The document discusses a legal case involving a foreclosure of property obtained through a homestead patent, with two main issues regarding the redemption period: whether it is two years as per the rural banks' act or five years as per the public land act, and the entitlements of a homesteader during government expropriation. The trial court ruled in favor of the homesteaders, allowing them the right to repurchase the property within the longer five-year period. This decision was affirmed by the court of appeals, emphasizing the special nature of public land laws concerning homesteaded properties.

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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superseded or repealed the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

2. Page 2 of 52
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
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

3. Page 3 of 52
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:
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

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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. BancoNacional 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
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

5. Page 5 of 52
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
taking of the property, it is but fair, fitting and
proper, that this amount be paid to plaintiffs-
appellees as the just compensation for their
property. To hand over this amount to the Rural
Bank would be to unjustly enrich the rural bank at
the expense of the plaintiffs who have less in life. 8
Its motion for reconsideration of the above decision having been
denied by the respondent Court in the Resolution of 17 May
1988, 9 the petitioner availed of this recourse and reiterates the
same errors it had raised before the respondent Court, to wit:
1. THE LOWER COURT ERRED IN DECLARING THAT
PLAINTIFFS-APPELLEES ARE ENTITLED TO THE
PRICE PAID BY THE NATIONAL HOUSING AUTHORITY
FOR THE PROPERTY IN QUESTION AND IN
ORDERING THE DEFENDANT-APPELLANT TO PAY OR
REMIT TO PLAINTIFFS-APPELLEES THE SUM OF
P435,117.00, THE REMAINING BALANCE OF SAID
PRICE OF THE PROPERTY PAID BY THE NATIONAL
HOUSING AUTHORITY AFTER DEDUCTING THE
OBLIGATION OF PLAINTIFFS-APPELLEES IN THE SUM
OF P54,883.00.
2. THE LOWER COURT ERRED IN NOT HOLDING
THAT PLAINTIFFS-APPELLEES' RIGHT TO
REPURCHASE UNDER SECTION 119 OF
COMMONWEALTH ACT NO. 141, AS AMENDED,
OTHERWISE KNOWN AS THE PUBLIC LANDS (sic)
ACT, IS ONLY LIMITED TO THE LAND ITSELF.
3. THE LOWER COURT ERRED IN NOT HOLDING
THAT THE ACT OF PLAINTIFFS-APPELLEES IN
TRYING TO REPURCHASE THE PROPERTY IN
QUESTION, OR, IN THE ALTERNATIVE, IN TRYING
TO RECOVER THE PROCEEDS OF THE SALE OR PRICE
THEREOF, IS PURELY SPECULATIVE IN NATURE.
4. THE LOWER COURT ERRED IN FINDING
DEFENDANT-APPELLANT LIABLE FOR INTEREST,
ATTORNEY'S FEES AND COSTS. 10
which may be reduced to the two (2) principal issues adverted to in
the exordium of this ponencia.

6. Page 6 of 52
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
him. It would, therefore, be in keeping with this
fundamental idea to hold, as we hold, that the right
to repurchase exists not only when the original
homesteader makes the conveyance, but also when
it is made by his widows or heirs. This construction is
clearly deducible from the terms of the statute.
As pointedly stated earlier in Jocson vs. Soriano, 13 in connection
with homestead statutes:
Acts Nos. 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. 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. Their object is to provide
a home for each citizen of the Government, where
his family may shelter and live beyond the reach of
financial misfortune, and to inculcate in individuals
those feelings of independence which are essential to
the maintenance of free institutions. Furthermore,
the state itself is concerned that the citizens shall not
be divested of a means of support, and reduced to
pauperism. (Cook and Burgwall vs. McChristian, 4
Cal., 24; Franklin vs. Coffee, 70 Am. Dec., 292;
Richardson vs. Woodward, 104 Fed. Rep., 873; 2l
Cyc., 459).
The conservation of a family home is the purpose of
homestead laws. The policy of the state is to foster
families as the factors of society, and thus promote
general welfare. The sentiment of patriotism and
independence, the spirit of free citizenship, the
feeling of interest in public affairs, are cultivated and
fostered more readily when the citizen lives
permanently in his own home, with a sense of its
protection and durability. (Waples on Homestead and
Exemptions, p. 3)
Because of such underlying policy and reason, the right to
repurchase under Section 119 cannot be waived by the party
entitled thereto, and applies with equal force to both voluntary and
involuntary conveyances. 14 And, as early as 1951, in Cassion vs.

7. Page 7 of 52
BancoNacional Filipino, 15 this Court declared that such right is
available in foreclosure sales of lands covered by a homestead or
free patent. Consistently therewith, 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.
We thus have consistent pronouncements in Paras vs. Court of
Appeals, 16 Oliva vs. Lamadrid, 17 Belisario vs. Intermediate
Appellate Court 18 and Philippine National Bank vs. De los
Reyes. 19These cases, with the exception of Oliva, involved the
question of which between the five (5) year repurchase period
provided in Section 119 of C.A. No. 141 20 or the one (1) year
redemption period under Act No. 3135 should prevail.
While Oliva is the only case, among those cited, that involves the
Rural Banks' Act, 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.e., to resolutely and unqualifiedly apply the
5-year period provided for in Section 119 of C.A. No. 141 and, as
categorically stated inParas and Belisario, to reckon the
commencement of the said period from the expiration of the one-
year period of redemption allowed in extrajudicial foreclosures. If
such be the case in foreclosure sales of lands mortgaged to banks
other than rural banks, then, by reason of the express policy
behind the Rural Banks' Act, 21 and following the rationale of Our
ruling in Oliva, 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.A. No. 141. Moreover, if this
Court is to be consistent with Paras and Belisario, the 5-year
repurchase period under C.A. No. 141 should begin to run only
from the expiration of the 2-year period under the Rural Banks'
Act. It may be observed in this connection thatOliva was decided in
31 October 1967, before the Rural Banks' Act, as amended by R.A.
No. 2670, was further amended by R.A. No. 5939. 22 As amended
by R.A. No. 2670, the pertinent portion of Section 5 only reads as
follows:
Sec. 5. . . . Provided, That when a land not covered
by a Torrens Title, a homestead or free patent land is
foreclosed, the homesteader or free patent holder,
as well as their heirs shall have the right to redeem
the same within two years from the date of
foreclosure: . . .
As amended later by R.A. No. 5939, it reads:
Sec. 5. . . . Provided, That when a homestead or free
patent land is foreclosed, the homesteader or free
patent holder, 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: . . . .
The amendment clarifies the rather vague language of Section 5 as
amended by R.A. No. 2670. The ambiguity lies in the fact that
although the latter seems to speak of three (3) classes of lands,
namely (a) those not covered by a Torrens title, (b) homestead
lands and (c) free patent lands, the two-year redemption period
may only be enjoyed by the homesteader, the free patent holder or
their heirs. Moreover, the clause does not clarify whether the
land not covered by a Torrens title refers to unregistered land
merely, or includes land acquired by a homestead or free patent
not yet issued certificates of title under the Torrens system. As
amended, however, by R.A. No. 5939, land acquired under the free
patent or homestead patent statutes may be redeemed within a
two-year period; however, the commencement of said period is
reckoned from the date of foreclosure, if such land is not yet
covered by the Torrens title, or from the registration of the
foreclosure — meaning, the certificate of sale — if it is already
covered by a Torrens title.
Thus, following the clear intent of Oliva, since private respondents'
foreclosed property was acquired under the homestead laws, they
had two (2) years from 7 December 1979 — when the certificate of
sale was registered — or until 7 December 1981, within which to
redeem the land. And, pursuant to Section 119 of C.A. No. 141,
they had five (5) years from 7 December 1981 within which to
repurchase it. Since the private respondents' offer to repurchase
was made well within the said 5-year period, the two (2) courts
below correctly ruled in their favor.

8. Page 8 of 52
Furthermore, We wish to stress here that We are unable to read in
Section 5 of R.A. No. 720, as amended, any legislative intent to
modify or repeal Section 119 of the Public Land Act. Each speaks of
and deals with a different right. Specifically, 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. 3135, as amended by Act No. 4118, to two
(2) years insofar as lands acquired under free patent and
homestead statutes are concerned. The second speaks of the right
to repurchase and prescribes the period within which it may be
exercised. These two (2) rights are by no means synonymous.
Under Act No. 3135, the purchaser in a foreclosure sale has, during
the redemption period, only an inchoate right and not the absolute
right to the property with all the accompanying incidents. 23 He
only becomes an absolute owner of the property if it is not
redeemed during the redemption period. 24 Upon the other hand,
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. Thus, in Paras vs. Court of
Appeals, 25 this Court, adverting to Gonzalez vs.
Calimbas, 26 stated:
After a careful study of the point raised in the
present appeal by certiorari, 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, begins not at the date
of the sale when merely a certificate is issued by the
Sheriff or other official, but rather on the day after
the expiration of the period of repurchase, 27 when
deed of absolute sale is executed and the property
formally transferred to the purchaser. As this Court
said in the case of Gonzales (sic) vs. Calimbas and
Poblete, 51 Phil., 355, the certificate of sale issued to
the purchaser at an auction sale is intended to be a
mere memorandum of the purchase. It does not
transfer the property but merely identifies the
purchaser and the property, states the price paid and
the date when the right of redemption expires. The
effective conveyance is made by the deed of
absolute sale executed after the expiration of the
period of redemption.
As a consequence of the inchoate character of the right during the
redemption period, Act No. 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, 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.
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, the former has become
the absolute owner thereof. 28
Thus, 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.A. No. 720, as amended, 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,
respectively, by a Torrens title. If the mortgagor fails to exercise
such right, 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.A. No.
141). If the land is mortgaged to parties other than rural banks,
the mortgagor may redeem the property within one (1) year from
the registration of the certificate of sale pursuant to Act No. 3135.
If he fails to do so, 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.
The expropriation of the land in question by the NHA is of no
moment. The expropriation case was begun before the foreclosure
sale and was brought against the private respondents, among
other parties. 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. Although
the petitioner had a Transfer Certificate of Title over the lot at the

9. Page 9 of 52
time of payment, its right thereto was subject to the private
respondents' right to repurchase. Since the private respondents
seasonably exercised said right, the petitioner was under the
obligation to restore to the former the compensation paid by the
NHA, which in effect replaced or substituted for the land. From
such amount should be subtracted, however, the repurchase price.
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, is without
merit. This is so because if, instead of having been expropriated,
the land was sold to other parties, the private respondents could
still have repurchased the same from the subsequent
vendees. 29 But since the land was expropriated by the
Government, and the private respondents could no longer
repurchase the same, reason, justice and equity demand that they
receive the compensation therefor less the amount adverted to
above, for such compensation merely substitutes for the land they
are entitled to.
WHEREFORE, the instant petition is DENIED, with costs against
petitioner.
The decision is immediately executory.
SO ORDERED.
Gutierrez, Jr., Bidin, Romero and Melo, JJ., concur.
G.R. No. 86044 July 2, 1990
VICTORINO TORRES, petitioner,
vs.
LEON VENTURA, respondent.
GANCAYCO, J.:
This nation has a wealth of laws on agrarian reform. 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.
Yet, despite such laws, it is a fact that the agrarian problems which
beset our nation have remained unsolved. Majority of our farmers
still live a hand-to-mouth existence. The clamor for change has not
died down.
One need not go far in order to search for the reason behind this.
We all know that our beautifully-worded agrarian laws have never
really been effectively implemented. Unscrupulous individuals have
found various ways in order to get around the laws. Loopholes in
the law and the ignorance of the poor farmers have been taken
advantage of by them. Consequently, 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.
We must put a stop to this vicious cycle and the time to do it is
now.
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. This also holds that agrarian laws are to
be liberally construed in favor of the farmer-beneficiary. 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.
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. 27 was
promulgated, or to private respondent in whose favor petitioner
transferred his rights over the land in consideration of P5,000.00.
The following facts can be gathered from the records of this case:
Petitioner was the leasehold tenant of a 4,000 square-meter parcel
of land included in the Florencio Firme Estate and located at
Caloocan, Cabatuan, Isabela. In 1972, when Presidential Decree

10. Page 10 of 52
No. 27 was signed into law, petitioner was the tiller of the
aforementioned piece of land and was automatically deemed owner
of the property. Under Presidential Decree No. 27, any form of
transfer of those lands within the coverage of the law is prohibited
except as otherwise provided therein.
In 1978, urgently in need of money, petitioner was forced to enter
into what is called a "selda" agreement, with private respondent,
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 P5,000.00 to be paid not earlier than 1980. As
part of the agreement, petitioner signed an "Affidavit of Waiver"
whereby he waived all his rights over the property in favor of
private respondent. According to petitioner, it was also agreed
upon by them that upon the payment of the loaned amount,
private respondent will deliver possession and enjoyment of the
property back to petitioner.
Two years later or in 1980, 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.
Because of this, the money being offered by petitioner to pay for
the loan was utilized for other purposes. In 1981, though petitioner
really wanted to get the property back, he could not do so because
he lacked the necessary funds. 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.
Hence, petitioner filed a complaint with the barangay captain of
Magsaysay, Cabatuan, Isabela stating therein that he mortgaged
his land to private respondent and that he already wanted to
redeem it. On the scheduled date of hearing, private respondent
failed to appear.
Upon the issuance by the barangay captain of a certificate to file
action, petitioner filed a complaint with the Regional Trial Court of
Cauayan, Isabela for the recovery of possession of the parcel of
land in question. After due trial, the said court rendered a decision
in favor of petitioner with the following dispositive portion:
WHEREFORE, in view of the foregoing considerations,
judgment is hereby rendered:
(1) DECLARING the affidavit of waiver (Exh. 1)
executed by the plaintiff waiving his right as a
leasehold tenant to the defendant null and void;
(2) ORDERING the defendant, his agents, tenants or
any person or persons acting on his behalf to deliver
immediately the possession of the land in question to
the plaintiff;
(3) DECLARING the loan of P5,000.00 received by
the plaintiff from the defendant in 1979 including
interest thereon considered paid as of December 1,
1983;
(4) ORDERING the defendant to pay the plaintiff
total damages and in the amount of P5,200.00 up to
December 1, 1986; and
(5) ORDERING the defendant to pay the plaintiff 6
cavans of palay at 50 kilos per planting season from
December 1, 1986, or their equivalent at the NFA
price of P3.50 per kilo, until the possession of the
land in question is delivered to the plaintiff. 1
On appeal to the Court of Appeals, the decision of the trial
court was reversed. Hence, this petition for review
on certiorari. 2
Taking into consideration the circumstances surrounding this case
and bearing in mind the constitutional mandate on the promotion
of agrarian reform, We rule in favor of petitioner.
It is not disputed by private respondent that petitioner was in fact
the tiller of the subject land when Presidential Decree No. 27 was
promulgated in 1972. As a consequence of the law, petitioner was
granted the right to possess and enjoy the property for himself.

