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SALES Legal Redemption to Assignment of Credits and Other Incorporeal Rights 1

Section 2 Legal Redemption written agreement stipulating that their shares in the house
and lot would be equal; and that Senen would live with
Articles 1619- 1623 their father on condition that he would pay the Social
Security System (SSS) the remaining loan obligation of the
I. Concept
former owners.
A. Legal redemption defined
- Article 1619. Legal redemption is the right to be In 1974, their father died. Virgilio then demanded that
subrogated, upon the same terms and conditions stipulated Senen vacate the house and that the property be sold, the
in the contract, in the place of one who acquires a thing by proceeds to be divided between them. Senen refused to
purchase or dation in payment, or by any other transaction comply with Virgilio's demand.
whereby ownership is transmitted by onerous title.
On July 26, 1979, the trial court rendered its Decision,
B. Applicable alienation declaring the brothers co-owners of the house and lot and
- Purchase
- Dation in payment are entitled to equal shares; and ordering that the property
- Any other transfer of ownership by onerous title. (cannot be sold, the proceeds to be divided equally between them.
take place in barter nor by hereditary title; not available The trial court also ordered Senen to vacate the property
where there is only a mortgage or lease) and to pay Virgilio rentals with interests corresponding to
the period from January 1975 until he leaves the premises.
C. Distinguished from Pre-emption
On appeal, docketed as CA-G.R. CV No. 03933, the Court
>> Pre-emption
of Appeals reversed the trial court's Decision.
- as the act or right of purchasing before others.
- exercised BEFORE the sale or re-sale against the
would-be vendor Virgilio then filed with this Court a petition for review on
certiorari, docketed as G.R. No. 76351.
>> Redemption
- exercised AFTER the sale has been perfected against On October 29, 1993, this Court rendered its Decision, the
the vendee. dispositive portion of which reads:
- the recognition of the right of redemption will result
in the rescission of the sale "WHEREFORE, the petition is GRANTED. The assailed
Decision of the Court of Appeals dated 16 October 1986 is
Requisites for the exercise of the right of pre-emption or REVERSED and SET ASIDE. The decision of the trial
redemption, as the case may be:
court in Civil Case No. 6912-P dated 26 July 1971 is
a) the piece of land is URBAN
b) the one exercising the right must be an REINSTATED, with the modification that respondent
ADJACENT OWNER Senen B. Aguilar is ordered to vacate the premises xxx
c) the piece of land sold must be so small and so
situated that a major portion thereof cannot be On March 27, 1995, Senen filed with the Regional Trial
used for any practical purpose within a Court, Branch 260, Paraaque City, an action for legal
reasonable time redemption against Virgilio and another brother, Angel,
d) such land was bought by its owner merely for docketed as Civil Case No. 95-039. Meanwhile, on
speculation
November 27, 1995, pursuant to this Court's Decision in
e) it is about to be resold, or that its resale has been
perfected G.R. No. 76351, the property was sold at public auction to
Alejandro C. Sangalang, intervenor-respondent herein.
D. Applicability of the rules Virgilio then received his share of the proceeds as well as
the rental payments due from Senen.
II. Instances of Legal Redemption
A. Redemption by Co-owners By then, Virgilio had moved to California, USA. It was
a) Purpose: intended to minimize co-ownership
only on January 25, 1997 that he was served, through the
b) Requisites
Cases: Aguilar vs. Aguilar Philippine Consulate in San Francisco, a copy of Senen's
Facts: The parties in this case are brothers, except complaint in Civil Case No. 95-039.
Alejandro Sangalang, herein intervenor-respondent. On
On February 24, 1997, Virgilio filed a motion to dismiss
October 28, 1993, Senen and Virgilio purchased a house
the complaint for lack of cause of action and forum
and lot located in Paraaque City, Metro Manila for the
shopping.
benefit of their father, Maximiano Aguilar (now deceased).
The brothers wanted their father to enjoy his retirement in a
In an Order dated June 27, 1997, the trial court dismissed
quiet neighborhood. On February 23, 1970, they executed a
Civil Case No. 05-039 on the ground of laches, holding that
SALES Legal Redemption to Assignment of Credits and Other Incorporeal Rights 2

Senen incurred a delay of seven (7) years before asserting more co-owners within a period of THIRTY DAYS to be
his right to redeem the property in question. counted from the time that he or they were NOTIFIED in
writing by the vendee or by the co-owner vendor; and
Petitioners Contention: Senen alleged that while he (5) the vendee must be REIMBURSED for the price of the
knows that Virgilio sold his 1/2 share of the property to sale.
Angel in January 1989, however, he (Senen) was not In this case, the sale took place in January 1989. Petitioner
furnished any written notice of the sale. Consequently, as a
admits that he has actual knowledge of the sale. However,
co-owner, he has the right to redeem the property.
he only asserted his right to redeem the property in March
1995 by filing the instant complaint. Both the trial court
Issue: Whether the CA erred in holding that Senen's
and the Appellate Court ruled that this was seven (7) years
complaint for legal redemption in Civil Case No. 05-039 is
late.
barred by laches.
Petitioner, however, now contends that there being no
Ruling: Legal redemption (retracto legal de comuneros) is
written notice to him of the sale by the vendee or vendor,
a privilege created by law, partly by reason of public policy
the thirty-day redemption period has not prescribed.
and partly for the benefit of the redemptioner to afford him
a way out of a disagreeable or inconvenient association into
Petitioner's contention lacks merit. The old rule is that a
which he has been thrust. written notice of the sale by the vendor to his co-owners is
indispensable for the latter to exercise their retracto legal de
With respect to redemption by co-owners, in case the share
comuneros. More recently, however, we have relaxed the
of a co-owner is sold to a third person, the governing law is
written notice requirement. Thus, in Si v. Court of Appeals,
Article 1620 of the Civil Code which provides: A co-
we ruled that a co-owner with actual notice of the sale is
owner of a thing may exercise the right of redemption in
not entitled to a written notice for such would be
case the shares of all the other co-owners or of any of them
superfluous. The law does not demand what is unnecessary.
are sold to a third person. If the price of the alienation is
grossly excessive, the redemptioner shall pay only a
reasonable rate. Avila vs. Barabat
FACTS: (Redemption not applicable)
Should two or more co-owners desire to exercise the right Subject property is a land located in Toledo City which is
of redemption, they may only do so in proportion to the now owned by the 5 children of Anunciation (upon her
share they may respectively have in the thing owned in death), each of the five children have built their houses on
common." the lot.

The purpose behind Article 1620 is to provide a method for Sps. Barabat leased the house built by Narcisa Avila
(Avila) one of the children. Avila subsequently relocated to
terminating the co-ownership and consolidating the
Cagayan de Oro City. She came back to Toledo City in
dominion in one sole owner. July 1979 to sell her house and share in the lot to her
siblings but no one showed interest in it. She then offered it
Article 1623 of the same Code also provides: The right of to respondents who agreed to buy it. Both Parties executed
legal pre-emption or redemption shall not be exercised a private document evidencing the transaction.
except within thirty days from the notice in writing by the Respondents stopped paying rentals to Avila and took
prospective vendee, or by the vendor, as the case may be. possession of the property as owners. They also assumed
The deed of sale shall not be recorded in the Registry of the payment of realty taxes on it.
Property, unless accompanied by an affidavit of the vendee 1982, Adlawans demanded Barabats to relocate as they are
that he has given written notice thereof to all possible purchasing the house and lot of Avila. Respondents then
redemptioners. filed an action for quieting of title and specific performance
for Avila to issue a public document. Avila denied the sale,
The right of redemption of co-owners excludes that of alleging it was a loan and that she innocently affixed her
adjoining owners." signature on the document.

From the above provisions, the following are the requisites RTC- favored the Barabats, declaring the private document
for the exercise of legal redemption: as a valid and lawful deed of sale. It nullified the
(1) There must be a CO-OWNERSHIP; subsequent deed of sale between Avila and the spouses
(2) one of the co-owners sold his right to a stranger; Adlawan. Avila was ordered to execute a formal and
(3) the sale was made BEFORE THE PARTITION of the notarized deed of sale in favor of respondents. CA
co-owned property; affirmed.
(4) the right of redemption must be exercised by one or
SALES Legal Redemption to Assignment of Credits and Other Incorporeal Rights 3

