G.R. No. 83992 January 27, 1993 RURAL BANK OF DAVAO CITY, INC. petitioner, vs.

THE HONORABLE COURT OF APPEALS and GABRIEL ABELLANO and FRANCISCO SEQUITAN, respondents. DAVIDE, JR., J.: Two (2) issues are presented for Our resolution in this petition for review under Rule 45 of the Rules of Court, viz:(1) whether or not the two-year redemption period fixed by the Rural Banks' Act 1 in a foreclosure sale of property acquired through a homestead patent superseded or repealed the five-year repurchase period prescribed in Section 119 of the Public Land Act 2 and (2) if it did not, whether, in the event of the expropriation by the Government of the subject property during the redemption or repurchase period, a homesteader, who thereafter exercised his right to redeem or repurchase, is entitled to the compensation for such expropriation less the redemption or repurchase amount. The trial court ruled in the negative for the first issue and in the affirmative for the second. The respondent Court of Appeals affirmed the trial court. Hence, We have the instant petition seeking for a contrary ruling. The undisputed facts generative of this controversy are as follows: On 18 April 1978, private respondents Gabriel Abellano and Francisca Sequitan obtained a loan in the amount of P45,000.00 from the petitioner, a rural bank organized and existing under the Rural Banks' Act. The terms thereof called for payment of the loan in two (2) equal installments on 21 October 1978 and 21 April 1979. As security for the loan, the private respondents mortgaged with the petitioner a parcel of land, belonging to them, with an area of one (1) hectare, more or less, located at Matina, Davao City and covered by Original Certificate of Title No. P-7392. The land was acquired through a homestead patent.

On 1 July 1978, the National Housing Authority (NHA) filed with the then Court of First Instance (CFI) of Davao City a complaint for the expropriation of several parcels of land located in Davao City to carry out its Slum Improvement and Resettlement Program; said action was directed against the private respondents, with respect to the mortgaged property, and fifteen (15) other persons. The case was docketed as Special Civil Case No. 11157 and was raffled off to Branch II of said court. As mortgagee, the petitioner filed therein a motion to intervene, which the court granted. Upon arrival of the loan's maturity dates, private respondents failed to pay their obligation to the petitioner. The latter therefore caused the extrajudicial foreclosure of the subject property in accordance with Act No. 3135, as amended. During the foreclosure sale held on 9 November 1979, the petitioner submitted the highest bid; consequently, the Deputy Sheriff executed in its favor a certificate of sale for the total amount of P54,883.00 which included the unpaid interest and other charges. The certificate of sale was registered in the Registry of Deeds of Davao City on 7 December 1979. Private respondents, however, failed to redeem the foreclosed property within the period of two (2) years from the date of registration, or up to 7 December 1981, as provided for in Section 5 of the Rural Banks' Act. Despite such failure, the petitioner extended the period to October 1982. The private respondents still failed to redeem the property. Petitioner then asked for the consolidation of its title over the same. In due course, the private respondents' certificate of title was canceled and in lieu thereof, Transfer Certificate of Title No. T-92487 in the name of the petitioner was issued on 3 November 1982. On 24 February 1983, Branch II of the CFI of Davao City issued an order in Special Civil Case No. 11157 requiring the NHA to pay the amount of P85.00 per square meter for the properties sought to be expropriated, which included the aforementioned foreclosed property. This amount was subsequently reduced to P49.00 per square meter. Thus, the price to be paid for the foreclosed property was P490,000.00. On 9 November 1983, private respondents notified the petitioner of their desire to repurchase the foreclosed property pursuant to

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Section 119 of the Public Land Act (C.A. No. 141). Rebuffed by the latter, private respondents filed on 9 February 1984 with the Regional Trial Court (RTC) of Davao City a complaint for reconveyance of their foreclosed property under said Section 119. The case was docketed as Civil Case No. 16693 and was raffled off to Branch XIII of the said court. In its Affirmative Defenses set up in the Answer to the complaint, petitioner claimed that the private respondents' action will no longer prosper because their right to repurchase had become moot and academic as the property could no longer be physically, materially and actually recovered or repurchased. This is so because no less than the sovereign state needed the same — pursuant to its socialized housing program under P.D. No. 875, as amended — to be divided into smaller lots for distribution to a greater number of recipients, and that "the right to repurchase cannot be exercised without the actual, material and physical recovery of the property itself, otherwise such an action, as the instant action of the plaintiffs, is purely speculative, which our Supreme Court, in a series of decisions, had frowned upon and disallowed." 3 After the issues were joined, the trial court conducted a pre-trial conference on 3 May 1984. On the same date, it issued an order requiring the private respondents to deposit the sum of P54,883.00 as repurchase price which they complied with. On 2 July 1984, private respondents filed a Motion to Amend the Complaint and File Supplemental Pleading alleging therein, inter alia, that since "there is a seeming impossibility for the plaintiffs now to reacquire the property by reason of the order of expropriation, justice also demands that the said amount of P490,000.00 must be given to the plaintiffs, in lieu of the property expropriated." Despite the petitioner's opposition, the trial court issued on 2 August 1984 an order granting the motion and admitting the amended complaint. The trial court decided the case on 1 February 1985 on the basis of the stipulation of facts submitted by the parties. The dispositive portion of the decision reads:

WHEREFORE, decision is hereby rendered, declaring plaintiffs entitled to the price paid by the National Housing Authority for the property in question and ordering the defendant: 1. To pay or remit the (sic) plaintiffs the sum of P435,117.00, the remaining balance of said price of the property paid by NHA after deducting the obligation of plaintiffs in the sum of P54,883.00; 2. To pay plaintiff's interest on the P435,117.00 at the rate defendant grants to its depositor commencing on the date when defendant received the sum of P490,000.00 from NHA in payment of the property in question until the whole obligation is fully paid; 3. To pay plaintiffs the sum of P10,000.00 as attorney's fee plus costs. SO ORDERED. 4 Petitioner seasonably appealed this decision to the then Intermediate Appellate Court on both questions of fact and law. The case was docketed as CA-G.R. CV No. 07689. On 30 March 1988, the respondent Court of Appeals, as the successor of the Intermediate Appellate Court, promulgated, through a division of five (5) (Sixteenth Division), its decision in CA-G.R. No. 07689 affirming the decision of the trial court in Civil Case No. 16693. 5 In affirming the trial court's decision, the respondent Court held that Section 5 of the Rural Banks' Act, as amended, did not reduce the period of redemption of homestead lands from the five (5) years prescribed in Section 119 of C.A. No. 141, as amended, to two (2) years from the date of registration of the foreclosure sale as fixed in the former; in support of such conclusion, it summoned Oliva vs. Lamadrid 6 wherein this Court, speaking through then Chief Justice Concepcion, held:

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It should be noted that the period of two (2) years granted for the redemption of property foreclosed under Section 5 of Republic Act No. 720, as amended by Republic Act No. 2670, refers to lands "notcovered by a Torrens Title, a homestead or free patent," or to owners of lands "without torrens title," who can "show five years or more of peaceful, continuous and uninterrupted possession thereof in the concept of an owner, or of homesteads or free patent lands pending the issuance of titles but already approved," or of "lands pending homestead or free patent titles." Plaintiff, however, had, on the land in question, a free patent and a Torrens title, which were issued over 26 years prior to the mortgage constituted in favor of the Bank. Accordingly, there is no conflict between Section 119 of Commonwealth Act No. 141 and Section 5 of Republic Act. No. 720, as amended, and the period of two (2) years prescribed in the latter is not applicable to him. Moreover, the legislative history of the bills which later became said Republic Act No. 2670, amending Republic Act No. 720, shows that the original proposal was to give homesteaders or free patent holders a period of ten (10) years within which to redeem their property foreclosed by rural banks; that this proposal was eventually found to be unwise, because its effect would have been to dissuade rural banks from granting loans to homesteaders or free patent holders — which were (sic) sought to be liberalized — said period of redemption being too long, from the viewpoint of said banks; and that, consequently, the proposal was given up, with the specific intent and understanding that homesteaders or holders of free patent (sic) would retain the right to redeem within five (5) years from the conveyance of their properties, as provided in the general law, that is to say the Public Land Act, or Commonwealth Act No. 141.

It is, therefore, our considered view that plaintiff herein has the right to repurchase the property in question within five (5) years from the date of the conveyance or foreclosure sale, or up to February 4, 1966, and that having exercised such right and tendered payment long before the date last mentioned, defendants herein are bound to reconvey said property to him. In said case, the mortgaged property involved was sold at a public auction by the Sheriff on 4 February 1961. Respondent Court further ruled that C.A. No. 141 is a special law and must prevail. Thus: Neither could it readily be concluded that the Rural Banks Act is a special law and that the Public Law (sic) Act is general. The Rural Bank Act deals with all kinds of land while the Public Land Act relates to a specific class of properties. In Cassion v. Banco Nacional Filipino, 89 Phil. 560, the sole question for decision is which of the conflicting provisions ought to prevail? Section 32 and Section 6 of Act No. 2938, which amended Act No. 2717 (sic) creating the Philippine National Bank, which allows the debtor only one year to redeem property sold under a mortgage foreclosure whether judicial or extra-judicial, or Section 117 of Act No. 2874 known as the Public Land Act, as amended, which provides that "every conveyance of land acquired under free (sic) patent or homestead provisions, when proper, shall be subject to repurchase by the applicant, his widow, or legal heirs for a period of five years from the date of conveyance," the Supreme Court held: Now then, it seems plain that Section 32 of Act No. 2938 and Section 6 of Act No. 3135 are wider in scope or more comprehensive than Section 117

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of Act No. 2874. They comprehend all kinds of property brought within the relations and circumstances provided thereby, while Section 117 of Act No. 2874 relates to a specific class of property. Stated otherwise, the property on which the Philippine National Bank's Charter and Act No. 3135 are operative is any property mortgaged to the Bank, whereas, as already stated, Act No. 2874 by its own terms is operative only on lands acquired under the free patent or homestead provisions. Section 32 of Act No. 2938 and Section 6 of Act No. 3l35 standing alone would include homestead or free patented lands, while Section 117 of Act No. 2874 would not embrace any property other than that mentioned therein even if Acts Nos. 2938 and 3135 did not exist. To use the words of Act No. 190 and the Rules of Court, Act No. 2874 manifests "a particular intent," the intent to promote the spread of small land ownership and the preservation of public land grants in the hands of the underprivileged for whose benefit they are specially intended and whose welfare is a special concern of the State. We therefore hold that Act No. 2874 is controlling, that homestead constitute an exception of Acts No. 2938 and 3135, and that the appealed decision should be affirmed. It is so ordered with costs against the appellant. (p. 562)

The Homestead Act is a social legislation enacted for the welfare and protection of the poor (Patricio vs. Bayog, 112 SCRA 42). A construction which would carry into effect the evident policy of the law should be adopted in favor of that interpretation which would defeat it. A decent respect for the policy of the law must save the Court from imputing to it a self defeating, if not disingeneous purpose (p. 65, Agpalo, Supra). Since the mortgaged property is a homestead covered by a Torrens Title, the five-year period of repurchase should be from the foreclosure sale on November 9, 1979 or up to November 9, 1984. NHA filed the eminent domain proceedings on July 1, 1978 while appellees were still the owners of the land. For this reason, they were the ones who were made defendants therein. Although the land was foreclosed and sold to the Rural Bank on November 9, 1979, the latter did not become the absolute owner thereof. It never did. Under Section 119 of the Public Land Law, plaintiff has up to November 9, 1984 within which to repurchase the property. Thus on November 9, 1983 appellees notified appellant bank of their desire to repurchase said property under Section 119, CA 141, but was (sic) refused. On February 9, 1984, appellees filed with the Regional Trial Court of Davao City, Branch XIII, an action for reconveyance and on May 3, 1984, the lower court issued an order requiring appellees to deposit the amount of P54,883.00 as the amount of repurchase price which was complied with by the latter, well within the period of five years from the date of foreclosure sale. 7 As to the fact that the land had already been expropriated by the NHA, the respondent Court observed that: While it is true that the land in question has been expropriated by the NHA who paid the total amount of P490,000.00 as the just compensation for the

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which may be reduced to the two (2) principal issues adverted to in the exordium of this ponencia. After the filing of the private respondents' Comment to the petition, the petitioner's reply thereto and the former's rejoinder to the reply, this Court gave due course to the petition and required the parties to submit their respective memoranda which they complied with. The petition is devoid of any merit. Respondent Court of Appeals committed no reversible error. Section 119 of the Public Land Act (C.A. No. 141) provides: Sec. 119. Every conveyance of land acquired under the free patent or homestead provisions, when proper, shall be subject to repurchase by the applicant, his widow, or legal heirs, within a period of five years from the date of the conveyance. 11 The policy of homestead laws and the reason behind the foregoing provision are expressed by this Court inPascua vs. Talens 12 in this wise: It is well-known that the homestead laws were designed to distribute disposable agricultural lots of the State to land-destitute citizens for their home and cultivation. Pursuant to such benevolent intention the State prohibits the sale or encumbrance of the homestead (Section 116) within five years after the grant of the patent. After that five-year period the law impliedly permits alienation of the homestead; but in line with the primordial purpose to favor the homesteader and his family the statute provides that such alienation or conveyance (Section 117) shall be subject to the right of repurchase by the homesteader, his widow or heirs within five years. This Section 117 is undoubtedly a complement of Section 116. It aims to preserve and keep in the family of the homesteader that portion of public land which the State had gratuitously given to

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It may be observed in this connection thatOliva was decided in 31 October 1967.A. with a sense of its protection and durability. 22 As amended by R. No. as we hold.A. the right to repurchase under Section 119 cannot be waived by the party entitled thereto. was further amended by R. 3135 should prevail. and applies with equal force to both voluntary and involuntary conveyances. While Oliva is the only case. are cultivated and fostered more readily when the citizen lives permanently in his own home. 4 Cal. 16 Oliva vs. Banco Nacional Filipino. 141. but also when it is made by his widows or heirs. It would. the pertinent portion of Section 5 only reads as follows: Page 6 of 52 . The sentiment of patriotism and independence. Moreover. the state itself is concerned that the citizens shall not be divested of a means of support. If such be the case in foreclosure sales of lands mortgaged to banks other than rural banks. Their object is to provide a home for each citizen of the Government. be in keeping with this fundamental idea to hold. if this Court is to be consistent with Paras and Belisario. (Waples on Homestead and Exemptions.A. Coffee. 2670. the spirit of free citizenship. 873. 3) Because of such underlying policy and reason. with homestead statutes: 13 in connection Acts Nos. Dec. Lamadrid. among those cited. We have ruled in a number of cases that said Section 119 prevails over statutes which provide for a shorter period of redemption in extrajudicial foreclosure sales. (Cook and Burgwall vs. 15 this Court declared that such right is available in foreclosure sales of lands covered by a homestead or free patent.A. Furthermore. then. As pointedly stated earlier in Jocson vs. where his family may shelter and live beyond the reach of financial misfortune. The conservation of a family home is the purpose of homestead laws. 459). Court of Appeals. 141 20 or the one (1) year redemption period under Act No. 21 and following the rationale of Our ruling in Oliva. No. and to inculcate in individuals those feelings of independence which are essential to the maintenance of free institutions. 19These cases. 17 Belisario vs.him. No. Intermediate Appellate Court 18 and Philippine National Bank vs. the 5-year repurchase period under C. 104 Fed. therefore. 70 Am. and thus promote general welfare. the feeling of interest in public affairs.A. before the Rural Banks' Act. No. as amended by R. as categorically stated inParas and Belisario. to reckon the commencement of the said period from the expiration of the oneyear period of redemption allowed in extrajudicial foreclosures. The statutes of the United States as well as of the various states of the Union contain provisions for the granting and protection of homesteads. p. it is with greater reason that the 2-year redemption period in Section 5 of the Rural Banks' Act should yield to the period prescribed in Section 119 of C. 2670. No.. by reason of the express policy behind the Rural Banks' Act. with the exception of Oliva.. We thus have consistent pronouncements in Paras vs. to resolutely and unqualifiedly apply the 5-year period provided for in Section 119 of C. 2l Cyc. Rep. 14 And. No.. the other cases reveal the clear intent of the law on redemption in foreclosure sales of properties acquired under the free patent or homestead statutes which have been mortgaged to banks or banking institutions — i.A. 5939. 1120 and 926 were patterned after the laws granting homestead rights and special privileges under the laws of the United States and the various states of the Union. Franklin vs. 141 and. as early as 1951.e.. No. involved the question of which between the five (5) year repurchase period provided in Section 119 of C.. This construction is clearly deducible from the terms of the statute. Richardson vs.A. 24. Soriano. that involves the Rural Banks' Act. 141 should begin to run only from the expiration of the 2-year period under the Rural Banks' Act. Woodward. and reduced to pauperism. 292. that the right to repurchase exists not only when the original homesteader makes the conveyance. De los Reyes. McChristian. Consistently therewith. in Cassion vs. The policy of the state is to foster families as the factors of society.

The second speaks of the right to repurchase and prescribes the period within which it may be exercised. 3135. as well as their heirs shall have the right to redeem the same within two years from the date of foreclosure: .A. Provided. No.A. as well as their heirs shall have the right to redeem the same within two years from the date of foreclosure in case of a land not covered by a Torrens title or two years from the date of the registration of the foreclosure in the case of a land covered by a Torrens title: . No. the two-year redemption period may only be enjoyed by the homesteader. we agree with the Court of Appeals that the five-year period within which a homesteader or his widow or heirs may repurchase a homestead sold at public auction or foreclosure sale under Act 3135 as amended. . the purchaser in a foreclosure sale has. 25 this Court. Furthermore. Since the private respondents' offer to repurchase was made well within the said 5-year period. 5. The amendment clarifies the rather vague language of Section 5 as amended by R. if such land is not yet covered by the Torrens title. a homestead or free patent land is foreclosed. adverting to Gonzalez vs. 5939. by R. the clause does not clarify whether the land not covered by a Torrens title refers to unregistered land merely. . 141. Thus. . And. The ambiguity lies in the fact that although the latter seems to speak of three (3) classes of lands. . or from the registration of the foreclosure — meaning. Provided. in Paras vs.Sec.A. Calimbas and Page 7 of 52 . That when a land not covered by a Torrens Title.A. since private respondents' foreclosed property was acquired under the homestead laws. We wish to stress here that We are unable to read in Section 5 of R. however. These two (2) rights are by no means synonymous. 2670. namely (a) those not covered by a Torrens title. 24 Upon the other hand. as amended. Court of Appeals. however. Calimbas. As this Court said in the case of Gonzales (sic) vs. any legislative intent to modify or repeal Section 119 of the Public Land Act. . As amended. 27 when deed of absolute sale is executed and the property formally transferred to the purchaser. 23 He only becomes an absolute owner of the property if it is not redeemed during the redemption period. as amended by Act No. or includes land acquired by a homestead or free patent not yet issued certificates of title under the Torrens system. the homesteader or free patent holder. No.A. . 26 stated: After a careful study of the point raised in the present appeal by certiorari. Thus. No. pursuant to Section 119 of C. No. the commencement of said period is reckoned from the date of foreclosure. only an inchoate right and not the absolute right to the property with all the accompanying incidents. the certificate of sale — if it is already covered by a Torrens title. the right to repurchase is based on the assumption that the person under obligation to reconvey the property has the full title to the property because it was voluntarily conveyed to him or that he had consolidated his title thereto by reason of a redemptioner's failure to exercise his right of redemption. to two (2) years insofar as lands acquired under free patent and homestead statutes are concerned. . begins not at the date of the sale when merely a certificate is issued by the Sheriff or other official. 5939. Specifically. land acquired under the free patent or homestead patent statutes may be redeemed within a two-year period. . 4118. (b) homestead lands and (c) free patent lands. they had two (2) years from 7 December 1979 — when the certificate of sale was registered — or until 7 December 1981. following the clear intent of Oliva. 720. That when a homestead or free patent land is foreclosed. Under Act No. Moreover. but rather on the day after the expiration of the period of repurchase. during the redemption period. the former merely liberalizes the duration of an existing right of redemption in extrajudicial foreclosure sales by extending the period of one (1) year fixed in Act No. the homesteader or free patent holder. they had five (5) years from 7 December 1981 within which to repurchase it. Each speaks of and deals with a different right. it reads: Sec. . the two (2) courts below correctly ruled in their favor. 5. As amended later by R. the free patent holder or their heirs. 3135. . within which to redeem the land. .

