G.R. No. L-10100; August 15, 1916
GALO ABRENICA, plaintiff-appellee, vs. MANUEL GONDA and MARCELINO DE GRACIA, defendants-appellants.

FACTS:
Plaintiff Galo Abrenica filed an action to compel defendants Manuel Gonda and Marcelino de Gracia to return two parcels of land. Abrenica alleged that on February 21, 1906, he sold the lands to Gonda under a right of repurchase (pacto de retro) for P75, with a redemption period of seven years. Upon the expiration of the period, Abrenica tendered payment to redeem the lands, but Gonda refused to accept it and deliver the property. Gonda, who had subsequently sold the lands to his co-defendant Marcelino de Gracia, claimed that the lands were sold to him outright by Abrenica and his mother about nineteen years prior. The case was tried by the justice of the peace of the provincial capital, acting under assignment by the Court of First Instance pursuant to Act No. 2041 . The trial court ruled in favor of Abrenica, ordering the defendants to return the lands upon payment of P75. The defendants appealed, assigning errors including the constitutionality of Act No. 2041 and the admissibility of evidence.

ISSUE:
1. Whether Act No. 2041 , authorizing a justice of the peace to try cases by assignment from the Court of First Instance, is constitutional.
2. Whether the trial court erred in admitting and considering parol evidence to prove a contract of sale with a right of repurchase, which by its terms was to be performed over a period exceeding one year.

RULING:
1. On the Constitutionality of Act No. 2041 : The Supreme Court affirmed its prior rulings, holding that Act No. 2041 is valid and does not conflict with the Act of Congress of July 1, 1902. A justice of peace acting under such a designation functions as a judge of the Court of First Instance and holds, in effect, a Court of First Instance. Therefore, the trial court had proper jurisdiction.

2. On the Admissibility of Parol Evidence: The Supreme Court held that the evidence was properly admitted and considered. While a contract for the sale of real property with a right of repurchase, performable over a period exceeding one year, ordinarily cannot be proved by parol evidence under the Statute of Frauds (subsections 1 and 5, Section 335, Code of Civil Procedure), the defendants waived their right to object. The defendants’ counsel failed to make a timely objection during the plaintiff’s direct examination regarding the contract. The motion to strike the testimony was made only after the examination was concluded, which was too late. Furthermore, by cross-examining the plaintiff and witnesses on details of the very contract they sought to strike out, the defendants tacitly waived their objection and treated the evidence as properly before the court. The trial court, therefore, correctly considered the testimonial evidence.

3. On the Merits: The Supreme Court found the evidence sufficient to establish that the transaction between Abrenica and Gonda was indeed a sale with a right of repurchase (pacto de retro) for P75 with a seven-year redemption period, not an absolute sale. Abrenica validly exercised his right of redemption within the stipulated period and tendered the repurchase price. Consequently, Gonda was obligated to return the lands. The subsequent sale by Gonda to De Gracia could not defeat Abrenica’s superior right, as Gonda was not the absolute owner and could only transfer whatever interest he had, which was subject to the redemption.

The judgment of the trial court was affirmed, with costs against the appellants.