ISSUE: WON the transaction between respondents and before it is sold to third parties, or the redemptive right if it
Avila was an absolute sale or an equitable mortgage. has already been sold. This is not applicable in the case and
this is not also alleged. DENIED.
Petitioners Relied on Arts. 1602 and 1604 Equitable
mortgage and on 1620 and 1623 of the Civil Code to justify
their right of redemption. c. Who May Exercise Redemption-
A Co-owner (1620)
RULING: For Articles 1602 and 1604 to apply, two If two or more co-owners desire to redeem they may only
requisites must concur: (1) the parties entered into a do so in PROPORTION to the share they may respectively
contract denominated as a contract of sale and (2) their have in the thing owned in common (1620 p.2)
intention was to secure an existing debt by way of
mortgage.Here, both the trial and appellate courts found CASE: Effect of Redemption by a co-owner of a deceased
that Exhibit "A" evidenced a contract of sale. They also co-owners share
agreed that the circumstances of the case show that Avila Facts: Rufino Cabales died on July 4, 1966 and left a
intended her agreement with respondents to be a sale. Both 5,714-square meter parcel of land located in Brgy. Rizal,
courts were unanimous in finding that the subsequent acts Sogod, Southern Leyte, covered by Tax Declaration No.
of Avila revealed her intention to absolutely convey the 17270 to his surviving wife Saturnina and children
disputed property. It was only after the perfection of the Bonifacio, Albino, Francisco, Leonora, Alberto and
contract, when her siblings began protesting the sale, that petitioner Rito.
she wanted to change the agreement.
On July 26, 1971, Bonifacio, Albino and Alberto sold the
Petitioners reliance on 1620 and 1623 is incorrect: subject property to Dr. Cayetano Corrompido for
P2,000.00, with right to repurchase within eight (8) years.
These provisions state: August 18, 1971, Alberto secured a note ("vale") from Dr.
Art. 1620. A co-owner of a thing may exercise the right of Corrompido in the amount of P300.00.
redemption in case the shares of all the other co-owners or
any of them, are sold to a third person. If the price of the On December 18, 1975, Bonifacio and Albino tendered
alienation is grossly excessive, the redemptioner shall pay their payment of P666.66 each to Dr. Corrompido.
only a reasonable one.
On even date, Saturnina and her four (4) children
Should two or more co-owners desire to exercise the right Bonifacio, Albino, Francisco and Leonora sold the subject
of redemption, they may only do so in proportion to the parcel of land to respondents-spouses Jesus and
share they may respectively have in the thing owned in Anunciacion Feliano for P8,000.00. The Deed of Sale
common. provided that P2286.00 belonging to the Heirs of Alberto
xxxxxxxxx and to Rito who are still minors upon the execution of this
instrument are held in trust by the VENDEE and to be paid
Art. 1623. The right of legal pre-emption or redemption and delivered only to them upon reaching the age of 21.
shall not be exercised except within thirty days from the Register of Deeds then issued OCT 17035 in the name of
notice in writing by the prospective vendor, or by the respondent-spouses.
vendor, as the case may be. The deed of sale shall not be
recorded in the Registry of Property, unless accompanied Saturnina paid Dr. Corrompido P966.66 for the obligation
by an affidavit of the vendor that he has given written of petitioner Nelson's late father Alberto, i.e., P666.66 for
notice thereof to all possible redemptioners. his share in the redemption of the sale with pacto de retro
as well as his "vale" of P300.00.
The right of redemption of co-owners excludes that of
adjoining owners. On July 24, 1986, 24-year old petitioner Rito Cabales
Petitioners right to redeem would have existed only had acknowledged receipt of the sum of P1,143.00 from
there been co-ownership among petitioners-siblings. But respondent Jesus Feliano, representing the former's share in
there was none. For this right to be exercised, co-ownership the proceeds of the sale of subject property.
must exist at the time the conveyance is made by a co-
owner and the redemption is demanded by the other co- Nelson learned from his uncle, petitioner Rito, of the sale
owner or co-owner(s).However, by their own admission, of subject property. In 1993, he signified his intention to
petitioners were no longer co-owners when the property redeem the subject land during a barangay conciliation
was sold to respondents in 1979. The co-ownership had process that he initiated.
already been extinguished by partition.
On January 12, 1995, contending that they could not have
Every act intended to put an end to indivision among co- sold their respective shares in subject property when they
heirs is deemed to be a partition.Here, the particular were minors, petitioners filed before the RTC a complaint
portions pertaining to petitioners had been ascertained and for redemption of the subject land plus damages. RTC ruled
they in fact already took possession of their respective against petitioners. CA modified the decision of trial court
parts. Under the law, subject to certain conditions, owners when it ruled that petitioner Nelson is co-owner to the
of adjoining urban land have the pre-emptive right to a lot extent of 1/7 of subject property as Saturnina was not
SALES Legal Redemption to Assignment of Credits and Other Incorporeal Rights 4

subrogated to Albertos rights when she purchased his process to redeem his property. By January 12, 1995, when
share. However, it denied petitioner Nelson's claim for petitioner Nelson filed a complaint for legal redemption
redemption for his failure to tender or consign in court the and damages, it is clear that the thirty-day period had
redemption money within the period prescribed by law. already expired.

Issue: (1) Whether CA erred in recognizing petitioner Petitioner Nelson, as correctly held by the Court of
Nelson Cabales as co-owners of subject land but denied Appeals, can no longer redeem subject property. But he and
him the right of legal redemption, his mother remain co-owners thereof with respondents-
spouses. Accordingly, title to subject property must include
(2) Whether CA erred in not recognizing petitioner Rito them.
Cabales as co-owner of subject land with similar right of
legal redemption. (2) No. As to petitioner Rito, the contract of sale was
unenforceable as correctly held by the Court of Appeals.
Ruling: Legal redemption may only be exercised by the co- Saturnina was clearly petitioner Rito's legal guardian
owner or co-owners who did not part with his or their pro- without necessity of court appointment considering that the
indiviso share in the property held in common. amount of his property or one-seventh of subject property
was P1,143.00, which is less than two thousand pesos.
(1) No. The first sale with pacto de retro to Dr. (Sec. 7, Rule 39, Rules of Court: Parents as guardians.
Corrompido by the brothers and co-owners Bonifacio, When the property of the child under parental authority is
Albino and Alberto was valid but only as to their pro- worth two thousand pesos or less, the father or the mother,
indiviso shares to the land. When Alberto died prior to without the necessity of court appointment, shall be his
repurchasing his share, his rights and obligations were legal guardian)
transferred to and assumed by his heirs, namely his wife
and his son, petitioner Nelson. But the records show that it The legal guardian only has the plenary power of
was Saturnina, Alberto's mother, and not his heirs, who administration of the minor's property. It does not include
repurchased for him. As correctly ruled by the Court of the power of alienation which needs judicial authority.
Appeals, Saturnina was not subrogated to Alberto's or his Thus, when Saturnina, as legal guardian of petitioner Rito,
heirs' rights to the property when she repurchased the share. sold the latter's pro-indiviso share in subject land, she did
not have the legal authority to do so. (Art. 1403 (1)
When Saturnina redeemed for Alberto's heirs who had then Unenforceable: Those entered into in the name of another
acquired his pro-indiviso share in subject property, it did person by one who has been given no authority or legal
not vest in her ownership over the pro-indiviso share she representation, or who has acted beyond his powers)
redeemed. But she had the right to be reimbursed for the
redemption price and held a lien upon the property for the Accordingly, the contract of sale as to the pro-indiviso
amount due until reimbursement. The result is that the heirs share of petitioner Rito was unenforceable. However, when
of Alberto, i.e., his wife and his son petitioner Nelson, he acknowledged receipt of the proceeds of the sale on July
retained ownership over their pro-indiviso share. 24, 1986, petitioner Rito effectively ratified it. This act of
ratification rendered the sale valid and binding as to him.
The sale as to the undivided share of petitioner Nelson and As a result, he lost his right to redeem subject property.
his mother was not valid such that they were not divested
of their ownership thereto. Necessarily, retained ownership d. Obligation of the redemptioner
over their undivided share of subject property and they may
redeem the subject property from respondents-spouses. But e. Legal redemption by co-heirs
they must do so within thirty days from notice in writing of Case: Redemption by excluded co-heir
the sale by their co-owners vendors. Galvez vs. CA
Facts: Timotea F. Galvez died intestate on 28 April 1965.
The right of redemption was invoked not days but years She left behind her children Ulpiano and Paz Galvez.
after the sale was made in 1978. We are not unmindful of Ulpiano, who died on 24 July 1959, predeceased Timotea
the fact that petitioner Nelson was a minor when the sale and was survived by his son, Porfirio Galvez. Timotea left
was perfected. Nevertheless, the records show that in 1988, a parcel of land situated at Pagdaraoan, San Fernando, La
petitioner Nelson, then of majority age, was informed of Union, covered by Tax Declaration No. 39645
the sale of subject property. Moreover, it was noted by the Considering that all the other compulsory heirs of Timotea
appellate court that petitioner Nelson was likewise already received their respective shares, 5 the property
informed thereof in 1993 and he signified his intention to passed by succession, both to Timotea's daughter, Paz
redeem subject property during a barangay conciliation
Galvez, and to the former's grandson, Porfirio, the latter
process. But he only filed the complaint for legal
redemption and damages on January 12, 1995, certainly succeeding by right of representation as the son of Ulpiano.
more than thirty days from learning about the sale.
Porfirio Galvez was surprised to discover that on 4 May
There was sufficient notice of the sale to petitioner Nelson. 1970, Paz Galvez executed an affidavit of adjudication
The thirty-day redemption period commenced in 1993, stating that she is the true and lawful owner of the said
after petitioner Nelson sought the barangay conciliation property. then issued in the name of Paz Galvez. On 22
SALES Legal Redemption to Assignment of Credits and Other Incorporeal Rights 5

June 1992, without the knowledge and consent of Porfirio The act of repudiation, in turn, is subject to certain
Galvez, Paz Galvez sold the property to Carlos Tam for a conditions: (1) a co-owner repudiates the co-ownership; (2)
consideration of Ten Thousand Pesos (P10,000.00) by way such an act of repudiation is clearly made known to the
of a Deed of Absolute Sale. other co-owners; (3) the evidence thereon is clear and
conclusive; and (4) he has been in possession through open,
Subsequently, on 27 September 1994, Carlos Tam sold the continuous, exclusive, and notorious possession of the
property to Tycoon Properties, Inc. through a Deed of property for the period required by law.
Absolute Sale executed by the former in favor of the latter.
As a result, the title of Carlos Tam over the property was The rule requires a clear repudiation of the co-ownership
cancelled and a new one, Transfer Certificate of Title duly communicated to the other co-owners. It is only when
(TCT) No. T-40390 was issued in favor of Tycoon such unequivocal notice has been given that the period of
Properties, Inc. prescription will begin to run against the other co-owners
and ultimately divest them of their own title if they do not
On 12 May 1994, Porfirio Galvez filed Civil Case No. seasonably defend it.
4895 before the RTC, Branch 26, of San Fernando, La
Union, for Legal Redemption with Damages and
Cancellation of Documents against Paz Galvez and Carlos
Tam. The Complaint was later amended to implead as To sustain a plea of prescription, it must always clearly
additional defendant, Tycoon Properties, Inc. appear that one who was originally a joint owner has
repudiated the claims of his co-owners, and that his co-
RESPONDENT'S CLAIM OVER THE SUBJECT owners were apprised or should have been apprised of his
PROPERTY, WHICH IS BASED ON AN IMPLIED claim of adverse and exclusive ownership before the
TRUST, HAS ALREADY PRESCRIBED BECAUSE alleged prescriptive period began to run.
THE ACTION WAS FILED 24 YEARS AFER
PETITIONER REPUDIATED THE SAID TRUST. Trust is a fiduciary relationship with respect to property
which involves the existence of equitable duties imposed
Issue: Whether or not prescription does not lie against a co- upon the holder of the title to the property to deal with it for
owner? the benefit of another.

