G.R. No.

L-27759 April 17, 1970

CRESENCIANO DE LA CRUZ, plaintiff-appellant,

vs.

JULIO CRUZ, ZENAIDA MONTES and ALFONSO MIRANDA, defendants-appellees.

Segundo C. Mastrille for plaintiff-appellant.

E. A. Bernabe for defendants-appellees.

REYES, J.B.L., J.:

The spouses Julio Cruz and Zenaida Montes were once the owners of a parcel of land
covered by Transfer Certificate of Title No. 10680 of the Office of the Registry of Deeds
for Pasay City, which parcel of land is more particularly described therein as follows:

A PARCEL OF LAND (Lot 10) of the subdivision plan Psd-790, being a

portion of the land described on plan Psu-2031-Amd. 2-A, LRC (G.L.R.O.)
Record No. 2484, situated in the Barrio of Malibay, Municipality of Pasay,
Province of Rizal. Bounded on NE., by Lot 9 of the subdivision plan:
containing an area of SIX HUNDRED SIXTY TWO (662) SQUARE
METERS.'" On 16 December 1965, Julio Cruz and Zenaida Montes sold a
portion of the aforesaid parcel of land to the plaintiff-appellant, Cresenciano
de la Cruz. The deed of absolute sale described the portion sold as —

... a portion with an area of Three Hundred and Thirty-One Square Meters
(331 sq. m.) on the northern part ...

Inserted in the deed was a stipulation, reading as follows:

It is hereby agreed that a plan will be made on the whole parcel of land
above-described showing the portion with an area of Three Hundred and
Thirty-one Square Meters (331 sq. m), hereby conveyed, and the remaining
portion with an area of Three Hundred Thirty-One Square Meters (331 sq.
m.), together with the technical description of each portion, that is, the
portion hereby conveyed, and the portion remaining.

On 28 February 1966, Julio Cruz and Zenaida Montes sold the remaining portion of the
land to Alfonso Miranda. The deed of sale described the portion sold as —

... that unsegregated portion with an area of THREE HUNDRED THIRTY

ONE (331) SQUARE METERS bordering C. Jose and F. Francisco Streets,
 Malibay, Pasay City, which is at the southern part of the parcel of land
covered by T.C.T. No. 10680 above-described.

Under date of 25 April 1966, Cresenciano de la Cruz, filed a complaint against Julio Cruz,
Zenaida Montes and Alfonso Miranda, praying the court to have himself (plaintiff-
appellant Cresenciano de la Cruz) declared as entitled to purchase, by way of pre-
emption and legal redemption, the one-half (½) portion of the land that was sold to
Miranda.

Upon joinder of issues, the parties agreed, during the pre-trial of the case, to submit the
case for decision on the pleadings, and, on the basis thereof, the court below rendered
judgment, as stated at the beginning of this decision.

Not satisfied with the court's decision, plaintiff-appellant Cresenciano de la Cruz

interposed the present direct appeal to the Supreme Court and assigns the following
errors as having been committed by the lower court;

2. The trial court erred in concluding that plaintiff is not entitled to the right
of pre-emption or legal redemption.

Nor is plaintiff-appellant entitled, as an adjoining owner, to the right of pre-emption or

redemption over the southern portion of the parcel of land because he had not alleged in
his complaint and has not proved (since the case was submitted for decision on the
pleadings) that said portion is so small and so situated that a major portion thereof cannot
be used for any practical purpose within a reasonable time, having been bought merely
for speculation (Article 1622, Civil Code; Soriente vs. CA, L-1734), 31 August 1963, 62
O.G. 7013, 8 SCRA 750).
[G.R. No. L-15312. November 29, 1960.]

In re: Petition for Consolidation of Ownership in Pacto de Retro Sale of a House. JUAN
TACDORO, petitioner and appellee, v. JESUS ARCENAS, oppositor and Appellant.

Desquitado & Acurantes for Appellant.

Armando V. Cortez for Appellee.

FACTS:

On December 22, 1958, petitioner-appellee Juan Tacdoro filed in the Court of First Instance of
Davao a petition (docketed as Misc. Case No. 374) alleging, among other things, that appellant
Jesus Arcenas had sold to the petitioner, con pacto de retro, a residential house situated at Bolton
Street, Davao City, and covered under Tax Declaration No. R-1452; that February 16, 1957 was
the original expiry dated fixed by the parties for the repurchase, but, upon subsequent agreement,
the period was extended for another year counted from the aforesaid date; and that the term of the
repurchase had expired without the right of repurchase having been exercised by the vendor.
Accordingly, petitioner prayed that the court order a judicial consolidation of ownership over the
property sold pursuant to the provisions of Article 1607 of the Civil Code.

