G.R. No. L-15499 - Butte vs. Manuel Uy and Sons, Inc.

Case Summary (G.R. No. L-15499)

Factual Background

Jose V. Ramirez held an undivided one-sixth interest in a house and lot in Sta. Cruz, Manila under Transfer Certificate of Title No. 52789 together with five other co-owners. Ramirez died on October 20, 1951. Special Proceeding No. 15026 for the settlement of his estate was instituted and his will was admitted to probate, but administration remained pending because creditors’ claims exceeded assets. The Bank of the Philippine Islands was appointed judicial administrator. On December 9, 1958, co-owner Marie Gamier Vda. de Ramirez sold her undivided one-sixth share to Manuel Uy & Sons, Inc. for P500,000. An affidavit by the vendor’s attorney-in-fact attested to the mailing of notices to possible redemptioners, the sale was registered, and the title was cancelled and reissued in the names of the vendee and other co-owners.

Procedural History

After the sale, the vendee and the vendor’s attorney-in-fact wrote the judicial administrator informing it of the alienation. The administrator forwarded the notices to Angela M. Butte through her counsel; dates of receipt varied in the record but the counsel received the vendor’s notice on December 16, 1958 and Mrs. Butte received it by December 19, 1958. On January 15, 1959, Mrs. Butte, through counsel, tendered a PNB cashier’s check for P500,000 to Manuel Uy & Sons, Inc. to exercise the right of legal redemption. The tender was refused, she consigned the amount in court the same day, and she filed an action for legal redemption seeking conveyance and damages. The trial court dismissed the complaint on May 13, 1959 on the grounds that she had no right to redeem and, alternatively, that redemption was not exercised within the thirty-day statutory period. The defendant’s counterclaim for damages was also dismissed. Both parties appealed to the Supreme Court.

Legal Issues Presented

The Supreme Court identified the principal issues as whether Angela M. Butte, as a testamentary legatee entitled to one-third of the free portion of the estate of Jose V. Ramirez, had the legal capacity to exercise the right of legal redemption over the one-sixth share sold by Marie Gamier while the estate was under judicial administration; and whether she exercised that right within the thirty-day period prescribed by Art. 1623 of the Civil Code.

Applicable Law on Succession and Redemption

The Court relied on the rule that rights to succession are transmitted from the moment of the decedent’s death, invoking Arts. 776, 777, and 947 to show that heirs and legatees acquire succession rights at death. The Court treated the right of legal redemption in Art. 1620 as an attribute of co-ownership that vests in a co-owner when another co-owner’s undivided share is sold to a third person. The Court also emphasized the exclusive method of computing the redemption period prescribed by Art. 1623, which counts thirty days from notice in writing by the vendor.

Court’s Finding on the Heir’s Right to Redeem

The Court held that the heirs of Jose V. Ramirez, including Angela M. Butte, acquired the deceased’s undivided one-sixth share at the moment of his death and thereby became co-owners of the Sta. Cruz property. The Court reasoned that the right of legal redemption vests in the person who, at the time of the alienation to a stranger, is a co-owner. Because the sale to Manuel Uy & Sons, Inc. occurred eight years after Ramirez’s death, the redemption right vested in the heirs as co-owners at the time of that sale. The Court rejected the notion that the presence of a judicial administrator deprived the heirs of their redemption right, because the redemption right did not belong to the estate at the time of death and therefore was not an asset transmissible by the decedent. The administrator’s statutory powers of possession and administration under the Rules of Court did not include a right to exercise legal redemption that only came into existence upon the third-party acquisition.

Court’s Finding on the Operative Notice and Timeliness

The Court construed Art. 1623 to require that the thirty-day period run from a written notice by the vendor, not by the vendee. The Court contrasted the present provision with the former law and stated that the legislature deliberately made the vendor’s notice the exclusive triggering event. The Court found that the operative notice was the December 11, 1958 letter by Mrs. Elsa R. Chambers as attorney-in-fact for the vendor, which the Bank received on December 15, 1958, forwarded to Mrs. Butte’s counsel who received it on December 16, 1958. Applying Art. 13 of the Civil Code to exclude the date of receipt and include the thirtieth day, the Court held that the period expired on January 15, 1959. Because Mrs. Butte tendered and consigned the P500,000 on January 15, 1959, the Court found her redemption timely.

Court’s Finding on Allegation of Grossly Excessive Price

The Court addressed appellant’s contention that the P500,000 price was grossly excessive and that the redemptioner should pay only a reasonable price under Art. 1620. The Court found no satisfactory proof of gross excess and noted that gross excess cannot be established by the personal estimate of a single realtor. Accordingly, it did not reduce the price paid by the vendee.

