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Gargollo v. Duero & Espejo (1961) Barrera, J. Short version: Seller sold land to buyer saying that up until a certain year, she may redeem the land. The time came that seller wants to redeem the land. But buyers did not want to return it. Seller goes to court saying that since she did not want to avail of the right given to her by NCC 546 (2) which was to refund the buyers expenses for the improvement, she is exercising the right given to her by NCC 547 which is to have the buyer remove the improvement on the land. Issue: Can buyer be compelled to return the land without seller reimbursing him for the improvement? SC says no. The article applicable is NCC 1616 not NCC 547. NCC 1616 says the right of repurchase cannot be availed without t he seller returning the price of the land + necessary and useful expenses. ----Facts:

Gargollo (seller) sold to Duero & Espejo (buyers) with pacto de retro a parcel of land in Iloilo. This was in May 1953. o Price: P400 o Later, the agreed price increased to P750 Accdg to the sale with pacto de retro, sellers could redeem the land on or before 1962. In Sept 1958, seller notified the buyers that she is redeeming the land the following month. When that month came (October), she gave the buyers written notice to accept the redemption amount of P750 When buyers refused the payment, seller deposited the payment to the Clerk of Court then advised the buyers to withdraw the amount Buyers say: because of the promise of seller to definitely sell the land to them for P1k, they made improvements on the land (banana & fruit trees, rice paddies, corn.) Pre trial: o Buyers agreed to return the property to seller upon payment of P750 plus P25 as reimbursement for real estate tax plus value of improvements But, the parties failed to agree on who should assess the value of the improvements Seller says: she did not want to exercise the option to refund the buyers expenses or pay the increase in value of the land as provided in NCC 546(2), but she is claiming the right given her by NCC 547. ART. 546. Necessary expenses shall be responded to every possessor; but only the possessor in good faith may retain the thing until he has been reimbursed therefor. Useful expenses shall refunded only to the possessor in good faith with the same right of retention, the person who has defeated him in a possession having the option of refunding the amount of the expenses or of paying the increase in value which the thing may have acquired by reason thereof. ART. 547. If the useful improvements can be removed without damage to the principal thing, the possessor in good faith may remove them, unless the person who recovers the possession exercise the option under paragraph 2 of the proceeding article.

Seller now prays: o That judgment be rendered declaring the land as already redeemed in view of her deposit of P750 to the Clerk of Court o To order the buyers to remove all improvements and to vacate o To order the buyers to pay the costs of the suit. Buyer answers: NCC 1616 states that the seller cannot avail of the right of repurchase without returning to the buyer the price of the sale 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. LC decided in favour of seller. o Seller did not want to exercise the option given by NCC 546 (2). o Accdg to NCC 547, as possessors in good faith, buyers are not entitled to retain the land but only to remove the improvements if it can be done without damage

Issue: Should the buyers be compelled to return the land to the seller without the seller first reimbursing the improvements made by the buyer? Held: No. Ratio:

The applicable provision is NCC 1616 not NCC 547. NCC 547 refers to possession. NCC 1616 deals specifically with conventional redemption.

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ART. 1616. The vendor cannot avail himself of the right of repurchase without returning to the vendee the price of the sale, 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. From this provision, it is clear that for a seller a retro to be entitled to exercise his right of redemption, he must reimburse the buyer a retro, not only (1) The price of the sale, but also-(2) The expenses of the contract and any other legitimate payments made by reason of the sale, and (3) The necessary and useful expenses made on the thing sold. The seller is not given the option to require the buyer to remove the useful improvements on the land, unlike that granted the owner of a land under NCC 546 and 547. Under NCC 1616, the seller must pay for the useful improvement introduced by the buyer; otherwise, the buyer may retain possession of the land until reimbursement is made

In this case: Since seller is unwilling to reimburse the buyer the value of the useful improvements (as agreed upon by them at the pretrial), buyer may not lawfully be ordered to vacate and deliver land to vendor. Decision of TC set aside. Case remanded to TC to continue hearing of the case to determine the value of the improvements.