LA FUERZA, INC., petitioner,
The flat
vs.
THE HON. COURT OF APPEALS and ASSOCIATED ENGINEERING CO.,
INC., respondents.
Sycip, Salazar, Luna and Associates for respondent Associated Engineering
Co., Inc.
De Santos and Delfino for petitioner.
CONCEPCION, C.J.:
Ordinary action for the recovery of a sum of money. In due course, the Court of
First Instance of Manila rendered judgment for defendant, La Fuerza, Inc. —
hereinafter referred to as La Fuerza — which was at first affirmed by the Court
of Appeals. On motion for reconsideration, the latter, however, set aside its
original decision and sentenced La Fuerza to pay to the plaintiff, Associated
Engineering Co., — hereinafter referred to as the Plaintiff — the sum of
P8,250.00, with interest at the rate of 1% per month, from July, 1960 until fully
paid, plus P500 as attorney's fees and the costs. Hence, this Petition for review
on certiorari.
The facts, as found by the Court of First Instance and adopted by the Court of
Appeals, are:
The plaintiff (Associated Engineering, Co., Inc.) is a corporation engaged
in the manufacture and installation of flat belt conveyors. The defendant
(La Fuerza, Inc.) is also a corporation engaged in the manufacture of
wines. Sometime in the month of January, 1960, Antonio Co, the manager
of the plaintiff corporation, who is an engineer, called the office of the
defendant located at 399 Muelle de Binondo, Manila and told Mariano Lim,
the President and general manager of the defendant that he had just
visited the defendant's plant at Pasong Tamo, Makati, Rizal and was
impressed by its size and beauty but he believed it needed a conveyor
system to convey empty bottles from the storage room in the plant to the
bottle washers in the production room thereof. He therefore offered his
services to manufacture and install a conveyor system which, according
to him, would increase production and efficiency of his business. The
president of the defendant corporation did not make up his mind then but
suggested to Antonio Co to put down his offer in writing. Effectively, on
February 4, 1960, marked as Exhibit A in this case. Mariano Lim did not
act on the said offer until February 11, 1960, when Antonio Co returned to
inquire about the action of the defendant on his said offer. The defendants
president and general manager then expressed his conformity to the offer
made in Exhibit A by writing at the foot thereof under the word
"confirmation" his signature. He caused, however, to be added to this offer
at the foot a note which reads: "All specifications shall be in strict
accordance with the approved plan made part of this agreement hereof."
A few days later, Antonio Co made the demand for the down payment of
P5,000.00 which was readily delivered by the defendant in the form of a
check for the said amount. After that agreement, the plaintiff started to
prepare the premises for the installations of the conveyor system by
digging holes in the cement floor of the plant and on April 18, 1960, they
delivered one unit of 110' 26" wide flat belt conveyor, valued at P3,750.00,
and another unit measuring 190' and 4" wide flat conveyor, valued at
P4,500.00, or a total of P13,250.00. Deducting the down payment of
P5,000.00 from this value, there is a balance, of P8,250.00 to be paid by
the defendant upon the completion of the installation, Exhibit B.
The work went under way during the months of March and April, during
which time the president and general manager of the defendant
corporation was duly apprised of the progress of the same because his
plant mechanic, one Mr. Santos, had kept him informed of the installation
for which he gave the go signal. It seems that the work was completed
during the month of May, 1960. Trial runs were made in the presence of
the president and general manager of the defendant corporation, Antonio
Co, the technical manager of the plaintiff, and some other people. Several
trial runs were made then totalling about five. These runs were continued
during the month of June where about three trial runs were made and,
lastly, during the month of July, 1960.
As a result of this trial or experimental runs, it was discovered, according
to the defendant's general manager, that the conveyor system did not
function to their satisfaction as represented by the technical manager of
the plaintiff Antonio Co for the reason that, when operated several bottles
collided with each other, some jumping off the conveyor belt and were
broken, causing considerable damage. It was further observed that the
flow of the system was so sluggish that in the opinion of the said general
manager of the defendant their old system of carrying the bottles from the
storage room to the washers by hand carrying them was even more
efficient and faster.
After the last trial run made in the month of July and after the plaintiff's
technical manager had been advised several times to make the necessary
and proper adjustments or corrections in order to improve the efficiency of
the conveyor system, it seems that the defects indicated by the said
president and general manager of the defendant had not been remedied
so that they came to the parting of the ways with the result that when the
plaintiff billed the defendant for the balance of the contract price, the latter
refused to pay for the reason that according to the defendant the conveyor
system installed by the plaintiff did not serve the purpose for which the
same was manufactured and installed at such a heavy expense.
belt conveyors installed in the factory of the defendant are still there....
xxx xxx xxx
On March 22, 1961, the contractor commenced the present action to recover
the sums of P8,250, balance of the stipulated price of the aforementioned
conveyors, and P2,000, as attorney's fees, in addition to the costs.
In its answer to the complaint, La Fuerza alleged that the "conveyors furnished
and installed by the plaintiff do not meet the conditions and warrantings"
(warranties?) of the latter, and set up a counterclaim for the P5,000 advanced
by La Fuerza, which prayed that the complaint be dismissed; that its contract
with the plaintiff be rescinded; and that plaintiff be sentenced to refund said sum
of P5,000 to La Fuerza, as well as to pay thereto P1,000 as attorney's fees,
apart from the costs.
After appropriate proceedings, the Court of First Instance of Manila rendered a
decision the dispositive part of which reads:
WHEREFORE, judgment is hereby rendered rescinding the contract
entered into by the parties in this case, marked as Exhibit A, and ordering
the plaintiff to refund or return to the defendant the amount of P5,000.00
which they had received as down payment, and the costs of this action.
On the other hand, defendant is ordered to permit the plaintiff to remove
the flat belt conveyors installed in their premises.
As above indicated, this decision was affirmed by the Court of Appeals, which,
on motion for reconsideration of the plaintiff, later set aside its original decision
and rendered another in plaintiff's favor, as stated in the opening paragraph
hereof.
The appealed resolution of the Court of Appeals was, in effect, based upon the
theory of prescription of La Fuerza's right of action for rescission of its contract
with the plaintiff, for — in the language of said resolution — "Article 1571 of the
Civil Code provides that an action to rescind 'shall be barred after six months
from delivery of the thing sold'", and, in the case at bar, La Fuerza did not avail
of the right to demand rescission until the filing of its answer in the Court of First
Instance, on April 17, 1961, or over ten (10) months after the installation of the
conveyors in question had been completed on May 30, 1960.
La Fuerza assails the view taken by the Court of Appeals, upon the ground: 1)
that there has been, in contemplation of law, no delivery of the conveyors by the
plaintiff; and 2) that, assuming that there has been such delivery, the period of
six (6) months prescribed in said Art. 1571 refers to the "period within which" La
Fuerza may "bring an action to demand compliance of the warranty against
hidden defects", not the action for rescission of the contract. Both grounds are
untenable.
With respect to the first point, La Fuerza maintains that plaintiff is deemed not
to have delivered the conveyors, within the purview of Art. 1571, until it shall
have complied with the conditions or requirements of the contract between them
— that is to say, until the conveyors shall meet La Fuerza's "need of a conveyor
system that would mechanically transport empty bottles from the storage room
to the bottle workers in the production room thus increasing the production and
efficiency" of its business-and La Fuerza had accepted said conveyors.
On this point, the Court of Appeals had the following to say:
Article 1571 of the Civil Code provides that an action to rescind 'shall
be barred after six months, from delivery of the thing sold". This
article is made applicable to the case at bar by Article 1714 which
provides that "the pertinent provisions on warranty of title against
hidden defect in a contract of sale" shall be applicable to a contract
for a piece of work. Considering that Article 1571 is a provision on
sales, the delivery mentioned therein should be construed in the light
of the provisions on sales. Article 1497 provides that the thing sold
shall be understood as delivered when it is placed in the control and
possession of the vendee. Therefore, when the thing subject of the
sale is placed in the control and possession of the vendee, delivery
is complete. Delivery is an act of the vendor. Thus, one of the
obligations of the vendor is the delivery of the thing sold (Art. 1495).
The vendee has nothing to do with the act of delivery by the vendor.
On the other hand, acceptance is an obligation on the part of the
vendee (Art. 1582). Delivery and acceptance are two distinct and
separate acts of different parties. Consequently, acceptance cannot
be regarded as a condition to complete delivery.
xxx xxx xxx
We find no plausible reason to disagree with this view. Upon the completion of
the installation of the conveyors, in May, 1960, particularly after the last trial run,
in July 1960, La Fuerza was in a position to decide whether or not it was satisfied
with said conveyors, and, hence, to state whether the same were a accepted or
rejected. The failure of La Fuerza to express categorically whether they
accepted or rejected the conveyors does not detract from the fact that the same
were actually in its possession and control; that, accordingly, the conveyors had
already been delivered by the plaintiff; and that, the period prescribed in said
Art. 1571 had begun to run.
With respect to the second point raised by La Fuerza, Art. 1571 of the Civil Code
provides:
Actions arising from the provisions of the preceding ten articles shall be barred
after six months, from the delivery of the thing sold.
xxx xxx xxx
Among the "ten articles" referred to in this provision, are Articles 1566 and 1567,
reading:
 Art. 1566. The vendor is responsible to the vendee for any hidden faults or
defects in the thing sold, even though he was not aware thereof. ."This
provision shall not apply if the contrary has been stipulated, and the vendor
was not aware of the hidden faults or defects in the thing sold.
