Republic of the Philippines

Court of Appeals
Cebu City

FELISA CODILLA, CHERRY

ARDIENTE NABLE, RICARDO
ARDIENTE, JR., ROSALINA
ARDIENTE DIACOMA, EDUARDO
ARDIENTE, BIENVENIDA
ARDIENTE, JUANITO ARDIENTE,
AVELINO ARDIENTE and NARCISA
ARDIENTE RABASANO,
Plaintiffs-Appellants, RTC CIVIL CASE NO. CEB-25963
FOR: RECONVEYANCE &
PARTITION

-versus -
MANUEL CABUENAS and
AGAPITO CINCO,
Defendants-Appellees.

x---------------------------------------------/

APPELLANT’S BRIEF

Pursuant to the
Notice of this Honorable Court
Plaintiffs-Appellants
by counsel, most respectfully submit this brief.

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Table of Contents

I. SUBJECT INDEX
II. ASSIGNMENT OF ERRORS
III.STATEMENT OF THE CASE
IV. STATEMENT OF THE FACTS
V. ISSUES
VI. ARGUMENTS
VII. RELIEFS

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ASSIGNMENT OF ERRORS

I. THE TRIAL COURT ERRED WHEN IT CONCLUDED

THAT THE CONTRACT WAS A DEED OF SALE AND NOT
AN EQUITABLE MORTGAGE.

II. ASSUMING THAT THE CONTRACT WAS A DEED OF

SALE, THE TRIAL COURT ERRED WHEN IT CONCLUDED
THAT BY MERE FACT OF NOTARIZATION, THE
PRESUMPTION OF MISTAKE UNDER THE CIVIL WAS
DEFEATED.

III. THE TRIAL COURT ERRED WHEN IT CONCLUDED

THAT THE REMEDY OF RECONVEYANCE IS DEFEATED
BY ACQUISITIVE PRESCRIPTION AND THAT THERE WAS
A VALID ACQUISITIVE PRESCRIPTION.

IV. THE TRIAL COURT ERRED WHEN IT CONCLUDED

THAT FELISA CODILLA WAS ESTOPPED FROM
ASSERTING THAT THE SUBJECT PROPERTY IS
CONJUGAL.

V. THE TRIAL COURT ERRED WHEN IT CONCLUDED

THAT LACHES SET IN AGAINST THE
PLANTIFFS-APPELLANTS.

3
STATEMENT OF THE CASE

This is an appeal from the decision of the Regional Trial Court

(Trial Court) dismissing the complaint for reconveyance and
partition filed by the plaintiffs-appellants.

The case arose when it was discovered by the

plaintiffs-appellants in the year 2000 that the tax declaration of their
land was changed to names of the defendant-appellees. It was later
discovered that the change was because of an alleged deed of sale.
The plaintiffs-appellants filed a complaint for reconveyance and
partition seeking to nullify such deed of sale on the ground of
mistake. The defendants-appellees filed an answer with
counterclaim denying that the deed of sale was executed as a
mistake and that they have acquired the land through acquisitive
prescription.

The Trial Court made a decision dismissing the complaint,

declaring the validity of the deed of sale on the ground of
notarization, acquisitive prescription and laches.

STATEMENT OF FACTS

Around the end of the 2nd World War, plaintiff Felisa Codilla
and her husband Ricardo Ardiente purchased the subject land from
Icoy Daclan.

In 1961, Ricardo Ardiente died intestate leaving the subject

land with his wife and children, herein plaintiffs-appellants.

On March 26, 1962, a Deed of Sale was executed between

plaintiff Felisa Codilla (unlettered) as seller, defendant Manuel
Cabuenas and defendant Agapito Cinco as buyers. The Deed of
Sale was written in English, and signed via thumbmark of plaintiff
Felisa Codilla. The terms thereof were not explained to plaintiff
Felisa Codilla, and she claimed that she was made to believe that
what she signed was a mere mortgage.

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 In 1977, Ricardo Ardiente Jr., the son of plaintiff Felisa Codilla,
wanted to cultivate the subject land. However, he was refused by
defendant Manuel Cabuenas since the subject property was
allegedly mortgaged, and the mortgage thereof was allegedly left
unpaid.

On or about August 10, 2000, plaintiff Felisa Codilla

discovered that Tax Declaration 120150, the subject land, was
cancelled and a new Tax Declaration 120151 in the name of
defendant Agapito Cinco and defendant Manuel Cabuenas was
issued in lieu thereof.

