Right of Legal Redemption Among Co-Owners Under Philippine Law

The right of legal redemption (also called the **right of pre-emption or retracto legal) among co-owners in the context of Philippine civil law arises when a co-owner sells their ideal or undivided share in co-owned property to a third party. This right allows the remaining co-owners to redeem the sold share from the purchaser under specific conditions.

The legal basis for this right is found in the Civil Code of the Philippines, primarily Article 1620, as well as related provisions. Below is a detailed analysis of this legal concept.

1. Legal Basis and Nature of the Right

Article 1620:

"A co-owner of a thing may exercise the right of redemption in case the shares of all the other co-owners or any of them are sold to a third person. If the price of the alienation is grossly excessive, the redemptioner shall pay only a reasonable one."

The right of redemption is statutory, meaning it exists by operation of law and does not require prior agreement among co-owners.
The purpose of this right is to preserve the co-ownership and prevent the intrusion of outsiders into the relationship of co-owners.
It applies only to voluntary sales to third persons, not to transfers made by donation, succession, or other involuntary modes.

2. Conditions for the Exercise of the Right

The co-owner's right to redeem arises when the following requisites are present:

a. Existence of Co-Ownership

The property must be co-owned at the time of the sale. Co-ownership exists when two or more persons own an undivided share in a single piece of property.
If the co-ownership is terminated (e.g., by partition), the right of legal redemption is no longer applicable.

b. Alienation of the Share of a Co-Owner

A co-owner must have voluntarily sold their ideal or undivided share to a third party.
The sale must be valid and binding between the seller (co-owner) and the buyer (third person).

c. Third-Party Buyer

The purchaser must be a third party, not another co-owner. If the sale is to another co-owner, there is no need for redemption because the ideal share remains within the co-ownership.

d. Price Paid

The redemptioner (remaining co-owner) is obligated to match the price paid by the third-party buyer, unless the price is deemed grossly excessive. In such cases, the redemptioner may pay only a reasonable price.

3. Procedure for Redemption

a. Notice of Sale

Under Article 1623 of the Civil Code:

"The right of legal pre-emption or redemption shall not be exercised except within thirty days from the notice in writing by the vendor, or by the vendee, to the co-owners."
This written notice must be made either by the seller or the buyer. The 30-day period starts from receipt of this notice.

b. Exercise of the Right

The co-owner must manifest their intent to redeem within the 30-day period.
The intent must be clear, definite, and communicated to the buyer (or seller, as the case may be).

c. Payment of the Redemption Price

To consummate the redemption, the co-owner must pay the price paid by the third party.
If the price is contested as being excessive, the redemptioner may tender a reasonable price, and the dispute may be resolved in court.

4. Limitations and Exceptions

a. Exclusion of Other Transfers

The right of redemption does not apply to transfers that are not sales, such as:
- Donations
- Testamentary dispositions (e.g., inheritance)
- Transfers made pursuant to a court order or legal adjudication

b. Prescription

The right of redemption prescribes after 30 days from the time the co-owner receives written notice of the sale.
Without proper notice, the 30-day period does not commence.

c. Waiver of the Right

Co-owners may waive their right of redemption explicitly or impliedly (e.g., by inaction after notice).

d. Partition

Once the property is partitioned and ownership becomes exclusive to individual portions, the right of redemption no longer exists.

5. Case Law Interpretations

Philippine jurisprudence has clarified key points regarding this right:

a. Notice Requirement is Mandatory

Courts have consistently held that proper written notice of the sale is a prerequisite for the 30-day redemption period to commence. (See Baysa v. Bacal, 2019)

b. Reasonable Price

In cases where the sale price is grossly excessive, courts have the authority to determine a reasonable price for redemption. (Guzman v. Galicia, 2005)

c. One-Year Limit in Special Cases

While the general rule is a 30-day period, certain cases (e.g., fraud or concealment) may allow for redemption within a year from discovery, based on equity.

6. Practical Considerations

a. Legal Strategy for Co-Owners

Co-owners seeking to avoid disruption should ensure that any sale of their ideal share is first offered to other co-owners (right of pre-emption).
If a co-owner sells without proper notice, aggrieved co-owners may seek court intervention to enforce the right of redemption.

b. Advice for Buyers

Third-party buyers must ensure compliance with the notice requirements under Article 1623 to protect their ownership against redemption claims.

7. Illustrative Example

A, B, and C co-own a parcel of land. A sells their 1/3 share to X (a third party) for PHP 1 million.
B and C, upon receiving written notice of the sale, have 30 days to redeem A's share by paying PHP 1 million to X.
If B and C both wish to redeem, they may do so pro rata, each contributing PHP 500,000 for the share.

Conclusion

The right of legal redemption under Article 1620 safeguards the interests of co-owners in maintaining the exclusivity of co-ownership. Proper procedural compliance, including the mandatory written notice and timely exercise of the right, is crucial to asserting this statutory privilege. Co-owners and third-party buyers alike must ensure adherence to the law to avoid disputes and protect their respective rights.