Ruling: petitioners cite Article 1451 of the Civil Code and The prescriptive period may only be counted from the time
claim that an implied or constructive trust which prescribes petitioners repudiated the trust relation in 1955 upon the
in ten years, was established between Paz Galvez and filing of the complaint for recovery of possession against
Porfirio Galvez. It is petitioners' unflinching stand that the private respondents so that the counterclaim of the private
implied trust was repudiated when Paz Galvez executed an respondents contained in their amended answer wherein
Affidavit of Self-Adjudication on 4 May 1970, registered they asserted absolute ownership of the disputed realty by
the same before the Register of Deeds of La Union on 4 reason of the continuous and adverse possession of the
June 1970 and secured a new tax declaration in her name. same is well within the 10-year prescriptive period.
From 4 May 1970 to the time the complaint was filed on 12
May 1994, 24 years have passed, hence, the action is In this case, we find that Paz Galvez effected no clear
clearly barred both by prescription and laches. (no merit) and evident repudiation of the co-ownership. The
execution of the affidavit of self-adjudication does not
Ostensibly, this case is governed by the rules on co- constitute such sufficient act of repudiation as
ownership since both Paz Galvez and Porfirio Galvez are contemplated under the law as to effectively exclude
obviously co-owners of the disputed property having Porfirio Galvez from the property. This Court has
inherited the same from a common ancestor. Article 494 of repeatedly expressed its disapproval over the obvious
the Civil Code provides that "[a] prescription shall not run bad faith of a co-heir feigning sole ownership of the
in favor of a co-owner or co-heir against his co-owners or property to the exclusion of the other heirs essentially
co-heirs as long as he expressly or impliedly recognizes the stating that one who acts in bad faith should not be
co-ownership." permitted to profit from it to the detriment of others.
this Court held that the act of exclusion does not constitute
It is a fundamental principle that a co-owner cannot acquire repudiation.
by prescription the share of the other co-owners, absent any
clear repudiation of the co-ownership. Porfirio Galvez's complaint was captioned "legal
redemption with damages, cancellation of documents and
reconveyance of share."
SALES Legal Redemption to Assignment of Credits and Other Incorporeal Rights 6

ART. 1619.Legal redemption is the right to be subrogated, alienation is grossly excessive, the redemptioner shall pay
upon the same terms and conditions stipulated in the only a reasonable one."
contract, in the place of one who acquires a thing by
purchase or dation in payment, or by any other transaction No written notice of the sale was given by Paz Galvez
whereby ownership is transmitted by onerous title. (vendor) to Porfirio Galvez, the co-owner as required under
Art. 1623 of the Civil Code. The written notice is
ART. 1620.A co-owner of a thing may exercise the right of mandatory. Hence, the right to redeem commenced when
redemption in case the shares of all the other co-owners or plaintiff sought to exercise it by instituting the complaint in
of any of them, are sold to a third person. If the price of the the instant case on June 12, 1994. The complaint of legal
alienation is grossly excessive, the redemptioner shall pay redemption may be filed even several years after the
only a reasonable one. consummation of sale

Should two or more co-owners desire to exercise the right As to petitioners Carlos Tam and Tycoon Properties, Inc.'s
of redemption, they may only do so in proportion to the claim that they are buyers in good faith, same fails to
share they may respectively have in the thing owned in persuade.
common.
"Tam did not exert efforts to determine the previous
The purpose of Article 1067 (of the old Civil Code, now ownership of the property in question" and relied only on
Article 1088 of the present Civil Code) is to keep strangers the tax declarations in the name of Paz Galvez. It must be
to the family out of a joint ownership, if, as is often the noted that Carlos Tam received a copy of the summons and
case, the presence of outsiders be undesirable and the other the complaint on 22 September 1994. This notwithstanding,
heir or heirs be willing and in a position to repurchase the he sold the property to Tycoon Properties, Inc. on 27
share sold. While there should be no question that an heir September 1994. Significantly, Carlos Tam is also an
may dispose his right before partition , a co-heir would owner of Tycoon Properties, Inc. to the extent of 45%. A
have had to pay only the price for which the vendee notice of lis pendens dated 8 July 1997 filed with the
acquired it. Registry of Deeds of the Province of La Union was
inscribed on TCT No. T-40390. Despite the inscription,
It is a one-way street. It is always in favor of the Tycoon Properties, Inc. mortgaged the land to Far East
redemptioner since he can compel the vendee to sell to him Bank and Trust Company
but he cannot be compelled by the vendee to buy the
alienated property. All these attendant circumstances negate petitioners' claim
of good faith.
The rule on redemption is liberally construed in favor of the
original owner of the property and the policy of the law is
to aid rather than defeat him in the exercise of his right of
redemption. B. Redemption by Adjoining Owners
a. Instances
The provision of Art. 1088 of the Civil Code of the
Philippines is very clear on the matter. Art. 1088, 1. Rural Lands
provides: "Should any of the heirs sell his hereditary i. Purpose- to favor the development of rural property in
the interest of agriculture.
rights to a stranger before the partition, any or all the co-
ii. Requisites:
heirs may be subrogated to the rights of the purchaser by -Both adjoining tenements are rural.
reimbursing him for the price of the sale, provided they do -There must be alienation.
so within the period of one (1) month from the time they -The area of the land alienated does not exceed one hectare
were notified in writing of the sale by the vendor." -The tenements must be adjacent without solution of
surface continuity (tenements separated by brooks, ravines,
There was no written notice sent to Porfirio Galvez by Paz roads, etc. are excluded)
Galvez when she sold her share over the land to Carlos -The vendee must owned some other rural land.
Tam. Porfirio Galvez only discovered on May 12, 1994
iii. Who may exercise the right
that the land was sold to Carlos Tam. Art. 1620, Civil
Code of the Philippines, provides: By order of Preference
a. Co-owners (1623 p. 2)
Art. 1620."A co-owner of a thing may exercise the right of b. Adjoining owners (1621 p.3)
redemption in case the share of all the other co-owners or
any of them are sold to a third person. If the price of the Preference (secondary order)
SALES Legal Redemption to Assignment of Credits and Other Incorporeal Rights 7

b.1 the owner of the adjoining land with smaller RULING: A construction of the word "rural" that is in
area. consonance with the legislative purpose must be followed.
b.2 the first to request redemption if areas are equal.
Thus, rural lands are distinguished from urban tenements:
Cases: Fabia vs. IAC

Facts: 1. Plaintiffs reside on a lot east of the land in xxx xxx xxx
question and adjacent to it;
(2) By its purpose or being for agricultural, fishing or
2. The lot is owned by the plaintiffs in common; timber exploitation, and not for dwelling, industry or
3. The land in question formerly belonged to Hugo Mararac commerce.
who sold the same to the spouses Leonardo Mararac and
Monica Resuello; xxx xxx xxx
4. At that time, the lot now owned by plaintiffs was owned
by plaintiff Angel Mararac and Juanito Mararac, who was The respondents have failed to satisfy the above criterion.
the husband of plaintiff Carina Rafanan who died in 1976; The land in question cannot be legally classified as rural
5. Leonardo Mararac and Monica Resuello sold to the land since it is principally used for residential rather than
defendants the land in question on February 25, 1975; agricultural purposes.
6. At that time, the lot in eastern side of the land in question
was owned by Angel Mararac and his brother, Juanita
Mararac; From the respondent's complaint alone, the land is
7. On April 8, 1975, defendants declared the land for tax admittedly residential. Truly a residential home lot is not
purposes; converted into agricultural land by the simple reservation of
8. At the time of sale of the land in question to the a plot for the cultivation of garden crops or the planting of
defendants in 1975 there was no offer to exercise right of bananas and some fruit trees. Nor can an orchard or
legal redemption; agricultural land be considered residential simply because a
9. At the time of the sale of the land in question to portion thereof has been criss-crossed with asphalt and
Leonardo Mararac and Monica Resuello in 1971, there was cement roads with buildings here and there (Republic of the
no offer of legal redemption; Philippines v. Lara, 50 O.G. 5778). We have to apply the
10. There was no legal redemption offered during the rule of reason based on the specific facts of each case. The
period between the first and second sale; land, subject matter of the petition, being primarily
11. The southern boundary of the lot in question is a barrio residential, cannot be considered as rural for purposes of
road with approximate area of 10 meters wide; legal redemption under the law.
12. The land in question in relation to plaintiffs' lot is not
separated by ravine, by brook, trait road or other servitude A further requisite laid down by the law to enable legal
for the benefit of others; redemption of adjoining lands is that both the land of
13. The land in question is fenced and was fenced even the one exercising the right and the adjacent property
before the first sale in March 27, 1971; sought to be redeemed should be rural or destined for
14. Defendants own rural lands other than the land in agricultural exploitation. If either, is urban or both are
question; urban, there is no right of redemption.
15. From Barangay Balogo, to Basing along the road
touching the southern bound of the land in question are
Thus, the circumstances under which legal redemption may
lines of houses on both sides;
be exercised not having been found present in the case at
16. House of plaintiffs is along the said road;
bar, the respondents have no right to enforce against the
17. A portion of the land in question on the side farther petitioners. GRANTED
from the road, is used as a fishwell;
18. Plaintiffs offered to redeem the land in the amount paid
by the defendants as well as an amount for the return of Primary Structures Corp. V. Valencia
investment of the property and interest, and payments of FACTS: Petitioner is a private corporation based in Cebu
attorney's fees and are able and willing to make the City. Adjacent to the lot of petitioner are parcels of land.
payment. The three lots, Mendoza to respondent spouses sometime
in December 1994. Petitioner learned of the sale of the lots
RTC- favored petitioners only in January, 1996, when Mendoza sold to petitioner a
CA- Reversed parcel also adjacent to lot belonging to the
ISSUEs: 1. WON the land in question may be considered latter. Forthwith, it sent a letter to respondents, on 30
rural for purposes of legal redemption under Section 2, January 1996, signifying its intention to redeem the three
Chapter 7, Title VI, New Civil Code 2. WON the parties lots. Respondents Refused.
are guilty of laches to prevent them from redeeming the
property. Thereupon, invoking the provisions of Articles 1621 and
1623, petitioner filed an action against respondents to
compel the latter to allow the legal redemption. Petitioner
claimed that neither Mendoza, the previous owner, nor
SALES Legal Redemption to Assignment of Credits and Other Incorporeal Rights 8

