GR 47342; (June, 1941)

EN BANC

G.R. No. 47342; June 30, 1941

HILARIO C. RODRIGUEZ, en su concepto de Administrador Judicial del Abintestado del finado Carlos Cervantes, demandante y apelante,
vs.
RAMON ECHEVARRIA, demandado y apelado:

D. Gaudencio Garcia y D. Jesus P. Morfe en representacion del apelante.
Sres. Habana y Kimpo y Sres. Escareal, Ong y Jarencio en representacion del apelado.

HORRILLENO, J.:

El demandante, como administrador judicial del finado Carlos Cervantes, inicio esta accion para obligar al demandado a que le permita retraer un terreno situado en la Ciudad de Davao con sus mejoras, mediante el pago de la suma de P3,000 que fue el precio de la venta con pacto de retro. En la demanda que presento silicitaba igualmente como remedios que se cancele el certificado de transferencia de titulo de la propiedad, expedido a favor del demandado, que se expida otro favor del demandante y que se le condene al demandado a pagar cierte indemnizacion por los alquileres que debieran haber rendido el terreno y sus mejoras.

Despues de la vista, el Juzgado de Primera Instancia de Davao dicto sentencia sobreseyendo la demanda, con las costas al demandante. Este apelo de dicha sentencia.

Las partes sometieron el asunto mediante el siguiente convenio de hechos.

1. That Carlos Cervantes, now deceased, was the sole and exclusive owner of a piece of real property situated in the then municipality of Davao, Province of Davao, now City of Davao, containing an area of 2,180 sq. m., and more specifically described in Original Certificate of Title No. 356.

2. That on March 5, 1928, the said Carlos Cervantes and Santiago de la Rosa executed a document of sale with the right of repurchase, whereby the said Carlos Cervantes for and in consideration of the sum of P4,200 sold and transferred to the said Santiago de la Rosa the property and improvements described in Original Certificate of Title No. 356. The right to repurchase was for a period of two years from March 5, 1928, or until March 4, 1930. The document was executed before Notary Public Celestino Chavez on March 5, 1928, and registered in the Register of Deeds of Davao on the same day. The terms of the said deed of sale are not questioned by the parties herein and said deed of sale is hereto attach, marked as Exhibit A of this agreed statement of facts, and made an integral part hereof.

3. That on October 3, 1931, Santiago de la Rosa, who was then Manager of the Davao Branch of the Philippine National Bank, and in view of his transfer from Davao to another station sold and transferred his rights, interest and participation in the deed of sale mentioned in paragraph 2, marked as Exhibit A, with the knowledge, consent and acquiescence of Carlos Cervantes, to the herein defendant Ramon Echevarria. The said document is entitled “Cesion de Derechos en una Venta con Pacto de Retro” and signed by Santiago de la Rosa, Ramon Echevarria and Carlos Cervantes before Notary Public Isidro S. Bastida on October 3, 1931. The parties herein do not question the terms and stipulation in the said document of October 3, 1931 and the same is made an integral part of this stipulation of facts, being identified as Exhibit B.

4. That paragraph three, four and five of the said document Exhibit B referred to in the foregoing paragraph are as follows:

3. Que en consideracion a la suma de tres mil pesos (P3,000), moneda filipina, que el Sr. Ramon Echevarria, soltero, mayor de edad, ciudadano español y con su direcion postal, Davao, me ha pagado y las he recibido a mi entera y completa satisfaccion, y con la confirmidad del mismo dueño del terreno Don Carlos Cervantes, quien se hace parte de esta escritura, por la presente cedo y traspaso todo mi derecho, interes y titulo a favor delmencionado Ramon Echevarria, sus herederos y causahabientes, en la mencionada escritura de venta con pacto de retro de fecha 5 de marzo de 1928 arriba descrita, como si Ramon Echevarria era y es comprador a retro de la finca descrita en el Certificado Original de Titulo No. 356, mediante la expresa condicion de que el o sea Don Ramon Echevarria es el que tiene derecho de cobrar los alquileres de las casas o edificios que se hallan dentro de la finca, dejando, sin embargo al referido Carlos Cervantes no exigira del mencionado Don Ramon Echevarria que los alquileres cobrados durante el plazo del retracto, sean deducidos del precio de la compra estipulado en este contrato.

