retro be declared one of
equitable mortgage.
o He chose (a); he was then barred from pursuing the other alternative
and inconsistent remedy of foreclosure of mortgage or collection of debt
ISSUE/HELD
W/N the petitioners are barred to collect – NO.
RATIO
Res judicata as a ground for dismissal was waived by the respondent
▪ Firstly, respondent failed to include it in her motion for that purpose. ROC
provides that, “…all objections not so included shall be deemed waived…"
▪ Secondly, the decision of the trial court holding that the sale with pacto de
retro was an equitable mortgage and consequently dismissing the petition
to consolidate ownership, did not constitute an adjudication of the right to
foreclose the mortgage or to collect the indebtedness.
o Correa vs. Mateo: the plaintiff had the right "within sixty days after
final judgment, for a failure to pay the amount due and owing him,
to foreclose his mortgage in a proper proceeding and sell all or
any part of the ten parcels of land to satisfy his debt."
o In effect this Court recognized the right of the plaintiff to enforce his lien
in a separate proceeding notwithstanding the fact that he had failed to
obtain judgment declaring him the sole and absolute owner of the
parcels of land in question.
The right of action to foreclose mortgage arose when the TC declared the contract as
an equitable mortgage
▪ It would be unjust to allow the respondent to escape payment of his debt,
especially so since the respondent was the one who claimed that she was a
debtor and not a vendor
▪ In a petition by the vendee in a pacto de retro sale, pursuant to CC Art
1607, for the purpose of consolidating ownership when the vendor fails to
redeem, the right of action to foreclose the mortgage or to collect the
indebtedness arises from the judgment of the court declaring the contract
as equitable mortgage.
▪ Although an alternative prayer to this effect may be made in the petition, the
same cannot but be conditional, that is, only in the event such a declaration
made, contrary to the plaintiff's claim and the principal relief he seeks.
▪ His failure to make that alternative prayer, and the failure of the court to grant it in
the judgment dismissing the petition, should not be considered as a bar to
collecting the indebtedness in a proper action for that purpose.

RULING
Wherefore, the orders appealed from are hereby reversed and the case remanded to
the trial court for further proceedings. Costs against defendant-appellee.
[172] GARGOLLO v. DUERO
G.R. No. 15973 | 29 April 1961 | Barrera, J.
SUMMARY
Gargollo sold a parcel of land to the defendants with a pacto de retro option. Years
later, Gargollo wanted to exercise such right. However, defendants refused.
Consequently, Gargollo deposited the Php 750 purchase price with the court.
Defendant still refused to give up the property and claimed that they banked on her
promise to sell the land to them for Php 1,000 and planted bananas and other fruit
trees, converted a portion into rice paddies, paid the delinquent taxes worth Php 25,
and incurred other expenses not less than Php 200. Gargollo refused to reimburse
such additional expenses made by the defendant. SC ruled that Gargollo cannot
validly exercise her right to repurchase without paying for the other expenses, as
stipulated by Art. 1616 of the NCC. Without such payment, the defendant may retain
possession of the land until reimbursement is made.
PROVISIONS
ART. 546. Necessary expenses shall be refunded to every possessor; but only the
possessor in good faith may retain the thing until he has been reimbursed therefor.
Useful expenses shall be refunded only to the possessor in good faith with the same
right of retention, the person who has defeated him in the possession having the
option of refunding the amount of the expenses or of paying the increase in value
which the thing may have acquired by reason thereof.
ART. 547. If the useful improvements can be removed without damage to the
principal thing, the possessor in good faith may remove them, unless the person who
recovers the possession exercises the option under paragraph 2 of the preceding
article.
ART. 1616. The vendor cannot avail himself of the right of repurchase without
returning to the vendee the price of the sale, and in addition:
(1) The expenses of the contract, and any other legitimate payments made by
reason of the sale;
(2) The necessary and useful expenses made on the thing sold.
DOCTRINE
For a vendor a retro to be entitled to exercise his right of redemption, he must
reimburse the vendee a retro:
(1) the price of the sale
(2) the expenses of the contract and any other legitimate payments made by reason
of the sale, and
(3) the necessary and useful expenses made on the thing sold
 Otherwise, the vendee may retain possession of the land until
reimbursement is made
FACTS
● In May 1953, Gargollo sold a parcel of land to the defendants with pacto de
retro for Php 400, which was subsequently increased to Php 750.
○ According to the deed of sale with pacto de retro, Gargollo could
redeem said Lot on or before 1962.
● In 1958, Gargollo verbally notified the defendants that she would redeem the
property. She thereafter gave the defendants written notice to accept the
redemption amount of Php 750.
● Banking on promise of Gargollo to sell the land to them for Php 1000,
defendants refused to accept the payment, in view of their ff. efforts:
○ defendants already planted bananas and other fruit trees
○ converted a portion into rice paddies, incurring expenses not less
than Php 200
○ paid the delinquent taxes worth Php 25
● Defendants therefore want to be reimbursed for the value of said
improvements and amount of expenses plus the price of the land they paid
● Gargollo deposited the said amount of Php 750 with the Clerk of Court,
advising the defendants to withdraw the said amount.
○ Defendants never withdrew the amount
● Both parties attempted to amicably settle before the RTC for the valuation of
the improvements, but to no avail
● Gargollo, subsequently, showed no intention to exercise the option to
refund the defendants' expenses or pay the increase in value of the land in
question as provided in paragraph 2 of Art. 546 of the Civil Code
○ Thereby claiming the right given her by Art. 547 of the same
code (i.e., compel removal of the improvements)
● Defendants filed a written reply stating that Arts. 546 and 547 do not
apply, rather Art. 1616 of the Civil Code applies
○ Exercise of the right of redemption requires the payment of
necessary and useful expenses
○ No right to compel removal of improvements
● RTC ordered the ff:
○ That Gargollo return to the defendants the purchase price of Php
750, and Php 25 for the delinquent taxes paid
○ That defendants vacate the land, and remove all the improvements
they introduced w/o Gargollo reimbursing
ISSUE/HELD
W/N Gargollo may validly exercise her right of redemption w/o reimbursing the
defendants – NO.
RATIO
● Arts. 546 and 547 apply to possession, while Art 1616 specifically applies to
conventional redemption, as in this case
 ● SEE DOCTRINE
● The vendor a retro is given no option to require the vendee a retro to remove
the useful improvements on the land subject of the sale a retro
○ Unlike that granted the owner of a land under Arts. 546 and 547 of
the Civil Code
● Since, in the instant case, Gargollo (vendor a retro) is unwilling to reimburse
defendants (vendees a retro) the value of the useful improvements, it stands
to reason that defendants may not lawfully be compelled to vacate and
deliver said land to her.

RULING
WHEREFORE, the decision of the trial court appeal from is reversed and set aside,
and the case is remanded to said court for determination of value of improvements.
[173] ABILLA v. GOBONSENG
G.R. No. 146651 | January 17, 2002 | Ynares-Santiago, J.
Petitioners: RONALDO P. ABILLA and GERALDA A. DIZON
Respondents: CARLOS ANG GOBONSENG, JR. and THERESITA MIMIE ONG
SUMMARY
The petitioners filed an action for specific performance of the Deed of Sale and
Option to Buy. However, the respondents claimed that there was no sale, only an
equitable mortgage. The lower courts ruled in favor of the petitioners and held that the
transaction is a pacto de retro sale. Seeing the chance to turn the decision in their
favor, respondents abandoned their theory that the transaction is an equitable
mortgage and adopted the finding of the CA that it was in fact a pacto de retro sale.
They now insist that they are entitled to exercise the right to repurchase pursuant to
par. 3 of Art. 1606. However, the SC held that Art. 1606 is inapplicable because there
was no showing on the part of the respondents a belief, founded on facts attendant
upon the execution of the sale with pacto de retro, honestly and sincerely entertained,
that the agreement was in reality a mortgage.
[Note: The case did not clearly illustrate what happened and only proceeded with the
procedural history; but it appears that respondents sold 17 lots to petitioners; and
when petitioners filed for specific performance, the respondents claimed that there
was no sale, only an equitable mortgage when they applied for loan from petitioners]
PROVISION
Art. 1606. The right referred to in Article 1601, in the absence of an express
agreement, shall last four years from the date of the contract.
Should there be an agreement, the period cannot exceed ten years.
However, the vendor may still exercise the right to repurchase within thirty
days from the time final judgment was rendered in a civil action on the basis
that the contract was a true sale with right to repurchase.
DOCTRINE
The application of par. 3 of Art. 1606 is predicated upon the bona fides of the
vendor a retro. It must appear that there was a belief on his part, founded on facts
attendant upon the execution of the sale with pacto de retro, honestly and sincerely
entertained, that the agreement was in reality a mortgage, one not intended to affect
the title to the property ostensibly sold, but merely to give it as security for a loan or
other obligation.
Conversely, if it should appear that the parties’ agreement was really one of sale —
transferring ownership to the vendee, but accompanied by a reservation to the vendor
of the right to repurchase the property — and there are no circumstances that may
reasonably be accepted as generating some honest doubt as to the parties' intention,
the proviso is inapplicable. If the rule were otherwise, it would be within the power of
every vendor a retro to set at naught a pacto de retro, or resurrect an expired right of
repurchase, by simply instituting an action to reform the contract — known to him to
be in truth a sale with pacto de retro — into an equitable mortgage.