respondents gave formal or even just a verbal notice of the desire to exercise the right:
sale of the lots as so required by Article 1623 of the Civil Preference is given to the adjacent
Code. owner/s whose intended use of the
land in question appears best
RTC: Dismissed justified. (1622 p.3)
CA: Affirmed dismissal Case: Contreras vs. CA
Facts: In 1949, Leis openly manifested her rights over a
ISSUE: WON Arts. 1621 and 1623 are applicable. house constructed on a parcel of land owned by Gatchalian.
In 1974, the house had been mortgaged to the Rural Bank
of Teresa (Rizal), Inc. (RBTRI) which eventually acquired
RULING: Whenever a piece of rural land not exceeding ownership of it due to the mortgagors failure to pay the
one hectare is alienated, the law grants to the adjoining loan. But in 1980, Isabelita, daughter of Leis, purchased the
owners a right of redemption except when the grantee or house back from the bank, as evidenced by a deed of sale.
buyer does not own any other rural land. In order that the
right may arise, the land sought to be redeemed and the Ownership of the land passed to Spouses Matawaran and in
adjacent property belonging to the person exercising the 1980 they executed executed two real estate mortgage
right of redemption must both be rural lands. If one or both contracts with the Capitol City Development Bank
are urban lands, the right cannot be invoked. (CCDB), covering the land, together with the house, as
security for a loan of P200,000.00. After the spouses had
failed to pay the loan, CCDB foreclosed on the mortgage
The trial court found the lots involved to be rural and acquired the mortgaged property in 1984. After no
lands. Unlike the case of Fabia vs. Intermediate Appellate redemption was made, CCDB consolidated title to the
Court (which ruled, on the issue of whether a piece of land property with TCT No. 115486 issued in its name.
was rural or not, that the use of the property for agricultural
purpose would be essential in order that the land might be Meanwhile, Isabelita married Danilo Alcantara and they
characterized as rural land for purposes of legal purchased in 1983 a 76 square meter lot adjacent to the
redemption), respondents in the instant case, however, did house which she earlier bought from RBTRI. In 1987 they
not dispute before the Court of Appeals the holding of the rented out the lower floors of the house to Contreras who
trial court that the lots in question are rural lands. resided therein.
With respect to the second issue, Article 1623 of the Civil In March 1990, CCDB and Contreras entered into a
Code provides that the right of legal pre-emption or Contract to Sell involving the subject land, "together with
redemption shall not be exercised except within thirty days the improvements existing thereon."
from notice in writing by the prospective vendor, or by the
vendor, as the case may be. In stressing the mandatory Alcantaras wrote CCDB concerning the Contract to Sell
character of the requirement, the law states that the deed of between it and Contreras. Therein, they informed the bank
sale shall not be recorded in the Registry of Property unless that they were the owners of the adjacent lot; that they had
the same is accompanied by an affidavit of the vendor that not been made aware of the Contract to Sell until after its
he has given notice thereof to all possible redemptioners execution; and that they were willing to avail of their
preferential right to purchase
GRANTED, and the assailed decision of the CA is
REVERSED and SET ASIDE. Petitioner is hereby given a But the Contract to Sell was followed by a Deed of
period of thirty days from finality of this decision within Absolute Sale dated 13 November 1990 wherein Contreras
which to exercise its right of legal redemption. purchased from CCDB, for the amount of P212,400.00, the
subject land "together with the improvements existing
2. Urban Lands (1622) thereon."
i. Requisites
- Both adjoining tenements are urban So, in 1991, Alcantaras filed before RTC a complaint
- The tenement being redeemed was seeking the annulment of Deed of Absolute Sale between
bought merely for speculation Contreras and CCDB. Reiterating their ownership of the lot
- The major portion of the tenement is adjacent to the subject land, the Alcantaras claimed that
so situated that it cannot be used for they are entitled to exercise their right of pre-emption and
any practical purpose within a redemption under Article 1622 of the Civil Code, and thus
reasonable time. specifically prayed that the trial court "[allow] the plaintiffs
- There is alienation to exercise their right of pre-emption and redemption under
- The tenements are adjacent Article 1622 of the Civil Code of the Philippines."
ii. Who may exercise the right- ( by order of In the midst of the trial that ensued, Contreras died and was
preference) substituted by her parents, Francisco and Lourdes Pascual.
a. Co-owners (1623 p.2) On 15 April 1997, the RTC rendered a Decision that
b. Adjoining owners (1622 p.1) ; if affirmed the Alcantaras' ownership over the subject house;
two or more adjoining owners ordered the surrender of possession of the house to the
SALES Legal Redemption to Assignment of Credits and Other Incorporeal Rights 9

Alcantaras; declared the Deed of Absolute Sale dated 13


November 1990 as null and void; and ordered the If the re-sale has been perfected, the owner of the adjoining
conveyance by CCDB to the Alcantaras of "the subject land shall have a right of redemption, also at a reasonable
property described as Lot A-4 covered by TCT No. 115486 price.
upon payment by the Alcantaras to CCDB the amount of xxx xxx xxx
P212,400.00, but which amount should be returned to
defendant spouses Francisco and Lourdes Pascual by the The petition betrays a lack of understanding on petitioner's
defendant bank." part that the exercise of the right of redemption would
entail the reconveyance to petitioner of the subject land on
RTC further held that the Alcantaras were entitled to which the house stands. This relief stands apart from the
exercise the right of pre-emption. CA affirmed in toto the judicial affirmation in the same RTC decision that the
RTC ruling. Alcantaras are also the owners of the house. It was not the
case, as petitioner says, of the Alcantaras lodging a claim
Issue: (1) Whether RTC erred in ordering the bank to only as against the house, as they had also lodged a claim
convey the subject land to the Alcantaras upon payment of against the subject land proceeding from their right of
the amount of P212,400.00, by awarding reliefs not asked redemption under Article 1622. In the case at bar, the trial
for by the Alcantaras court found that the Alcantaras were entitled to exercise
their rights under Article 1622, but it would not have been
(2) Whether Alcantaras were merely claiming a portion of sufficient nor correct for it to just make the corresponding
the house, but never the whole house and lot as what RTC pronouncement in the decision and then stop. The relief
ruled. assailed by petitioner as unwarranted is nothing more but
the affordance of the right of redemption to the Alcantaras
Ruling: (1) No. Such payment happened to be the exact at the same reasonable price the bank had sold the property
amount for which CCDB had sold the subject property to to petitioner. We see no error in granting such relief.
petitioner, as evidenced by the Deed of Absolute Sale
which petitioner herself had attached to her Answer before
the RTC.
b.Obligation of the Redemptioneer
The precise relief granted by the RTC is drawn from the 1. To pay a reasonable price
Alcantaras' specific prayer in their complaint that sought a 2. To notify the prospective vendor and vendee of
judgment "allowing the plaintiffs to exercise their right of his desire to redeem.
pre-emption and redemption under Article 1622 of the Civil
Code of the Philippines, and directing CCDB to instead III. Procedure in Redemption
convey Lot A-4 registered under TCT No. N-115486 of the A. When to exercise the redemption- within 30 days
Register of Deeds of Rizal in favor of the plaintiffs." from the notice in writing by the vendor

(2) No. The complaint proceeded from the premise that the a. Cases re: notice
Alcantaras were still the owners of the whole house, and Verdad vs. CA
thus sought a judicial affirmation of such ownership. In Facts: Zosima Verdad, is the purchaser of a 248-square
paragraph 20 of the complaint the Alcantaras further meter residential lot located along Magallanes Street, now
explained that they are also the owners of the adjacent lot, Marcos M. Calo St., Butuan City.
while in paragraph 23 they manifested that they "are now
actively asserting their right of ownership over the HOUSE Private respondent, Socorro Codero Vda. De Rosales, seeks
in question and their pre-emptive right over the lot whereon to exercise a right of legal redemption over the subject
it stands." Finally, in paragraph 29 they asserted that they property and traces her title to the late Macaria Atega, her
"should therefore be allowed to exercise their right of pre- mother-in-law, who died intestate on 08 March 1956.
emption and redemption under Article 1622 of the Civil
Code of the Philippines." During her lifetime, Macaria contracted two marriages: the
first with Angel Burdeos and the second, following the
Clearly, it is sufficiently alleged in the complaint that the latter's death, with Canuto Rosales. At the time of her own
Alcantaras are entitled to exercise their right of pre-emption death, Macaria was survived by her son Ramon A. Burdeos
and redemption under Article 1622 of the Civil Code. They and her grandchild (by her daughter Felicidad A. Burdeos)
specifically prayed that judgment be rendered entitling Estela Lozada of the first marriage and her children of the
them to exercise such right, which under Article 1622 second marriage, namely, David Rosales, Justo Rosales,
entails the following: Romulo Rosales, and Aurora Rosales.