4. Que las condiciones del presente contrato son tales de que si Don Carlos Cervantes pagare o haga que se paguela cantidad de tres mil pesos (P3,000), moneda filipina, al mencionado Don Ramon Echevarria, al vencimiento del plazo del retracto convenido, que terminara el 31 de diciembre de 1932, entonces esta venta a retro se quedara nulo y sin valor alguno; en caso contrario, esta venta sera definitiva y sin necesidad de otorgar una nueva escritura.

5. That upon the expiration of December 31, 1932, the defendant Ramon Echevarria look steps for the cancellation of Original Certificate of Title No. 356 which was in fact cancelled and in lieu thereof Transfer Certificate of Title No. 1092 was issued in his name on January 21, 1933. Previous to the issuance of Transfer of Certificate of Title No. 1092 and on January 5, 1933, the defendant Ramon Echevarria sent the following registered letter to Carlos Cervantes.

Sr. Dn. CARLOS CERVANTES
Callwe San Pedro
Davao, Davao

MUY SR. MIO:

Por la presente queda Vd. notificado que no habiendo Vd. recomprado dentrodel plazo convenido que expiro el 31 de diciembre de 1932, el terreno solar con todas sus mejoras que Vd. me lo vendio con pacto de retro, segun escritura de fecha 3 de octubre de 1931 y ratificada ante la fe del Notario Publico, Sr. Isidro Bastida, me he quedado por ministerio de la ley dueño absoluto del referido solar y sus mejoras.

En vista de lo que antecede, le requiero a Vd. que desaloje y abandone la casa donde Vd. vive inmediatamente, con la advertencia, ademas, de que a partir desde el primero de los corrientes y hasta que salga Vd. de cobrare un alquiler de cincuenta pesos (P50) mensuales, como dueño absoluto de la casa ocupada por Vd.

6. That Carlos Cervantes, in his lifetime, was living in the property in question until his death on September 7, 1933, and his successors in the interest continue to live therein up to the present time without paying any rent notwithstanding repeated demands of Ramon Echevarria to pay a monthly rental of P50.

7. That Ramon Echevarria on various occasions required the successors in interest of Carlos Cervantes, deceased, to vacate the premises but he refused to do so to this date.

8. That due to their failure to leave the premises, Ramon Echevarria filed a complaint for ejectment against them. The case is registered in this Court as civil case No. 1252. On September 19, 1935, the said case was dismissed by the Court Motu Proprio, the order of dismissal being as follows:

AUTO

Por escrito de 19 de septiembre de 1935, las partes solicitan la transferencia de la vista señalada para hoy hasta el 3 de octubre de 1935, pero esta causa se ha promovido en 23 de marzo de 1933. De entonces aca ha estado pendiente de tramitacion, sin haberse hecho por los interesados ninguna gestion para su pronto despacho. Por lo que, el Juzgado motu proprio fijo este dia para la vista de la misma. Y, no obstante, las partes mismas piden ahora la posposicion de la vista sin motivo suficientemente justificado.

Por tanto, el Juzgado, habiendo al parecer las partes perdido el interes en su prosecucion, sobresee esta causa, denegado la transferencia solicitada, de confirmidad con el articulo 127 del Codigo de Procedimiento Civil, sin costas.

Asi se ordena.

Davao, Davao, a 19 de septiembre de 1935.

9. That the deceased Carlos Cervantes failed to pay taxes on the property from 1931. And when the title to the property was registered in the name of the defendant Ramon Echevarria, he had the taxes consolidated to avoid the property being sold at public auction. That since then Ramon Echevarria has been paying for all the taxes due on the property.

