Case Digest (G.R. No. 96943-45)
Facts:
“La Germinal” obtained a judgment in the Court of First Instance of the city of Manila against Vicente Torres prior to October 10, 1914; execution issued and the property in question was sold at public auction to Magdaleno Gomez on October 10, 1914 for P2,000, with a sheriff’s deed expressly recognizing Torres’s right of redemption within 12 months, after which “La Germinal” took possession. On September 28, 1915, Torres sold and transferred to Gomez all of Torres’s right, title, and interest in the equity of redemption, and on September 29, 1915 Gomez gave “La Germinal” notice and offered to pay P2,000 plus interest and costs, less rents received, but “La Germinal” refused; Gomez then commenced the present action and deposited the amount due in court.
The lower court found that Torres’s sale of the equity of redemption to Gomez was valid, that Gomez had paid valid consideration and thus owned the equity, and that Gomez had attempted to exercise the redemption within the redemption period by tendering the proper redemption amount subject to credit for rents. The only issue on appeal was whether Gomez owned the equity of redemption and was entitled to reconveyance.
Issues:
- Whether Magdaleno Gomez was the owner of the equity of redemption and therefore entitled to a conveyance of the property from “La Germinal”.
- Whether Torres’s sale of the equity of redemption to Gomez was a feigned transaction made to defraud creditors.
Ruling:
The Court held that the lower court’s judgment should be affirmed. It found no evidence supporting the claim that Torres’s sale was feigned or fraudulent, and it sustained the finding that Gomez paid valid consideration and thereby became the owner of the equity of redemption.
The Court further ruled that Gomez, as Torres’s successor in interest, had the right to exercise redemption within the redemption period. Gomez’s tender was correctly computed under the governing rules, subject to reduction by rents received, and the amount due had been deposited in court, entitling Gomez to reconveyance.
Ratio:
The Court ruled that Torres had a right to sell his equity of redemption under Sec. 464, Act No. 190, and that the evidence did not support the defendants’ allegation that the sale was a scheme to defraud creditors. Since the sale was valid and Gomez purchased the equity, he stepped into Torres’s position and acquired the right to redeem.
On redemption, the Court applied Art. 465 and Art. 469 of Act No. 190, requiring the redemptioner to pay the full purchase price at public auction plus interest and costs, with reduction for the purchaser’s receipts from rents during possession. Using the case figures, the Court concluded that the redemption amount should be reduced by the rents received, and since the corresponding balance had been deposited in court by Gomez at the commencement of the action, the conditions for reconveyance were satisfied.
Doctrine:
- Under Sec. 464, Act No. 190, a judgment debtor’s equity of redemption may be sold and transferred.
- Under Art. 465 and Art. 469 of Act No. 190, the redemptioner must pay the auction purchase price plus interest and costs, subject to reduction by the purchaser’s receipts from rents during occupation.
- When the buyer’s claim of a feigned fraudulent sale is unsupported by evidence, the transferee’s ownership of the equity of redemption stands.