Art. 1622.Whenever a piece of urban land which is so small Socorro Rosales is the widow of David Rosales who
and so situated that a major portion thereof cannot be used himself, some time after Macaria's death, died intestate
for any practical purpose within a reasonable time, having without an issue.
been bought merely for speculation, is about to be re-sold,
the owner of the adjoining land has a right of pre-emption In an instrument, dated 14 June 1982, the heirs of Ramon
at a reasonable price. Burdeos sold to petitioner Zosima Verdad (their interest on)
SALES Legal Redemption to Assignment of Credits and Other Incorporeal Rights 10

the disputed lot supposedly for the price of P55,460.00. In a "ARTICLE 1619.Legal redemption is the right to be
duly notarized deed of sale, dated 14 November 1982, it subrogated, upon the same terms and conditions stipulated
would appear, however, that the lot was sold for only in the contract, in the place of one who acquires a thing by
P23,000.00. Petitioner explained that the second deed was purchase or dation in payment, or by any other transaction
intended merely to save on the tax on capital gains. whereby ownership is transmitted by onerous title."

Socorro discovered the sale on 30 March 1987 while she "ARTICLE 1620.A co-owner of a thing may exercise the
was at the City Treasurer's Office. She tendered the sum of right of redemption in case the shares of all the other co-
P23,000.00 to Zosima. The latter refused to accept the owners or of any of them, are sold to a third person. If the
amount for being much less than the lot's current value of price of the alienation is grossly excessive, the redemptioner
P80,000.00. shall pay only a reasonable one."

private respondents, on 16 October 1987, initiated against We hold that the right of redemption was timely exercised
petitioner an action for "Legal Redemption with by private respondents. Concededly, no written notice of
Preliminary Injunction" before the Regional Trial Court of the sale was given by the Burdeos heirs (vendors) to the co-
Butuan City. owners required under Article 1623 of the Civil Code

Issue: Whether or not the private respondent have the right "ARTICLE 1623.The right of legal pre-emption or
to redeem the property that was sold by a co heir to zosimo redemption shall not be exercised except within thirty
she being the spouse of david rosales (son of macaria), not days from the notice in writing by the prospective vendor,
being a co heir herself in the intestate estate of macaria? or by the vendor, as the case may be. The deed of sale
shall not be recorded in the Registry of Property, unless
Whether or not the redemption period of the right to accompanied by an affidavit of the vendor that he has
redeem the property from the buyer has prescribed? given written notice thereof to all possible
redemptioners."
Ruling: We rule that Socorro can. It is true that Socorro, a
daughter-in-law (or, for that matter, a mere relative by Hence, the thirty-day period of redemption had yet to
affinity), is not an intestate heir of her parents-in-law; commence when private respondent Rosales sought to
however, Socorro's right to the property is not because she exercise the right of redemption on 31 March 1987, a day
rightfully can claim heirship in Macaria's estate but that she after she discovered the sale from the Office of the City
is a legal heir of her husband, David Rosales, part of whose Treasurer of Butuan City, or when the case was initiated,
estate is a share in his mother's inheritance. on 16 October 1987, before the trial court.

David Rosales, incontrovertibly, survived his mother's The written notice of sale is mandatory. This Court has
death. When David Rosales himself later died, his own long established the rule that notwithstanding actual
estate, which included his undivided interest over the knowledge of a co-owner, the latter is still entitled to a
property inherited from Macaria, passed on to his widow written notice from the selling co-owner in order to
Socorro and her co-heirs pursuant to the law on succession. remove all uncertainties about the sale, its terms and
conditions, as well as its efficacy and status.
"ARTICLE 995.In the absence of legitimate descendants All given, we find no error in the appellate court's finding
and ascendants, and illegitimate children and their that private respondents are entitled to the redemption of
descendants, whether legitimate or illegitimate, the the subject property.
surviving spouse shall inherit the entire estate, without
prejudice to the rights of brothers and sisters, nephews and Francisco vs. Boiser
nieces, should there be any, under Article 1001. Facts of the Case: Petitioner Adalia B. Francisco and three
of her sisters were co-owners of four parcels of registered
"xxx xxx xxx
lands on which the Ten Commandments Building at 689
ARTICLE 1001.Should brothers and sisters or their Rizal Avenue Extension, Caloocan City, was erected. On
children survive with the widow or widower, the latter August 6, 1979, they sold 1/5 of their undivided share in
shall be entitled to one-half of the inheritance and the the subject parcels of land to their mother, Adela Blas, for
brothers and sisters or their children to the half." P10,000.00. On August 8, 1986, without the knowledge of
the other co-owners, Adela Blas sold her 1/5 share for
Socorro and herein private respondents, along with
P10,000.00 to respondent Zenaida Boiser who is another
the co-heirs of David Rosales, thereupon became co-
owners of the property that originally descended sister of petitioner. On August 5, 1992, petitioner received
from Macaria. summons, with a copy of the complaint in Civil Case No.
15510 filed by respondent demanding her share in the
When their interest in the property was sold by the Burdeos
rentals being collected by petitioner from the tenants of the
heirs to petitioner, a right of redemption arose in favor of
private respondents; thus: building. Petitioner then informed respondent that she was
exercising her right of redemption as a co-owner of the
subject property. On August 12, 1992, she deposited the
SALES Legal Redemption to Assignment of Credits and Other Incorporeal Rights 11

amount of P10,000.00 as redemption price. On September substantial compliance with the required written notice
14, 1995, petitioner instituted Civil Case No. C-17055 under Art. 1623 of the New Civil Code. The Court ruled
before the Regional Trial Court in Caloocan City. She that Art. 1623 of the Civil Code is clear in requiring that
alleged that the 30 day period for redemption under Art. the written notification should come from the vendor or
1623 of the Civil Code had not begun to run against her prospective vendor, not from any other person. In the case
since the vendor, Adela Blas, never informed her and the at bar, the written notice came from the buyer or vendee
other owners about the sale to respondent. She learned and not from the vendor of the property subject of legal
about the sale only on August 5, 1992, after she received redemption. The Court also ruled that the receipt by
the summons in Civil Case No. 15510, together with the petitioner of summons in Civil Case No. 15510 on August
complaint. Respondent, on the other hand, contended that 5, 1992 amounted to actual knowledge of the sale from
petitioner knew about the sale as early as May 30, 1992, which the 30-day period of redemption commenced to run.
when she wrote petitioner a letter informing the latter about Petitioner then had until September 4, 1992 within which to
the sale, with a demand that the rentals corresponding to exercise her right of legal redemption, but in August 12,
her 1/5 share be remitted to her. Said letter was sent with a 1992 she deposited the P10,000.00 redemption price. As
copy of the Deed of Sale between respondent and Adela petitioner's exercise of said right was timely, the same
Blas. On appeal, the Court of Appeals affirmed the decision should be given effect.
of the Regional Trial Court. She moved for reconsideration
but her motion was denied by the appellate court. Hence, In the case at bar, the plaintiffs have not been furnished any
the present petition. written notice of sale or a copy thereof by Eufemia Omole,
the vendor. Said plaintiffs' right to exercise the legal right
On August 19, 1996, the trial court dismissed petitioner's of preemption or redemption, given to a co-owner when
complaint for legal redemption. It ruled that Art. 1623 does any one of the other co-owners sells his share in the thing
not prescribe any particular form of notifying co-owners owned in common to a third person, as provided for in
about a sale of property owned in common to enable them Article 1623 of the Civil Code, has not yet accrued.
to exercise their right of legal redemption. Consequently,
the 30-day period of redemption should be counted not There was thus a return to the doctrine laid down in Butte.
from August 5, 1992, when petitioner received summons in That ruling is sound. In the first place, reversion to the
Civil Case No. 15510, but at the latest, from June 8, 1992, ruling in Butte is proper. Art. 1623 of the Civil Code is
the date petitioner wrote the tenants of the building clear in requiring that the written notification should come
advising them to continue paying rentals in full to her. from the vendor or prospective vendor, not from any other
Petitioner failed to redeem the property within that period. person. There is, therefore, no room for construction.
Indeed, the principal difference between Art. 1524 of the
Issue: Whether the letter of May 30, 1992 sent by former Civil Code and Art. 1623 of the present one is that
respondent to petitioner notifying her of the sale on August the former did not specify who must give the notice,
8, 1986 of Adela Blas' 1/5 share of the property to whereas the present one expressly says the notice must be
respondent, containing a copy of the deed evidencing such given by the vendor. Effect must be given to this change in
sale, can be considered sufficient as compliance with the statutory language.
notice requirement of Art. 1623 for the purpose of legal
redemption. In the second place, it makes sense to require that the notice
required in Art. 1623 be given by the vendor and by
Ruling of the Court: Art. 1623 of the Civil Code provides: nobody else. As explained by this Court through Justice
The right of legal pre-emption or redemption shall not be J.B.L. Reyes in Butte, the vendor of an undivided interest is
exercised except within thirty days from the notice in in the best position to know who are his co-owners who
writing by the prospective vendor, or by the vendor, as the under the law must be notified of the sale. It is likewise the
case maybe. The deed of sale shall not be recorded in the notification from the seller, not from anyone else, which
Registry of Property, unless accompanied by an affidavit of can remove all doubts as to the fact of the sale, its
the vendor that he has given written notice thereof to all perfection, and its validity, for in a contract of sale, the
possible redemptioners. seller is in the best position to confirm whether consent to
the essential obligation of selling the property and
The right of redemption of co-owners excludes that of transferring ownership thereof to the vendee has been
adjoining owners. given.

