G.R. No. 75304; January 23, 1990
BIENVENIDA PANGILINAN, CRISENCIO PANGILINAN, and NARCISO LINTAG, petitioners, vs. FIDEL RAMOS, TARCILLA RAMOS GADUQUE, GERONIMO RAMOS, LETICIA RAMOS, ESTERLITA RAMOS, JUANITA RAMOS, EMILIA DUCUT RAMOS, LEOCADIO RAMOS, MACARIO RAMOS and CATALINO RAMOS, respondents.

FACTS

The property in dispute, an unregistered residential lot, was originally sold by the spouses Luz to Leocadio Ramos in 1964. It was subsequently sold to Tarcilla Ramos (later Gaduque) in October 1964. On October 26, 1965, Tarcilla Ramos executed a Deed of Sale with Conventional Redemption in favor of the petitioners (spouses Pangilinan and Narciso Lintag) for P1,000.00. The deed expressly granted Ramos the right to repurchase the property within five years by reimbursing the same amount. After executing this deed, Ramos left for Olongapo City for over nine years, during which her whereabouts were unknown to her family. The petitioners declared the property in their names for taxation, paid real estate taxes from 1965 to 1977, and built a residential house on the lot in 1972.
The stipulated five-year redemption period expired without Ramos exercising her right. Years later, after locating Ramos, the respondents (Ramos and her siblings) sought to redeem the property but were refused by the petitioners. This led to the filing of a complaint for recovery of possession, annulment of document, and damages. The Court of First Instance of Pampanga dismissed the complaint, declaring the petitioners as exclusive owners. On appeal, the Court of Appeals modified the decision, declaring the contract as a true sale with a right to repurchase and ordering Ramos to redeem the property within thirty days from the finality of its decision upon payment of a computed repurchase price.

ISSUE

Whether the vendor, Tarcilla Ramos, can still exercise the right of redemption after the expiration of the stipulated five-year period, given the judicial determination of the contract’s true nature.

RULING

Yes. The Supreme Court affirmed the decision of the Court of Appeals. The legal logic hinges on the application of Article 1606 of the Civil Code. The contract’s terms were clear: it was a sale with conventional redemption (pacto de retro) with a five-year repurchase period. The general rule is that failure to redeem within the agreed period results in the consolidation of ownership in favor of the vendee. However, an exception applies when the very nature of the contract is disputed. Paragraph 3 of Article 1606 provides that if the vendor contests the contract’s nature in a civil action and the court ultimately declares it to be a true sale with a right to repurchase, the vendor is granted a fresh period of thirty days from the finality of that judgment to exercise the right of redemption.
Here, the respondents filed an action where the true character of the deed was the central issue. The Court of Appeals, affirming the trial court’s finding, correctly declared it as a contract of sale with a right of repurchase. Consequently, the law explicitly grants Tarcilla Ramos a new 30-day period from the finality of the judgment to redeem. This period is not prescriptive but a mandatory condition precedent fixed by law to resolve uncertainty over title. The petitioners’ arguments on the expiration of the conventional period were thus superseded by this statutory right, which aims to settle conclusively the status of the property once the contract’s nature is judicially determined. The redemption price was properly computed to include the principal