Fernandez v. Tarun
REITERATIONFacts
The Antecedents: Respondents, Spouses Carlos and Narcisa Tarun, sought to partition a fishpond property located in Dagupan City, originally co-owned by several individuals including Angel Fernandez and his co-owners. Antonio and Demetria Fernandez, co-owners of the property, sold their respective shares, totaling 1,094.54 square meters, to the Spouses Tarun on June 4 and June 18, 1967. Despite the sale, Angel Fernandez and subsequently his heirs, the petitioners, remained in possession of the entire fishpond. The respondents, having acquired a portion of the co-owned property, demanded partition and accounting of income, which was refused by the petitioners. Procedural History: The Regional Trial Court (RTC) of Dagupan City initially ruled in favor of the petitioners, holding that they were entitled to redeem the property sold to the respondents under Articles 1620 and 1621 of the Civil Code, and declared the sale void for non-compliance with Article 1623. However, the Court of Appeals (CA) reversed the RTC's decision, finding that the petitioners were not entitled to redeem the property. The CA reasoned that Angel Fernandez, the predecessor of the petitioners, was the co-owner at the time of the sale and had not exercised his right to redeem, and that the Deed of Extrajudicial Partition constituted substantial compliance with the notice requirement. The CA further held that the petitioners were bound by the terms of the agreement entered into by their predecessor. The Petition: The petitioners, Oscar C. Fernandez, Gil C. Fernandez, and Armando C. Fernandez, filed a Petition for Review on Certiorari with the Supreme Court, challenging the CA's decision. They raised several issues, primarily arguing their entitlement to exercise the right of legal redemption, the nature of the transaction as an equitable mortgage, the validity of the extrajudicial partition, and their entitlement to damages. They contended that the sale to respondents was void due to lack of written notice as required by Article 1623 of the Civil Code and that the extrajudicial partition was lopsided and iniquitous. The Supreme Court, however, denied the petition, affirming the CA's ruling that the right of redemption is not applicable when a portion of co-owned property is sold to a co-owner, and that the petitioners were bound by the actions and agreements of their predecessor, Angel Fernandez.
Issue(s)
Whether or not petitioners are entitled to exercise their right of legal redemption. Whether or not the transaction is one of equitable mortgage. Whether or not the deed of extrajudicial partition is void and inefficacious. Whether or not petitioners are entitled to damages, attorney’s fees and costs. Whether or not the lower court committed grave abuse of discretion amounting to lack of jurisdiction when it substituted its surmises, conjectures and guesswork in place of the trial court’s findings of fact borne by the evidence on record.
Ruling
The Supreme Court denied the petition and affirmed the assailed Court of Appeals Decision. The dispositive portion of the CA Decision, which ordered the partition of Lot 2991 and the issuance of separate titles corresponding to the shares of Angel Fernandez and the Spouses Tarun, was upheld.
Ratio Decidendi
On the Issue of Legal Redemption: The Court held that petitioners are not entitled to legal redemption because the sale was made to respondents, who were already co-owners, not third persons. Article 1620 of the Civil Code grants the right of redemption only when a co-owner's share is sold to a stranger. The Court clarified that a "third person" in this context refers to anyone who is not a co-owner. Furthermore, the Court found that the Deed of Extrajudicial Partition, executed by the co-owners including Angel Fernandez, served as substantial compliance with the notice requirement under Article 1623 of the Civil Code. By signing this deed, Angel Fernandez was deemed to have actual knowledge of the sale to respondents, and the 30-day period for redemption, which expired on December 4, 1969, had long passed during his lifetime. Petitioners, as his successors-in-interest, could no longer exercise a right that had already expired. On the Issue of Equitable Mortgage: The Court found the contention that the sale was an equitable mortgage untenable. Petitioners failed to establish that the price was unusually inadequate or that the vendors remained in possession as lessees or otherwise, as required by Article 1602 of the Civil Code. Crucially, the sellers were Antonio and Demetria Fernandez, not Angel Fernandez, and they were not claiming the transaction was an equitable mortgage. The Court also noted that mere inadequacy of price does not automatically void a sale unless it is grossly inadequate or shocking to the conscience, which was not proven here. On the Issue of the Validity of the Extrajudicial Partition: The Court upheld the validity of the Deed of Extrajudicial Partition, stating that parties are bound by agreements they enter into with full awareness of the consequences, even if they turn out to be disadvantageous. The Court found that the partition was done fairly, and the exchange of shares, particularly Angel Fernandez trading his share in one property for the entire Lot 2991 (except the portion sold to respondents), was arguably more favorable to him as it consolidated his ownership. Petitioners are bound by this agreement as successors-in-interest. On the Issue of Damages and Attorney's Fees: The claim for damages and attorney's fees was denied. The Court reasoned that respondents, as established co-owners, had a legal right to demand partition of the property under Article 494 of the Civil Code. Therefore, their action for partition was not unfounded, and petitioners were not entitled to damages or attorney's fees on this basis. On the Issue of Factual Findings of the CA: The Court found no reason to overturn the CA's factual findings, which were supported by substantial evidence. The CA correctly ruled that the extrajudicial partition was freely entered into and that the sale was not void. The Court reiterated that factual findings of the CA are conclusive and binding unless exceptions apply, which were not present in this case. The argument regarding the lack of an affidavit accompanying the registration of the deeds of sale was also dismissed as the CA's findings on notice and substantial compliance were deemed sufficient.
Main Doctrine
The right of legal redemption under Article 1620 of the Civil Code is available only when a co-owned property is sold to a third person, i.e., a non-co-owner. When a portion is sold to an existing co-owner, the right of redemption does not arise. Furthermore, while written notice is required for the exercise of legal redemption, jurisprudence has accepted actual knowledge or substantial compliance through other means, such as a deed of extrajudicial partition, as sufficient notice, thereby triggering the 30-day period for redemption.