11. Page 11 of 52
The conflict arose when petitioner, by force of circumstances,
transferred possession of his land to private respondent in
consideration of a sum certain. As to what was actually the
contract that was entered upon is being contested by the two
parties herein. 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.
The stand of private respondent, on the other hand, is that
petitioner relinquished all his rights over the property in his favor,
as expressly written in the Affidavit of Waiver that petitioner
signed.
In its decision, 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. 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. 27. The Court of Appeals, on the other hand, believed
that petitioner completely waived his rights over the land as
evidenced by the Affidavit of Waiver he executed. According to the
Court of Appeals, the said Affidavit of Waiver is valid because at
the time of its execution, petitioner was not yet the owner of the
land there having been no title issued to him yet. As such,
continued the Court of Appeals, the Affidavit of Waiver did not
violate Presidential Decree No. 27. The Court of Appeals further
added that petitioner abandoned his landholding and received
benefits under the agreement, hence, should not be rewarded at
the expense of private respondent.
After a careful scrutiny of the two conflicting decisions and an
exhaustive study of the laws and jurisprudence applicable to this
case, We affirm the judgment of the trial court. First, of all, 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. It need not be stressed that in the matter of credibility
of witnesses, We rely heavily on the findings of the trial court
because it had the opportunity to meet them face to face. As the
trial court observed, petitioner's version is more convincing
because of the apparent evasive attitude of private respondent as
compared to the candid testimony of the petitioner. 3
Indeed, We find it hard to believe that petitioner, who has been
tilling the land in question for a long, 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. Furthermore, if the situation were otherwise, 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. 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.
Petitioner, or anyone in his right mind for that matter, would not
waste his time, effort and money, especially if he is poor, to
prosecute an unworthy action. If at all, petitioner is an example of
a poor tenant farmer who, due to sheer poverty, was constrained
to mortgage his only land 4 to somebody else 5 — situation which
Presidential Decree No. 27 sought to prevent by providing an
explicit prohibition on transfers.
The above finding notwithstanding, and assuming that petitioner
really waived his tenancy rights in favor of private respondent, this
case should still be resolved against private respondent. The
transfer would still be void for being made in violation of
Presidential Decree No. 27.
We shall now take a closer look at the law.
Presidential Decree No. 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. 6 The law points out that reformation must start
with the emancipation of the tiller from the bondage of the soil. 7
The fundamental policy of the law is reflected in its title, to wit:
PRESIDENTIAL DECREE NO. 27 — DECREEING THE EMANCIPATION
OF TENANT FROM THE BONDAGE OF THE SOIL, TRANSFERRING TO
THEM THE OWNERSHIP OF THE LAND THEY TILL AND PROVIDING
THE INSTRUMENTS AND MECHANISM THEREFOR. This policy is
intended to be given effect by the following provisions:
xxxxxxxxx

12. Page 12 of 52
The tenant farmer, whether in land classified as
landed estate or not, 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).
xxxxxxxxx
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, the
Code of Agrarian Reforms and other existing laws
and regulations; (Emphasis supplied).
xxxxxxxxx 8
The law is clear and leaves no room for doubt. Upon the
promulgation of Presidential Decree No. 27 on October 21, 1972,
petitioner was DEEMED OWNER of the land in question. As of that
date, he was declared emancipated from the bondage of the soil.
As such, he gained the rights to possess, cultivate, and enjoy the
landholding for himself. Those rights over that particular property
were granted by the government to him and to no other. To insure
his continued possession and enjoyment of the property, he could
not, under the law, make any valid form of transfer except to the
government or by hereditary succession, to his successors.
Yet, it is a fact that despite the prohibition, many farmer-
beneficiaries like petitioner herein were tempted to make use of
their land to acquire much needed money. Hence, the then Ministry
of Agrarian Reform issued the following Memorandum Circular:
Despite the above prohibition, however, there are
reports that many farmer-beneficiaries of PD 27
havetransferred the ownership, rights, and/or
possession of their farms/homelots to other persons
or have surrendered the same to their former
landowners. All these transactions/surrenders are
violative of PD 27 and therefore, null and
void. 9 (Emphasis supplied.)
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. With
regard to the legal prohibition, 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. 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.
Following this, absolute title over lands covered by Presidential
Decree No. 27 would end up in the name of persons who were not
the actual tillers when the law was promulgated.
Furthermore, the evidence on hand shows that Certificate of Land
Transfer No. 096267 covering the land in question is in the name
of petitioner Victorino Torres. 10 This is admitted by private
respondent. 11 In Gloria de Oliver vs. Sisenando Cruz, et al., 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.
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.
Having settled that the contract of transfer entered into between
petitioner and private respondent is void ab initio, We now go to
the issue of whether or not the principle of pari delicto 13 applies to
this case. We rule in the negative. Public policy and the policy of
the law must prevail. To hold otherwise will defeat the spirit and
intent of Presidential Decree No. 27 and the tillers will never be
emancipated from the bondage of the soil.
In Catalina de los Santos vs. Roman Catholic Church, 14 this Court
ruled that the pari delicto doctrine is not applicable to a homestead

13. Page 13 of 52
which has been illegally sold in violation of the homestead law. 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.
In Acierto, et al. vs. De los Santos, et al., 15 where the principle
was reiterated, this Court, through Justice Alex Reyes, made the
following pronouncement:
Appellants, however, 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, and that, 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, plaintiffs may no longer
claim the homestead. Similar contentions were made
in the case of Catalina de los Santos vs. Roman
Catholic Church of Midsayap et al., G.R. No.
L-6088, decided February 25, 1954, but they were
there overruled, this Court holding that
the paridelictodoctrine may not be invoked in a case
of this kind since it would run counter to an avowed
fundamental policy of the State, that the forfeiture of
the homestead is a matter between the State and
the grantee or his heirs, and that until the State had
taken steps to annul the grant and asserts title to
the homestead the purchaser is, as against the
vendor or his heirs "no more entitled to keep the
land than any intruder. 16
The pronouncements in the two above-mentioned cases were
adopted by this Court in Angeles, et al. vs. Court of Appeals, 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.
In view of all the foregoing, We hold that the contract, being
void ab initio, must be given no effect at all. 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.
WHEREFORE, the Decision of the Court of Appeals in CA-G.R. CV
No. 15482 is REVERSED AND SET ASIDE. The Decision of the
Regional Trial Court of Cauayan, Isabela in Civil Case No. Br. XIX-
167 is hereby ordered REINSTATED. Costs against private
respondent.
SO ORDERED.
Narvasa, C.J., Cruz, Griño-Aquino and Medialdea, JJ., concur.
G.R. No. L-48458 November 7, 1941
THE PEOPLE OF THE PHILIPPINES, plaintiff-appellee,
vs.
FIDEL FORTUNO, defendant-appellee.
Armando Magpayo for the appellant.
Acting First Assistant Solicitor-General Amparo and Assistant
Solicitor-General Kapunan, for the appellee.
MORAN, J.:
Defendant Fidel Fortuno rented from "El Hogar Filipino" a room in
the Crystal Arcade; and the rental having become due, he issued in
favor of the latter a check for P60 drawn against the Bank of the
Commonwealth. This check was, upon representation to the bank
for payment, dishonored for lack of funds. An information
for estafawas presented against the defendant in the municipal
court of Manila where, 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.
Defendant appealed to the Court of First Instance where, after
entering a plea of not guilty and thereafter substituting the same
with the plea of guilty, he was sentenced to the same penalty
imposed by the municipal court. Defendant interposed appeal from
this judgment.
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, does not constitute the crime

14. Page 14 of 52
of estafa if the check was intended as payment of a pre-existing
obligation, as in the instant case. The reason for this rule is that
deceit, to constitute estafa, should be the efficient cause of the
defraudation and as such should be prior to, simultaneous with, the
act of fraud. (Cf. People vs. Liluis, 59 Phil., 339, 342;
People vs. Quesada, 60 Phil., 515 520.)
Defendant's plea of guilty is of no moment. Such plea constitutes a
mere admission of the material allegations of the information but
not that the facts thus alleged constitute an offense.
Judgment is reversed and the defendant is hereby acquitted with
costs de oficio.
Abad Santos, Diaz, Horilleno, and Ozaeta, JJ., concur.
G.R. No. L-19012 October 30, 1967
VICTORIA JULIO, plaintiff-appellant,
vs.
EMILIANO DALANDAN and MARIA DALANDAN, defendants-
appellees.
Pedro Magsalin and O.M. Herrera for plaintiff-appellant.
Cornelio R. Magsarili for defendants-appellees.
SANCHEZ, J.:
Disputing the correctness of the lower court's order of April 29,
1961 dismissing the complaint, plaintiff elevated the case1 to this
Court on appeal.
Plaintiff's complaint — which defendants, by a motion to dismiss,
successfully overturned in the court below — is planted upon a
document Annex "A" of the complaint, labeled in the national
language "SALAYSAY" (Statement). It was in the form of an
affidavit subscribed and sworn to by one Clemente Dalandan on
September 8, 1950. By the terms of this writing, Clemente
Dalandan, deceased father of defendants Emiliano and Maria
Dalandan, acknowledged that a four-hectare piece of riceland in
Las acknowledged that a four-hectare piece of riceland in Las
Piñas, Rizal belonging to Victoriana Dalandan, whose only child and
heir is plaintiff Victoria Julio, was posted as security for an
obligation which he, Clemente Dalandan, assumed but, however,
failed to fulfill. The result was that Victoriana's said land was
foreclosed. The key provisions of said document are:2
3. Na anglupangpalayangitonapagaarini VICTORIANA
DALANDAN at sakasalukuyan ay walangibangtagapagmana
kung di si VICTORIA JULIO, ay napafianzasa akin
nuongbago pa dumatinganghulingdigmaan at
dahilsahindiakonakatupadsaakingpananagutangnasasagutan
ngbukidniyangito ay naembargoangnasabiniyanglupa;
[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;]
4. Na dahildito ay akosamakatuwid ay nanagotsakanya
(VICTORIA JULIO), sapagkakaembargonglupaniyangiyong
kung kaya'tnagkasundo kami naako ay
nanagotsakanyasapagkaembargongiyon at
ipinangakokosakanyanaanglupaniyangiyonnanaembargongd
ahilsaakingpananagutan ay akingpapalitanngbukid din na
may mahigitna APAT (4) nahectarea (o humigitkumulangsa
APAT NA KABANG BINHI);
[That because of this, and as agreed upon between us, I
accordingly held myself liable to Victoria Julio for the
foreclosure of her said land, 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; (4)
hectares, that is, one planted to four cavanes of seedlings,
more or less;]
5. Na hindimaaringpilitinangakingmgaanak (EMILIANO AT
MARIA DALANDAN),
nahinginanganingbukidnanabangitsaitaasngsalaysaynaito;

15. Page 15 of 52
[That my children (EMILIANO AND MARIA DALANDAN) may
not be forced to give up the harvest of the farm herein
above mentioned;]
6. Na
hindirinmaaringhinginkaaggadsalalongmadalingpanahonang
kapalitngbukidna may apatnakabangbinhi;
[That neither may the land — which was exchanged for the
farm with four cavanes of seedlings — be demanded
immediately;]
Victoria Julio, in turn, joined Clemente Dalandan in the execution
of, and also swore to, the said document, in this wise:
Na, ako VICTORIA JULIO,
nabinabanggitsaitaasnitosasalaysayni CLEMENTE
DALANDAN, ay
nagpapatunaynatutoonglahatangkanyangsalaysaynaiyon at
tinatanggapkoangkanyangmgasinasabi.
[That I, VICTORIA JULIO, mentioned in the above statement
of CLEMENTE DALANDAN, attest to the truth of, and accept,
all that he stated therein.]
Back to the complaint herein. Plaintiff went on to aver that the land
of Clemente Dalandan set forth in the document, Annex "A" of the
complaint, 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), 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 after the death of Clemente Dalandan, plaintiff requested from
defendants, Clemente's legitimate and surviving heirs who
succeeded in the possession of the land thus conveyed, to deliver
the same to her; that defendants "insisted that according to the
agreement", neither delivery of the land nor the fruits thereof could
immediately be demanded, and that "plaintiff acceded to this
contention of defendants and allowed them to continue to remain
in possession" thereof; 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, plaintiff prayed
for judgment against defendants:
(a) Adjudging the herein plaintiff as owner of the land
described in paragraph 4 hereof;
(b) Fixing a time within which defendants should deliver the
said parcels of land to the herein plaintiff as well as the
fruits 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;
(d) Ordering the defendants to pay the plaintiff the sum of
P2,000.00 as attorneys' fees;
(e) Ordering the defendants to pay the costs of the suit;
and granting such other relief and remedy as may be just
and equitable in the premises.
Defendants met the complaint with a motion to dismiss grounded
on: (1) prescription of plaintiff's action; (2) pendency of another
suit between the same parties for the same cause; and (3) release
and/or abandonment of the claim set forth in plaintiff's complaint.
By its order of April 29, 1961, the lower court ruled that plaintiff's
suit, viewed either as an action for specific performance or for the
fixing of a term, had prescribed. Reason: the 10-year period from
the date of the document had elapsed. The lower court found it
unnecessary to pass upon the other grounds for the motion to
dismiss. Hence, this appeal.
1. The threshold problem, basic to an understand of the issues
herein involved, is the meaning to be attached to the document
now under review. Undoubtedly, bad more felicitous terms been
employed, the intention of the parties could easily be read.

16. Page 16 of 52
Unfortunately, ineptness of expression exacts of us an examination
of the document. Familiar rules of interpretation of documents tell
us that in ascertaining the intention of the parties, the contents
thereof should not be interpreted piecemeal; all parts, provisions or
terms are to be considered; each paragraph clause or phrase must
be read not in isolation, but in the light of the entire writing;
doubtful ones should be given that sense which may result from all
of them, considered as a whole. Such construction will be adopted
as will result from an overall view of the document itself.
It is, in this perspective that we now look into the writing.
Adverting to paragraph 4 of the deed, 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. But this view loses sight of the later provisions thereof.
By paragraph 5, Clemente's children may not be forced to give up
the harvest of the farm mentioned in the deed. This was followed
by paragraph 6 which states that Victoria Julio may not
immediately demand the substitute (kapalit) for the forfeited land.
These last two statements in the deed express the dominant
purpose of the instrument. They convey the idea that the naked
ownership of the land in substitution was, indeed, transferred to
Victoria Julio. 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, the herein defendants. For, the right to demand fruits and
physical possession of property has been known to be attributes of
ownership.
The disputed complaint in paragraphs 6 and 7 thereof, in essence,
avers plaintiff's request for the delivery of the real property;
defendants' answer that "according to the agreement" neither land
nor fruits thereof could immediately be taken away from them, and
plaintiff's conformity thereto; and plaintiff's demands that the
period for delivery be fixed and defendants' refusal.
The allegations of the complaint just noted carry us to another
aspect of the document: defendants' rights over the land vis-a-
visplaintiff's. What rights were transmitted to defendants by their
father, Clemente Dalandan? Paragraphs 6 and 7 of the document
supply the answer. They are usufructuaries for an undetermined
length of time. For so long as that period has not been fixed and
has not elapsed, they hold the property. Theirs is to enjoy the
fruits of the land and to hold the same as trustees of Victoria Julio.
And this because, by the deed, Clemente Dalandan divested
himself of the ownership — qualified solely by withholding
enjoyment of the fruits and physical possession. In consequence,
Clemente Dalandan cannot transmit to his heirs, the present
defendants, such ownership.3 Nemodat quod non habet. And then,
the document is a declaration by Clemente Dalandan, now
deceased, against his own proprietary interests. Such document is
binding upon his heirs.4
2. But, defendants aver that recognition of the trust may not be
proved by evidence aliunde. They argue that by the express terms
of Article 1443 of the Civil Code, "[n]o express trusts concerning an
immovable or any interest therein may be proved by parol
evidence." This argument overlooks the fact that no oral evidence
is necessary. The express trust imposed upon defendants by their
predecessor appears in the document itself. For, while it is true
that said deed did not in definitive words institute defendants as
trustees, 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. Not that this view is without statutory
support. Article 1444 of the Civil Code states that: "No particular
words are required for the creation of an express trust, it being
sufficient that a trust is clearly intended." In reality, the
development of the trust as a method of disposition of property, so
jurisprudence teaches, "seems in large part due to its freedom
from formal requirements."5 This principle perhaps accounts for the
provisions in Article 1444 just quoted. For, "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."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.
Posadas, 64 Phil. 353, 368. Conversely, the mere fact that the
word "trust" or "trustee" was employed would not necessarily
prove an intention to create a trust. What is important is whether
the trustor manifested an intention to create the kind of
relationship which in law is known as a trust. It is unimportant that
the trustor should know that the relationship "which he intends to
create is called a trust, and whether or not he knows the precise

