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G.R. No. 165907. July 27, 2009.*

SPS. DOMINADOR R. NARVAEZ and LILIA W.

NARVAEZ, petitioners, vs. SPS. ROSE OGAS ALCISO and
ANTONIO ALCISO, respondents.

Obligations and Contracts; Stipulation Pour Autrui;

Requisites.—In Limitless Potentials, Inc. v. Quilala (463 SCRA
586 [2005]), the Court laid down the requisites of a stipulation
pour autrui: (1) there is a stipulation in favor of a third person; (2)
the stipulation is a part, not the whole, of the contract; (3) the
contracting parties clearly and deliberately conferred a favor to
the third person—the favor is not an incidental benefit; (4) the
favor is unconditional and uncompensated; (5) the third person
communicated his or her acceptance of the favor before its
revocation; and (6) the contracting parties do not represent, or are
not authorized by, the third party.
Appeals; Questions of Law; Questions of Fact; Words and
Phrases; Once the issue invites a review of the evidence, the
question is one of fact.—A petition for review on certiorari under
Rule 45 of the Rules of Court should include only questions of law
—questions of fact are not reviewable. A question of law exists
when the doubt centers on what the law is on a certain set of
facts, while a question of fact exists when the doubt centers on the
truth or falsity of the alleged facts. There is a question of law if
the issue raised is capable of being resolved without need of
reviewing the probative value of the evidence. Once the issue
invites a review of the evidence, the question is one of fact.
Same; Factual findings of the trial court are binding on the
Supreme Court; Exceptions.—The exceptions to the rule that the
factual findings of the trial court are binding on the Court are (1)
when there is grave abuse of discretion; (2) when the findings are
grounded on speculations; (3) when the inference made is
manifestly mistaken; (4) when the judgment of the Court of
Appeals is based on a misapprehension of facts; (5) when the
factual findings are conflicting; (6) when the Court of Appeals
went beyond the issues of the case and its findings are contrary to
the admissions of the parties; (7)

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* FIRST DIVISION.

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Narvaez vs. Alciso

when the Court of Appeals overlooked undisputed facts which, if

properly considered, would justify a different conclusion; (8) when
the findings of the Court of Appeals are contrary to those of the
trial court; (9) when the facts set forth by the petitioners are not
disputed by the respondents; and (10) when the findings of the
Court of Appeals are premised on the absence of evidence and are
contradicted by the evidence on record. The Spouses Narvaez did
not show that the instant case falls under any of the exceptions.
Same; Assignment of Errors; Pleadings and Practice; Only
errors specifically assigned and properly argued in the appellant’s
brief will be considered, except jurisdictional and clerical errors.—
The rule is that only errors specifically assigned and properly
argued in the appellant’s brief will be considered, except
jurisdictional and clerical errors. However, the Court is clothed
with ample authority to review matters not assigned as errors if
their consideration is necessary in arriving at a just decision.
Sales; Builders in Good Faith; Article 448 of the Civil Code is
inapplicable in cases involving contracts of sale with right of
repurchase—it is inapplicable when the owner of the land is the
builder, sower, or planter; Where the true owner himself is the
builder of the works on his own land, the issue of good faith or bad
faith is entirely irrelevant.—Article 448 is inapplicable in cases
involving contracts of sale with right of repurchase—it is
inapplicable when the owner of the land is the builder, sower, or
planter. In Pecson v. Court of Appeals (244 SCRA 407 [1995]), the
Court held that: Article 448 does not apply to a case where
the owner of the land is the builder, sower, or planter who
then later loses ownership of the land by sale or donation. This
Court said so in Coleongco v. Regalado: Article 361 of the old
Civil Code is not applicable in this case, for Regalado
constructed the house on his own land before he sold said
land to Coleongco. Article 361 applies only in cases where a
person constructs a building on the land of another in
good or in bad faith, as the case may be. It does not apply
to a case where a person constructs a building on his own
land, for then there can be no question as to good or bad

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faith on the part of the builder. Elsewise stated, where the

true owner himself is the builder of the works on his own
land, the issue of good faith or bad faith is entirely
irrelevant.