Art. 1567. In the cases of articles 1561, 1562, 1564, 1565 and 1566, the
vendee may elect between withdrawing from the contract and demanding a
proportionate reduction of the price, with damages in either case.
xxx xxx xxx
Pursuant to these two (2) articles, if the thing sold has hidden faults or defects
— as the conveyors are claimed to have — the vendor — in the case at bar, the
plaintiff — shall be responsible therefor and the vendee — or La Fuerza, in the
present case — "may elect between withdrawing from the contract
and demanding a proportional reduction of the price, with damages in either
case." In the exercise of this right of election, La Fuerza had chosen to withdraw
from the contract, by praying for its rescission; but the action therefor — in the
language of Art. 1571 — "shall be barred after six months, from the delivery of
the thing sold." The period of four (4) years, provided in Art. 1389 of said Code,
for "the action to claim rescission," applies to contracts, in general, and must
yields, in the instant case, to said Art. 1571, which refers to sales in particular.
Indeed, in contracts of the latter type, especially when goods, merchandise,
machinery or parts or equipment thereof are involved, it is obviously wise to
require the parties to define their position, in relation thereto, within the shortest
possible time. Public interest demands that the status of the relations between
the vendor and the vendee be not left in a condition of uncertainty for an
unreasonable length of time, which would be the case, if the lifetime of the
vendee's right of rescission were four (4) years.
WHEREFORE, the appealed resolution of the Court of Appeals is hereby
affirmed, with costs against appellant, La Fuerza, Inc. It is so ordered.
ANGEL VILLARICA and NIEVES PALMA GIL DE VILLARICA, petitioners,
vs.
THE COURT OF APPEALS, JULIANA MONTEVERDE, GAUDENCIO
CONSUNJI and JOVITO S. FRANCISCO, respondents.
Ruiz Law Office and Leopoldo M. Abellera for petitioners.
Anatolia Reyes for respondent Jovito S. Francisco.
Jose M. Kimpo for respondents Juliana Monteverde, et al..
CAPISTRANO, J.:
On May 19, 1951, the spouses Angel Villarica and Nieves Palma Gil de Villarica
sold to the spouses Gaudencio Consunji and Juliana Monteverde a lot
containing an area of 1,174 sq. meters, situated in the poblacion of the City of
Davao, for the price of P35,000. The instrument of absolute sale dated May 19,
1951 (Exh. "B"), in the form of a deed poll, drafted by Counselor Juan B.
Espolong who had been appointed by the Villaricas as their agent to sell the lot,
was acknowledged on May 25, 1951, before the same Juan B. Espolong who
was also a Notary Public. The public instrument of absolute sale and the
vendors' TCT No. 2786 were delivered to the vendees. On the same day, May
25, 1951, the spouses Consunji executed another public instrument, Exh. "D",
whereby they granted the spouses Villarica an option to buy the same property
within the period of one year for the price of P37,750. In July, same year, the
spouses Consunji registered the absolute deed of sale, Exh. "B", in
consequence of which TCT No. 2786 in the names of the spouses Villarica was
cancelled and a new TCT No. 3147 was issued in the names of the spouses
Consunji. In February, 1953, the spouses Consunji sold the lot to Jovito S.
Francisco for the price of P47,000 by means of a public instrument of sale Exh.
"4". This public instrument of sale was registered in view of which TCT No. 3147
in the names of the spouse Consunji was cancelled and a new TCT in the name
of Jovito S. Francisco was issued.
On April 14, 1953, the spouses Villarica brought an action in the Court of First
Instance of Davao against the spouses Consunji and Jovito S. Francisco for the
reformation of the instrument of absolute sale, Exh. "B", into an equitable
mortgage as a security for a usurious loan of P28,000 alleging that such was
the real intention of the parties. Defendants answered that the deed of absolute
sale expressed the real intention of the parties and they also alleged a
counterclaim for sums of money borrowed by the plaintiffs from the Consunjis
which were then due and demandable. After trial, the Court of First Instance of
Davao rendered its decision holding that the instrument of absolute sale, Exh.
"B", was really intended as an equitable mortgage. Judgment was accordingly
rendered reforming the deed of absolute sale into an equitable mortgage.
Judgment was likewise rendered in favor of defendant Consunjis on their
counterclaim for sums of money. Judgment was also rendered in favor of
defendant Francisco as purchaser in good faith. Both parties appealed to the
Court of Appeals.
On September 15, 1961, the Court of Appeals rendered its decision finding that
the public instrument of absolute sale, Exh. "B", expressed the true intention of
the parties and that the defendants-appellants' (Consunjis) counterclaim for
sums of money was substantiated by the evidence. Accordingly the Court of
Appeals rendered judgment as follows:
WHEREFORE, the judgment appealed from is reversed and the
complaint is dismissed as to the defendant spouses, and the plaintiffs
are ordered to pay to them their remaining indebtedness of fifteen
thousand (P15,000.00) pesos with interest at 5% from July 7, 1951.
That part of the judgment dismissing the complaint as to Jovito S.
Francisco is hereby affirmed, with the modification that the attorney's
fees in the sum of P2,350.00 awarded to him is eliminated. The
present case is not one of those enumerated in Article 2208 of the
New Civil Code where attorney's fees may be recovered. Costs
against the plaintiffs-appellants.
On December 6, 1961, the spouses Villarica, plaintiffs-appellants in the Court
of Appeals, petitioned the Supreme Court for certiorari or review of the decision
rendered by the Court of Appeals. The petition was given due course and the
decision of the Court of Appeals is now before us for review on questions of law.
Petitioners contend that the Court of Appeals erred in finding that the public
instrument of absolute sale, Exh. "B", expressed the true intention of the parties,
arguing that under Article 1604 in relation to Articles 1602 and 1603 of the Civil
Code, the instrument of absolute sale, Exh. "B", should be presumed as an
equitable mortgage on the grounds that (1) the price of P35,000 was unusually
inadequate; (2) the vendors remained in possession of the property sold; (3) the
period of one year for repurchase granted in the instrument Exh. "D" was
extended for one month; and (4) the vendors pay the taxes on the land sold.
The contention is unmeritorious in view of the following considerations:
(1) The price of P35,000 was not even inadequate. The land sold was assessed
for tax purposes at P8,870 effective 1950. It was purchased by the spouses
Villarica from the Philippine Alien Property Custodian in October, 1950, for the
price of P20,000. The Villaricas borrowed P7,400 from a Chinese named
Domingo Lua Chin Lam and, with this borrowed money, made part payment of
the price to the Philippine Alien Property Custodian. Then they mortgaged the
land to the Philippine Alien Property Custodian as security for the P10,000
unpaid balance of the purchase price. One year later, on May 19, 1951, they
sold the land by means of the instrument of absolute sale Exh. "B" to the
Consunjis for the price of P35,000, thus making a profit of P15,000 in one year
without having invested their own money in buying the land. On February 21,
1953, the Consunjis sold the land to Jovito S. Francisco for the price of P47,000,
thus making profit of P12,000. The price of P70,000 found by the trial court to
be the market price of the land at the time of the trial in 1956 was not the market
price in 1951 when the Villaricas sold the lot to the Consunjis. Hence, it is
evident that the price of P35,000 stated in the instrument of absolute sale Exh.
"B" was the market price of the lot in 1951.
(2) The vendors did not remain in possession of the land sold as lessees or
otherwise. On their request in order to help them in the expenses of their
children in Manila, the vendors were merely allowed by the vendees to collect
the monthly rents of P300 for five months up to October, 1951, on the
understanding that the amounts so collected would be charged against them.
But thereafter the vendees were the ones who collected the monthly rents from
the tenants. It follows that the vendors did not remain in possession of the land
as lessees or otherwise.
(3) In Exh. "D" the Consunjis as new owners of the lot granted the Villaricas an
option to buy the property within the period of one year from May 25, 1951 for
the price of P37,750. Said option to buy is different and distinct from the right of
repurchase which must be reserved by the vendor, by stipulation to that effect,
in the contract of sale. This is clear from Article 1601 of the Civil Code, which
provides:
Conventional redemption shall take place when the
vendor reserves the right to repurchase the thing sold, with the
obligation to comply with the provisions of article 1616 and other
stipulation which may have been agreed upon.
The right of repurchase is not a right granted the vendor by the vendee in a
subsequent instrument, but is a right reserved by the vendor in the same
instrument of sale as one of the stipulations of the contract. Once the instrument
of absolute sale is executed, the vendor can no longer reserve the right to
repurchase, and any right thereafter granted the vendor by the vendee in a
separate instrument cannot be a right of repurchase but some other right like
the option to buy in the instant case. Hence, Exhibits "B" and "D" cannot be
considered as evidencing a contract of sale with pacto de retro. Since Exh. "D"
did not evidence a right to repurchase but an option to buy, the extension of the
period of one year for the exercise of the option by one month does not fall
under No. 3, of Article 1602 of the Civil Code, which provides that:
When upon or after the expiration of the right to repurchase another
instrument extending the period of redemption or granting a new
period is executed.
(4) The taxes paid by the vendors were back taxes up to the time of the sale on
May 19, 1951. The vendors had the obligation to pay the back taxes because
they sold the land free of all liens and encumbrances. The taxes due after the
sale were paid by the vendees.
