A.M. No. MTJ-02-1437 - Contreras vs. Monserate

Case Summary (A.M. No. MTJ-02-1437)

Factual Background

In 1915 Julio Javellana obtained a judgment for P5,710.50 with interest against Maximino Mirasol and Eugenio Kilayco, and execution was levied upon certain properties of Maximino. Those properties were sold at public auction on July 6, 1915, and were purchased by Javellana for P5,920. On April 4, 1916, Luis Mirasol purchased two judgments held by the Bank of the Philippine Islands against Maximino and paid P6,150 for them; thereafter Luis transmitted money and instructions to his brother Alejandro Mirasol to redeem the sold properties. On July 3, 1916 Alejandro, acting for Luis, deposited with deputy sheriff Geronimo Nunez a bearer check drawn on the Bank of the Philippine Islands for P6,604.74 and received a receipt reciting payment for the purchase price and accrued interest. The check was not immediately presented; it passed into the hands of Governor Amando Avancena, then to his successor Gregorio Yulo, and was presented to the bank and paid on December 13, 1916. Pursuant to the redemption, on March 9, 1918 Nunez executed a public instrument purporting to convey to Luis all right, title, and interest in the property formerly vested in Maximino.

Procedural History

On April 11, 1918 Javellana filed a complaint in the Court of First Instance of Iloilo attacking the redemption as irregular, unauthorized, and fraudulent, and prayed that the March 9, 1918 instrument be declared void and cancelled and that the sheriff be required to issue to him a definitive deed as purchaser under section 466 of the Code of Civil Procedure. The trial court, presided over by his Honor, Judge L. M. Southworth, found the redemption effected in good faith and in accordance with law and on October 7, 1918 entered judgment declaring Luis Mirasol owner and absolving the defendants. Javellana appealed.

Central Factual Issue

The pivotal question concerned fact: whether the July 3, 1916 deposit by Alejandro Mirasol was an absolute and unconditional payment in good faith for the purpose of redemption or a contingent, colorable deposit made in collusion with deputy sheriff Nunez to be returned if litigation succeeded against the redeemer. The trial court resolved the question in favor of the redeemer, and on review the Supreme Court affirmed that finding after examining the evidence of family status, prior litigation, the sequence of events surrounding the bank judgment purchase, and the circumstances of the check and its handling by officers.

The Parties' Contentions

Javellana urged that the redemption was simulated, asserting collusion between Alejandro and Nunez, concealment of the act of redemption, failure to present the check for payment, and other suspicious circumstances indicating an intent to return the funds rather than to effect a bona fide redemption. He further argued that Luis was estopped by his prior litigation position as claimant of ownership to claim redemption. The respondents denied any collusion, explained the assignment of the bank judgments and the intent to redeem as judgment-creditor, and relied upon the deputy sheriff’s acceptance and receipt as evidencing a lawful and unconditional redemption.

Findings on Notice and Delay

The Court found that there was no concealment of the redemption and that delay in presenting the check for payment was explained by the course of events and by the conduct of Javellana and his counsel. The attorney Ruperto Montinola learned of the deposit very shortly after July 3, 1916, and he advised his client to await formal steps because the duty to tender payment lay upon the redemptioner. The Court concluded that the delay in cashing the check resulted from this advice and the parties’ subsequent inaction rather than from a prearranged scheme to deprive Javellana of the money.

Legal Questions Regarding Formalities of Redemption

The Court addressed several subsidiary legal questions: whether the use of a check rather than immediate payment in money invalidated the redemption; whether payment to the officer conducting the sale instead of directly to the purchaser sufficed; and whether failure to produce the documents required by section 467 of the Code of Civil Procedure defeated the redemption. The Court held that acceptance of a check did not render the payment invalid, though the officer who accepted it assumed liability for resulting damages; that payment to the officer was authorized by section 466 and therefore not defective; and that failure to produce the precise documentary proofs prescribed by section 467 did not void a redemption where the officer, fully aware of the facts, accepted the tender. The Court relied upon policy favoring redemptions as a means to permit debtor property to satisfy liabilities and cited Enage vs. Vda. e Hijos de F. Escano for that principle.