FACTS
● Petitioner spouses instituted an action for specific performance, recovery of sum
of money and damages against respondents with the RTC Dumaguete City
Branch 42, seeking reimbursement of the expenses they incurred in connection
with the preparation and registration of two public instruments: a "Deed of Sale"
and an "Option to Buy"
o Respondents raised the defense that the transaction covered by the
public instruments, which appears to be a Deed of Sale with Right of
Repurchase, was a mortgage in truth, in fact, in law, and in legal
construction
● RTC ruled in favor of petitioners and declared that the transaction between the
parties was NOT an equitable mortgage.
o Said transaction is a sale giving respondents until August 31, 1983
within which to buy back the 17 lots subject of the controversy.
o Ordered respondents to pay expenses incurred by petitioners (for
registration of the Deed of Sale, amount paid to the bank, and capital
gains tax with legal rate of interest, attorneys fees, moral damages,
expenses of litigation)
● Respondents appealed to CA
● CA: the transaction was a pacto de retro sale and NOT an equitable
mortgage.
o MR denied
● Respondent then filed a petition for review with SC but such was dismissed for
having been filed out of time; MR was denied
● Respondents filed a second MR
o Claimed that since the transaction was declared a pacto de retro sale by
CA, they can repurchase the property pursuant to the Art. 1606 (3), CC:
“However, the vendor may still exercise the right to repurchase within
thirty days from the time final judgment was rendered in a civil action on
the basis that the contract was a true sale with right to repurchase.”
o Second MR was again denied:
▪ The issue of the applicability of Art 1606 was raised only the
motion for clarification with the CA, and not before the trial
court and on appeal to the CA.
● Respondents later filed with RTC an urgent motion to repurchase the lots in
question with tender of payment
o Motion was denied by the judge who later inhibited himself
 o The case was reraffled to RTC Dumaguete City Branch 41, which
set aside previous order and granted respondent’s motion to
repurchase.
● Thus, this case.
ISSUE/HELD
W/N the declaration of the transaction as a pacto de retro sale will entitle respondents
to the right to repurchase under Art. 1606 (3), CC – NO.
RATIO
● It must be stressed that it has been respondent’s consistent claim that the
transaction was an equitable mortgage and not a pacto de retro sale or a sale
with option to buy. But seeing the chance to turn the decision in their favor,
respondents abandoned their theory and adopted the finding of the CA that it
was in fact a pacto de retro sale. They now insist that they are entitled to
exercise the right to repurchase pursuant topar. 3 of Art. 1606.
o If such will be the case, the scenario would be that although
respondents failed to prove that the contract was an equitable
mortgage, they could nonetheless still repurchase the property within 30
days from the finality of the judgment declaring the contract to be truly
a pacto de retro sale. However, under the undisputed facts of the
case at bar, this cannot be allowed.
● It was held in Vda. de Macoy v. Court of Appeals that Art. 1606 is inapplicable.
o In this case, the petitioners claimed that the contract was not a sale with
right to repurchase but an equitable mortgage; and that even assuming
that transaction to be a pacto de retro sale, they can nevertheless
repurchase the property by virtue of Art. 1606.
o The application of par. 3 of Art. 1606 is predicated upon the bona
fides of the vendor a retro. It must appear that:
▪ there was a belief on his part, founded on facts attendant
upon the execution of the sale with pacto de retro,
honestly and sincerely entertained, that the agreement
was in reality a mortgage, one not intended to affect the
title to the property ostensibly sold, but merely to give it
as security for a loan or other obligation.
o In that event, if the matter of the real nature of the contract is submitted
for judicial resolution, the application of the rule is meet and proper; that
the vendor a retro be allowed to repurchase the property sold within 30
days from rendition of final judgment declaring the contract to be a true
sale with right to repurchase.
o Conversely, if it should appear that the parties’ agreement was
really one of sale — transferring ownership to the vendee, but
accompanied by a reservation to the vendor of the right to
repurchase the property — and there are no circumstances that
may reasonably be accepted as generating some honest doubt as
to the parties' intention, the proviso is inapplicable.
▪ Reason: If the rule were otherwise, it would be within the
power of every vendor a retro to set at naught a pacto de
retro, or resurrect an expired right of repurchase, by
simply instituting an action to reform the contract —
known to him to be in truth a sale with pacto de retro —
into an equitable mortgage.
o As postulated by the petitioner, "to allow herein private respondents to
repurchase the property by applying said paragraph x x x to the case at
bar despite the fact that the stipulated redemption period had already
long expired when they instituted the present action, would in effect alter
or modify the stipulation in the contract as to the definite and specific
limitation of the period for repurchase (2 years from date of sale or only
until June 25, 1958) thereby not simply increasing but in reality
resuscitating the expired right to repurchase x x x and likewise the
already terminated and extinguished obligation to resell by herein
petitioner."
o The rule would thus be made a tool to spawn, protect and even
reward fraud and bad faith, a situation surely never contemplated
or intended by the law.
● In this case, both TC and CA were of the view that the transaction was truly
a pacto de retro sale and that none of the circumstances under Art. 1602,
CC exists to warrant a conclusion that the transaction subject of the "Deed
of Sale" and "Option to Buy" was an equitable mortgage
o If respondents really believed that the transaction was indeed an
equitable mortgage, as a sign of good faith, they should have, at
the very least, consigned with the trial court the amount of
P896,000.00, representing their alleged loan, on or before the
expiration of the right to repurchase on August 21, 1983
o Thus, the declaration of the transaction as a pacto de retro sale will not,
under the circumstances, entitle respondents to the right of repurchase
set forth under the third paragraph of Article 1606 of the Civil Code
RULING
Petition is GRANTED. Order of the RTC Dumaguete City, Branch 41,
is REVERSED and SET ASIDE.
[174] BUTTE v. MANUEL UY2
G.R No L-15499 | 28 February 1962 | JBL Reyes, J.
Petitioner: Angela M. Butte
Respondent: Manuel Uy and Sons, Inc.
TOPIC: SALES – Extinguishment of Sale; Legal Redemption; Period to Redeem.
SUMMARY
Jose V. Ramirez was a co-owner of a house and lot in Sta. Cruz, Manila. When he
died, he bequeathed 1/3 of his estate to herein petitioner, Angela Butte. This included
a part of his undivided interest in the Sta. Cruz property. BPI was also made to be the
administrator of the property.
One of the co-owners (Vda. De Ramirez) subsequently sold their undivided share in
the Sta. Cruz property to Respondent Manuel Uy and Sons, Inc. When the sale was
executed, notice of the sale was sent to BPI, who in turn forwarded the notice of sale
to Petitioner. Petitioner offered to redeem her part of Vda. De Ramirez’s share; this
offer was made through a letter and a check to Manuel Uy and Sons. When this
tender was refused by Respondents, Petitioner brought an action for legal
redemption. This was dismissed by the CFI; hence, this appeal to the Supreme Court.
The SC reversed the CFI. They first held that Butte had acquired the right to
redemption by succession; as she was designated as an heir by Jose V. Ramirez’s
will, she acquired the right to redeem the undivided share in the property upon his
death. Furthermore, the Court ruled that the 30-day period by which to exercise the
right of redemption must be reckoned from day when the vendor gives written notice
to the parties, not the vendee. As Butte actually received the notice of the sale on
December 16, and she tendered her offer on January 15, she validly exercised her
right to legal redemption. Therefore, the Supreme Court reversed the CFI and allowed
Butte to exercise her right to redeem her share in the property.
PROVISIONS
NCC 1619. Legal redemption is the right to be subrogated, upon the same terms and
conditions stipulated in the contract, in the place of one who acquires a thing by
purchase or dation in payment, or by any other transaction whereby ownership is
transmitted by onerous title. (1521a)
NCC 1623. The right of legal pre-emption or redemption shall not be exercised except
within thirty days from the notice in writing by the prospective vendor, or by the
vendor, as the case may be. The deed of sale shall not be recorded in the Registry of
Property, unless accompanied by an affidavit of the vendor that he has given written
notice thereof to all possible redemptioners.
2
Digest from C2021 (except summary and relevant info)
The right of redemption of co-owners excludes that of adjoining owners. (1524a)
DOCTRINE
The 30-day period from which the right of legal redemption is exercised should be
reckoned from the time when the seller gives notice of the sale.
In considering whether or not the offer to redeem was timely, …the notice given by
the vendee (buyer) should not be taken into account. The text of Article 1623 clearly
and expressly prescribes that the thirty days for making the redemption are to be
counted from notice in writing by the vendor.
FACTS
● Jose V. Ramirez, during his lifetime, was a co-owner of a house and lot
located at Sta. Cruz, Manila;
o He owned a 1/6th undivided share of the property.
● Other owners are:
o Marie Garnier Vda. de Ramirez (1/6);
o José E. Ramirez (1/6);
o Belen T. Ramirez (1/6);
o Rita De Ramirez (1/6); and
o José Ma. Ramirez (1/6.)