The Supreme Court reversed the decision of the Court of Now, it is clear that by not immediately notifying the co-
Appeals. The Court did not consider the letter sent by owner, a vendor can delay or even effectively prevent the
respondent to petitioner with a copy of the deed of sale as meaningful exercise of the right of redemption. In the
SALES Legal Redemption to Assignment of Credits and Other Incorporeal Rights 12

present case, for instance, the sale took place in 1986, but it respondent and Fortunato entered into a contract of sale of
was kept secret until 1992 when vendee (herein respondent) land.
needed to notify petitioner about the sale to demand 1/5
As private respondent wanted to register the claimed sale
rentals from the property sold. Compared to serious
transaction, she supposedly demanded that Fortunato
prejudice to petitioner's right of legal redemption, the only execute the corresponding deed of sale and to receive the
adverse effect to vendor Adela Blas and respondent-vendee balance of the consideration. However, Fortunato
is that the sale could not be registered. It is non-binding, unjustifiably refused to heed her demands. Private
only insofar as third persons are concerned. 17 It is, respondent, therefore, prayed that Fortunato be ordered to
therefore, unjust when the subject sale has already been execute and deliver to her "a sufficient and registrable deed
established before both lower courts and now, before this of sale involving his one-eleventh (1/11) share or
participation in the land.
Court, to further delay petitioner's exercise of her right of
legal redemption by requiring that notice be given by the Fortunato and petitioner denied the material allegations of
vendor before petitioner can exercise her right. For this the complaint and claimed that Fortunato never sold his
reason, we rule that the receipt by petitioner of summons in share in Lot No. 2319 to private respondent and that his
Civil Case No. 15510 on August 5, 1992 constitutes actual signature appearing on the purported receipt was forged.
knowledge on the basis of which petitioner may now
exercise her right of redemption within 30 days from ISSUE: WON Fortunato was furnished with a written
notice of sale of the shares of his co-owners as required by
finality of this decision.
Article 1623 of the Civil Code.
Our ruling is not without precedent. In Alonzo v.
Intermediate Appellate Court, we dispensed with the need
RULING: Art. 1623 of the Civil Code is clear in
for written notification considering that the redemptioners
requiring that the written notification should come from the
lived on the same lot on which the purchaser lived and
vendor or prospective vendor, not from any other
were thus deemed to have actual knowledge of the sales.
person. There is, therefore, no room for
We stated that the 30-day period of redemption started, not
construction. Indeed, the principal difference between Art.
from the date of the sales in 1963 and 1964, but sometime
1524 of the former Civil Code and Art. 1623 of the present
between those years and 1976, when the first complaint for
one is that the former did not specify who must give the
redemption was actually filed. For 13 years, however, none
notice, whereas the present one expressly says the notice
of the co-heirs moved to redeem the property. We thus
must be given by the vendor. Effect must be given to this
ruled that the right of redemption had already been
change in statutory language.
extinguished because the period for its exercise had already
expired.
In this case, the records are bereft of any indication that
In the present case, as previously discussed, receipt by Fortunato was given any written notice of prospective
petitioner of summons in Civil Case No. 15510 on August or consummated sale of the portions of Lot No. 2319 by
5, 1992 amounted to actual knowledge of the sale from the vendors or would-be vendors. The thirty (30)-day
which the 30-day period of redemption commenced to run. redemption period under the law, therefore, has not
Petitioner had until September 4, 1992 within which to commenced to run.
exercise her right of legal redemption, but on August 12,
1992 she deposited the P10,000.00 redemption price. As Despite this, however, we still rule that petitioner could no
petitioner's exercise of said right was timely, the same longer invoke her right to redeem from private respondent
should be given effect. for the exercise of this right "presupposes the existence of a
co-ownership at the time the conveyance is made by a co-
Vda. De Ape vs. CA owner and when it is demanded by the other co-owner or
FACTS:Cleopas Ape was the registered owner of a parcel co-owners. The regime of co-ownership exists when
of land particularly Upon Cleopas Ape's death, the property
ownership of an undivided thing or right belongs to
passed on to his wife, Maria Ondoy, and their eleven (11)
children, namely: Fortunato, Cornelio, Bernalda, different persons. By the nature of a co-ownership, a co-
Bienvenido, Encarnacion, Loreta, Lourdes, Felicidad, owner cannot point to specific portion of the property
Adela, Dominador, and Angelina, all surnamed Ape. owned in common as his own because his share therein
remains intangible. As legal redemption is intended to
On 15 March 1973, Generosa Cawit de Lumayno (private minimize co-ownership, once the property is subdivided
respondent herein) instituted a case for "Specific and distributed among the co-owners, the community
Performance of a Deed of Sale with Damages" against
ceases to exist and there is no more reason to sustain any
Fortunato and his wife Perpetua (petitioner herein). It was
alleged in the complaint that on April 1971, private right of legal redemption.
SALES Legal Redemption to Assignment of Credits and Other Incorporeal Rights 13

In this case, records reveal that although Lot No. 2319 has Meanwhile, Tupas obtained a special crop loan from PNB.
not yet been formally subdivided, still, the particular Upon the formers failure to pay the loan, PNB filed for
portions belonging to the heirs of Cleopas Ape had sum of money before the CFI. A writ of preliminary
already been ascertained and they in fact took attachment was issued and annotated on August 23, 1954 at
possession of their respective parts. the back of the original copy of TCT No. V-1642, of the
spouses Tupas. The attachment was further re-entered by
Aguilar case, supra the Register of Deeds on the Transfer Certificate of Title
Cabales case, supra No. T-5281 later issued to Juanita Bulaong pursuant to that
Deed of Sale executed on May 1, 1957 in her favor by
B. Requisites for the Registration of the Sale in the plaintiffs-appellees.
Registry of Property - it must be accompanied by
an affidavit of the vendor that he has given On April 4, 1959, pursuant to a writ of execution issued by
written notice to all possible redemptioneers. CFI, Provincial Sheriff of Cotabato sold the land in
question at public auction to PNB being the sole bidder.
C. Special Rules: Sheriff then executed a certificate of sale dated April 6,
a. Legal Redemption requires no previous 1959 specifying therein that the one-year period of
notice of intention to redeem. redemption shall expire on April 4, 1960. The certificate of
b. Tender of the price is not a condition sale was registered in the Office of the Register of Deeds of
precedent to redemption. Cotabato on August 26, 1959.

IV. Other Cases of Legal Redemption On March 26, 1960, Juanita Bulaong, then already married
a. Redemption by the debtor in the sale of credit in to Daniel Damasco, instituted before the same court an
litigation (1634) action against the Philippine National Bank for "Recovery
b. Redemption by co-heirs in case of a sale by an of Ownership" of the same parcel of land.
heir of his hereditary rights to a stranger before
partition (1088) Judgment was in favor of PNB, nullifying the sale executed
c. Redemption by the applicant, his widow, and on May 1, 1957 by spouses Tupas in favor of Juanita
legal heirs within 5 years from the conveyance Bulaong. Spouses Damasco and PNB entered into a
under a homestead or free patent (Sec. 119, CA compromise agreement agreeing to purchase the land in
141) question from PNB. So PNB executed a Deed of Sale in
d. Redemption within 1 year by a judgment debtor favor of the spouses Damasco. Then TCT No. 13104 was
or redemptioneer of real property sold under issued, this time, in the name of the said spouses.
execution.
e. Redemption by the owner of the property sold for On June 10, 1965, spouses Tupas filed against spouses
delinquent realty taxes. Damasco, Register of Deeds and PNB an action for the
f. Redemption within 1 year by the mortgagor in "Repurchase of Land Under Section 119 of CA 141". CFI
sales under ruled that the five-year period should be counted from the
1. Extra-judicial foreclosure (Sec 6, date of the consolidation of the ownership and the issuance
Act 3135) of the transfer certificate of title in the name of the
2. Judicial foreclosure sale by banks purchaser at public auction not only because under Act 496
within the purview of the General the act of registration of the deed is the operative act which
banking act binds the land and vests title in the transferee and from
such time is the land deemed conveyed, within the meaning
CASES: of Section 119, but also because of the far more important
a. Period of redemption in auction sale of reason for public policy conceived in this right to
homestead to satisfy money judgment repurchase to enable the family of the applicant or
Tupas vs. Damasco grantee to keep that homestead.
Facts: On March 8, 1951, Homestead Patent No. V-240
was issued to the Spouses Tupas over a parcel of land, Lot Issue: From what time should the five-year period
No. 895, Pls-209-D, with an area of 128,409 sq.m., General mentioned in Section 119 of the Public Land Law within
Santos City, South Cotabato and on July 8, 1952, Original which to exercise the right to repurchase, be counted.
Certificate of Title No. V-1042 of the Office of the Register
of Deeds of Cotabato was issued in their names. Ruling: Section 119 of the Public Land Law
(Commonwealth Act 141, as amended) provides - "Every
On May 1, 1957, Deed of Sale was executed in favor of conveyance of land acquired under the free patent or
Juanita Bulaong. TCT T-5281 was issued in her favor on homestead provisions, when proper, shall be subject to
December 16, 1957. Since 1951 to the present, Juanita repurchase by the applicant, his widow or legal heirs,
Bulaong and her father, defendant-appellant Eusebio within a period of five years from the date of the
Bulaong, have been actually occupying the said parcel and conveyance." (Emphasis supplied.)
later caused the construction of a residential building
thereon valued at P35,000.00, more or less. Appellees could only exercise the right to repurchase his
former homestead within five years from April 4, 1959, the
SALES Legal Redemption to Assignment of Credits and Other Incorporeal Rights 14

