G.R. No. 130722 - Spouses Litonjua vs. L and R Corp.

On August 6, 1974 and March 27, 1978, spouses Reynaldo K. Litonjua and Erlinda P. Litonjua borrowed P200,000.00 each (total P400,000.00) from L & R Corporation.
The loans were secured by a real estate mortgage over two Cubao, Quezon City parcels (TCT Nos. 197232 – 599 m²; 197233 – 1,436 m²).
The mortgage deed contained:

Paragraph 8 – prohibition against any sale, disposition or encumbrance without prior written consent of L & R.
Paragraph 9 – a “right of first refusal” in favor of L & R should the mortgagors decide to sell.

On July 14, 1979, the Litonjuas sold both parcels to Philippine White House Auto Supply, Inc. (PWHAS) for P430,000.00 without notifying or obtaining consent from L & R.
The deeds of sale were annotated at the back of TCT Nos. 197232 and 197233.

After default, L & R initiated extrajudicial foreclosure; on July 23, 1980 the properties were sold at public auction to L & R as sole bidder for P221,624.58.
On August 15, 1980, L & R learned of the PWHAS sale when it presented its certificate of sale for registration.
On March 10, 1981, PWHAS tendered P238,468.04 to L & R to redeem; L & R refused.
On March 31, 1981, PWHAS paid P240,798.94 to the Ex-Officio Sheriff; a certificate of redemption was issued to the Litonjuas.

The Register of Deeds refused to annotate the certificate of redemption as an adverse claim.
On August 20, 1981, L & R caused cancellation of TCT Nos. 197232–197233 and issuance of TCT Nos. 280054–280055 in its name, free of encumbrance.
The Litonjuas and PWHAS filed a complaint for quieting of title, annulment of title and damages; the trial court dismissed, the Court of Appeals reversed, then reconsidered and set aside its reversal.

Whether paragraph 8 (prohibition on alienation without consent) is valid and enforceable.
Whether paragraph 9 (right of first refusal) is valid and enforceable.
Whether the sale by the Litonjuas to PWHAS without consent is valid and enforceable.
Whether PWHAS, as successor-in-interest, had the right to redeem the foreclosed properties.
Whether the redemption made by PWHAS within one year is valid.