### Facts:
The case involves a dispute over a property located at Lot No. 5, Block No. 2021 of the Cadastral Survey of Manila, originally owned by Tan Tiong Tick and his spouse, who had six children including D. Annie Tan (petitioner) and the respondents. To secure a loan from China Banking Corporation, the property was mortgaged and, upon the death of Tan Tiong Tick, was foreclosed by the bank and purchased at auction. The heirs attempted to annul the mortgage and foreclosure but failed to redeem the property within the allowed period, leading to the bank’s consolidation of ownership.
Subsequently, an agreement was reached allowing the heirs to repurchase the property, which D. Annie Tan attempted to do alone a day before the deadline. Despite her sole payment, the deed of sale was executed in favor of all heirs. D. Annie Tan then filed a complaint seeking reconveyance and damages. The lower court dismissed her claim but ordered the siblings to reimburse her, which was affirmed by the Court of Appeals, leading to this petition.
### Issues:
1. Whether there was a co-ownership among the heirs at the time D. Annie Tan repurchased the property.
2. Whether the heirs had a creditor-debtor relationship with the bank necessitating collective action for repurchase.
3. Whether the agreement permitted individual exercise of the repurchase option.
### Court’s Decision:
The Supreme Court granted D. Annie Tan’s petition, reversing the Court of Appeals’ decision. It held that:
– There was no co-ownership among the heirs when D. Annie Tan repurchased the property, as the co-ownership had been dissolved following the consolidation of the bank’s ownership post-redemption period.
– No creditor-debtor relationship existed among the heirs post-foreclosure, negating the need for collective repurchase.
– The agreement did not stipulate the necessity for collective action among the heirs for repurchase, allowing for individual exercise of the repurchase option.
### Doctrine:
The decision reiterates principles of co-ownership and redemption rights, clarifying that foreclosed property’s consolidation under the creditor’s name dissolves any existing co-ownership among heirs of the debtor. It also emphasized that agreements allowing repurchase post-consolidation should not implicitly impose co-ownership among potential purchasers if not explicitly defined.
### Class Notes:
– Co-ownership is dissolved upon the foreclosure and consolidation of ownership by the mortgagee.
– A right to repurchase exercised by one among several heirs does not necessitate the existence or reconstitution of co-ownership.
– Agreements for repurchase should be construed based on their explicit terms rather than assumed conditions imposed at the time of exercise.
– The principle of equity favors those who actively take steps to preserve family patrimony.
### Historical Background:
This case underscores the tensions between preserving familial property and the formalities of law surrounding foreclosure, redemption, and co-ownership. In the broader context of Philippine property law, it highlights the safeguards for heirs’ rights against third-party claims and clarifies the individual’s capability to act independently to preserve family assets.
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