GR 32670; (December, 1977) (Digest)
G.R. No. L-32670 December 29, 1977
ARSENIO GERARDINO, SR., VIRGINIA GERARDINO SY, ANGELINA GERARDINO GUMBA, and CORAZON GERARDINO LEGAYADA, petitioners, vs. THE HONORABLE JUDGE, COURT OF FIRST INSTANCE (BR. III), CAPIZ and JOVITO GLORIA, respondents.
FACTS
Private respondent Jovito Gloria filed a complaint for consolidation of ownership over a parcel of land against Rosario Artuz, alleging a deed of sale with a right to repurchase executed on October 10, 1964. Gloria claimed Artuz failed to repurchase within the stipulated one-year period. In her answer, Artuz admitted the document’s existence but contended it was merely an equitable mortgage securing a loan of P2,025, from which only P1,525 was actually received as P500 was retained as interest. She alleged she was deaf, blind, senile, and did not understand English, and that she had made a valid tender of repurchase which was refused. She consigned the amount with the court.
Upon Artuz’s death, her heirs, the petitioners herein, were substituted as defendants. After several postponements and a denied motion for postponement by the defendants’ counsel, the trial court proceeded with the hearing ex parte on October 17, 1969, allowing Gloria to present evidence. The court subsequently denied the petitioners’ motion for relief from the ex parte order and rendered a decision on December 26, 1969, ordering the consolidation of ownership in favor of Gloria. The petitioners’ motion for new trial was also denied.
ISSUE
Whether the trial court committed a grave abuse of discretion in denying the petitioners’ motion for new trial and in ordering the consolidation of ownership based on ex parte proceedings, thereby depriving them of their day in court to present a meritorious defense.
RULING
Yes. The Supreme Court granted the petition, set aside the lower court’s decision, and dismissed the complaint for consolidation. The Court ruled that while the petitioners and their counsel were negligent in their handling of the case, substantial justice demanded they be given their day in court. The answer raised a meritorious defense, specifically alleging that the transaction was an equitable mortgage, not a true sale with pacto de retro, and that the original vendor was in a vulnerable state. Under Article 1606 of the Civil Code, even if the contract were ultimately deemed a true sale with right to repurchase, the vendors (or their successors) retain the right to repurchase within thirty days from the finality of a judgment declaring it as such.
The Court found it unnecessary to remand the case for a new trial. Since the petitioners had already consigned the repurchase price of P2,025 with the court, which act constituted a valid exercise of the right of redemption, the complaint for consolidation should be dismissed. The petitioners were declared entitled to ownership and possession of the property, and the private respondent was ordered to deliver it to them.