17. Page 17 of 52
characteristics of the relationship which is called a trust."7 Here,
that trust is effective as against defendants and in favor of the
beneficiary thereof, plaintiff Victoria Julio, who accepted it in the
document itself.8
3. 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, basis of plaintiff's cause of action. Obviously, the document
was not prepared by a learned scrivener. It imperfectly speaks of a
"farm of more than four (4) hectares." But averment in the
complaint is not lacking to clear the uncertainty as to the identity
of the land mentioned in that document. 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, and
which is set forth in small parcels under said paragraph. This
allegation in the complaint does not add any new term or
stipulation to the writing. Rather, it explains an obscurity
occasioned by lack of precision in a clumsily prepared document.
Thus it is, 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, "it has also been held that the writings, in being
considered for the purpose of satisfying the statute of frauds, are
to be considered in their setting, and that parol evidence is
admissible to make clear the terms of a trust the existence of
which is established by a writing, . . ."9
4. This case having been brought before us on a motion to dismiss,
we need but stress that we are to be guided solely by the
averments of the complaint. So guided, 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, but in trust. There is no statement in the
complaint intimating disavowal of such trust; the complaint alleges
refusal to deliver possession. In the sense in which we understand
the complaint to be, it cannot be said that plaintiff's action to
recover the property thus held in trust has prescribed. Given the
fiduciary relation which according to the complaint is recognized by
defendants, the latter may not invoke the statute of limitations as
a bar to plaintiff's action.10
5. Even on the assumption that defendants have not been
constituted as trustees under the document in question, still we
arrive at the same conclusion. For, plaintiff's action is aimed, by an
alleged owner of real property at recovery of possession thereof,
conditioned upon the fixing of the period therefor. Since plaintiff
claims ownership, possession, in the words of this Court "is a mere
consequence of ownership."11 It may not be said that plaintiff's suit
is barred by the statute of limitations. She is protected by Article
1141 of the Civil Code, which reads: "Real actions over immovables
prescribe after thirty years." 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.
6. Defendants in their brief draw attention, by way of counter-
assignment of error, 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, and on the
further ground of release and/or abandonment.
The facts bearing on this issue are: In Land Registration Case N-
706, G.L.R.O. Record No. N-7014, Court of First Instance of Rizal,
defendants are applicants. That case — so defendants aver —
covers the very same land set forth in plaintiff's complaint. In their
opposition to that application, 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." Defendants argue that if plaintiff was the real
owner of the entire area, opposition should have been presented
on the whole, not merely as to fifty salt beds.
Parenthetically, 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, 1964 in L-19101
(EmilianoDalandanand Maria Dalandan, plaintiffs, vs. Victoria Julio,
et al., defendants). There, this Court affirmed the order dismissing
the complaint filed by defendants herein, plaintiffs therein, for the
repurchase of fifty salt beds which were the subject of a sale

18. Page 18 of 52
withpacto de retro executed on September 24, 1932 by Clemente
Dalandan in favor of Victoriana Dalandan, predecessor of plaintiff.
There is no point in the argument that an action is pending
between plaintiff and defendants. Because, 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. Failure to so object in reference to
the registration of a bigger portion of the land, simply means that
there is no case between the parties in reference thereto in the
land registration proceeding.
Not that plaintiff released or abandoned the claim to that bigger
portion. For, there is an averment in the complaint that an
agreement exists between plaintiff and defendants to defer delivery
thereof; and that defendants thereafter refused to fix the period for
such delivery. So that, on the assumption that defendants should
succeed in obtaining title to the property in the land registration
case, such would not bar Victoria Julio from requiring them to
execute a conveyance of the property in her favor, in the event she
(plaintiff herein) prevails in the present case. And this, because
defendants could here be declared as mere trustees of plaintiff, if
the averments of the complaint are found to be true."12
For the reasons given, the order of the Court of First Instance of
Rizal dated April 29, 1961 dismissing the complaint is hereby
reversed and set aside, with instructions to remand the case to the
court below for further proceedings.
Costs against defendants-appellees.So ordered.
Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Bengzon, J.P.,
Zaldivar, Castro, Angeles and Fernando, JJ.,concur.
G.R. No. L-14714 April 30, 1960
ARISTON ANDAYA, ET AL., plaintiffs-appellees,
vs.
DR. MELENCIO MANANSALA, defendant-appellant.
Constante R. Ayson for appellees.
Jose V. Manansala for appellant.
REYES, J. B. L., J.:
Originally brought to the Court of Appeals, this appeal was
forwarded to us by said court because it raises only legal
questions.
There is no dispute as to the antecedents of the case, which the
lower court found to be as follows:
On June 13, 1934, one Isidro Fenis sold the land in question
to EustaquiaLlanes, with right of repurchase within a period
of five years. After the expiry of said period, and without
repurchasing the said property, Isidro Fenis sold it again to
Maria Viloria on January 13, 1944. Seven months later, or
on August 21, 1914, Maria Viloria sold by way of sale with
right to repurchase within a period of one year, the said
property together with another parcel of land to the herein
defendant MelencioManansala. On August 1, 1946, upon the
expiry of the said period, Manansala registered with the
Register of Deeds an affidavit consolidating his title on the
property. A year later, or on September 28, 1947, Maria
Viloria sold by way of absolute sale the same property to
CiriacoCasiño, Fidela Valdez, and the plaintiff spouses
Ariston Andaya and MicaelaCabrito, for P4,800.00, which
deed contained the following stipulation:
The following month, or on October 18, 1947,
EustaquiaLlanes, instituted Civil case No. 399 to quiet title
and to recover possession of said parcel from CiriacoCasiño.
Eight months later, or on June 9, 1949, a defendant
MelencioManansala sold by way of absolute sale, the
property in question to the spouses CiriacoCasiño and Fidela
Valdez, and the plaintiffs for P1,500.00, which deed
contained the following stipulation:
That from and after this date, 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

19. Page 19 of 52
and in case of eviction, I promise, agree and covenant to
answer to and for the vendee in the form and manner
provided by law.
This document of conveyance was recorded in the Register
of Deeds under Act No. 3344, on June 9, 1948.
In the meantime, on September 28, 1948, EustaquiaLlanes,
included as co-defendant in Civil Case No. 399,
MelencioManansala (Annex C), and on September 2, 1950,
as additional defendants, Fidela Valdez and the spouses
Ariston Andaya and MicaelaCabrito (Annex D). The said
defendant filed a joint answer to the second amended
complaint, claiming title on said property on the basis of the
conveyance made in favor of Manansala, and from the latter
to the other defendants. Judgment was rendered in that
case in favor of EustaquiaLlanes, and on October 17, 1955,
the said judgment having become final, a writ of execution
was issued against Ciriaco Casino, Fidela Valdez, Ariston
Andaya and MicaelaCabrito. In the enforcement of said writ,
the properties of Fidela Valdez were attached and sold at
public auction to cover the damages, representing the value
of the produce of the land, amounting to P676.00, costs of
the suit in the amount of P33.20, or a total of P709.20
(Annex H-1).
On March 23, 1956, plaintiffs spouses Ariston Andaya and
MicaelaCabrito commenced this case in the Court of First Instance
of Ilocos Sur against defendant MelencioManansala 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. Defendant Manansala denied liability for
the damages claimed, 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 EustaquiaLlanes in Civil Case
No. 399, considering that Manansala had registered the land in his
name with the office of the Register of Deeds. After the case was
submitted for a summary judgment and the parties had agreed on
a statement of facts, the lower court entered the following
decision:
Considering that the same land was already sold to the
plaintiffs and their co-vendee, CiriacoCasiño and Fidela
Valdez, it is obvious that their only purpose in acquiring the
same land from the defendant at the low price of P1,500.00
was to enable them to register the prior deed of sale
executed by Maria Viloria. This is true, 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. This was clearly the understanding of the parties,
and the plaintiffs apparently knew that the stipulation on
warranty in the deed was made pro forma and could not
have been intended, 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. This being so, 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 said transaction being before August
30, 1950.
In determining therefore the obligations of the defendant,
those applicable to a vendor in cases of rescission of a
contract should be applied.
WHEREFORE, the Court renders judgment sentencing the
defendant to return to the plaintiffs the sum of P750.00
which represent one-half of the purchase price with interest
at 6% from June 9, 1948 until fully paid, and to pay the
costs of this suit.
From the above decision, defendant MelencioManansala appealed,
claiming that after finding that he was not liable to plaintiffs-
appellees for breach of warranty against eviction, 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.
There is merit in the appeal.

20. Page 20 of 52
The vendor's liability for warranty against eviction in a contract of
sale is waivable and may be renounced by the vendee (last par.,
Art. 1475, Old Code; last par., Art. 1548, New). The contract of
sale between herein appellant and the appellees included a
stipulation as to the warranty; 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, 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; and the further fact that when the sale between
appellant and appellee was made, the property was already the
subject of a pending litigation between appellees and one
EustaquiaLlanes, who claimed its title and possession by virtue of
an earlier sale from the original owner, and it was by final
judgment in this litigation that appellees were evicted from and
land. Not having appealed from the decision of the court below,
appellees are bound by these findings, the implication of which is
that they not only renounced or waived the warranty against
eviction, but that they knew of the danger of eviction and assumed
its consequences.
Now, according to Article 1477 of the old Code (the law applicable
when the contract in this case was made),
When the vendee has waived the right to warranty in case
of eviction, and eviction shall occur, the vendor shall only
pay the price which the thing sold had at the time of the
eviction, unless the vendee has made the waiver with
knowledge of the danger of eviction and assumed its
consequences. (Same as Art. 1554 of the new Code)
As already stated, appellees knew of the danger of eviction at the
time they purchased the land in question from appellant, and
assumed its consequences. Therefore, the appellant is not even
obliged to restore to them the price of the land at the time of
eviction, but is completely exempt from liability whatsoever.
Neither may appellant be condemned to return the price received
from appellees on the theory of rescission of their contract of sale,
as held by the court below. In the first place, the remedy of
rescission contemplates that the one demanding it is able to return
whatever he has received under the contract; and when this can
not be done, rescission can not be carried out (Art. 1295, Old
Code; Art. 1385, New). 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, as in this case, for he can no longer
restore the thing to the vendor. It is only when the vendee loses "a
part of the thing sold of such importance, in relation to the whole,
that he would not have purchased it without said part" that he may
ask for rescission, but he has "the obligation return the thing
without other encumbrances than those which it had when he
acquired it" (Art. 1479, old Code; 1556, New). In the second place,
appellees, as already stated, assumed the risk of eviction, which
stops them from asking for rescission even were it possible for
them to restore what they had received under the contract.
On their part, appellees claim that in view of the eviction from the
land in question, 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.
The claim is untenable, not only because appellant, as we have
held, is exempt from any liability for appellees eviction, but also
because not having appealed from the decision of the court below,
appellees can not ask for a modification thereof or an award of
damages not included therein (Davidvs. De la Cruz, 103 Phil., 380;
54 Off. Gaz. [35] 8073; Pineda &Ampil Mfg. Co. vs. Bartolome, 95
Phil., 930; Gorospe vs. Peñaflorida, 101 Phil., 886).
Wherefore, the decision appealed from is reversed and the
complaint dismissed, with costs against appellees Ariston Andaya,
et al.
Paras, C.J., Bengzon, Montemayor, Bautista Angelo, Labrador,
Concepcion, Endencia and Gutierrez David, JJ.,concur.
G.R. No. L-17384 October 31, 1961
NESTOR RIGOR VDA. DE QUIAMBAO, ET AL., petitioners,
vs.
MANILA MOTOR COMPANY, INC., and the HON. COURT OF
APPEALS, respondents.

21. Page 21 of 52
Manuel Y. Macias for petitioners.
Ozaeta, Gibbs and Ozaeta for respondents.
REYES, J.B.L., J.:
This petition for certiorari brings to this Court for review the
decision of the Court of Appeals in its CA-G.R. No. 17031-R,
reversing that of the Court of First Instance of Manila and
dismissing petitioners' complaint.
The facts are not in dispute. On March 7, 1940, Gaudencio R.
Quiambao, deceased husband of petitioner Nestora Rigor
Vda.deQuiambao and father of the other petitioners, bought from
respondent Manila Motor Company, Inc. one (1) Studebaker car on
the installment plan. Upon default in the payment of a number of
installments, respondent company sued GaudencioQuiambao in
Civil Case No. 58084 of the Court of First Instance of Manila. On
December 4, 1940, judgment was entered in said case, awarding in
favor of the plaintiff the sum of P3,054.32, with interest thereon at
12% per annum, and P300.00 attorney's fees.
On July 14, 1941, the court issued a writ of execution directed to
the Provincial Sheriff of Tarlac, who thereupon levied on and
attached two parcels of land covered by Transfer Certificate of Title
No. 18390 of the Office of the Register of Deeds for Tarlac. On
August 27, 1941, Attorney Felix P. David, then counsel for the
Manila Motor Company, accompanied by the sheriff, personally
apprised GaudencioQuiambao of the levy. The latter pleaded to
have the execution sale suspended and begged for time within
which to satisfy the judgment debt, proposing that in the
meanwhile, he would surrender to the company the Studebaker
car. This proposition was accepted, accordingly,
GaudencioQuiambao delivered the car to the company, and
Attorney David issued a receipt therefor that reads:
August 27, 1941
Received from Mr. GaudencioQuiambao, Studebaker
President Sedan License No. 45-368 pending settlement of
the judgment in Civil Case No. 58043 CFI Manila rendered
in favor of Manila Motor Company.
DAVID AND ANGELES
by (Sgd.) Felix P. David.
Attorneys for Manila Motor Company
On October 16, 1941, GaudencioQuiambao remitted to the
company, on account of the judgment, the sum of P500.00; he,
however, failed to make further payments, thus leaving a balance
still unsettled of P1,952.47, with interest thereon at 12% per
annum from March 6, 1940.
In the meantime, 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, Inc., as enemy
property.
After the war, the company filed with the Philippine War Damage
Commission, among other things, a claim for its mortgage lien on
the car of GaudencioQuiambao and was awarded the sum of
P780.47, P409.75 of which amount had already been paid.
On October 12, 1949, the company addressed a letter to
GaudencioQuiambao asking him to fill a blank form relative to the
lost car. Quiambao having since died, his widow, Nestora Rigor
Vda.deQuiambao, returned the form with the statement that the
questioned car was surrendered to the company for storage. On
May 18, 1953, a demand was made on the widow to settle the
deceased's unpaid accounts, but in view of her refusal, the
company urged the Provincial Sheriff of Tarlac to carry out the pre-
war writ of execution issued in Civil Case No. 58043. Although the
records of that case had been lost during the war, and have not
been reconstituted, a copy of said writ of execution kept on file by
the provincial sheriff was saved. Accordingly, the latter advertised
for sale at public auction the properties levied upon. Notified of the
sheriff's action, the heirs of the deceased Quiambao filed this suit
to annul and set aside the writ of execution and to recover
damages. Judgment was rendered by the Court of First Instance of
Manila in favor of plaintiffs-petitioners, but on appeal to the Court

22. Page 22 of 52
of Appeals, the decision was reversed and another entered
dismissing the complaint. Hence, this appeal by writ of certiorari.
Briefly, 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 GaudencioQuiambao and
of barring the former from executing its pre-war judgment in Civil
Case No. 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, petitioners, citing the case of H.E. Heacock
Company vs. Buntal Manufacturing Company, et al., 66 Phil. 245-
246, maintain that the "taking of the automobile by respondent
company from GaudencioQuiambao ... amounted to a waiver of
said company's right to execute its judgment in Civil Case No.
58043 and clearly constituted a cancellation or rescission of the
sale," which, under the first paragraph of Article 1454-A of the old
Civil Code1, then applicable, bars any further claim for unpaid
installments. There is no merit in this claim. Unlike situation that
arose in the H.E. 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, here it was the buyer (deceased GaudencioQuiambao) who
offered, indeed pleaded, to surrender his car only in order that he
might given more time within which to satisfy the judgment debt,
and suspend the impending execution sale of the properties levied
upon. The very receipt issued then by the company, and accepted
without objection by the deceased (GaudencioQuiambao), indicated
that the car was received "pending settlement of the judgment in
Civil Case No. 58043." Other circumstances that militate against
petitioners' theory of rescission or annulment of the contract of
sale and waiver of the judgment of debt and, conversely,
strengthen the proposition that the delivery of the car to
respondent company was merely to postpone the satisfaction of
the judgment amount, are that the deceased still paid the further
sum of P500.00 on account of his indebtedness about two months
after the car was surrendered, and that despite respondent
company's acceptance of the car, the company made repeated
demands against the petitioners to settle the deceased's unpaid
accounts.
Since respondent company did not receive the car for the purpose
of appropriating the same, but merely as security for the ultimate
satisfaction of its judgment credit, the situation under
consideration could not have amounted to a foreclosure of the
chattel mortgage as petitioners imply.
Petitioners next argue that "the payment of war damage
compensation to respondent company . . . produced the same and
equal legal effect as formal foreclosure," and in view of the second
paragraph of Article 1454-A2 of the Spanish Civil Code, the latter is
now precluded from claiming unpaid installments. We do not agree.
Having been the party who was last in possession of the lost car,
the company was well within its rights, or better still, under
obligation, to protect the interest of the car owner, as well as its
own, by claiming, as it did, the corresponding war damage
compensation for the car. Such action of the company can not
reasonably be construed as a constriction of its rights under the
pre-war judgment.
Furthermore, in Manila Motor Company, Inc. vs. Fernandez, 52 Off.
Gaz. No. 16, 6883, 6885, we held:
. . . At any rate, it is the actual sale of the mortgaged
chattel in accordance with section 14 of Act No. 1508 that
would bar the creditor (who chooses to foreclose) from
recovering any unpaid balance (Pacific Commercial
Company vs. De la Rama, 72 Phil. 380).
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 won, in the
pre-war Civil Case No. 58043.