If the mortgagor fails to exercise such right. This is so because if. to indemnify the mortgagor in case it be shown that the sale was made without violating the mortgage or without complying with the requirements of the Act. Since the private respondents seasonably exercised said right. If he fails to do so. If the land is mortgaged to parties other than rural banks. reason. the mortgagor may redeem the property within one (1) year from the registration of the certificate of sale pursuant to Act No.R. the certificate of sale issued to the purchaser at an auction sale is intended to be a mere memorandum of the purchase. the land was sold to other parties. The expropriation of the land in question by the NHA is of no moment. with costs against petitioner. the petitioner was under the obligation to restore to the former the compensation paid by the NHA. 29 But since the land was expropriated by the Government.. as amended. That bond is not required after the purchaser has consolidated his title to the property following the mortgagor's failure to exercise his right of redemption for in such a case. As a consequence of the inchoate character of the right during the redemption period. Romero and Melo. JJ. the mortgagor may redeem the property within two (2) years from the date of foreclosure or from the registration of the sheriff's certificate of sale at such foreclosure if the property is not covered or is covered. instead of having been expropriated. Page 8 of 52 .Poblete. he or his heirs may repurchase the property within five (5) years from the expiration of the redemption period also pursuant to Section 119 of the Public Land Act. 28 Thus. The argument that the petitioner was under no obligation to deliver the above portion of the compensation because the property was acquired by the NHA and therefore it was legally impossible for the former to convey the land to the private respondent. and the private respondents could no longer repurchase the same. its right thereto was subject to the private respondents' right to repurchase. he or his heirs may still repurchase the property within five (5) years from the expiration of the two (2) year redemption period pursuant to Section 119 of the Public Land Act (C. is without merit. 141). Jr. the repurchase price. It does not transfer the property but merely identifies the purchaser and the property. respectively. 720. by a Torrens title. 355. 1990 VICTORINO TORRES. which in effect replaced or substituted for the land. WHEREFORE. concur. Act No. Although the petitioner had a Transfer Certificate of Title over the lot at the time of payment.A. 51 Phil. justice and equity demand that they receive the compensation therefor less the amount adverted to above. SO ORDERED. among other parties. Bidin. petitioner. The decision is immediately executory. the rules on redemption in the case of an extrajudicial foreclosure of land acquired under free patent or homestead statutes may be summarized as follows: If the land is mortgaged to a rural bank under R. the former has become the absolute owner thereof. respondent... LEON VENTURA.A. for such compensation merely substitutes for the land they are entitled to. No. 86044 July 2. The expropriation case was begun before the foreclosure sale and was brought against the private respondents. the private respondents could still have repurchased the same from the subsequent vendees. vs. No. The effective conveyance is made by the deed of absolute sale executed after the expiration of the period of redemption. however. 3135 allows the purchaser at the foreclosure sale to take possession of the property only upon the filing of a bond in an amount equivalent to the use of the property for a period of twelve (12) months. the instant petition is DENIED. No. From such amount should be subtracted. states the price paid and the date when the right of redemption expires. The court's order for the payment of compensation was entered and the compliance thereof by the NHA was made within the private respondents' 5-year repurchase period. G. Gutierrez. 3135.

In 1972.000. private respondent failed to appear. One need not go far in order to search for the reason behind this. with private respondent. he could not do so because he lacked the necessary funds. Because of this. 27. petitioner filed a complaint with the barangay captain of Magsaysay. Hence. We must put a stop to this vicious cycle and the time to do it is now. the money being offered by petitioner to pay for the loan was utilized for other purposes.: This nation has a wealth of laws on agrarian reform. Posed before Us for resolution in this petition for review on certiorari is the question of to whom ownership and possession of a certain landholding rightfully belongs: to petitioner who was the tiller of the land when Presidential Decree No. it was also agreed upon by them that upon the payment of the loaned amount. Anyone who wishes to contest the rights of the farmer to land given to him by the government in accordance with our agrarian laws has the burden of proving that the farmer does not deserve the government grant. According to petitioner. It was only in 1985 when petitioner was able to save enough money to make another offer but this time private respondent categorically denied said offer and refused to vacate the land. 27 was promulgated. the farmers who are intended to be protected and uplifted by the said laws find themselves back to where they started or even in a worse position. Majority of our farmers still live a hand-to-mouth existence. any form of transfer of those lands within the coverage of the law is prohibited except as otherwise provided therein. In 1981.00. Under Presidential Decree No. Yet. Cabatuan. despite such laws. The following facts can be gathered from the records of this case: Petitioner was the leasehold tenant of a 4. J. private respondent will deliver possession and enjoyment of the property back to petitioner. Unscrupulous individuals have found various ways in order to get around the laws. Two years later or in 1980. We all know that our beautifully-worded agrarian laws have never really been effectively implemented. petitioner offered to pay the loaned amount but private respondent asked for an extension of one more year to continue cultivating the land and enjoying its fruits. Page 9 of 52 . wherein he transferred his rights of possession and enjoyment over the landholding in question to the latter in consideration of a loan in the amount of P5. Cabatuan. 27 was signed into law. or to private respondent in whose favor petitioner transferred his rights over the land in consideration of P5. The clamor for change has not died down. though petitioner really wanted to get the property back. petitioner was forced to enter into what is called a "selda" agreement. Consequently. when Presidential Decree No. In 1978. Isabela stating therein that he mortgaged his land to private respondent and that he already wanted to redeem it. This also holds that agrarian laws are to be liberally construed in favor of the farmer-beneficiary. On the scheduled date of hearing. As part of the agreement. Loopholes in the law and the ignorance of the poor farmers have been taken advantage of by them. urgently in need of money.GANCAYCO.00 to be paid not earlier than 1980.000 square-meter parcel of land included in the Florencio Firme Estate and located at Caloocan. Such laws were enacted not only because of the constitutional mandate regarding the protection to labor and the promotion of social justice but also because of the realization that there is an urgent need to do something in order to improve the lives of the vast number of poor farmers in our land. petitioner was the tiller of the aforementioned piece of land and was automatically deemed owner of the property.000. it is a fact that the agrarian problems which beset our nation have remained unsolved. This case serves to remind those who are involved in the execution of agrarian laws that it is the farmer-beneficiary's interest that must be primarily served. petitioner signed an "Affidavit of Waiver" whereby he waived all his rights over the property in favor of private respondent. Isabela.

50 per kilo. the said Affidavit of Waiver is valid because at the time of its execution. In its decision. (2) ORDERING the defendant. Hence. this petition for review on certiorari. 1983. As such. Isabela for the recovery of possession of the parcel of land in question. 27. (4) ORDERING the defendant to pay the plaintiff total damages and in the amount of P5. is that petitioner relinquished all his rights over the property in his favor.000. the Affidavit of Waiver did not violate Presidential Decree No. judgment is hereby rendered: (1) DECLARING the affidavit of waiver (Exh.00 received by the plaintiff from the defendant in 1979 including interest thereon considered paid as of December 1. After a careful scrutiny of the two conflicting decisions and an exhaustive study of the laws and jurisprudence applicable to this case. 1986. the trial court ruled in favor of petitioner having found his version more convincing than that of private respondent whose evasive attitude did not go unnoticed therein. in view of the foregoing considerations. (3) DECLARING the loan of P5. It is not disputed by private respondent that petitioner was in fact the tiller of the subject land when Presidential Decree No. 27. The conflict arose when petitioner. as expressly written in the Affidavit of Waiver that petitioner signed. The stand of private respondent. believed that petitioner completely waived his rights over the land as evidenced by the Affidavit of Waiver he executed. until the possession of the land in question is delivered to the plaintiff. petitioner was granted the right to possess and enjoy the property for himself. the said court rendered a decision in favor of petitioner with the following dispositive portion: WHEREFORE. We rule in favor of petitioner. on the other hand. by force of circumstances. 2 Taking into consideration the circumstances surrounding this case and bearing in mind the constitutional mandate on the promotion of agrarian reform. should not be rewarded at the expense of private respondent. of all. 1) executed by the plaintiff waiving his right as a leasehold tenant to the defendant null and void. The Court of Appeals further added that petitioner abandoned his landholding and received benefits under the agreement. The trial court further ruled that the transfer of property from petitioner to private respondent is null and void for being violative of Presidential Decree No. on the other hand. As to what was actually the contract that was entered upon is being contested by the two parties herein. We affirm the judgment of the trial court. First. Petitioner has insisted from the very beginning that the agreement entered into between him and private respondent was one of mortgage and that private respondent promised to give back to him his landholding upon payment of the loaned amount. hence. It need not be stressed that in the matter of credibility Page 10 of 52 . or their equivalent at the NFA price of P3. As a consequence of the law. The Court of Appeals. the decision of the trial court was reversed. 27 was promulgated in 1972. According to the Court of Appeals.00 up to December 1.Upon the issuance by the barangay captain of a certificate to file action. petitioner filed a complaint with the Regional Trial Court of Cauayan. After due trial. tenants or any person or persons acting on his behalf to deliver immediately the possession of the land in question to the plaintiff.200. his agents. and (5) ORDERING the defendant to pay the plaintiff 6 cavans of palay at 50 kilos per planting season from December 1. transferred possession of his land to private respondent in consideration of a sum certain. 1986. We have given much weight to the finding of the trial court that what was entered upon by the parties herein was a contract of mortgage. petitioner was not yet the owner of the land there having been no title issued to him yet. continued the Court of Appeals. 1 On appeal to the Court of Appeals.

Hence. to his successors. 27 — DECREEING THE EMANCIPATION OF TENANT FROM THE BONDAGE OF THE SOIL. Yet. to wit: PRESIDENTIAL DECREE NO. As of that date. 7 The fundamental policy of the law is reflected in its title. and assuming that petitioner really waived his tenancy rights in favor of private respondent.of witnesses. This policy is intended to be given effect by the following provisions: xxx xxx xxx The tenant farmer. petitioner was DEEMED OWNER of the land in question. the then Ministry of Agrarian Reform issued the following Memorandum Circular: Page 11 of 52 . Presidential Decree No. TRANSFERRING TO THEM THE OWNERSHIP OF THE LAND THEY TILL AND PROVIDING THE INSTRUMENTS AND MECHANISM THEREFOR. 3 Indeed. he could not. whether in land classified as landed estate or not. make any valid form of transfer except to the government or by hereditary succession. due to sheer poverty. xxx xxx xxx 8 The law is clear and leaves no room for doubt. 27. or anyone in his right mind for that matter. We find it hard to believe that petitioner. and enjoy the landholding for himself. 6 The law points out that reformation must start with the emancipation of the tiller from the bondage of the soil. who has been tilling the land in question for a long. he was declared emancipated from the bondage of the soil. petitioner would not have made repeated offers to pay for the amount he borrowed from private respondent and demand from the latter the possession of the land. was constrained to mortgage his only land 4 to somebody else 5 — situation which Presidential Decree No. the Code of Agrarian Reforms and other existing laws and regulations. he gained the rights to possess. We rely heavily on the findings of the trial court because it had the opportunity to meet them face to face. shall be DEEMED OWNER of a portion constituting a family size farm of five (5) hectares if not irrigated and three (3) hectares if irrigated. (Emphasis supplied). 27 sought to prevent by providing an explicit prohibition on transfers. if the situation were otherwise. xxx xxx xxx TITLE TO LAND ACQUIRED PURSUANT TO THIS DECREE OR THE LAND REFORM PROGRAM OF THE GOVERNMENT SHALL NOT BE TRANSFERABLE except by hereditary succession or to the Government in accordance with the provisions of this Decree. To insure his continued possession and enjoyment of the property. We shall now take a closer look at the law. (Emphasis supplied). to prosecute an unworthy action. cultivate. As the trial court observed. effort and money. Upon the promulgation of Presidential Decree No. many farmerbeneficiaries like petitioner herein were tempted to make use of their land to acquire much needed money. it is a fact that despite the prohibition. He would not have even thought of bringing an action for the recovery of the same if he honestly believed that he had already given it up in favor of private respondent. Those rights over that particular property were granted by the government to him and to no other. petitioner's version is more convincing because of the apparent evasive attitude of private respondent as compared to the candid testimony of the petitioner. would not waste his time. this case should still be resolved against private respondent. 27 on October 21. 1972. The above finding notwithstanding. Petitioner. under the law. especially if he is poor. petitioner is an example of a poor tenant farmer who. long time would suddenly lose interest in it and decide to leave it for good at a time when he knew that full ownership over the same was soon going to be in his hands. If at all. Furthermore. 27 was signed into law in view of the fact that the old concept of land ownership by a few has spawned valid and legitimate grievances that gave rise to violent conflict and social tension. As such. The transfer would still be void for being made in violation of Presidential Decree No.

et al. 17 wherein We ruled that the sale of the homestead by the homesteader is null and void and his heirs have the right to recover the homestead illegally disposed of. Having settled that the contract of transfer entered into between petitioner and private respondent is void ab initio. To hold otherwise will defeat the spirit and intent of Presidential Decree No. et al. this Court holding that the pari delictodoctrine may not be invoked in a case of this kind since it would run counter to an avowed fundamental policy of the State. since the same provision says the illegal sale shall have the effect of annulling the grant and cause the reversion of the property and its improvements to the State. Furthermore. the evidence on hand shows that Certificate of Land Transfer No. rights. With regard to the legal prohibition. 1954.. 11 In Gloria de Oliver vs. 27 and the tillers will never be emancipated from the bondage of the soil. decided February 25. G. however.. 15 where the principle was reiterated. as against the vendor or his heirs "no more entitled to keep the land than any intruder.. Similar contentions were made in the case of Catalina de los Santos vs. through Justice Alex Reyes. Court of Appeals. there are reports that many farmer-beneficiaries of PD 27 havetransferred the ownership. absolute title over lands covered by Presidential Decree No. and that until the State had taken steps to annul the grant and asserts title to the homestead the purchaser is. In Acierto. We rule in the negative. All these transactions/surrenders are violative of PD 27 and therefore. 16 The pronouncements in the two above-mentioned cases were adopted by this Court in Angeles. 9 (Emphasis supplied. De los Santos. No. Following this. They are not negotiable except when it is used by the beneficiary as a collateral for a loan with the rural bank for an agricultural production. et al. et al. Roman Catholic Church. vs. 14 this Court ruled that the pari delicto doctrine is not applicable to a homestead which has been illegally sold in violation of the homestead law. 096267 covering the land in question is in the name of petitioner Victorino Torres. We hold that title refers not only to that issued upon compliance by the tenant-farmer of the said conditions but also includes those rights and interests that the tenant-farmer immediately acquired upon the promulgation of the law. contend that the voiding provision of the Act may not be invoked in favor of plaintiffs as their predecessor in interest was in pari delicto. 10 This is admitted by private respondent. Sisenando Cruz. and/or possession of their farms/homelots to other persons or have surrendered the same to their former landowners. but they were there overruled. made the following pronouncement: Appellants. 27 would end up in the name of persons who were not the actual tillers when the law was promulgated.) We do not agree with the Court of Appeals when it ruled that petitioner's land is not included in the legal prohibition since petitioner has not yet acquired absolute title to the land having failed to comply with all the conditions set forth by the law. L-6088. Public policy and the policy of the law must prevail. et al. To rule otherwise would make a tenant — farmer falling in the category of those who have not yet been issued a formal title to the land they till — easy prey to those who would like to tempt them with cash in exchange for inchoate title over the same. 12 the Court of Appeals correctly ruled that: The rights and interests covered by the Certificate of Land Transfer are beyond the commerce of man. that the forfeiture of the homestead is a matter between the State and the grantee or his heirs. plaintiffs may no longer claim the homestead. null and void. One of the reasons given by this Court for the ruling is that the policy of the law is to give land to a family for home and cultivation.R..Despite the above prohibition. Roman Catholic Church of Midsayap et al. and that. We now go to the issue of whether or not the principle of pari delicto 13 applies to this case. Page 12 of 52 . vs. In Catalina de los Santos vs. this Court. however.

L-19012 October 30.. 342. for the appellee.R. G. L-48458 November 7. and Ozaeta. The issuance of a check with knowledge on the part of the drawer that has no funds to cover its amount and without informing the payee of such circumstance.R. The parties in this case are to be placed in status quo which was the condition prevailing prior to the execution of the void contract. Abad Santos. People vs.: Disputing the correctness of the lower court's order of April 29. 15482 is REVERSED AND SET ASIDE. JJ. People vs. Defendant interposed appeal from this judgment. SO ORDERED. dishonored for lack of funds. Liluis. upon a plea of guilty. he was sentenced to two months and one day of arresto mayor and to pay an indemnity of P60 with subsidiary imprisonment in case of insolvency. Cornelio R. concur. by a motion to dismiss. defendantsappellees. plaintiff-appellant.R. Acting First Assistant Solicitor-General Amparo and Assistant Solicitor-General Kapunan. plaintiff elevated the case1 to this Court on appeal. Such plea constitutes a mere admission of the material allegations of the information but not that the facts thus alleged constitute an offense. plaintiff-appellee. does not constitute the crime of estafa if the check was intended as payment of a pre-existing obligation. Cruz. J. to constitute estafa. G. the Decision of the Court of Appeals in CA-G. This check was. Defendant appealed to the Court of First Instance where. WHEREFORE. simultaneous with.. JJ. Magsarili for defendants-appellees.. being void ab initio. 1967 THE PEOPLE OF THE PHILIPPINES. Horilleno. Narvasa. after entering a plea of not guilty and thereafter substituting the same with the plea of guilty. SANCHEZ. Herrera for plaintiff-appellant. CV No. Griño-Aquino and Medialdea. MORAN. XIX167 is hereby ordered REINSTATED. Plaintiff's complaint — which defendants. defendant-appellee.) Defendant's plea of guilty is of no moment. 1941 imposed by the municipal court. Armando Magpayo for the appellant. he issued in favor of the latter a check for P60 drawn against the Bank of the Commonwealth. upon representation to the bank for payment. concur. Quesada.: Defendant Fidel Fortuno rented from "El Hogar Filipino" a room in the Crystal Arcade. J. the act of fraud.M. should be the efficient cause of the defraudation and as such should be prior to. Isabela in Civil Case No. must be given no effect at all. FIDEL FORTUNO.. 515 520. 1961 dismissing the complaint. EMILIANO DALANDAN and MARIA DALANDAN. as in the instant case. and the rental having become due. The reason for this rule is that deceit.In view of all the foregoing. An information for estafawas presented against the defendant in the municipal court of Manila where. Br. successfully overturned in the court below — is planted upon a Page 13 of 52 . No.. C. vs. 339. 59 Phil. Costs against private respondent. 60 Phil. No. We hold that the contract. (Cf. vs.J. he was sentenced to the same penalty VICTORIA JULIO. The Decision of the Regional Trial Court of Cauayan. Pedro Magsalin and O. Judgment is reversed and the defendant is hereby acquitted with costs de oficio. Diaz.

sa pagkakaembargo ng lupa niyang iyong kung kaya't nagkasundo kami na ako ay nanagot sa kanya sa pagkaembargong iyon at ipinangako ko sa kanya na ang lupa niyang iyon na naembargo ng dahil sa aking pananagutan ay aking papalitan ng bukid din na may mahigit na APAT (4) na hectarea (o humigit kumulang sa APAT NA KABANG BINHI). na hingin ang ani ng bukid na nabangit sa itaas ng salaysay na ito.] 6. Annex "A" of the complaint. the said document. mentioned in the above statement of CLEMENTE DALANDAN. Na hindi rin maaring hingin kaaggad sa lalong madaling panahon ang kapalit ng bukid na may apat na kabang binhi. and as agreed upon between us. The key provisions of said document are: 2 3. in turn. Na dahil dito ay ako samakatuwid ay nanagot sa kanya (VICTORIA JULIO). acknowledged that a four-hectare piece of riceland in Las acknowledged that a four-hectare piece of riceland in Las Piñas. plaintiff requested from defendants. all that he stated therein. whose only child and heir is plaintiff Victoria Julio. ako VICTORIA JULIO. [That because of this. referred to six small parcels described in paragraph 4 thereof with a total area of barely two hectares — "the only land owned by Clemente Dalandan at the time of the execution of the document" — except fifty plots or "banigan" (saltbeds).] Back to the complaint herein.document Annex "A" of the complaint. Rizal belonging to Victoriana Dalandan. ay napafianza sa akin nuong bago pa dumating ang huling digmaan at dahil sa hindi ako nakatupad sa aking pananagutang na sasagutan ng bukid niyang ito ay naembargo ang nasabi niyang lupa. (4) hectares. failed to fulfill. that after the death of Clemente Dalandan.] Victoria Julio. Plaintiff went on to aver that the land of Clemente Dalandan set forth in the document. 1950. It was in the form of an affidavit subscribed and sworn to by one Clemente Dalandan on September 8. joined Clemente Dalandan in the execution of. assumed but. more or less. Clemente Dalandan. attest to the truth of. that is. I accordingly held myself liable to Victoria Julio for the foreclosure of her said land. labeled in the national language "SALAYSAY" (Statement). Na hindi maaring pilitin ang aking mga anak (EMILIANO AT MARIA DALANDAN). which were previously conveyed to plaintiff's mother by mean of pacto de retro sale and title to which had already been vested in the latter. [That my children (EMILIANO AND MARIA DALANDAN) may not be forced to give up the harvest of the farm herein above mentioned. By the terms of this writing. The result was that Victoriana's said land was foreclosed. and I promised her that I would replace her aforesaid land which was foreclosed because of my obligation with another farm of more than four. to deliver Page 14 of 52 . however. [That neither may the land — which was exchanged for the farm with four cavanes of seedlings — be demanded immediately. and also swore to. Na ang lupang palayang ito na pagaari ni VICTORIANA DALANDAN at sa kasalukuyan ay walang ibang tagapagmana kung di si VICTORIA JULIO.] 5. Clemente Dalandan.] 4. ay nagpapatunay na tutoong lahat ang kanyang salaysay na iyon at tinatanggap ko ang kanyang mga sinasabi. and accept. in this wise: Na. na binabanggit sa itaas nito sa salaysay ni CLEMENTE DALANDAN. was posted as security for an obligation which he. deceased father of defendants Emiliano and Maria Dalandan. [That this riceland owned by VICTORIANA DALANDAN whose sole heir is VICTORIA JULIO was posted as security for an obligation assumed by me even before the outbreak of the last war and because I failed to fulfill the obligation secured by her said farm the same was foreclosed. Clemente's legitimate and surviving heirs who succeeded in the possession of the land thus conveyed. one planted to four cavanes of seedlings. VICTORIA JULIO. [That I.