Right of an Ordinary Judgment Creditor to Redeem

The Court confronted the more fundamental question whether an ordinary creditor whose judgment is subsequent to the judgment under which property was sold may redeem. The English text of section 464 used the word “lien,” which suggested difficulties under local law where a judgment does not create a real lien but only a preferential right. The Court looked to the official Spanish translation, which rendered the term as derecho preferente, and held that this expression better suited the domestic legal conception. Citing authorities and the treatise on judgments, and relying upon Tec Bi & Co. vs. Chartered Bank of India, Australia and China, the Court concluded that a subsequent judgment creditor or his assignee possessing a preferential right may exercise the statutory right of redemption in this jurisdiction. The Court noted contrary Ca

Case Syllabus (A.M. No. MTJ-02-1437)

Parties and Procedural Posture

Julio Javellana was the plaintiff and appellant who had purchased property at sheriff's sale to satisfy his judgment against Maximino Mirasol and Eugenio Kilayco.
Luis Mirasol was the respondent redemptioner and alleged assignee of judgments formerly held by the Bank of the Philippine Islands.
Geronimo Nunez was the respondent deputy sheriff who accepted a check proffered to effect redemption and later executed a document purporting to convey the redeemed property.
The case came to the Court by appeal from a judgment of the Court of First Instance of Iloilo entered on October 7, 1918, which declared the redemption valid and dismissed the plaintiff's complaint.

Key Factual Allegations

The Court of First Instance had rendered judgment in 1915 for P5,710.50 in favor of Julio Javellana against Maximino Mirasol and others, which resulted in an execution sale on July 6, 1915.
Julio Javellana purchased the levied properties at auction for P5,920 on July 6, 1915.
On July 3, 1916, Alejandro Mirasol, acting for Luis Mirasol, deposited with Geronimo Nunez a bearer check for P6,604.74 to redeem the property under section 465 of the Code of Civil Procedure.
The deposit was accompanied by a transfer document dated April 4, 1916, showing that Luis Mirasol had purchased judgments against Maximino Mirasol from the Bank of the Philippine Islands for P6,150.
The check was retained in the sheriff's office and was not presented for payment until December 13, 1916, when Governor Amando Avancena's successor presented it and received payment.
Pursuant to the redemption, Geronimo Nunez executed a public instrument on March 9, 1918, purporting to convey the right, title, and interest in the property to Luis Mirasol.

Procedural History

Julio Javellana filed a complaint on April 11, 1918, attacking the redemption as irregular and fraudulent and sought cancellation of the March 9, 1918 instrument and issuance of a definitive deed to himself under section 466 of the Code of Civil Procedure.
The Court of First Instance, presided by Judge L. M. Southworth, heard the case and on October 7, 1918, held that the redemption was effected in good faith and in accordance with law, and entered judgment for the defendants.
Julio Javellana appealed the judgment to this Court.

Issues Presented

Whether the July 3, 1916 deposit by Alejandro Mirasol was an unconditional payment in good faith effecting redemption or a collusive, contingent deposit intended to be returned if favorable litigation results occurred.
Whether a bearer check as the medium of payment invalidated the redemption.
Whether tender to the sheriff who conducted the sale, instead of direct payment to the purchaser, defeated the redemption.
Whether the failure to produce the documents specified in section 467 of the Code of Civil Procedure rendered the redemption ineffective.
Whether an ordinary judgment creditor or assignee having a judgment subsequent to the sale may exercise the right of redemption under section 464 of the Code of Civil Procedure.

Contentions of the Parties

Julio Javellana contended that the deposit was collusive and that the sheriff and the Mirasols conspired to conceal the redemption and to return the check if the appealed title actions succeeded.
Julio Javellana further contended that the use of a check, the tender to the sheriff, and the failure to produce the documents required by section 467 invalidated the redemption.
Luis Mirasol and Geronimo Nunez contended that the deposit was an unconditional tender in good faith and that the sheriff duly accepted it in accordance with the redemption provisions of the Code.

Evidence and Findings

The trial court found no concealment of the redemption and noted prompt notice to Julio Javellana's attorney, Ruperto Montinola, within days of the deposit.
Montinola admitted knowledge of the deposit shortly after July 3, 1916, and advised his client to await action since the redemptioner should tender payment to the creditor.
The record showed that Luis Mirasol had in fact purchased the ban