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Narvaez vs. Alciso

Same; The right of repurchase may be exercised only by the

vendor in whom the right is recognized by contract or by any
person to whom the right may have been transferred”; In a sale
with right of repurchase, the applicable provisions are Articles
1606 and 1616 of the Civil Code, not Article 448.—As the Court of
Appeals correctly observed, the terms of the 14 August 1981 Deed
of Sale of Realty show that Bate and the Spouses Narvaez entered
into a sale with right of repurchase, where Bate transferred his
right of repurchase to Alciso. The Deed states that, “The SELLER
(Bate) carries over the manifested intent of the original SELLER
of the property (Alciso) to buy back the same at a price under such
conditions as the present BUYERS (Spouses Narvaez) may
impose.” Article 1601 of the Civil Code states that, “Conventional
redemption shall take place when the vendor reserves the right to
repurchase the thing sold, with the obligation to comply with the
provisions of Article 1616 and other stipulations which may have
been agreed upon.” In Gallar v. Husain (20 SCRA 186 [1967]), the
Court held that “the right of repurchase may be exercised only by
the vendor in whom the right is recognized by contract or by any
person to whom the right may have been transferred.” In a sale
with right of repurchase, the applicable provisions are Articles
1606 and 1616 of the Civil Code, not Article 448.

PETITION for review on certiorari of a decision of the

Court of Appeals.
   The facts are stated in the opinion of the Court.
  E.P. Mallari & Associates and Emilio L. Gayo for
petitioners.
  George Erwin M. Garcia and Marciano T. Inso for
respondents.

CARPIO, J.:

The Case

This is a petition1 for review on certiorari under Rule 45

of the Rules of Court. The petition challenges the 29
October
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1 Rollo, pp. 7-30.

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2004 Decision2 of the Court of Appeals in CA-G.R. CV No.

63757. The Court of Appeals affirmed with modification the
6 April 1998 Decision3 of the Regional Trial Court (RTC),
Judicial Region 1, Branch 8, La Trinidad, Benguet, in Civil
Case No. 84-CV-0094.

The Facts

Larry A. Ogas (Ogas) owned a 1,329-square meter parcel

of land situated in Pico, La Trinidad, Benguet. The
property was covered by Transfer Certificate of Title (TCT)
No. T-1068, and a portion was subject to a 30-year lease
agreement4 with Esso Standard Eastern, Inc. Ogas sold the
property to his daughter Rose O. Alciso (Alciso). TCT No. T-
1068 was cancelled and TCT No. T-124225 was issued in
the name of Alciso.
On 25 August 1979, Alciso entered into a Deed of Sale
with Right to Repurchase,6 selling the property to Jaime
Sansano (Sansano) for P10,000. Alciso later repurchased
the property from Sansano and, on 28 March 1980, she
entered into another Deed of Absolute Sale,7 this time
selling the property to Celso S. Bate (Bate) for P50,000.
The Deed stated that:

“The SELLER warrants that her title to and ownership of the

property herein conveyed are free from all liens and
encumbrances except those as appear on the face of the title,
specifically, that lease over the said property in favor of ESSO
STANDARD EASTERN, INC., the rights over which as a lessor
the SELLER likewise hereby transfers in full to the buyer.”8

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2 Id., at pp. 32-43. Penned by Associate Justice Rosalinda Asuncion-

Vicente, with Associate Justices Eugenio S. Labitoria and Bienvenido L.
Reyes, concurring.
3 CA Rollo, pp. 29-47. Penned by Judge Angel V. Colet.
4 Rollo, pp. 54-55.
5 Records, pp. 10-11.
6 Rollo, pp. 56-57.
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7 Id., at pp. 58-60.

8 Id., at p. 59.

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Narvaez vs. Alciso

TCT No. T-12422 was cancelled and TCT No. T-160669 was
issued in the name of Bate. On 14 August 1981, Bate
entered into a Deed of Sale of Realty,10 selling the property
to the spouses Dominador R. Narvaez and Lilia W. Narvaez
(Spouses Narvaez) for P80,000. TCT No. T-16066 was
cancelled and TCT No. T-1652811  was issued in the name
of the Spouses Narvaez. In 1982, the Spouses Narvaez built
a commercial building on the property amounting to
P300,000.
Alciso demanded that a stipulation be included in the 14
August 1981 Deed of Sale of Realty allowing her to
repurchase the property from the Spouses Narvaez. In
compliance with Alciso’s demand, the Deed stated that,
“The SELLER (Bate) carries over the manifested intent of
the original SELLER of the property (Alciso) to buy back
the same at a price under such conditions as the present
BUYERS (Spouses Narvaez) may impose.” The Spouses
Narvaez furnished Alciso with a copy of the Deed.
Alciso alleged that she informed the Spouses Narvaez
that she wanted to repurchase the property. The Spouses
Narvaez demanded P300,000, but Alciso was willing to pay
only P150,000. Alciso and the Spouses Narvaez failed to
reach an agreement on the repurchase price.
In a Complaint12 dated 15 June 1984 and filed with the
RTC, Alciso prayed that (1) the 25 August 1979 Deed of
Sale with Right to Repurchase, the 28 March 1980 Deed of
Absolute Sale, and the 14 August 1981 Deed of Sale of
Realty be annulled; (2) the Register of Deeds be ordered to
cancel TCT Nos. T-16066 and T-16528; (3) the Spouses
Narvaez be ordered to reconvey the property; and (4)
Sansano, Bate, and the Spouses Narvaez be ordered to pay
damages, attorney’s fees and expenses of litigation. Alciso
claimed that the inten-