date of the execution sale or up to April 4, 1964. Since this heirs, within the period of five years from the date of
action to repurchase was filed on June 10, 1965, the same conveyance. The five-year period of redemption fixed in
was filed out of time. At any rate, even if we have to Section 119 of the Public Land Law of homestead sold at
compute the five-year period from the expiration of the extrajudicial foreclosure begins to run from the day after
right to redeem granted to a judgment debtor, still this case the expiration of the one-year period of repurchase allowed
was filed beyond five years, because the one-year period of in an extrajudicial foreclosure. (Manuel vs. PNB, et al., 101
redemption in this case expired on April 4, 1960, and the Phil. 968). Hence, petitioners still had five (5) years from
five-year period from April 4, 1960 is April 4, 1965. July 22, 1972 (the expiration of the redemption period
under Act 3135) within which to exercise their right to
That homestead law should be interpreted in favor of the repurchase under the Public Land Act.
homesteader and that the underlying purpose of said
Section 119 is to give the homesteader every chance to
preserve for himself and his family the land that the State
had gratuitously given him no longer applies In the case Chapter 8
at bar. The sale by appellees of their homestead even before Assignment of Credits and Other Incorporeal Rights
the expiration of the five-year prohibited period indicates I. Concept: A contract unilateral or bilateral, onerous or
lack of intent on the part of the homesteader to preserve the lucrative, commutative or aleatory, whereby a person
homestead for himself and his family. transmits to another his right or rights against a third party,
whether or not an equivalent for the transmission is
** So, the decision appealed from is hereby REVERSED received from the transferee. (Sanchez Roman)
and another one entered dismissing the complaint.
While the NCC treats of assignment of credits as a variety
b. Period of redemption in auction sale of of sales, the fact is that the assignment may be effected in a
homestead variety of ways; by sale, by barter, by donation or even by
Belisario v. IAC testament. The assignment is a transfer entirely different
FACTS: Sps Belisario were the grantees of a homestead from the transaction originating it.
patent. After the death of Rufino (husband), his heirs
executed a mortgage over the homestead in favor of PNB. Articles 1624-1635
The mortgagors defaulted in the payment of the loan. On I. Concept
January 31, 1963, the land was sold at public auction with Leodonio vs.Capitol Development Corp.
with PNB as the highest bidder. The sale was registered on FACTS: This is a case for a collection of sum of money
July 22, 1971. filed by Capitol Development Corp against Ledonio.
Respondent alleged that petitioner obtained from a Ms.
On April 21, 1971, Belisario et al. wrote to PNB making Patrocinio S. Picache two loans, with the aggregate
known their desire to redeem the land for the same price as principal amount of P60,000.00, and covered by
the auction sale. On August 24, 1971, PNB refused promissory notes duly signed by petitioner.
Belisarios offer of redemption. On January 9, 1975,
Belisario et al. filed an action for Repurchase of Homestead Petitioner obtained two loans totaling P60,000.00 from Ms.
against PNB. Picache, for which he executed promissory notes, dated 9
November 1988 and 10 November 1988; (2) he failed to
The trial court dismissed the action on the grounds that pay any of the said loans; (3) Ms. Picache executed on 1
consignation of the redemption price was not made by April 1989 an Assignment of Credit covering petitioner's
Belisario. CA affirmed. loans in favor of respondent for the consideration of
P60,000.00; (4) petitioner had knowledge of the assignment
ISSUE: WON Belisario can repurchase the property under of credit; and (5) petitioner still failed to pay his
Sec. 119 of CA 141. indebtedness despite repeated demands by respondent and
its counsel. Petitioner's persistent assertions that he never
RULING: YESThe redemption period, for purposes of acquired any loan from Ms. Picache, or that he signed the
determining the time when a formal Deed of Sale may be promissory notes in blank and under duress, deserve scant
executed or issued and the ownership of the registered land consideration. They were already found by both the Court
consolidated in the purchaser at an extrajudicial foreclosure of Appeals and the RTC to be implausible and inconsistent
sale under Act 3135, should be reckoned from the date of with petitioner's own evidence.
the registration of the Certificate of Sale in the Office of the
Register of Deeds concerned and not from the date of ISSUE: WON conventional subrogation occurred when
public auction.
Ms. Picache assigned the debt, due her from the petitioner,
In this case, under Act 3135, petitioners may redeem the to the respondent; and without petitioner's consent as
property until July 22, 1972. In addition, Section 119 of debtor, WON the said conventional subrogation should be
Commonwealth Act 141 provides that every conveyance of deemed to be without force and effect.
land acquired under the free patent or homestead patent
provisions of the Public Land Act, when proper, shall be
RULING: NO to all. This Court cannot sustain petitioner's
subject to repurchase by the applicant, his widow or legal
contention and hereby declares that the transaction between
SALES Legal Redemption to Assignment of Credits and Other Incorporeal Rights 15

Ms. Picache and respondent was an assignment of credit, conventional subrogation requires an agreement among the
not conventional subrogation, and does not require parties concerned the original creditor, the debtor, and the
petitioner's consent as debtor for its validity and new creditor. It is a new contractual relation based on the
enforceability. mutual agreement among all the necessary parties.

An assignment of credit has been defined as an agreement Article 1300 of the Civil Code provides that conventional
by virtue of which the owner of a credit (known as the subrogation must be clearly established in order that it may
assignor), by a legal cause - such as sale, dation in payment take effect. Since it is petitioner who claims that there is
or exchange or donation - and without need of the debtor's conventional subrogation in this case, the burden of proof
consent, transfers that credit and its accessory rights to rests upon him to establish the same by a preponderance of
another (known as the assignee), who acquires the power to evidence.
enforce it, to the same extent as the assignor could have
enforced it against the debtor. Finally, assuming arguendo that this Court considers
petitioner a third person to the Assignment of Credit, dated
On the other hand, subrogation, by definition, is the 1 April 1989, the fact that the said document was duly
transfer of all the rights of the creditor to a third person, notarized makes it legally enforceable even as to him.
who substitutes him in all his rights. It may either be legal According to Article 1625 of the Civil Code
or conventional. Legal subrogation is that which takes ART. 1625. An assignment of credit, right or
place without agreement but by operation of law because of action shall produce no effect as against third
certain acts. Conventional subrogation is that which takes persons, unless it appears in a public instrument,
place by agreement of parties. or the instrument is recorded in the Registry of
Property in case the assignment involves real
Although it may be said that the effect of the assignment of property.
credit is to subrogate the assignee in the rights of the
original creditor, this Court still cannot definitively rule Notarization converted the Assignment of Credit, dated 1
that assignment of credit and conventional subrogation are April 1989, a private document, into a public document,
one and the same. thus, complying with the mandate of the afore-quoted
provision and making it enforceable even as against third
A noted authority on civil law provided a discourse on the persons.
difference between these two transactions, to wit

Conventional Subrogation and Assignment of Credits. II. Essential Requisites and Formalities
In the Argentine Civil Code, there is essentially no A. These depend in each case upon the contract or
difference between conventional subrogation and act giving rise to the assignment.
assignment of credit. The subrogation is merely the effect a. Assignment of real rights upon immovable
of the assignment. In fact it is expressly provided (article property, done by way of donation, requires
769) that conventional redemption shall be governed by the a public instrument.
provisions on assignment of credit. b. Assignment by way of legacy requires a
probated will.
Under our Code, however, conventional subrogation is c. Assignment of choses in action by sale or
not identical to assignment of credit. In the former, the onerous contract, if involving P500 or more,
debtor's consent is necessary; in the latter, it is not required. is unenforceable inter partes, and comes
Subrogation extinguishes an obligation and gives rise to a under the Statute of Frauds (a written memo
new one; assignment refers to the same right which passes is required)
from one person to another. The nullity of an old obligation d. Assignment of a negotiable instrument
may be cured by subrogation, such that the new obligation requires indorsement or delivery.
will be perfectly valid; but the nullity of an obligation is not
remedied by the assignment of the creditor's right to B. As against third persons (but not the debtor of the
another. (Emphasis supplied.) credit assigned)- an assignment of a credit, right
or action shall produce no effect unless it appears
This Court has consistently adhered to the foregoing in a public instrument, or the instrument is
distinction between an assignment of credit and a recorded in the registry of property, in case the
conventional subrogation. Such distinction is crucial assignment involves real property (1625)
because it would determine the necessity of the debtor's
consent. In an assignment of credit, the consent of the a. The consent of the debtor of the assigned
debtor is not necessary in order that the assignment may credit is not required for the validity of the
fully produce the legal effects. What the law requires in an assignment: but the assignment is not fully
assignment of credit is not the consent of the debtor, but effective against the debtor until he is
merely notice to him as the assignment takes effect only notified thereof or has actual knowledge of
from the time he has knowledge thereof. A creditor may, the assignment; i.e. the debtor until then is
therefore, validly assign his credit and its accessories not bound to pay the assignee.
without the debtor's consent. On the other hand,
SALES Legal Redemption to Assignment of Credits and Other Incorporeal Rights 16

III. Effect of a valid assignment vehicle dated December 24, 1975 in favor of the C.R.
A. It transfers title to the assigned credit to the Tecson Enterprises to secure payment of the note. The
assignee, even if the debtor is unaware thereof. mortgage was registered both in the Registry of Deeds and
a. The assignment includes all accessory the Land Transportation Office. On the same date, C.R.
rights, such as guaranty, pledge, mortgage or Tecson Enterprises, in turn, executed a deed of assignment
preference (1672) of said promissory note and chattel mortgage in favor of
B. The assignee takes the credit subject to all Filinvest Credit Corporation with the conformity of
defenses acquired by the debtor before notice or respondent spouses. The latter were aware of the
knowledge of the assignment. endorsement of the note and the mortgage to Filinvest as
a. The debtor who, before having knowledge they in fact availed of its financing services to pay for the
of the assignment, pays his creditor shall be car. In 1976, respondent spouses transferred and delivered
released from the obligation. (1626) the vehicle to Conrado R. Tecson by way of sale with
b. The debtor may set up compensation of assumption of mortgage. Subsequently, in 1978, Filinvest
credits acquired after assignment but before assigned all its rights and interest over the same promissory
notice thereof (1198) unless the debtor note and chattel mortgage to petitioner Servicewide
agreed to the assignment (when he cannot Specialists Inc. without notice to respondent spouses. Due
compensate). to the failure of respondent spouses to pay the installments
c. Any compromise or release of the assigned under the promissory note from October 1977 to March
claim made by the assignor before notice, 1978, and despite demands to pay the same or to return the
will be valid against the assignee and vehicle, petitioner was constrained to file before the
discharge the debtor. Regional Trial Court of Manila on May 22, 1978 a
complaint for replevin with damages against them,
Is recording a sufficient notice? Yes, provided the docketed as Civil Case No. 115567. In their answer,
recording is required (not merely permitted) by law respondent spouses denied any liability claiming they had
already returned the car to Conrado Tecson pursuant to the
C. Warranty by the assignor Deed of Sale with Assumption of Mortgage. Thus, they
a. The assignor in good faith shall be responsible for filed a third party complaint against Conrado Tecson
the existence and legality of the credit at the time of praying that in case they are adjudged liable to petitioner,
sale, unless it should have been sold as doubtful. Conrado Tecson should reimburse them.
Doubtfulness of the credit assigned must expressly
appear; it is not presumed (Manresa) ISSUE: (1)WON the assignment of a credit requires notice
to the debtor in order to bind him. More specifically, is the
b. The assignor in good faith does not answer for the debtor-mortgagor who sold the property to another entitled
solvency of the debtor unless- to notice of the assignment of credit made by the creditor to
1. Expressly stipulated; or another party such that if the debtor was not notified of the
2. The insolvency of the debtor was known to assignment, he can no longer be held liable since he already
him personally; or alienated the property? Conversely, is the consent of the
3. The insolvency of the debtor was prior to the creditor-mortgagee necessary when the debtor-mortgagor
sale and of common knowledge (1628) alienates the property to a third person?