bad more felicitous terms been employed. the herein defendants. avers plaintiff's request for the delivery of the real property. It is. that demands have "been made upon defendants to fix the period within which they would deliver to the herein plaintiff the above-described parcels of land but defendants have refused and until now still refuse to fix a specific time within which they would deliver to plaintiff the aforementioned parcels of land." Predicated upon the foregoing allegations. Reason: the 10-year period from the date of the document had elapsed. in this perspective that we now look into the writing. and that "plaintiff acceded to this contention of defendants and allowed them to continue to remain in possession" thereof. (c) Adjudging that upon the expiration of the said time defendants convey and deliver to the herein plaintiff the said parcels of land as well as the fruits thereof. but in the light of the entire writing. is the meaning to be attached to the document now under review. Unfortunately. They convey the idea that the naked ownership of the land in substitution was. doubtful ones should be given that sense which may result from all of them. Undoubtedly. and granting such other relief and remedy as may be just and equitable in the premises.the same to her. (e) Ordering the defendants to pay the costs of the suit. this appeal. The threshold problem.00 as attorneys' fees. By its order of April 29. that defendants "insisted that according to the agreement". By paragraph 5. and (3) release and/or abandonment of the claim set forth in plaintiff's complaint. 1961. Hence. had prescribed. viewed either as an action for specific performance or for the fixing of a term. Else there would have been no sense in the proviso that the fruits as well as the physical possession of the land could not immediately be demanded by Victoria Julio from Clemente's children. Familiar rules of interpretation of documents tell us that in ascertaining the intention of the parties. in essence. the contents thereof should not be interpreted piecemeal. and plaintiff's conformity thereto. The lower court found it unnecessary to pass upon the other grounds for the motion to dismiss. The disputed complaint in paragraphs 6 and 7 thereof. (b) Fixing a time within which defendants should deliver the said parcels of land to the herein plaintiff as well as the fruits thereof. (d) Ordering the defendants to pay the plaintiff the sum of P2. But this view loses sight of the later provisions thereof. plaintiff prayed for judgment against defendants: (a) Adjudging the herein plaintiff as owner of the land described in paragraph 4 hereof. the right to demand fruits and physical possession of property has been known to be attributes of ownership. and plaintiff's demands that the period for delivery be fixed and defendants' refusal. (2) pendency of another suit between the same parties for the same cause. considered as a whole. ineptness of expression exacts of us an examination of the document. provisions or terms are to be considered. Such construction will be adopted as will result from an overall view of the document itself. defendants take the position that the deceased Clemente Dalandan simply "promised" to Victoria Julio a farm of about four hectares to replace the land of Victoriana Dalandan (mother of Victoria Julio) which was foreclosed. indeed. all parts. For. Defendants met the complaint with a motion to dismiss grounded on: (1) prescription of plaintiff's action. basic to an understand of the issues herein involved. Adverting to paragraph 4 of the deed. 1.000. defendants' answer that "according to the agreement" neither land nor fruits thereof could immediately be taken away from them. each paragraph clause or phrase must be read not in isolation. the intention of the parties could easily be read. transferred to Victoria Julio. These last two statements in the deed express the dominant purpose of the instrument. the lower court ruled that plaintiff's suit. This was followed by paragraph 6 which states that Victoria Julio may not immediately demand the substitute (kapalit) for the forfeited land. Page 15 of 52 . Clemente's children may not be forced to give up the harvest of the farm mentioned in the deed. neither delivery of the land nor the fruits thereof could immediately be demanded.

But. "[n]o express trusts concerning an immovable or any interest therein may be proved by parol evidence. Clemente Dalandan? Paragraphs 6 and 7 of the document supply the answer. Conversely. and whether or not he knows the precise characteristics of the relationship which is called a trust. 64 Phil. the complaint alleges refusal to deliver possession. Obviously. They argue that by the express terms of Article 1443 of the Civil Code. "technical or particular forms of words or phrases are not essential to the manifestation of intention to create a trust or to the establishment thereof. the document was not prepared by a learned scrivener. plaintiff Victoria Julio. but in trust. that authorities are not wanting in support of the view that "in so far as the identity of land involved" in a trust is concerned. who accepted it in the document itself. Plaintiff points out in paragraph 4 of her complaint that while said deed does not specifically define its boundaries "the parties to the said document actually refer" to the land which was "the only land owned by Clemente Dalandan at the time of the execution " thereof. defendants aver that recognition of the trust may not be proved by evidence aliunde.The allegations of the complaint just noted carry us to another aspect of the document: defendants' rights over the land vis-a-vis plaintiff's. by the deed. Rather. It imperfectly speaks of a "farm of more than four (4) hectares. Theirs is to enjoy the fruits of the land and to hold the same as trustees of Victoria Julio. the present defendants. This allegation in the complaint does not add any new term or stipulation to the writing. And then. It is unimportant that the trustor should know that the relationship "which he intends to create is called a trust. In consequence. and that parol evidence is admissible to make clear the terms of a trust the existence of which is established by a writing. They are usufructuaries for an undetermined length of time. There is no statement in the complaint intimating disavowal of such trust. "it has also been held that the writings.4 2." This argument overlooks the fact that no oral evidence is necessary. the mere fact that the word "trust" or "trustee" was employed would not necessarily prove an intention to create a trust. "seems in large part due to its freedom from formal requirements. 368." In reality. . Thus it is." But averment in the complaint is not lacking to clear the uncertainty as to the identity of the land mentioned in that document."9 4. What rights were transmitted to defendants by their father. so jurisprudence teaches. it explains an obscurity occasioned by lack of precision in a clumsily prepared document. such ownership. So guided. Clemente Dalandan cannot transmit to his heirs. they hold the property. we must say that there is sufficient showing in the complaint that there is an acknowledgment on the part of defendants that they hold the property not as their own. Article 1444 of the Civil Code states that: "No particular words are required for the creation of an express trust. we need but stress that we are to be guided solely by the averments of the complaint. it being sufficient that a trust is clearly intended. Such document is binding upon his heirs.3 Nemo dat quod non habet."5 This principle perhaps accounts for the provisions in Article 1444 just quoted. And this because. in being considered for the purpose of satisfying the statute of frauds. For. Clemente Dalandan divested himself of the ownership — qualified solely by withholding enjoyment of the fruits and physical possession. now deceased.8 3. against his own proprietary interests."7 Here. 353. it cannot be said that plaintiff's action to Page 16 of 52 . that trust is effective as against defendants and in favor of the beneficiary thereof. while it is true that said deed did not in definitive words institute defendants as trustees. Not that this view is without statutory support. are to be considered in their setting. Posadas. For. What is important is whether the trustor manifested an intention to create the kind of relationship which in law is known as a trust. . the document is a declaration by Clemente Dalandan. a duty is therein imposed upon them — when the proper time comes — to turn over both the fruits and the possession of the property to Victoria Julio. In the sense in which we understand the complaint to be. . Plaintiff is not to be handicapped by a lack of a clear statement as to the actual description of the land referred to in the trust deed. The express trust imposed upon defendants by their predecessor appears in the document itself. basis of plaintiff's cause of action. For so long as that period has not been fixed and has not elapsed. the development of the trust as a method of disposition of property."6 Nor would the use of some such words as "trust" or "trustee" essential to the constitution of a trust as we have held in Lorenzo vs. This case having been brought before us on a motion to dismiss. and which is set forth in small parcels under said paragraph.

there is an averment in the complaint that an agreement exists between plaintiff and defendants to defer delivery thereof. Costs against defendants-appellees. For. J. to their claim that this case should also be dismissed upon the ground that there exists another action pending between the same parties for the same cause. There is no point in the argument that an action is pending between plaintiff and defendants. conditioned upon the fixing of the period therefor." Defendants argue that if plaintiff was the real owner of the entire area. There. And this. defendants are applicants. G. still we arrive at the same conclusion. in the words of this Court "is a mere consequence of ownership.10 5. for the repurchase of fifty salt beds which were the subject of a sale withpacto de retro executed on September 24." We take this view for the obvious reason that defendants' motion to dismiss on this score is directed at the prescription of plaintiff's action — not on acquisitive prescription. plaintiffs therein. The facts bearing on this issue are: In Land Registration Case N706. and on the further ground of release and/or abandonment. Bengzon.R. Record No. such would not bar Victoria Julio from requiring them to execute a conveyance of the property in her favor.. Failure to so object in reference to the registration of a bigger portion of the land. with instructions to remand the case to the court below for further proceedings. Dizon.J. Since plaintiff claims ownership. Concepcion. predecessor of plaintiff. simply means that there is no case between the parties in reference thereto in the land registration proceeding. which reads: "Real actions over immovables prescribe after thirty years.. So that. on the assumption that defendants should succeed in obtaining title to the property in the land registration case. by an alleged owner of real property at recovery of possession thereof. That case — so defendants aver — covers the very same land set forth in plaintiff's complaint. defendants). because defendants could here be declared as mere trustees of plaintiff. Makalintal. 6. if the averments of the complaint are found to be true. with the exception of the fifty salt beds — which according to the complaint is not included in the deed — plaintiff filed no opposition to defendants' application for land registration. Court of First Instance of Rizal. Parenthetically. In their opposition to that application.L. Angeles and Fernando. by way of counterassignment of error. G. JJ. 1932 by Clemente Dalandan in favor of Victoriana Dalandan.. Reyes.R. Given the fiduciary relation which according to the complaint is recognized by defendants. L-14714 April 30." 12 For the reasons given. this Court affirmed the order dismissing the complaint filed by defendants herein. the question of ownership over the portion of fifty salt beds had already been resolved by this Court in a decision promulgated on February 29. Even on the assumption that defendants have not been constituted as trustees under the document in question. not merely as to fifty salt beds. and that defendants thereafter refused to fix the period for such delivery. plaintiff's action is aimed. in the event she (plaintiff herein) prevails in the present case. C. N-7014. plaintiffs. She is protected by Article 1141 of the Civil Code. Victoria Julio.P. the order of the Court of First Instance of Rizal dated April 29."11 It may not be said that plaintiff's suit is barred by the statute of limitations. possession. Not that plaintiff released or abandoned the claim to that bigger portion. the latter may not invoke the statute of limitations as a bar to plaintiff's action. 1964 in L-19101 (Emiliano Dalandan and Maria Dalandan. 1961 dismissing the complaint is hereby reversed and set aside. Defendants in their brief draw attention. vs. Zaldivar. 1960 Page 17 of 52 ..concur. Because. For.recover the property thus held in trust has prescribed. No.. Castro. et al.B.O. herein plaintiff prayed that the same land — the subject of this suit — (covered by Plan PSU 129514) be registered "in the names of the herein applicants and oppositor with the specific mention therein that the herein oppositor owns fifty salt beds therein and having an absolute right to the use of the depositories. J.L. So ordered. opposition should have been presented on the whole.

Jose V.500. costs of the suit in the amount of P33.ARISTON ANDAYA. which deed contained the following stipulation: The following month. On March 23. this appeal was forwarded to us by said court because it raises only legal questions.. or on September 28. 1947. and without repurchasing the said property. amounting to P676. Maria Viloria sold by way of absolute sale the same property to Ciriaco Casiño. 1944. 399. and the plaintiff spouses Ariston Andaya and Micaela Cabrito. Maria Viloria sold by way of sale with right to repurchase within a period of one year. 1956. the said judgment having become final. on June 9. Eustaquia Llanes. MELENCIO MANANSALA. upon the expiry of the said period. a defendant Melencio Manansala sold by way of absolute sale. which the lower court found to be as follows: On June 13. ET AL. the vendee herein named are the lawful owners of the land herein sold which I warrant to be free from all kinds of liens and encumbrances whatever and in case of eviction. and on September 2. 3344.00. In the enforcement of said writ. plaintiffs-appellees. and the plaintiffs for P1. on September 28. instituted Civil case No. and on October 17. 1946. Ariston Andaya and Micaela Cabrito. or on October 18. and from the latter to the other defendants. a writ of execution was issued against Ciriaco Casino. Seven months later. L. REYES. included as co-defendant in Civil Case No. Ayson for appellees. 399 to quiet title and to recover possession of said parcel from Ciriaco Casiño.: Originally brought to the Court of Appeals. 1948. I promise. Judgment was rendered in that case in favor of Eustaquia Llanes. On August 1. and alleged that it was plaintiffs and their co-purchasers who pleaded with him to sell said land to them at a low price after they had been sued by Eustaquia Llanes in Civil Case No. defendant-appellant.20. 399.00. as additional defendants.00. vs. Manansala registered with the Register of Deeds an affidavit consolidating his title on the property. Eight months later. Isidro Fenis sold it again to Maria Viloria on January 13. 1950. or on August 21. After the expiry of said period. After the case was submitted for a summary judgment and the parties had Page 18 of 52 .. In the meantime. J. There is no dispute as to the antecedents of the case. The said defendant filed a joint answer to the second amended complaint. the properties of Fidela Valdez were attached and sold at public auction to cover the damages. claiming title on said property on the basis of the conveyance made in favor of Manansala. A year later. This document of conveyance was recorded in the Register of Deeds under Act No. with right of repurchase within a period of five years. the property in question to the spouses Ciriaco Casiño and Fidela Valdez. B. Defendant Manansala denied liability for the damages claimed. representing the value of the produce of the land. plaintiffs spouses Ariston Andaya and Micaela Cabrito commenced this case in the Court of First Instance of Ilocos Sur against defendant Melencio Manansala to recover damages suffered by them by reason of the latter's breach of his warranty of title or against eviction embodied in his sale of the land in question to plaintiffs. Fidela Valdez. Fidela Valdez and the spouses Ariston Andaya and Micaela Cabrito (Annex D). Constante R. Manansala for appellant. 1914.800. 1934. 1947. Eustaquia Llanes. considering that Manansala had registered the land in his name with the office of the Register of Deeds. or a total of P709. Melencio Manansala (Annex C).20 (Annex H-1). DR. or on June 9. the said property together with another parcel of land to the herein defendant Melencio Manansala. one Isidro Fenis sold the land in question to Eustaquia Llanes. 1955. agree and covenant to answer to and for the vendee in the form and manner provided by law. which deed contained the following stipulation: That from and after this date. 1949. J. 1948. Fidela Valdez. for P4.

There is merit in the appeal. claiming that after finding that he was not liable to plaintiffsappellees for breach of warranty against eviction. but the lower court found that the parties understood that such stipulation was merely pro forma and that the appellant vendor was not to be bound thereby. defendant Melencio Manansala appealed.00 which represent one-half of the purchase price with interest at 6% from June 9. This is true. From the above decision. according to Article 1477 of the old Code (the law applicable when the contract in this case was made). last par. When the vendee has waived the right to warranty in case of eviction. New). In determining therefore the obligations of the defendant. appellees knew of the danger of eviction at the time they purchased the land in question from appellant. 1554 of the new Code) As already stated. 1475. it is obvious that their only purpose in acquiring the same land from the defendant at the low price of P1. appellees are bound by these findings. 1948 until fully paid. who claimed its title and possession by virtue of an earlier sale from the original owner. Ciriaco Casiño and Fidela Valdez. and eviction shall occur. WHEREFORE. but that they knew of the danger of eviction and assumed its consequences. This being so. and assumed its consequences. the implication of which is that they not only renounced or waived the warranty against eviction. because the title of the defendant had already consolidated pursuant to Article 1509 of the Spanish Civil Code as shown by an affidavit of the defendant registered with the Register of Deeds of this province. Art. Therefore. the property was already the subject of a pending litigation between appellees and one Eustaquia Llanes. Not having appealed from the decision of the court below.. the appellant is not even obliged to restore to them the price of the land at the time of eviction. in view of the fact that the same land had been previously bought by appellees from Maria Viloria and that their only purpose in buying the same again from appellant was to enable them to register their prior deed of sale.agreed on a statement of facts. and the further fact that when the sale between appellant and appellee was made. unless the vendee has made the waiver with knowledge of the danger of eviction and assumed its consequences. 1950. but is completely exempt from liability whatsoever.500. the Court renders judgment sentencing the defendant to return to the plaintiffs the sum of P750. the said transaction being before August 30. Page 19 of 52 . The contract of sale between herein appellant and the appellees included a stipulation as to the warranty. those applicable to a vendor in cases of rescission of a contract should be applied. This was clearly the understanding of the parties. it would be inequitable now to hold that the defendant is liable under the provisions of Article 1555 of the new Civil Code or under Act 1478 of the Spanish Civil Code which is the law that should be applied. The vendor's liability for warranty against eviction in a contract of sale is waivable and may be renounced by the vendee (last par. the vendor shall only pay the price which the thing sold had at the time of the eviction.00 was to enable them to register the prior deed of sale executed by Maria Viloria. and the plaintiffs apparently knew that the stipulation on warranty in the deed was made pro forma and could not have been intended. (Same as Art. and it was by final judgment in this litigation that appellees were evicted from and land. 1548. Old Code.. Art. considering the above circumstances from the fact that said property was then subject of a pending litigation as an actual warranty on the title and possession of the purchasers. Now. the lower court entered the following decision: Considering that the same land was already sold to the plaintiffs and their co-vendee. the lower court erred in holding him liable as in rescission of sale and ordering him to return to plaintiffs-appellees the price of the land in question with interests. and to pay the costs of this suit.

.Neither may appellant be condemned to return the price received from appellees on the theory of rescission of their contract of sale. he would surrender to the company the Studebaker car. It is only when the vendee loses "a part of the thing sold of such importance. Old Code. INC. not only because appellant.B.R. COURT OF APPEALS. 886). The facts are not in dispute. the remedy of rescission contemplates that the one demanding it is able to return whatever he has received under the contract. Montemayor. G. In the second place. De la Cruz. The claim is untenable. proposing that in the meanwhile. for he can no longer restore the thing to the vendor.: This petition for certiorari brings to this Court for review the decision of the Court of Appeals in its CA-G. and P300. Manuel Y.054. Endencia and Gutierrez David. and when this can not be done. but also because not having appealed from the decision of the court below. 1941. which stops them from asking for rescission even were it possible for them to restore what they had received under the contract. 103 Phil.L. No. and the HON. Pineda & Ampil Mfg. one (1) Studebaker car on the installment plan.. DE QUIAMBAO. but he has "the obligation return the thing without other encumbrances than those which it had when he acquired it" (Art. 1556. C. Upon default in the payment of a number of installments. ET AL. David. J. Gaz. the court issued a writ of execution directed to the Provincial Sheriff of Tarlac. petitioners. reversing that of the Court of First Instance of Manila and dismissing petitioners' complaint. On March 7. deceased husband of petitioner Nestora Rigor Vda. as already stated. 1940. 1961 NESTOR RIGOR VDA. J.. accordingly. Quiambao. vs. appellees can not ask for a modification thereof or an award of damages not included therein (Davidvs.. 930. Paras. rescission can not be carried out (Art. who thereupon levied on and attached two parcels of land covered by Transfer Certificate of Title No.. 1941. JJ. they are entitled to recover from appellant more items of damages under Article 1555 of the New Code than the mere return of the price with interests as ordered by the trial court. On their part.R. 18390 of the Office of the Register of Deeds for Tarlac. This proposition was accepted. et al. 17031-R. Co. Gaudencio Quiambao delivered the car to the company. accompanied by the sheriff. that he would not have purchased it without said part" that he may ask for rescission. Labrador. 54 Off. REYES. Bautista Angelo. Wherefore. [35] 8073. The latter pleaded to have the execution sale suspended and begged for time within which to satisfy the judgment debt. vs. Peñaflorida. in relation to the whole. 1940. Bartolome. 1295.. Ozaeta. 101 Phil. Inc. with interest thereon at 12% per annum. On July 14. It is for this reason that the law on sales does not make rescission a remedy in case the vendee is totally evicted from the thing sold. then counsel for the Manila Motor Company. as in this case. de Quiambao and father of the other petitioners. Macias for petitioners. is exempt from any liability for appellees eviction. personally apprised Gaudencio Quiambao of the levy. the decision appealed from is reversed and the complaint dismissed. Art. and Attorney David issued a receipt therefor that reads: Page 20 of 52 . 1385. 380. 58084 of the Court of First Instance of Manila. New). respondent company sued Gaudencio Quiambao in Civil Case No. L-17384 October 31. On December 4. Gibbs and Ozaeta for respondents. Bengzon. Gaudencio R. old Code. In the first place. New). Concepcion. respondents.00 attorney's fees. 1479. appellees. 95 Phil. MANILA MOTOR COMPANY. bought from respondent Manila Motor Company.. awarding in favor of the plaintiff the sum of P3. Gorospe vs. On August 27.32.concur. as we have held.. appellees claim that in view of the eviction from the land in question. No. Attorney Felix P.J. assumed the risk of eviction. as held by the court below. with costs against appellees Ariston Andaya. judgment was entered in said case.