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9 Id., at p. 63.
10 Id., at pp. 64-67.
11 Id., at p. 62.
12 Id., at pp. 44-51.
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tion of the parties was to enter into a contract of real estate

mortgage and not a contract of sale with right of
repurchase. She stated that:

“[C]ontrary to the clear intention and agreement of the parties,

particularly the plaintiffs herein, defendant JAIME SANSANO,
taking advantage of the good faith and financial predicament and
difficulties of plaintiffs at the time, caused to be prepared and
induced with insidous [sic] words and machinations, prevailed
upon plaintiff to sign a contract denominated as “Sale With Right
to Repurchase,” instead of Deed of Real Estate Mortgage as was
the clear intention and agreement of the parties.
xxxx
Defendant JAIME SANSANO caused to be prepared a contract
denominated as DEED OF ABSOLUTE SALE, covering the lot in
question, contrary to the clear intention and understanding of
plaintiff who was inveigled into signing said contract under the
impression that what she was executing was a real estate
mortgage.”13

The RTC’s Ruling

In its 6 April 1998 Decision, the RTC held that (1) the 25
August 1979 Deed of Sale with Right to Repurchase
became functus officio when Alciso repurchased the
property; (2) the action to annul the 28 March 1980 Deed of
Absolute Sale had prescribed; (3) Alciso had no legal
personality to annul the 14 August 1981 Deed of Sale of
Realty; (4) the 14 August 1981 Deed of Sale of Realty
contained a stipulation pour autrui in favor of Alciso —
Alciso could repurchase the property; (5) Alciso
communicated to the Spouses Narvaez her acceptance of
the favor contained in the stipulation pour autrui; (6) the
repurchase price was P80,000; (7) Alciso could either
appropriate the commercial building after payment of the
indemnity equivalent to one-half of its market value when
constructed or sell the land to the Spouses Narvaez; and (8)
Al-

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13 Id., at pp. 45-47.

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ciso was entitled to P100,000 attorney’s fees and P20,000

nominal damages.
The Spouses Narvaez appealed to the Court of Appeals.
In their Appellants Brief14   dated 21 November 2000, the
Spouses Narvaez claimed that (1) the 14 August 1981 Deed
of Sale of Realty did not contain a stipulation pour autrui
— not all requisites were present; (2) the RTC erred in
setting the repurchase price at P80,000; (3) they were
purchasers for value and in good faith; and (4) they were
builders in good faith.

The Court of Appeals’ Ruling

In its 29 October 2004 Decision, the Court of Appeals

held that (1) the 14 August 1981 Deed of Sale of Realty
contained a stipulation pour autrui; (2) Alciso accepted the
favor contained in the stipulation pour autrui; (3) the RTC
erred in setting the repurchase price at P80,000; (4) the 14
August 1981 Deed of Sale of Realty involved a contract of
sale with right of repurchase and not real estate mortgage;
(5) the Spouses Narvaez were builders in good faith; and (6)
Alciso could either appropriate the commercial building
after payment of the indemnity or oblige the Spouses
Narvaez to pay the price of the land, unless the price was
considerably more than that of the building. The Court of
Appeals remanded the case to the RTC for determination of
the property’s reasonable repurchase price.

The Issue

The Spouses Narvaez elevated the case to the Court. In

their Petition dated 15 December 2004, the Spouses
Narvaez claimed that Alciso did not communicate her
acceptance of the favor contained in the stipulation pour
autrui; thus, she could not repurchase the property.

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14 CA Rollo, pp. 95-140.

