[With Resolutions of April 23, 1962]

Butte versus Manuel Uy and Sons

The Case

This is the case of Butte versus Manuel Uy and Sons, an action for legal redemption brought by Angela M. Butte, a testamentary heir of the late Jose V. Ramirez, against Manuel Uy and Sons, Incorporated, which had purchased the undivided one sixth share of a co-owner in a parcel of land in Santa Cruz, Manila. The case matters because it fixes two rules every reviewee must carry into the examination room: that the right of legal redemption of a co-owner belongs to the heirs in their own right from the moment of the decedent's death, and not to the judicial administrator of the estate; and that the thirty day period to redeem runs only from the written notice given by the vendor, not by the buyer.

Procedural History

Angela M. Butte tendered the redemption price, and upon its refusal she consigned the amount in court and filed her complaint for legal redemption before the Court of First Instance of Manila. That court rendered decision dismissing the complaint, holding that she had no right to redeem and that, in any event, she had exercised it beyond the statutory thirty day period. The defendant's counterclaim for damages was likewise dismissed for lack of sufficient proof. Both parties appealed directly to the Supreme Court. The Supreme Court reversed the trial court and upheld the redemption. Manuel Uy and Sons timely moved for reconsideration, and the Court, in its resolution of April 23, 1962, modified the dispositive portion of its decision.

Facts

During his lifetime, Jose V. Ramirez was a co-owner of a house and lot in Santa Cruz, Manila, holding an undivided one sixth share, together with five other co-owners, among them Marie Gamier Vda. de Ramirez. On October 20, 1951, Jose V. Ramirez died. His estate, which included that one sixth share, became the subject of a special proceeding for the settlement of his estate. His will, which bequeathed one third of the free portion to Angela M. Butte, was admitted to probate, but the proceedings remained pending because the claims of creditors exceeded the assets. The Bank of the Philippine Islands was appointed judicial administrator.

On December 9, 1958, Marie Gamier Vda. de Ramirez sold her undivided one sixth share to Manuel Uy and Sons, Incorporated, for 500,000 pesos. The deed was registered and a new certificate of title was issued in the name of the vendee and the other co-owners. On the same day, the vendee wrote the administrator bank informing it of the sale. The bank forwarded the letter to Mrs. Butte through her counsel, who received it on December 10, 1958, and her son personally handed the letters to her on December 11 or 12, 1958. Separately, the vendor, through her attorney-in-fact Mrs. Chambers, wrote the bank on December 11, 1958 confirming the sale. The bank received that letter on December 15, 1958, endorsed it to Mrs. Butte's counsel, who received it on December 16, 1958, and Mrs. Butte received it on December 19, 1958.

On January 15, 1959, Mrs. Butte sent a letter and a cashier's check for 500,000 pesos to Manuel Uy and Sons, Incorporated, offering to redeem the share. The tender was refused, so on the same day she consigned the amount in court and filed her action. She also alleged that the price was grossly excessive and prayed for damages. It later appeared, and was confirmed by official certification, that she withdrew the consigned amount on August 24, 1959.

Issues

• Whether or not Angela M. Butte, as testamentary heir of Jose V. Ramirez, may exercise the right of legal redemption over the one sixth share sold by Marie Gamier Vda. de Ramirez, despite the presence of a judicial administrator and the pendency of the testate proceeding.
• Whether or not she exercised the right of legal redemption within the period prescribed by law.
• Whether or not the price of 500,000 pesos was grossly excessive.
• Whether or not the withdrawal of the consigned amount affects her right to redeem and the accountability for fruits.

Applicable Provisions

Article 1620 of the Civil Code provides:

Article 1620. A co-owner of a thing may exercise the right of redemption in case the shares of all the other co-owners or of any of them, are sold to a third person. If the price of the alienation is grossly excessive, the redemptioner shall pay only a reasonable one. Should two or more co-owners desire to exercise the right of redemption, they may only do so in proportion to the share they may respectively have in the thing owned in common.

This is the very source of the right Mrs. Butte invoked as a co-owner.