ARGUMENTS

I. THE TRIAL COURT ERRED WHEN IT CONCLUDED THAT THE

CONTRACT WAS A DEED OF SALE AND NOT AN EQUITABLE
MORTGAGE

The relevant portion1 of the decision is quoted:

1. The deed of sale executed by plaintiff Felisa

Codilla vda. De Ardiente, dated March 26, 1962,
is valid and being a notarized document, its due
execution is presumed. This document would
support the court’s findings that defendants are
the lawful owner of Lot 116304-CAD-12 Ext.
located in Barangay Pong-ol, Cebu City;

2. The same document clearly shows it is a deed

of sale, not mortgage;

It is the intention of the parties and not the title of the

documents that determine the nature of the contract.

The New Civil Code recognizes the fact that the

instrument representing the contract does not necessarily
reflect the true intention of the parties. Under Art. 1370 of the
New Civil Code, if the words appear to be contrary to the
evident intention of the parties, the latter shall prevail over the
former.
1 Records, at page 195

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 Under Art. 1371 of the New Civil Code, in order to judge
the intention of the contracting parties, their
contemporaneous and subsequent acts shall be considered.

Hence, the Trial Court erred when it refused to consider

facts and circumstances outside the instrument in determining
the nature of the contract.

To determine the intention of the parties, weight should be

given on the acts of the parties, their corresponding
educational backgrounds and the customs / practices
prevailing in their locality.

The following circumstances / acts of the parties were not

considered in the conclusion that the contract was not an
equitable mortgage.

1. That the supposed seller Felisa Codilla is unlettered.2 She does

not know how to speak nor understand English, the language of the
contract.
2. That the supposed buyer Manuel Cabuenas is literate.
3. That the Deed of Sale was never explained to the supposed
seller.3
4. That the Barangay Captain of the place where both parties reside
and where the transaction took place testified to the prevalence of
the prenda en dono.4
5. That when Ricardo Ardiente Jr., the son of Felisa Codilla used
part of the property from 1962 until around 1977.5
6. That when Ricardo Ardiente Jr. asked Manuel Cabuenas if he
could cultivate the subject land, Manuel Cabuenas did not
categorically refuse him on the ground that he was the absolute
owner.6

The prenda en dono is a common contract in the locality of both

parties.

2 Records, at Page 48
3 Records, at Page 111; Records, at Page 120.
4 Records, at Page 77
5 Records, at Page 63
6 Records, at Page 63

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 It is an uncontested fact7 that the contract called prenda en
dono was prevalent at that time of the execution of the contract. The
Barangay Captain, a neutral third person testified to the nature of
such contract:

1. A property is meant to secure a loan.

2. Upon receiving the loan money, the property will be surrendered
to the creditor.
3. The property can be redeemed by the debtor after paying back
the loan money.
4. There is no redemption period.

The prenda en dono is a form of equitable mortgage.

An equitable mortgage has been defined as one which although

lacking in some formality, or form or words, or other requisites
demanded by a statute, nevertheless reveals the intention of the
parties to charge real property as security for a debt, there being no
impossibility nor anything contrary to law in this intent8.

Under Art. 1602 of the New Civil Code, the contract shall be
presumed to be an equitable mortgage, in any of the following
cases:

(1) When the price of a sale with right to repurchase is

unusually inadequate;

(2) When the vendor remains in possession as lessee or

otherwise;

(3) When upon or after the expiration of the right to

repurchase another instrument extending the period of
redemption or granting a new period is executed;

(4) When the purchaser retains for himself a part of the

purchase price;

7 Records, at Page 77
8 Rockville Excel International Corp. vs Spouses Culla, G.R. No. 155716, October 2, 2009.

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 (5) When the vendor binds himself to pay the taxes on the
thing sold;

(6) In any other case where it may be fairly inferred that

the real intention of the parties is that the transaction
shall secure the payment of a debt or the performance of
any other obligation.

The prenda en dono falls within the definition of Equitable

Mortgage because the real intention is to secure the payment of a
debt.

Plaintiffs-Appellants consistently claim that they entered into prenda

endono and not a deed of sale. They enjoy that presumption under
the New Civil Code.

Evidence on record9 show that Plaintiffs-Appellants consistently

insist that they never entered into a deed of sale. They explained
that the reason why they could not enter the property is because
they entered into a prenda endomo and not a Sale.

Evidence on record also show that the Deed of Sale was

written in English and contrary to the usual signatures, a
thumbmark was used.