The petitioners admit that they cannot now question the finding of the Court of
Appeals that they fully received the price of P35,000 mentioned in the
instrument of absolute sale Exh. "B". In addition, we noted that the petitioners
acknowledged in writing (Exh. "4"-Consunji-Monteverde), dated May 28, 1951,
having received full payment of said price of P35,000. In view hereof and of the
foregoing considerations, petitioners' contention that Exhibits "B" and "D" were
used as a device to cover a usurious loan, has absolutely no merit.
The findings of the Court of Appeals on the amounts due from the spouses
Villarica to the spouses Consunji as loans, evidenced by promissory notes, after
deducting partial payments made thereon being factual, cannot be reviewed.
PREMISES CONSIDERED, the judgment of the Court of Appeals is hereby
affirmed, with costs against petitioners also in this instance.

PEDRO TAPAS and MARIA ORIÑA DE TAPAS, petitioners,
vs.
COURT OF APPEALS, ROBERTO DE JESUS and CEFERINA DE
JESUS, respondents.
Tabora, Concon & Baranda for petitioners.
Ramon Imperial for private respondents.
FERNANDO, J.:
The obstacle that had to be hurdled by petitioners in this certiorari proceeding
to review a decision of the Court of Appeals 1 is that there was an express
finding therein that the transaction in question was one of an absolute deed of
sale. It should be mentioned that petitioners, as plaintiffs in the lower court, were
unsuccessful in their action to reform certain contracts so as to give them the
character of equitable mortgages merely. They fared better in respondent Court
of Appeals, which ruled in their favor insofar as two parcels of land were
concerned. They were so adjudged to be of that character. 2 Their plea was,
however, denied as to a third parcel, the lower court being upheld in its finding
that there was an absolute sale. 3 The decision of respondent Court penned by
the late Justice Fernando Hernandez is notable for its lucidity
comprehensiveness and careful appraisal of the legal issues involved.
Nonetheless, petitioners would claim that an error was committed by such
tribunal in view of the Civil Code provision: "However, the vendor may still
exercise the right to repurchase within thirty days from the time final judgment
was rendered in a civil action on the basis that the contract was a true sale with
right to repurchase." 4 A reading of the above would clearly show the weakness,
not to say the futility, of this petition for review. What is spoken of is clearly the
sale with right to repurchase The finding of respondent Court of Appeals was
precisely to the contrary, We are not at liberty to reverse such a finding. We
have to affirm.
It was noted in the exhaustive opinion of the late Justice Hernandez that
petitioners as plaintiffs did not deny that the deed in question clearly was on the
of absolute sale. It was prepared in the Office of the then City Assessor, one
Eutiquio V. Guevarra, also a notary public, who testified that such precisely was
the intention of the parties and that the contents thereof were explained to them.
Petitioner Maria Orina de Tapas was allegedly deficient in formal schooling. She
was, however, married to an educated man, a former seminarian no less. H was
present at the signing of that document and signed at the left-hand margin
thereof. Respondent Court could not, therefore, lend credence to the
unsubstantiated version of the wife to the contrary, her husband not being called
to the witness stand. Nor could the price be deemed as grossly inadequate,
being based on the assessed value. There was an allegation that an adjacent
lot did command a higher price, their statement being attributed to one Macario
Mariano. Again, it was noted by respondent Court that he was not asked to
verify such allegation by being called to appear as a witness. Petitioners having
stayed in possession of the lot in question should be explained by the
employment of private respondents, the De Jesus couple. Roberto de Jesus,
the husband, was an inspector in the Bureau of Fisheries; he had to do a lot of
traveling. The wife, Ceferina de Jesus, was a nurse without a fixed place of
work. It was to their interest thereon to lease the lot in question to petitioners,
the vendors. Such a lease contract was duly entered into. Nor was the assertion
that petitioners continued to pay real estate taxes proven. On the contrary, the
receipts were produced, duly issued in the name of respondents. The
conclusion was, therefore, inevitable. As succinctly set forth by the late Justice
Hernandez: Hemos revisado las ... pruebas de las partes sobre la contencion
de los demandantes sobre la verdadera naturalize del documents de venta
absolute ... y nuestra conclusion es que la misma refleja la verdadera intencion
de las partes." 5
On the facts as found, the law was correctly applied. The petition, to repeat,
must fail.
1. Even if there were a less meticulous and conscientious appraisal of the
evidence submitted, this Court is not at liberty to alter or modify the facts as set
forth in the decision now sought to be reversed. As was so clearly stated in Chan
v. Court of Appeals: 6 "What petitioner ignores is that from Guico v. Mayuga, a
1936 decision, the opinion being penned by the then Justice Recto, it has been
well-settled that the jurisdiction of this Court in cases brought to us from the
Court of Appeals is limited to reviewing and revising the errors of law imputed
to it, its findings of fact being conclusive. More specifically, in a decision exactly
a month later, this Court, speaking through the then Justice Laurel, it was held
that the same principle is applicable even if the Court of Appeals was in
disagreement with the lower court as to the weight of the evidence with a
consequent reversal of its findings of fact." 7 The Chan opinion cited thirty-five
decisions in support of such a view. Since then, there has been six more
decisions to the same effect. 8 It cannot. be denied, therefore, that the
transaction herein challenged cannot be looked upon as other than an absolute
deed of sale.
2. The crucial question then is whether there being an absolute deed of sale,
the vendor, in the language of Article 1606 of the Civil Code, may still exercise
the right to repurchase within thirty days from the time the final judgment was
rendered in a civil action on the basis that the contract was a true sale with right
to repurchase. The wording of the above provision is plain and explicit. Should
the vendor fail in his attempt to show that the contract entered into was really a
loan and that the parties really intended a pacto de retro sale, he still has thirty
days to exercise the right to repurchase from the finality of the judgment. As set
forth in the provision, there must be such express finding. The transaction must
be one of pacto de retro. The law cannot be any clearer. That is what it says:
"the contract was a true sale with right to repurchase."
There is nothing in the rather laconic discussion of three pages in the brief for
appellant filed by Attorney Perfecto Tabora to indicate the contrary. Mention was
made by him of Feria v. Suva. That was negligence on his part. The case
is Feria vs. Suva, 9 a 1953 decision. He also did not point out that there was
hardly any need to discuss Article 1606 of the Civil Code as the decision in
question had become final and, therefore, was a bar to such
action. 10 Reference was made, however, to the Court of Appeals in refusing to
apply the provisions of the New Civil Code and to a comment made by Justice
Capistrano on this article. It hardly lends support to the claim of petitioner. The
language of Justice Capistrano is equally explicit: "It is intended to cover suits
where the seller claims that the real intention was a loan with equitable
mortgage, but the Court decides otherwise." 11 Here, according to Justice
Labrador, speaking for this Court, when the Court of Appeals refused to grant
the plaintiffs-appellants the privilege of redemption under this article, it was
because there was no question as to the transaction being deemed admittedly
one of sate with pacto de retro. 12 If such indeed were the case, how much more
unpersuasive is the plea of petitioner hen the express finding of respondent
Court of Appeals is that here an absolute deed of sale was intended by the
parties. Moreover, a little more research by counsel for petitioner would have
cautioned him against citing a Court of Appeals decision. As of the time he
submitted the brief on March 23, 1964, he could have mentioned nine other
decisions from Fernandez v. Suplido, 13 decided in 1955, where this Court held
that there was no necessity to discuss the applicability of Article 1606,
to Morales v. Biagtas,14 a 1962 decision. This excerpt is particularly relevant:
"Moreover, even if the provisions of article 1606 of the new Civil Code could be
invoked, still such redemption or repurchase could be made within thirty days
from the date of final judgment rendered in a civil action where the issue or
controversy between the parties concerns or involves the juridical nature or
character of the contract. There being no issue or controversy as to the juridical
nature or character of the contract in question, the provisions of the new Code
invoked by the appellees cannot be applied." 15 There are two 1960 decisions
from this Court worth noting, Fernandez v. Fernandez, 16 and Rosario v.
Rosario. 17 In the former, Justice J.B.L. Reyes pointed out: "There is no merit in
this appeal. It is, already settled that where the right to repurchase had expired
before the effectivity of the New Civil Code, Article 1606 thereof providing that
'the vendor may still exercise the right to repurchase within thirty days from the
time final judgment was rendered in a civil action on the basis that the contract
was a true sale with right to repurchase' can no longer be applied, as it would
be an impairment of the right that had already become vested in the vendee
under the provisions of the old Code .... Full ownership over the land in question
having become consolidated and vested in defendant- appellee since 1936, his
light thereto can no longer be impaired by allowing plaintiffs now to sue for the
exercise of the right of redemption given by Article 1606 of the New Code. 18 In
the latter, former Justice, now retired Chief Justice, Paras had this to say: "The
appellants have also missed the proper application of article 1606 of the new
Civil Code which was taken from article 1508 of the old Civil Code, except the
last paragraph which provides for the' first time that 'the vendor may still exercise
the right to repurchase within thirty days from the time the final judgment wise
rendered in a civil action on the basis that the contract was a true sale with right
to repurchase.' The new provision contemplates a case involving a controversy
as to the true nature of the contract, and the court is called upon to decide
whether it is sale with pacto de retro or an equitable mortgage. In the case at
bar, the transaction is admittedly a deed of sale and the stipulated period of
redemption had expired." 19 It bears repeating that here there can be no
controversy as to the contract being one of absolute deed of sale, pure and
simple. There could not even then be a period redemption. In the light of such
authoritative pronouncements from this Tribunal, it thus clearly appears that the
petition is without support in law.