1941." which.75 of which amount had already been paid. et al. among other things. the heirs of the deceased Quiambao filed this suit to annul and set aside the writ of execution and to recover damages. In the meantime. a copy of said writ of execution kept on file by the provincial sheriff was saved. Studebaker President Sedan License No. Inc. the issues are: (a) Did the delivery of the Studebaker car to respondent company produce the effect of rescinding or annulling the contract of sale between the company and the deceased Gaudencio Quiambao and of barring the former from executing its pre-war judgment in Civil Case No. the company urged the Provincial Sheriff of Tarlac to carry out the prewar writ of execution issued in Civil Case No. a claim for its mortgage lien on the car of Gaudencio Quiambao and was awarded the sum of P780. with interest thereon at 12% per annum from March 6. David. de Quiambao. his widow. petitioners. to surrender his car only in order that he might given more time within which to satisfy the judgment debt. 245246. the company filed with the Philippine War Damage Commission. the latter advertised for sale at public auction the properties levied upon. the Pacific war broke out. and when the Japanese forces occupied the country shortly thereafter. the invaders seized all the assets of the Manila Motor Company. he. Buntal Manufacturing Company. then applicable. Gaudencio Quiambao remitted to the company.. and have not been reconstituted. 58043. P409. 1953. bars any further claim for unpaid installments. 58043 CFI Manila rendered in favor of Manila Motor Company. under the first paragraph of Article 1454-A of the old Civil Code1. but on appeal to the Court of Appeals. 1941 Received from Mr. Nestora Rigor Vda. the decision was reversed and another entered dismissing the complaint. as enemy property. 58043 and clearly constituted a cancellation or rescission of the sale. indeed pleaded. Notified of the sheriff's action. Hence.47. On October 12.47. Accordingly. a demand was made on the widow to settle the deceased's unpaid accounts. on account of the judgment.. After the war. 1940. DAVID AND ANGELES by (Sgd. this appeal by writ of certiorari. here it was the buyer (deceased Gaudencio Quiambao) who offered. the company addressed a letter to Gaudencio Quiambao asking him to fill a blank form relative to the lost car..August 27.E. On May 18. 1949. but in view of her refusal. the sum of P500. Heacock Company vs. Briefly. Unlike situation that arose in the H. 58043? (b) Did the payment to respondent company and the latter's acceptance of war damage compensation for the lost car amount to a foreclosure of the mortgage covenated in its favor? and (c) Was the pre-war judgment already prescribed taking into account the moratorium laws? Anent the first issue. There is no merit in this claim. however. and suspend the impending execution sale of the properties levied upon. Quiambao having since died. and accepted without objection by the deceased (Gaudencio Page 21 of 52 . citing the case of H. amounted to a waiver of said company's right to execute its judgment in Civil Case No. Heacock Company case wherein the vendor demanded the return of the thing sold and thereby indicated an unequivocal desire on its part to rescind its contract with the vendee. returned the form with the statement that the questioned car was surrendered to the company for storage. 66 Phil. 45-368 pending settlement of the judgment in Civil Case No. Attorneys for Manila Motor Company On October 16. failed to make further payments.E.) Felix P. maintain that the "taking of the automobile by respondent company from Gaudencio Quiambao .. Although the records of that case had been lost during the war. The very receipt issued then by the company. thus leaving a balance still unsettled of P1. Judgment was rendered by the Court of First Instance of Manila in favor of plaintiffs-petitioners.00.952. Gaudencio Quiambao.

That being the case. and won. 342 on July 26.Quiambao). we held: . 1954. the latter is now precluded from claiming unpaid installments. the outbreak of the Pacific War to January 30. Such action of the company can not reasonably be construed as a constriction of its rights under the pre-war judgment. indicated that the car was received "pending settlement of the judgment in Civil Case No. 58043. from the time the order took effect on March 10. Celda. No. From the entry of the judgment to May 19. but merely as security for the ultimate satisfaction of its judgment credit. 1954. considering that even the minimum period of from December 8. Having been the party who was last in possession of the lost car. 1941. Furthermore. From this term we must deduct the period covered by the debt moratorium under Executive Order No. 1942 is already a term of one (1) month and 23 days. 1948. . 416). 6885. Said judgment was entered on December 4. this Court may take judicial notice of the fact that regular courts in Luzon were closed for months during the early part of the Japanese occupation until they were reconstituted by order of the Chairman of the Executive Commission on January 30. 52 Off. L-10127. the company made repeated demands against the petitioners to settle the deceased's unpaid accounts. 1940. Page 22 of 52 . 72 Phil. . 1508 that would bar the creditor (who chooses to foreclose) from recovering any unpaid balance (Pacific Commercial Company vs. But as held in Talens vs. the corresponding war damage compensation for the car. 1941. and on July 14. are that the deceased still paid the further sum of P500. to protect the interest of the car owner. Chuakay & Co. De la Rama. a writ of execution was issued.R." Other circumstances that militate against petitioners' theory of rescission or annulment of the contract of sale and waiver of the judgment of debt and. G. At any rate. which is 3 years. No. conversely. June 30. a period of 13 years. 32 (which applied to all debts payable within the Philippines). there is still left a period of 10 years and 29 days. or better still. Petitioners next argue that "the payment of war damage compensation to respondent company . 6883. 1942.00 on account of his indebtedness about two months after the car was surrendered. 81 Phil. the period covered from the entry of the prewar judgment to the time respondent company attempted to sell the levied properties at auction. But perhaps the best reason why respondent company may not be construed as having rescinded or cancelled the contract of sale or foreclosed the mortgage on the automobile in question is precisely because it brought suit for specific performance. and that despite respondent company's acceptance of the car. it is the actual sale of the mortgaged chattel in accordance with section 14 of Act No. 1945. Respondent company took no further step to enforce the judgment until May 19.3 This interruption in the functions of the courts has also been held to interrupt the running of the prescriptive period (see also Palma vs." and in view of the second paragraph of Article 1454-A2 of the Spanish Civil Code. We do not agree. respondent scheduled two (2) parcels of land owned by the petitioners for sale at public auction pursuant to the writ of July 14. . Since respondent company did not receive the car for the purpose of appropriating the same. Deducting the period during which Executive Order No. as well as its own.. 16. Inc. Fernandez. 58043. produced the same and equal legal effect as formal foreclosure. respondent company could not be barred by prescription from proceeding with the execution sale pursuant to the levy and writ of execution issued under the pre-war judgment. . 4 months and 16 days. 5 months and 15 days had elapsed. 1941. under obligation. 380). in the pre-war Civil Case No. 5 months and 15 days. as it did. 1958. the company was well within its rights. by claiming. 32 was in force. the situation under consideration could not have amounted to a foreclosure of the chattel mortgage as petitioners imply. vs. Gaz. until it was partially lifted by Republic Act No. strengthen the proposition that the delivery of the car to respondent company was merely to postpone the satisfaction of the judgment amount. from 13 years. There is likewise no merit in the contention that the pre-war judgment had already prescribed. on which date. in Manila Motor Company.

1960 Page 23 of 52 . however.. . 1951. Concepcion. and that a valid execution issued and levy made within the five-year period after entry of the judgment may be enforced by sale of the property levied upon thereafter. invoked by the petitioners. As correctly observed by the appellate court below.. failure to pay two or more installments shall confer upon the vendor the right to cancel the sale or foreclose the mortgage if one has been given on the property.G. and that after it has been taken from the defendant. Footnotes 1 The provision reads: "In a contract for the sale of personal property payable in installments. . Echaus.72. The sale of the property by the sheriff and the application of the proceeds are simply the carrying out of the writ of execution and levy which when issued were valid. Paredes. is not in point. Bengzon. .. 71 Phil. This rests upon the principle that the levy is the essential act by which the property is set apart for the satisfaction of the judgment and taken into custody of the law.75 which the respondent Manila Motor Company actually received from the Philippine War Damage Commission on account of the car of Gaudencio Quiambao that had been seized from it by the enemy occupant during the war. if the vendor has chosen to foreclose the mortgage he shall have no further action against the purchaser for the recovery of any unpaid balance owning by the same. J. Labrador. April 27. No. Chico. IN VIEW OF ALL THE FOREGOING. this Court has held: We are of the opinion that a valid execution issued and levy made within the period provided by law may be enforced by a sale thereafter. G. No. Padilla.. G.R. the judgment of the Court of Appeals appealed from is affirmed. and any agreement to the contrary shall be null and void. The case of Ansaldo vs.542. L-13435 July 27.J. without reimbursement to the purchaser of the installments already paid." 3 In Alcantara vs. 150. 318). On this point. Dizon and De Leon. if there be an agreement to this effect. for there the judgment creditor attempted to carry out the writ of execution 10 years after entry of judgment. This should reduce the principal amount still due the respondent from the petitioners to the sum of P1. Hotel Co. . vs. provided the sale is made within ten years after the entry of the judgment. both cited cases — . (Government of P. The petitioners should. 217.I. C. with costs against petitioners. Barrera. courts were not opened for nearly five (5) months. irrespective of the time when it may be sold (Southern Cal. Bautista Angelo.Petitioners raised the issue whether or not the pre-war writ of execution and levy may still be enforced by sale of the levied property after the lapse of the five-year period within which a judgment may be executed by motion. Co. be credited the amount of P409. took no part. the Court of Appeals estimated that in Bulacan. and by action after the lapse of said period but before the same shall have been barred by any statute of limitations.R. . his interest is limited to its application to the judgment. vs. concur. affirm the fundamental principles that a valid judgment may be enforced by motion within five years after its entry. Fidelity and Surety Company of the Philippine Islands.. L. L-2378. 94 Cal. JJ. 222). 49 O." 2 The paragraph reads: "However.

Tolentino. On April 24.500.. including interest.500.300. Plan Psu-32606. ET AL. or if the downpayment be less than P1. de Vera. sent him a letter urging immediate payment of his unpaid account with the Company. plaintiff-appellant offered to buy the lot in question (about 248. de Landahl(as Administratrix of the intestate estate of John Landahl)having been dismissed. Conrado Vicente.L. It appears that Januaria Rodriguez was the original registered owner of a big tract of land (part of which is the land in question). plaintiff-appellant made another payment of P300 for which a receipt dated June 20. and the amounts already paid (P1. which the Payatas Subdivision accepted.. promulgated on October 31.000. Questions of law and of fact are involved. the Company wrote him that it was agreeable to a down-payment of P1.240 in cash. plaintiff and appellant. Defendant-appellee Eulogio Rodriguez was then the Secretary-Treasurer of said Payatas Subdivision Inc.23. then considered his contract cancelled and extinguished. and through the intercession of defendant-appellee Eulogio Rodriguez.The Company agreed to sell said lot (Lot 51) for P2. the Company's bookkeeper (Exhibits "G" & "G"-1). so that title could be transferred to him as per agreement. amounted to P819. 1928. and asking him to answer within 10 days (Exhibit "H"). which. de Landahl.21. 1926. on several occasions. leased or otherwise disposed of (Exhibit "A"-1). who was plaintiffappellant's friend. Sr. Rodriguez. situated in San Mateo.. 1928 was issued to him (Exhibit "I"). Celestino L. vs. which. Plaintiff-appellant made a counter-offer for P2.300. dismissing his complaint. Generoso. Plaintiff-appellant wanted to pay in installments. Januara Rodriguez ceded and transferred said land to the Payatas Subdivision Inc. meters in area).B.1957. a provisional receipt was issued. J.: Eusebio Manuel appeals from the judgment of the Court of First Instance of Rizal.000.600). 8821 of the Register of Deeds of Rizal. to compel defendants to execute a deed of absolute sale of said lot in favor of said plaintiff and to receive the unpaid balance of the purchase price thereof. Garcia and Cruz for appellee E. defendants and appellees.EUSEBIO MANUEL. Sumulong. After making the initial payment of P1. this appears to be the last payment made by plaintiff-appellant on Lot 51. 1926. the Payatas Subdivision Inc. In 1924. The cross-claim by defendant Eulogio Rodriquez against his co-defendant Dolores Vda. 1929. so that on April 30..00. the appeal was directly taken to this Court. Sr. the Payatas Subdivision Inc. Plaintiff-appellant then requested that the downpayment be reduced to P1. this was granted. and there being no appeal therefrom. So far as the record discloses. the Payatas Subdivision Inc. provided it was paid in each (Exhibit "E"). and requesting answer within 10 days (Exhibit "J"). SR. Still. including interest and taxes. Defendants-appellees advance the theory that in view of plaintiffappellant's repeated default in paying his outstanding account. Hialo and Vidanes for appellant. the property in question. plaintiff-appellant was placed in the possession of the lot. with interest at 10% on the balance (Exhibit "F"). plaintiffappellant did not pay his account. embraced by Transfer Certificate of Title No. and on August 2. sold. the Company sent to his residence its acting secretary. urging immediate payment thereof. amounted to P596. It also appears that plaintiff-appellant did not make any payments within the 9 to 10-month period mentioned in Exhibit "F".. forfeited to Page 24 of 52 . de Dios for appellee Llanos Vda. REYES. subdivided. J. to be administered by said firm. was substituted by the official receipt sent by Casiano M.310 sq. EULOGIO RODRIGUEZ. Rizal. 1926.000. sent plaintiff-appellant a detailed statement of his unpaid account which. on August 25. The complaint seeks to have plaintiff Eusebio Manuel declared absolute owner of Lot 51. the balance to be paid within 9 to 10 months without interest. or by installments with 10% interest (Exhibit "C"). but the property being worth over P2. to collect the balance. Sometime in April. despite the fact that thereafter. and to declare the subsequent sales of said lot null and void and to cancel the transfer certificates of title issued to the transferees. Thereafter. the facts pertaining thereto will be omitted. Soon after.

including Lot 51 in question. 43. moreover. it appears that on February 4. 46521 was issued in Landahl's name (Exhibit 3-Landahl). alinsunod sa pinagkayarian".Pursuant to such sale. his secretary wrote plaintiffappellant (Exhibit "O"). medical expenses. 2. pars. Act 190). forfeited. his right of action to compel the execution of a formal deed of conveyance has prescribed. was extrajudically dissolved. sold Lot 51(among others) to John Landahl (represented in the transaction by Carlos Landahl as attorney-in-fact). the land being covered by a Torrens title. plaintiff-appellant brought the instant case. Still. introduced by plaintiff as his evidence. On April 6. sold several properties to the latter. in consideration of the monthly advances. support. The sale was duly registered and Transfer Certificate of Title No. 1 & 2. Eulogio Rodriguez. considering that the land being covered by a Torrens title. would agree to an immediate transfer of ownership to plaintiff without any guaranty or security that the balance of the price would be completely paid. 3.. which she received from the said Eulogio Rodriguez (Exhibit "U"). who was the aunt of defendant-appellee Eulogio Rodriguez. but its papers of dissolution were lost or destroyed during the war. because plaintiffappellant would have insisted that it be reduced to a public document. Sr. etc.the Company. that sometime in 1939. the transaction being merely a contract to sell or promise to sell. much less registered. Plaintiff would not have waited for more than 20 years to file this action to enforce the contract if this where an absolute sale. Sometime in 1941.192. 44709 was issued to Eulogio Rodriguez. It is highly improbable that the Payatas Subdivision Inc. to compel the execution of a formal deed of conveyance in his favor covering the purported sale in 1926. confirms that the agreement between plaintiff and the company was that title would be transferred to plaintiff only upon full payment of the price. Secondly. The decision of the trial court dismissing the complaint is predicated on two main findings — Firstly. the Payatas Subdivision Inc. requesting payment of the balance "at ng kayo naman y mabigyan na ng katibayan.. which is unlikely if the contract had been an absolute sale. The statement in Exhibit "J". to compel receipt of the unpaid balance of the price which plaintiff-appellant consigned in court. and to annul the subsequent sales to Eulogio Rodriguez and to John Landahl. Sr. in Japanese war notes (Exhibit 1-Landahl). it was easy for the vendor to resell or encumber the same property to some other person on the basis of a clean title. as aforesaid. 1949. instructed his secretary to write plaintiffappellant to urge him to pay his unsettled account with the Payatas Subdivision. Eulogio Rodriguez. Sr. maintenance. care. services. 4. As per instructions. Januaria Rodriguez. the understanding being that upon failure to pay the installments as demanded. involving immediate transfer of ownership. the vendor corporation had the right to consider the contract cancelled and the amounts already paid. whether the contract is considered written or verbal (Sec. The alleged contract of absolute sale was not reduced to a formal deed of conveyance. Transfer Certificate of Title No. 1941. then Mayor of Manila. Inc. The findings that the contract entered into 1926 was a mere contract to sell or promise to sell was predicted on the following premises: 1.80. Likewise. Page 25 of 52 . or just a little less than 23 years after the alleged sale to him of Lot 51 in 1926. was an absolute sale. all unsold properties belonging to Januaria Rodriguez were returned to her. Code of Civil Procedure. — That even under plaintiff-appellant's theory that his contract with defunct Payatas Subdivision Inc. that after said dissolution. there was no payment. and the corresponding transfer certificates to title issued to them. (Exhibit 21-a). the action is barred by laches. On August 5. — That the transaction in 1926 was mere contract to sell or promise to sell of Lot 51 to plaintiff-appellant. having sold all its properties (except some properties it was administering for Januaria Rodriguez). for and in consideration of P157. 1944.

but only a transfer after full payment of the price.000. considering that Lot 51 is covered by a Torrens title. 550). 7. He contends that contrary to the finding of the lower court. were not reduced to any written document. and again referred to other matters regarding the sale which should be threshed out between the parties. alinsunod sa pinagkayarian". The nature of the transaction as a mere contract to sell is established by the testimony of witnesses for defendantsappellees. transfer of title being conditioned on full payment of the price. Apart from whether the letters negotiating the transaction could constitute a written contract of sale. strengthening the conclusion that what transpired in 1926 was a mere contract to sell.5. the contract was reduced to a formal deed conveyance and the court found that the parties had agreed to and actually effectuated a delivery. they fail to show that the parties had committed all the terms of their agreement to writing. to have agreed to an immediate transfer of ownership without guaranty of the balance being ever paid. wherein the contract captioned "Promesa De Venta" was held to be an absolute sale. Jur. In his brief containing 20 assignments of error. As observed by the trial court. so that a contract partly in writing and partly oral. 12 Am. et al. The dissolution of the Payatas Subdivision Inc. Ah Sing.. One other evidence of the true character of the transaction is the statement contained in Exhibit "J" of the following tenor: "at ng kayo naman ay mabigyan na ng katibayan. It is generally recognized that to be a written contract. after making reference to the terms of payment desired by plaintiffappellant. referring to the attached receipt. 75 P2d 810. with interest at 10% if it be by installments. at which time the deed of conveyance is then executed in favor of the buyer. while Exhibits "G" and "G"-1 are mere receipts of payment. Suffice it to say that comparison will not hold. in legal effect. as the land is covered by the Torrens title. is. sometime in 1939 must have been the reason which prompted the cancellation of plaintiff's contract. Peifer vs. if the contract were an absolute sale. and if the buyer defaults in paying the installments due. 69 Phil. Exhibit "E" accepts a previous counter-offer made by plaintiffappellant to buy Lot 51 for P2. Exhibit "G" is a note by Payatas Inc. Plaintiff-appellant tries to refute this by citing El Banco Nacional Filipino vs. Exhibit "D" offered to reduce the total price for Lots 44 and 51 (early negotiation were for 2 lots) to P2. the balance would bear interest at 10%. and also referred to other matters concerning the sale which should be discussed personally by the parties. provided the payment was in cash. It may be taken judicial notice of that it is a general practice among subdivision companies engaging in installment sales to place the buyer immediately in possession after the downpayment. Exhibit "C" merely offers to sell Lot 51 for P2. it is unlikely that plaintiff-appellant would not have insisted that the same be reduced to a public document. citing the series of communications between plaintiffappellant and the Payatas Subdivision Inc. A careful examination of these exhibits. Page 26 of 52 .240. because in the cited case. the corporation cancels the contracts and forfeits the amount already paid. only the price and the terms of payments were in writing.. Exhibits "F". and the other matters alluded to in some of the communications. The most important. Exhibit "G-1"). as it had to wind up all its affairs and conclude all pending business before dissolution. there was a formal deed of conveyance. 611. In the instant case. These letters shows that if at all. all its terms must be in writing. however. and. covering the down-payment of P1.500. the company remaining owner of the property until full payment. the 1926 contract was not verbal but written. it is unlikely for the Payatas Subdivision Inc. plaintiff-appellant insists that the contract in 1926 was not merely a contract to sell but an absolute sale (Errors I-IV). Loose Wiles Biscuit Co. the absence of a formal deed of conveyance strongly indicates that the parties did not intend immediate transfer of title.. Exhibits "C" to "G"-1. there could be no delivery except by the act of registration of the deed or instrument. laid down the condition that if the first payment is at least P1. the balance payable in 9 to 10 months would not bear interest. 157 NE 240. 6. reveals that Exhibits "C" to "F" are mere bargaining negotiations that took place before the parties arrived at a full understanding. an oral contract (Fey vs. the alleged transfer of title. On the other hand. and if the initial payment was less than P1.300 made by plaintiff-appellant for Lot 51.955. New Comer.500.