Under Art. 1332 of the New Civil Code, when one of the
parties is unable to read, or if the contract is in a language not
understood by him, and mistake or fraud is alleged, the person
enforcing the contract must show that the terms thereof have been
fully explained to the former.

Evidence on record10 also show that the supposed seller is

unlettered. The complaint also alleged mistake when it claimed that
she was made to believe that the contract was only a mortgage.

9 Records, at Page 48
10 Records, at Page 48

8
 Hence, there exists a presumption that the contract was
executed by mistake unless the person enforcing the contract
shows that the terms thereof have been fully explained to the former.
In this case, the terms were never explained.

II. ASSUMING THAT THE CONTRACT WAS A DEED OF SALE,

THE RTC ERRED WHEN IT CONCLUDED THAT BY THE MERE
FACT OF NOTARIZATION, THE PRESUMPTION OF MISTAKE
UNDER THE CIVIL CODE IS DEFEATED.

The relevant portion11 of the decision is quoted:

1. The deed of sale executed by plaintiff

Felisa Codilla vda. De Ardiente, dated
March 26, 1962, is valid and being a
notarized document, its due execution is
presumed. This document would support
the court’s findings that defendants are the
lawful owner of Lot 116304-CAD-12 Ext.
located in Barangay Pong-ol, Cebu City;

2. The same document clearly shows it is a

deed of sale, not mortgage;

The mere fact of notarization of a Deed of Sale doesn’t preclude a

party from arguing against it by evidence of fraud, mistake,
compromise, payment, statute of limitations, estoppel, and want of
consideration.

In Acabal v. Acabal12, the Supreme Court has ruled that the

failure to deny the genuineness and due execution of an actionable
document doesn’t preclude a party from arguing against it by
evidence of fraud, mistake, compromise, payment, statute of
limitations, estoppel, and want of consideration.13

11 Records, at page 195

12 G.R. No. 148376, March 31, 2005.
13 Willard B. Riano, Civil Procedure (2016 Edition).

9
 Hence, the Trial Court erred when it ruled that the mere fact that
the Deed of Sale is a notarized document, due execution is
presumed, without considering the ground of mistake.

Mistake is alleged when one of the parties is unable to read, or if the

contract is in a language not understood by him.

The law14 states that:

When one of the parties is unable to read, or

if the contract is in a language not understood
by him, mistake or fraud is alleged, xxx.

It is an uncontested fact15 that Felisa Codilla, the alleged seller,

cannot read and write even in the Cebuano dialect. The allegation
of mistake is even more apparent since the Deed of Sale is written
in English.

The law16 also states that:

When one of the parties is unable to read, or if
the contract is in a language not understood
by him, mistake or fraud is alleged, the person
enforcing the contract must show that the
terms thereof have been fully explained to the
former.

The purpose of the law is to protect a party to a contract

disadvantaged by illiteracy, ignorance, mental weakness or some
other handicap. 17 This rule is especially necessary in the
Philippines where unfortunately there is still a large number of
illiterates, and where the documents are usually written in the
English or Spanish language.18

The defendants in this case weren’t able to present any proof

that the alleged seller, Felisa Codilla, was made to understand the
tenor of the document she signed. The only evidence they have is
14 Article 1332, New Civil Code.
15 Records, at Page 48.
16 Article 1332, Civil Code.
17 Leonardo v. Court of Appeals, G.R. No. 125485, [September 13, 2004], 481 Phil. 520-537
18 Report of the Code of Commission, p. 136

10
an inconsistent, self-serving testimony of the defendant Agapito
Cinco.19

III. THE RTC ERRED WHEN IT CONCLUDED THAT THE

REMEDY OF RECONVEYANCE IS DEFEATED BY ACQUISITIVE
PRESCRIPTION AND THAT THERE WAS A VALID ACQUISITIVE
PRESCRIPTION

The relevant portion20 of the decision provides:

4. “On the issue of good faith of the defendants,
Article 1127 of the Civil Code states that good
faith of the possessor consists in the reasonable
belief that the person whom he received the thing
was the owner thereof, and could transmit his
ownership.”

For acquisitive prescription to prosper, the Civil Code provides that:

Art 1117. Acquisitive prescription of dominion and other real
rights may be ordinary or extraordinary.
Ordinary acquisitive prescription requires possession of
things in good faith and with just title for the time fixed by law.

Art 1118. Possession has to be in the concept of an owner,

public, peaceful and uninterrupted.