WHEREFORE, the appealed decision of the Court of Appeals is affirmed. Costs
against petitioners.
THERESITA, JUAN, ASUNCION, PATROCINIA, RICARDO, and GLORIA, all
surnamed DIMAGUILA, Petitioners,
vs.
JOSE and SONIA A. MONTEIRO, Respondents.
DECISION
MENDOZA, J.:
This is a petition for review on certiorari under Rule 45 of the Rules of Court
assailing the August 15, 2011Decision1 and the March 5, 2012 Resolution2 of
the Court of Appeals (CA), in CA-G.R. CV No. 92707, which affirmed the August
23, 2007 Decision3 of the Regional Trial Court, Branch 27, Santa Cruz, Laguna
(RTC), in Civil Case No. SC-3108.
The Facts
On July 5, 1993, the respondent spouses, Jose and Sonia Monteiro (Spouses
Monteiro), along with Jose, Gerasmo, Elisa, and Clarita Nobleza, filed their
Complaint for Partition and Damages before the RTC, against the pet1t10ners,
Theresita, Juan, Asuncion, Patrocinia, Ricardo, and Gloria Dimaguila (The
Dimaguilas), together with Rosalina, Jonathan, Eve, Sol, Venus, Enrique, Nina,
Princess Arieta, and Evangelina Borlaza. The complaint alleged that all the
pmiies were co-owners and prayed for the pmiition of a residential house and
lot located at Gat. Tayaw St., Liliw, Laguna, with an area of 489 square meters,
and covered by Tax Declaration No. 1453. Spouses Monteiro anchored their
claim on a deed of sale executed in their favor by the heirs of Pedro Dimaguila
(Pedro).
In their Answer, the Dimaguilas and the other defendants countered that there
was no co-ownership to speak of in the first place. They alleged that the subject
property, then owned by Maria Ignacio Buenaseda, had long been partitioned
equally between her two sons, Perfecto and Vitaliano Dimaguila, through a
Deed of Extrajudicial Partition, with its southern-half portion assigned to
Perfecto and the northern-half portion to Vitaliano. They claimed that they were
the heirs of Vitaliano and that Spouses Monteiro had nothing to do with the
property as they were not heirs of either Perfecto or Vitaliano.
During the course of the proceedings, several incidents were initiated, namely:
(a) Motion to Dismiss for lack of legal capacity to sue of Spouses Monteiro and
for lack of cause of action; (b) Motion for Reconsideration of the Order of denial
thereof, which was denied; (c) Motion for Production and Inspection of
Documents; (d) Motion for Reconsideration of the Order granting the same,
which was denied; (e) Motion to Defer Pre-trial; (f) Notice of Consignation by
the petitioners in the exercise of their alleged right of redemption of the share
being claimed by the Spouses Monteiro in light of the deed of sale they
produced and claimed to have been executed by the heirs of Pedro in their
favor; (g) Motion to Remove Sonia Monteiro (Sonia) as plaintiff, which was
denied; (h) Motion for Reconsideration thereof, which was also denied; (i)
Motion for Clarification and/or Extended Resolution; and (j) Motion to Suspend
Proceedings due to a pending Petition for Certiorari before the CA assailing
several of the RTC orders. The proceedings resumed after the promulgation by
the CA of its April 5, 2000 Resolution in CA-G.R. No. SP 52833, which upheld
the assailed RTC orders.
On January 2, 2001, upon resumption of the proceedings, Spouses Monteiro
filed their Motion for Leave to Amend and/or Admit Amended Complaint.4 The
RTC granted their motion. The amended complaint abandoned the original
claim for partition and instead sought the recovery of possession of a portion of
the subject property occupied by the Dimagui as and other defendants,
specifically, the potiion sold to the couple by the heirs of Pedro. Furthermore,
only Spouses Monteiro were retained as plaintiffs and the Dimaguilas as
defendants.
In amending their complaint, Spouses Montiero adopted the Dimaguilas'
admission in their original answer that the subject propetiy had already been
partitioned between Perfecto and Vitaliano, through a Deed of Extrajudicial
Partition, dated October 5, 1945, and that during their lifetime, the brothers
agreed that Perfecto would become the owner of the southern-hal f portion and
Vitaliano of the northern-half portion, which division was observed and
respected by them as well as their heirs and successors-in-interest.
Spouses Monteiro further averred that Perfecto was survived by Esperanza,
Leandro and Pedro, who had divided the southern-half portion equally amongst
themselves, with their respective 1 /3 shares measuring 81.13 square meters
each; that Pedro's share pertains to the 1 /3 of the southern-half immediately
adjacent to the northern-half adjudicated to the
Dimaguilas as heirs of Vitaliano; that on September 29, 1992, Pedro's share
was sold by his heirs to them through a Bilihan ng Lahat Naming Karapatan
(Bilihan) with the acquiescence of the heirs of Esperanza and Leandro
appearing in an Affidavit of Conformity and Waiver; and that when they
attempted to take possession of the share of Pedro, they discovered that the
subject portion was being occupied by the Dimaguilas.
In their Answer5 to the amended complaint, the Dimaguilas admitted that the
subject property was inherited by, and divided equally between Perfecto and
Vitaliano, but denied the admission in their original answer that it had been
actually divided into southern and nmihern portions. Instead, they argued that
the Extrajudicial Partition mentioned only the division of the subject property
"into two and share and share alike." In effect, they argued the existence of a
co-owenrship, contrary to their original position. The Dimaguilas further argued
that the Bilihan did not specify the metes and bounds of the property sold, in
violation of Article 1458 of the Civil Code. Even assuming that such had been
specified, they averred that the sale of a definite portion of a property owned in
common was void since a co-owner could only sell his undivided share in the
property.
During the trial, Spouses Monteiro presented Pedrito Adrieta, brother of Sonia
Monteiro (Sonia), who testified that Perfecto was his grandfather and that at the
time of Perfecto's death, he had two properties, one of which was the subject
property in Liliw, Laguna, which went to his children, Esperanza, Leonardo and
Pedro. Pedro was survived by his children Pedrito, Theresita, Francisco, and
Luis, who, in turn, sold their rights over the subject property to Sonia.
Sonia testified that she was approached by Pedro's son, Francisco, and was
asked if she was interested in purchasing Pedro's 1/3 share of the southern
portion of the Bahay na Sato, and that he showed her a deed of extrajudicial
partition executed by and between Perfecto and Vitaliano, as well as the tax
declaration of the property to prove that the property had already been
partitioned between the two brothers.
Engineer Baltazar F. Mesina testified that he was the geodetic engineer hired
by Spouses Monteiro to survey the property in Liliw, and recounted that he
checked the boundary of the subject property, subdivided the lot into two and
came up with a survey plan.
Crisostomo Arves, an employee from the Office of the Municipal Assessor,
presented a certified true copy of the cadastral map of Liliw and a list of
claimants/owners.
Dominga Tolentino, a record officer of the Department of Environment and
Natural Resources (DENR), testified that as part of her duties, she certifies and
safekeeps the records of surveyed land, including cadastral maps from the
region.
One of the Dimaguilas, Asuncion, was the sole witness for the defendants. She
testified that their first counsel made a mistake when he alleged in their original
answer that the property had already been partitioned into n01ihern and
southern portions between the two brothers, as the original answer had been
rushed and they were never given a copy of it. She claimed that the mistake
was only pointed out to her by their new counsel after their former counsel
withdrew due to cancer. She further testified that there was no intention to
partition the "bahay na bato" which stood on the subject property, in order to
preserve its historical and sentimental value.
Ruling of the RTC
In its August 23, 2007 Decision, the RTC ruled in favor of Spouses Monteiro
and ordered the Dimaguilas to turn over the possession of the subject 1 /3
portion of the southern-half of the property, to wit:
WHEREOF, judgment is hereby rendered in favor of the plaintiffs and against
the defendants:
a. Ordering the defendants and all persons claiming rights under
them to peacefully vacate and turn-over possession of 1/ 3 of the
southern portion of the property covered by Tax Declaration No.
1453, specifically described as "A" of Lot 877 in the sketch plan
marked as Exhibit "I", within 60 days from the finality of this Decision,
failing which let a writ of possession issue;
b. Ordering the defendants to pay the plaintiffs, jointly and solidarily,
the amount of ?500 per month in the form of rent for the use of the
property from July 1993 until the property is vacated;
c. Ordering the defendants to pay the plaintiffs, jointly and solidarily,
attorney's fees of ₱30,000 and litigation expense of ₱20,000.
SO ORDERED.6
The RTC found that although the extrajudicial partition merely divided the
property into two share and share alike, evidence aliunde was appreciated to
show that there was an actual division of the property into south and north
between Perfecto and Vitaliano, and that such partition was observed and
honored by their heirs. These pieces of evidence were the cadastral map of
Liliw7 and a corresponding list of claimants, which showed that the subject
property had long been registered as Lot 876 (northern-half), claimed by
Buenaventura Dimaguila (Buenaventura), an heir of Vitaliano, and Lot 877
(southern-half), claimed by Perfecto.