● October 20, 1951: José V. Ramirez died.
o Subsequently, Special Proceeding No. 15026 was instituted to
settle his estate, that included the one-sixth (1/6) undivided share in
the aforementioned property.
o His last will and testament has been admitted to probate, wherein
he bequeathed his estate to his children and grandchildren
and one-third (1/3) of the free portion to Mrs. Angela M. Butte,
hereinafter referred to as plaintiff-appellant.
o The Bank of the Philippine Islands was appointed judicial
administrator.
● December 9, 1958: Mrs. Marie Garnier Vda. de Ramirez, one of the co-
owners of the late José V. Ramirez in the Sta. Cruz property, sold her
undivided 1/6 share to Manuel Uy & Sons, Inc., defendant-appellee herein,
for the sum of P500,000.00.
o After the execution an affidavit to the effect that formal notices of
the sale had been sent to all possible redemptioners, the deed of
sale was duly registered and the old TCT was cancelled in lieu
of which a new one was issued in the name of the vendee and
the other-co-owners.
 ● December 9, 1958 (same day): Manuel Uy and Son Inc. sent a letter to the
Bank of the Philippine Islands as judicial administrator of the estate of the
late José V. Ramirez informing it of the above-mentioned sale.
o This letter, together with that of the bank, was forwarded by the
latter to Mrs. Butte. (note: she only received this notice on Dec. 16,
1958)
● January 15, 1959: Mrs. Angela M. Butte, sent a letter and a Philippine
National Bank cashier’s check in the amount of P500,000.00 to Manuel Uy
and Sons, Inc. offering to redeem share sold by Mrs. Marie Garnier Vda. de
Ramirez.
o This tender was refused by Respondents.
● This tender having been refused, plaintiff on the same day consigned the
amount in court and filed the corresponding action for legal redemption.
o Without prejudice to the determination by the court of the
reasonable and fair market value of the property sold which she
alleged to be grossly excessive, plaintiff prayed for conveyance of
the property, and for actual, moral and exemplary damages.
● May 13, 1959: the CFI dismissed the plaintiff’s complaint.
ISSUES/HELD/RATIO
1. W/N Butte in the case at bar has a right to redeem the property – YES.
● By law, the rights to the succession of a deceased person are transmitted to
his heirs from the moment of his death, and the right of succession includes
all property, rights and obligations that survive the decedent so from the
instant of Jose Ramirez’ death, his heirs became co-owners of an undivided
share and co-owner of the whole property thus they became entitled to
exercise the right of legal redemption as soon as another co-owner has sold
his undivided share to a stranger.
● The presence of the judicial administrator is of no moment because
the rights of the administrator of possession and administration of the real
and personal estate of the deceased do not include the right of legal
redemption of the undivided share sold to Manuel Uy and Sons because the
right to redeem only came into existence when the sale was perfected 8
years from the death of Jose
● The administrator cannot exercise the right of redemption since the land was
sold AFTER the death of Ramirez. The administrator may exercise the right
to redeem only if the right pertains to the estate, and this can only happen if
the sale of said portion to Uy was done before the death of Ramirez.
2. W/N she exercised the right of redemption within the period prescribed by law –
YES.
● The counting of the 30 days for making redemption must be from the
notice in writing by the vendor, not the vendee
● It’s the seller of the interest who is in the best position to know who his co-
owners are and that they need to be notified of the sale
● Such notice removes all doubts as to the fact of the sale, its perfection and
validity, so the party notified doesn’t need to entertain doubt that seller might
still contest the alienation
● While the bank got the notice on December 15, the seller notified her co-
owners the next day (December 16).
o Angela Butte tendered redemption and consigned on January 16
o She exercised her right within the 30-day period.
● The determining point is not when the Bank got the notice, but it was when
Butte got notice.
RULING
PREMISES CONSIDERED, the judgment appealed from is hereby reversed and set
aside, and another one entered:
(a) Declaring the consignation of P500,000,00 made by appellant Angela M. Butte
duly and properly made;
(b) Declaring that said appellant properly exercised in due time the legal redemption
of the one-sixth (1/6) undivided portion of the land covered by Certificate of Title
No. 59363 of the Office of the Register of Deeds of the City of Manila, sold on
December 9, 1958 by Marie Garnier Vda. de Ramirez to appellant Manuel Uy &
Sons, Inc.;
(c) Ordering appellant Manuel Uy & Sons, Inc. to accept the consigned price and to
convey to Angela M. Butte the undivided portion above referred to, within 30
days from the time our decision becomes final, and subsequently to account for
the rentals and fruits of the redeemed share from and after January 15, 1958,
until its conveyance; and
(d) Ordering the return of the records to the court of origin for further proceedings
conformable to this opinion.
Without finding as to costs.
[175] CONEJERO v. CA
G.R. No. L-21812 | April 29, 1966 | JBL Reyes
TOPIC: Legal Redemption
SUMMARY
In this case, petitioner Paz and respondent Enrique are co-owners of a property they
acquired from their parents. When Enrique sold his share to respondent Raffinan, Paz
was only given notice when Enrique showed Paz’s husband a copy of the deed of
sale. The petitioners then offered to redeem the property which the respondent
denied. The Supreme Court held that the period to redeem has already elapsed since
the petitioners made no valid tender in favor of the respondent Raffinan.
DOCTRINE
● NCC 1623 does not prescribe a particular form of notice or any distinctive
method for notifying the redemptioner.
● legal tender is an indispensable requirement because it is only by such
means that the buyer can become certain that the offer to redeem is one
made serious and in good faith.
FACTS
 Paz Torres and Enrique Torres co-owned a lot and building in Cebu City
under a TCT that both inherited from their deceased parents. On SEPT.
15,1949, Enrique Torres sold his half interest to Raffiñan Spouses for
P13,000 with right to repurchase within 1 year.
 On APRIL 3, 1951 (6 months after expiration of right of repurchase) Enrique
Torres executed the deed of absolute sale of the same half interest in the
property in favour of the Raffinans for P28,000. Such deed has not been
brought to attention of Enrique’s sister and co-owner Paz Torres de
Conejero nor of her husband, Enrique Conejero until AUGUST 19,1952
when Enrique Torres showed to the husband of Paz Torres the copy of the
same deed. Conejero then went to the buyers (Raffinans) offering to
redeem such property which offer was raised to P 29,000 and afterwards to
P34,000.
 Not being able to reach a settlement, Conejero Spouses filed on OCTOBER
4, 1952 a complaint before CFI Cebu to be declared entitled to redeem said
property. Raffinans however claimed absolute title over the same saying that
Conejeros lost their right of redemption since they failed to exercise it within
the lawful period.
 CFI found the deed of sale to be an equitable mortgage and favored
Conejeros in that they were entitled to redeem such property for P34,000.
 Upon appeal by Raffinans, CA reversed said ruling and found that the deed
in favour of Raffinans was a true sale citing article 1623 of the NCC (see
notes). Hence this petition by Conejeros praying to compel Raffinans to
permit redemption of said property.
ISSUES/HELD/RATIO
1. W/N the Conejero spouses were validly notified of the sale in favour of the
Raffinan spouses – YES.
 There was valid written notice given to the Conejeros.
 Evidence does not sufficiently show that a written notice was in fact given to
Conejeros but this issue is not decisive since Conejeros came to know of
the sale on AUGUST 19, 1952 on which date they immediately offered
to redeem. Conejeros argue that the offer to redeem on the 1st day they
knew of the sale on AUGUST 19,1952 has preserved their right of legal
redemption as the 30-day period under the law had not lapsed. Raffinans
counter that as early as APRIL 3, 1951, date of absolute sale, Conejeros
already knew of the sale. The offer to redeem made on August 19,1952 was
already beyond the 30-day period. HOWEVER, SC decided not to rule on
whether there was notice within 30-day period because it held that such
point was inconsequential to the case.
 SC agreed with Conejeros that written notice, which they contend to not
having received any, is indispensable and that mere knowledge of the
sale by the redemptioner does not satisfy the law. But SC also
emphasized that article 1623 does not prescribe any particular form of
notice nor any specific manner for notifying the redemptioner. As long
as the latter is informed in writing of the sale and the its particulars, the 30
day period start running.
 In this case, Conejeros admit that on AUGUST 19, 1952, co-owner Enrique
Torres showed and gave the husband of Paz Torres (acting on behalf of the
latter) a copy of the deed of sale in favour of the Raffinan spouses. The
furnishing of this copy was equivalent to giving written notice under
the law: it came from the vendor and made available in writing the details
and finality of the sale. Hence, the period of redemption should have ended
on September 18, 1952 (starting August 19, 1952).
2. W/N Conejeros effectuate all the steps required for a valid redemption – NO.
 There was no valid offer to redeem by the Conejeros.
 On whether there was a valid offer to redeem, SC noted that the law grants
to the co-owner the right of redemption but that the offer must be valid
and effective accompanied by an actual tender of an acceptable
redemption price. Conejeros merely offered P10,000 in check to redeem
the property with promise to pay balance thru a loan to be obtained in the
future from a bank. SC held that the offer was not a legal tender of the
price. Raffinans’ refusal, in lieu of the price of P28,000 stated in the deed of
sale, of the offer was thus justified since the conditions precedent for a valid
exercise of the right does not exist.