23. Page 23 of 52
There is likewise no merit in the contention that the pre-war
judgment had already prescribed. Said judgment was entered on
December 4, 1940, and on July 14, 1941, a writ of execution was
issued. Respondent company took no further step to enforce the
judgment until May 19, 1954, on which date, respondent scheduled
two (2) parcels of land owned by the petitioners for sale at public
auction pursuant to the writ of July 14, 1941. From the entry of the
judgment to May 19, 1954, a period of 13 years, 5 months and 15
days had elapsed. From this term we must deduct the period
covered by the debt moratorium under Executive Order No. 32
(which applied to all debts payable within the Philippines), from the
time the order took effect on March 10, 1945, until it was partially
lifted by Republic Act No. 342 on July 26, 1948.
Deducting the period during which Executive Order No. 32 was in
force, which is 3 years, 4 months and 16 days, from 13 years, 5
months and 15 days, the period covered from the entry of the pre-
war judgment to the time respondent company attempted to sell
the levied properties at auction, there is still left a period of 10
years and 29 days. But as held in Talens vs. Chuakay& Co., G.R.
No. L-10127, June 30, 1958, 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, 1942.3 This interruption in the
functions of the courts has also been held to interrupt the running
of the prescriptive period (see also Palma vs. Celda, 81 Phil. 416).
That being the case, 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,
considering that even the minimum period of from December 8,
1941, the outbreak of the Pacific War to January 30, 1942 is
already a term of one (1) month and 23 days.
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. On this point, 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. . . . 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. 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, and that after it has been taken from the defendant,
his interest is limited to its application to the judgment,
irrespective of the time when it may be sold (Southern Cal.
L. Co. vs. Hotel Co., 94 Cal. 217, 222). (Government of P.I.
vs. Echaus, 71 Phil. 318)..
The case of Ansaldo vs. Fidelity and Surety Company of the
Philippine Islands, G.R. No. L-2378, April 27, 1951, invoked by the
petitioners, is not in point, for there the judgment creditor
attempted to carry out the writ of execution 10 years after entry of
judgment. As correctly observed by the appellate court below, both
cited cases —
. . . affirm the fundamental principles that a valid judgment
may be enforced by motion within five years after its entry,
and by action after the lapse of said period but before the
same shall have been barred by any statute of limitations,
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,
provided the sale is made within ten years after the entry of
the judgment.
The petitioners should, however, be credited the amount of
P409.75 which the respondent Manila Motor Company actually
received from the Philippine War Damage Commission on account
of the car of GaudencioQuiambao that had been seized from it by
the enemy occupant during the war. This should reduce the
principal amount still due the respondent from the petitioners to
the sum of P1,542.72.
IN VIEW OF ALL THE FOREGOING, the judgment of the Court of
Appeals appealed from is affirmed, with costs against petitioners.

24. Page 24 of 52
Bengzon, C.J., Padilla, Bautista Angelo, Labrador, Concepcion,
Paredes, Dizon and De Leon, JJ., concur.
Barrera, J., took no part.
Footnotes
1 The provision reads:
"In a contract for the sale of personal property payable in
installments, 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, without reimbursement to the purchaser of the
installments already paid, if there be an agreement to this
effect."
2 The paragraph reads:
"However, 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, and any agreement to the contrary shall be null
and void."
3 In Alcantara vs. Chico, 49 O.G. 150, the Court of Appeals
estimated that in Bulacan, courts were not opened for
nearly five (5) months.
G.R. No. L-13435 July 27, 1960
EUSEBIO MANUEL, plaintiff and appellant,
vs.
EULOGIO RODRIGUEZ, SR., ET AL., defendants and appellees.
Sumulong, Hialo and Vidanes for appellant.
Generoso, Tolentino, Garcia and Cruz for appellee E. Rodriguez, Sr.
Celestino L. de Dios for appellee Llanos Vda. deLandahl.
REYES, J.B.L., J.:
Eusebio Manuel appeals from the judgment of the Court of First
Instance of Rizal, promulgated on October 31,1957, dismissing his
complaint.
Questions of law and of fact are involved, but the property being
worth over P2,000,000.00, the appeal was directly taken to this
Court.
The complaint seeks to have plaintiff Eusebio Manuel declared
absolute owner of Lot 51, Plan Psu-32606, situated in San Mateo,
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; and to declare the subsequent sales
of said lot null and void and to cancel the transfer certificates of
title issued to the transferees. The cross-claim by defendant
Eulogio Rodriquez against his co-defendant Dolores
Vda.deLandahl(as Administratrix of the intestate estate of John
Landahl)having been dismissed, and there being no appeal
therefrom, the facts pertaining thereto will be omitted.
It appears that Januaria Rodriguez was the original registered
owner of a big tract of land (part of which is the land in question),
embraced by Transfer Certificate of Title No. 8821 of the Register
of Deeds of Rizal. In 1924, Januara Rodriguez ceded and
transferred said land to the Payatas Subdivision Inc., to be
administered by said firm, subdivided, sold, leased or otherwise
disposed of (Exhibit "A"-1). Defendant-appellee Eulogio Rodriguez
was then the Secretary-Treasurer of said Payatas Subdivision Inc.
Sometime in April, 1926, plaintiff-appellant offered to buy the lot in
question (about 248,310 sq. meters in area).The Company agreed
to sell said lot (Lot 51) for P2,240 in cash, or by installments with
10% interest (Exhibit "C"). Plaintiff-appellant made a counter-offer
for P2,000, which the Payatas Subdivision accepted, provided it
was paid in each (Exhibit "E"). Plaintiff-appellant wanted to pay in
installments, and on August 2, 1926, the Company wrote him that
it was agreeable to a down-payment of P1,500, the balance to be
paid within 9 to 10 months without interest, or if the down-
payment be less than P1,500, with interest at 10% on the balance

25. Page 25 of 52
(Exhibit "F"). Plaintiff-appellant then requested that the down-
payment be reduced to P1,300, and through the intercession of
defendant-appellee Eulogio Rodriguez, Sr., who was plaintiff-
appellant's friend, this was granted. After making the initial
payment of P1,300, a provisional receipt was issued, which, on
August 25, 1926, was substituted by the official receipt sent by
Casiano M. de Vera, the Company's bookkeeper (Exhibits "G" &
"G"-1). Soon after, plaintiff-appellant was placed in the possession
of the lot.
It also appears that plaintiff-appellant did not make any payments
within the 9 to 10-month period mentioned in Exhibit "F", so that
on April 30, 1928, the Payatas Subdivision Inc. sent him a letter
urging immediate payment of his unpaid account with the
Company, which, including interest, amounted to P819.23, and
asking him to answer within 10 days (Exhibit "H"). Thereafter,
plaintiff-appellant made another payment of P300 for which a
receipt dated June 20, 1928 was issued to him (Exhibit "I"). So far
as the record discloses, this appears to be the last payment made
by plaintiff-appellant on Lot 51, the property in question. On April
24, 1929, the Payatas Subdivision Inc. sent plaintiff-appellant a
detailed statement of his unpaid account which, including interest
and taxes, amounted to P596.21, urging immediate payment
thereof, so that title could be transferred to him as per agreement,
and requesting answer within 10 days (Exhibit "J"). Still, plaintiff-
appellant did not pay his account, despite the fact that thereafter,
on several occasions, the Company sent to his residence its acting
secretary, Conrado Vicente, to collect the balance.
Defendants-appellees advance the theory that in view of plaintiff-
appellant's repeated default in paying his outstanding account, the
Payatas Subdivision Inc. then considered his contract cancelled and
extinguished, and the amounts already paid (P1,600), forfeited to
the Company, the transaction being merely a contract to sell or
promise to sell; that sometime in 1939, the Payatas Subdivision
Inc., having sold all its properties (except some properties it was
administering for Januaria Rodriguez), was extrajudically dissolved,
but its papers of dissolution were lost or destroyed during the war;
that after said dissolution, all unsold properties belonging to
Januaria Rodriguez were returned to her.
Sometime in 1941, Januaria Rodriguez, who was the aunt of
defendant-appellee Eulogio Rodriguez, sold several properties to
the latter, including Lot 51 in question, in consideration of the
monthly advances, support, services, care, maintenance, medical
expenses, etc. which she received from the said Eulogio Rodriguez
(Exhibit "U").Pursuant to such sale, Transfer Certificate of Title No.
44709 was issued to Eulogio Rodriguez, Sr. (Exhibit 21-a).
Likewise, it appears that on February 4, 1941, Eulogio Rodriguez,
Sr., then Mayor of Manila, instructed his secretary to write plaintiff-
appellant to urge him to pay his unsettled account with the Payatas
Subdivision, Inc. As per instructions, his secretary wrote plaintiff-
appellant (Exhibit "O"). Still, there was no payment.
On August 5, 1944, Eulogio Rodriguez, Sr. sold Lot 51(among
others) to John Landahl (represented in the transaction by Carlos
Landahl as attorney-in-fact), for and in consideration of
P157,192.80, in Japanese war notes (Exhibit 1-Landahl). The sale
was duly registered and Transfer Certificate of Title No. 46521 was
issued in Landahl's name (Exhibit 3-Landahl).
On April 6, 1949, or just a little less than 23 years after the alleged
sale to him of Lot 51 in 1926, plaintiff-appellant brought the
instant case, as aforesaid, to compel the execution of a formal
deed of conveyance in his favor covering the purported sale in
1926; 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, and the
corresponding transfer certificates to title issued to them.
The decision of the trial court dismissing the complaint is
predicated on two main findings —
Firstly. — That the transaction in 1926 was mere contract to sell or
promise to sell of Lot 51 to plaintiff-appellant, the understanding
being that upon failure to pay the installments as demanded, the
vendor corporation had the right to consider the contract cancelled
and the amounts already paid, forfeited.
Secondly. — That even under plaintiff-appellant's theory that his
contract with defunct Payatas Subdivision Inc. was an absolute

26. Page 26 of 52
sale, involving immediate transfer of ownership, his right of action
to compel the execution of a formal deed of conveyance has
prescribed, whether the contract is considered written or verbal
(Sec. 43, pars. 1 & 2, Code of Civil Procedure, Act 190); moreover,
the action is barred by laches.
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. The alleged contract of absolute sale was not reduced to a
formal deed of conveyance, much less registered, which is unlikely
if the contract had been an absolute sale, because plaintiff-
appellant would have insisted that it be reduced to a public
document, the land being covered by a Torrens title.
2. It is highly improbable that the Payatas Subdivision Inc. 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. The statement in Exhibit "J", introduced by plaintiff as his
evidence, requesting payment of the balance "at ng kayo naman y
mabigyannangkatibayan, alinsunodsapinagkayarian", confirms that
the agreement between plaintiff and the company was that title
would be transferred to plaintiff only upon full payment of the
price.
4. Plaintiff would not have waited for more than 20 years to file
this action to enforce the contract if this where an absolute sale,
considering that the land being covered by a Torrens title, it was
easy for the vendor to resell or encumber the same property to
some other person on the basis of a clean title.
5. The nature of the transaction as a mere contract to sell is
established by the testimony of witnesses for defendants-
appellees.
6. The dissolution of the Payatas Subdivision Inc. sometime in
1939 must have been the reason which prompted the cancellation
of plaintiff's contract, as it had to wind up all its affairs and
conclude all pending business before dissolution.
7. 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 down-
payment, the company remaining owner of the property until full
payment, at which time the deed of conveyance is then executed in
favor of the buyer; and if the buyer defaults in paying the
installments due, the corporation cancels the contracts and forfeits
the amount already paid.
In his brief containing 20 assignments of error, plaintiff-appellant
insists that the contract in 1926 was not merely a contract to sell
but an absolute sale (Errors I-IV). He contends that contrary to the
finding of the lower court, the 1926 contract was not verbal but
written, citing the series of communications between plaintiff-
appellant and the Payatas Subdivision Inc., Exhibits "C" to "G"-1. A
careful examination of these exhibits, however, reveals that
Exhibits "C" to "F" are mere bargaining negotiations that took place
before the parties arrived at a full understanding, while Exhibits
"G" and "G"-1 are mere receipts of payment; they fail to show that
the parties had committed all the terms of their agreement to
writing. Exhibit "C" merely offers to sell Lot 51 for P2,240, with
interest at 10% if it be by installments; Exhibit "D" offered to
reduce the total price for Lots 44 and 51 (early negotiation were
for 2 lots) to P2,955, and also referred to other matters concerning
the sale which should be discussed personally by the parties;
Exhibit "E" accepts a previous counter-offer made by plaintiff-
appellant to buy Lot 51 for P2,000, provided the payment was in
cash, and again referred to other matters regarding the sale which
should be threshed out between the parties; Exhibits "F", after
making reference to the terms of payment desired by plaintiff-
appellant, laid down the condition that if the first payment is at
least P1,500, the balance payable in 9 to 10 months would not
bear interest; and if the initial payment was less than P1,500, the
balance would bear interest at 10%; Exhibit "G" is a note by
Payatas Inc. referring to the attached receipt, Exhibit "G-1"),
covering the down-payment of P1,300 made by plaintiff-appellant
for Lot 51.

27. Page 27 of 52
These letters shows that if at all, only the price and the terms of
payments were in writing. The most important, the alleged transfer
of title, and the other matters alluded to in some of the
communications, were not reduced to any written document. It is
generally recognized that to be a written contract, all its terms
must be in writing; so that a contract partly in writing and partly
oral, is, in legal effect, an oral contract (Fey vs. Loose Wiles Biscuit
Co., 75 P2d 810; Peifer vs. New Comer, et al., 157 NE 240; 12 Am.
Jur. 550). Apart from whether the letters negotiating the
transaction could constitute a written contract of sale, the absence
of a formal deed of conveyance strongly indicates that the parties
did not intend immediate transfer of title, but only a transfer after
full payment of the price. As observed by the trial court, if the
contract were an absolute sale, it is unlikely that plaintiff-appellant
would not have insisted that the same be reduced to a public
document, considering that Lot 51 is covered by a Torrens title. On
the other hand, it is unlikely for the Payatas Subdivision Inc. to
have agreed to an immediate transfer of ownership without
guaranty of the balance being ever paid.
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 mabigyannangkatibayan,
alinsunodsapinagkayarian", strengthening the conclusion that what
transpired in 1926 was a mere contract to sell, transfer of title
being conditioned on full payment of the price. Plaintiff-appellant
tries to refute this by citing El BancoNacional Filipino vs. Ah Sing,
69 Phil. 611, wherein the contract captioned "Promesa De Venta"
was held to be an absolute sale. Suffice it to say that comparison
will not hold, because in the cited case, the contract was reduced
to a formal deed conveyance and the court found that the parties
had agreed to and actually effectuated a delivery. In the instant
case, there was a formal deed of conveyance, and, as the land is
covered by the Torrens title, there could be no delivery except by
the act of registration of the deed or instrument.
Adding to the pile of circumstances, 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,
for it if were an absolute sale, it was unlikely for plaintiff-appellant
to wait as long as he did before commencing the present action,
considering that as the land was covered by a Torrens title, it could
have been very easy for the Payatas Subdivision to dispose or
encumber the same to another party. Considering the steady
increase in land values since 1926 (Martin vs. Martin,* 57 Off. Gaz.
[9] 1589), 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.
The dissolution of the Payatas Subdivision Inc. sometime in 1939 is
sufficiently established by the evidence. The only argument
advanced by plaintiff-appellant to show that it was not dissolved in
1939 (Error I-IV; IX-X) is Exhibit "O", the letter written in 1941 by
the secretary of defendant-appellee Eulogio Rodriguez, asking for
payment of the balance of the price, wherein the statement
appears "Sa utosngpangasiwanngPayatas Estate Subdivision . . .",
from which it is supposed to be inferred that said corporation had
not yet been dissolved. However, in Exhibit "O" itself, the payment
was being asked to be made at the office of defendant-appellee
Eulogio Rodriguez at the City Hall, showing that Payatas
Subdivision no longer even had an office. Also significant is the
computation of interest mentioned in Exhibit "O" which, according
to said letter, accrued only up to January, 1939. All these, plus the
other circumstances on record, give credence to defendant-
appellees' contention that the corporation was really dissolved in
1939.
Although this dissolution cannot be determinative of the character
of the sale in 1926 (as to whether conditional or absolute), it must
really have been the occasion which prompted the termination of
the contract, as the corporation had to wind up its affairs and close
all pending business. Plaintiff-appellant, however, argues (Errors I-
IV; VI; VIII) that the Payatas Subdivision had no right to cancel
the contract, as there was no demand by suit or notarial act, as
provided by Article 1504 of the Old Code (Art. 1592, N. C. C.). This
is without merit, because Article 1504 requiring demand by suit or
notarial act in case the vendor of realty wants to rescind, does not
apply to a contract to sell or promise to sell, where title remains
with the vendor until fulfillment to a positive suspensive condition,
such as full payment of the price (Caridad Estates vs. Santero, 71
Phil., 114, 121; Albea vs. Inquimboy, 86 Phil., 476; 47 Off. Gaz.

