Co-Owner's Right of Redemption Does Not Apply to Sales to Another Co-Owner

The right of legal redemption is a special privilege granted by law to co-owners who wish to avoid having a stranger enter their property arrangement. But what happens when a co-owner sells his share to another co-owner? Does the right still arise? In Fernandez v. Spouses Tarun (G.R. No. 143868, November 14, 2002), the Supreme Court settled this question with a clear rule: the right of redemption exists only when a share is sold to a third person, not to a fellow co-owner.

The Facts of the Case

The case involved an 8,209-square meter fishpond in Dagupan City originally co-owned by several members of the Fernandez family. In 1967, two co-owners, Antonio and Demetria Fernandez, sold their respective shares to Spouses Carlos and Narcisa Tarun, who were not yet co-owners at that time. These sales were registered on the original certificate of title.

Two years later, in 1969, the remaining co-owners executed a Deed of Extrajudicial Partition with Exchange of Shares. Under this deed, Angel Fernandez exchanged his share in another fishpond for the shares of his co-owners in the disputed property, making him and the Spouses Tarun co-owners of the entire fishpond. The deed expressly recognized and respected the earlier sales to the Spouses Tarun.

After Angel Fernandez died, his heirs—the petitioners—demanded partition of the property. When the Spouses Tarun sought partition and damages, the heirs claimed they had the right to redeem the portions sold to the respondents, arguing that they were never notified of the 1967 sales.

The Issue: When Does the Right of Redemption Arise?

The central question was whether the petitioners, as successors-in-interest of a co-owner, could exercise the right of legal redemption over shares that had been sold to persons who later became co-owners.

The Supreme Court ruled they could not. Under Article 1620 of the Civil Code, a co-owner may exercise the right of redemption only when the shares of all the other co-owners, or any of them, are sold to a third person. A third person, in this context, means anyone who is not a co-owner.

In this case, by the time the petitioners entered the co-ownership through succession, the Spouses Tarun were already co-owners. The sales to them had been consummated years earlier. The Court cited its earlier ruling in Basa v. Aguilar to emphasize that legal redemption is intended to minimize co-ownership by giving co-owners a way out of an inconvenient association with a stranger. Where no new participant is added to the co-ownership, the right does not arise.

The Notice Requirement Under Article 1623

The petitioners also argued that the sales were void because the vendors failed to send written notice to the other co-owners as required by Article 1623 of the Civil Code. The Court rejected this argument.

Article 1623 provides that the right of redemption must be exercised within thirty days from written notice by the vendor. It also states that a deed of sale shall not be recorded unless accompanied by an affidavit that written notice was given to all possible redemptioners. However, the law does not declare the sale void for lack of such notice.

More importantly, the Court noted that the law does not prescribe any particular form of written notice. In this case, Angel Fernandez signed the Deed of Extrajudicial Partition in 1969, which expressly recognized the sales to the Spouses Tarun. This constituted sufficient notice. His thirty-day period to redeem expired in December 1969. Having failed to exercise his right then, his heirs could not later claim it.

The Equitable Mortgage Argument

The petitioners further claimed that the sales were actually equitable mortgages because the price was allegedly grossly inadequate and the vendors remained in possession. The Court found this untenable.

For a contract to be considered an equitable mortgage under Article 1602 of the Civil Code, certain circumstances must be manifest, such as an unusually inadequate price or the vendor remaining in possession as lessee or otherwise. However, the sellers in this case—Antonio and Demetria—were not claiming the sales were equitable mortgages. The person who remained in possession, Angel Fernandez, was not even the seller. Moreover, the petitioners failed to establish the fair market value of the property in 1967, so there was no basis to conclude the price was shocking to the conscience.

Practical Takeaways

• The right of legal redemption under Article 1620 applies only when a co-owner's share is sold to a third person—someone who is not already a co-owner. If the buyer is already a co-owner, the right does not arise.
• Written notice of a sale need not follow a specific form. A deed of partition or other document that clearly acknowledges the sale can serve as sufficient notice, starting the thirty-day redemption period.
• Failure to exercise the right of redemption within thirty days from notice results in waiver. Successors-in-interest are bound by the inaction of their predecessor.
• Lack of written notice does not void a sale. It only prevents the registration of the deed unless accompanied by the required affidavit.
• Courts will not relieve parties from unwise contracts. A co-owner who freely enters into a partition or exchange agreement with full knowledge of its terms is bound by it, even if it later proves disadvantageous.

This article is general information and not legal advice. For your specific situation, consult a lawyer or ask ASG Legal AI.