 
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Narvaez vs. Alciso

The Court’s Ruling

The petition is unmeritorious.

Article 1311, paragraph 2, of the Civil Code states the
rule on stipulations pour autrui:

“If a contract should contain some stipulation in favor of a

third person, he may demand its fulfillment provided he
communicated his acceptance to the obligor before its revocation.
A mere incidental benefit or interest of a person is not sufficient.
The contracting parties must have clearly and deliberately
conferred a favor upon a third person.”

In Limitless Potentials, Inc. v. Quilala,15 the Court laid

down the requisites of a stipulation pour autrui: (1) there is
a stipulation in favor of a third person; (2) the stipulation is
a part, not the whole, of the contract; (3) the contracting
parties clearly and deliberately conferred a favor to the
third person — the favor is not an incidental benefit; (4)
the favor is unconditional and uncompensated; (5) the third
person communicated his or her acceptance of the favor
before its revocation; and (6) the contracting parties do not
represent, or are not authorized by, the third party.
All the requisites are present in the instant case: (1)
there is a stipulation in favor of Alciso; (2) the stipulation is
a part, not the whole, of the contract; (3) Bate and the
Spouses Narvaez clearly and deliberately conferred a favor
to Alciso; (4) the favor is unconditional and uncompensated;
(5) Alciso communicated her acceptance of the favor before
its revocation — she demanded that a stipulation be
included in the 14 August 1981 Deed of Sale of Realty
allowing her to repurchase the property from the Spouses
Narvaez, and she informed the Spouses Narvaez that she
wanted to repurchase the property; and (6) Bate and the
Spouses Narvaez did not represent, and were not
authorized by, Alciso.

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15 G.R. Nos. 157391, 160749 and 160816, 15 July 2005, 463 SCRA 586,
605.

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Narvaez vs. Alciso

The Spouses Narvaez claim that Alciso did not

communicate her acceptance of the favor. They state that:

“A perusal of the provision of the Deed of Sale of Realty

between Celso Bate and the spouses Dominador R. Narvaez and
Lilia W. Narvaez (Annex “B”) which clearly provides that “the
third person” (Rose O. Alciso) must have communicated her
acceptance to the obligors (spouses Dominador R. Narvaez and
Lilia W. Narvaez) before its revocation was not complied with.
The acceptance is at best by mere inference.
xxxx
Petitioner Narvaez clearly stated that while the contract (Deed
of Sale of Realty, Annex “D”) contained an [sic] stipulation in
favor of a third person (Rose O. Alciso), she did not demand its
fulfillment and communicate her acceptance to the obligors before
its revocation.
xxxx
We maintain that the stipulation aforequoted is not a
stipulation pour autrui. Let the following be emphasized:
1. While the contract contained a stipulation in favor of a
third person (Rose Alciso) she did not demand its fulfillment and
she never communicated her acceptance to the obligors (Spouses
Narvaez) before its revocation (Uy Tam vs. Leonard, 30 Phil. 471;
Coquia vs. Fieldmen’s Insurance Co., Inc., 26 SCRA 178)
2. Granting arguendo that the stipulation is a pour autrui yet
in the three meetings Rose Alciso had with Mrs. Narvaez she
never demanded fulfillment of the alleged stipulation pour autrui
and, what is worse, she did not communicate her acceptance to
the obligors before it is revoked.”16

A petition for review on certiorari under Rule 45 of the

Rules of Court should include only questions of law —
questions of fact are not reviewable. A question of law
exists when the doubt centers on what the law is on a
certain set of facts, while a question of fact exists when the
doubt centers on the truth or falsity of the alleged facts.
There is a question of law

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16 Rollo, pp. 19, 22, and 25.

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if the issue raised is capable of being resolved without need

of reviewing the probative value of the evidence. Once the
issue invites a review of the evidence, the question is one of
fact.17
Whether Alciso communicated to the Spouses Narvaez
her acceptance of the favor contained in the stipulation
pour autrui is a question of fact. It is not reviewable.
The factual findings of the trial court, especially when
affirmed by the Court of Appeals, are binding on the
Court.18 In its 6 April 1998 Decision, the RTC found that
Alciso communicated to the Spouses Narvaez her
acceptance of the
favor contained in the stipulation pour autrui. The RTC
stated that:

“Rose Alciso communicated her acceptance of such

favorable stipulation when she went to see defendant
Lillia [sic] Narvaez in their house. Under the foregoing
circumstances, there is no question that plaintiff Rose Alciso can
maintain her instant action for the enforcement and/or fulfillment
of the aforestated stipulation in her favor to by [sic] back the
property in question.”19 (Emphasis supplied)

In Florentino v. Encarnacion, Sr.,20 the Court held that

the acceptance may be made at any time before the
favorable stipulation is revoked and that the acceptance
may be in any form — it does not have to be formal or
express but may be implied. During the trial, Alciso
testified that she informed the Spouses Narvaez that she
wanted to repurchase the property:
q What was your proposal to Mrs. Narvaez by way of settlement?