c. Where the solvency of the debtor is warranted by the Only notice to the debtor of the assignment of credit is
assignor, his liability lasts only- required. His consent is not required. In contrast, consent
1. One year after the assignment, if the debt was of the creditor-mortgagee to the alienation of the mortgaged
already matured. property is necessary in order to bind said creditor. To
2. One year after maturity, if the debt matures after evade liability, respondent spouses invoked Article 1626 of
assignment(1629) *Compare this with partition the Civil Code which provides that "the debtor who, before
between co-heirs (liability for solvency lasts 5 having knowledge of the assignment, pays his creditor shall
years) be released from the obligation." They argue that they were
not notified of the assignment made to petitioner. This
d. Recovery of the warranty provision, however, is applicable only where the debtor
1. The assignor in good faith must return the rice pays the creditor prior to acquiring knowledge of the latter's
recived plus expenses of the contract and assignment of his credit. It does not apply, nor is it
payments on account thereof. (1628 p.2) relevant, to cases of non-payment after the debtor came to
2. The assignor in bad faith: all of the above plus know of the assignment of credit. This is precisely so since
damages (1628, p.3). the debtor did not make any payment after the assignment.

Leodonio case, supra In the case at bar, what is relevant is not the assignment of
Servicewide Specialists v. CA credit between petitioner and its assignor, but the
FACTS: Sometime in 1975, respondent spouses Atty. Jesus knowledge or consent of the creditor's assignee to the
and Elizabeth Ponce bought on installment a Holden debtor-mortgagor's sale of the property to another.
Torana vehicle from C.R. Tecson Enterprises. They
executed a promissory note and a chattel mortgage on the
SALES Legal Redemption to Assignment of Credits and Other Incorporeal Rights 17

When the credit was assigned to petitioner, only notice to he was unable to settle his obligation to respondent despite
but not the consent of the debtor-mortgagor was necessary oral and written demands made against him.
to bind the latter. Applying Article 1627 of the Civil Code,
3 the assignment made to petitioner includes the accessory On October 11, 1990, petitioner and respondent executed a
rights such as the mortgage. Article 2141, on the other Deed of Assignment, whereby petitioner assigned to
hand, states that the provisions concerning a contract of respondent his receivables in the amount of P335,462.14
pledge shall be applicable to a chattel mortgage, such as the from Jomero Realty Corporation. But when respondent
one at bar, insofar as there is no conflict with Act No. 1508, tried to collect the said credit from Jomero Realty
the Chattel Mortgage Law. As provided in Article 2096 in Corporation, the latter refused to honor the Deed of
relation to Article 2141 of the Civil Code, a thing pledged Assignment because it claimed that petitioner was also
may be alienated by the pledgor or owner "with the consent indebted to it. So, respondent demanded to petitioner for
of the pledgee." payment of his obligation but petitioner refused to pay
claiming that his obligation had been extinguished when
In this case, however, since the alienation by the they executed the Deed of Assignment.
respondent spouses of the vehicle occurred prior to the
assignment of credit to petitioner, it follows that the former Consequently, on January 10, 1991, respondent filed an
were not bound to obtain the consent of the latter as it was action for recovery of a sum of money against the petitioner
not yet an assignee of the credit at the time of the alienation before the RTC which dismissed the complaint on the
of the mortgaged vehicle. ground that the assignment of credit extinguished the
T obligation. However, CA reversed it by ruling that: (1)
he next question is whether respondent spouses needed to petitioner failed to comply with his warranty under the
notify or secure the consent of petitioner's predecessor to Deed; (2) the object of the Deed did not exist at the time of
the alienation of the vehicle. The sale with assumption of the transaction, rendering it void pursuant to Article 1409
mortgage made by respondent spouses is tantamount to a of the Civil Code; and (3) petitioner violated the terms of
substitution of debtors. In such case, mere notice to the the Deed of Assignment when he failed to execute and do
creditor is not enough, his consent is always necessary as all acts and deeds as shall be necessary to effectually enable
provided in Article 1293 of the Civil Code. Without such the respondent to recover the collectibles.
consent by the creditor, the alienation made by respondent
spouses is not binding on the former. On the other hand, Issue: Whether CA erred in holding that the deed of
Articles 1625, 9 1626 10 and 1627 of the Civil Code on assignment did not extinguish petitioners obligation
assignment of credits do not require the debtor's consent for
the validity thereof and so as to render him liable to the Ruling: No. An assignment of credit is an agreement by
assignee. The law speaks not of consent but of notice to the virtue of which the owner of a credit, known as the
debtor, the purpose of which is to inform the latter that assignor, by a legal cause, such as sale, dacion en pago,
from the date of assignment he should make payment to the exchange or donation, and without the consent of the
assignee and not to the original creditor. Notice is thus for debtor, transfers his credit and accessory rights to another,
the protection of the assignee because before said date, known as the assignee, who acquires the power to enforce
payment to the original creditor is valid. it to the same extent as the assignor could enforce it against
When Tecson Enterprises assigned the promissory note and the debtor.
the chattel mortgage to Filinvest, it was made with
respondent spouses' tacit approval. When Filinvest in turn, Hence, it may well be that the assignment of credit, which
as assignee, assigned it further to petitioner, the latter is in the nature of a sale of personal property, produced the
should have notified the respondent spouses of the effects of a dation in payment which may extinguish the
assignment in order to bind them. This, they failed to do. obligation. However, as in any other contract of sale, the
Therefore, for failure of respondent spouses to obtain the vendor or assignor is bound by certain warranties. More
consent of Filinvest thereto, the sale of the vehicle to specifically, the first paragraph of Article 1628 of the Civil
Conrado R. Tecson was not binding on the former. When Code provides:
the credit was assigned by Filinvest to petitioner,
respondent spouses stood on record as the debtor- The vendor in good faith shall be responsible for the
mortgagor. existence: and legality of the credit at the time of the sale,
unless it should have been sold as doubtful; but not for the
solvency of the debtor, unless it has been so expressly
Lo vs. KJS ECO-FORMWORK System Phil., Inc. stipulated or unless the insolvency was prior to the sale and
Facts: On February 22, 1990, petitioner ordered of common knowledge.
scaffolding equipments from respondent worth
P540,425.80. He paid a downpayment in the amount of From the above provision, petitioner, as vendor or assignor,
P150,000.00. The balance was made payable in ten is bound to warrant the existence and legality of the credit
monthly installments. at the time of the sale or assignment. When Jomero claimed
that it was no longer indebted to petitioner since the latter
Respondent delivered the scaffoldings to petitioner. But also had an unpaid obligation to it, it essentially meant that
petitioners business encountered financial difficulties and its obligation to petitioner has been extinguished by
compensation. In other words, respondent alleged the non-
SALES Legal Redemption to Assignment of Credits and Other Incorporeal Rights 18

existence of the credit and asserted its claim to petitioner's


warranty under the assignment. Therefore, it behooved on
petitioner to make good its warranty and paid the
obligation.

By warranting the existence of the credit, petitioner should


be deemed to have ensured the performance thereof in case
the same is later found to be inexistent. He should be held
liable to pay to respondent the amount of his indebtedness.

IV. Special Assignments


A. Sale of inheritance (estate):
a. If without enumeration of the items
composing it, the vendor only answers for
his character as heir(1630)
b. The vendor shall reimburse the vendee for
the fruits obtained or anything received from
the inheritance sold (1632) if the contrary is
not stipulated.
c. The vendee shall reimburse the vendor for-
1. All that vendor paid on account of the
estate debts;
2. Credits that the vendor had against the
estate (1633)

B. Sale rights, rents or products for a lump sum


a. The vendor answers for the legitimacy of the
whole in general
b. There is no warranty of individual items,
unless there is eviction of the whole or of
the part of greater value (1631).

C. Sale and redemption of litigous credits


a. Concept of Litigous credit- a credit is
considered in litigation from the time the
complaint concerning the same is answered.
b. Effect of Sale-
1. Legal Redemption by the debtor-
Requisites:
i.The debtor must reimburse the
assignee for-
a. The price the assignee paid
b. Judicial costs incurred by him
c. Interest on the price from the day
it was paid (1634 p.1)

ii. The right must be exercised within


30 days from the date the assignee
demands payment from him. (1634 p.3)

2. Excepted from the rule are sales (or


assignments) made to:
a. A co-heir or co-owner of the right
assigned;
b. A creditor in payment of the
credit;
c. The possessor of a tenement or
piece of land which is subject to
the right in litigation assigned
(1635)

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