The petition was heard on December 24, 1958, the date set by the petitioner. Appellant was served
a copy of the said petition two days previously, or on December 22, 1958; but no summons was
served by the court.

On January 6, 1959, the court a quo entered an order consolidating ownership of the property in
question in favor of the petitioner. On January 10, 1959, appellant filed a motion for
reconsideration, contending that the lower court had no jurisdiction to consider the petition of the
appellee for lack of summons, and that the denominated pacto de retro sale was in fact an equitable
mortgage. This motion was denied by the court in its order of January 21, 1959.

HELD:

The Court below erred in considering that judicial consolidation of ownership under Article 1607
of the new Civil Code can be had by a mere motion with three days’ notice, instead of requiring
an independent proceeding, for which docket fees are chargeable. As aforesaid, a motion could
only exist as an incident to a principal suit or proceeding.

It is still premature to decide here and now whether the agreement in question is a true pacto de
retro sale or in reality a mere equitable mortgage. Upon the other hand, the arguments advanced
by the appellant convince us that his exceptions to the orders appealed from were not taken merely
for frivolous reasons.
That the vendor or retro should be made a party-defendant to the proceedings and, therefore, be
entitled to notice of the same, is clearly inferable from the codal provision that the judicial order
consolidating ownership in the vendee a retro shall not issue unless "after the vendor has been duly
heard" (Art. 1607, Civil Code, supra); which statement would also imply that the proceedings
therein to be taken are in no way to be construed as merely summary in nature. This conclusion is
further fortified by other provisions of the new Civil code such as articles 1602, 1603, 1604, 1605
and 1606, which are all indicated of the legislative intent to accord the vendor a retro the maximum
safeguards for the protection of his legal rights under the true agreement of the parties.

The obvious intent of the Civil Code in requiring a judicial confirmation of the consolidation in
the vendee a retro of the ownership over the property sold, is not only to have all doubts over the
true nature of the transaction speedily ascertained and decided, but also to prevent the interposition
of buyers in good faith while such determination is being made. Under the former method of
consolidation by a mere extra-judicial affidavit of the buyer a retro, the latter could easily cut off
any claims of the seller by disposing of the property, after such consolidation, to strangers in good
faith and without notice. The chances of the seller a retro to recover his property would thus be
nullified, even if the transaction were really proved to be a mortgage and not a sale.
REYES vs ROSALES

25 Phil. 495

TRENT, J.:

On July 29, 1902, Rivera sold a parcel of land to Reyes and Ordoveza for 800 pesos under pacto
de recto, on the condition, however, that the repurchase could not be made until after three years
from the date of the contract of sale. In this document Rivera states that he was of age. On May
29, 1903, Rivera sold his right to repurchase to Rosales for 1,075 pesos. In the document
evidencing this sale, Rivera states that he is 23 years of age. Rosales, who is the plaintiff in
this case, alleges that in January, 1908, he tendered 800 pesos to Reyes and Ordoveza with the
request that the land be surrendered to him in accordance with the contract entered into between
them and Rivera in 1902, but that they refused to accept the money and comply with his request.

The contract of 1902 provided that the right to repurchase could not be exercised within three years
from the date of the contract

ISSUE:
Whether or not the right to repurchase had expired before Rosales attempted to exercise it.

HELD:

Under the Partidas, as under the Roman Law, no attempt was made to limit the duration of
contracts with pacto de retro. Unless limited by the contract of the parties, it was generally held
that the right to repurchase was perpetual. By its decision of May 12, 1875, the supreme court of
Spain first attempted to place a restriction upon the length of such contracts by holding that they
gave rise to a personal action of prescription in accordance with the law on prescription of
actions. (23 Scaevola, 767.)

In the present case, the only stipulation of the parties with reference to the right to repurchase was
that it could not be exercised within three years from the date of the sale. Had it not been for this
condition, it is evident that that right would have expired four years from the date of the sale. But
if it were held that, regardless of such a provision, the redemption right expires within four years
from the date of the contract unless there is a special provision as to how long this right, once
effective, shall continue, many otherwise perfectly valid contracts can be conceived in which the
redemption privilege would be unenforceable; For instance, if the stipulation in question had
provided that the right to redeem could not be exercised within five years from the date of the
contract, it is quite apparent that, according to the argument advanced by the defendants, the vendor
could not have redeemed the property at all, for the right to do so would have expired one year
previously.