Court’s Disposition in the Main Decision

The Supreme Court reversed the trial court. It declared the consignation of P500,000 duly made and that Angela M. Butte properly exercised the legal redemption in due time of the one-sixth undivided portion sold by Marie Gamier. The Court ordered Manuel Uy & Sons, Inc. to accept the consigned price and convey the undivided portion to Mrs. Butte within thirty days from finality, and to account for rents and fruits of the redeemed share from and after January 15, 1958 until conveyance. The Court remanded the records for further proceedings conformable to the opinion and made no finding as to costs.

Motion for Reconsideration and Supplemental Resolution

On motion for reconsideration, Manuel Uy & Sons, Inc. presented evidence that the P500,000 consigned by Mrs. Butte had actually been withdrawn by her on August 24, 1959, as shown by a certification dated March 8, 1962. The defendant also renewed contentions that Mrs. Butte was not entitled to redeem and that the certificate of title did not show her as co-owner. The Court treated the certification of withdrawal as an actual fact and found merit in it.

Effect of Withdrawal of Consignation and Revised Disposition

The Court explained that withdrawal of the consignation did not negate Mrs. Butte’s right to redeem but it did prevent an actual redemption until payment was actually made. Consequently, Manuel Uy & Sons, Inc. remained the owner of the undivided sixth and was entitled to the fruits and benefits of that share until t

Case Syllabus (G.R. No. L-15499)

Parties and Procedural Posture

The plaintiff-appellant is ANGELA M. BUTTE and the defendant-appellee is MANUEL UY & SONS, INC..
The action is an appeal from a decision of the Court of First Instance of Manila dismissing plaintiff-appellant's complaint for legal redemption.
The trial court also dismissed the appellee's counterclaim for damages for lack of proof, and both parties appealed directly to this Court.
A resolution on reconsideration was later rendered modifying the original dispositive orders of the Court.

Key Factual Allegations

The subject is an undivided house and lot in Sta. Cruz, Manila, originally appearing in Transfer Certificate of Title No. 52789 in the names of six co-owners each owning one-sixth shares.
Jose V. Ramirez died on October 20, 1951, and Special Proceeding No. 15026 was instituted to settle his estate, with his will admitted to probate and the Bank of the Philippine Islands appointed judicial administrator.
The will allegedly bequeathed one-third of the free portion to ANGELA M. BUTTE and the remainder to the testator's children and grandchildren, but the estate proceedings remained pending because creditor claims exceeded assets.
On December 9, 1958, Marie Gamier Vda. de Ramirez sold her undivided one-sixth share to MANUEL UY & SONS, INC. for P500,000, and the deed was registered after an affidavit of notice was executed by her attorney-in-fact, Mrs. Elsa R. Chambers.
The purchaser sent a letter to the judicial administrator on December 9, 1958, and Mrs. Chambers sent a confirming letter dated December 11, 1958, which the Bank received December 15, 1958 and forwarded to appellant's counsel who received it December 16, 1958.
ANGELA M. BUTTE tendered a Philippine National Bank cashier's check for P500,000 and a letter of redemption on January 15, 1959, which was refused, and she thereupon consigned the amount in court and instituted the present redemption action on the same day.

Statutory Framework

The relevant provisions are ART. 1620 and ART. 1623 of the Civil Code of the Philippines, which govern the right of co-owners to redeem and the thirty-day notice requirement respectively.
The Court applied succession rules including ART. 776, ART. 777, and ART. 947 to determine transmission of rights on death.
The Court relied on the civil personality principle of ART. 42 to hold that a deceased cannot acquire new rights after death.
The Court referenced procedural powers of an estate administrator under sec. 3, Rule 85 and sec. 2, Rule 88, Rules of Court, to delineate the administrator's possession and litigation powers.

Issues Presented

The principal issue was whether ANGELA M. BUTTE, as a testamentary legatee of the decedent, could exercise the right of legal redemption over the one-sixth share sold by Marie Gamier despite the presence of a judicial administrator and pending estate liquidation.
The subsidiary issue was whether the tender and consignation by ANGELA M. BUTTE were made within the thirty-day period prescribed by law for legal redemption.

Contentions of the Parties

ANGELA M. BUTTE contended that she and other heirs acquired the decedent's undivided share at his death and thereby acquired the co-ownership right to redeem when a co-owner sold to a stranger, and that her tender of P500,000 was timely.
MANUEL UY & SONS, INC. contended that the right to redeem was vested in the estate or its administrator and that the appellant had no personal right to redeem or had failed to exercise it within the statutory period.
MANUEL UY & SONS, INC. also counterclaimed for damages and attorneys' fees on the theory the action was unfounded.

Court's Reasoning

The Court held that by o