 Bona fide redemption imports a seasonable and valid tender of the
entire price and this was not done. There was no reason for requiring
the vendee (Raffinans) to accept payment by installments from a
 redemptioner, since it would result in an indefinite extensions of the 30-day
redemption period, when the purpose of the law in fixing a definite term is to
avoid prolonged uncertainty as to ownership of thing sold. Conejeros neither
filed suit within 30 days nor made consignation of the price. While they got a
copy of the deed of sale on August 19, 1952, complaint was only filed on
OCTOBER 4, 1952.
 It was argued by Conejeros that article 1620 allows redemptioner to pay only
reasonable price if price is grossly excessive and that the reasonableness of
the price is determined by the courts. SC however said that the right to pay
reasonable price does not excuse redemptioner from the duty to make
proper tender of price nor does it authorize redemptioner to demand the
vendee to accept payment in installments. Conejeros never even contested
the reasonableness of the price. There were even willing to pay as much as
P34,000. Redemption price should either be fully offered in legal tender
or validly consigned in court since only by such means can the buyer be
certain that the offer to redeem is made seriously and in good faith.
Otherwise, it would leave the buyer open to harassment by speculators and
unneeded prolongation of redemption period

Petitioners filed an MR but was denied in a resolution which added the following
points:
1) SC clarified that the 30-day period was not deemed to be a period of prescription
nor that the loss of right to redeem was due to a bar of the statute of limitation.
Petitioners’ right to redeem was lost simply because they failed to make valid
tender of entire redemption money within the period given by law.
2) While co-owner’s right to redeem is a substantial right, it is limited in its duration
and subject to strict compliance with legal requirements for otherwise, the 30-day
limitation fixed by law is nullified.
3) Whether petitioners exercised diligence in asserting willingness to pay was
immaterial. Redemption is effectuated only by payment or valid tender of the
price within the said period. The only matter to be investigated by the courts is
the timeliness of the right and the only way to exercise it is by valid payment
within 30 days.

RULING
Wherefore, the motion for reconsideration is denied.

NOTES
Article 1263, NCC.
"The right of legal redemption or redemption shall not be exercised except within thirty
days from the notice in writing by the prospective vendor, or by the vendor, as the
case may be. The deed of sale shall not be recorded in the Registry of Property,
unless accompanied by an affidavit of the vendor that he has given written notice
thereof to all possible redemptioners.
"The right of redemption of co-owners excludes that of adjoining owners".
[176] DOROMAL v. CA
GR No. L-3608 | September 5, 1975 | Barredo, J.
SUMMARY
The Horilleno brothers and sisters and Javellana (heir of one Horilleno sister who
passed away) were co-owners of a lot. The co-owners with the exception of Javellana
wanted to sell the lot to the Doromals. The Horillenos signed and executed special
powers of attorneys. Javellana did not because she did not agree to the sale. 6/7
share of the lot was sold to the Doromals and a TCT was issued in their name on
April 29, 1968 for the 6/7 portion. On June 10, 1968, Javellana wrote a letter to the
Doromals stating her interest to exercise her right of redemption to the property. The
Doromals refused to let her exercise such right, so Javellana filed an action for
redemption of the property. The RTC ruled in favor of the Doromals. On appeal, the
CA reversed it stating that although Javellana was informed of her co-owners’
proposal to sell the land to the Doromals, she was never notified, least of all in writing,
of the actual execution and registration of the deed of sale, so her right to redeem had
not yet expired at the time she made her offer to redeem the lot.
The SC affirmed the CA decision. It held that although written notice is given to the
co-owner, the 30-day period does not begin to run from the receipt of such written
notice, because the transaction covered in the notice did not pertain to a perfected
contract of sale (there was no agreement as to the price), and must be accompanied
by the actual execution and delivery of the deed of sale. It is best that the period
should not be deemed to have commenced unless the notice of disposition is made
after the formal deed of disposal has been duly executed.
DOCTRINE
For purposes of the co-owner’s right of redemption granted by Art. 1620, the notice in
writing which Art. 1623 requires of which the 30-day period to redeem should be
counted is a notice not only of a perfected sale, but of the actual execution and
delivery of the deed of sale. This is implied in the latter portion of Art. 1623 which
requires that before a register of deeds can record a sale by a co-owner, there must
be presented to him, an affidavit to the effect that the notice of the sale had been sent
in writing to the other co-owners.
It is best that the period should not be deemed to have commenced unless the
disposition is made after the formal deed of disposal has been duly executed.
FACTS
 Lot 3504 in Iloilo was originally decreed in the name of the late Justice
Horilleno in 1916 with OCT. But before he died (undated), he executed a last
ISSUE/HELD
will and testament attesting that the lot was a co-ownership between himself
W/N the notice in writing of the sale contemplated in Art. 1623 refers to a notice in
and his brothers and sisters Luis, Soledad, Fe, Rosita, Carlos and
writing after execution and registration of the instrument of sale, hence, of the
Esperanza.
document of sale – YES.
 Esperanza died and was succeeded by her only daughter and heir Javellana
in the proportion of 1/7 undivided ownership.
 Even though their right had not yet been annotated in the title, the co-owners
led by Carlos and Mary (Judge Horilleno’s daughter), wanted to sell their
shares in 1967 OR if agreeable to Javellana, to sell the entire property.
 Father and Son Doromal, Sr. and Jr. wanted to buy the lot. Since the
brothers and sisters Horilleno were scattered in various parts of the country,
they all executed various powers of attorney in favor of their niece Mary.
They also prepared a power of attorney for signature by Javellana.
 October 22, 1967 – Carlos received a check as earnest money from
Doromal, Jr for P5,000 and the price agreed upon was P5/sq. M.
 Javellana DID NOT sign the power of attorney because she did not agree to
the sale. The rest of the co-owners went ahead with their sale of their 6/7
portion.
 April 29, 1968 – New title was issued in the name of the co-owners for the
6/7 portion and also the 1/7 portion of Javellana, as well as the deed of sale
to the Doromals. This TCT was cancelled on the same day because a new
one was issued: 6/7 under Doromals, 1/7 under Javellana.
 The sale was consummated by virtue of completion of payment by
Doromals.
 However, on June 10, 1968 – Javellana’s lawyer went to the residence of
the Doromals to give a letter stating that through her nephew, she was
making a formal offer to repurchase or redeem the 6/7 undivided share of
the lot.
o Then and there, Javellana’s lawyer tendered P30,000 for exercise
of the legal redemption.
o Doromals refused.
 The very next day, Javellana filed an action for redemption, and during trial,
thru oral and documentary proof, sought to show that as co-owner, she had
the right to redeem at the price stated in the deed of sale (P30,000).
 Doromals’ reply: Javellana had no right to redeem because she was
informed of the sale of the 6/7 share; and that if ever she did have that right,
the price should be P115,250 and not P30,000 because the former was the
real price.
 RTC: Dismissed case.
 CA: Reversed RTC. Although Javellana was informed of her co-owners’
proposal to sell the land, she was “never notified, least of all, in writing” of
the actual execution and registration of the deed of sale. So the right to
redeem had not yet been expired at the time she made her offer for that
purpose via letter delivered to the Doromals.

RATIO
 The letters sent by Carlos Horilleno to Javellana dated January 18, 1968 and
November 5, 1967, constituted the required notice in writing from which the
30-day period fixed in Art. 1623 should be computed.
 BUT to start with, there is no showing that the letters were even received by
Javellana and when they were actually received.
o Doromals do not pinpoint which of the 2 letters, their dates being
more than 2 months apart, is the required notice.
 Neither of the letters referred to a consummated sale. It was Carlos Horilleno
alone who signed them. As of January 18, 1968, powers of attorney from the
other co-owners were still to be secured.
her tender to redeem it on June 10, 1968 was within the period prescribed
by law.
 It is immaterial when she might have actually come to know about the deed
since she was never shown a copy of it through a written communication by
either any of the Doromals or any of her co-owners-vendees.
OTHER ISSUE
The other issue is regarding the price of redemption. The Court held that the price
was the one stipulated in the contract, P30,000, even if the Doromals insisted they
actually paid P115,250.
RULING
The Decision of the CA is AFFIRMED.

November 5, 1967 letter January 18, 1968 letter

Price mentioned – P5/sq.m. (as early as
October 27, 1967, Carlos had already
received P5,000 from Doromals
supposedly as earnest money)
Price mentioned – P4/sq.m. It was only
during this date that Carlos told his
niece about the earnest money.
Explanation: “At later negotiation it was
increased to P5/sq.m.”

 While the letters relied upon by the Doromals could convey the idea that
more or less some kind of consensus had been arrived at among the other
co- owners to sell the property to them, it cannot be said definitely that the
sale was actually perfected.
