G.R. No. 109972 - Verdad vs. Court of Appeals

Case Summary (G.R. No. 109972)

Factual Background

The disputed lot originally devolved from the intestate estate of Macaria Atega, who died on 08 March 1956. Macaria left surviving heirs from two marriages, including a son of her first marriage, Ramon A. Burdeos, and children of her second marriage, among them David Rosales. David survived Macaria and thereby acquired an undivided share in the lot. David later died intestate and without issue, leaving his widow Socorro C. Rosales and other heirs who succeeded to his estate, which included his inherited undivided interest in the subject lot. Instruments executed by the heirs of Ramon Burdeos purporting to sell their interest in the lot to Zosima Verdad appeared on 14 June 1982 (showing a price of P55,460.00) and on 14 November 1982 (a notarized deed showing a price of P23,000.00). Petitioner explained that the lower price reflected tax considerations. Socorro learned of the sale on 30 March 1987, sought barangay conciliation on 31 March 1987, and tendered P23,000.00 to petitioner, who refused the tender as unconscionable relative to the lot's current value of P80,000.00.

Trial Court Proceedings

Private respondents instituted an action for “Legal Redemption with Preliminary Injunction” before the Regional Trial Court of Butuan City on 16 October 1987. After reception of evidence, the trial court rendered a decision on 29 June 1990 holding that private respondents’ right to redeem had lapsed.

Court of Appeals Ruling

Private respondents appealed to the Court of Appeals. The appellate court, by decision dated 22 April 1993, reversed the trial court and declared that Socorro C. Rosales was entitled to redeem the inheritance rights or pro indiviso share of the heirs of Ramon Burdeos in Lot 529, Ts-65, within eleven days from finality of its decision, unless written notice of the sale and its terms were received in the interim, and conditioned redemption upon the return of the purchase price of P23,000.00.

Issues Presented to the Supreme Court

Petitioner raised assignments of error contending (1) that the Court of Appeals erred in declaring Socorro C. Rosales entitled to redeem for being contrary to law and evidence; (2) that the Court of Appeals ignored that respondents’ actual knowledge and the resulting delay constituted laches; (3) that the appellate court erred in treating referral to the barangay as a timely exercise of the right of legal redemption and in allowing redemption absent payment in legal tender; and (4) that the Court of Appeals erred in ruling that the statutory redemption period was stayed by commencement of barangay proceedings.

The Parties’ Contentions

Petitioner principally argued that Socorro lacked capacity to redeem because she was a daughter-in-law and not an intestate heir of Macaria, and that private respondents had actual knowledge of the sale which, together with delay, amounted to laches that barred redemption. Petitioner also contended that barangay referral did not constitute a timely exercise of the legal redemption right, that tender must be in legal tender, and that barangay conciliation did not suspend the running of the statutory redemption period. Private respondents maintained that Socorro, as widow of David Rosales, succeeded to David’s estate which included his undivided share of the property; that a right of legal redemption arose upon the sale of the shares of other co-owners; that the mandatory written notice required by ART. 1623 of the Civil Code was not given and therefore the statutory thirty-day redemption period had not begun; and that Socorro tendered the purchase price during barangay conciliation but the tender was refused.

Ruling of the Supreme Court

The Supreme Court denied the petition and affirmed the decision of the Court of Appeals. The Court ordered costs against petitioner.

Legal Basis and Reasoning

The Court first addressed capacity to redeem. It held that Socorro C. Rosales could exercise the right of legal redemption because she succeeded to the estate of her husband, David Rosales, and thereby became a co-owner of the undivided interest in the lot that David had inherited from Macaria. The Court cited ART. 995 and ART. 1001 of the Civil Code to show that in the absence of descendants and ascendants a surviving spouse inherits, and that when brothers or sisters survive with the widow the spouse takes one-half of the inheritance and the siblings the other half. The Court then invoked ART. 1619 and ART. 1620 to describe the nature and scope of the right of legal redemption and to establish that a co-owner may redeem when the shares of other co-owners are sold to a third person, paying a reasonable price if the alienation is grossly excessive. The Court found that a right of redemption arose in favor of private respondents when the Burdeos heirs sold their interest to petitioner.