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17 Pagsibigan v. People, G.R. No. 163868, 4 June 2009, 588 SCRA 249.

18 Id.

19 CA Rollo, pp. 41-42.

20 169 Phil. 195, 205; 79 SCRA 192, 203 (1977).

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a I tried to go to her and asked her if I could redeem the property and
Mrs. Narvaez told me why not, you could redeem the property but
not our price.
xxxx
q Now, when you went back to her, what if any did you propose to her
or tell her, Madam witness?

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a I just asked for the redemption for the property, sir and she just told
me wa [sic] the price that I could only redeem the property.
q Three Hundred thousand pesos?
a Yes, sir.
q Did you make any counter proposal?
a Yes, for the third time I want [sic] back again your Honor...21

    The exceptions to the rule that the factual findings of

the trial court are binding on the Court are (1) when there
is grave abuse of discretion; (2) when the findings are
grounded on speculations; (3) when the inference made is
manifestly mistaken; (4) when the judgment of the Court of
Appeals is based on a misapprehension of facts; (5) when
the factual findings are conflicting; (6) when the Court of
Appeals went beyond the issues of the case and its findings
are contrary to the admissions of the parties; (7) when the
Court of Appeals overlooked undisputed facts which, if
properly considered, would justify a different conclusion; (8)
when the findings of the Court of Appeals are contrary to
those of the trial court; (9) when the facts set forth by the
petitioners are not disputed by the respondents; and (10)
when the findings of the Court of Appeals are premised on
the absence of evidence and are contradicted by the
evidence on record.22 The Spouses Narvaez did not show
that the instant case falls under any of the exceptions.

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21 TSN, 4 March 1988, pp. 10-12.

22 Ilagan-Mendoza v. Court of Appeals, G.R. No. 171374, 8 April 2008,
550 SCRA 635, 647.

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In its 29 October 2004 Decision, the Court of Appeals

held that Bate and the Spouses Narvaez entered into a sale
with right of repurchase and that, applying Article 448 of
the Civil Code, Alciso could either appropriate the
commercial building after payment of the indemnity or
oblige the Spouses Narvaez to pay the price of the land,
unless the price was considerably more than that of the
building. Article 448 states:

“Art. 448. The owner of the land on which anything has been
built, sown or planted in good faith, shall have the right to appro-

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priate as his own the works, sowing or planting, after payment of

the indemnity provided for in Articles 546 and 548, or to oblige
the one who built or planted to pay the price of the land, and the
one who sowed, the proper rent. However, the builder or planter
cannot be obliged to buy the land if its value is considerably more
than that of the building or the trees. In such case, he shall pay
reasonable rent, if the owner of the land does not choose to
appropriate the building or trees after proper indemnity. The
parties shall agree upon the terms of the lease and in case of
disagreement, the court shall fix the terms thereof.”

The Court of Appeals stated that:

“[T]he contract between defendants-appellants Bate and

Narvaez spouses is a contract of sale with a stipulation granting
plaintiffs-appellees the right to repurchase the property at a
reasonable price. Being the absolute owners of the property in
question, defendants-appellants Narvaez spouses have the
undisputed right to use, enjoy and build thereon.
Having built the improvement on the land they own and
registered in their names, they are likened to builders in good
faith and their rights over the improvement shall be governed by
Article 448 of the Civil Code which provides:
ART. 448. The owner of the land on which anything
has been built, sown or planted in good faith, shall have the
right to appropriate as his own the works, sowing or
planting, after payment of the indemnity provided for in
articles 546 and 548, or to oblige the one who built or
planted to pay the price of the land, and the one who sowed,
the proper rent. However, the builder or planter cannot be
obliged to buy the land if its

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Narvaez vs. Alciso

value is considerably more than that of the building or

tress. In such case, he shall pay reasonable rent, if the
owner of the land does not choose to appropriate the
building or trees after proper indemnity. The parties shall
agree upon the terms of the lease and in case of
disagreement, the court shall fix the terms thereof.
Applying said Article, plaintiffs-appellees, after repurchasing
the land, will have the following options:
(1) to appropriate for themselves the building upon
payment of its value to defendants-appellants Narvaez
spouses; OR

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(2) to compel the defendants-appellants Narvaez

spouses to buy the land, unless the value of thereof [sic] be
considerably more than that of the building, in which case,
said spouses may lease the land instead. The parties shall
agree upon the terms of the lease and in case of
disagreement, the courts shall fix the terms thereof.”23

The Court disagrees.