 The difference in price in both letters shows that no definite price has been
agreed upon (see table). Even if the P5,000 was paid to Carlos in October
1967, there is nothing to show that it was in the concept of earnest money
since it was not clear that there was a definite agreement as to the price and
that the Doromals were decided to buy 6/7 only of the property should
Javellana refuse to agree to part with her 1/7 share.
 For purposes of the co-owner’s right of redemption granted by Art. 1620, the
notice in writing which Art. 1623 requires of which the 30-day period to
redeem should be counted is a notice not only of a perfected sale, but
of the actual execution and delivery of the deed of sale. This is implied in
the latter portion of Art. 1623 which requires that before a register of deeds
can record a sale by a co-owner, there must be presented to him, an
affidavit to the effect that the notice of the sale had been sent in writing to
the other co-owners.
 Justice Gatmaitan: It is best that the period should not be deemed to
have commenced unless the disposition is made after the formal deed
of disposal has been duly executed.
 Since Javellana was never notified in writing of the execution of the deed of
sale by which the Doromals acquired the property, it necessarily follows that
[177] ADALIA B. FRANCISCO v. ZENAIDA F. BOISER
G.R. No. 1376777 | May 31, 2000 | Mendoza, J.
SUMMARY
Francisco and three of her sisters were co-owners of parcels of land. ⅕ of their
undivided share was sold to Adela Blas, who later sold the same to Zenaida Boiser
without the knowledge of the other co-owners. Francisco received summons pursuant
to a complaint filed by Boiser, demanding her share in the rentals. Francisco informed
Boiser that she is exercising her right of redemption as owner. The point of contention
in this case is the reckoning point from which the 30-day period for redemption must
be counted. The court ruled that it should be counted from the time the vendor
informs the co-owners of such sale. However, an exception was made in this case, to
prevent further delay in Francisco exercise of her right of redemption.
DOCTRINE
● GENERAL RULE: Notice to the co-owners must be given by the vendor.
● However, there may be exceptions, such as when it will further delay
petitioner’s exercise of her right of legal redemption by requiring that
notice be given by the vendor before petitioner can exercise her right.
PROVISION
Art. 1623, NCC. The right of legal pre-emption or redemption shall not be exercised
except within thirty days from the notice in writing by the prospective vendor,
or by the vendor, as the case maybe. The deed of sale shall not be recorded in
the Registry of Property, unless accompanied by an affidavit of the vendor that
he has given written notice thereof to all possible redemptioners.
The right of redemption of co-owners excludes that of adjoining owners.
FACTS
● Petitioner Adalia B. Francisco and three of her sisters, Ester, Elizabeth
and Adeluisa, were co-owners of four parcels of registered lands on
which stands the Ten Commandments Building at 689 Rizal Avenue
Extension, Caloocan City.
● On August 6, 1979, they sold 1/5 of their undivided share in the subject
parcels of land to their mother, Adela Blas, for P10,000.00, thus making the
latter a co-owner of said real property to the extent of the share sold.
● On August 8, 1986, without the knowledge of the other co-owners,
Adela Blas sold her 1/5 share for P10,000.00 to respondent Zenaida
Boiser who is another sister of petitioner.
● On August 5, 1992, Francisco received summons, with a copy of the
complaint in Civil Case No. 15510, filed by Boiser demanding her share
in the rentals being collected by Francisco from the tenants of the
building.
● Francisco then informed Boiser that she was exercising her right of
redemption as a co-owner of the subject property.
● On August 12, 1992, she deposited the amount of P10,000.00 as
redemption price with the Clerk of Court. This move to redeem the property
was interposed as a permissive counterclaim in Civil Case No. 15510.
However, said case was dismissed after Boiser was declared non-suited
with the result that petitioner’s counterclaim was likewise dismissed.
● On September 14, 1995, Francisco instituted Civil Case No. C-17055
before the Regional Trial Court in Caloocan City.
○ She alleged that the 30-day period for redemption under Art.
1623 of the Civil Code had not begun to run against her since
the vendor, Adela Blas, never informed her and the other
owners about the sale to Boiser.
○ She learned about the sale only on August 5, 1992, after she
received the summons in Civil Case No. 15510, together with the
complaint.
● Boiser, on the other hand, contended that Francisco knew about the sale
as early as May 30, 1992, because, on that date, she wrote Francisco a
letter informing the latter about the sale, with a demand that the rentals
corresponding to her 1/5 share of the subject property be remitted to
her.
○ Said letter was sent with a copy of the Deed of Sale between
respondent and Adela Blas.
○ On the same date, letters 4 were likewise sent by respondent to the
tenants of the building, namely, Seiko Service Center and Glitters
Corporation, informing them of the sale and requesting that,
thenceforth, they pay 1/5 of the monthly rentals to Respondent.
○ That Francisco received these letters is proved by the fact that on
June 8, 1992, she wrote 5 the building’s tenants advising them
to disregard Boiser’s request and continue paying full rentals
directly to her.
● The trial court dismissed Franisco’s complaint for legal redemption.
○ It ruled that Art. 1623 does not prescribe any particular form of
notifying co-owners about a sale of property owned in
common to enable them to exercise their right of legal
redemption.
○ While no written notice was given by the vendor, Adela Blas, to
Francisco or the other owners, Francisco herself admitted that
she had received Boiser’s letter of May 30, 1992 and was in
fact furnished a copy of the deed evidencing such sale.
○ The trial court considered the letter sent by Boiser to Francisco
with a copy of the deed of sale as substantial compliance with
the required written notice under Art. 1623 of the New Civil
Code.
 ○ Consequently, the 30-day period of redemption should be
counted not from August 5, 1992, when Francisco received
summons in Civil Case No. 15510, but at the latest, from June
8, 1992, the date she wrote the tenants of the building advising
them to continue paying rentals in full to her.
○ Francisco failed to redeem the property within that period.
● The Court of Appeals affirmed the decision of the Regional Trial Court.
● Hence, this petition.
ISSUE/HELD
Whether the letter of May 30, 1992 sent by Boiser to Francisco notifying her of
the sale on August 8, 1986 of Adela Blas’ 1/5 share of the property to respondent,
containing a copy of the deed evidencing such sale, can be considered sufficient as
compliance with the notice requirement of Art. 1623 for the purpose of legal
redemption – NO.
RATIO
● The trial court and the Court of Appeals relied on the ruling in Distrito v.
Court of Appeals that Art. 1623 does not prescribe any particular form of
written notice, nor any distinctive method for notifying the
redemptioner. They also invoked the rulings in De Conejero v. Court of
Appeals and Badillo v. Ferrer that furnishing the redemptioner with a
copy of the deed of sale is equivalent to giving him the written notice
required by law.
● On the other hand, Francisco points out that the cited cases are not relevant
because the present case does not concern the particular form in which
notice must be given. Rather, the issue here is whether a notice sent
by the vendee may be given in lieu of that required to be given by the
vendor or prospective vendor.
● Art. 1623 of the Civil Code provides:
The right of legal pre-emption or redemption shall not be
exercised except within thirty days from the notice in writing
by the prospective vendor, or by the vendor, as the case
maybe. The deed of sale shall not be recorded in the Registry
of Property, unless accompanied by an affidavit of the vendor
that he has given written notice thereof to all possible
redemptioners.
The right of redemption of co-owners excludes that of
adjoining owners.
● In ruling that the notice given by the vendee was sufficient, the appellate
court cited the case of Etcuban v. Court of Appeals. In Etcuban, notice to
the co-owners of the sale of the share of one of them was given by the
vendees through their counterclaim in the action for legal redemption.
Despite the apparent meaning of Art. 1623, it was held in that case that it
was "of no moment" that the notice of sale was given not by the
vendor but by the vendees. "So long as the [co-owner] is informed in
writing of the sale and the particulars thereof, the 30 days for
redemption start running, and the redemptioner has no cause to
complain," so it was held. The contrary doctrine of Butte v. Manuel Uy and
Sons, Inc. was thus overruled sub silencio.
● However, in the later case of Salatandol v. Retes, decided a year after the
Etcuban case, the Court expressly affirmed the ruling in Butte that the
notice required by Art. 1623 must be given by the vendor. In Salatandol,
the notice given to the redemptioner by the Register of Deeds of the
province where the subject land was situated was held to be
insufficient.
● Resolving the issue of whether such notice was equivalent to the notice from
the vendor required under Art. 1623, this Court stated:
○ ". . . The test of Article 1623 clearly and expressly prescribes that
the thirty days for making the redemption are to be counted
from notice in writing by the vendor. Under the old law (Civil
Code of 1889, Art. 1524), it was immaterial who gave the notice; so
long as the redeeming co-owner learned of the alienation in favor of
the stranger, the redemption period began to run. It is thus
apparent that the Philippine legislature in Article 1623 deliberately
selected a particular method of giving notice, and that method must
be deemed exclusive.
○ Why these provisions were inserted in the statute we are not
informed, but we may assume until the contrary is shown, that a
state of facts in respect thereto existed, which warranted the
legislature in so legislating
○ "The reasons for requiring that the notice should be given by
the seller, and not by the buyer, are easily divined.
■ The seller of an undivided interest is in the best
position to know who are his co-owners that under the
law must be notified of the sale.