1939. which is not the case. 1955. by reason of the nonpayment of the balance of the price. we find not necessary to discuss. plus the other circumstances on record. the failure of which is not a breach. showing that Payatas Subdivision no longer even had an office.. Santero. C. 1950). It is contended (Error V) that the balance of the price was not due and payable within the 9 to 10-month period mentioned in Exhibit "F". VI. Although this dissolution cannot be determinative of the character of the sale in 1926 (as to whether conditional or absolute). . accrued only up to January. . casual or serious. and finds nothing to justify such a strained conclusion. the pertinent portion merely stated that if the first payment is at least P1. 12.500. it was unlikely for plaintiff-appellant to wait as long as he did before commencing the present action. L6573. Inquimboy. The circumstances shown by the trend of evidence. Plaintiff-appellant. 131. L-2077 and Aspuria vs. 1592. Mirandavs. Gaz. from which it is supposed to be inferred that said corporation had not yet been dissolved. this Court had examined said letter. as the corporation had to wind up its affairs and close all pending business. Considering the steady increase in land values since 1926 (Martin vs. considering that as the land was covered by a Torrens title. according to said letter.). give credence to defendantappellees' contention that the corporation was really dissolved in 1939. October 3. [9] 1589). in accordance with Article 1117 of the Old Civil Code. the payment was being asked to be made at the office of defendantappellee Eulogio Rodriguez at the City Hall. sometime in 1939 is sufficiently established by the evidence. but simply an event that prevented the obligation of the vendor to convey title from acquiring binding force. until full payment of the price. argues (Errors IIV. VIII) that the Payatas Subdivision had no right to cancel the contract. where non-payment is a resolutory condition.* 57 Off. p. All these. 71 Phil. 114. In contracts to sell. Also significant is the computation of interest mentioned in Exhibit "O" which. it must really have been the occasion which prompted the termination of the contract. C. 476. The contention of plaintiff-appellant that Payatas Subdivision Inc. This is without merit. February 28. The Page 27 of 52 . does not apply to a contract to sell or promise to sell. L-2121. such as full payment of the price (Caridad Estates vs. as there was no demand by suit or notarial act. because Article 1504 requiring demand by suit or notarial act in case the vendor of realty wants to rescind. To argue that there was only a casual breach is to proceed from the assumption that the contract is one of absolute sale. Whether the trial court could take judicial notice of the alleged practice in subdivision companies to retain ownership over lands they contracted to sell. subject to a suspensive condition that was terminated for the Payatas Subdivision Inc.. N. not the period within which the balance will fall due. The dissolution of the Payatas Subdivision Inc. Caridad Estates. including the oral testimony of the witnesses for defendant-appellees. The only argument advanced by plaintiff-appellant to show that it was not dissolved in 1939 (Error I-IV. Caridad Estates. before its dissolution. Gaz. more than convince this Court that the transaction in 1926 was merely a contract to sell. then. where title remains with the vendor until fulfillment to a positive suspensive condition. In other words. however. in Exhibit "O" itself. for it if were an absolute sale. where ownership is retained by the seller and is not to pass until the full payment of the price. 121. it could have been very easy for the Payatas Subdivision to dispose or encumber the same to another party. as provided by Article 1504 of the Old Code (Art. as we said. Albea vs. 47 Off. the fact that plaintiff-appellant did not file this action to enforce the contract until after more than 20 years from the alleged absolute sale in 1926 induces no other conclusion than that the transaction was a mere contract to sell. the balance will bear interest at 10%. Supp. et al. IX-X) is Exhibit "O". had no right to cancel the contract as there was only a "casual breach" is likewise untenable. is a positive suspensive condition. the letter written in 1941 by the secretary of defendant-appellee Eulogio Rodriguez.Adding to the pile of circumstances.. wherein the statement appears "Sa utos ng pangasiwan ng Payatas Estate Subdivision . 86 Phil. Martin. plaintiff's laches and his neglect to comply with his own obligations are powerful indicia against the merits of his case rendering his case highly inequitable. However.". asking for payment of the balance of the price. Jocson vs. Reasonably interpreted. such payment. Capitol Subdivision Inc. the initial payment determines whether or not interest will be paid.

for appellee. The land in question being covered by a Torrens title. 34 Phil.. praying that judgment be entered in his favor and against the defendant (1) for the purchase price of the schooner Santa Marina. Barrera. and later. ANDRES GRIMALT. Hence. Alberto Barretto. Article 1169. to John Landhal. 1941. XV. Labrador. 1. there is not even a deed or instrument that could possibly be registered. counsel for Pedro Roman filed a complaint in the Court of First Instance of this city against Andres Grimalt. defendant-appellee. the latter was not yet the owner of Lot 51 and the Payatas Subdivision Inc. and Gutierrez David. concur. Anyway. J. since Exhibit "O" is dated February 4. for appellant. XIV. was not yet the owner of Lot 51. in the absence of stipulation. appellant failed to take advantage of the proposal. it becomes academic to discuss the assignments of error pertaining thereto (Errors VII. Tuason vs. Raymundo. upon instructions of defendantappellee Eulogio Rodriguez.: On July 2. As to whether or not Eulogio Rodriguez had already acquired Lot 51 when Exhibit "O" was sent to plaintiffappellant. (3) for Page 28 of 52 . the amounts paid by plaintiff be returned. for whomever Eulogio Rodriguez was acting. But this is not material. had not yet been dissolved. Ocampo. Bautista Angelo. and it appears that demands were made which plaintiff-appellant failed to heed. Bengzon. Montemayor. since the purpose for which he paid them was not attained. In the instant case. payable by installments in the manner stipulated.C. Old Civil Code. the judgment of the trial court is affirmed. 1941 while Exhibit "U" (the deed of sale from Januaria Rodriguez to Eulogio Rodriguez) is dated December 26. plaintiff-appellant has no personality to question the sales subsequently made to Eulogio Rodriguez. of course. there is enough evidence that the company was dissolved in 1939. Miranda and Sierra. we find it unnecessary to discuss the remaining errors assigned in appellant's brief. vs. XVI). Buzon vs. Equity would.Lichauco.R. 13 Phil. specially since there is no evidence that Landhal was prevented from relying on the clear certificate of title in the name of Rodriguez. and could not have prevented the subsequent sale of the property to another party. XIII.). Costs against plaintiff-appellant.period here bears no relation to the amount to be initially paid. As earlier discussed. Chicote. that his failure to complete payment of the price and his laches in enforcing his rights render it inequitable to compel performance of the contract at the present time. Plaintiff-appellant next contends (Errors IX-XI) that when Exhibit "O" was sent by Clemente Felix. he still wanted to give plaintiff-appellant a chance to own the land as a gesture of liberality. 646. demand that. and the same remains without binding effect. 635. TORRES. No. and it appears of record that such reimbursement was made as early as 1945 (Exhibits 1 to 1-C).500 pesos or its equivalent in Philippine currency. only the act of registration of the deed or instrument could effect transfer of ownership (Worcester vs. since it would merely show that. to wit. plaintiff-appellant. N. (2) for legal interest on the installments due on the dates set forth in the complaint. 1100. plaintiff-appellant was legally bound to pay the obligation due upon judicial or extra-judicial demand (Art. it would really seem that said Eulogio Rodriguez. Having lost all rights to the land. April 11. XII. 28 Phil.C. as of that time. there is yet another reason why the purported sale to plaintiff-appellant could not have transferred title to him. Concepcion. At any rate. 1904. 1906 G. 354). 2412 PEDRO ROMAN. From a different perspective. In view of the foregoing. Having reached the conclusion that title to the disputed property never passed to plaintiff-appellant. JJ.

The court below found that the parties had not arrived at a definite understanding. but admitted. and November 15. and that on the 30th of the same month demand was made upon the defendant for the payment of the purchase price of the vessel in the manner stipulated and defendant failed to pay. 1450 of the Civil Code. also that the vessel was in a seaworthy condition. Plaintiff finally prayed that judgment be rendered in accordance with the prayer of his previous complaint. that the vessel was ready for delivery to the purchaser and that an attempt had been made to deliver the same. m. that the contract having been closed and the vessel being ready for delivery to the purchaser. that the purchase price and method of payment had been agreed upon. (Art. after examining the documents. To this order the plaintiff duly excepted. September 15. it was sunk about 3 o’clock p. Defendant also denied the other allegations of the complaint inconsistent with his own allegations and further denied the statement contained in paragraph 4 of the complaint to the effect that the contract was completed as to the vessel. as a result of a severe storm.) Page 29 of 52 . the plaintiff stating that the vessel belonged to him and that it was then in a sea worthy condition. in the harbor of Manila and is a total loss. even though neither has been actually delivered.. A sale shall be considered perfected and binding as between vendor and vendee when they have agreed as to the thing which is the object of the contract and as to the price.costs of proceedings. and (4) for such other and further remedy as might be considered just and equitable. alleging that on or about June 13 both parties met in a public establishment of this city and the plaintiff personally proposed to the defendant the sale of the said vessel. June 25. both parties. on July 15. that both parties then called on Calixto Reyes. We think that this finding is supported by the evidence introduced at the trial. who. On October 24 of the same year the court made an order sustaining the demurer filed by defendant to the complaint and allowing plaintiff ten days within which to amend his complaint. through one Fernando Agustin Pastor. and offered to deliver the same at once to defendant if he so desired. the allegations contained in the last part of the said paragraph. but. adding in his letter that if the plaintiff accepted the plan of payment suggested by him the sale would become effective on the following day. however. that plaintiff on or about the 24th of the same month had notified the defendant through Agustin Pastor that he accepted the plan of payment suggested by him and that from that date the vessel was at his disposal. that the defendant in a letter dated June 23 had agreed to purchase the said schooner and of offered to pay therefor in three installment of 500 pesos each. verbally agreed upon the sale of the said schooner. 1904. wrote to him on the 23d of June and set the following day for the execution of the contract. informed them that they were insufficient to show the ownership of the vessel and to transfer title thereto. he insisted that he would buy the vessel only when the title papers were perfected and the vessel duly inspected. that plaintiff then promised to perfect his title and about June 23 called on defendant to close the sale. and the defendant believing that plaintiff had perfected his title. a notary public. to wit. that defendant accepted the offer of sale on condition that the title papers were found to be satisfactory. Defendant in his answer asked that the complaint be dismissed with costs to the plaintiff. Counsel for plaintiff on November 5 amended his complaint and alleged that between the 13th and the 23rd day of June. upon being informed that plaintiff had done nothing to perfect his title.

The first paragraph of article 1460 of the Civil Code and section 335 of the Code of Civil Procedure are not applicable.R. So ordered.Ownership is not considered transmitted until the property is actually delivered and the purchaser has taken possession of the value and paid the price agreed upon. Mapa. payable in three installments. Arellano. 1462 of the Civil Code. the purchase of which had not been concluded. No. (Art. JJ.. in which case the sale is considered perfected. during a severe storm and before the owner had complied with the condition exacted by the proposed purchaser. The vessel was sunk in the bay on the afternoon of the 25th of June. however. be enforced on account of the entire loss of the thing or made the basis of an action in court through failure to conform to the requisites provided by law.500 pesos. 1904. The judgment of the court below is affirmed and the complaint is dismissed with costs against the plaintiff. the purchaser. These provisions contemplate the existence of a perfected contract which can not. provided the title papers to the vessel were in proper form. and Andres Grimalt. The papers presented by him did not show that he was the owner of the vessel. that article 1452 of the Civil Code relative to the injury or benefit of the thing sold after a contract has been perfected and articles 1096 and 1182 of the same code relative to the obligation to deliver a specified thing and the extinction of such obligation when the thing is either lost or destroyed. therefore. When the sale is made by means of a public instrument the execution thereof shall be equivalent to the delivery of the thing which is the object of the contract. concur. Roman promised. The conversations had between the parties and the letter written by defendant to plaintiff did not establish a contract sufficient in itself to create reciprocal rights between the parties. If no contract of sale was actually executed by the parties the loss of the vessel must be borne by its owner and not by a party who only intended to purchase it and who was unable to do so on account of failure on the part of the owner to show proper title to the vessel and thus enable them to draw up the contract of sale. They agreed upon the sale of the vessel for the sum of 1.J. to wit. Johnson. the alleged owner.from the 13th to the 23d of June. L-28845 June 10.. Carson and Willard. the production of the proper papers showing that the plaintiff was in fact the owner of the vessel in question. 1904. G. to perfect his title to the vessel. had been for several days negotiating for the purchase of the schooner Santa Marina . The defendant was under no obligation to pay the price of the vessel. the owner. however.) Pedro Roman. It follows. It is so stated in the letter written by the purchaser to the owner on the 23rd of June. 1971 Page 30 of 52 . The sale of the schooner was not perfected and the purchaser did not consent to the execution of the deed of transfer for the reason that the title of the vessel was in the name of one Paulina Giron and not in the name of Pedro Roman. but he failed to do so. are not applicable to the case at bar. After the expiration of twenty days from the date hereof let judgment be entered in accordance herewith and ten days thereafter let the case be remanded to the Court of First Instance for proper action. C.

he ceded and transferred to petitioner the land then titled in his name. that there are houses on the land in question and the owners thereof pay to her the corresponding rents. covered by Transfer Certificate of Title No. Jr. his surviving spouse. TEEHANKEE. were made to understand that they were merely mortgaging the land in question to the defendant as security for the sum of P100. B). Gil Joaquin executed a deed of "Venita con Pacto de Retro". Sabina Reyes tried to establish that the document. she had been paying the taxes for the land declared in the name of her husband under Tax Declaration No. that the conditions stated in the document above-quoted are not true except that portion in letter (b) whereby her late husband agreed to pay an annual rent of P12.00 as lessee thereof during the stipulated period of redemption. attempted to show that she is the lawful owner of the land in question. Sabina Reyes." Exhibit A-1. namely. on the ground of fraud. Gil Joaquin.. Elvira. Page 31 of 52 . as follows: Plaintiff.TEODORA GONZALES BUNYI. presided by the late Justice (then Judge) Angel H. J. Gil Joaquin. whereby for and in consideration of the sum of P100. with the right of repurchasing the same within two years thereafter. summarized the conflicting claims of the parties per their testimonial and documentary evidence. 1950. 1935. filed by private respondents as plaintiff in the Court of First Instance of Rizal. Loida Vivo. JR. On September 24. and Lualhati. that in affixing her thumbmark to the document. and assuming the payment of the land taxes and agreeing to pay an annual rental of P12. Baez & Vasquez for private respondents. by petitioner. Rizal. Mojica. 1 Respondents filed the suit on May 30. and that she learned for the first time that the defendant was claiming ownership of the land only in 1961 when the defendant caused it to be surveyed and so she consulted her present counsel. leaving respondents as his heirs. Rosendo. does not represent the true intention and agreement of the parties thereto. Luis Teodoro for petitioner. 947 (Exh. ELVIRA JOAQUIN. 1941 in petitioner's name. that the contents thereof were not faithfully explained to her and her late husband. respondents. and the condition appearing in letter (c) whereby her late husband bound himself to pay the taxes for the land. LUALHATI JOAQUIN and LOIDA VIVO and the HONORABLE COURT OF APPEALS. ROSENDO JOAQUIN. having acquired same in virtue of the instrument "Venta Con Pacto de Retro. The trial court. petitioner. 1961 as heirs of the previous registered owner of the land.00 paid to him.00. and represented by their mother. SABINA REYES. Exhibit A-I. his daughter. expressly excluding the house or houses built thereon. Anonuevo. that since 1935 up to January 1961. all surnamed Joaquin (children of a deceased son. that she had been paying interest every year to the defendant on the sum loaned. and his minor grandchildren. as their guardian ad litem. petitioner executed an affidavit of consolidation of ownership and Joaquin's title was accordingly cancelled and a new certificate of title issued on July 7. LUZ JOAQUIN. The main facts are undisputed. Luz Joaquin. of a parcel of land containing 16 ares and 59 centares (Lot No. who signed the same. On July 5. she and her late husband.: Appeal for certiorari from a decision of the Court of Appeals. 1941. who had died on June 10. Rosendo). Petitioner Teodora Gonzales Bunyi was the defendant in an action for reconveyance. The defendant. on the other hand. 43437 issued in her name.00 which they borrowed from her. vs. 1310 of the Friar Lands Estate) situated in Taguig. after Gil Joaquin had failed to repurchase the land.

V. It is our sense that the delay of plaintiffs in seeking relief in court 'speaks against the probability of the wrong complained of. five months before the filing of the complaint. Estacion. Sept. 1950).. Passing upon the contrary claim of respondents. the trial court found the uncorroborated and lone testimony of Sabina Reyes to be inadequate and incredible: "(W)e find the uncorroborated testimony of plaintiff Sabina Reyes to the effect that she and her late husband. To accomplish this result. Gil Joaquin. 1935.L. although she was taught how to write her name by her father so that she could vote. After so long a period the charges of fraud must be clearly and in controvertibly proved . Jocson vs. twenty six years after the execution of the instrument. 1055. et al. that she did not study in any school. 43437 covering the land was issued on July 7. Sabina Reyes. to repurchase the land within the period of two years and pay the rents as stipulated in the contract. that Gil Joaquin had been vice mayor of Muntinglupa and he spoke and understood Spanish. 60 Phil. ruling that the applicable provisions were those of the old Civil Code then in force. explained to them the contents thereof. Her lone and biased testimony is not sufficient to overcome the aforesaid document which is a sale with Right to repurchase (venta con pacto de retro) . 1950 had been Page 32 of 52 . the evidence must be so clear. She declared that she had religiously paid the taxes for the land. strong and convince as to exclude all reasonable controversy as to the falsity of the certificate.R. Villafuerte. C and C-1). the certificate will be upheld. A-I) in Biñan. CA-G. that her husband who reached the second grade did not understand Spanish. The trial court rendered judgment holding that the questioned deed spoke "in unequivocal terms of a sale and the conveyance of the land with the right to repurchase. Why the belated payment if she believes to be still the owner of the property?" 3 The trial court finally upheld petitioner's defense of laches and prescription on the basis of the following considerations: "(L)astly. she filed an affidavit of consolidation of ownership and as a consequence thereof. She claimed that she had been paying the real estate taxes for the land as shown by her documents. Mere denials on the part of plaintiff Sabina Reyes can not offset or defeat said notarial documents" 2 The trial court further ruled out the applicability of Articles 1602 to 1605 of the Civil Code of the Philippines invoked by respondents as warranting the construction of the contract as an "equitable mortgage". She further testified that the notary public before whom Gil Joaquin and plaintiff Sabina Reyes acknowledged and ratified the document (Exh. thus: "(I)t will be noted that the plaintiffs are attempting to defeat the effect of the deed of the late Gil Joaquin. it appears that Gil Joaquin who died on June 10.' (Robinson vs. in her favor.which Gil Joaquin executed in her favor on September 24. The records show that she paid the real estate taxes for the years 1949 to 1959 on December 22. 1637-R.J. were induced to sign the original of said document because of their belief that they were merely mortgaging the land in question as security for the sum of P100. Transfer Certificate of Title No. 1960 only (Exhs. 27. Laguna. Deeply embedded in our jurisprudence is the rule that 'mere preponderance of providence is not sufficient to overthrow a certificate of a notary public to the effect that a grantor executed a certain document and acknowledged the fact of its execution before him. their predecessor in interest. Exhibits 3 and 4. that because of the failure of Gil Joaquin and his wife. and when the evidence is conflicting.00 which they borrowed from her to be incredible. Villafuerte vs. there is nothing to justify our construing that contract as a mere mortgage. 5). that is. No. In this case we find that plaintiffs failed to produce 'clear strong and convincing evidence to overcome the positive value of said document. The trial court further found the belated claims of respondents to be unsupported by the evidence. 171. Reyes. In the face of its plain terms. 784. 18 Phil. yet she failed to substantiate her testimony with the best evidence. and that the land had been registered in her name for taxation purposes since 1949 (Exh. 1941.' Plaintiff Sabina Reyes failed to produce any receipt tending to prove her claim that she had regularly paid the interests on the alleged 'loan' since 1935 up to the filing of the complaint.

