Doromal v. Javellana
REITERATIONFacts
The Antecedents: Lot 3504, originally decreed in the name of the late Justice Antonio Horilleno, was co-owned by his siblings and his niece, Filomena Javellana (herein respondent), who succeeded her deceased mother. The co-owners, led by Carlos Horilleno, decided to sell their shares. They hired Cresencia Harder to find buyers, who interested the Doromals (herein petitioners). The co-owners executed powers of attorney in favor of Mary H. Jimenez. Respondent Javellana was sent a power of attorney and a letter indicating a price of P4.00 per square meter, but she did not agree and did not sign. Unknown to her, earnest money of P5,000.00 was already received by Carlos Horilleno from Ramon Doromal, Jr. on October 22, 1967, at P5.00 per square meter. The other co-owners proceeded with the sale of their 6/7 share through their attorney-in-fact, Mary H. Jimenez. A petition was filed to issue a new title, and subsequently, a deed of sale to the Doromals was registered. A new title was issued in the names of the co-owners (6/7 to Horillenos, 1/7 to Javellana), which was immediately cancelled by another title in the names of the Doromals (6/7) and Javellana (1/7). The Doromals paid P97,000.00 by check and an additional P18,250.00 in cash, totaling P115,250.00, although the deed of sale stated a price of P30,000.00. Procedural History: On June 10, 1968, respondent Javellana, through her lawyer, Atty. Arturo H. Villanueva, Jr., offered to repurchase the 6/7 undivided share for P30,000.00, tendering the cash. The Doromals refused. The next day, June 11, 1968, Javellana filed a case for legal redemption. The trial court dismissed the complaint, finding that Javellana was informed of the intended sale and that she sought to enrich herself by redeeming at the lower stated price instead of the actual price paid. The Court of Appeals reversed the trial court's decision, holding that Javellana was never notified in writing of the actual execution and registration of the deed of sale, thus her right to redeem had not expired. The appellate court also ruled that the redemption price should be P30,000.00 as stated in the deed of sale, despite evidence of a higher actual price. The Petition: Petitioners (Spouses Doromal) sought review of the Court of Appeals' decision, arguing that the notice in writing contemplated by Article 1623 of the Civil Code should include prior notices of intended sale, and that the inscription of the sale in the Registry of Property should suffice as notice. They also contended that the redemption price should be the actual price paid, not the understated price in the deed of sale.
Issue(s)
Whether the letters sent by Carlos Horilleno to respondent Javellana constituted sufficient written notice under Article 1623 of the Civil Code for the purpose of legal redemption. Whether the inscription of the sale in the Registry of Property serves as notice to possible redemptioners. Whether the redemption price should be the amount stated in the deed of sale or the actual amount paid by the vendees, especially when the former is understated to evade taxes.
Ruling
The Supreme Court affirmed the decision of the Court of Appeals, holding that the respondent's right to legal redemption had not yet expired. The Court ruled that the notice in writing required by Article 1623 of the Civil Code must be a notice of the actual execution and delivery of the deed of sale, not merely of a proposal or perfected sale. Furthermore, the Court held that the redemption price must be the amount stated in the deed of sale, even if it was understated to evade taxes, as the parties who understated the price are considered in pari delicto and cannot benefit from their fraudulent act.
Ratio Decidendi
On the sufficiency of written notice for legal redemption: The Court held that the letters sent by Carlos Horilleno to respondent Javellana did not constitute sufficient written notice under Article 1623 of the Civil Code. These letters merely indicated an intention to sell and discussed potential prices, but they did not refer to a consummated sale or the actual execution of a deed of sale. The Court emphasized that for the purpose of legal redemption, the notice must be of the actual execution and delivery of the deed of sale, not just a proposal or a perfected sale. The absence of a definite price in the earlier letters and the fact that powers of attorney were still being secured further negated the sufficiency of these letters as notice of a completed transaction. Therefore, respondent Javellana's right to redeem had not yet expired when she made her offer. On the effect of registration as notice: The Court rejected the petitioners' argument that the inscription of the sale in the Registry of Property serves as notice to possible redemptioners. While registration is generally notice to the whole world, the specific provision of Article 1623 requires a "notice in writing" from the vendor to the redemptioner. This notice is a prerequisite for the running of the 30-day period for redemption. The law also mandates an affidavit of the vendor that such notice has been given before the deed of sale can be recorded. Therefore, registration alone, without the required written notice to the redemptioner, does not commence the redemption period. The purpose of the written notice is to provide a clear and unmistakable guide to the redemptioner regarding the sale and the terms thereof. On the redemption price: The Court affirmed the appellate court's ruling that the redemption price should be P30,000.00, as stated in the deed of sale, despite evidence that the actual price paid was P115,250.00. The Court found that the consideration was deliberately understated in the deed of sale to minimize the payment of registration fees, stamps, and sales tax, constituting tax evasion. The Court held that parties who engage in such fraudulent acts are considered in pari delicto and cannot benefit from their illegal agreement. To allow redemption at the actual price would reward their attempt to defraud the government. The Court reiterated that the right of redemption is to be exercised "upon the same terms and conditions stipulated in the contract," and in this case, the stipulated price in the public document was P30,000.00. The Court also noted that Article 1620 allows a redemptioner to pay only a reasonable price if the alienation price is "grossly excessive," but this provision was not invoked or applicable here; instead, the issue was an understated price due to tax evasion.
Main Doctrine
For purposes of the co-owner's right of redemption under Article 1623 of the Civil Code, the notice in writing required is a notice of the actual execution and delivery of the deed of sale, not merely of a perfected sale or proposal to sell. Furthermore, where the consideration in the deed of sale is understated to evade taxes, the redemptioner is entitled to redeem at the stipulated price in the deed, and the parties who understated the price are considered in pari delicto.