■ Also, the notice by the seller removes all doubts as to
fact of the sale, its perfection, and its validity, the
notice being a reaffirmation thereof; so that that party
notified need not entertain doubt that the seller may still
contest the alienation. This assurance would not exist if
the notice should be given by the buyer."
○ There was thus a return to the doctrine laid down in Butte. That
ruling is sound. In the first place, reversion to the ruling in Butte is
proper. Art. 1623 of the Civil Code is clear in requiring that the
written notification should come from the vendor or
prospective vendor, not from any other person. There is,
therefore, no room for construction.
● Indeed, the principal difference between Art. 1524 of the former Civil ● In the present case, as previously discussed, receipt by Francisco of
Code and Art. 1623 of the present one is that the former did not specify summons in Civil Case No. 15510 on August 5, 1992 amounted to
who must give the notice, whereas the present one expressly says the actual knowledge of the sale from which the 30-day period of
notice must be given by the vendor. Effect must be given to this redemption commenced to run.
change in statutory language. ○ Petitioner had until September 4, 1992 within which to exercise her
● In the second place, it makes sense to require that the notice required in Art. right of legal redemption, but on August 12, 1992 she deposited the
1623 be given by the vendor and by nobody else. As explained by this Court P10,000.00 redemption price.
through Justice J B.L. Reyes in Butte, the vendor of an undivided interest ○ As petitioner’s exercise of said right was timely, the same
is in the best position to know who are his co-owners who under the should be given effect.
law must be notified of the sale. It is likewise the notification from the
seller, not from anyone else, which can remove all doubts as to the fact RULING
of the sale, its perfection, and its validity, for in a contract of sale, the WHEREFORE, in view of the foregoing, the petition is GRANTED and the decision of
seller is in the best position to confirm whether consent to the the Court of Appeals is REVERSED and the Regional Trial Court, Branch 122,
essential obligation of selling the property and transferring ownership Caloocan City is ordered to effect petitioner’s exercise of her right of legal redemption
thereof to the vendee has been given. in Civil Case No. C-17055.
● Now, it is clear that by not immediately notifying the co-owner, a vendor
can delay or even effectively prevent the meaningful exercise of the
right of redemption.
● In the present case, for instance, the sale took place in 1986, but it was
kept secret until 1992 when vendee (herein respondent) needed to
notify petitioner about the sale to demand 1/5 rentals from the property
sold. Compared to serious prejudice to petitioner’s right of legal redemption,
the only adverse effect to vendor Adela Blas and respondent-vendee is that
the sale could not be registered. It is non-binding, only insofar as third
persons are concerned.
● It is, therefore, unjust when the subject sale has already been
established before both lower courts and now, before this Court, to
further delay petitioner’s exercise of her right of legal redemption by
requiring that notice be given by the vendor before petitioner can
exercise her right.
● For this reason, we rule that the receipt by petitioner of summons in
Civil Case No. 15510 on August 5, 1992 constitutes actual knowledge
on the basis of which petitioner may now exercise her right of
redemption within 30 days from finality of this decision.
● Precedent: In Alonzo v. Intermediate Appellate Court, the court dispensed
with the need for written notification considering that the
redemptioners lived on the same lot on which the purchaser lived and
were thus deemed to have actual knowledge of the sales.
○ The Court stated that the 30-day period of redemption started,
not from the date of the sales in 1963 and 1964, but sometime
between those years and 1976, when the first complaint for
redemption was actually filed. For 13 years, however, none of
the co-heirs moved to redeem the property. Thus, the right of
redemption had already been extinguished because the period for
its exercise had already expired.
[178] MISTERIO v. CEBU STATE COLLEGE OF SCIENCE AND TECHNOLOGY
G.R. No. 152199 | June 23, 2005 | Callejo, Sr., J.
TOPIC: Extinguishment of Sale – Legal Redemption – Period to Redeem
SUMMARY
Provincial Board of Cebu donated 41 lots of the Banilad Friar Lands Estate to SAHS,
subject to 2 conditions: (1) if the SAHS ceases to operate, ownership of the lots would
automatically revert to the province, and (2) SAHS could not alienate, lease, or
encumber the properties. In June 1983, BP 412 was enacted, incorporating and
consolidating as one school system certain vocational schools in Cebu, including
SAHS. It became an extension of CSCST. In 1990, Asuncion's heirs informed CSCST
of their intention to exercise the option to repurchase Lot 1064 since SAHS had
ceased to exist. CSCST’s Vocational School Superintendent II informed their counsel
that SAHS still existed; only the name was changed.
DOCTRINE
In this case, the vendor a retro and the vendee a retro did not agree on any period for
the exercise of the right to repurchase the property. The 4-year period to repurchase
the property was not suspended merely and solely because there was a divergence
of opinion between the parties as to the precise meaning of the phrase “after the
SAHS shall cease to exist” in the deed of sale. Thus, the period began to run from the
happening of the stipulated condition contained in the covering deed of sale, rather
than from the date of the contract. The pendency of a litigation pertaining to the right
of redemption does not toll the period because such period “is not suspended merely
and solely because there is a divergence of opinion between the parties as to the
precise meaning of the phrase providing for the condition upon which the right to
repurchase is triggered. The existence of seller a retro’s right to repurchase the
proper is not dependent upon the prior final interpretation by the court of the said
phrase.”
PROVISION
Article 1606. The right referred to in Article 1601, in the absence of an express
agreement, shall last four years from the date of the contract.
Should there be an agreement, the period cannot exceed ten years.
However, the vendor may still exercise the right to repurchase within thirty days from
the time final judgment was rendered in a civil action on the basis that the contract
was a true sale with right to repurchase.
FACTS
 August 2, 1948: Sudlon Agricultural High School (SAHS) was established in
Cebu.
 1952: The Provincial Board of Cebu granted the usufruct of 41 parcels of
land, covering 104.5441 hectares of the Banilad Friar Lands Estate to the
SAHS.
 June 20, 1953: pursuant to RA 948, SAHS was nationalized.
 December 31, 1956: Asuncion Sadaya-Misterio executed a Deed of Sale of
a parcel of land (Lot 1064) of the Banilad Friar Lands Estate in favor of the
SAHS.
o The sale was subject to the right of the vendor to repurchase the
property after the high school shall have ceased to exist or shall
have transferred its site elsewhere.
 May 22, 1957: A TCT was issued reflecting the sale.
 March 18, 1960: Through Resolution No. 491, the Provincial Board of Cebu
donated the aforementioned 41 lots to SAHS, subject to two conditions:
(1) that if the SAHS ceases to operate, the ownership of the lots would
automatically revert to the province, and
(2) that the SAHS could not alienate, lease or encumber the properties.
 June 10, 1983: BP Blg. 412 took effect, incorporating and consolidating as
one school system certain vocational schools in Cebu, including the SAHS,
and which became an extension of the Cebu State College of Science and
Technology (CSCST).
o In the meantime, the province of Cebu decided to recover the 41
lots it had earlier donated to SAHS on the ground that the said
deed was void, and that SAHS had no personality to accept the
donation.
 In the meantime, Asuncion died intestate.
 August 19, 1988: When Asuncion’s heirs learned that Cebu was trying to
recover the property it had earlier donated to SAHS, they informed the
province of their intent to exercise their right to repurchase the property as
stipulated in the deed of sale executed by their predecessor-in-interest.
 February 1, 1989: The province (represented by then Governor Osmeña),
and the CSCST (represented by then DECS Secretary Quisumbing),
entered into a Memorandum of Agreement over the 40 parcels of land,
allocating 53 hectares to the province of Cebu, and 51 hectares for the
SAHS.
 March 13, 1990: Asuncion’s heirs, through counsel Atty. Padilla, informed
CSCST of their intention to exercise the option to repurchase Lot 1064
granted to them under the deed of sale, as the SAHS had ceased to exist.
 March 29: In response, Bonilla, Vocational School Superintendent II of
CSCST, wrote to Atty. Padilla:
o that SAHS still existed,
o that it had grown into a higher status, and
o that only the name changed, which is does not imply the loss of its
existence.
 December 23, 1993: Asuncion’s heirs filed a complaint before the RTC for
Nullity of Sale and/or Redemption.
o Respondent’s Arguments:
 At the time of the execution of the contract of sale with the
late Asuncion sometime on December 31, 1956, SAHS
had no juridical personality of its own.
 When BP 412 was enacted, law transferred all the
personnel, properties, including buildings, sites, and
improvements, records, obligations, monies and
appropriation of SAHS to the CSCST.
 The abolition of SAHS and its merger or consolidation as
part of CSCST had rendered operative the condition in the
Deed of Sale
o Petitioner’s Defenses:
 The complainants are estopped from contesting the
juridical capacity of SAHS to own or acquire this property
which is the subject of this case, after a long period of sile
nce or inaction from the transfer of the title in favor of
Sudlon Agricultural School; (and other defenses)
 November 29, 1995: RTC ruled in favor of the plaintiff heirs, declaring the
Deed of Sale null and void for SAHS’s lack of juridical personality to acquire
real property or having ceased to exist, and ordering CSCST to reconvey the
land upon payment of purchase price.
o CSCST, through the OSG, appealed the decision to the CA.