The rule is that only errors specifically assigned and
properly argued in the appellant’s brief will be considered,
except jurisdictional and clerical errors.24   However, the
Court is clothed with ample authority to review matters
not assigned as errors if their consideration is necessary in
arriving at a just decision.25
Article 448 is inapplicable in cases involving contracts of
sale with right of repurchase — it is inapplicable when the
owner of the land is the builder, sower, or planter. In
Pecson v. Court of Appeals,26 the Court held that:

_______________

23 Rollo, pp. 40-41.

24 Solid Homes, Inc. v. Court of Appeals, 341 Phil. 261, 278; 275 scra
267, 282 (1997).
25 Poliand Industrial Limited v. National Development Company, G.R.
No. 143866, 22 August 2005, 467 SCRA 500, 532-533.
26 314 Phil. 313, 322-323; 244 SCRA 407, 414-415 (1995).

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Narvaez vs. Alciso

“Article 448 does not apply to a case where the owner of

the land is the builder, sower, or planter who then later loses
ownership of the land by sale or donation. This Court said so in
Coleongco v. Regalado:
Article 361 of the old Civil Code is not applicable
in this case, for Regalado constructed the house on
his own land before he sold said land to Coleongco.
Article 361 applies only in cases where a person
constructs a building on the land of another in good
or in bad faith, as the case may be. It does not apply
to a case where a person constructs a building on his
own land, for then there can be no question as to
good or bad faith on the part of the builder.
Elsewise stated, where the true owner himself is the
builder of the works on his own land, the issue of good

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faith or bad faith is entirely irrelevant.” (Emphasis supplied)

Article 448 is inapplicable in the present case because

the Spouses Narvaez built the commercial building on the
land that they own. Besides, to compel them to buy the
land, which they own, would be absurd.
As the Court of Appeals correctly observed, the terms of
the 14 August 1981 Deed of Sale of Realty show that Bate
and the Spouses Narvaez entered into a sale with right of
repurchase, where Bate transferred his right of repurchase
to Alciso. The Deed states that, “The SELLER (Bate)
carries over the manifested intent of the original SELLER
of the property (Alciso) to buy back the same at a price
under such conditions as the present BUYERS (Spouses
Narvaez) may impose.” Article 1601 of the Civil Code states
that, “Conventional redemption shall take place when the
vendor reserves the right to repurchase the thing sold, with
the obligation to comply with the provisions of Article 1616
and other stipulations which may have been agreed upon.”
In Gallar v. Husain,27 the Court held that “the right of
repurchase may be exercised only by the

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27 126 Phil. 606, 611; 20 SCRA 186, 191 (1967).

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74 SUPREME COURT REPORTS ANNOTATED

Narvaez vs. Alciso

vendor in whom the right is recognized by contract or by

any person to whom the right may have been transferred.”
In a sale with right of repurchase, the applicable
provisions are Articles 1606 and 1616 of the Civil Code, not
Article 448. Articles 1606 and 1616 state:

“Art. 1606. The right referred to in Article 1601, in the

absence of an express agreement, shall last four years from the
date of the contract.
Should there be an agreement, the period cannot exceed ten
years.
However, the vendor may still exercise the right to repurchase
within thirty days from the time final judgment was rendered in a
civil action on the basis that the contract was a true sale with
right to repurchase.
Art. 1616. The vendor cannot avail himself of the right of
repurchase without returning to the vendee the price of the sale,

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and in addition:
(1) The expenses of the contract, and any other
legitimate payments made by reason of the sale;
(2) The necessary and useful expenses made on the
thing sold.”