Acquisitive prescription is a mode of acquiring ownership by a

possessor through the requisite lapse of time. In order to ripen into
ownership, possession must be in the concept of an owner, public,
peaceful and uninterrupted.
Possession as a security to a loan is not possession in the concept
of the owner

Plaintiff-appellant Codilla has consistently claimed that such

transaction was that of a prenda endono. The property was for the
security of the loan from defendant-appellee Cabuenta.21 Security
over loan as an equitable mortgage does not transfer the ownership

19 Records, at Page 111; Records, at Page 120

20
Records, at Page 195.
21 Records, at Page 58.

11
of the property to the mortgagor. The mortgagor herein is merely a
possessor in the concept of a holder.

One whose interest is merely that of a holder, such as a

mortgagee is not qualified to become a possessor-builder in good
faith. Only possession acquired and enjoyed in the concept of
owner, therefore, can serve as a title for acquiring dominion. Thus,
mere possession with a juridical title, not being in the concept of an
owner, cannot ripen into ownership by acquisitive prescription,
unless the juridical relation is first expressly repudiated and such
repudiation has been communicated to the other party.22

Assuming, however, that appellee-defendant Cabuenas are

possessors in the concept of an owner by virtue of the dead of sale,
such would override the presumption of mistake of the contract
under Art. 1332 of the New Civil Code as it is an undisputed fact
that Appellant-Plaintiff is unlettered and no evidence explaining the
dead of sale was presented.

Possession allowing the free and unregulated use of half the

property for more than 10 years is not exclusive possession.

The possession of the appellee-defendant Cabuenas over the

subject property, as consistently claimed, was under prenda en
dono. Prenda en dono, as stated by the expert witness, is a written
or unwritten contract wherein the property will be surrendered to the
person who accept the mortgage and the property will be redeemed
but without any date or redemption period.23 Given this, possession
of the property by the Cabuenas was undoubtedly subject to the
redemption of Codilla and contrary to the concept of exclusive
possession.

Possession in good faith is not the same as possession in the

concept of the owner.

The New Civil Code provides that:

Art. 525. The possession of things or rights may be had in one
of two concepts: either in the concept of owner, or in that of
22 Elmer T. Rabuya, Property (2017 Edition)
23 Records, at Page 77

12
 the holder of the thing or right to keep or enjoy it, the
ownership pertaining to another person.

Good Faith on the part of the defendant does not automatically

transmit ownership. Under the law on acquisitive prescription,
whether or not the possessor is in good faith, such requires as an
essential element the possession in the concept of an owner for it to
acquire ownership by virtue of extraordinary prescription.24

Consistent with the above mentioned argument,

appellee-defendant could not have been possessors in the concept
of an owner, but merely possessors in the concept of a holder under
the prenda en dono.

IV. THE TRIAL COURT ERRED WHEN IT CONCLUDED THAT

FELISA CODILLA WAS ESTOPPED FROM ASSERTING THAT
THE SUBJECT PROPERTY IS CONJUGAL

The relevant portion25 of the decision is quoted:

3. Plaintiff Felisa Codilla vda. De Ardiente is

estopped from asserting that subject
property is conjugal because she made
defendants believe that land in the deed of
sale that is her paraphernal property. So
defendants believed her and they bought
the property. Article 1431 of the Civil Code,
the substantive law on the matter provides
that through estoppel an admission or
representation is rendered conclusive upon
the person making it, and cannot be denied
or disproved as against the person relying
thereon. Section 2, Rule 131 on the Rule
on Evidence also provides:

“Conclusive presumptions”

Whenever a party has, by his own

declaration, act or omission, intentionally

24 Elmer T. Rabuya, Property (2017 Edition).

25 Records, at page 195

13
 and deliberately led another to believe a
particular thing true, and to act upon such
belief, he cannot, in any litigation arising out
of such declaration, act, or omission be
permitted to falsify it.

There is no evidence that Felisa Codilla made the

defendants-appellees believe that the subject property was her
paraphernal property except the deed of sale 26 . Evidence on
record27 would show that during the preparation, negotiations and
execution of the Deed of Sale, the parties never discussed nor
considered the conjugal or paraphernal nature of the subject
property.

Further, Art. 1439 of the New Civil Code states that estoppel
is effective only as between the parties thereto or their successors
in interest. In this case, the plaintiffs-appellants also include the
children who are third parties to the Deed of Sale.

Hence, the trial court erred when it applied estoppel by merely

looking at the stipulations of the contract while ignoring the
circumstances in the preparation, negotiation and execution of the
contract as well as ignoring the rights of third parties in the action.