1961.Vice Mayor of Muntinglupa. 1961. under the law stands unrebutted and controlling . Under the facts. however. hence. Exhibit A-1. and so is the contract . the latter translated the contents into tagalog before it was signed by the Joaquin spouses in Biñan. to be Sale with right to repurchase. it is hard to be that he signed the document. as was the deed itself. as per annotation on TD 947.. and declared that under Article 1332 of the Philippine Civil Code. according to him. Only defendant testifies on this score. It is our conviction that the action has already prescribed." 4 Respondents appealed the trial court's decision to the Court of Appeals. drawn on Spanish which they did not understand and that they were induced to sign the document on representation of defendant that it was the deed of mortgage.. and understood Spanish. defendant has not discharged the burden of proof. Exhibit A.. Laguna. She declared pertinently that it is Gil Joaquin 'who asked the preparation of that document. Exhibit A. It finally held the respondents' action to be "one for declaration of the inexistence of the contract which does not prescribe. he spoke. if not fraud." The appellate court therefore reversed the trial court's judgment and granted the reconveyance of the land as prayed for in respondents' complaint. It follows that the consent of spouses Gil Joaquin and Sabina Reyes to the document. on July 7. when they instituted this action? The delay in the commencement of this action strongly casts a doubt in our mind as to the verity of their complaint. the burden of proof is on the defendant to allow pursuant to Article 1332 of the new civil code. and secured a new certificate of title in her name. The appellate court did not make any factual findings of its own. If he were really defrauded why did he not exercise his right of action? Why did he not repurchase the land and/or file an action for annulment of the aforesaid document during his lifetime? And why did plaintiffs sleep on their rights until May 30.' Exhibit A: that after the document was prepared by the notary public. much less overturn those of the trial court. since the change in the status of the property was not reflected in the tax roll of the municipality of Muntinglupa until August 28. Her bare testimony is not sufficient to establish by preponderance of evidence that the Joaquin spouses fully know the contents of the document. she being illiterate and her husband having reached grade 3 only. the burden was on petitioner as vendee a retro to show that the Joaquin spouses fully understood the contents of the deed and that her "bare testimony" was not sufficient to discharge the burden.. 1941. under the law stands unrebutted and controlling" and that the consent to the Joaquin spouses to the deed was therefore null and void. although her late husband reached sixth grade: that the notary gave a copy of the deed to the Joaquin spouses. that she did not have any schooling. Exhibit D-1 when plaintiffs TD was cancelled. The circumstances that Exhibit A is a public document executed prior to the effectivity of the new Civil Code do not preclude Page 33 of 52 . that they signed the deed in Muntinglupa in the belief it was a deed of mortgage and that they did not appear before the notary public in Biñan.. Exhibit 2-A. per its following brief opinion: Plaintiff Sabina Reyes having alleged and testified that she and her late husband Gil Joaquin thumbmarked and signed the deed.. It held that petitioner had consolidated her ownership in a "surreptitious manner" and that "under the facts. if not fraud. presumption of mistake. is null and void. It. that the Joaquin spouses fully understood the content thereof . Exhibit A. and in defendant's allowing plaintiffs to continue in possession of the lot after 1941 despite said change in ownership.. plaintiffs' theory finds confirmation in the surreptitious manner [that] defendant made and filed the affidavit of consolidation of ownership. especially considering the countervailing testimony of plaintiff Sabina Reyes that she and her husband did not understand Spanish.. without understanding its contents. Moreover. pitted the lone testimony of petitioner as against that of respondent Sabina Reyes. hence presumption of mistake. Laguna. defendant [petitioner] has not discharged the burden of proof. Exhibit 1.

. yet she failed to substantiate her testimony with the best evidence. Having found that the deed of sale. 1941 in a "surreptitious manner" on the assumption. which was designed for the protection of illiterates and of a party to a contract who "is a disadvantage on account of his ignorance. Article 1332.. it has first to be established convincingly by respondents that Gil Joaquin could not read or that the contract was written in a language not understood by him.. Exhibits 3 and 4." The appellate court still made mention of another relevant factor testified to by petitioner — not mentioned by the trial court — that "it was Gil Joaquin who 'asked the preparation of that document'. She declared that she had religiously paid the taxes for the land. T. The records show that she paid the real estate taxes for the years 1949 to 1959 on December 22." and that on the other hand. that is. When one of the parties is unable to read.. Exhibit A.. "Plaintiff Sabina Reyes failed to produce any receipt tending to prove her claim that she had regularly paid the interests and the alleged `loan' since 1935 up to the filing of the complaint. when plaintiffs' TD was cancelled and that petitioner "allowed plaintiffs to continue in Possession of the lot after 1941 despite said change of ownership. 2.. which the Court finds meritorious. strong and convincing evidence the positive value and effect of the notary's certificate that the Joaquin spouses duly executed the "Venta con Pacto de Retro" and acknowledged the fact of its execution of their sworn and free will before him. it is hard to believe that he signed the document Exhibit A-1 without understanding its contents. mental weakness or other handicap. and that the land had been registered in her name for taxation purposes since 1949 (Exh. it follows that the present action may be treated as one for declaration of the inexistence of the contract which does not prescribe . since the further presumption arose that the deed was prepared in accordance with Gil's understanding and instructions. who failed to overcome by clear. as per annotation on TD-947. had been vice mayor of Muntinglupa. or if the contract is in a language not understood by him. affecting burden of proof . the person enforcing the contract must show that the terms thereof have been fully explained to the former. The appellate court merely concluded that petitioner had consolidated ownership of the land on July 7. 1332.the application of Article 1332 aforesaid . The appellate court's error was in applying Article 1332 of the New Civil Code and declaring that thereunder petitioner had the burden which she failed to discharge as defendant — of showing that the Joaquin spouses fully understood the contents of the "Venta con Pacto de Retro"... (n) For the proper application of said article to the case at bar. without reference to the evidence of record.." Petitioner's brief further cites as to the fact of possession that "it was admitted by Luz Joaquin herself (one of the respondents and daughter of Gil Joaquin) that after World War II. null and void. Exhibit D-1. "by the notary public. that petitioner's ownership of the land was not reflected in the municipality's tax roll "until August 28. . (S. This factual basis was far from shown. 5). Exhibit A. N. who translated the contents into tagalog before the Joaquin spouses signed the same — which completely relieved petitioner of any burden of proof. On the contrary..... he spoke and understood Spanish. and mistake or fraud is alleged. the trial court duly found — and the appellate court made in contrary finding — that "Gil Joaquin. Petitioner in turn filed this appeal. five months before the filing of the complaint. she removed her house from the same lot." provides that: 5 Art. when the pertinent factual basis for application of said Article 1332 had not been duly established. of August Page 34 of 52 .. properly ruled that it was respondents. 1960 only (Exhs. 1961. since he caused its preparation. C and C-1)." These assumptions of the appellate court are not supported by the evidence of record cited 'in the trial court's decision that petitioner "had been paying the real estate taxes for the land as shown by her documents. therefore. The trial court. 1. which is procedural in nature. as plaintiffs. there being no vested right in the rules of evidence .

Makalintal. Without costs. Justice Reyes.1âwphi1.e. Zaldivar.nêt The case was originally filed on December 10. if any such rights ever existed. ACCORDINGLY. The complaint-in-intervention was admitted by the trial court in an Order dated May 4.. Castro.. respondents. 1993 by Paterno Inquing. J. the Court. 8 and S. IRENE GUILLERMO. 1994. ownership is consolidated in the vendee by operation of law. vs.: This is a petition for review on certiorari under Rule 45 of the Rules of Court seeking reversal of the Decision1 of the Court of Appeals dated June 25. The Court of Appeals decision reversed and set aside the Decision 2 dated May 13. Page 35 of 52 . G. ten years after petitioner's consolidation of ownership of the land on July 7. GONZAGA-REYES. N.1962 p. J. No. 2001 ROSENCOR DEVELOPMENT CORPORATION and RENE JOAQUIN. Fernando. C. JJ. and as was appointed out by Mr. petitioners. N. herein respondents. Exhibit A. "(U)nder Article 1509 of the old Code. Concepcion. in Fernandez vs. 8 has held that "the right of action to question the nature of the original transaction as well as any action to recover the land. Originally." which citation of the record is not denied in respondent's brief. 1941." The court's jurisprudence has been uniform in support of petitioner's submittal that the rights vested in her as vendee under the provisions of the old Code could not be impaired by the provisions of the new Civil Code which took effect only in 1950. 3 & 7) which was not even denied by the respondents. Rene Joaquin. Reyes." The sale at bar is governed by the provisions of the old civil code. J. Dizon. concur.. pp. 2) while one of the daughters of the petitioner. PATERNO INQUING. FERNANDO MAGBANUA and LIZZA TIANGCO. were extinguished by prescription ten years after the appellant consolidated his ownership in 1936." Respondents' right to question the nature of the deed and to seek reconveyance must be held therefore to have prescribed in 1951.. reserves his vote. against Rosencor Development Corporation (hereinafter "Rosencor"). 1963. 7 On the question of prescription of action. J.. when a new certificate of title was issued in her favor and that of Gil Joaquin was cancelled. 1990 between defendants Rosencor and Eufrocina de Leon but later amended (sic) praying for the rescission of the deed of sale. 1962. the vendee irrevocably acquires ownership over the thing sold upon failure of the vendor to redeem — i. of October 26. Fortunata Bunyi has a house on the same lot since 1959 (S. is null and void. the complaint was one for annulment of absolute deed of sale but was later amended to one for rescission of absolute deed of sale. Villamor and Makasiar. Q-93-18582.R. the judgment of the Court of Appeals appealed from is hereby reversed and set aside. 3. 1999 in CA-G. Fernandez. 53963.R. of February 27. CV No. and Eufrocina de Leon." hence "it follows that the present action may be treated as one for declaration of the inexistence of the contract which does not prescribe. 140479 March 8. Irene Guillermo and Federico Bantugan.J. A complaint-for intervention was thereafter filed by respondents Fernando Magbanua and Danna Lizza Tiangco.3 The facts of the case. took no part. 1996 of Branch 217 of the Regional Trial Court of Quezon City in Civil Case No. p. are as follows: "This action was originally for the annulment of the Deed of Absolute Sale dated September 4. Barredo.B. as stated by the trial court and adopted by the appellate court. and the filing of the present action almost twenty years after such consolidation is barred by prescription.L. Justice Reyes in one case 6. per Mr. FEDERICO BANTUGAN. T. The final error of the appellate court flowed from its erroneous conclusion that "the consent of spouses Gil Joaquin and Sabina Reyes to the document. T.

They refused to leave the premises. in November 1990. they received a letter from Eufrocina de Leon offering to sell to them the property they were leasing for P2. the barangay interceded between the parties herein after which Rosencor raised the issue as to the rental payment of the premises. In June 1990. Rene Joaquin came to the leased premises introducing himself as its new owner.000. It was also at this instance that the lessees were furnished with a copy of the Deed of Sale and discovered that they were deceived by de Leon since the sale between her and Rene Joaquin/Rosencor took place in September 4. Upon the death of the spouses Tiangcos in 1975. The lessees offered to buy the property from de Leon for the amount of P1.00 plus an additional P274. They also asked for a copy of the deed of sale between her and the new owners thereof but she refused to heed their request. 150 Tomas Morato Ave.000. no answer was given by de Leon as to their offer to buy the property.000.000. Aguila wrote them another letter demanding the rental payment and introducing herself as counsel for Rosencor/Rene Joaquin. In January 1991. The lessees offered to tender their rental payment to de Leon but she refused to accept the same. However. the latter turned down their request and instead Atty.000. Erlinda Aguila demanding that they vacate the premises so that the demolition of the building be undertaken. De Leon told them that she will be submitting the offer to the other heirs. and c) de Leon be Page 36 of 52 .000. de Leon refused to accept the lessees’ rental payment claiming that they have run out of receipts and that a new collector has been assigned to receive the payments. the lessees again received another letter from Atty. Thereafter.000. The lessees offered to reimburse de Leon the selling price of P726.000.000. when they asked Rene Joaquin a copy of the deed of sale. In that same month. In April 1992 before the demolition can be undertaken by the Building Official.000. The lessees were renting the premises then for P150. xxx. The lessees continued to stay in the premises and allegedly spent their own money amounting from P50..00.00 for its upkeep.00 to complete their P1.00 a month and were allegedly verbally granted by the lessors the pre-emptive right to purchase the property if ever they decide to sell the same. b) the defendants Rosencor/Rene Joaquin be ordered to reconvey the property to de Leon. they filed the present action praying for the following: a) rescission of the Deed of Absolute Sale between de Leon and Rosencor dated September 4.000. Aguila demanding that they vacate the premises. Since then. The following month Atty. the new owners of the premises. The lessees also noted that the property was sold only for P726.00. The lessees were allegedly promised the same pre-emptive right by the heirs of Tiangcos since the latter had knowledge that this right was extended to the former by the late spouses Tiangcos.000.00 earlier offer. In the same manner. 1990 while de Leon made the offer to them only in October 1990 or after the sale with Rosencor had been consummated. the management of the property was adjudicated to their heirs who were represented by Eufrocina de Leon. Aguila wrote them several letters demanding that they vacate the premises. 96161 and owned by spouses Faustino and Cresencia Tiangco. The lessees requested from de Leon why she had disregarded the pre-emptive right she and the late Tiangcos have promised them. the lessees received a letter from de Leon advising them that the heirs of the late spouses Tiangcos have already sold the property to Rosencor. Quezon City covered by TCT No.00 to P100. A month thereafter. 1990.Plaintiffs and plaintiffs-intervenors averred that they are the lessees since 1971 of a two-story residential apartment located at No. The lease was not covered by any contract.00. When their offer was refused. the lessees received a letter from Atty.00. These expenses were never deducted from the rentals which already increased to P1.

SO ORDERED. II. in turn. (2) The reconveyance of the subject premises to appellee Eufrocina de Leon. thru appellee Eufrocina de Leon. On June 25. the trial court issued an Order for the elevation of the records of the case to the Court of Appeals. Page 37 of 52 .00. The trial court held that the right of redemption on which the complaint was based was merely an oral one and as such. 1999. No pronouncement as to costs.9 Hence. the appealed decision (dated May 13. this petition for review on certiorari where petitioners Rosencor Development Corporation and Rene Joaquin raise the following assignment of errors10: I. 1999. and (4) The appellants to. 1996) of the Regional Trial Court (Branch 217) in Quezon City in Case No. to afford the appellants thirty days within which to exercise their right of first refusal by paying the amount of ONE MILLION PESOS (P1. THE COURT OF APPEALS GRAVELY ERRED WHEN IT ORDERED THE RESCISSION OF THE ABSOLUTE DEED OF SALE BETWEEN EUFROCINA DE LEON AND PETITIONER ROSENCOR."6 Not satisfied with the decision of the trial court. On August 8. No costs. respondents herein filed a Notice of Appeal dated June 3. The dispositive portion of the June 25. 1997. Plaintiffs and plaintiffsintervenors are hereby ordered to pay their respective monthly rental of P1. in view of the foregoing. In its stead. a new one is rendered ordering: (1) The rescission of the Deed of Absolute Sale executed between the appellees on September 4. 1996. Q-93-18582 is hereby REVERSED and SET ASIDE.00 per month reckoned from May 1990 up to the time they leave the premises. the Court of Appeals rendered its decision7 reversing the decision of the trial court. premises considered. pay the appellees back rentals from May 1990 up to the time this decision is promulgated. The dispositive portion of the May 13. 1999 decision is as follows: "WHEREFORE.000. THE COURT OF APPEALS COMMTITED MANIFEST ERROR IN MANDATING THAT EUFROCINA DE LEON AFFORD RESPONDENTS THE OPPORTUNITY TO EXERCISE THEIR RIGHT OF FIRST REFUSAL.ordered to reimburse the plaintiffs for the repairs of the property.8 Petitioners herein filed a Motion for Reconsideration of the decision of the Court of Appeals but the same was denied in a Resolution dated October 15. the Court DISMISSES the instant action. SO ORDERED".000. 1990. is unenforceable under the law.000. 1996 Decision is as follows: "WHEREFORE. On the same date. respondents filed their appellate brief before the Court of Appeals.000. (3) The heirs of Faustino and Crescencia Tiangco. or apply the said amount as part of the price for the purchase of the property in the sum of P100. The trial court held that the right of redemption on which the complaint. the Regional Trial Court rendered a Decision5 dated May 13. 1996 dismissing the complaint.00) for the subject property." 4 After trial on the merits.

In the following cases an agreement hereafter made shall be unenforceable by action. Both the appellate court and the trial court failed to discuss. but when a sale is made by auction and entry is made by the auctioneer in his sales book. or by his agent. be in writing. b) A special promise to answer for the debt. The term "statute of frauds" is descriptive of statutes which require certain classes of contracts to be in writing. other than a mutual promise to marry. paragraph 2. The following contracts are unenforceable. or some note or memorandum thereof. or some of them. or miscarriage of another. terms of sale. price. THE COURT OF APPEALS GRIEVOUSLY ERRED IN CONCLUDING THAT RESPONDENTS HAVE ESTABLISHED THEIR RIGHT OF FIRST REFUSAL DESPITE PETITIONERS’ RELIANCE ON THEIR DEFENSE BASED ON THE STATUTE OF FRAUDS.III. of such things in action. for herself and for the heirs of the spouses Faustino and Crescencia Tiangco. of the agreement cannot be received without the writing. but merely regulates the formalities of the contract necessary to render it enforceable. evidence. 1403. in denying the petition for reconveyance. the threshold issue of whether or not a right of first refusal is indeed covered by the provisions of the New Civil Code on the statute of frauds. at the time of the sale. as follows: "Art. more specifically the provisions on the statute of frauds. the appellate court ruled that respondents had duly proven the same by reason of petitioners’ waiver of the protection of the statute by reason of their failure to object to the presentation of oral evidence of the said right. The resolution of the issue on the applicability of the statute of frauds is important as it will determine the type of evidence which may be considered by the trial court as proof of the alleged right of first refusal. 1403. did not appeal the decision of the Court of Appeals. chattels or things in action. unless the buyer accept and receive part of such goods and chattels. unless the same. This statute does not deprive the parties of the right to contract with respect to the matters therein involved. or a secondary evidence of its contents: a) An agreement that by its terms is not to be performed within a year from the making thereof. The Court of Appeals. Said article provides. Thus. The trial court. and subscribed by the party charged. or pay at the time some part of the purchase money. held that right of first refusal relied upon by petitioners was not reduced to writing and as such. default. or the evidences. therefore. is unenforceable by virtue of the said article. c) An agreement made in consideration of marriage. also held that the statute of frauds governs the "right of first refusal" claimed by respondents. however. However. of the amount and kind of property sold. on the other hand. unless they are ratified: xxx (2) Those that do not comply with the Statute of Frauds as set forth in this number. At the onset. in coming out with their respective decisions. they are included in the provisions of the New Civil Code regarding unenforceable contracts. names of purchasers and person on whose account the sale is made. d) An agreement for the sale of goods. Eufrocina de Leon. it is a sufficient memorandum. at a price not less than five hundred pesos. Page 38 of 52 . we not that both the Court of Appeals and the Regional Trial Court relied on Article 1403 of the New Civil Code. more particularly Art.