10. That prior to June 18, 1937, neither the deceased Carlos Cervantes nor anybody in his name offered to repurchase the property in question from Ramon Echevarria. Then on June 18,1937, Atty. Tiburcio Cervantes, one of the sons of the deceased Carlos Cervantes, wrote a letter to Ramon Echevarria offering to repurchase the property in question. The letter was not accompanied by any money or check for the said repurchase. The said letter is as follows:

Mr. RAMON ECHEVARRIA
City of Davao

SIR:

In my own behalf and in behalf of my coheirs I wish to advice you that as heirs of the late Carlos Cervantes we are ready to pay you the P3,000 due you under the contract executed on October 3, 1931, between you and the said deceased, at any time you make demand from us. Under clause 5 of the said contract we have the right to repurchase the property, subject of the contract, at any time upon payment to you the P3,000. You are, therefore, requested to prepare the necessary papers for the transfer of the property in favor of the heirs of said Carlos Cervantes.

In the event that you refuse to make the necessary transfer in our favor within a reasonable time from the receipt of the letter we shall be compelled to bring the matter to Court for judicial determination.

Hoping for an early reply on the matter, I beg to remain,

11. That this case filed on June 26, 1937.

El apelante sostiene: (1) que el Juzgado erro al no de clarar que el Exhibit A, considerando sus terminos y estipulaciones, es en equidad una hipoteca para garantizar el pago de P4,200 que aparentemente representa un prestamo de P3,000 mas sus intereses al 20 por ciento al año, o un total de intereses de P1,200 por dos años; (2) que el Juzgado erro al no declarar que el Exhibit B no es en realidad un documento de venta con pacto de retro, sino una mera novacion del Exhibit A que extendio el plazo para el retracto hasta el 31 de diciembre de 1932; y (3) que el Juzgado erro al no declarar que bajo la clausula 5 del Exhibit B el demandante tiene derecho a recomprar la propidad mediante el pago de la suma de P3,000.

En el fondo toda la cuestion se limita a determinar si el plazo estatuido para el retracto ha expirado ya y, consiguientemente, si el demandante, como administrador judicial del finado Carlos Cervantes, tiene aun derecho a retraer el inmueble que se vendio con pacto de retro.

Convenimos con el Juzgado en que segun la escritura, Exhibit B, el plazo prorrogado fijado por las partes para el retracto expiro el 31 de diciembre de 1932 de conformidad con las clausulas contenidas en el Exhibit B que es la escritura de venta otorgada por Santiago de la Rosa a favor del demandado Ramon Echevarria con intervencion y aquiescencia del difunto Carlos Cervantes.

En la clausula 3 del Exhibit B se dice treminantemente que el plazo prorrogado que se concedio a Carlos Cervantes para el retracto de la propiedad inmueble expiraria el 31 de diciembre de 1932; y en la clausula 4 se reitera que el termino del mencionado retracto expirara el 31 de diciembre de 1932 y que en el caso de que no se ejercite dicho derecho por Carlos Cervantes, la venta quedaria definitiva y absoluta. Declaramos que la intencion de las partes no pudo haberse expresado mas claramente en el sentido de que el plazo prorrogado para el retracto se habia limitado hasta el 31 de dicienbre de 1932. Pero se alega por el apelante que la clausula 5 del documento demuestra que dicho plazo no quedo limitado a la indicada fecha, sino que dejo a voluntad del vendedor el retraer la propiedad en cualquier tiempo. Dicha clausula se lee asi:

5. Queda tambien pactado y convenido que en cualquiera fecha, Don Carlos Cervantes podra recomprar la finca mediante el pago de la suma de tres mil pesos (P3,000). moneda filipina.

Opinamos con el Juzgado que la clausula 5 debe leerse o interpretarse en relacion con las clausulas precedentes 3 y 4 y que asi interpretada resulta que las partes contratantes no quisieron decir otra cosa sino que el vendedor podia recomprar la propiedad inmueble en cualquiera fecha antes del 31 de diciembre de 1932. No podemos convenir con la interpretacion dada por el apelante porque, de ser asi, la clausula 5 pugnaria con la intencion expresada en las clausulas 3 y 4 y no habria terminos habiles para armonizar ni conciliar los conceptos de las tres clausula.