The RTC held that the manner of partition was admitted by the Dimaguilas
themselves in their original answer. It gave no credence to the claim of Asuncion
that such admission was an error of their fonner counsel and that she was
unaware of the contents of their original answer. It noted that the Dimaguilas
had strongly maintained their theory of partition from 1992 when the complaint
was first filed, and only changed their defense in 2001 when Spouses Monteiro
filed their amended complaint. It keenly observed that it was precisely their
admission which propelled Spouses Monteiro to amend their complaint from
one of partition to recovery of possession. Thus, the RTC concluded that there
was indeed a partition of the subject property into southern-half and northern-
half portions between Perfecto and Vitaliano and that the Dimaguilas were
estopped from denying the same.
As to the authenticity of the Bilihan, where the 1 /3 share of Pedro was sold to
Spouses Monteiro, the RTC found the document to be regular and authentic
absent any piece of evidence to the contrary. It stated that the proper persons
to contest the sale were not the Dimaguilas, who were the heirs of Vitaliano, but
the heirs of Perfecto. It noted that the records showed that the heirs of
Esperanza and Leandro (Pedro's siblings), had signified their conformity to the
pa1iition and to the sale of Pedro's 1 /3 portion.
Ruling of the CA
In its assailed August 15, 2011 Decision, the CA affirmed the ruling of the RTC.
The CA found that Spouses Monteiro had established their case by a
preponderance of evidence thru their presentation of the Deed of Extrajudicial
Partition,8 the cadastral map and the municipal assessor's records.9 It noted,
more importantly, that the Dimaguilas themselves corroborated the claim of
partition in their original answer. It likewise ruled that the petitioners were
estopped from denying their admission of partition after the respondent spouses
had relied on their judicial admission.
The Dimaguilas also insisted on their argument, which was raised before the
RTC, but not addressed, that the Bilihan should not have been admitted as
evidence for lack of a documentary stamp tax, in accordance with Section 201
of the National Internal Revenue Code (N!RC). Citing Gabucan v. Manta10 and
Del Rosario v. Hamoy,11 the CA, however, ruled that if a document which did
not bear the required documentary stamp was presented in evidence, the court
should require the proponent to affix the requisite stamp. The CA noted that the
RTC had failed to direct Spouses Monteiro to affix the stamp and merely
reminded the presiding judge to be more vigilant on similar situations in the
future. Nonetheless, it held that the petitioners did not possess the necessary
personality to assail the sale between Spouses Monteiro and the heirs of Pedro
because it pe1iained to the southern-half of the property to which they had no
claim.
The CA likewise found sufficient basis for the award of rentals as compensatory
damages since Spouses Monteiro were wrongfully deprived of possession of
the 1/3 portion of the southern-half of the subject property. It also upheld the
award of attorney's fees and litigation expenses by the RTC, considering that
Spouses Monteiro were compelled to litigate and incur expenses to protect their
rights and interest.
In its assailed March 5, 2012 Resolution, the CA denied the petitioners' motion
for reconsideration for lack of merit.
Hence, this petition.
ASSIGNMENT OF ERRORS
I the said lots were respectively claimed by Buenaventura and Perfecto.
THE COURT OF APPEALS GRAVELY ERRED IN FINDING THAT THERE
WAS AN ACTUAL PARTITION OF THE PROPERTY COVERED BY TAX
DECLARATION NO. 1453.
II
THE COURT OF APPEALS GRAVELY ERRED IN FINDING THAT THE 1/3
PORTION OF THE SOUTHERN HALF OF THE PROPERTY WAS SOLD TO
THE RESPONDENTS.
III
THE COURT OF APPEALS GRAVELY ERRED IN ADMITTING IN EVIDENCE
EXHIBIT C, THE BIL/HAN NG LAHA T NAMING KARAPATAN.
IV
THE COURT OF APPEALS GRAVELY ERRED IN RULING THAT THE
RESPONDENTS ARE ENTITLED TO RECOVER POSSESSION OF THE 1/3
PORTION OF THE SOUTHERN HALF OF THE PROPERTY.
V in the aforesaid deed as follows, to wit:
THE COURT OF APPEALS GRAVELY ERRED IN FINDING THE
PETITIONERS LIABLE FOR RENTALS FOR THE USE OF THE PROPERTY
FROM JULY 1993 UNTIL VACATED.
VI
THE COURT OF APPEALS GRAVELY ERRED IN HOLDING THE
PETITIONERS LIABLE FOR ATTORNEY'S FEES AND LITIGATION
EXPENSES.
VII
THE COURT OF APPEALS GRAVELY ERRED WHEN IT FAILED TO
CONSIDER THE PETITIONERS' SUPPLEMENTAL ANSWER TO AMENDED
COMPLAINT AND TO GRANT THE COUNTERCLAIMS INTERPOSED
THEREIN.12
The Dimaguilas argue that their original allegation regarding the partition of the
subject property into northern and southern portions was a mistake of their
former counsel, and it was not their intention to partition the property because
to do so would damage the house thereon. Even assuming an admission was
made, the petitioners aver that such was made only by some, but not all, of the
co-owners; and that partition can only be made by all co-owners, and allowing
the admission is tantamount to effecting partition by only some co-owners.
Spouses Monteiro themselves, in their original complaint, made an admission
that they were co-owners of the property and asserted that there was no
partition. The evidence aliunde considered by the RTC, consisting of the
cadastral map and the list of claimants, were timely objected to during the trial
as hearsay and a violation of the best evidence rule.
The petitioners reiterate that the Bilihan should not have been admitted into
evidence because it lacked the documentary stamp tax required by Section 201
of the NIRC, providing that no document shall be admitted in evidence until the
requisite stamps have been affixed thereto. They argue that the ruling of
petitioners' lack of personality to assail the deed of sale is different from the
issue of the deed of sale's admissibility as evidence. They conclude that
considering that no documentary stamp was ever affixed on the deed of sale,
such should never have been admitted into evidence and consequently, should
not have been relied upon by the lower courts to prove the sale of 1/3 of the
southern portion; and that considering that the Bilihan is inadmissible as
evidence, the respondent spouses have no basis for their claim to the subject
1/3 portion of the southern-half of the property. Thus, they insist that the lower
courts erred in awarding to Spouses Monteiro the possession of the subject
prope1iy, the rentals, attorney's fees and litigation expenses, and in failing to
rule on their counterclaim for demolition of improvements and payment of
damages.
The assignment of errors boils down to two main issues:
I. Whether there was a pa1iition of the subject property; and
2. Whether the 1/3 portion of the southern-half of the subject property
was sold to the respondent spouses.
Ruling of the Court
At the outset, it must be pointed out that the petitioners' assignment of errors
calls for the Court to again evaluate the evidence to determine whether there
was a partition of the property and whether the 1/3 portion of the southern half
was sold to the respondent spouses. These clearly entail questions of fact which
are beyond the Court's ambit of review under Rule 45 of the Rules of Court,
especially considering that the findings of fact of the RTC were affirmed by the
CA.13 On this ground alone, the present petition must be denied. Nonetheless,
the Court shall delve into these factual issues to finally put this case to rest.
Partition of the Subject Property
Spouses Monteiro, as plaintiffs in the original case, had the burden of proof to
establish their case by a preponderance of evidence, which is the weight, credit,
and value of the aggregate evidence on either side, synonymous with the term
"greater weight of the evidence." Preponderance of evidence is evidence which
is more convincing to the court as worthy of belief than that which is offered in
opposition thereto.14
To prove their claim of partition, the respondent spouses presented the
following: (1) the Deed of Extrajudicial Partition, dated October 5, 1945,
executed by and between the brothers Perfecto and Vitaliano; (2) the cadastral
map of Liliw Cadm-484,15 dated August 6, 1976, showing that the subject
property had been divided into southern and northern portions, registered as
Lot Nos. 876 and 877; and (3) the Municipal Assessor's records16 showing that
It is undisputed that the Deed of Extrajudicial Partition stated that Perfecto and
Vitaliano agreed "to divide between them into two and share and share alike"
the subject property, including the house situated thereon. It appears, however,
that the property was actually partitioned into definite portions, namely, southern
and northern halves, as reflected in the cadastral map of Liliw, which were
respectively claimed by an heir of Vitaliano and Perfecto himself. It, thus,
appears that the subject property had already been partitioned into definite
portions more than 20 years prior to the original complaint for partition filed in
1993, and that such division had been observed by the brothers' heirs. As earlier
pointed out, the petitioners themselves admitted to this very fact in their original
answer, to wit:
(b) On September 5, 1945 the brothers PERFECTO and VITALIANO
DIMAGUILA executed a deed of EXTRA JUDICIAL PARTITION of the
aforedescribed property dividing the same into two (2) equal parts as indicated
xxx
(c) As a result of the foregoing partition and as known by all the parties in this
case from the beginning or as soon as they reached the age of discernment
PERFECTO DIMAGUILA became the sole and exclusive owner of the southern
half of the aforedescribed property and VITALIANO DIMAGUILA became the
sole owner of the northern half of the same property; the house that was built
thereon and still existing up to this time was likewise equally divided between
the two (2) DIMAGUILA brothers in accordance with the extrajudicial partition of
half equal shares;
xxx
2. In other words, the share of VITALIANO DIMAGUILA in the above described
property has already been long segregated and had passed on to his heirs as
is very well known by all the parties in this case;17
xxx
(Emphases in the Original)
Section 418 of Rule 129 of the Rules of Court provides that an admission made
by a pa1iy in the course of the proceedings in the same case does not require
proof, and may be contradicted only by showing that it was made through
palpable mistake. The petitioners argue that such admission was the palpable
mistake of their former counsel in his rush to file the answer, a copy of which
was not provided to them. Petitioner Asuncion testified:
Q So, why was that allegations (sic) made in the Answer?
