G.R. No. L-15891. February 29, 1964.
IN RE: PETITION FOR CONSOLIDATION OF OWNERSHIP OF REAL PROPERTY, ANGEL FUNIESTAS, petitioner-appellee, vs. SEVERO ARCE, respondent-appellant.

FACTS

On July 10, 1948, respondent Severo Arce executed a “Deed of Sale with the Right to Repurchase” over a parcel of riceland in favor of petitioner Angel Funiestas for P2,750. The contract stipulated a ten-year redemption period, after which absolute title would vest in the vendee without further deed. Arce failed to redeem within the decade. Consequently, on December 10, 1958, Funiestas filed a petition in the Court of First Instance of Zambales to consolidate his ownership over the property.
Arce opposed the petition, raising factual defenses. He alleged that the purchase price was inadequate and that there was a verbal agreement requiring Funiestas to make a demand to redeem one year before the expiration period, which was not complied with. Based on this, he prayed for a one-year extension from the date of his opposition to repurchase. Initially, the court referred the case for the presentation of evidence due to these factual issues, but the record shows no evidence was ever taken.

ISSUE

Whether the trial court erred in resolving the petition for consolidation as a pure question of law without first receiving evidence on the factual issues raised by the respondent.

RULING

Yes, the Supreme Court set aside the lower court’s order and remanded the case for further proceedings. The legal logic is grounded in procedural due process and the proper classification of issues for adjudication. The trial court incorrectly characterized the case as involving only a question of law. The respondent’s opposition and subsequent memorandum explicitly contested material facts that went to the very nature of the transaction.
Arce’s allegations of inadequate price and a verbal collateral agreement regarding a demand for redemption were factual assertions requiring proof. More critically, in his memorandum, he contended that the true contract was not a pacto de retro sale but one “of pledge” (construed as an equitable mortgage). This defense, if proven, would fundamentally alter the legal relationship of the parties, as an equitable mortgage is not subject to consolidation of ownership upon mere expiration of a term but is governed by foreclosure laws. Resolving such a pivotal claim necessitates a full hearing where parties can present testimonial and documentary evidence.
The Supreme Court held that it was reversible error for the trial court to issue an order of consolidation based solely on the pleadings and memoranda, thereby precluding the respondent from substantiating his factual defenses. The case was not ripe for summary resolution on a purely legal basis. The order was vacated, and the case was remanded to the lower court to conduct the appropriate proceedings, receive evidence, and resolve the factual controversies before any legal conclusion on consolidation could be validly made.