La pretension del apelante de que las ventas con pacto de retro eran ficticias y que lo que en realidad se convinieron por las partes fueron hipotecas para garantir el prestamo de P3,000, es insostenible. Los documentos que el efecto se otorgaron son tan claros que no dejan lugar o otra interpretacion. En ellos se ha estipulado y convernido por las partes que el inmueble se vendio con pacto de retro y que precio original fue de P4,200. Es verdad que en la segunda venta el precio se ha reducido a P3,000 solamente, pero ello se debio a que Santiago de le Rosa, que fue el segundo transmitente, habia recibido ya de Carlos Cervantes la suma de P1,200 a cuenta del precio de P4,200.

Se confirma la decision recurrida, con las costas de esta instancia al apelante.

Avanceña, Pres., Diaz, y Moran, MM., estan coformes.

Separate Opinions

LAUREL, J., dissenting:

I dissent.

Considering the terms and stipulation contained in the alleged pacto de retro sale, Exhibit A, between Carlos Cervantes and Santiago de la Rosa, I express the opinion that the transaction was merely one of loan and that Exhibit A was merely intended as security for the payment of that loan. In other words, what purports to be a deed of sale with the right of repurchase should be construed merely as an equitable mortgage to guarantee the payment of what appears to be the liquidated amount obtained by Carlos Cervantes, the alleged vendor, from Santiago de la Rosa, the alleged vendee. My reasons for reaching this conclusion are the following:

(1) The vendor continued in possession of the property notwithstanding execution of the document, Exhibit A. There is not even any stipulation in this document that the supposed vendor was to continue occupying the property as a lessee. In fact, it is alleged in paragraph V of the complaint (p. 4, bill of exceptions) “Que desde la fecha en que se ortogo la excritura de venta a retro a favor de Santiago de la Rosa, Exhibito A, hasta esta fecha. Carlos Cervantes en vida y despues su familia, viuda e hijos, continuaron y continuan hasta esta fecha viviendo en el mismo terreno como unicos dueños y exclusivos del mismo, sin reconecer a ningun orto dueño”, and this fact of possession by the supposed vendor and his successors in interest is not even denied or controverted. On the contrary, in the counterclaim filed by defendant, this fact of possession is expressly admitted, as according to the allegation therein contained, the heirs of the vendor refused to pay rents or vacate the premises, and asked that the plaintiff vendor be adjudged to pay the sum of P2,850 covering the rent of the premises from January, 1933.

(2) Under the terms of Exhibit A, the vendor would be entitled to collect and receive “todas las rentas y productos de la propiedad objeto de estaventa durante el referido plazo del retracto, para mi exclusivo beneficio.”(Clause [c], Exhibit A.).

(3) Under the terms of conditions of the document, Exhibit A, also, the vendor is authorized to make partial payments “a cuenta de la indicada suma.” (Clause [b], Exhibit A.)

(4) That the vendor will continue to shoulder the expenses for the repair of the building thereon as well as the taxes that may become due on the property sold. (Clause [d], Exhibit A.)

These circumstances are, in my opinion, strong and clear indicia that the transaction intended was that of a loan and not of purchase with pacto de retracto. It is a well-settled doctrine that contracts are not what the parties see fit to call them but what they are by principles of law. (Compañia Agricola de Ultrazar vs. Reyes, 4 Phil., 2, 23.) And that where an instrument contains words usually found in a sale with a right of repurchase but also contains other words and expressions not usually found in such instruments but rather in those executed as security for the payment of a debt, and the acts of the parties during the existence of the contract were such as to demonstrate that they regarded the instrument in question as a security for a loan, the same will be held not to be a sale but a security. (Manlaguit vs. Sanchez Dy Puico, 34 Phil., 325.)