A May be, (sic) in his rush to file the Answer, Atty. Paredes filed the same
without giving us a copy ...19
This contention is unacceptable. It is a purely self-serving claim unsupported by
any iota of evidence. Bare allegations, unsubstantiated by evidence, are not
equivalent to proof.20 Furthermore, the Court notes that this position was
adopted by the petitioners only almost eight (8) years after their original answer
was filed, in response to the amended complaint of the respondent spouses. In
their original answer to the complaint for partition, their claim that there was
already a partition into northern-half and southern-half portions, was the very
essence of their defense. It was precisely this admission which moved the
respondent spouses to amend their complaint. The petitioners cannot now insist
that the very foundation of their original defense was a palpable mistake.
Article 143121 of the Civil Code provides that through estoppel, an admission is
rendered conclusive upon the person making it, and cannot be denied or
disproved as against the person relying thereon. The respondent spouses had
clearly relied on the petitioners' admission and so amended their original
complaint for partition to one for recovery of possession of a portion of the
subject property. Thus, the petitioners are now estopped from denying or
attempting to prove that there was no partition of the property.
Considering that an admission does not require proof, the admission of the
petitioners would actually be sufficient to prove the partition even without the
documents presented by the respondent spouses. If anything, the additional
evidence they presented only served to corroborate the petitioners' admission.
The petitioners argue that they timely objected to the cadastral map and the list
of claimants presented by the respondent spouses, on the ground that they
violated the rule on hearsay and the best evidence rule.
Anent the best evidence rule, Section 3( d) of Rule 130 of the Rules of Court
provides that when the subject of inquiry is the contents of a document, no
evidence shall be admissible other than the original document itself, except
when the original is a public record in the custody of a public officer or is
recorded in a public office.22 Section 7 of the same Rule provides that when the
original of a document is in the custody of a public officer or is recorded in a
public office, its contents may be proved by a certified copy issued by the public
officer in custody thereof.23 Section 24 of Rule 132 provides that the record of
public documents may be evidenced by a copy attested by the officer having
the legal custody or the record.24
Certified true copies of the cadastral map of Liliw and the corresponding list of
claimants of the area covered by the map were presented by two public officers.
The first was Crisostomo Arves, Clerk III of the Municipal Assessor's Office, a
repository of such documents. The second was Dominga Tolentino, a DENR
employee, who, as a record officer, certifies and safekeeps records of surveyed
land involving cadastral maps. The cadastral maps and the list of claimants, as
ce1iified true copies of original public records, fall under the exception to the
best evidence rule.
As to the hearsay rule, Section 44 of Rule 130 of the Rules of Court similarly
provides that entries in official records are an exception to the rule. 25 The rule
provides that entries in official records made in the performance of the duty of a
public officer of the Philippines, or by a person in the performance of a duty
specially enjoined by law, are prima facie evidence of the facts therein stated.
The necessity of this rule consists in the inconvenience and difficulty of requiring
the official's attendance as a witness to testify to the innumerable transactions
in the course of his duty. The document's trustworthiness consists in the
presumption of regularity of performance of official duty.26
Cadastral maps are the output of cadastral surveys. The DENR is the
department tasked to execute, supervise and manage the conduct of cadastral
surveys.27 It is, therefore, clear that the cadastral map and the corresponding
list of claimants qualify as entries in official records as they were prepared by
the DENR, as mandated by law. As such, they are exceptions to the hearsay
rule and are primafacie evidence of the facts stated therein.
Even granting that the petitioners had not admitted the partition, they presented
no evidence to contradict the evidence of the respondent spouses. Thus, even
without the admission of the petitioners, the respondent spouses proved by a
preponderance of evidence that there had indeed been a partition of the subject
property.
Sale of 1/3 Portion of the Southern-half
To prove that 1/3 of the southern-half portion of the subject property was sold
to them, Spouses Monteiro presented a deed of sale entitled Bilihan ng Lahat
Naming Karapatan,28 dated September 29, 1992, wherein Pedro's share was
sold by his heirs to them, with the acquiescence of the heirs of Esperanza and
Leandro in an Affidavit of Conformity and Waiver.29 The petitioners argue that
the Bilihan should not have been admitted into evidence because it lacked the
documentary stamp tax required by Section 201 of the NIRC.
On August 29, 1994, the petitioners filed a motion for the production and/or
inspection of documents,30 praying that Spouses Monteiro be ordered to
produce the deed of sale, which they cited as the source of their rights as co-
owners. On November 20, 1995, Spouses Monteiro submitted their
compliance,31 furnishing the RTC and the petitioners with a copy32 of the
Bilihan. On January 3, 1996, the petitioners filed a notice of
consignation,33 manifesting that they had attempted to exercise their right of
redemption as co-owners of the 1/3 portion of the southern half of the property
under Article 162334 of the Civil Code by sending and tendering payment of
redemption to Spouses Monteiro, which was, however, returned.
By filing the notice of consignation and tendering their payment for the
redemption of the 1/3 portion of the southern-half of the property, the petitioners,
in effect, admitted the existence, due execution and validity of the Bilihan.
Consequently, they are now estopped from questioning its admissiblity in
evidence for relying on such for their right of redemption. Additionally, the Court
notes that the copy35 of the Bilihan which was originally submitted by Spouses
Monteiro with its compliance filed on November 20, 1995, does in fact bear a
documentary stamp tax. It could only mean that the documentary stamp tax on
the sale was properly paid. The Bilihan was, therefore, properly admitted into
evidence and considered by the RTC.
In any case, as correctly held by the lower cou1is, the petitioners, as heirs of
Vitaliano, who inherited the northern-half po1iion of the subject property, do not
possess the necessary personality to assail the sale of the southern-half portion
between Spouses Monteiro and the heirs of Pedro.1âwphi1 They are not real
parties-in-interest who stand to be benefited or injured by the sale of the 1/3
portion of the southern-half over which they have absolutely no right. As
correctly ruled by the courts below, only fellow co-owners have the personality
to assail the sale, namely, the heirs of Pedro's siblings, Esperanza and Leandro.
They have, however, expressly aquiesced to the sale and waived their right to
the property in the affidavit presented by Spouses Monteiro. 36 As such, the
petitioners have no right to their counterclaims of demolition of improvements
and payment of damages.
With Spouses Monteiro having sufficiently proved their claim over the subject I
/3 portion of the southern-half of the prope1iy through the Bilihan, the lower
courts did not err in awarding possession, rentals, attorney's fees, and litigation
expenses to them.
The Court, however, finds that the award of rentals should be reckoned from
January 2, 2001, the date the Spouses Monteiro filed their Amended Complaint
seeking recovery of the subject portion. Interest at the rate of 6% per annum
shall also be imposed on the total amount of rent due from finality of this
Decision until fully paid.37
WHEREFORE, the petition is DENIED. The August 15, 2011 Decision and the
March 15, 2012 Resolution of the Court of Appeals, in CA-G .R. CV No. 92707
are AFFIRMED with MODIFICATION, in that:
a. The award of rent at the rate of ₱500.00 per month shall be
reckoned from January 2, 2001 until the property is vacated; and
b. Interest at the rate of 6% per annum shall be imposed on the total
amount of rent due from finality of this Decision until fully paid.
SO ORDERED.
AVELINO BALURAN, petitioner,
vs.
HON. RICARDO Y. NAVARRO, Presiding Judge, Court of First Instance of
Ilocos Norte, Branch I and ANTONIO OBEDENCIO, respondents.
Alipio V. Flores for petitioner.
Rafael B. Ruiz for private respondent.
MUÑOZ PALMA, J.:
Spouses Domingo Paraiso and Fidela Q. Paraiso were the owners of a
residential lot of around 480 square meters located in Sarrat, Ilocos Norte. On
or about February 2, 1964, the Paraisos executed an agreement entitled
"BARTER" whereby as party of the first part they agreed to "barter and
exchange" with spouses Avelino and Benilda Baluran their residential lot with
the latter's unirrigated riceland situated in Sarrat, Ilocos Norte, of approximately
223 square meters without any permanent improvements, under the following
conditions:
1. That both the Party of the First Part and the Party of the Second Part
shall enjoy the material possession of their respective properties; the
Party of the First Part shall reap the fruits of the unirrigated riceland and
the Party of the Second Part shall have a right to build his own house in
the residential lot.
2. Nevertheless, in the event any of the children of Natividad P. Obencio,
daughter of the First Part, shall choose to reside in this municipality and
build his own house in the residential lot, the Party of the Second Part
shall be obliged to return the lot such children with damages to be
incurred.
3. That neither the Party of the First Part nor the Party of the Second Part
shall encumber, alienate or dispose of in any manner their respective
properties as bartered without the consent of the other.