 October 3, 1997: The province of Cebu and CSCST executed a Deed for
Reversion, in which the CSCST deeded to the province of Cebu the
property.
o November 12: A new TCT was issued in the name of the province.
 July 31, 2000: CA reversed RTC, ruling that the period for the petitioners to
repurchase the property expired on June 1987, four years after the
enactment of B.P. Blg. 412.
o The period within which the property was to be repurchased must
be restrictively applied in order to settle ownership and title at the
soonest possible time, and not to leave such title to the subject
property uncertain.
 Hence, this petition.
 Petitioner’s Arguments: Citing Article 1606(3) of the New Civil Code,
petitioners argue that "prescription should start to run from the time it is
legally feasible for the party to redeem the land, which is the time when the
action to redeem has accrued."
o Unless and until judgment would be rendered stating that the SAHS
has ceased to exist, the period to repurchase the property would
not start to run. It is only from the finality of the said judgment that
the right to repurchase the property may be exercised; hence, they
still had thirty (30) days from the date of the promulgation of the CA
decision within which to repurchase the property.
o Since the lien, their right to repurchase the property, was annotated
on the title of the land, the right to exercise the same is
imprescriptible, and they had been vigilant of their right to
repurchase the property, as far back as 1973.
 Respondent’s Arguments: Petitioners' reliance on Article 1606(3) of the New
Civil Code is misplaced, because the law applies only to sales where the
right to repurchase is not expressly agreed upon by the parties.
o Here, the right to repurchase is unquestionable.
o The annotation of the right of redemption has no bearing on the
issue of prescription, positing that the "Torrens System has
absolutely nothing to do with the period of prescription of one's right
to repurchase, as in the instant case."
o Whatever right they had on the property had already prescribed by
the mere lapse of time, by reason of negligence.
ISSUES/HELD
1. W/N Sudlon Agricultural School still retained its personality as such school or
was still in existence; and
2. W/N the petitioners had the right to exercise the right to repurchase the property.
RATIO
 The essence of a pacto de retro sale is that title and ownership of the
property sold is immediately rested in the vendee a retro, subject to the
restrictive condition of repurchase by the vendor a retro within the
period provided in Article 1606 of the New Civil Code.
 The failure of the vendee a retro to repurchase the property vests upon the
latter by operation of law the absolute title and ownership over the property
sold.
 Pending the repurchase of the property, the vendee a retro may alienate,
mortgage or encumber the same, but such alienation or encumbrance is as
revocable as is his right. If the vendor a retro repurchases the property, the
right of the vendee a retro is resolved, because he has to return the property
free from all damages and encumbrances imposed by him. The vendor a
retro may also register his right to repurchase under the Land Registration
Act and may be enforced against any person deriving title from the vendee a
retro.
 In this case, the vendor a retro and the vendee a retro did not agree on
any period for the exercise of the right to repurchase the property.
Hence, the vendor a retro may extend the said right within four days from the
happening of the allocated condition contained in the deed: (a) the cessation
of the existence of the SAHS, or (b) the transfer of the school to other site.
 Petitioners alleged that the SAHS ceased to exist on June 10, 1983, when
B.P. Blg. 412 took effect, abolishing therein the SAHS which, in the
 meantime, had been converted into the Sudlon Agricultural College. The CA
found the position of the petitioners to be correct, and declared that
conformably to the condition in the deed of sale, and under Article 1606 of
the New Civil Code, the right of the petitioners as successors-in-interest
of the vendee a retro commenced to run on June 10, 1983. Hence, they
had until June 10, 1987 within which to repurchase the property;
however, they failed to do so.
 The four-year period for the petitioners to repurchase the property was not
suspended merely and solely because there was a divergence of opinion
between the petitioners, on the one hand, and the respondent, on the other,
as to the precise meaning of the phrase after the SAHS shall cease to exist
in the deed of sale. The existence of the petitioners right to repurchase the
property was not dependent upon the prior final interpretation by the court of
the said phrase condition of repurchase by the vendor a retro within the
period provided in Article 1606 of the New Civil Code.
 The failure of the vendee a retro to repurchase the property vests upon the
latter by operation of law the absolute title and ownership over the property
sold.
 Pending the repurchase of the property, the vendee a retro may alienate,
mortgage or encumber the same, but such alienation or encumbrance is as
revocable as is his right.
o If the vendor a retro repurchases the property, the right of the
vendee a retro is resolved, because he has to return the property
free from all damages and encumbrances imposed by him.
 In this case, the vendor a retro and the vendee a retro did not agree on any
period for the exercise of the right to repurchase the property. Hence, the
vendor a retro may extend the said right within four days from the happening
of the allocated condition contained in the deed: (a) the cessation of the
existence of the SAHS, or (b) the transfer of the school to other site.

RULING
The petition is denied.
[179] CEBU STATE COLLEGE OF SCIENCE AND TECHNOLOGY v. MISTERIO
G.R. No. 179025 | June 17, 2015 | Peralta, J.
TOPIC: Extinguishment of Sale
Petitioner: CEBU STATE COLLEGE OF SCIENCE AND TECHNOLOGY (CSCST),
represented by its incumbent President
Respondents: LUIS S. MISTERIO, GABRIEL S. MISTERIO, FRANCIS S.
MISTERIO, THELMA S. MISTERIO, and ESTELA S. MISTERIO-TAGIMACRUZ
SUMMARY
Respondents sought to repurchase the property which was previously sold to the
Petitioners on the ground that the latter had ceased to exist (which was one of the
conditions for repurchase stipulated in the sale). The Court held that the respondent’s
cause of action had already lapsed because the Civil Code provides that, in the
absence of any agreement as to the period for repurchase, the period for repurchase
shall be four years after the happening of the stipulated condition.
DOCTRINE
Where there is conventional redemption when the vendor a retro reserves the
right to repurchase the property sold, the parties to the sale must observe the
parameters set forth by Art. 1606, NCC.
● The right referred to in Article 1601, in the absence of an express
agreement, shall last four years from the date of the contract.
● Should there be an agreement, the period cannot exceed ten years.
○ Any agreement in excess of ten years or waiver of such period shall
be void.
While the occurrence of the second suspensive condition may give rise to a
separate cause of action, the same must always be taken in conjunction with the
periods prescribed by law insofar as they frown upon the uncertainty of titles to
real property. Otherwise, vendors may simply impose several resolutory conditions,
the happening of each will practically extend the life of the contract beyond the
parameters set forth by the Civil Code.
● In other words: conditions for repurchase must also fall within the prescribed
periods, otherwise, it would be a circumvention of the limits prescribed by
the CC.
○ Evil sought to be avoided: Since agreement for period of
repurchase is limited to ten years, people would instead stipulate
conditions with indefinite periods, thus extending the period for
repurchase beyond what is prescribed by law. (see last part of
ratio)
FACTS
● December 31, 1956: Asuncion Sadaya (mother of respondents) executed a
Deed of Sale over a parcel of land (Lot 1064 with an area of 4,563 sqm) in
favor of Sudlon Agricultural High School (SAHS).
○ The sale was subject to the right of the vendor to repurchase
the property after SAHS shall have ceased to exist, or shall
have transferred its school site elsewhere
● May 22, 1957: TCT No. 13086 (title of the land) was cancelled and a new
one (TCT No. 15959) was issued in the name of SAHS, with the vendor’s
right to repurchase annotated at its dorsal portion
● March 18, 1960: the Provincial Board of Cebu donated 41 parcels of
land (104.5441 hectares) of the Banilad Friar Lands Estate to the SAHS
subject to 2 conditions: (1) that if the SAHS ceases to operate, the
ownership of the lots would automatically revert to the province, and
(2) that the SAHS could not alienate, lease or encumber the properties
○ June 10, 1983: BP Blg. 412 (An Act Converting the Cebu School of
Arts and Trades in Cebu City into a Chartered College to be Known
as the Cebu State College of Science and Technology, Expanding
its Jurisdiction and Curricular Programs) took effect; it
incorporated and consolidated several schools in the Province
of Cebu, including the SAHS, as part of CSCST and transferred
all personnel, properties, including buildings, sites, and
improvements, records, obligations, monies and
appropriations of SAHS to the CSCST
● In the meantime, the Province of Cebu sought to recover the 41 parcels
of land it previously donated to SAHS on the basis of an initial report of
its provincial attorney that SAHS had no personality to accept the
donation, and thus, the deed it executed was void
● Later, respondents, as heirs of the late Asuncion Sadaya, informed Emilio
Osmeña (then Governor of the Province of Cebu) through a letter of their
intention to repurchase the property as stipulated in the Deed of Sale.
○ March 13, 1990: respondents informed petitioner of their intention
to exercise their right to repurchase under the Deed of Sale on the
ground that the SAHS had ceased to exist.
○ However, CSST’s Vocational School Superintendent II informed
respondents that SAHS still existed as only the name of the
school was changed.
