G.R. No. 136368 ; January 16, 2002
Jaime Tan, Jr., as Judicial Administrator of the Intestate Estate of Jaime C. Tan, petitioner, vs. Hon. Court of Appeals (Ninth Special Div.) and Jose A. Magdangal and Estrella Magdangal, respondents.

FACTS

The case involves a parcel of land originally owned by the late Jaime C. Tan. In 1981, Tan executed a deed of absolute sale over the property to the spouses Jose and Estrella Magdangal, with a simultaneous agreement granting Tan a one-year right to repurchase. Tan died in 1988 without having redeemed the property. His heirs subsequently filed a suit for reformation of instrument, alleging the transaction was an equitable mortgage. The Regional Trial Court ruled in favor of the heirs, declaring the deed an equitable mortgage and ordering the redemption of the property within 120 days from the finality of its decision. This judgment was affirmed by the Court of Appeals.
The Magdangals received the CA decision on October 5, 1995. The Entry of Judgment was issued on March 13, 1996, stating the decision became final on October 21, 1995. On March 21, 1996, the Magdangals filed a motion for consolidation of ownership, arguing the 120-day redemption period commenced 15 days after their receipt of the CA decision (October 20, 1995) and had expired. On April 16, 1996, Tan, Jr. deposited the redemption price with the trial court. The RTC denied the Magdangals’ motion and approved the redemption.

ISSUE

Whether the 120-day period for redemption commenced from the finality of the Court of Appeals decision (as per the old rule) or from the petitioner’s receipt of the Entry of Judgment (as per the new 1997 Rules of Civil Procedure).

RULING

The Supreme Court ruled in favor of petitioner Jaime Tan, Jr., holding that his redemption was timely. The Court emphasized that while procedural rules may be applied retroactively, they cannot be applied in a manner that impairs vested substantive rights or results in manifest injustice. The right of redemption, once vested by a final judgment declaring the transaction an equitable mortgage, is a substantive right.
At the time Tan, Jr. exercised his right, prevailing jurisprudence held that the redemption period commenced from the party’s receipt of the Entry of Judgment. The new Section 1, Rule 39 of the 1997 Rules, which states that a judgment becomes final upon the expiration of the period to appeal, should not be applied retroactively to this case. To do so would unjustly deprive Tan, Jr. of his right to redeem the property—a right he sought to protect in litigation since 1988—simply because of a procedural change. The Court reinstated the trial court’s orders approving the redemption, as applying the new rule retroactively would be inequitable and defeat the substantive right of redemption that had already vested.