G.R. No. L-12731; January 27, 1959
FAUSTO CATAGONA, plaintiff-appellee, vs. SEGUNDO DIONISIO, ET AL., defendants-appellants.

FACTS

On June 2, 1954, plaintiff Fausto Catagona filed an action to declare a contract with defendant Segundo Dionisio as an equitable mortgage, not a sale with a right to repurchase, and to settle related monetary claims. The defendant countered that it was a sale with pacto de retro and he had consolidated ownership due to non-payment. Instead of trial, the parties submitted a written amicable settlement agreement to the court on September 2, 1954. The court approved it and rendered judgment ordering compliance. The key terms were: (1) cancellation of the previous deed of sale with right of redemption; (2) cancellation of the defendant’s title and issuance of a new one in the plaintiff’s name; (3) plaintiff’s acknowledgment of a P2,600 debt to the defendant, payable without interest by February 28, 1955; (4) plaintiff’s agreement to execute a mortgage on the property to secure the debt; and (5) mutual waiver of other claims.
The plaintiff failed to pay the P2,600 by the agreed date. The defendant did not demand the execution of the mortgage but instead filed a motion for execution of the judgment on May 25, 1955, which the court granted. Consequently, the provincial sheriff sold the property at public auction on August 25, 1955, and the defendant was the highest bidder. A new title (Transfer Certificate of Title No. 18965) was issued in the defendant’s name.
On April 7, 1956, within one year from the auction sale date, the plaintiff paid the sheriff P3,205 to redeem the property. The sheriff executed a deed of repurchase. To effect the transfer, the plaintiff filed a motion on April 16, 1956, asking the court to order the defendant to surrender his title to the Register of Deeds. The court granted this motion on April 23, 1956.
The defendant filed a motion for reconsideration, arguing that the plaintiff had no right of redemption because the auction sale resulted from the execution of a judgment based on their agreement, not from the foreclosure of a mortgage executed in favor of institutions like the Philippine National Bank or the Rehabilitation Finance Corporation, which have special redemption laws. The trial court denied this motion, prompting the appeal.

ISSUE

Whether the plaintiff had the right to redeem the property sold at public auction within one year from the date of sale.

RULING

Yes, the plaintiff had the right of redemption. The Supreme Court affirmed the trial court’s order.
The Court clarified that the auction sale was not a result of the foreclosure of the mortgage contemplated in the amicable agreement. The defendant had waived his right to have that mortgage executed. Instead, he sought and obtained an ordinary writ of execution to satisfy his credit after the plaintiff’s default on the P2,600 payment. Therefore, the sale was an ordinary execution sale. Under the applicable law (then Section 26 of Rule 39 of the Rules of Court), a judgment debtor is entitled to redeem property sold on execution within one year from the date of the sale. The plaintiff validly exercised this right by paying the redemption price to the sheriff on April 7, 1956, which was within the one-year period from August 25, 1955. The trial court correctly ordered the defendant to surrender his certificate of title to effectuate the redemption.