Having ruled upon the question as to the existence of respondents’ right of first refusal. or for the sale of real property or of an interest therein.00 and offered to sell the same to the respondents at the same price if they were interested. More specifically. 13 The question now is whether a "right of first refusal" is among those enumerated in the list of contracts covered by the Statute of Frauds. 1990 between Rosencor Page 39 of 52 . it is a contractual grant. 2(e) of the New Civil Code presupposes the existence of a perfected. a right of first refusal need not be written to be enforceable and may be proven by oral evidence. contract of sale. the vice-president of petitioner Rosencor. albeit unwritten. par.12 The application of such statute presupposes the existence of a perfected contract. respondents presented a letter20 dated October 9. At best.11 Moreover. who admitted having no personal knowledge of the details of the sales transaction between Rosencor and the heirs of the spouses Tiangco21. We have previously held that not all agreements "affecting land" must be put into writing to attain enforceability. by their heirs a right of first refusal over the property they were currently leasing should they decide to sell the same. They only presented petitioner Rene Joaquin. then she would not have bothered to offer the property for sale to the respondents.14Thus. It must be noted that petitioners did not present evidence before the trial court contradicting the existence of the right of first refusal of respondents over the disputed property. Federico Bantugan. As such. On this point. later on. the right of first refusal claimed by respondents was substantially proven by respondents before the lower court.e) An agreement for the leasing of a longer period than one year. is a right of first refusal akin to "an agreement for the leasing of a longer period than one year. Moreover. we have held that the setting up of boundaries. the statute of frauds refers to specific kinds of transactions and cannot apply to any other transaction that is not enumerated therein. The reason simply is that these agreements are not among those enumerated in Article 1403 of the New Civil Code. Irene Guillermo. if Eufrocina de Leon did not recognize respondents’ right of first refusal over the property they were leasing.000. par. informed them that they had received an offer to buy the disputed property for P2. The next question to be ascertained is whether or not respondents have satisfactorily proven their right of first refusal over the property subject of the Deed of Absolute Sale dated September 4. Furthermore. but of the right of first refusal over the property sought to be sold19. the next issue to be answered is whether or not the Court of Appeals erred in ordering the rescission of the Deed of Absolute Sale dated September 4. not of the sale of the real property involved. A right of first refusal is not among those listed as unenforceable under the statute of frauds. 1990 where Eufrocina de Leon. and Paterno Inquing uniformly testified that they were promised by the late spouses Faustino and Crescencia Tiangco and. 2(e) of the New Civil Code. there being no evidence to the contrary.18 A right of first refusal. the application of Article 1403. or for the sale of real property or of an interest therein" as contemplated by Article 1403. such as the one involved in the instant case. As such. the representative of the heirs of the spouses Tiangco. They also dispensed with the testimony of Eufrocina de Leon22 who could have denied the existence or knowledge of the right of first refusal. 1990 between petitioner Rosencor and Eufrocina de Leon.000. we agree with the factual findings of the Court of Appeals that respondents have adequately proven the existence of their right of first refusal. f) A representation to the credit of a third person." The purpose of the statute is to prevent fraud and perjury in the enforcement of obligations depending for their evidence on the unassisted memory of witnesses by requiring certain enumerated contracts and transactions to be evidenced by a writing signed by the party to be charged. Verily. is not by any means a perfected contract of sale of real property. and an agreement creating a right of way 17 are not covered by the provisions of the statute of frauds.15 the oral partition of real property16. It is thus evident that the statute of frauds does not contemplate cases involving a right of first refusal.

Although the occupying the subject property at the time it was sold to it.. Bocaling and Co. Bonnevie23. The status of creditors could be validly accorded the Bonnevies for they had substantial interests that were prejudiced by the sale of the subject property to the petitioner without recognizing their right of first priority under the Contract of Lease. the petitioner cannot tenably claim to be a buyer in good faith as it had notice of the lease of the property by the Bonnevies and such knowledge should have cautioned it to look deeper into the agreement to determine if it involved stipulations that would prejudice its own interests. rescission is a remedy granted by law to the contracting parties and even to third persons. en banc. Mayfair Theater. Tested by these principles. the petitioner cannot be deemed a purchaser in good faith for the record shows that it categorically admitted that it was aware of the lease in favor of the Bonnevies. this rule is not applicable in the case before us because the petitioner is not considered a third party in relation to the Contract of Sale nor may its possession of the subject property be regarded as acquired lawfully and in good faith. Rescission implies a contract which. Inc. who were actually occupying the subject property at the time it was sold to it. was the vendee in the Contract of Sale. the Court upheld the decision of a lower court ordering the rescission of a deed of sale which violated a right of first refusal granted to one of the parties therein.and Eufrocina de Leon and in decreeing that the heirs of the spouses Tiangco should afford respondents the exercise of their right of first refusal. like creditors. Inc. even if initially valid.25. In other words. Moreover. Bocaling and Co. or to protect some incompatible and preferent right created by the contract. even if this should be valid. Guzman. Inc. Good faith connotes an honest intention to abstain from taking unconscientious advantage of another." Subsequently24 in Equatorial Realty and Development. the Court. Using the ruling in Guzman Bocaling & Co. it could only exercise the said right if the fraudulent sale is first set aside or rescinded. Thus: Page 40 of 52 . It is true that the acquisition by a third person of the property subject of the contract is an obstacle to the action for its rescission where it is shown that such third person is in lawful possession of the subject of the contract and that he did not act in bad faith. According to Tolentino. Under Article 1380 to 1381 (3) of the Civil Code. Although the Contract of Lease was not annotated on the transfer certificate of title in the name of the late Jose Reynoso and Africa Reynoso. vs. with three justices dissenting. vs. However. In Guzman. by means of the restoration of things to their condition at the moment prior to the celebration of said contract.26 ordered the rescission of a contract entered into in violation of a right of first refusal. may a contract of sale entered into in violation of a third party’s right of first refusal be rescinded in order that such third party can exercise said right? The issue is not one of first impression. the petitioner cannot deny actual knowledge of such lease which was equivalent to and indeed more binding than presumed notice by registration. A purchaser in good faith and for value is one who buys the property of another without notice that some other person has a right to or interest in such property without and pays a full and fair price for the same at the time of such purchase or before he has notice of the claim or interest of some other person in the property. Bonnevie as basis. the Court decreed that since respondent therein had a right of first refusal over the said property. produces a lesion or pecuniary damage to someone that justifies its invalidation for reasons of equity. The Court held: "xxx Contract of Sale was not voidable but rescissible. Inc. to secure reparations for damages caused to them by a contract. Indeed. It is a relief allowed for the protection of one of the contracting parties and even third persons from all injury and damage the contract may cause. a contract otherwise valid may nonetheless be subsequently rescinded by reason of injury to third persons. vs.

00. was that Mayfair will have the right of first refusal in the event Carmelo sells the leased premises. Thus: "We hold however. by executing the two lease contracts. the entire Claro M. without prior notice to Mayfair. kept a low profile for some time. There was an exchange of letters evidencing the offer and counter-offers made by both parties. less a mortgage lien of P100. While it initially recognized Mayfair’s right of first refusal. Since Equatorial is a buyer in bad faith. did not pursue the exercise to its logical end. The Court has made an extensive and lengthy discourse on the concept of. a right of first refusal in the case of Guzman. rescissible. and then sold. Equatorial’s knowledge of the stipulations therein should have cautioned it to look further into the agreement to determine if it involved stipulations that would prejudice its own interests. Bonnevie. as correctly observed by the Court of Appeals. Equatorial cannot tenably claim that to be a purchaser in good faith. Bocaling & Co. XXX As also earlier emphasized. should have likewise been offered to petitioner. the Page 41 of 52 . Summarizing the rulings in the two previously cited cases. vs. the price for which they were finally sold to respondent Raymundo. The facts of the case and considerations of justice and equity require that we order rescission here and now. Court of Appeals. Equatorial admitted that its lawyers had studied the contract or lease prior to the sale. was prejudiced by the sale of the subject property to Equatorial without Carmelo conferring to Mayfair every opportunity to negotiate within the 30-day stipulate periond. Carmelo violated such right when without affording its negotiations with Mayfair the full process to ripen to at least an interface of a definite offer and a possible corresponding acceptance within the "30-day exclusive option" time granted Mayfair. The selling price quoted to the Bonnevies was 600. and. the sale of the properties for the amount of P9. As such. studied the said contracts.000. therefore. Rescission is a relief allowed for the protection of one of the contracting parties and even third persons from all injury and damage the contract may cause or to protect some incompatible and preferred right by the contract.00. In that case. Recto property to Equatorial. In fact. Carmelo abandoned negotiations.27 In Paranaque Kings Enterprises. the contract of sale between Equatorial and Carmelo is characterized by bad faith. On the other hand. for it informed the latter of its intention to sell the said property in 1974. It is undisputed that Carmelo did recognize this right of Mayfair. the lessees (Raul and Christopher Bonnevie) were given a "right of first priority" to purchase the leased property in case the lessor (Reynoso) decided to sell. that in order to have full compliance with the contractual right granting petitioner the first option to purchase.000. Since Mayfair had a right of first refusal. since it was knowingly entered into in violation of the rights of and to the prejudice of Mayfair. however. Inc.000."What Carmelo and Mayfair agreed to. We agree with respondent Appellate Court that the records bear out the fact that Equatorial was aware of the lease contracts because its lawyers had. the Court affirmed the nature of and concomitant rights and obligations of parties under a right of first refusal. this finding renders the sale to it of the property in question. vs. All of these matters are now before us and so there should be no piecemeal determination of this case and leave festering sores to deteriorate into endless litigation. prior to the sale. rescission lies. Carmelo. 28 the Court held that the allegations in a complaint showing violation of a contractual right of "first option or priority to buy the properties subject of the lease" constitute a valid cause of action enforceable by an action for specific performance. under a contract of lease. and obligations under. it can exercise the right only if the fraudulent sale is first set aside or rescinded.00 to be fully paid in cash. The sale of the subject real property should now be rescinded considering that Mayfair. which had substantial interest over the subject property.000.

Said paragraph 9 grants upon L&R Corporation the right of first refusal over the mortgaged property in the event the mortgagor decides to sell the same." Carmelo initially offered to sell the leased property to Mayfair for six to seven million pesos. XXX Page 42 of 52 .300.00 of which P137. including the leased premises. In the recent case of Litonjua vs L&R Corporation. to Equatorial for P11. This Court upheld the right of first refusal of the lessee Mayfair.500.000. Bonnevie is instructive on this point.00 was to be paid in cash while the balance was to be paid only when the property was cleared of occupants. v. In addition to rescission of the contract of sale. Mayfair Theater. vs. We held that even if the Bonnevies could not buy it at the price quoted (P600. It is only upon the failure of L&R Corporation to exercise its right of first refusal could the spouses Litonjua validly sell the subject properties to the others. the LESSEE shall be given 30 days exclusive option to purchase the same. Bocaling & Co. was prejudiced by its sale to Equatorial without Carmelo conferring to Mayfair every opportunity to negotiate within the 30-day stipulated period" In that case. two contracts of lease between Carmelo and Mayfair provided "that if the LESSOR should desire to sell the leased premises. Inc. which had substantial interest over the subject property. Nothing was heard thereafter from Carmelo. the latter sold its entire Recto Avenue property. The Court held that both Carmelo and Equatorial acted in bad faith: Carmelo or knowingly violating the right of first option of Mayfair. which is a perfectly valid provision. Reynoso could not sell it to another for a lower price and under more favorable terms and conditions without first offering said favorable terms and price to the Bonnevies as well. we agree with the Amended Decision of the Court of Appeals that the sale made to PWHAS is rescissible. and only under the same terms and conditions previously offered to the Bonnevies. XXX This principle was reiterated in the very recent case of Equatorial Realty vs.00). which was decided en banc.29 the Court. We see nothing wrong in this provision. and Equatorial for purchasing the property despite being aware of the contract stipulation. Only if the Bonnevies failed to exercise their right of first priority could Reynoso thereafter lawfully sell the subject property to others. Thus: "While petitioners question the validity of paragraph 8 of their mortgage contract. What then is the status of the sale made to PWHAS in violation of L & R Corporation’s contractual right of first refusal? On this score. and rescinded the sale of the property by the lessor Carmelo to Equatorial Realty "considering that Mayfair.000. to notify the latter of their intention to sell the property and give it priority over other buyers. The case of Guzman. Thus.selling price offered by Reynoso to and accepted by Guzman was only P400.00. The right of first refusal has long been recognized as valid in our jurisdiction. held that the sale made therein in violation of a right of first refusal embodied in a mortgage contract. while the spouses Litonjua had every right to sell their mortgaged property to PWHAS without securing the prior written consent of L&R Corporation. Mayfair indicated interest in purchasing the property though it invoked the 30-day period. then L&R Corporation shall be given the right to match the offered purchase price and to buy the property at that price. they had the obligation under paragraph 9. under the same terms and conditions offered to L&R Corporation. they appear to be silent insofar as paragraph 9 thereof is concerned.00 without priorly informing Mayfair. L&R Corporation is in effect stating that it consents to lend out money to the spouses Litonjua provided that in case they decide to sell the property mortgaged to it. Four years later.000. Bocaling & Co. the Court ordered Carmelo to allow Mayfair to buy the subject property at the same price of P11. nonetheless. Bonnevie.000. also citing the case of Guzman. was rescissible. The consideration for the loan mortgage includes the consideration for the right of first refusal.300.

The name of petitioner Rosencor or any of Page 43 of 52 . However. As such. the same is rescissible because it ignored L & R Corporation’s right of first refusal. valid. paragraph 3. a contract validly agreed upon may be rescinded if it is "undertaken in fraud of creditors when the latter cannot in any manner collect the claim due them."30 It must be borne in mind that. XXX All things considered. the Court ordered the rescission of sales made in violation of a right of first refusal precisely because the vendees therein could not have acted in good faith as they were aware or should have been aware of the right of first refusal granted to another person by the vendors therein. We fail to see how the letter could give rise to bad faith on the part of the petitioner." Moreover.32 In this regard. the right of first refusal involved in the instant case was an oral one given to respondents by the deceased spouses Tiangco and subsequently recognized by their heirs. Respondents failed to present any evidence that prior to the sale of the property on September 4. was rescissible. rescission shall not take place "when the things which are the object of the contract are legally in the possession of third persons who did not act in bad faith. even the lease contract by which respondents derive their right to possess the property involved was an oral one. under Article 1385. PWHAS cannot claim ignorance of the right of first refusal granted to L & R Corporation over the subject properties since the Deed of Real Estate Mortgage containing such a provision was duly registered with the Register of Deeds.31 A purchaser in good faith is one who buys the property of another without notice that some other person has a right or interest in such a property and pays a full and fair price at the time of the purchase or before he has notice of the claim or interest of some other person in the property. PWHAS is presumed to have been notified thereof by registration. Respondents point to the letter dated June 1. however. we hold that the evidence on record fails to show that petitioners acted in bad faith in entering into the deed of sale over the disputed property with the heirs of the spouses Tiangco. indeed. is that a contract of sale entered into in violation of a right of first refusal of another person. which violated the right of first refusal. there must be clear and convincing proof that petitioners were made aware of the said right of first refusal either by the respondents or by the heirs of the spouses Tiangco. while valid. As such. In fact. In the case at bar. Under Article 1381 of the New Civil Code. while the sale is. as enunciated in the cited cases. petitioners were aware or had notice of the oral right of first refusal. On this point. notwithstanding the absence of L & R Corporation’s prior written consent thereto. It is axiomatic that good faith is always presumed unless contrary evidence is adduced. In this letter. 199033 as indicative of petitioners’ knowledge of the said right. a certain Atty." Thus. its offer to redeem and its tender of the redemption price. as successor-in-interest of the spouses Litonjua. There is. 1990. which equates to notice to the whole world. unlike the cases cited above. the prevailing doctrine. The rationale for this is found in the provisions of the New Civil Code on rescissible contracts. what then are the relative rights and obligations of the parties? To recapitulate: the sale between the spouses Litonjua and PWHAS is valid. much less registered with the Registry of Deeds. in order to hold that petitioners were in bad faith. a circumstance which prevents the application of this doctrine in the case at bench. In the cases cited above. Erlinda Aguila demanded that respondent Irene Guillermo vacate the structure they were occupying to make way for its demolition. the rule on constructive notice would be inapplicable as it is undisputed that the right of first refusal was an oral one and that the same was never reduced to writing.It was then held that the Contract of Sale there. Inasmuch as the sale to PWHAS was valid. within the one-year period should have been accepted as valid by the L & R Corporation. No mention is made of the right of first refusal granted to respondents. is rescissible.

1996 of the Quezon City Regional Trial Court. RECAREDO ESPINA. 1990 between petitioner Rosencor and the heirs of the spouses Tiangco. DE ESPINA. vs. concur. Page 44 of 52 . We do not agree. Their remedy however is not an action for the rescission of the Deed of Absolute Sale but an action for damages against the heirs of the spouses Tiangco for the unjustified disregard of their right of first refusal35. Eufrocina de Leon wrote the letter on her own behalf and not on behalf of petitioners and. the decision of the Court of Appeals dated June 25. WHEREFORE.000. it only shows that Eufrocina de Leon was aware of the existence of the oral right of first refusal. bad faith on the part of Eufrocina de Leon does not mean that petitioner Rosencor likewise acted in bad faith. Moreover. as indicative of the bad faith of petitioners. it would only be on the part of Eufrocina de Leon as she was aware of the right of first refusal of respondents yet she still sold the disputed property to Rosencor. premises considered. There is no showing that prior to the date of the execution of the said Deed. Aguila stated during trial that she wrote the letter in behalf of the heirs of the spouses Tiangco. 1991 SIMPROSA VDA.R. petitioners were made aware or put on notice of the existence of the oral right of first refusal. 1990 of Eufrocina de Leon. Atty. The Decision dated May 13. even assuming that Atty. there is no showing that Rosencor was aware at that time that such a right of first refusal existed. The acquisition by Rosencor of the property subject of the right of first refusal is an obstacle to the action for its rescission where. GAUDIOSA ESPINA and NECIFORA ESPINA. Melo. where she recognized the right of first refusal of respondents. JJ. CELIA ESPINA. absent clear and convincing evidence to the contrary. SO ORDERED. Branch 217 is hereby REINSTATED insofar as it dismisses the action for rescission of the Deed of Absolute Sale dated September 4. However.. as in this case. G. petitioner Rosencor will be presumed to have acted in good faith in entering into the Deed of Absolute Sale over the disputed property.it officers did not appear on the letter and the letter did not state that Atty. if there was any indication of bad faith based on respondents’ evidence. It does not show that petitioners were likewise aware of the existence of the said right. No. There is even no showing that they contacted the heirs of the spouses Tiangco after they received this letter to remind them of their right over the property. Vitug. TIMOTEO ESPINA. Aguila and inform her about their preferential right over the disputed property. respondents notified Rosencor or Atty. Clearly. the Court of Appeals thus erred in ordering the rescission of the Deed of Absolute Sale dated September 4. Aguila of their right of first refusal over the property. the letter was made a month after the execution of the Deed of Absolute Sale on September 4.00 per month reckoned from May 1990 up to the time respondents leave the premises. Aguila was indeed writing in behalf of petitioner Rosencor. L-45142 April 26. as such. petitioners were put on notice of the existence of the right of first refusal. 1990 letter.34 This does not mean however that respondents are left without any remedy for the unjustified violation of their right of first refusal. 1999 is REVERSED and SET ASIDE. Respondents likewise point to the letter dated October 9. Aguila was writing in behalf of petitioner. Considering that there is no showing of bad faith on the part of the petitioners. There is no showing that prior to the execution of the Deed of Absolute Sale. Respondents did not try to communicate with Atty. petitioners. Moreover. 1990 and orders the payment of monthly rentals of P1. it was shown that Rosencor is in lawful possession of the subject of the contract and that it did not act in bad faith. Thus. Panganiban. and Sandoval-Gutierrez. Neither was there any showing that after receipt of this June 1. 1990 between petitioner Rosencor and the heirs of the spouses Tiangco. In fact.