28. Page 28 of 52
Supp. 12, p. 131; Jocson vs. Capitol Subdivision Inc. et al., L-
6573, February 28, 1955; Mirandavs. Caridad Estates, L-2077 and
Aspuria vs. Caridad Estates, L-2121, October 3, 1950).
The contention of plaintiff-appellant that Payatas Subdivision Inc.
had no right to cancel the contract as there was only a "casual
breach" is likewise untenable. In contracts to sell, where ownership
is retained by the seller and is not to pass until the full payment of
the price, such payment, as we said, is a positive suspensive
condition, the failure of which is not a breach, casual or serious,
but simply an event that prevented the obligation of the vendor to
convey title from acquiring binding force, in accordance with Article
1117 of the Old Civil Code. To argue that there was only a casual
breach is to proceed from the assumption that the contract is one
of absolute sale, where non-payment is a resolutory condition,
which is not the case.
Whether the trial court could take judicial notice of the alleged
practice in subdivision companies to retain ownership over lands
they contracted to sell, until full payment of the price, we find not
necessary to discuss. The circumstances shown by the trend of
evidence, including the oral testimony of the witnesses for
defendant-appellees, more than convince this Court that the
transaction in 1926 was merely a contract to sell, subject to a
suspensive condition that was terminated for the Payatas
Subdivision Inc. before its dissolution, by reason of the non-
payment of the balance of the price.
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". this Court had examined said letter, and finds nothing to
justify such a strained conclusion. Reasonably interpreted, the
pertinent portion merely stated that if the first payment is at least
P1,500, then, the balance will bear interest at 10%. In other
words, the initial payment determines whether or not interest will
be paid, not the period within which the balance will fall due. The
period here bears no relation to the amount to be initially paid. At
any rate, plaintiff-appellant was legally bound to pay the obligation
due upon judicial or extra-judicial demand (Art. 1100, Old Civil
Code; Article 1169, N.C.C.); and it appears that demands were
made which plaintiff-appellant failed to heed.
Plaintiff-appellant next contends (Errors IX-XI) that when Exhibit
"O" was sent by Clemente Felix, upon instructions of defendant-
appellee Eulogio Rodriguez, the latter was not yet the owner of Lot
51 and the Payatas Subdivision Inc. had not yet been dissolved. As
earlier discussed, there is enough evidence that the company was
dissolved in 1939. As to whether or not Eulogio Rodriguez had
already acquired Lot 51 when Exhibit "O" was sent to plaintiff-
appellant, it would really seem that said Eulogio Rodriguez, as of
that time, was not yet the owner of Lot 51, since Exhibit "O" is
dated February 4, 1941 while Exhibit "U" (the deed of sale from
Januaria Rodriguez to Eulogio Rodriguez) is dated December 26,
1941. But this is not material, since it would merely show that, for
whomever Eulogio Rodriguez was acting, he still wanted to give
plaintiff-appellant a chance to own the land as a gesture of
liberality. Anyway, appellant failed to take advantage of the
proposal, and the same remains without binding effect.
Having lost all rights to the land, plaintiff-appellant has no
personality to question the sales subsequently made to Eulogio
Rodriguez, and later, to John Landhal. Hence, it becomes academic
to discuss the assignments of error pertaining thereto (Errors VII,
XII, XIII, XIV, XV, XVI), specially since there is no evidence that
Landhal was prevented from relying on the clear certificate of title
in the name of Rodriguez.
From a different perspective, there is yet another reason why the
purported sale to plaintiff-appellant could not have transferred title
to him, and could not have prevented the subsequent sale of the
property to another party. The land in question being covered by a
Torrens title, only the act of registration of the deed or instrument
could effect transfer of ownership (Worcester vs. Ocampo, 34 Phil.
646; Tuason vs. Raymundo, 28 Phil. 635; Buzon vs.Lichauco, 13
Phil. 354). In the instant case, there is not even a deed or
instrument that could possibly be registered.
Having reached the conclusion that title to the disputed property
never passed to plaintiff-appellant; 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, we find it unnecessary to discuss the remaining errors
assigned in appellant's brief.

29. Page 29 of 52
Equity would, of course, demand that, in the absence of
stipulation, the amounts paid by plaintiff be returned, since the
purpose for which he paid them was not attained; and it appears of
record that such reimbursement was made as early as 1945
(Exhibits 1 to 1-C).
In view of the foregoing, the judgment of the trial court is affirmed.
Costs against plaintiff-appellant.
Bengzon, Montemayor, Bautista Angelo, Labrador, Concepcion,
Barrera, and Gutierrez David, JJ., concur.
April 11, 1906
G.R. No. 2412
PEDRO ROMAN, plaintiff-appellant,
vs.
ANDRES GRIMALT, defendant-appellee.
Alberto Barretto, for appellant.
Chicote, Miranda and Sierra, for appellee.
TORRES, J.:
On July 2, 1904, counsel for Pedro Roman filed a complaint in the
Court of First Instance of this city against Andres Grimalt, praying
that judgment be entered in his favor and against the defendant
(1) for the purchase price of the schooner Santa Marina, to wit,
1,500 pesos or its equivalent in Philippine currency, payable by
installments in the manner stipulated; (2) for legal interest on the
installments due on the dates set forth in the complaint; (3) for
costs of proceedings; and (4) for such other and further remedy as
might be considered just and equitable.
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. To
this order the plaintiff duly excepted.
Counsel for plaintiff on November 5 amended his complaint and
alleged that between the 13th and the 23rd day of June, 1904,
both parties, through one Fernando Agustin Pastor, verbally agreed
upon the sale of the said schooner; 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, to
wit, on July 15, September 15, and November 15, 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; 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, and offered to deliver the same at once to
defendant if he so desired; that the contract having been closed
and the vessel being ready for delivery to the purchaser, it was
sunk about 3 o’clock p. m., June 25, in the harbor of Manila and is
a total loss, as a result of a severe storm; 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. Plaintiff finally prayed that
judgment be rendered in accordance with the prayer of his
previous complaint.
Defendant in his answer asked that the complaint be dismissed
with costs to the plaintiff, 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,
the plaintiff stating that the vessel belonged to him and that it was
then in a sea worthy condition; that defendant accepted the offer
of sale on condition that the title papers were found to be
satisfactory, also that the vessel was in a seaworthy condition; that
both parties then called on Calixto Reyes, a notary public, who,
after examining the documents, informed them that they were

30. Page 30 of 52
insufficient to show the ownership of the vessel and to transfer title
thereto; 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, wrote to him on the
23d of June and set the following day for the execution of the
contract, but, upon being informed that plaintiff had done nothing
to perfect his title, he insisted that he would buy the vessel only
when the title papers were perfected and the vessel duly inspected.
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; that the
purchase price and method of payment had been agreed upon;
that the vessel was ready for delivery to the purchaser and that an
attempt had been made to deliver the same, but admitted,
however, the allegations contained in the last part of the said
paragraph.
The court below found that the parties had not arrived at a definite
understanding. We think that this finding is supported by the
evidence introduced at the trial.
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, even though neither
has been actually delivered. (Art. 1450 of the Civil Code.)
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, in which case the sale is
considered perfected.
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. (Art. 1462 of the Civil Code.)
Pedro Roman, the owner, and Andres Grimalt, the purchaser, had
been for several days negotiating for the purchase of the
schooner Santa Marina - from the 13th to the 23d of June, 1904.
They agreed upon the sale of the vessel for the sum of 1,500
pesos, payable in three installments, provided the title papers to
the vessel were in proper form. It is so stated in the letter written
by the purchaser to the owner on the 23rd of June.
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, the alleged owner. Roman
promised, however, to perfect his title to the vessel, but he failed
to do so. The papers presented by him did not show that he was
the owner of the vessel.
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.
The vessel was sunk in the bay on the afternoon of the 25th of
June, 1904, during a severe storm and before the owner had
complied with the condition exacted by the proposed purchaser, to
wit, the production of the proper papers showing that the plaintiff
was in fact the owner of the vessel in question.
The defendant was under no obligation to pay the price of the
vessel, the purchase of which had not been concluded. The
conversations had between the parties and the letter written by

31. Page 31 of 52
defendant to plaintiff did not establish a contract sufficient in itself
to create reciprocal rights between the parties.
It follows, therefore, 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, are not
applicable to the case at bar.
The first paragraph of article 1460 of the Civil Code and section
335 of the Code of Civil Procedure are not applicable. These
provisions contemplate the existence of a perfected contract which
can not, 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.
The judgment of the court below is affirmed and the complaint is
dismissed with costs against the plaintiff. 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. So
ordered.
Arellano, C.J., Mapa, Johnson, Carson and Willard, JJ., concur.
G.R. No. L-28845 June 10, 1971
TEODORA GONZALES BUNYI, petitioner,
vs.
SABINA REYES, LUZ JOAQUIN, ELVIRA JOAQUIN, ROSENDO
JOAQUIN, JR., LUALHATI JOAQUIN and LOIDA VIVO and the
HONORABLE COURT OF APPEALS, respondents.
Luis Teodoro for petitioner.
Anonuevo, Baez & Vasquez for private respondents.
TEEHANKEE, J.:
Appeal for certiorari from a decision of the Court of Appeals.
Petitioner Teodora Gonzales Bunyi was the defendant in an action
for reconveyance, on the ground of fraud, of a parcel of land
containing 16 ares and 59 centares (Lot No. 1310 of the Friar
Lands Estate) situated in Taguig, Rizal, covered by Transfer
Certificate of Title No. 43437 issued in her name, filed by private
respondents as plaintiff in the Court of First Instance of Rizal. 1
Respondents filed the suit on May 30, 1961 as heirs of the previous
registered owner of the land, Gil Joaquin, who had died on June 10,
1950, leaving respondents as his heirs, namely, his surviving
spouse, Sabina Reyes; his daughter, Luz Joaquin; and his minor
grandchildren, Elvira, Rosendo, Jr. and Lualhati, all surnamed
Joaquin (children of a deceased son, Rosendo), and represented by
their mother, Loida Vivo, as their guardian ad litem.
The main facts are undisputed. On September 24, 1935, Gil
Joaquin executed a deed of "Venita con Pacto de Retro", whereby
for and in consideration of the sum of P100.00 paid to him. by
petitioner, he ceded and transferred to petitioner the land then
titled in his name, expressly excluding the house or houses built
thereon, with the right of repurchasing the same within two years
thereafter, and assuming the payment of the land taxes and
agreeing to pay an annual rental of P12.00 as lessee thereof during
the stipulated period of redemption.
On July 5, 1941, after Gil Joaquin had failed to repurchase the
land, 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, 1941 in petitioner's name.
The trial court, presided by the late Justice (then Judge) Angel H.
Mojica, summarized the conflicting claims of the parties per their
testimonial and documentary evidence, as follows:

32. Page 32 of 52
Plaintiff, Sabina Reyes tried to establish that the
document, Exhibit A-I, does not represent the true
intention and agreement of the parties thereto; that
the contents thereof were not faithfully explained to
her and her late husband; that in affixing her
thumbmark to the document, she and her late
husband, Gil Joaquin, who signed the same, were
made to understand that they were merely
mortgaging the land in question to the defendant as
security for the sum of P100.00 which they borrowed
from her; 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, and the condition appearing
in letter (c) whereby her late husband bound himself
to pay the taxes for the land; that she had been
paying interest every year to the defendant on the
sum loaned; that since 1935 up to January 1961,
she had been paying the taxes for the land declared
in the name of her husband under Tax Declaration
No. 947 (Exh. B); that there are houses on the land
in question and the owners thereof pay to her the
corresponding rents; 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.
The defendant, on the other hand, attempted to
show that she is the lawful owner of the land in
question, having acquired same in virtue of the
instrument "Venta Con Pacto de Retro," Exhibit A-1,
which Gil Joaquin executed in her favor on
September 24, 1935; that because of the failure of
Gil Joaquin and his wife, Sabina Reyes, to
repurchase the land within the period of two years
and pay the rents as stipulated in the contract, she
filed an affidavit of consolidation of ownership and as
a consequence thereof, Transfer Certificate of Title
No. 43437 covering the land was issued on July 7,
1941, in her favor. She claimed that she had been
paying the real estate taxes for the land as shown by
her documents, Exhibits 3 and 4, and that the land
had been registered in her name for taxation
purposes since 1949 (Exh. 5). She further testified
that the notary public before whom Gil Joaquin and
plaintiff Sabina Reyes acknowledged and ratified the
document (Exh. A-I) in Biñan, Laguna, explained to
them the contents thereof; that Gil Joaquin had been
vice mayor of Muntinglupa and he spoke and
understood Spanish; that she did not study in any
school, although she was taught how to write her
name by her father so that she could vote; 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. In the face of its plain terms,
there is nothing to justify our construing that contract as a mere
mortgage.
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, Gil Joaquin, 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 P100.00 which they
borrowed from her to be incredible. 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). 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. To accomplish this result, the evidence must be so
clear, strong and convince as to exclude all reasonable controversy
as to the falsity of the certificate, and when the evidence is
conflicting, the certificate will be upheld.' (Robinson vs. Villafuerte,
18 Phil. 171; Jocson vs. Estacion, 60 Phil. 1055; V.L.J. 784;
Villafuerte vs. Reyes, et al., CA-G.R. No. 1637-R, Sept. 27, 1950).
In this case we find that plaintiffs failed to produce 'clear strong

33. Page 33 of 52
and convincing evidence to overcome the positive value of said
document. 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", ruling that the applicable provisions were those of the
old Civil Code then in force.
The trial court further found the belated claims of respondents to
be unsupported by the evidence, thus: "(I)t will be noted that
the plaintiffs are attempting to defeat the effect of the deed of the
late Gil Joaquin, their predecessor in interest, twenty six years
after the execution of the instrument. After so long a period the
charges of fraud must be clearly and in controvertibly proved. It is
our sense that the delay of plaintiffs in seeking relief in court
'speaks against the probability of the wrong complained
of.' 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. She
declared that she had religiously paid the taxes for the land, yet
she failed to substantiate her testimony with the best evidence.
The records show that she paid the real estate taxes for the years
1949 to 1959 on December 22, 1960 only (Exhs. C and C-1), that
is, five months before the filing of the complaint. 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,
it appears that Gil Joaquin who died on June 10, 1950 had been
Vice Mayor of Muntinglupa, he spoke, and understood Spanish; it is
hard to be that he signed the document, Exhibit A-1, without
understanding its contents. 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, 1961, 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. It is our conviction that the action
has already prescribed." 4
Respondents appealed the trial court's decision to the Court of
Appeals. The appellate court did not make any factual findings of
its own, much less overturn those of the trial court.
It, however, pitted the lone testimony of petitioner as against that
of respondent Sabina Reyes, and declared that under Article 1332
of the Philippine Civil Code, 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. It held that petitioner had
consolidated her ownership in a "surreptitious manner" and that
"under the facts, defendant [petitioner] has not discharged the
burden of proof, hence presumption of mistake, if not fraud, under
the law stands unrebutted and controlling" and that the consent to
the Joaquin spouses to the deed was therefore null and void, as
was the deed itself. It finally held the respondents' action to be
"one for declaration of the inexistence of the contract which does
not prescribe."
The appellate court therefore reversed the trial court's judgment
and granted the reconveyance of the land as prayed for in
respondents' complaint, 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, Exhibit A, 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, the burden of proof is on the defendant to
allow pursuant to Article 1332 of the new civil code,
that the Joaquin spouses fully understood the
content thereof ... Only defendant testifies on this
score. She declared pertinently that it is Gil Joaquin
'who asked the preparation of that document,'
Exhibit A: that after the document was prepared by
the notary public, the latter translated the contents
into tagalog before it was signed by the Joaquin
spouses in Biñan, Laguna; that she did not have any
schooling, although her late husband reached sixth
grade: that the notary gave a copy of the deed to