4. That inasmuch as the bartered properties are not yet accordance with
Act No. 496 or under the Spanish Mortgage Law, they finally agreed and
covenant that this deed be registered in the Office of the Register of
Deeds of Ilocos Norte pursuant to the provisions of Act No. 3344 as
amended. (p. 28, rollo)
On May 6, 1975 Antonio Obendencio filed with the Court of First Instance of
Ilocos Norte the present complaint to recover the above-mentioned residential
lot from Avelino Baluran claiming that he is the rightful owner of said residential
lot having acquired the same from his mother, Natividad Paraiso Obedencio,
and that he needed the property for Purposes Of constructing his house thereon
inasmuch as he had taken residence in his native town, Sarrat. Obedencio
accordingly prayed that he be declared owner of the residential lot and that
defendant Baluran be ordered to vacate the same forfeiting his (Obedencio)
favor the improvements defendant Baluran had built in bad faith.1
Answering the complaint, Avelino Baluran alleged inter alia (1) that the "barter
agreement" transferred to him the ownership of the residential lot in exchange
for the unirrigated riceland conveyed to plaintiff's Predecessor-in-interest,
Natividad Obedencio, who in fact is still in On thereof, and (2) that the plaintiff's
cause of action if any had prescribed. 2
At the pre-trial, the parties agreed to submit the case for decision on the basis
of their stipulation of facts. It was likewise admitted that the aforementioned
residential lot was donated on October 4, 1974 by Natividad Obedencio to her
son Antonio Obedencio, and that since the execution of the agreement of
February 2, 1964 Avelino Baluran was in possession of the residential lot, paid
the taxes of the property, and constructed a house thereon with an value of
P250.00. 3 On November 8, 1975, the trial Judge Ricardo Y. Navarro rendered
a decision the dispositive portion of which reads as follows:
Consequently, the plaintiff is hereby declared owner of the
question, the defendant is hereby ordered to vacate the same
with costs against defendant.
Avelino Baluran to whom We shall refer as petitioner, now seeks a review of
that decision under the following assignment of errors:
I — The lower Court erred in holding that the barter agreement did not
transfer ownership of the lot in suit to the petitioner.
II — The lower Court erred in not holding that the right to re-barter or re-
exchange of respondent Antonio Obedencio had been barred by the
statute of limitation. (p. 14, Ibid.)
The resolution of this appeal revolves on the nature of the undertaking contract
of February 2, 1964 which is entitled "Barter Agreement."
It is a settled rule that to determine the nature of a contract courts are not bound
by the name or title given to it by the contracting parties. 4 This Court has held
that contracts are not what the parties may see fit to call them but what they
really are as determined by the principles of law. 5 Thus, in the instant case, the
use of the, term "barter" in describing the agreement of February 2, 1964, is not
controlling. The stipulations in said document are clear enough to indicate that
there was no intention at all on the part of the signatories thereto to convey the
ownership of their respective properties; all that was intended, and it was so
provided in the agreement, was to transfer the material possession
thereof. (condition No. 1, see page I of this Decision) In fact, under condition
No. 3 of the agreement, the parties retained the right to alienate their respective
properties which right is an element of ownership.
With the material ion being the only one transferred, all that the parties acquired
was the right of usufruct which in essence is the right to enjoy the Property of
another. 6 Under the document in question, spouses Paraiso would harvest the
crop of the unirrigated riceland while the other party, Avelino Baluran, could
build a house on the residential lot, subject, however, to the condition, that when
any of the children of Natividad Paraiso Obedencio, daughter of spouses
Paraiso, shall choose to reside in the municipality and build his house on the
residential lot, Avelino Baluran shall be obliged to return the lot to said children
"With damages to be incurred." (Condition No. 2 of the Agreement) Thus, the
mutual agreement — each party enjoying "material possession" of the other's
property — was subject to a resolutory condition the happening of which would
terminate the right of possession and use.
A resolutory condition is one which extinguishes rights and obligations already
existing. 7 The right of "material possession" granted in the agreement of
February 2, 1964, ends if and when any of the children of Natividad Paraiso,
Obedencio (daughter of spouses Paraiso, Party of the First Part) would reside
in the municipality and build his house on the property. Inasmuch as the
condition opposed is not dependent solely on the will of one of the parties to the
contract — the spouses Paraiso — but is Part dependent on the will of third
persons — Natividad Obedencio and any of her children — the same is valid. 8
When there is nothing contrary to law, morals, and good customs Or Public
Policy in the stipulations of a contract, the agreement constitutes the law
between the parties and the latter are bound by the terms thereof. 9
Art. 1306 of the Civil Code states:
Art. 1306. The contracting parties may establish such stipulations,
clauses, terms and conditions as they may deem convenient, provided
they are not contrary to law, Morals, good customs, public order, or public
policy.
Contracts which are the private laws of the contracting parties, should be
fulfilled according to the literal sense of their stipulations, if their terms are
clear and leave no room for doubt as to the intention of the contracting
parties, for contracts are obligatory, no matter what their form may be,
whenever the essential requisites for their validity are present. (Philippine
American General Insurance Co., Inc. vs. Mutuc, 61 SCRA 22)
The trial court therefore correctly adjudged that Antonio Obedencio is entitled to
recover the possession of the residential lot Pursuant to the agreement of
February 2, 1964.
Petitioner submits under the second assigned error that the causa, of action if
any of respondent Obedencio had Prescribed after the lapse of four years from
the date of execution of the document of February 2, 1964. It is argued that the
remedy of plaintiff, now respondent, Was to ask for re-barter or re-exchange of
the properties subject of the agreement which could be exercised only within
four years from the date of the contract under Art. 1606 of the Civil Code.
The submission of petitioner is untenable. Art. 1606 of the Civil Code refers to
conventional redemption which petitioner would want to apply to the present
situation. However, as We stated above, the agreement of the parties of
February 2, 1964, is not one of barter, exchange or even sale with right to
repurchase, but is one of or akin the other is the use or material ion or enjoyment
of each other's real property.
Usufruct may be constituted by the parties for any period of time and under such
conditions as they may deem convenient and beneficial subject to the provisions
of the Civil Code, Book II, Title VI on Usufruct. The manner of terminating or
extinguishing the right of usufruct is primarily determined by the stipulations of
the parties which in this case now before Us is the happening of the event
agreed upon. Necessarily, the plaintiff or respondent Obedencio could not
demand for the recovery of possession of the residential lot in question, not until
he acquired that right from his mother, Natividad Obedencio, and which he did
acquire when his mother donated to him the residential lot on October 4, 1974.
Even if We were to go along with petitioner in his argument that the fulfillment
of the condition cannot be left to an indefinite, uncertain period, nonetheless, in
the case at bar, the respondent, in whose favor the resolutory condition was
constituted, took immediate steps to terminate the right of petitioner herein to
the use of the lot. Obedencio's present complaint was filed in May of 1975,
barely several months after the property was donated to him.
One last point raised by petitioner is his alleged right to recover damages under
the agreement of February 2, 1964. In the absence of evidence, considering
that the parties agreed to submit the case for decision on a stipulation of facts,
We have no basis for awarding damages to petitioner.
However, We apply Art. 579 of the Civil Code and hold that petitioner will not
forfeit the improvement he built on the lot but may remove the same without
causing damage to the property.
Art. 579. The usufructuary may make on the property held in usufruct
such useful improvements or expenses for mere pleasure as he may
deem proper, provided he does not alter its form or substance; but he
shall have no right to be indemnified therefor. He may, however. He may,
however, removed such improvements, should it be possible to do so
without damage to the property. (Emphasis supplied)
Finally, We cannot close this case without touching on the unirrigated riceland
which admittedly is in the possession of Natividad Obedencio.
In view of our ruling that the "barter agreement" of February 2, 1964, did not
transfer the ownership of the respective properties mentioned therein, it follows
that petitioner Baluran remains the owner of the unirrigated riceland and is now
entitled to its Possession. With the happening of the resolutory condition
provided for in the agreement, the right of usufruct of the parties is extinguished
and each is entitled to a return of his property. it is true that Natividad Obedencio
who is now in possession of the property and who has been made a party to
this case cannot be ordered in this proceeding to surrender the riceland. But
inasmuch as reciprocal rights and obligations have arisen between the parties
to the so-called "barter agreement", We hold that the parties and for their
successors-in-interest are duty bound to effect a simultaneous transfer of the
respective properties if substance at justice is to be effected.
WHEREFORE, Judgment is hereby rendered: 1) declaring the petitioner
Avelino Baluran and respondent Antonio Obedencio the respective owners the
unirrigated riceland and residential lot mentioned in the "Barter Agreement" of
February 2, 1964; 2) ordering Avelino Baluran to vacate the residential lot and
removed improvements built by thereon, provided, however that he shall not be
compelled to do so unless the unirrigated riceland shall five been restored to his
possession either on volition of the party concerned or through judicial
proceedings which he may institute for the purpose.
Without pronouncement as to costs. So Ordered.
SUI MAN HUI CHAN and GONZALO CO, petitioners
vs.
HON. COURT OF APPEALS and OSCAR D. MEDALLA, respondents.
DECISION
QUISUMBING, J.:
For review on certiorari is the Decision1 dated May 3, 2001, of the Court of
Appeals in CA-G.R. SP No. 61889, affirming the Order2 dated January 11, 2000,
of the Regional Trial Court (RTC) of Mandaluyong City, Branch 213, in Civil
Case No. MC99-666, which had denied petitioners’ Motion to Dismiss the
complaint filed by private respondent.
The facts, as culled from records, are as follows:
On March 30, 1999, private respondent Oscar Medalla filed a complaint before
the RTC of Mandaluyong City, docketed as Civil Case No. MC99-666, for
collection of a sum of money arising from breach of a contract of lease and
damages, against petitioners Sui Man Hui Chan and Gonzalo Co.