● Respondents then filed a complaint with the RTC Cebu for Nullity of Sale
and/or Redemption against CSCST, its chairman, and president
○ RTC: ruled in favor of respondents; petitioner appealed to CA
○ CA: reversed RTC’s decision
■ While the SAHS had ceased to exist when BP Blg. 412
took effect, respondents are barred by prescription
from exercising their right to repurchase the subject
property, which expired in June 1987, or four years from
 the effectivity of BP Blg. 412, as provided by Art. 1606,
NCC
[Note: There is a discussion on forum shopping which I don’t think is relevant to the
topic lol]
ISSUE/HELD
W/N respondents have a cause of action – NO.
RATIO
● SC: Where there is conventional redemption when the vendor a retro
reserves the right to repurchase the property sold, the parties to the sale
must observe the parameters set forth by Art. 1606, NCC: “The right
referred to in Article 1601, in the absence of an express agreement, shall
last four years from the date of the contract.
o Should there be an agreement, the period cannot exceed ten
years.
● However, the vendor may still exercise the right to repurchase within
thirty days from the time final judgment was rendered in a civil action
on the basis that the contract was a true sale with right to repurchase.”
o Thus, depending on whether the parties have agreed upon a
specific period within which the vendor a retro may exercise his
right to repurchase, the property subject of the sale may be
redeemed only within the limits prescribed by the provision (if
no agreement: 4 years, if with agreement: 10 years maximum)
● Here, the parties did not agree on any period for the exercise of the right
to repurchase the property thus, respondents may use said right within 4
years from the happening of the allocated conditions contained in their
Deed of Sale, which was on: (a) the cessation of the existence of the SAHS,
or (b) the transfer of the school to other site
o However, since respondents failed to exercise their right to
redeem within the required 4 years from the time when SAHS
had ceased to exist, or from the date of effectivity of BP Blg. 412,
respondents are barred by prescription
● The Court has long since enunciated an unfavorable notion against a
prolonged uncertainty with respect to the ownership and tenure of real
property
o “A pacto de retro is, in a certain aspect, the suspension of the title
to the land involved. We are of the opinion that it was the intention
of the legislature to limit the continuance of such a condition, with
the purpose that the title to the real estate in question should be
definitely placed, it being, in the opinion of the legislature, against
public policy to permit such an uncertain condition relative to the
title to real estate to continue for more than ten years.”
o Thus, the Court frowned upon agreements indicating indefinite
stipulations for the exercise of the right to repurchase and
restricted the redemption period to ten 10 years from the date
of the contract of sale, in consonance with the provisions of
the Civil Code.
▪ When vendors a retro were granted the right to
repurchase properties sold "at any time they have the
money," "in the month of March of any year," or "at any
time after the first year," this Court had not hesitated in
imposing the 10-year period, the expiration of which
effectively bars redemption of the subject properties;
also, the Court has invalidated stipulations permitting
the repurchase of property only after the lapse of at
least 10 years from the date of the execution of the
contract for being in contravention of the limitation
mandated by the Civil Code provision; waivers of such
period were likewise held to be void for being against
public policy.
o Also, the Court deemed it necessary to keep within the 10-year
period those instances where parties agree to suspend the
right until the occurrence of a certain time, event, or condition,
insofar as the application of the 4-year period in the first
paragraph of Art. 1606, CC would prolong the exercise of the
right beyond 10 years.
● A long term for redemption renders the tenure of property uncertain and
redounds to its detriment, for neither does the precarious holder cultivate the
ground with the same interest as the owner, nor does he properly attend to
the preservation of the building, and owing to the fact that his enjoyment of
the property is temporary, he endeavours above all to derive the greatest
benefit therefrom, economizing to that end even the most essential
expenses
o Thus, while the occurrence of the second suspensive
condition may give rise to a separate cause of action, the
same must always be taken in conjunction with the periods
prescribed by law insofar as they frown upon the uncertainty
of titles to real property. Otherwise, vendors may simply
impose several resolutory conditions, the happening of each
will practically extend the life of the contract beyond the
parameters set forth by the Civil Code
▪ To permit respondents to exercise their right to repurchase
upon the happening of the second resolutory condition,
when they utterly failed to timely exercise the same upon
the happening of the first, would effectively result in a
circumvention of the periods expressly mandated by law
 ● Here, it would be rather absurd to permit respondents to repurchase
the subject property upon the occurrence of the second suspensive
condition, particularly, the relocation of SAHS on October 3, 1997, the
time when petitioner ceded the property to the Province of Cebu, which
is nearly 41 years after the execution of the Deed of Sale on December
31, 1956

RULING
WHEREFORE, premises considered, the instant petition is GRANTED. The Decision
dated July 25, 2007 of the Court Appeals in CAG.R. CV No. 77329 is REVERSED
and SET ASIDE.
[180] ORTEGA v. ORCINE
38 Phil. 276 | March 31, 1971 | Barredo, J.
TOPIC: Adjoining Landowners of Urban Land
SUMMARY
Petitioner wants to redeem the land he sold to Orcine, which the latter then sold to
Esplana. When it was sold to Esplana, it was a mere ricefield but the latter had
subdivided it into lots and is actually being occupied by a private school.
Petitioner invokes Art. 1622. He conceded that the land was rural when he sold it to
Esplana but upon exercise of redemption, it was already urban. Hence, the reckoning
point is at the time he seeks to exercise redemption.
DOCTRINE
It is evident that the purpose of the new Civil Code in allowing redemption of adjoining
urban land is to discourage speculation in real estate and the consequent aggravation
of the housing problems in centers of population.
It is clear that the term urban in this provision does not necessarily refer to the nature
of the land itself sought to be redeemed nor to the purpose to which it is somehow
devoted, but to the character of the community or vicinity in which it is found. In this
sense, even if the land is somehow dedicated to agriculture, it is still urban, in
contemplation of this law, if it is located within the center of population or the more or
less populated portion of a city or town.
PROVISION
Art. 1622, CC. Whenever a piece of urban land which is so small and so situated that
a major portion thereof cannot be used for any practical purpose within a reasonable
time, having been bought merely for speculation, is about to be re-sold, the owner of
any adjoining land has a right of pre-emption at a reasonable price.
If the re-sale has been perfected, the owner of the adjoining land shall have a right of
redemption, also at a reasonable price.
When two or more owners of adjoining lands wish to exercise the right of pre-emption
or redemption, the owner whose intended use of the land in question appears best
justified shall be preferred.
FACTS
● Petitioner wants to redeem the 4,452-square-meter parcel of land sold to
Orcine, which the later sold to Esplana.
o When it was sold to Esplana, it was a mere rice field but the latter
subdivided it into lots and is actually being occupied by private
schools.
● Petitioner invoked Art. 1622 of the Civil Code. He conceded that the land
was rural when he sold it to Esplana but upon exercise of redemption, it was
already urban.
● LOWER COURT: ruled in favor of defendant Orcine. Hence, petitioner filed
for appeal.
ISSUE/HELD
Can petitioner exercise a right of repurchase – NO.
RATIO
● The intent behind the law is to encourage agglomeration of tracts of land,
basically to take advantage of economies of scale.
o Basically, consolidating small tracts of land with bigger ones was
meant to improve agricultural productivity. Since petitioner’s land is
urban, it is inconsistent with the policy behind the law.
● Even on the assumption that the land in controversy is urban, still Article
1622 of the present Civil Code which is not invoked by appellant does not
support his case.
o This Court has already emphasized in previous cases, that an
owner of urban land may not redeem an adjoining urban property
where he does not allege in his complaint, much less prove at the
trial, that the latter is so small and so situated that a major portion
thereof cannot be used for any practical purpose within a
reasonable time, having been bought merely for speculation.
● In view, however, of the facts that:
o (1) the land of appellant is a school site; and
o (2) the one in question has been filled with earth, developed and
subdivided into small lots for residential purposes,
it is quite safe to conclude that both lands are in the populated section of the
town and are accordingly urban.
● [see doctrine] It cannot be said that appellee Esplana bought the same
"merely for speculations" since in less than eight months, from March 27,
1965 when he bought it, to December 7, 1965 when the present complaint
was filed, he had developed the same into a subdivision for re-sale, which
shows that he must have had definite purpose in mind in buying the same.
RULING
The article used by the appellant is inapplicable in this case.
In the case at bar, appellant himself submits that the land in question should be
considered as urban. Actually, the facts on record do not sufficiently show where it is
situated. In view, however, of the facts that: (1) the land of appellant is a school site
and (2) the one in question has been filled with earth, developed and subdivided into
small lots for residential purposes, it is quite safe to conclude that both lands are in
the populated section of the town and are accordingly urban.
Now, considering that the land which appellant seeks to redeem is 4,452 square
meters in area, which is far from being "so small and so situated that a major portion
thereof cannot be used for any practical purpose" for quite the contrary, it has been
made a subdivision, and also that it cannot be said that appellee Esplana bought the
same "merely for speculations" since in less than eight months, from March 27, 1965
when he bought it, to December 7, 1965 when the present complaint was filed, he
had developed the same into a subdivision for re-sale, which shows that he must
have had definite purpose in mind in buying the same, it is Our holding that appellant
cannot invoke Article 1622 of the Civil Code. We cannot hold that such purpose is
speculative.

RULING
The decision appealed from is affirmed, with cost against appellant.