34. Page 34 of 52
the Joaquin spouses. Her bare testimony is not
sufficient to establish by preponderance of evidence
that the Joaquin spouses fully know the contents of
the document, Exhibit A, to be Sale with right to
repurchase, especially considering the countervailing
testimony of plaintiff Sabina Reyes that she and her
husband did not understand Spanish, she being
illiterate and her husband having reached grade 3
only, according to him; 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, Laguna. Moreover, plaintiffs' theory finds
confirmation in the surreptitious manner [that]
defendant made and filed the affidavit of
consolidation of ownership, Exhibit 2-A, and secured
a new certificate of title in her name, Exhibit 1, on
July 7, 1941, since the change in the status of the
property was not reflected in the tax roll of the
municipality of Muntinglupa until August 28, 1961,
as per annotation on TD 947, Exhibit D-1 when
plaintiffs TD was cancelled, and in defendant's
allowing plaintiffs to continue in possession of the lot
after 1941 despite said change in ownership. Under
the facts, defendant has not discharged the burden
of proof, hence, presumption of mistake, if not fraud,
under the law stands unrebutted and controlling ....
It follows that the consent of spouses Gil Joaquin and
Sabina Reyes to the document, Exhibit A, is null and
void, and so is the contract .... The circumstances
that Exhibit A is a public document executed prior to
the effectivity of the new Civil Code do not preclude
the application of Article 1332 aforesaid ..., which is
procedural in nature, affecting burden of proof ...,
there being no vested right in the rules of evidence
....
Having found that the deed of sale, Exhibit A, null
and void, it follows that the present action may be
treated as one for declaration of the inexistence of
the contract which does not prescribe ....
Petitioner in turn filed this appeal, which the Court finds
meritorious.
1. 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", when the pertinent factual basis for
application of said Article 1332 had not been duly established.
Article 1332, which was designed for the protection of illiterates
and of a party to a contract who "is a disadvantage on account of
his ignorance, mental weakness or other handicap," provides
that: 5
Art. 1332. When one of the parties is unable to read,
or if the contract is in a language not understood by
him, and mistake or fraud is alleged, the person
enforcing the contract must show that the terms
thereof have been fully explained to the
former. (n)
For the proper application of said article to the case at bar, 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. This factual basis was far from shown. On the
contrary, the trial court duly found — and the appellate court made
in contrary finding — that "Gil Joaquin, ... had been vice mayor of
Muntinglupa; he spoke and understood Spanish; it is hard to
believe that he signed the document Exhibit A-1 without
understanding its contents." 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', Exhibit A, "by the notary public,
who translated the contents into tagalog before the Joaquin
spouses signed the same — which completely relieved petitioner of
any burden of proof, since the further presumption arose that the
deed was prepared in accordance with Gil's understanding and
instructions, since he caused its preparation.

35. Page 35 of 52
The trial court, therefore, properly ruled that it was respondents,
as plaintiffs, who failed to overcome by clear, 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.
2. The appellate court merely concluded that petitioner had
consolidated ownership of the land on July 7, 1941 in a
"surreptitious manner" on the assumption, without reference to the
evidence of record, that petitioner's ownership of the land was not
reflected in the municipality's tax roll "until August 28, 1961, as
per annotation on TD-947, Exhibit D-1, when plaintiffs' TD was
cancelled and that petitioner "allowed plaintiffs to continue in
Possession of the lot after 1941 despite said change of ownership."
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, Exhibits 3 and 4, and that the land had been
registered in her name for taxation purposes since 1949 (Exh. 5);"
and that on the other hand, "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. She declared that she had religiously
paid the taxes for the land, yet she failed to substantiate her
testimony with the best evidence. The records show that she paid
the real estate taxes for the years 1949 to 1959 on December 22,
1960 only (Exhs. C and C-1), that is, five months before the filing
of the complaint." 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,
she removed her house from the same lot, (S. T. N. of August
1962 p. 8 and S. T. N. of February 27, 1963, p. 2) while one of the
daughters of the petitioner, FortunataBunyi has a house on the
same lot since 1959 (S. T. N. of October 26, 1962, pp. 3 & 7)
which was not even denied by the respondents," which citation of
the record is not denied in respondent's brief.
3. 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, Exhibit A, is null and void," hence "it
follows that the present action may be treated as one for
declaration of the inexistence of the contract which does not
prescribe." The sale at bar is governed by the provisions of the old
civil code, and as was appointed out by Mr. Justice Reyes in one
case 6, "(U)nder Article 1509 of the old Code, the vendee
irrevocably acquires ownership over the thing sold upon failure of
the vendor to redeem — i.e. ownership is consolidated in the
vendee by operation of law." 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. 7
On the question of prescription of action, the Court, per Mr. Justice
Reyes, in Fernandez vs. Fernandez, 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, if any such rights ever existed, 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, ten years after
petitioner's consolidation of ownership of the land on July 7, 1941,
when a new certificate of title was issued in her favor and that of
Gil Joaquin was cancelled, and the filing of the present action
almost twenty years after such consolidation is barred by
prescription.
ACCORDINGLY, the judgment of the Court of Appeals appealed
from is hereby reversed and set aside. Without costs.
Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Zaldivar,
Fernando, Villamor and Makasiar, JJ., concur.
Castro, J., took no part.
Barredo, J., reserves his vote.
G.R. No. 140479 March 8, 2001

36. Page 36 of 52
ROSENCOR DEVELOPMENT CORPORATION and RENE
JOAQUIN, petitioners,
vs.
PATERNO INQUING, IRENE GUILLERMO, FEDERICO
BANTUGAN, FERNANDO MAGBANUA and LIZZA
TIANGCO, respondents.
GONZAGA-REYES, J.:
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, 1999 in CA-G.R. CV No. 53963. The Court of
Appeals decision reversed and set aside the Decision2 dated May
13, 1996 of Branch 217 of the Regional Trial Court of Quezon City
in Civil Case No. Q-93-18582.1âwphi1.nêt
The case was originally filed on December 10, 1993 by
PaternoInquing, Irene Guillermo and Federico Bantugan, herein
respondents, against Rosencor Development Corporation
(hereinafter "Rosencor"), Rene Joaquin, and Eufrocina de Leon.
Originally, the complaint was one for annulment of absolute deed
of sale but was later amended to one for rescission of absolute
deed of sale. A complaint-for intervention was thereafter filed by
respondents Fernando Magbanua and Danna LizzaTiangco. The
complaint-in-intervention was admitted by the trial court in an
Order dated May 4, 1994.3
The facts of the case, as stated by the trial court and adopted by
the appellate court, are as follows:
"This action was originally for the annulment of the Deed of
Absolute Sale dated September 4, 1990 between
defendants Rosencor and Eufrocina de Leon but later
amended (sic) praying for the rescission of the deed of sale.
Plaintiffs and plaintiffs-intervenors averred that they are the
lessees since 1971 of a two-story residential apartment
located at No. 150 Tomas Morato Ave., Quezon City covered
by TCT No. 96161 and owned by spouses Faustino and
CresenciaTiangco. The lease was not covered by any
contract. The lessees were renting the premises then for
P150.00 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.
Upon the death of the spouses Tiangcos in 1975, the
management of the property was adjudicated to their heirs
who were represented by Eufrocina de Leon. 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. The lessees continued to stay in the premises and
allegedly spent their own money amounting from
P50,000.00 to P100,000.00 for its upkeep. These expenses
were never deducted from the rentals which already
increased to P1,000.00.
In June 1990, the lessees received a letter from Atty.
ErlindaAguila demanding that they vacate the premises so
that the demolition of the building be undertaken. They
refused to leave the premises. In that same month, 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. Thereafter, they
received a letter from Eufrocina de Leon offering to sell to
them the property they were leasing for P2,000,000.00.
xxx.
The lessees offered to buy the property from de Leon for
the amount of P1,000,000.00. De Leon told them that she
will be submitting the offer to the other heirs. Since then,
no answer was given by de Leon as to their offer to buy the
property. However, in November 1990, Rene Joaquin came
to the leased premises introducing himself as its new owner.
In January 1991, the lessees again received another letter
from Atty. Aguila demanding that they vacate the premises.
A month thereafter, 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. The
following month Atty. Aguila wrote them another letter
demanding the rental payment and introducing herself as

37. Page 37 of 52
counsel for Rosencor/Rene Joaquin, the new owners of the
premises.
The lessees requested from de Leon why she had
disregarded the pre-emptive right she and the late Tiangcos
have promised them. 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. In the same manner,
when they asked Rene Joaquin a copy of the deed of sale,
the latter turned down their request and instead Atty. Aguila
wrote them several letters demanding that they vacate the
premises. The lessees offered to tender their rental
payment to de Leon but she refused to accept the same.
In April 1992 before the demolition can be undertaken by
the Building Official, the barangay interceded between the
parties herein after which Rosencor raised the issue as to
the rental payment of the premises. 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, 1990 while de Leon made the
offer to them only in October 1990 or after the sale with
Rosencor had been consummated. The lessees also noted
that the property was sold only for P726,000.00.
The lessees offered to reimburse de Leon the selling price of
P726,000.00 plus an additional P274,000.00 to complete
their P1,000.000.00 earlier offer. When their offer was
refused, 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, 1990;
b) the defendants Rosencor/Rene Joaquin be ordered to
reconvey the property to de Leon; and c) de Leon be
ordered to reimburse the plaintiffs for the repairs of the
property, or apply the said amount as part of the price for
the purchase of the property in the sum of P100,000.00."4
After trial on the merits, the Regional Trial Court rendered a
Decision5 dated May 13, 1996 dismissing the complaint. The trial
court held that the right of redemption on which the complaint. The
trial court held that the right of redemption on which the complaint
was based was merely an oral one and as such, is unenforceable
under the law. The dispositive portion of the May 13, 1996 Decision
is as follows:
"WHEREFORE, in view of the foregoing, the Court
DISMISSES the instant action. Plaintiffs and plaintiffs-
intervenors are hereby ordered to pay their respective
monthly rental of P1,000.00 per month reckoned from May
1990 up to the time they leave the premises. No costs.
SO ORDERED."6
Not satisfied with the decision of the trial court, respondents herein
filed a Notice of Appeal dated June 3, 1996. On the same date, the
trial court issued an Order for the elevation of the records of the
case to the Court of Appeals. On August 8, 1997, respondents filed
their appellate brief before the Court of Appeals.
On June 25, 1999, the Court of Appeals rendered its
decision7 reversing the decision of the trial court. The dispositive
portion of the June 25, 1999 decision is as follows:
"WHEREFORE, premises considered, the appealed decision
(dated May 13, 1996) of the Regional Trial Court (Branch
217) in Quezon City in Case No. Q-93-18582 is hereby
REVERSED and SET ASIDE. 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,
1990;
(2) The reconveyance of the subject premises to
appellee Eufrocina de Leon;
(3) The heirs of Faustino and CrescenciaTiangco,
thru appellee Eufrocina de Leon, to afford the
appellants thirty days within which to exercise their
right of first refusal by paying the amount of ONE

38. Page 38 of 52
MILLION PESOS (P1,000,000.00) for the subject
property; and
(4) The appellants to, in turn, pay the appellees back
rentals from May 1990 up to the time this decision is
promulgated.
No pronouncement as to costs.
SO ORDERED".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, 1999.9
Hence, this petition for review on certiorari where petitioners
Rosencor Development Corporation and Rene Joaquin raise the
following assignment of errors10:
I.
THE COURT OF APPEALS GRAVELY ERRED WHEN IT
ORDERED THE RESCISSION OF THE ABSOLUTE DEED OF
SALE BETWEEN EUFROCINA DE LEON AND PETITIONER
ROSENCOR.
II.
THE COURT OF APPEALS COMMTITED MANIFEST ERROR IN
MANDATING THAT EUFROCINA DE LEON AFFORD
RESPONDENTS THE OPPORTUNITY TO EXERCISE THEIR
RIGHT OF FIRST REFUSAL.
III.
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.
Eufrocina de Leon, for herself and for the heirs of the spouses
Faustino and CrescenciaTiangco, did not appeal the decision of the
Court of Appeals.
At the onset, we not that both the Court of Appeals and the
Regional Trial Court relied on Article 1403 of the New Civil Code,
more specifically the provisions on the statute of frauds, in coming
out with their respective decisions. The trial court, in denying the
petition for reconveyance, held that right of first refusal relied upon
by petitioners was not reduced to writing and as such, is
unenforceable by virtue of the said article. The Court of Appeals,
on the other hand, also held that the statute of frauds governs the
"right of first refusal" claimed by respondents. However, 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.
Both the appellate court and the trial court failed to discuss,
however, 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. 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.
The term "statute of frauds" is descriptive of statutes which require
certain classes of contracts to be in writing. This statute does not
deprive the parties of the right to contract with respect to the
matters therein involved, but merely regulates the formalities of
the contract necessary to render it enforceable. Thus, they are
included in the provisions of the New Civil Code regarding
unenforceable contracts, more particularly Art. 1403, paragraph 2.
Said article provides, as follows:
"Art. 1403. The following contracts are unenforceable,
unless they are ratified:
xxx

39. Page 39 of 52
(2) Those that do not comply with the Statute of Frauds as
set forth in this number. In the following cases an
agreement hereafter made shall be unenforceable by action,
unless the same, or some note or memorandum thereof, be
in writing, and subscribed by the party charged, or by his
agent; evidence, therefore, of the agreement cannot be
received without the writing, 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;
b) A special promise to answer for the debt, default,
or miscarriage of another;
c) An agreement made in consideration of marriage,
other than a mutual promise to marry;
d) An agreement for the sale of goods, chattels or
things in action, at a price not less than five hundred
pesos, unless the buyer accept and receive part of
such goods and chattels, or the evidences, or some
of them, of such things in action, or pay at the time
some part of the purchase money; but when a sale is
made by auction and entry is made by the
auctioneer in his sales book, at the time of the sale,
of the amount and kind of property sold, terms of
sale, price, names of purchasers and person on
whose account the sale is made, it is a sufficient
memorandum;
e) An agreement for the leasing of a longer period
than one year, or for the sale of real property or of
an interest therein;
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.11 Moreover, the statute of frauds refers to
specific kinds of transactions and cannot apply to any other
transaction that is not enumerated therein.12 The application of
such statute presupposes the existence of a perfected contract.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. More specifically, is a right of first refusal akin to "an
agreement for the leasing of a longer period than one year, or for
the sale of real property or of an interest therein" as contemplated
by Article 1403, par. 2(e) of the New Civil Code.
We have previously held that not all agreements "affecting land"
must be put into writing to attain enforceability.14Thus, we have
held that the setting up of boundaries,15 the oral partition of real
property16, and an agreement creating a right of way17 are not
covered by the provisions of the statute of frauds. The reason
simply is that these agreements are not among those enumerated
in Article 1403 of the New Civil Code.
A right of first refusal is not among those listed as unenforceable
under the statute of frauds. Furthermore, the application of Article
1403, par. 2(e) of the New Civil Code presupposes the existence of
a perfected, albeit unwritten, contract of sale.18 A right of first
refusal, such as the one involved in the instant case, is not by any
means a perfected contract of sale of real property. At best, it is a
contractual grant, not of the sale of the real property involved, but
of the right of first refusal over the property sought to be sold19.
It is thus evident that the statute of frauds does not contemplate
cases involving a right of first refusal. As such, a right of first
refusal need not be written to be enforceable and may be proven
by oral evidence.
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,
1990 between petitioner Rosencor and Eufrocina de Leon.
On this point, we agree with the factual findings of the Court of
Appeals that respondents have adequately proven the existence of