Article 1623 of the Civil Code provides:

Article 1623. The right of legal preemption or redemption shall not be exercised except within thirty days from the notice in writing by the prospective vendor, or by the vendor, as the case may be. The deed of sale shall not be recorded in the Registry of Property, unless accompanied by an affidavit of the vendor that he has given written notice thereof to all possible redemptioners. The right of redemption of co-owners excludes that of adjoining owners.

This fixes the thirty day period and, critically, the person from whom the notice must come.

Article 777 of the Civil Code provides:

Article 777. The rights to the succession are transmitted from the moment of the death of the decedent.

This is the basis for holding that the heirs became co-owners at the instant of death.

Article 776 of the Civil Code provides:

Article 776. The inheritance includes all the property, rights and obligations of a person which are not extinguished by his death.

This defines what passed to the heirs, and what did not.

Article 947 of the Civil Code provides:

Article 947. The legatee or devisee acquires a right to the pure and simple legacies or devises from the death of the testator, and transmits it to his heirs.

This confirms that the heir's right vests at death, not at distribution.

Ruling

On the first issue, the Court held that Mrs. Butte was clearly entitled to redeem. By law, the rights to the succession are transmitted from the moment of the decedent's death, and the right of succession includes all property rights and obligations that survive him. The heirs of Jose V. Ramirez therefore acquired his undivided share from the moment of his death, and from that instant became co-owners with the surviving co-owners. A co-owner of an undivided share is necessarily a co-owner of the whole. The right of redemption vested exclusively in consideration of the redemptioner's quality as co-owner, independently of the size of the share.

The Court rejected the argument that the judicial administrator stood in the way. The administrator's rights of possession and administration do not include the right of legal redemption, because that right came into existence only when the sale was perfected, eight years after the death of Jose V. Ramirez, and formed no part of his estate. The heirs acquired it originally, in their individual capacity, not derivatively from the decedent. Death extinguishes civil personality, so the decedent could not acquire a right eight years after his death. All the law requires is that the redemptioner be a co-owner at the time the share of another co-owner is sold to a stranger.

On the second issue, the Court held that the redemption was timely. The period is peremptory, because the policy of the law is not to leave the purchaser's title in uncertainty. The notice that counted was that given by the vendor, through her attorney-in-fact, received by the bank on December 15, 1958 and by Mrs. Butte's counsel on December 16, 1958. Counting from December 16, excluding that day and including January 15, 1959, the tender and consignation on January 15, 1959 fell on the last day of the thirty day period. The Court stressed that the notice by the buyer should not be taken into account, since the text of Article 1623 expressly requires notice in writing by the vendor, and the seller is in the best position to know who his co-owners are.

On the third issue, the Court found no justification for the claim that 500,000 pesos was grossly excessive, since gross excess cannot be predicated on mere individual estimates of market price by a single realtor. On the fourth issue, in its resolution, the Court held that the withdrawal of the consigned amount did not affect the right of redemption, which is optional and not compulsory, and the price was tendered in due time. But no actual redemption would have been legally made until the price is in fact paid, so the vendee remained owner and entitled to the fruits until actual payment. The mora of the vendee did not entitle Mrs. Butte to damages, absent proof of the reality and extent of the damage.

Doctrine

First, the right of legal redemption of a co-owner belongs to the heirs in their own individual capacity from the moment of the decedent's death, by force of Article 777, and does not form part of the estate administered by the judicial administrator. Second, the thirty day period under Article 1623 runs only from the written notice given by the vendor, and notice by the buyer does not start the period. Third, the right vests in the redemptioner by reason of the quality of co-owner, regardless of the size of the share. Fourth, the redemptioner must be a co-owner at the time of the sale to a stranger.

Disposition

The Supreme Court reversed the trial court, declared the tender of 500,000 pesos duly made and the right of redemption preserved, and ordered Manuel Uy and Sons, Incorporated to execute a deed of conveyance of the one sixth share in favor of Angela M. Butte upon her payment of 500,000 pesos within sixty days from the finality of the decision.

Remember This

The one line to memorize: the thirty day period to redeem runs from the written notice of the vendor, and the heir's right of redemption vests at the moment of death, not through the administrator. Examiners use this case to test the reckoning of the redemption period and the distinction between the heir's personal right and the estate under administration.