In all such cases it would seem that the vendor should be allowed four years from the expiration
of the time within which the right to redeem could not be exercised, or in the event that four years
would extend the life of the contract beyond ten years, the balance of the ten-year period, on the
ground that vendors, where the right to redeem is not thus suspended and no express agreement as
to the length of time during which it may be exercised is made, are also allowed four years. This
construction, it must be conceded, is the most logical and just.

We are of the opinion that the effect of the express stipulation or agreement in the contract which
we have been discussing was to extend the life of the contract to seven years from the date of its
execution.

For the above reasons, we are of the opinion that the complaint alleges sufficient facts to constitute
a cause of action. The judgment appealed from is reversed, and the cause remanded, with
instructions to require the defendants to answer, without costs.
FELIX ONGOCO and BELEN CONSUNJI, petitioners,
vs.
THE HON. JUDGE OF THE COURT OF FIRST INSTANCE OF BATAAN, THE
REGISTER OF DEEDS OF BATAAN, APOLONIO SORIANO and CIRILA MINA,
respondents.

Tañada, Teehankee & Carreon for petitioners.

Bienvenido L. Bascara for respondent Register of Deeds.
Filemon S. Trinidad for respondents Apolonio Soriano and Cirila Mina.

BENGZON,. J.P., J.:

Felix Ongoco and Belen Consunji, spouses, were owners of a parcel of land, 695 square
meters in area, at Abucay, Bataan, covered by Transfer Certificate of Title No. T-8185 in their
names. On May 2, 1959 the aforesaid spouses sold their land to Apolonio Soriano and Cirila Mina,
for P1,500.00, with right to repurchase within three years from said date.

No repurchase was made within the agreed period. On August 29, 1962, Apolonio Soriano
and Cirila Mina filed in the Court of First Instance of Bataan a "petition" for an order declaring
them the absolute owners of the land and transferring the certificate of title to their names.

Although the petition was docketed as "Special Civil Case No. 2827" the respondents-
vendors were not served with summons but only sent a copy of the petition by registered mail. The
petitioners asked that the case be set for hearing on September 11, 1962 at 8:00 a.m. On September
4, 1962, however, respondents-vendors moved for postponement of the hearing.1awphîl.nèt

On September 11, 1962 , the date set for hearing, respondents-vendors were not present in
court when the case was called. The Court of First Instance denied their motion for postponement
and thereupon rendered judgment declaring the petitioners-vendees absolute owners of the land
and ordering registration thereof in their names.

Respondents-vendors moved, on October 4, 1962, to set aside the judgment but on October
25, 1962 the motion was denied. Subsequently, on February 26, 1963, the respondents-vendors in
said case filed the present suit herein for certiorari.

ISSUE:

Petitioners contend that respondent Judge gravely abused his discretion and/or acted without or in
excess of jurisdiction in rendering the judgment aforementioned.
HELD:

Article 1607 of the New Civil Code provides:

ART. 1607. In case of real property, the consolidation of ownership in the vendee by virtue of the
failure of the vendor to comply with the provisions of article 1616 shall not be recorded in the
Registry of Property without a judicial order, after the vendor has been duly heard.

Speaking through Mr. Justice J.B.L. Reyes, this Court has already ruled that the foregoing article
requires the filing of an ordinary civil action and, consequently, service of summons on parties-
defendants as well as opportunity to answer or move to dismiss within 15 days therefrom.

From the facts of this case it is clear that the requisite of an ordinary civil action has not been
followed. For, as stated, no summons was served on the respondents-vendors. Assuming that
respondents-vendors' motion to postpone may be taken as voluntary submission to the lower
court's jurisdiction — producing the effect or service of summons — still, they should have been
given 15 days therefrom to file an answer. The Court of First Instance instead forthwith rendered
judgment, so that respondents-vendors were deprived of their right to be heard, in violation of
Article 1607 of the New Civil Code.

WHEREFORE, the writ of certiorari is granted, the judgment in question is set aside, and
respondent Judge is ordered to allow herein petitioners to file, within 15 days from notice, their
answer in Special Civil Case No. 2827. No costs. So ordered.