Timoteo. herein plaintiffs. Celia. one-half (1/2) portion which contains an area of one and three-fourths (1 3/4) hectares and which forms part of Parcel 4 Page 45 of 52 . de Espina and their children namely. Sofia Espina. one-half (1/2) of the parcel of land adjudicated to each of said plaintiffs-heirs and defendants. 1952. (b) To each of the following compulsory heirs. 1975 dismissing the complaint for partition. Timoteo. the temporary division was finalized by the heirs. August 13. Surigao del Sur in Civil Case No." dated May 9. 1975 denying the second motion for reconsideration and March 15. 4 is occupied by Recaredo. 1976 denying plaintiffs' notice of appeal. although the same is actually titled in the name of Sofia. The complaint alleges that parcel No. Sofia Espina. hence the same is owned in common by petitioners and private respondents in eight (8) equal parts. Sr. Celia. Decedent's estate comprises of four (4) parcels of land located at the Municipality of Barobo Province of Surigao del Sur. 1975 denying the motion for reconsideration. Private respondents alleged in their answer that in or about April. for private respondents. J. Simprosa Vda. July 25. 1953 and was survived by his spouses. Gaudencia and Necifora. while lot No. 1952 until the latter's death pursuant to their contract of procession The assignment of shares was as follows: (a) To the surviving spouses.00 each per quarter starting April. After the death of Marcos. 5570 in the name of one of the heirs. Cipriano C. 3732 issued in the name of one of the heirs. together with their children made a temporary verbal division and assignment of shares among their children. The antecedent facts are as follows: Marcos Espina died on February 14. Alvizo. To Recaredo (sic) Espina. 1951. while the other three (3) parcels of land being conjugal properties. 1 has been subdivided into two lots. Simprosa presently occupies parcel No. Lot No. Parcel No. Lianga. L-108. Said parcel of land is in the possession of petitioners and private respondents who have their respective houses thereon. 1329 PCS-44 is covered by Original Certificate of Title No.:p This is a petition for certiorari with prayer for the issuance of a writ of preliminary injunction seeking the nullification of the orders issued by the respondent Judge Otilio Abaya. in his capacity as the presiding judge of the Court of First Instance of Surigao del Sur.THE HON. but notwithstanding such demands private respondents refused to accede. 1 is the exclusive property of the deceased. Thereafter the heirs took immediate possession of their respective shares on April 20. de Espina. Jose Espina as trustee for the heirs of Marcos Espina. MEDIALDEA. respondents. Sora and Jose. to wit: 1. et. v. al. Gaudiosa. de Espina. 2 while parcel No. Petitioners have several times demanded the partition of the aforementioned properties. Necifora. 1973 an action for partition of the aforementioned parcels of land was filed by petitioners Simprosa and her children Recaredo. 3 is occupied by Timoteo. are also owned in common. who acquired the title as a trustee for the beneficiaries or heirs of Marcos Espina. It also alleges that parcel No. Branch II. Simprosa. (sic) Simprosa Vda. 994 PL8-44 is covered by Original Certificate of Title No. all surnamed Espina. the late Marcos Espina and his widow. entitled "Simprosa Vda. OTILIO ABAYA and SOFIA ESPINA and JOSE ESPINA. one-half (1/2) belongs to the widow Simprosa and the other half is owned by her and her children in eight (8) equal parts. On August 23. Recaredo. et. Private respondents took actual physical possession of their respective shares including the portions ceded to them by Simprosa upon their payment of P50. al.

xxx xxx xxx II Page 46 of 52 .00 beginning April. 3. and said Sofia Espina has been regularly paying to said Simprosa Vda. (sic) Espina. Gaudiosa Espina and Necifora Espina and Simprosa Vda. (Rollo. 2.00. the said Parcel IV has been in the possession of both Recaredo Espina and plaintiff Simprosa Vda. the other half (1/2) of said Parcel III (sic) is the share of the surviving spouses (sic) Simprosa Vda. one-half (1/2) portion of the parcel of land included in the deception of Parcel 1 in paragraph III of the complaint. 1952 until her death. 5. to wit: I THAT THE FACTS ALLEGED IN THE COMPLAINT FAIL TO CONFER UPON THE COURT COMPLETE AND LAWFUL JURISDICTION OVER THE CASE FOR NONCOMPLIANCE WITH THE CONDITION SINE QUA NON CONCERNING SUIT BETWEEN MEMBERS OF THE SAME FAMILY. the other half (1/2) portion of which parcel III was the share of the surviving spouses (sic). de Espina. 1952 until the present time as their share. Sofia Espina obtained Original Certificate of Title in her name of said parcel of land which is included in the description of said parcel 1. To Cecilia (sic) Espina. Gaudiosa Espina and Necifora Espina.whose description is given in paragraph III of the complaint. the other half (1/2) of said parcel being the share of the surviving spouses (sic) Simprosa Vda. the said Parcel III was originally assigned by Marcos Espina who thereupon obtained an Original Certificate of Title in her (sic) name but was finally adjudicated to said Timoteo Espina in April. share and share alike which contains two (2) hectares and which forms part of Parcel II whose description is given in paragraph III of the complaint. de Espina from April 20. one-half (1/2) portion. 1952 until the present time. as her exclusive property. de Espina quarterly from April. de Espina and having been ceded by said Simprosa Vda. and by virtue of said agreement. 4. and said Parcel III has been in the possession of said Timoteo Espina and Simprosa Vda. 27-28) On February 13. and said Parcel III (sic) has been in the possession of said Cecilia. 1952 until the present time. To Jose Espina. de Espina from April. 1952 until her death. and by virtue of said agreement. and said Jose Espina has been regularly quarterly paying to said Simprosa Vda. the other half (1/2) of said parcel being the share of the surviving spouses (sic) Simprosa Vda. de Espina from April.00 beginning April. 1974 private respondents filed a motion to dismiss the complaint alleging the following grounds.00 until the present time. de Espina from April. Jose Espina obtained Original Certificate of Title in his name of said parcel of land which is included in the description of said Parcel 1 as his exclusive property. Simprosa Vda. de Espina. the said amount of P50. 1952 until the present time. To Sofia Espina. 1952. de Espina and having been coded (sic) by said Simprosa Vda. 1952 the said amount of P50. one-half (1/2) portion of the other parcel of land included in the description of Parcel 1 in paragraph 1 of the complaint. de Espina to said Sofia Espina for a valuable consideration payable quarterly at the rate of P50. de Espina to said Jose Espina for a valuable consideration payable quarterly at the rate of P50. pp. To Timoteo Espina. one half (1/2) portion which contains an area of not less than one-half (1/2) hectare and which forms part of Parcel 3 whose description is given in paragraph III of the complaint.

. The petitioners raised four (. Simprosa could not have ceded her right and that of her other children except by a public document. THAT THE ORDER OF DISMISSAL HAS NO LEGAL BASIS IN FACT AND IN LAW. 7) However. 3. 50) However. 1 being an exclusive property of the deceased should have been divided into eight (8) equal parts. On August 11. THAT THE STATUTE OF LIMITATIONS IS NOT APPLICABLE IN THE CASE AT BAR.Rollo. parcel No. 1975 and a motion for extension of time to file their Record on Appeal on September 18. petitioners' motion was denied in an order dated July 23.41) assignment of errors: 1. Again said motion was denied on August 13. pp. the private respondents stress that 'any supposed right of the petitioners to demand a new division or partition of said estate of Marcos Espina has long been barred by the Statute of Limitations and has long prescribed. 1975. could only cede her share of the land which is 1/8 portion thereof and cannot validly cede the shares of her then minor children without being duly appointed as guardian. the respondent judge disapproved petitioners' Record on Appeal and appeal bond on the ground that the notice of appeal was filed out of time. 1975 the trial court granted the motion and thereafter dismissed the complaint. . Simprosa . 1-5. Whether or not an oral partition among co-heirs is valid. pp. On March 15. the rule insisted by the private respondents on prescriptibility of an action for reconcile conveyance of real property based on an implied trust is not applicable in the case at bar. 2. Hence. 5) The petitioners claim that the alleged oral partition is invalid and strictly under the coverage of the statute of Frauds on two grounds. 1976. p. petitioners. 1975 petitioners filed another motion for reconsideration stressing that they were denied due process when their motion was not heard. under Article 1358 of the New Civil Code. (Memorandum of Petitioners. Therefore. Whether or not an action for partition among coheirs prescribes. STATUTE OF LIMITATIONS. xxx xxx xxx III THAT THE PLAINTIFFS HAS NO LEGAL CAPACITY TO SUE. 10) Petitioners maintain that the present action is not for reconveyance but one for partition. 34-38) xxx xxx xxx On May 9. to wit: 1. p. p. Whether or not a hearing on a motion for reconsideration is indispensable the lack of which is a deal of due process. In addition. petitioners filed their notice of appeal on September 11. 4. . Secondly. (Rollo.THAT THE CAUSE OF ACTION IS BARRED BY . pp. this petition." (Memorandum for Private Respondents. 8-9) Page 47 of 52 . p. (Motion to Dismiss Complaint. Thereafter. Hence. 1975. 1975. 2. On May 23. to wit: Firstly. (Memorandum for Petitioners. 1975 petitioners filed a motion for reconsideration on the following grounds. argue that private respondents cannot set up the defense of prescription or laches because their possession of the property no matter how long cannot ripen into ownership. Whether or not the second motion for reconsideration is pro forma Rollo.

434) The absence of a formal hearing on the petitioners' motion for reconsideration is thoroughly explained in the order of the respondent judge dated August 13. private respondents insist that the oral partition is valid and binding and does not fall under the coverage of the Statute of Frauds. December 18. v. al.On the other hand. Commentaries and Jurisprudence on the Civil Code of the Philippines. v. 180 SCRA 188. Intermediate Appellate Court (G. L275.R. 13) We find the petition devoid of merit. II. We already ruled in Lebrilla. Vol. 1213) A cursory reading of the aforequoted order will show that there was indeed no formal hearing on the motion for reconsideration. et al. Anent the issue of oral partition. Petitioners claim that they were denied due process when the motion for reconsideration was denied without any hearing. An oral agreement for the partition of the property owned in common is valid and enforceable upon the parties. an action for partition among co-heirs ceases to be such. No. March 29. G. Its refusal does not constitute a denial of due process in the absence of a showing of abuse of discretion. Finally. 1983 Edition. 1976 disapproving petitioners' Record on Appeal and appeal bond may not properly be a subject of a petition for certiorari. the court opted to resolve plaintiffs' motion based on the pleadings of the parties. from the moment these co-heirs claim that they are the absolute and exclusive owners of the properties and deny the others any share therein. the question involved is no longer one of partition but of ownership. al. thus. for partition is not a conveyance of property but simply a segregation and designation of the part of the property which belong to the coowners. private respondents maintain that the hearing of a motion for reconsideration in oral argument is a matter which rest upon the sound discretion of the Court. the imprescriptibility of the action for partition cannot be invoked because two of the co-heirs. and becomes one for title where the defendants allege exclusive ownership. Andal. However. it suspends the running of the period of appeal. namely private respondents Sora and Jose Espina possessed the property as exclusive owners and their possession for a period of twenty one (21) years is sufficient to acquire it by prescription. There Page 48 of 52 ." (Tolentino. Hence. private respondent maintain that the order of respondent judge dated March 1 5. 1957) Time and again.. 72623. The Statute of Frauds has no operation in this kind of agreements. et. Plaintiffs' allegation that the Clerk of Court failed to calendar their motion for reconsideration for oral argument has not deprived the plaintiffs of any substantial right or his right to due process. 182183 citing Hernandez v. 431. (Memorandum of Private Respondents.R. 118 Phil. (see Philippine Manufacturing Co. No. 1975. Ang Bisig ng PMC et. the notice of appeal was timely filed. 192) that an action for partition is imprescriptible. 1989. without further oral arguments. We sustain the validity of said partition. 1975 requiring counsel for defendants to answer plaintiffs' motion for reconsideration.. On this point. p. the Court stresses that the hearing of a motion for reconsideration in oral argument is a matter which rests upon the sound discretion of the Court. The court considered the arguments of the parties stated in their pleadings as already sufficient to apprise the court of the issues involved in said motion. Hence. In the case at bar. which is hereunder quoted as follows: When the court issued its order of June 5. petitioners stress that the second motion for reconsideration is not pro forma. SO ORDERED. (Memorandum of Private Respondents. pp. However. "An agreement of partition may be made orally or in writing.

FR. 1988.R. oral argument on the motion is reduced to an unnecessary ceremony and should be overlooked (see Ethel Case. HONORABLE COURT OF APPEALS and SUBSTITUTED HEIRS OF REV.: Page 49 of 52 . L-41132 April 27. The issue raised in the motion was fully discussed therein and in the opposition thereto. Finally. Intermediate Appellate Court. that the motion is grounded on the lack of basis in fact and in law of the order of dismissal and the existence or lack of it is determined by a reference to the facts alleged in the challenged pleading. the Court is convinced that the acts of respondent judge.R. although seemingly a different ground than those alleged in their first motion for reconsideration. 75) Therefore. the strict application of the said file will not in any way override sub-substantial justice. Cruz. the second motion for reconsideration has not stated new grounds considering that the alleged failure of the Clerk of Court to set plaintiffs' motion for reconsideration. in dismissing the action for partition and in subsequently denying the motions for reconsideration of the petitioners. 3. LUCIO V. 77) However. Under such circumstances. 158 SCRA 69. 75041. to it The grounds stated in said motion being in reiteration of the same grounds alleged in his first motion. 60578. (see Edra v. 77 Phil. 1989.is no question however. vs. which is clearly beyond the period of thirty (30) days allowed by the rules. p. No. All premises considered. p. Thus. 1976. 517. as it only refers to the right of plaintiffs' counsel to argue his motion in court just to amplify the same grounds already deed by the court. SO ORDERED. it is very evident that the second motion for reconsideration being pro-forma did not suspend the running of the period of appeal. Gancayco and Griño-Aquino. G. 2. G. p. 522).. Jugo. does not amount to grave abuse of discretion. Therefore. No. the same is pro-forma. 1975 ispro forma. February 23. is only incidental to the issues raised in their first motion for reconsideration. NARVASA. it has been a basic rule that certiorari is not a substitute for appeal which had been lost.R. No. GARCIA (DECEASED). Dulay.respondents. v. Rollo. 74) xxx xxx xxx Furthermore. p. (Ibid. petitioner. (Escudero v. the delay of five (5) days in filing a notice of appeal and a motion for extension to file a record on appeal cannot be excused on the basis of equity. 179 SCRA 344) A special civil action under Rule 65 of the Rules of Court will not be a substitute or cure for failure to file a timely petition for review oncertiorari (appeal) under Rule 45 of the Rules of Court. 1988 VICTORINO HERNANDEZ. J. Narvasa. We adhere to the findings of the trial court that the second motion for reconsideration dated August 11. G. ACCORDINGLY. the petition is DISMISSED. p. the lower court committed no error when it held that the notice of appeal was filed after the lapse of thirty five (35) days. (Order dated March 15. et al.Rollo. the case at bar is totally devoid of merit. thus. JJ. as emphasized earlier. November 13. concur. (Ibid. 77) The application of the abovecited rule should be relaxed where it is shown that it will result in a manifest failure or miscarriage of justice.

Fr." Hernandez had put up no objection to the application. Garcia's land and encroached pro tanto on the land of Hernandez (on which. On appeal. Garcia the absolute owner of three parcels of land in Parañaque. Parañaque. 8 The court thereafter adjudged Fr. Garcia could claim no title. 1-B. his tenants had been living for many years [decades. the Appellate Court's factual conclusions are not reviewable by this Court. Garcia absolute owner. He averred anew that the Advance Plan supporting the application was "irregular. the Court of Appeals declared Fr. 11 and the appellate court gave his appeal short shrift. that under the Statute of Frauds. Garcia 4 applied in 1959 for the registration in his name of Lots 1-A. This judgment became final on December 9. Garcia's name that Hernandez discovered the anomaly in the application." Thus having been "misled to believe that no encroachment has been made by applicant. 9 Hernandez promptly refiled his petition for the reopening of the decree.. 7 Allegedly lulled into complacency by the recentness of their agreement as to the limits of their respective properties. but in view of the new trial ordered by the court upon motion of the heirs-oppositors. he failed in his bid to reopen and correct the decree in Land Registration Case No. the law affords the remedy of review of the decree of registration by petition in the land registration court within one year from its issuance of the order. Garcia as the owner of Lots 1-A and 2 and the heirs-oppositors as owners of Lot 1-B. Garcia's name.. and that Hernandez's parents and predecessors-in-interest. in fact] before the date of Fr. the petitioner is entitled to the relief sought. the Advance Plan Psu-172410-B submitted in Fr. because it disregarded the existing Bureau of Lands monuments designating the actual possessions of the petitioner and the applicant" and "falsely designates (other) . These monuments were set along a line which the landowners had previously agreed upon as representing the correct boundary between their estates. Hernandez proffered no opposition to Fr. and 2 of Plan Psu-172410-B in Bo. He at once filed a petition for review of the decree. N-2488 Fr. San Dionisio. but as he could convince neither the Court of First Instance of Rizal nor the Court of Appellants 2 of the merits of his petition. He argued that the decree covered a substantial portion of his land to which Fr.. 15 and since here those conclusions are Page 50 of 52 . Decree No. the petition was dismissed on the ground of prematurity. Garcia's application. of an the lots. the parties' covenant as to their properties' metes and bounds was unenforceable since it was not reduced to writing. 1970. by acquisitive prescription. Garcia's behalf to the land registration court in 1959 included 220 square meters of land now disputed — Lots ABC and 4057-A of Lot 1-B. 3 This Court however finds that upon the recorded facts. It was not until the court had already ordered the registration of the lots in Fr. 132620 was issued by the CFI of Rizal. 12 Both courts were of the view essentially that the evidence did not bear out the claim of fraud. leaving the heirs of Andres San Buenaventura as the only oppositors thereto. it should be mentioned. 5 no dividing boundaries existed thereon until cadastral surveyors from the Bureau of Lands laid down official monuments to mark the separation of the lots. and confident that the visible landmarks installed by the government surveyors precluded any overstepping of those limits. which could not have included the disputed property.. Lucio V. however. 6 Unknown to Hernandez.." and "conscious of the previous agreement and the fact that the Bureau of Lands monuments have not been altered. boundaries . 1 This was the remedy availed of by Victorino Hernandez. monuments. This was in 1956. 8664 in Fr. and since both estates were once owned by one Andres San Buenaventura. 14 Ordinarily.To those prevented by fraud from proving their title to land subject of registration proceedings in another's name. thus fraudulently giving the false impression to petitioner that no alteration has actually been made in originally agreed-upon boundaries in the course of the preparation of (the) Plan. 10 As stated at the outset. acquired title by purchase from San Buenaventura to only 516 square meters of land. His property adjoined that of Hernandez. and the Register of Deeds issued OCT No. not actually marked by any . Garcia's application). the trial court dismissed Hernandez's petition. This area fell beyond the stipulated boundaries of Fr. 13 Victorino and Tranquilino..

The respondents again did not care to refute the premises on which the argument is predicated. Hernandez avows that these structures were purposely installed to mark the limits of their estates.. Garcia's application. "falsely designate(d) as boundaries the lines marked by . ordering the Register of Deeds of Rizal to register the 220 square meters in question in favor of petitioner Victorino Hernandez. they freely conceded the presence of a fence along this line.328 square meters in area. his opponents could only let this statement pass with telling silence. 18 If the respondent insist on the figures named in the deeds of sale. however. but were quick to point out that they had merely "permitted" Hernandez to put up this "temporary" structure "to stop the public (from) using . and worse. it may be added — which clearly should have been weighed by the court a quo in Hernandez's favor. Garcia as to the boundary of their estates. All the land embraced within the stated boundaries was sold. basis of Fr. the recorded facts prove Hernandez's entitlement to the relief sought. as when facts of substance were overlooked by the appellate court which. The respondents cannot hold Hernandez to the approximate area fixed in the deed and claim ownership over the excess. such formality is only required of contracts involving leases for longer than one year. ACCORDINGLY. 8664 of the Register of Deeds of Rizal is null and void." further buttresses his claim. 16 In this case there are several pivotal facts — about which there is no controversy whatever. Hernandez argues that if indeed the Advance Plan. Garcia. deftly cheated of the chance to vindicate his claim to the land." The excuse is lamentably feeble. All they averred in their defense is that the agreement did not bind them. were this to be reckoned from the "mojones. and to cancel Original Certificate of Title No. the application of the rule should result in a verdict against him. which.. 20 Given the weight they deserve. It is of record. to begin with. The Statute of Frauds finds no application to this case. 17 but only because the Court missed sight of the fact that the adjoining lots sold to the spouses and to Fr. if correctly considered. was prepared without regard to the boundary indicated by the fence and the surveyors markers. the Appellate Court may have been convinced of the impossibility of the inclusion of the disputes lot in the 516 square meters stated as sold to Hernandez's parents in the deed of sale in their favor.. The rule admits of exceptions. It is also to be noted that the presence of Hernandez's tenants on the land within his side of the border. Garcia. that concrete monuments or "majones" were laid out by government surveyors in 1956 between the properties of Hernandez and Fr. This explains the discrepancy between the area of the land purportedly conveyed to the Hernandezes in the instrument (516 square meters) and the actual area falling within the boundaries described in the same document. then they themselves stand to lose 736 square meters of land. after the survey. the appealed decision of the Court of Appeals is hereby REVERSED and set aside and another one entered. Under the Statute of Frauds. Hernandez's testimony is thus admissible to establish his agreement with Fr. 8664 and issue a new one in favor Page 51 of 52 . The respondents' reliance on the Statute of Frauds to secure a contrary judgment is misplaced. but inexplicably were not. Article 1403(2) (e) of the Civil Code.. or for the sale of real property or of an interest therein. 19 but the estate was later found to be actually 2. In any event. San Buenaventura had only sold 1. was found to be 716 square meters.decidedly adverse to Hernandez. Lastly. The foregoing considerations demonstrate more than adequately that the inclusion of the 220-square-meter area in the Original Certificate of Title No. corners not actually marked by any Bureau of Lands monuments" which purposely left the mistaken impression that the exact limits of the adjoining estates had been faithfully drawn. this place as a common madden shed. then he was truly a victim of fraud. Not every agreement "affecting land" must be put in writing to attain enforceability. might have changed the outcome of the case. Neither did they seriously dispute that these "mojones" were installed along the line agreed upon by the parties as marking their properties' boundaries. Lastly. Garcia were unregistered and unsurveyed at the time of the transfer.545 square meters to Fr. the argument is entirely in accord with the evidence and the norms of logic.

. SO ORDERED.of the private respondents excluding said 220-square-meter area belonging to the petitioner. concur. Cruz. Gancayco and Griño-Aquino. Page 52 of 52 . No pronouncement as to costs. JJ.

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