G.R. No. L-5922
CARLOS MARTELL ONG, plaintiff-appellant, vs. CARLOTO JARIOL, ET AL., defendants-appellees.
October 18, 1910

FACTS: Carlos Martell Ong (plaintiff-appellant) filed a complaint alleging that he was the owner of a parcel of land in Iligan, which he had mortgaged to Carloto Jariol for P400 without interest, on the condition that Jariol would return the land upon payment of P400 plus expenses for improvements. Ong claimed he demanded the return of the land and offered to pay, but Jariol (and later his son, Leandro Jariol) refused. Ong further alleged that Leandro Jariol subsequently conveyed the property to Gregorio Nanaman, who then sold it to M.W. Frield. Ong sought to nullify these transfers, recover the land, and claim P200 in damages for lost fruits. To support his claim, Ong presented a private document (Exhibit A) which he asserted was the mortgage agreement.

The defendants (M.W. Frield, Leandro Jariol, and Gregorio Nanaman) denied the mortgage claim. They asserted that Ong had unconditionally sold the land to Carloto Jariol, as evidenced by a public instrument (Exhibit 1) ratified before a notary public. Carloto Jariol’s heirs (his widow Tomasa Sabilla and son Leandro Jariol) then sold the land outright to Gregorio Nanaman, who subsequently sold it to M.W. Frield, also through notarized instruments. The defendants further pointed out that Ong had previously sued Leandro Jariol in the justice of the peace court for P200 in damages for selling the land, and a judgment favorable to Ong had been rendered and executed, implying Ong had recognized the sale and sought monetary compensation. They also noted that Ong had only offered P300 to buy the land back when Jariol’s heirs offered it to him, which contradicted his claim of a P400 mortgage and right to repurchase.

The Court of First Instance absolved the defendants from the complaint, dismissed the preliminary injunction, and assessed costs against Ong. Ong appealed this decision.

ISSUE: 1. What was the true nature of the agreement between Carlos Martell Ong and Carloto Jariol a mortgage or an absolute sale?
2. Can the plaintiff seek to nullify the subsequent sales of the property to third parties?
3. Does the plaintiff’s prior action for damages preclude his current claim for recovery of the land?

RULING: The Supreme Court affirmed the decision of the lower court, ruling in favor of the defendants.

1. The transaction was an absolute sale, not a mortgage. The Court gave greater probative value to the public instrument (Exhibit 1) evidencing an absolute sale, which was duly executed before a notary public, over the private document (Exhibit A) presented by Ong. Public instruments are accorded greater reliability and efficacy, especially against third parties.
2. The plaintiff cannot seek to nullify the subsequent sales. Under Article 1302 of the Civil Code, an action for nullity of contracts may only be brought by those principally or subsidiarily obligated by virtue thereof. Ong was not a party to the subsequent sales between Jariol’s heirs, Nanaman, and Frield. These subsequent purchasers acquired the property in good faith, without knowledge of Ong’s alleged private mortgage document. Furthermore, a private document has no legal effect against third persons (Art. 1230 Civil Code).
3. The plaintiff’s prior action for damages precluded his current claim for recovery of the land. Ong had previously sued Leandro Jariol in the justice of the peace court for damages caused by the sale of the land and had obtained a favorable judgment for P200. This prior action for damages indicated that Ong implicitly recognized the sale of the land and sought monetary compensation for its loss, rather than challenging the validity of the sale or seeking to recover the property itself. Having already been indemnified for the loss of the land, he could not seek to recover the land again. His offer of P300 to buy the land back also contradicted his claim of a P400 mortgage with a right to repurchase.

Therefore, the Court found that the defendants’ acquisition of the property was legitimate, and Ong had no legal right to compel its return or nullify the successive transfers.