G.R. No. 158920 : November 28, 2012

REPUBLIC OF THE PHILIPPINES (Represented by the Social Security System), Petitioner, v. MARAWI-MARANTAO GENERAL HOSPITAL, INC. and ATTY. MACAPANTON K. MANGONDATO, Respondents.



On October 16, 1970, the MMGHI obtained a loan from SSS secured by a real estate mortgage. For failure of the MMGHI to pay the monthly amortizations, the SSS extrajudicially foreclosed on the mortgage. The mortgaged property was subsequently sold on March 8, 1991 in a public auction where the SSS was the highest bidder. On October 16, 1991, the sheriffs certificate of sale was registered.

Sometime in 1992, Atty. Mangondato, Acting Chairman of the MMGHI board of directors and representing MMGHI, negotiated with the SSS for the repurchase of the property and asked for an additional six (6) months within which to make the redemption. After further negotiation, the Social Security Commission (SSC) approved Atty. Mangondatos offer to redeem the property.

Consequently, a deed of conditional sale of the subject property was executed by MMGHI. Thereafter, in a letter dated April 7, 1997, Atty. Mangondato demanded the SSS to immediately implement the transfer of the subject property. However, in a letter dated May 5, 1997, the SSS informed Atty. Mangondato that the conditional sale was a nullity.

Aggrieved by the action of the SSS, the MMGHI and Atty. Mangondato filed a complaint for specific performance and damages against the SSS in the RTC.

The RTC ruled in favor of MMGHI and Atty. Mangondato. The Republic of the Philippines, represented by the SSS, filed its appellants brief. It asserted that the trial court erred in directing the SSS to execute a deed of absolute sale in favor of MMGHI and Atty.Mangondato despite the nullity of the conditional sale. The CA affirmed the RTCs decision.

Hence, this present appeal. The Republic basically argues that no valid redemption could have been effected by entering into the deed of conditional sale as the period of redemption had already expired.

ISSUE: Whether or not MMGHI and Atty. Mangondato validly redeemed the property under the deed of conditional sale?

HELD: MMGHI and Atty. Mangondato validly redeemed the property.

CIVIL LAW: right of redemption; obligatoriness of contracts; contract to sell

The alleged nullity of the deed of conditional sale because the period of redemption had expired is wrong. As this Court held inDevelopment Bank of the Philippines v. West Negros College, Inc.: "The right of legal redemption must be exercised within specified time limits. However, the statutory period of redemption can be extended by agreement of the parties."

The policy of the law is to aid rather than defeat the right of redemption; thus, public bidding is not a condition for redemption. In view of the validity of the redemption made by MMGHI and Atty. Mangondato through the contract of conditional sale between the parties, the SSS must faithfully comply with its obligations under the said contract.This is in accordance with the principle ofobligatoriness of contracts, that obligations arising from contract have the force of law between the parties and should be complied with in good faith.

The deed of conditional sale provides that title to the property remains with the seller and will only be transferred to the buyer-redemptioner upon the execution of a final deed of sale and that upon full payment of the purchase price by the buyer-redemptioner, the SSS as seller has the obligation to execute a deed of absolute sale in favor of the former. It is established case law that where the seller promises to execute a deed of absolute sale upon the completion by the buyer of the payment of the price, the contract is only a contract to sell.

A contract to sell is defined as a bilateral contract whereby the prospective seller, while expressly reserving the ownership of the property despite delivery thereof to the prospective buyer, binds himself to sell the property exclusively to the prospective buyer upon fulfillment of the condition agreed, i.e., full payment of the purchase price. In a contract to sell, the prospective seller explicitly reserves the transfer of title to the prospective buyer, meaning, the prospective seller does not as yet agree or consent to transfer ownership of the property subject of the contract to sell until the happening of an event, which for present purposes we shall take as the full payment of the purchase price.What the seller agrees or obliges himself to do is to fulfill his promise to sell the subject property when the entire amount of the purchase price is delivered to him.

Petition is DENIED