40. Page 40 of 52
their right of first refusal. Federico Bantugan, Irene Guillermo, and
PaternoInquing uniformly testified that they were promised by the
late spouses Faustino and CrescenciaTiangco and, later on, by their
heirs a right of first refusal over the property they were currently
leasing should they decide to sell the same. Moreover, respondents
presented a letter20 dated October 9, 1990 where Eufrocina de
Leon, the representative of the heirs of the spouses Tiangco,
informed them that they had received an offer to buy the disputed
property for P2,000,000.00 and offered to sell the same to the
respondents at the same price if they were interested. Verily, if
Eufrocina de Leon did not recognize respondents’ right of first
refusal over the property they were leasing, then she would not
have bothered to offer the property for sale to the respondents.
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. They only presented
petitioner Rene Joaquin, the vice-president of petitioner Rosencor,
who admitted having no personal knowledge of the details of the
sales transaction between Rosencor and the heirs of the spouses
Tiangco21. They also dispensed with the testimony of Eufrocina de
Leon22 who could have denied the existence or knowledge of the
right of first refusal. As such, there being no evidence to the
contrary, the right of first refusal claimed by respondents was
substantially proven by respondents before the lower court.
Having ruled upon the question as to the existence of respondents’
right of first refusal, 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, 1990 between
Rosencorand Eufrocina de Leon and in decreeing that the heirs of
the spouses Tiangco should afford respondents the exercise of their
right of first refusal. In other words, 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.
In Guzman, Bocaling and Co, Inc. vs. Bonnevie23, 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. The Court held:
"xxx Contract of Sale was not voidable but rescissible.
Under Article 1380 to 1381 (3) of the Civil Code, a contract
otherwise valid may nonetheless be subsequently rescinded
by reason of injury to third persons, like creditors. 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.
According to Tolentino, rescission is a remedy granted by
law to the contracting parties and even to third persons, to
secure reparations for damages caused to them by a
contract, even if this should be valid, by means of the
restoration of things to their condition at the moment prior
to the celebration of said contract. 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, or to protect some incompatible and preferent right
created by the contract. Rescission implies a contract which,
even if initially valid, produces a lesion or pecuniary damage
to someone that justifies its invalidation for reasons of
equity.
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. However, 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.
Indeed, Guzman, Bocaling and Co. was the vendee in the
Contract of Sale. Moreover, 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

41. Page 41 of 52
favor of the Bonnevies, who were actually occupying the
subject property at the time it was sold to it. Although the
occupying the subject property at the time it was sold to it.
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, 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. Good faith connotes an
honest intention to abstain from taking unconscientious
advantage of another. Tested by these principles, 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."
Subsequently24 in Equatorial Realty and Development, Inc. vs.
Mayfair Theater, Inc.25, the Court, en banc, with three justices
dissenting,26 ordered the rescission of a contract entered into in
violation of a right of first refusal. Using the ruling in Guzman
Bocaling& Co., Inc. vs. Bonnevie as basis, the Court decreed that
since respondent therein had a right of first refusal over the said
property, it could only exercise the said right if the fraudulent sale
is first set aside or rescinded. Thus:
"What Carmelo and Mayfair agreed to, by executing the two
lease contracts, was that Mayfair will have the right of first
refusal in the event Carmelo sells the leased premises. It is
undisputed that Carmelo did recognize this right of Mayfair,
for it informed the latter of its intention to sell the said
property in 1974. There was an exchange of letters
evidencing the offer and counter-offers made by both
parties. Carmelo, however, did not pursue the exercise to
its logical end. While it initially recognized Mayfair’s right of
first refusal, 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, Carmelo abandoned
negotiations, kept a low profile for some time, and then
sold, without prior notice to Mayfair, the entire Claro M.
Recto property to Equatorial.
Since Equatorial is a buyer in bad faith, this finding renders
the sale to it of the property in question, rescissible. 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, prior to the sale, studied the said
contracts. As such, Equatorial cannot tenably claim that to
be a purchaser in good faith, and, therefore, rescission lies.
X XX
As also earlier emphasized, the contract of sale between
Equatorial and Carmelo is characterized by bad faith, since
it was knowingly entered into in violation of the rights of
and to the prejudice of Mayfair. In fact, as correctly
observed by the Court of Appeals, Equatorial admitted that
its lawyers had studied the contract or lease prior to the
sale. 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.
Since Mayfair had a right of first refusal, it can exercise the
right only if the fraudulent sale is first set aside or
rescinded. 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.
The facts of the case and considerations of justice and
equity require that we order rescission here and now.
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. The sale of

42. Page 42 of 52
the subject real property should now be rescinded
considering that Mayfair, which had substantial interest over
the subject property, 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.27
In Paranaque Kings Enterprises, Inc. vs. Court of Appeals,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. Summarizing the rulings in
the two previously cited cases, the Court affirmed the nature of
and concomitant rights and obligations of parties under a right of
first refusal. Thus:
"We hold however, that in order to have full compliance
with the contractual right granting petitioner the first option
to purchase, the sale of the properties for the amount of
P9,000,000.00, the price for which they were finally sold to
respondent Raymundo, should have likewise been offered to
petitioner.
The Court has made an extensive and lengthy discourse on
the concept of, and obligations under, a right of first refusal
in the case of Guzman, Bocaling& Co. vs. Bonnevie. In that
case, under a contract of lease, 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. The selling price quoted to the
Bonnevies was 600,000.00 to be fully paid in cash, less a
mortgage lien of P100,000.00. On the other hand, the
selling price offered by Reynoso to and accepted by Guzman
was only P400,000.00 of which P137,500.00 was to be paid
in cash while the balance was to be paid only when the
property was cleared of occupants. We held that even if the
Bonnevies could not buy it at the price quoted
(P600,000.00), nonetheless, 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. Only if the Bonnevies
failed to exercise their right of first priority could Reynoso
thereafter lawfully sell the subject property to others, and
only under the same terms and conditions previously
offered to the Bonnevies.
X XX
This principle was reiterated in the very recent case
of Equatorial Realty vs. Mayfair Theater, Inc. which was
decided en banc. This Court upheld the right of first refusal
of the lessee Mayfair, and rescinded the sale of the property
by the lessor Carmelo to Equatorial Realty "considering that
Mayfair, which had substantial interest over the subject
property, 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, the LESSEE shall be given 30 days
exclusive option to purchase the same." Carmelo initially
offered to sell the leased property to Mayfair for six to
seven million pesos. Mayfair indicated interest in purchasing
the property though it invoked the 30-day period. Nothing
was heard thereafter from Carmelo. Four years later, the
latter sold its entire Recto Avenue property, including the
leased premises, to Equatorial for P11,300,000.00 without
priorly informing Mayfair. The Court held that both Carmelo
and Equatorial acted in bad faith: Carmelo or knowingly
violating the right of first option of Mayfair, and Equatorial
for purchasing the property despite being aware of the
contract stipulation. In addition to rescission of the contract
of sale, the Court ordered Carmelo to allow Mayfair to buy
the subject property at the same price of P11,300,000.00.
In the recent case of Litonjuavs L&R Corporation,29 the Court, also
citing the case of Guzman, Bocaling& Co. vs. Bonnevie, held that
the sale made therein in violation of a right of first refusal
embodied in a mortgage contract, was rescissible. Thus:

43. Page 43 of 52
"While petitioners question the validity of paragraph 8 of
their mortgage contract, they appear to be silent insofar as
paragraph 9 thereof is concerned. 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. We see nothing wrong in this provision. The
right of first refusal has long been recognized as valid in our
jurisdiction. The consideration for the loan mortgage
includes the consideration for the right of first refusal. 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, then L&R
Corporation shall be given the right to match the offered
purchase price and to buy the property at that price. Thus,
while the spouses Litonjua had every right to sell their
mortgaged property to PWHAS without securing the prior
written consent of L&R Corporation, they had the obligation
under paragraph 9, which is a perfectly valid provision, to
notify the latter of their intention to sell the property and
give it priority over other buyers. 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, under the same terms and conditions offered to
L&R Corporation.
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, we agree with the Amended Decision
of the Court of Appeals that the sale made to PWHAS is
rescissible. The case of Guzman, Bocaling& Co. v.
Bonnevie is instructive on this point.
X XX
It was then held that the Contract of Sale there, which
violated the right of first refusal, was rescissible.
In the case at bar, 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. As such, PWHAS is presumed to have
been notified thereof by registration, which equates to
notice to the whole world.
X XX
All things considered, what then are the relative rights and
obligations of the parties? To recapitulate: the sale between
the spouses Litonjua and PWHAS is valid, notwithstanding
the absence of L & R Corporation’s prior written consent
thereto. Inasmuch as the sale to PWHAS was valid, its offer
to redeem and its tender of the redemption price, as
successor-in-interest of the spouses Litonjua, within the
one-year period should have been accepted as valid by the
L & R Corporation. However, while the sale is, indeed, valid,
the same is rescissible because it ignored L & R
Corporation’s right of first refusal."
Thus, the prevailing doctrine, as enunciated in the cited cases, is
that a contract of sale entered into in violation of a right of first
refusal of another person, while valid, is rescissible.
There is, however, a circumstance which prevents the application
of this doctrine in the case at bench. In the cases cited above, 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. The rationale for this is found in the provisions of
the New Civil Code on rescissible contracts. Under Article 1381 of
the New Civil Code, 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." Moreover,
under Article 1385, 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."30
It must be borne in mind that, unlike the cases cited above, 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. As such, in order to hold

44. Page 44 of 52
that petitioners were in bad faith, 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.
It is axiomatic that good faith is always presumed unless contrary
evidence is adduced.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.32 In this regard, 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, much less registered with the
Registry of Deeds. In fact, even the lease contract by which
respondents derive their right to possess the property involved was
an oral one.
On this point, 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.
Respondents failed to present any evidence that prior to the sale of
the property on September 4, 1990, petitioners were aware or had
notice of the oral right of first refusal.
Respondents point to the letter dated June 1, 199033 as indicative
of petitioners’ knowledge of the said right. In this letter, a certain
Atty. ErlindaAguila demanded that respondent Irene Guillermo
vacate the structure they were occupying to make way for its
demolition.
We fail to see how the letter could give rise to bad faith on the part
of the petitioner. No mention is made of the right of first refusal
granted to respondents. The name of petitioner Rosencor or any of
it officers did not appear on the letter and the letter did not state
that Atty. Aguila was writing in behalf of petitioner. In fact, Atty.
Aguila stated during trial that she wrote the letter in behalf of the
heirs of the spouses Tiangco. Moreover, even assuming that Atty.
Aguila was indeed writing in behalf of petitioner Rosencor, there is
no showing that Rosencor was aware at that time that such a right
of first refusal existed.
Neither was there any showing that after receipt of this June 1,
1990 letter, respondents notified Rosencor or Atty. Aguila of their
right of first refusal over the property. Respondents did not try to
communicate with Atty. Aguila and inform her about their
preferential right over the disputed property. 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.
Respondents likewise point to the letter dated October 9, 1990 of
Eufrocina de Leon, where she recognized the right of first refusal of
respondents, as indicative of the bad faith of petitioners. We do not
agree. Eufrocina de Leon wrote the letter on her own behalf and
not on behalf of petitioners and, as such, it only shows that
Eufrocina de Leon was aware of the existence of the oral right of
first refusal. It does not show that petitioners were likewise aware
of the existence of the said right. Moreover, the letter was made a
month after the execution of the Deed of Absolute Sale on
September 4, 1990 between petitioner Rosencor and the heirs of
the spouses Tiangco. There is no showing that prior to the date of
the execution of the said Deed, petitioners were put on notice of
the existence of the right of first refusal.
Clearly, if there was any indication of bad faith based on
respondents’ evidence, 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. However, bad
faith on the part of Eufrocina de Leon does not mean that
petitioner Rosencor likewise acted in bad faith. There is no showing
that prior to the execution of the Deed of Absolute Sale, petitioners
were made aware or put on notice of the existence of the oral right
of first refusal. Thus, absent clear and convincing evidence to the
contrary, petitioner Rosencor will be presumed to have acted in
good faith in entering into the Deed of Absolute Sale over the
disputed property.
Considering that there is no showing of bad faith on the part of the
petitioners, the Court of Appeals thus erred in ordering the
rescission of the Deed of Absolute Sale dated September 4, 1990
between petitioner Rosencor and the heirs of the spouses Tiangco.
The acquisition by Rosencor of the property subject of the right of

45. Page 45 of 52
first refusal is an obstacle to the action for its rescission where, as
in this case, it was shown that Rosencor is in lawful possession of
the subject of the contract and that it did not act in bad faith.34
This does not mean however that respondents are left without any
remedy for the unjustified violation of their right of first refusal.
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.
WHEREFORE, premises considered, the decision of the Court of
Appeals dated June 25, 1999 is REVERSED and SET ASIDE. The
Decision dated May 13, 1996 of the Quezon City Regional Trial
Court, Branch 217 is hereby REINSTATED insofar as it dismisses
the action for rescission of the Deed of Absolute Sale dated
September 4, 1990 and orders the payment of monthly rentals of
P1,000.00 per month reckoned from May 1990 up to the time
respondents leave the premises.
SO ORDERED.
Melo, Vitug, Panganiban, and Sandoval-Gutierrez, JJ., concur.
G.R. No. L-45142 April 26, 1991
SIMPROSA VDA. DE ESPINA, RECAREDO ESPINA, TIMOTEO
ESPINA, CELIA ESPINA, GAUDIOSA ESPINA and NECIFORA
ESPINA, petitioners,
vs.
THE HON. OTILIO ABAYA and SOFIA ESPINA and JOSE
ESPINA, respondents.
Cipriano C. Alvizo, Sr. for private respondents.
MEDIALDEA, J.: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,
Branch II, Lianga, Surigaodel Sur in Civil Case No. L-108, entitled
"SimprosaVda. deEspina, et. al. v. Sofia Espina, et. al." dated May
9, 1975 dismissing the complaint for partition; July 25, 1975
denying the motion for reconsideration; August 13, 1975 denying
the second motion for reconsideration and March 15, 1976 denying
plaintiffs' notice of appeal.
The antecedent facts are as follows:
Marcos Espina died on February 14, 1953 and was survived by his
spouses, SimprosaVda. deEspina and their children namely,
Recaredo, Timoteo, Celia, Gaudiosa, Necifora, Sora and Jose, all
surnamed Espina. Decedent's estate comprises of four (4) parcels
of land located at the Municipality of Barobo Province of Surigao del
Sur.
On August 23, 1973 an action for partition of the aforementioned
parcels of land was filed by petitioners Simprosa and her children
Recaredo, Timoteo, Celia, Gaudencia and Necifora.
The complaint alleges that parcel No. 1 is the exclusive property of
the deceased, hence the same is owned in common by petitioners
and private respondents in eight (8) equal parts, while the other
three (3) parcels of land being conjugal properties, are also owned
in common, 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.
It also alleges that parcel No. 1 has been subdivided into two lots.
Lot No. 994 PL8-44 is covered by Original Certificate of Title No.
5570 in the name of one of the heirs, Sofia Espina, who acquired
the title as a trustee for the beneficiaries or heirs of Marcos Espina,
while lot No. 1329 PCS-44 is covered by Original Certificate of Title
No. 3732 issued in the name of one of the heirs, Jose Espina as
trustee for the heirs of Marcos Espina. Said parcel of land is in the
possession of petitioners and private respondents who have their
respective houses thereon.

