Ceynas v. Ulanday
REITERATIONFacts
1. The Antecedents: On February 22, 1944, Rufino Ceynas and his siblings executed a deed of sale with a right to repurchase concerning their shares in six parcels of land for P2,200.00. In July 1944, they obtained an additional P800.00 from the vendees, Pamfilo Ulanday and Simplicia Fabia, under the same deed. 2. Procedural History: Rufino Ceynas first filed an action on February 20, 1948, seeking to declare the deed a simple mortgage and to compel acceptance of payment in Japanese notes, but this was dismissed as premature. He filed a second action on May 12, 1953, again asking for the deed to be declared a simple mortgage and for redemption based on the Ballantyne Schedule. This complaint was amended to include his siblings. The Court of First Instance ruled that only Rufino Ceynas could redeem his share, dismissing the claims of the other siblings for failing to exercise their right of redemption within the stipulated period. The case was certified to the Supreme Court on appeal due to the purely legal nature of the issues. 3. The Petition: The appellants contend that the trial court erred in dismissing their claims, arguing that Rufino Ceynas's initial action tolled the redemption period for all co-owners. They also challenge the classification of the deed as a sale with right to repurchase rather than an equitable mortgage and dispute the currency used for redemption. The Supreme Court, however, found that Rufino's action was solely on his behalf and did not toll the period for his siblings. The terms of the deed clearly indicated a sale with right to repurchase. While affirming the trial court's decision regarding the currency and the nature of the contract, the Supreme Court modified the ruling, applying Article 1606, paragraph 3, of the new Civil Code to allow all appellants to exercise their right of redemption within thirty days from the finality of the judgment, payable in present currency.
Issue(s)
Whether the action filed by Rufino Ceynas on February 20, 1948, tolled the period of redemption for his co-appellants. Whether the contract executed by the parties is a sale with right to repurchase or an equitable mortgage. Whether the redemption price should be calculated based on the Ballantyne Schedule or the prevailing currency at the time of redemption.
Ruling
The Supreme Court modified the decision of the trial court. It affirmed that only Rufino Ceynas could exercise the right to redeem his share, but also held that the other co-appellants could still exercise their right to redeem their respective shares within thirty (30) days from the finality of the judgment, applying Article 1606, paragraph 3 of the new Civil Code. The Court upheld the contract as a sale with right to repurchase and ruled that the redemption price should be paid in the prevailing Philippine currency.
Ratio Decidendi
On the tolling of the redemption period: The Court held that the action filed by Rufino Ceynas on February 20, 1948, did not toll the period of redemption for his brothers and sisters. The Court reasoned that the action was filed by Rufino Ceynas alone, or only in his own behalf, and not in representation of his co-owners. Under Article 1514 of the Spanish Civil Code, if several persons collectively sell their undivided realty with a reserved right of repurchase, none of them can exercise this right for more than his respective share. Therefore, without proof that Rufino Ceynas attempted to redeem the entire undivided interest on behalf of all, his action could not suspend the redemption period for the others. On the nature of the contract: The Court found no merit in the appellants' claim that the contract was an equitable mortgage. Examining the deed of sale with right to repurchase (Exhibit A), the Court noted the explicit terms wherein the appellants "sell, cede and convey by way of Sale With Right of Repurchase" and reserved the right to repurchase within ten (10) years. Since the appellants presented no parole evidence to show a contrary intention, the Court concluded that the intention of the parties was to enter into a contract of sale with right to repurchase, as clearly indicated by the document's terms. On the redemption price and currency: The Court found no error in the trial court's decision to calculate the redemption price in the prevailing currency, rather than under the Ballantyne Schedule. The contract allowed repurchase within 10 years from February 22, 1944, but stipulated that the right could only be exercised after the first five years. This meant the right to repurchase vested after the liberation of the Philippines. Following established jurisprudence, when payment of an obligation is stipulated to be made at the end of a period that falls after liberation, payment must be effected in the currency then prevailing. Furthermore, the Court noted that the redemption period expired on February 22, 1954, after the new Civil Code took effect on August 30, 1950. Applying Article 1606, paragraph 3 of the new Civil Code, which states that a vendor who has lost the right to redeem may still do so within thirty (30) days from the time the judgment becomes final, the Court allowed the co-appellants to exercise their right to redeem their shares upon payment of their respective shares in the repurchase price, to be paid in the present currency.
Main Doctrine
The filing of an action by one co-owner to declare a sale with right to repurchase as an equitable mortgage does not toll the period of redemption for the other co-owners, as each co-owner can only exercise the right of repurchase for his respective share. However, if the contract was entered into before the effectivity of the new Civil Code and the redemption period extends beyond its effectivity, Article 1606, paragraph 3 of the new Civil Code may apply, allowing redemption within thirty (30) days from finality of judgment.