The complaint alleged that on November 14, 1988, Napoleon C. Medalla as
lessor and Ramon Chan as lessee entered into a Lease Contract3 over a hotel
building located at No. 29 Abanao Street, Baguio City. Chan would use the
leased premises as a restaurant named "Cypress Inn". Pertinently, the parties
agreed on the following:
1. The period of lease shall be for ten (10) years or from 15 July 1988
to 15 July 1998.
2. The payment of the realty taxes due to the government on the
leased premises shall be for the account of the Lessee.
3. The agreement is binding upon the heirs and/or successors-in-
interest of the Lessor and the Lessee.
Petitioner Gonzalo Co was employed by Ramon Chan as the general manager
of "Cypress Inn" and acted as his agent in all his dealings with Napoleon
Medalla.
On August 5, 1989, Ramon Chan died. He was survived by his wife, petitioner
Sui Man Hui Chan, who continued to operate the restaurant.
On July 17, 1996, Napoleon Medalla died. Among his heirs is private respondent
Oscar Medalla, who succeeded him as owner and lessor of the leased
premises. The contract was neither amended nor terminated after the death of
the original parties but was continued by their respective successors-in-interest
pursuant to the terms thereof. Petitioners Chan and Co, the latter, in his capacity
as agent and general manager, continued to deal with private respondent
Medalla in all transactions pertaining to the contract.
On various occasions, petitioners failed to pay the monthly rentals due on the
leased premises. Despite several Statements of Accounts sent by Medalla,
petitioners failed to pay the rentals due but, nonetheless, continued to use and
occupy the leased premises.
On February 26, 1997, Medalla sent a letter addressed to Ramon Chan,
indicating that (1) the contract of lease would expire on July 15, 1998, and (2)
he was not amenable to a renewal of said contract after its expiration.
Medalla then sent demand letters to petitioners, but the latter still failed to pay
the unpaid rentals. He also found out that petitioners had not paid the realty
taxes due on the leased premises since 1991, amounting to ₱610,019.11.
Medalla then asked petitioners to settle the unpaid rentals, pay the unpaid real
estate taxes, and vacate the leased premises.
On January 1999, petitioners vacated the premises but without paying their
unpaid rentals and realty taxes. Aggrieved by petitioners’ refusal to pay the
amounts owing, which had reached ₱4,147,901.80 by March 1999, private
respondent Medalla instituted Civil Case No. MC99-666.
In their Answer to the Complaint, petitioners denied owing private respondent a successor-in-interest to the restaurant business of the late Ramon Chan. Both
the amounts claimed by the latter. They alleged that the late Ramon Chan had continued to operate the business after the death of Ramon. Thus, they are real
paid all the rentals due up to March 15, 1998. Moreover, they need not pay any parties-in-interest in the case filed by private respondent, notwithstanding that
balance owing on the rentals as they were required to pay two (2) months they are not signatories to the Contract of Lease.
advance rentals upon signing of the contract and make a guarantee deposit A lease contract is not essentially personal in character. Thus, the rights and
amounting to ₱220,000. On the matter of unpaid realty taxes, petitioners alleged obligations therein are transmissible to the heirs.11 The general rule, therefore,
that private respondent was responsible therefor as the owner of the leased is that heirs are bound by contracts entered into by their predecessors-in-
premises, notwithstanding any contrary stipulations in the contract. interest except when the rights and obligations arising therefrom are not
On July 19, 1999, petitioners filed a Supplemental Answer with Motion to transmissible by (1) their nature, (2) stipulation or (3) provision of law.12 In the
Dismiss alleging that they were neither parties nor privies to the Contract of subject Contract of Lease, not only were there no stipulations prohibiting any
Lease, hence they are not the real parties-in-interest. transmission of rights, but its very terms and conditions explicitly provided for
Private respondent filed a Reply and Opposition to petitioners’ Supplemental the transmission of the rights of the lessor and of the lessee to their respective
Answer with Motion to Dismiss dated August 2, 1999, praying for the denial of heirs and successors. The contract is the law between the parties. The death of
the Motion to Dismiss for having been belatedly filed in direct contravention of a party does not excuse nonperformance of a contract, which involves a
Section 1, Rule 16, of the 1997 Rules of Civil Procedure. 4 He further alleged property right, and the rights and obligations thereunder pass to the successors
that petitioner Chan, as the owner of the business and petitioner Co as the agent or representatives of the deceased. Similarly, nonperformance is not excused
of petitioner Chan, are clearly real parties-in-interest in the case. Private by the death of the party when the other party has a property interest in the
respondent pointed to their continuous dealings with him in all transactions subject matter of the contract.13
relating to the contract after the death of Ramon Chan and even after the Finally, as to petitioners’ contention that any claim should have been filed before
expiration of the Contract of Lease. the estate proceeding of Ramon Chan pursuant to Section 5 of Rule 86, the trial
On January 11, 2000, the RTC denied petitioners’ Motion to Dismiss, thus: court found that the unpaid rentals sought to be claimed were for the period April
WHEREFORE, in view of the foregoing, the motion to dismiss dated July 19, 1993 to December 1998. Note that Ramon Chan, the original lessee, died on
1999 filed by defendant through counsel against plaintiff is hereby DENIED for August 5, 1989. In other words, as the unpaid rentals did not accrue during the
lack of merit. lifetime of Ramon Chan, but well after his death, his estate might not be held
SO ORDERED.5 liable for them. Hence, there is no indubitable basis to apply Section 5, Rule 86,
The trial court pointed out that petitioners continued to transact business with of the Revised Rules of Court as petitioners urge respondents to do.
private respondent after the death of Ramon Chan as shown by the WHEREFORE, the instant petition is DENIED and the Decision of the Court of
communications between the parties. It also declared that private respondent’s Appeals in CA-G.R. SP. No. 61889 is AFFIRMED. Costs against petitioners.
acquiescence to petitioners’ continued occupation and enjoyment of the leased SO ORDERED.
premises and the latter’s recognition of the former’s ownership of said premises
reflected an oral agreement between the parties to continue the Lease Contract.
Petitioners moved for reconsideration on the ground that any claim should be
filed against the estate of Ramon Chan in an estate proceeding pursuant to
Section 5, Rule 86, of the Revised Rules of Court6 since Ramon Chan’s estate
is the real party-in-interest. The court denied said motion and declared that
Section 5, Rule 86 is inapplicable in the case. It pointed out that the unpaid
rentals being claimed were those for the period April 1993 to December 1998.
These were incurred by petitioners and not by the late Ramon Chan, who died
on August 5, 1989.
Dissatisfied, petitioners elevated the matter to the Court of Appeals through a
special civil action of certiorari, docketed as CA-G.R. SP No. 61889. The Court
of Appeals, however, affirmed the RTC Orders, as follows:
WHEREFORE, foregoing premises considered, the petition having no merit in
fact and in law is hereby DENIED DUE COURSE and ACCORDINGLY
ORDERED DISMISSED. The assailed Orders are resultantly AFFIRMED WITH
COSTS TO PETITIONERS.
SO ORDERED.7
Hence, the instant petition submitting as sole issue for our resolution:
whether or not respondent Court of Appeals committed serious error in law in
affirming the RTC Orders denying petitioners’ motion to dismiss and the
subsequent motion for reconsideration.8
Petitioners argue that the Court of Appeals erred in affirming the RTC’s Orders
because they are not the real parties-in-interest and hence, were improperly
impleaded in the complaint as defendants. Petitioners insist that they were
neither parties nor were they privy to the Contract of Lease between the late
Ramon Chan and Napoleon Medalla. They vigorously assert that any claim for
unpaid rentals should be made against the estate of Ramon Chan pursuant to
Section 5, Rule 86 of the Revised Rules of Court.
We find for private respondent. Prefatorily, it bears stressing that petitioners’
Motion to Dismiss was filed after an Answer had already been filed. This alone
warranted an outright dismissal of the motion for having been filed in
contravention of the clear and explicit mandate of Section 1, Rule 16, of the
Revised Rules of Civil Procedure. Under this section, a motion to dismiss shall
be filed within the time for but before filing the answer to the complaint or
pleading asserting a claim.9 Here, petitioners filed their Supplemental Answer
with Motion to Dismiss almost two months after filing their Answer, in clear
contravention of the aforecited rule.
The Court of Appeals stated that the grant or denial of a Motion to Dismiss is an
interlocutory order, and it cannot be the proper subject of a special civil action
for certiorari. The proper remedy in such a case is to appeal after a decision has
been rendered, the CA said. A writ of certiorari is not intended to correct every
controversial interlocutory ruling; it is resorted to only to correct a grave abuse
of discretion or a whimsical exercise of judgment equivalent to lack or excess of
jurisdiction. The function of a petition for certiorari is limited to keeping an
inferior court within the bounds of its jurisdiction and to relieve persons from
arbitrary acts, acts which courts or judges have no power or authority in law to
perform. Certiorari is not designed to correct erroneous findings and
conclusions made by the court.10 On this score, we are in agreement with the
appellate court.
At any rate, we find no merit to petitioners’ contention that they are not real
parties-in-interest since they are not parties nor signatories to the contract and
hence should not have been impleaded as defendants. It is undeniable that
petitioner Chan is an heir of Ramon Chan and, together with petitioner Co, was