If Exhibit A should be considered as a mere security for the payment of a loan, and since Exhibit B is on its face merely an assignment by Santiago de la Rosa to Ramon Echevarria, the defendant-appellee herein, of the former’s right and interest under Exhibit A (paragraph 3, Exhibit B), it follows that the defendant-appelle merely acquired the right of a creditor with an equitable mortgage and certainly no greater right than of his predecessor in interest, the original creditor with an equitable mortgage. It is to be observed that although at the time of the execution of Exhibit B, which was on October 3, 1931, the purported period of redemption under Exhibit A had already expired, and the original creditor, Santiago de la Rosa, could have pretended to be the absolute owner of the property and could have sold the same to the defendant, Echevarria, said original creditor merely sold his rights under Exhibit A, and the herein defendant-appellee agreed to extend the period for paying the obligation to December 31, 1932, and further expressly agreed to allow the deceased, Carlos Cervantes, to repurchase the property at any time.

Viewed in the light of what has been said, it is easy to comprehend why in the contract, Exhibit B, it is stipulated that the supposed original vendor could redeem the property “en cualquierra fecha … mediante el pago de la suma de tres mil pesos (P3,000), moneda filipina.” (Clause 5, Exhibit B, p. 18, bill of exceptions.)

Upon the other hand, assuming that there is doubt as to whether Exhibit A is a contract of sale with pacto de retro or an equitable mortgage, the doubt should be resolved in favor of the latter, because such a contract involves a smaller transmission of rights and interests, and the debtor does not surrender all rights to collect what simply confers upon the creditor the right to collect what is owing from the value of the thing given as security, there existing between the parties are greater reciprocity of rights and obligations. (Art. 1289, Civil Code; Olino vs. Medina, 13 Phil., 379; Perez vs. Cortes, 15 Phil., 211; Padilla vs. Linsangan, 19 Phil., 65.)

In reaching the foregoing conclusion I have not overlooked the circumstances that the so-called vendee a retro sold his rights to the herein defendant-appellee for only three thousand pesos on the theory that the former had already been paid P1,200 of the original sum of P4,200 as mentioned in clause 2 of Exhibit B. It is worthy to note the coincidence that, as alleged by the plaintiff-appellant, P1,200 is exactly equal to the interest of P3,000 for two years, which is the period of redemption stipulated in Exhibit A, or at the usurious rate of interest of 20 per cent per annum. Neither have I overlooked the circumstance that the defendant-appellee herein was willing to recall the property only for the sum of P20,000, and while this may be construed as a mere courteous refusal to part with the property, such circumstance is significant to bear in mind. Whether the contract contemplated was one of mortgage or sale, in view of the appellee’s admitted fact that at the time of the alleged sale the property had an income of P1,560 per annum, and assuming that the original loan was P3,000 as contended by the plaintiff-appellant, the value of the property at the time of the execution of the said contract must have been very much more. In the case of Cabigao vs. Lim (50 Phil., 844, 860), we said:

The presumptions are that a person takes ordinary care of his own business and that he is of sound mind until otherwise proven. (Code of Civ. Proc., sec. 334.) If these plaintiff would not sell one-half of the annual revenue produced therefrom, unless the sale was intended merely as the record to overcome this presumption. In its essential points, the case is very similar to that of Aguilar vs. Rubiato and Gonzalez Vila (40 Phil., 570), in which this court held that an alleged sale, with the right to repurchase, was only a mortgage.

By and large substantial justice will be done all concerned by holding the contract as one of equitable mortgage and not of sale with pacto de retro: the heirs of the deceased will retain the ownership of the common property inherited from their predecessor in interest upon payment of the amount of the indebtedness and interest thereon, and the supposed vendee will get back his money and its earnings. Fundamenta justitiae sunt ut ne cui neceatur.

I am, therefore, of the opinion that the judgment of the trial court should be reserved, and reconveyance of the property to the heirs of Carlos Cervantes permitted, upon payment of the amount of the loan, plus interest, without pronouncement regarding costs.

Batas Pinas