46. Page 46 of 52
Simprosa presently occupies parcel No. 2 while parcel No. 3 is
occupied by Timoteo, although the same is actually titled in the
name of Sofia. Parcel No. 4 is occupied by Recaredo.
Petitioners have several times demanded the partition of the
aforementioned properties, but notwithstanding such demands
private respondents refused to accede.
Private respondents alleged in their answer that in or about April,
1951, the late Marcos Espina and his widow, Simprosa, together
with their children made a temporary verbal division and
assignment of shares among their children. After the death of
Marcos, the temporary division was finalized by the heirs.
Thereafter the heirs took immediate possession of their respective
shares on April 20, 1952. Private respondents took actual physical
possession of their respective shares including the portions ceded
to them by Simprosa upon their payment of P50.00 each per
quarter starting April, 1952 until the latter's death pursuant to
their contract of procession The assignment of shares was as
follows:
(a) To the surviving spouses, (sic) SimprosaVda.
deEspina, herein plaintiffs, one-half (1/2) of the
parcel of land adjudicated to each of said plaintiffs-
heirs and defendants;
(b) To each of the following compulsory heirs, to wit:
1. To Recaredo (sic) Espina, 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
whose description is given in paragraph III of the
complaint, the said Parcel IV has been in the
possession of both RecaredoEspina and plaintiff
SimprosaVda. deEspina from April 20, 1952 until the
present time;
2. To TimoteoEspina, 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 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 TimoteoEspina in April, 1952, the
other half (1/2) portion of which parcel III was the
share of the surviving spouses (sic), SimprosaVda.
deEspina, and said Parcel III has been in the
possession of said TimoteoEspina and SimprosaVda.
deEspina from April, 1952 until the present time as
their share;
3. To Cecilia (sic) Espina, GaudiosaEspina and
NeciforaEspina, one-half (1/2) portion, 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, the other
half (1/2) of said Parcel III (sic) is the share of the
surviving spouses (sic) SimprosaVda. deEspina, and
said Parcel III (sic) has been in the possession of
said Cecilia. (sic) Espina, GaudiosaEspina and
NeciforaEspina and SimprosaVda.deEspina from
April, 1952 until the present time;
4. To Sofia Espina, one-half (1/2) portion of the
parcel of land included in the deception of Parcel 1 in
paragraph III of the complaint, the other half (1/2)
of said parcel being the share of the surviving
spouses (sic) SimprosaVda. deEspina and having
been ceded by said SimprosaVda. deEspina to said
Sofia Espina for a valuable consideration payable
quarterly at the rate of P50.00 beginning April, 1952
until her death, and said Sofia Espina has been
regularly paying to said SimprosaVda. de Espina
quarterly from April, 1952 the said amount of P50.00
until the present time, and by virtue of said
agreement, 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, as her
exclusive property;

47. Page 47 of 52
5. To Jose Espina, one-half (1/2) portion of the other
parcel of land included in the description of Parcel 1
in paragraph 1 of the complaint, the other half (1/2)
of said parcel being the share of the surviving
spouses (sic) SimprosaVda. deEspina and having
been coded (sic) by said SimprosaVda. deEspina to
said Jose Espina for a valuable consideration payable
quarterly at the rate of P50.00 beginning April, 1952
until her death, and said Jose Espina has been
regularly quarterly paying to said SimprosaVda.
deEspina from April, 1952 until the present time, the
said amount of P50.00, and by virtue of said
agreement, 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. (Rollo, pp. 27-28)
On February 13, 1974 private respondents filed a motion to dismiss
the complaint alleging the following grounds, to wit:
I
THAT THE FACTS ALLEGED IN THE COMPLAINT FAIL
TO CONFER UPON THE COURT COMPLETE AND
LAWFUL JURISDICTION OVER THE CASE FOR NON-
COMPLIANCE WITH THE CONDITION SINE QUA NON
CONCERNING SUIT BETWEEN MEMBERS OF THE
SAME FAMILY.
xxxxxxxxx
II
THAT THE CAUSE OF ACTION IS BARRED BY . . . .
STATUTE OF LIMITATIONS.
xxxxxxxxx
III
THAT THE PLAINTIFFS HAS NO LEGAL CAPACITY TO
SUE, (Motion to Dismiss Complaint, pp. 1-5;Rollo,
pp. 34-38)
xxxxxxxxx
On May 9, 1975 the trial court granted the motion and thereafter
dismissed the complaint. On May 23, 1975 petitioners filed a
motion for reconsideration on the following grounds, to wit:
1. THAT THE ORDER OF DISMISSAL HAS NO LEGAL
BASIS IN FACT AND IN LAW.
2. THAT THE STATUTE OF LIMITATIONS IS NOT
APPLICABLE IN THE CASE AT BAR. (Rollo, p. 50)
However, petitioners' motion was denied in an order dated July 23,
1975. On August 11, 1975 petitioners filed another motion for
reconsideration stressing that they were denied due process when
their motion was not heard. Again said motion was denied on
August 13, 1975.
Thereafter, petitioners filed their notice of appeal on September
11, 1975 and a motion for extension of time to file their Record on
Appeal on September 18, 1975.
On March 15, 1976, the respondent judge disapproved petitioners'
Record on Appeal and appeal bond on the ground that the notice of
appeal was filed out of time. Hence, this petition. The petitioners
raised four (,41) assignment of errors:
1. Whether or not an action for partition among co-
heirs prescribes.
2. Whether or not an oral partition among co-heirs is
valid.
3. Whether or not a hearing on a motion for
reconsideration is indispensable the lack of which is a
deal of due process.

48. Page 48 of 52
4. Whether or not the second motion for
reconsideration is pro forma Rollo, p. 10)
Petitioners maintain that the present action is not for reconveyance
but one for partition. Hence, 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. In addition, petitioners, 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. (Memorandum for Petitioners, p. 7)
However, 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." (Memorandum for Private
Respondents, p. 5)
The petitioners claim that the alleged oral partition is invalid and
strictly under the coverage of the statute of Frauds on two
grounds, to wit:
Firstly, parcel No. 1 being an exclusive property of the deceased
should have been divided into eight (8) equal parts. Therefore,
Simprosa .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.
Secondly, under Article 1358 of the New Civil Code, Simprosa could
not have ceded her right and that of her other children except by a
public document. (Memorandum of Petitioners, pp. 8-9)
On the other hand, private respondents insist that the oral partition
is valid and binding and does not fall under the coverage of the
Statute of Frauds.
Petitioners claim that they were denied due process when the
motion for reconsideration was denied without any hearing.
However, 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.
Finally, petitioners stress that the second motion for
reconsideration is not pro forma, thus, it suspends the running of
the period of appeal. Hence, the notice of appeal was timely filed.
On this point, private respondent maintain that the order of
respondent judge dated March 1 5, 1976 disapproving petitioners'
Record on Appeal and appeal bond may not properly be a subject
of a petition for certiorari. (Memorandum of Private Respondents,
p. 13)
We find the petition devoid of merit.
We already ruled in Lebrilla, et al. v. Intermediate Appellate
Court (G.R. No. 72623, December 18, 1989, 180 SCRA 188; 192)
that an action for partition is imprescriptible. However, an action
for partition among co-heirs ceases to be such, and becomes one
for title where the defendants allege exclusive ownership.
In the case at bar, the imprescriptibility of the action for partition
cannot be invoked because two of the co-heirs, 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. Hence, 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.
Anent the issue of oral partition, We sustain the validity of said
partition. "An agreement of partition may be made orally or in
writing. An oral agreement for the partition of the property owned
in common is valid and enforceable upon the parties. The Statute
of Frauds has no operation in this kind of agreements, for partition
is not a conveyance of property but simply a segregation and
designation of the part of the property which belong to the co-
owners." (Tolentino, Commentaries and Jurisprudence on the Civil
Code of the Philippines, Vol. II, 1983 Edition, 182-

49. Page 49 of 52
183 citing Hernandez v. Andal, et. al., G.R. No. L275, March 29,
1957)
Time and again, 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. Its refusal does not constitute a
denial of due process in the absence of a showing of abuse of
discretion. (see Philippine Manufacturing Co. v. AngBisigng PMC et.
al., 118 Phil. 431, 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, 1975, which is hereunder
quoted as follows:
When the court issued its order of June 5, 1975
requiring counsel for defendants to answer plaintiffs'
motion for reconsideration, the court opted to
resolve plaintiffs' motion based on the pleadings of
the parties, without further oral arguments. 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.
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.
SO ORDERED. (Memorandum of Private
Respondents, pp. 1213)
A cursory reading of the aforequoted order will show that there was
indeed no formal hearing on the motion for reconsideration. There
is no question however, 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 issue raised in the motion was fully
discussed therein and in the opposition thereto. Under such
circumstances, oral argument on the motion is reduced to an
unnecessary ceremony and should be overlooked (see Ethel Case,
et al. v. Jugo, 77 Phil. 517, 522).
We adhere to the findings of the trial court that the second motion
for reconsideration dated August 11, 1975 ispro forma, to it
The grounds stated in said motion being in
reiteration of the same grounds alleged in his first
motion, the same is pro-forma. (Order dated March
15, 1976, p. 2, Rollo, p. 74)
xxxxxxxxx
Furthermore, 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, although seemingly a
different ground than those alleged in their first
motion for reconsideration, is only incidental to the
issues raised in their first motion for reconsideration,
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. (Ibid, p. 3,Rollo,
p. 75)
Therefore, it is very evident that the second motion for
reconsideration being pro-forma did not suspend the running of the
period of appeal. Thus, the lower court committed no error when it
held that the notice of appeal was filed after the lapse of thirty five
(35) days, which is clearly beyond the period of thirty (30) days
allowed by the rules.
Finally, it has been a basic rule that certiorari is not a substitute for
appeal which had been lost. (see Edra v. Intermediate Appellate
Court, G.R. No. 75041, November 13, 1989, 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.
(Escudero v. Dulay, G.R. No. 60578, February 23, 1988, 158 SCRA
69, 77)

50. Page 50 of 52
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. (Ibid, p. 77) However, as emphasized earlier, the case at
bar is totally devoid of merit, thus, the strict application of the said
file will not in any way override sub-substantial justice.
Therefore, 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.
All premises considered, the Court is convinced that the acts of
respondent judge, in dismissing the action for partition and in
subsequently denying the motions for reconsideration of the
petitioners, does not amount to grave abuse of discretion.
ACCORDINGLY, the petition is DISMISSED.
SO ORDERED.
Narvasa, Cruz, Gancayco and Griño-Aquino, JJ., concur.
G.R. No. L-41132 April 27, 1988
VICTORINO HERNANDEZ, petitioner,
vs.
HONORABLE COURT OF APPEALS and SUBSTITUTED HEIRS
OF REV. FR. LUCIO V. GARCIA (DECEASED).respondents.
NARVASA, J.:
To those prevented by fraud from proving their title to land subject
of registration proceedings in another's name, 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. 1 This was the remedy availed of by Victorino Hernandez,
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 failed
in his bid to reopen and correct the decree in Land Registration
Case No. N-2488 Fr. Lucio V. Garcia the absolute owner of three
parcels of land in Parañaque. 3 This Court however finds that upon
the recorded facts, the petitioner is entitled to the relief sought.
Fr. Garcia 4 applied in 1959 for the registration in his name of Lots
1-A, 1-B, and 2 of Plan Psu-172410-B in Bo. San Dionisio,
Parañaque. His property adjoined that of Hernandez, and since
both estates were once owned by one Andres San
Buenaventura, 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. These monuments
were set along a line which the landowners had previously agreed
upon as representing the correct boundary between their estates.
This was in 1956. 6
Unknown to Hernandez, the Advance Plan Psu-172410-B submitted
in Fr. 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. This area fell beyond the stipulated boundaries of Fr.
Garcia's land and encroached pro tanto on the land of Hernandez
(on which, it should be mentioned, his tenants had been living for
many years [decades, in fact] before the date of Fr. Garcia's
application). 7 Allegedly lulled into complacency by the recentness
of their agreement as to the limits of their respective properties,
and confident that the visible landmarks installed by the
government surveyors precluded any overstepping of those limits,
Hernandez proffered no opposition to Fr. Garcia's application,
leaving the heirs of Andres San Buenaventura as the only
oppositors thereto.
It was not until the court had already ordered the registration of
the lots in Fr. Garcia's name that Hernandez discovered the
anomaly in the application. He at once filed a petition for review of
the decree, but in view of the new trial ordered by the court upon
motion of the heirs-oppositors, the petition was dismissed on the
ground of prematurity. 8 The court thereafter adjudged Fr. Garcia
as the owner of Lots 1-A and 2 and the heirs-oppositors as owners
of Lot 1-B.

51. Page 51 of 52
On appeal, however, the Court of Appeals declared Fr. Garcia
absolute owner, by acquisitive prescription, of an the lots. This
judgment became final on December 9, 1970; Decree No. 132620
was issued by the CFI of Rizal, and the Register of Deeds issued
OCT No. 8664 in Fr. Garcia's name. 9
Hernandez promptly refiled his petition for the reopening of the
decree. He argued that the decree covered a substantial portion of
his land to which Fr. Garcia could claim no title. He averred anew
that the Advance Plan supporting the application was "irregular,
because it disregarded the existing Bureau of Lands monuments
designating the actual possessions of the petitioner and the
applicant" and "falsely designates (other) ... boundaries ... not
actually marked by any ... monuments, 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." Thus having been "misled to believe
that no encroachment has been made by applicant," and
"conscious of the previous agreement and the fact that the Bureau
of Lands monuments have not been altered." Hernandez had put
up no objection to the application. 10
As stated at the outset, the trial court dismissed Hernandez's
petition, 11 and the appellate court gave his appeal short
shrift. 12 Both courts were of the view essentially that the evidence
did not bear out the claim of fraud; that under the Statute of
Frauds, the parties' covenant as to their properties' metes and
bounds was unenforceable since it was not reduced to writing; and
that Hernandez's parents and predecessors-in-interest, 13 Victorino
and Tranquilino, acquired title by purchase from San Buenaventura
to only 516 square meters of land, which could not have included
the disputed property. 14
Ordinarily, the Appellate Court's factual conclusions are not
reviewable by this Court, 15 and since here those conclusions are
decidedly adverse to Hernandez, the application of the rule should
result in a verdict against him. The rule admits of exceptions,
however, as when facts of substance were overlooked by the
appellate court which, if correctly considered, might have changed
the outcome of the case. 16
In this case there are several pivotal facts — about which there is
no controversy whatever, it may be added — which clearly should
have been weighed by the court a quo in Hernandez's favor, but
inexplicably were not. It is of record, to begin with, that concrete
monuments or "majones" were laid out by government surveyors
in 1956 between the properties of Hernandez and Fr. Garcia.
Hernandez avows that these structures were purposely installed to
mark the limits of their estates; his opponents could only let this
statement pass with telling silence. Neither did they seriously
dispute that these "mojones" were installed along the line agreed
upon by the parties as marking their properties' boundaries. All
they averred in their defense is that the agreement did not bind
them. Lastly, they freely conceded the presence of a fence along
this line, but were quick to point out that they had merely
"permitted" Hernandez to put up this "temporary" structure "to
stop the public (from) using ... this place as a common madden
shed." The excuse is lamentably feeble.
Hernandez argues that if indeed the Advance Plan, basis of Fr.
Garcia's application, was prepared without regard to the boundary
indicated by the fence and the surveyors markers, and worse,
"falsely designate(d) as boundaries the lines marked by ... 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, then he was truly a
victim of fraud, deftly cheated of the chance to vindicate his claim
to the land. The respondents again did not care to refute the
premises on which the argument is predicated. In any event, the
argument is entirely in accord with the evidence and the norms of
logic.
Lastly, 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, 17 but only because the Court missed sight of the fact
that the adjoining lots sold to the spouses and to Fr. Garcia were
unregistered and unsurveyed at the time of the transfer. 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, which, after the survey, was found to be

52. Page 52 of 52
716 square meters. The respondents cannot hold Hernandez to the
approximate area fixed in the deed and claim ownership over the
excess. All the land embraced within the stated boundaries was
sold. 18 If the respondent insist on the figures named in the deeds
of sale, then they themselves stand to lose 736 square meters of
land. San Buenaventura had only sold 1,545 square meters to Fr.
Garcia, 19 but the estate was later found to be actually 2,328
square meters in area. 20
Given the weight they deserve, the recorded facts prove
Hernandez's entitlement to the relief sought. The respondents'
reliance on the Statute of Frauds to secure a contrary judgment is
misplaced. The Statute of Frauds finds no application to this c ase.
Not every agreement "affecting land" must be put in writing to
attain enforceability. Under the Statute of Frauds, Article 1403(2)
(e) of the Civil Code, such formality is only required of contracts
involving leases for longer than one year, or for the sale of real
property or of an interest therein. Hernandez's testimony is thus
admissible to establish his agreement with Fr. Garcia as to the
boundary of their estates. It is also to be noted that the presence
of Hernandez's tenants on the land within his side of the border,
were this to be reckoned from the "mojones," further buttresses
his claim.
The foregoing considerations demonstrate more than adequately
that the inclusion of the 220-square-meter area in the Original
Certificate of Title No. 8664 of the Register of Deeds of Rizal is null
and void.
ACCORDINGLY, the appealed decision of the Court of Appeals is
hereby REVERSED and set aside and another one entered, ordering
the Register of Deeds of Rizal to register the 220 square meters in
question in favor of petitioner Victorino Hernandez; and to cancel
Original Certificate of Title No. 8664 and issue a new one in favor
of the private respondents excluding said 220-square-meter area
belonging to the petitioner. No pronouncement as to costs.
SO ORDERED.
Cruz, Gancayco and Griño-Aquino, JJ., concur.