On the question of timeliness, the Court held that ART. 1623 makes the written notice of sale mandatory and that the thirty-day period for exercise of the right of legal redemption runs only from such written notice. The Court reiterated established precedent that actual knowledge of a co-owner, standing alone, does not substitute for the statutory written notice because written notice eliminates uncertainties about the sale and its terms; it cited Cabrera vs. Villanueva, 160 SCRA 672, and Conejero vs. Court of Appeals, 16 SCRA 775. The Court considered but distinguished Alonzo vs. Intermediate Appellate Court, 150 SCRA 259, noting that Alonzo carved a narrow exception to the prevailing rule based upon peculiar circumstances where the redemption action was filed many years after sale; the Court emphasized that Alonzo did not displace the general rule.

Concerning tender and

Case Syllabus (G.R. No. 109972)

Parties and Procedural Posture

Zosima Verdad filed a petition for review from the decision of the Court of Appeals reversing the Regional Trial Court's judgment on an action for legal redemption.
Socorro C. Rosales and other private respondents instituted an action for Legal Redemption with Preliminary Injunction in the Regional Trial Court, Butuan City, against petitioner.
The trial court rendered judgment on 29 June 1990 holding that private respondents' right to redeem had lapsed.
The Court of Appeals reversed by decision dated 22 April 1993 and declared Socorro C. Rosales entitled to redeem within eleven days from finality under specified terms.
Petitioner sought review in the Supreme Court and raised several assignments of error challenging the appellate court's rulings on law and fact.

Key Factual Allegations

The subject property is a 248-square meter residential lot identified as Lot No. 529, Ts-65, Butuan Cadastre, located along Magallanes Street, now Marcos M. Calo St., Butuan City.
The lot originally descended from intestate decedent Macaria Atega, who died on 08 March 1956 and whose children included Ramon A. Burdeos and David Rosales.
Heirs of Ramon Burdeos, namely his widow Manuela Legaspi Burdeos and children Felicidad and Ramon, Jr., executed an instrument dated 14 June 1982 selling their interest in the lot to Zosima Verdad for P55,460.00.
A notarized deed of sale dated 14 November 1982 reflected a sale price of P23,000.00, which petitioner explained was to mitigate capital gains tax.
Socorro C. Rosales discovered the sale on 30 March 1987 at the City Treasurer's Office and on 31 March 1987 sought Barangay conciliation and tendered P23,000.00 to petitioner which was refused.
Private respondents filed the redemption action on 16 October 1987 alleging entitlement to redeem the heirs' pro indiviso shares.

Issues Presented

Whether Socorro C. Rosales had the legal capacity to exercise the right of legal redemption as widow of a co-heir who predeceased the sale.
Whether redemption was timely exercised given the absence of written notice by the selling co-heirs and the alleged actual knowledge of the sale by co-owners.
Whether tender of payment in barangay conciliation satisfied the requirements for legal redemption in law and jurisprudence.
Whether the filing of barangay proceedings or actual knowledge tolled or affected the statutory period for redemption.

Contentions of the Parties

Petitioner contended that Socorro C. Rosales lacked capacity to redeem because she was not an intestate heir of Macaria but only a daughter-in-law by affinity.
Petitioner further argued that private respondents' delay and actual knowledge of the sale constituted laches and that written notice should be equated with actual knowledge in this case.
Private respondents asserted that Socorro C. Rosales, as widow and heir of her deceased husband David Rosales, succeeded to his hereditary share and thus had the right to redeem.
Private respondents maintained that tender of the purchase price during barangay proceedings and prompt action upon discovery constituted timely exercise of the legal redemption right.

Statutory Framework

ART. 9