Under Article 1616, Alciso may exercise her right of

redemption by paying the Spouses Narvaez (1) the price of
the sale, (2) the expenses of the contract, (3) legitimate
payments made by reason of the sale, and (4) the necessary
and useful expenses made on the thing sold. In the present
case, the cost of the building constitutes a useful expense.
Useful expenses include improvements which augment the
value of the land.28
Under the first paragraph of Article 1606, Alciso had
four years from 14 August 1981 to repurchase the property
since there was no express agreement as to the period
when the right can be exercised. Tender of payment of the
repurchase

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28 Spouses Macasaet v. Spouses Macasaet, 482 Phil. 853, 873; 439

SCRA 625, 645 (2004).

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VOL. 594, JULY 27, 2009 75

Narvaez vs. Alciso

price is necessary in the exercise of the right of redemption.

Tender of payment is the seller’s manifestation of his or her
desire to repurchase the property with the offer of
immediate performance.29
Alciso’s intimation to the Spouses Narvaez that she
wanted to repurchase the property was insufficient. To
have effectively exercised her right of repurchase, Alciso
should have tendered payment. In Lee v. Court of
Appeals,30 the Court held that:

“The rule that tender of payment of the repurchase price is

necessary to exercise the right of redemption finds support in civil
law. Article 1616 of the Civil Code of the Philippines x x x
furnishes the guide, to wit: “The vendor cannot avail himself of
the right of repurchase without returning to the vendee the price
of the sale...”
Thus, in the case of Angao vs. Clavano, 17 Phil. 152, it was
held that “it is not sufficient for the vendor to intimate or to state

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to the vendee that the former desires to redeem the thing sold,
but he must immediately thereupon offer to repay the price...”
Likewise, in several other cases decided by the Supreme Court
(Fructo vs. Fuentes, 15 Phil. 362; Retes vs. Suelto, 20 Phil. 394;
Rosales vs. Reyes, et al., 25 Phil. 495; Canuto vs. Mariano, 37 Phil.
840; De la Cruz, et al. vs. Resurreccion, et al., 98 Phil. 975; and
other cases) where the right to repurchase was held to have been
properly exercised, there was a definite finding of tender of
payment having been made by the vendor.” (Emphasis supplied)

Nevertheless, under the third paragraph of Article 1606,

Alciso has 30 days from the finality of this Decision to
exercise her right of repurchase. In Laserna v. Javier,31 the
Court held that:

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29  Legaspi v. Court of Appeals, 226 Phil. 24, 29; 142 SCRA 82, 88
(1986).
30 160-A Phil. 820, 829; 68 SCRA 196, 204 (1975).
31 110 Phil. 172, 175 (1960).

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76 SUPREME COURT REPORTS ANNOTATED

Narvaez vs. Alciso

“The new Civil Code in Article 1606, thereof gives the vendors
a retro “the right to repurchase within thirty days from the time
final judgment was rendered in a civil action, on the basis that
the contract was a true sale with the right to repurchase.” This
provision has been construed to mean that “after the courts have
decided by a final or executory judgment that the contract was a
pacto de retro and not a mortgage, the vendor (whose claim as
mortgagor had definitely been rejected) may still have the
privilege of repurchasing within 30 days.” (Perez, et al. vs.
Zulueta, 106 Phil. 264.)”

The third paragraph of Article 1606 allows sellers, who

considered the transaction they entered into as mortgage,
to repurchase the property within 30 days from the time
they are bound by the judgment finding the transaction to
be one of sale with right of repurchase.
WHEREFORE, the Court DENIES the petition. The
Court AFFIRMS the 29 October 2004 Decision of the Court
of Appeals in CA-G.R. CV No. 63757 with
MODIFICATION. Respondent Rose O. Alciso may exercise
her right of redemption by paying the petitioners Spouses

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Dominador R. Narvaez and Lilia W. Narvaez (1) the price

of the sale, (2) the expenses of the contract, (3) legitimate
payments made by reason of the sale, and (4) the necessary
and useful expenses made on the subject property. The
Court DIRECTS the Regional Trial Court, Judicial Region
1, Branch 8, La Trinidad, Benguet, to determine the
amounts of the expenses of the contract, the legitimate
expenses made by reason of the sale, and the necessary and
useful expenses made on the subject property.
After such determination, respondent Rose O. Alciso
shall have 30 days to pay the amounts to petitioners
Spouses Dominador R. Narvaez and Lilia W. Narvaez.
SO ORDERED.

Puno (C.J., Chairperson), Corona, Leonardo-De Castro

and Bersamin, JJ., concur.

Petition denied, judgment affirmed with modification.

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