V. THE TRIAL COURT ERRED WHEN IT CONCLUDED THAT

LACHES SET IN AGAINST THE PLANTIFFS-APPELLANTS.

The relevant portion28 of the decision is quoted:

5. On the issue of prescription and

laches, Article 1137 of the Civil Code states
that ownership and other real rights over
immovables prescribe through uninterrupted
adverse possession thereof for thirty years,
without need of title or of good faith.
Plaintiffs are guilty of laches for having
asserted that they are also the owners of
subject property only after thirty nine (39)
years. The defense of laches applies
independently of prescription.
26 Records, at page 7
27 Records, at page 112
28 Records, at page 195

14
 The trial court erred when it concluded that laches had set in
against plaintiffs.

The RTC committed reversible error when it concluded that

laches had set in on the plaintiff considering that 39 years had
passed before they duly asserted ownership of the lot. Under the
law, laches is defined as the failure or neglect, for an
unreasonable and unexplained length of time, to do that which by
the exercise of due diligence could or should have been done
earlier. Verily, laches serves to deprive a party guilty of it of any
judicial remedies.29 the equitable defense of laches has four (4)
elements:

(1) conduct on the part of the defendant or of one under whom her
of one under whom he claims, giving rise to the situation of
which complaint is made and for which the complainant seeks a
remedy;
(2) delay in asserting the complainant’s rights, the complainant
having had knowledge or notice, of the defendant’s conduct,
having been afforded an opportunity to institute a suit;
(3) lack of knowledge or notice on the part of the defendant that the
complainant would assert the right on which he bases his suit;
and
(4) injury or prejudice to the defendant in the event relief is
accorded to the complainant, or the suit is not held to be
barred.30

The second element clearly points out that in order for laches
to set in, the complainant must have had sufficient knowledge of the
existence of their rights, and that despite knowing their rights, they
failed to file a suit within a reasonable time, thus causing injury and
damage to defendants.

It is an uncontested fact that the plaintiff is unlettered.31 She

admits to not knowing how to read or write, and to not being able to

29
Estate of the Late Encarnacion Vda. de Panlilio v. Dizon, G.R. No. 148777, October 18,
2007 cited in Associated Labor Unions & Divine Word University Employees Union-ALU v.
Court Of Appeals, G.R. No. 156882, October 31, 2008.
30 Miguel v. Catalino, G.R. No. L-23072, November 29, 1968; Pangasinan v. Almazora, G.R.

No. 200558, July 1, 2015.

31 Records at p. 48

15
speak and understand the English language, the language in which
the Deed of Sale was written. She and her family were also not able
to finish their schooling, as plaintiff herself admitted that she and her
husband did not receive any formal education, in her
testimony.32 It is also an uncontested fact that the plaintiff does not
know the difference between a mortgage and a Deed of Absolute
Sale.33 During their transaction with defendant-appellee Cabuenas,
she was not effectively informed by the latter of the contents of the
Deed of Sale and its implications on them.34

Thus, she could have never have known that she had a right
to the land claimed by defendants-appellees. Thus, she could not
have known that she must file a suit within a reasonable time to
assert her rights. Thus, because she had no knowledge of her rights
to begin with, it could not be said that she slept on her rights. As a
matter of fact, when she learned that her land was already claimed
by defendants-appellees in the year 2000, she immediately made
steps to reclaim her land by filing this case against
defendants-appellees. Thus, the elements of laches cannot apply to
plaintiffs in this case.

The length of time of the delay of action is well-explained contrary to

the conclusions of the RTC.

It was well explained in the evidence of the plaintiffs why it

took so long for the plaintiffs to institute a suit against defendants.
From the records, it is clear that from the time of the conveyance of
the property in 1962 to about 1977, plaintiffs allowed the
defendants to cultivate part of the land they mortgaged to them.
They could not have done that if they were not aware that they
owned the land. They also constantly used the road within the lot. It
was only in 1977 when the plaintiffs were totally denied access to
the lot by defendants when they were refused entry by defendant
Cabuenas.35 This shows that from the time of the conveyance of
the property until plaintiffs were denied access to the lot in 1977,
they openly asserted their ownership of the lot by performing acts of
dominion and ownership over the said lot.

32 Records at p. 48
33 Records at p. 48
34 Records at p. 48
35 Records at p. 62

16
 Furthermore, in her testimony, plaintiff-appellant Codilla
stated that when she conveyed the property to defendant-appellee
she was only under the impression that what she was doing is that
she was only mortgaging her lot to Cabuenas, so that Cabuenas
would give her a loan, and once she had already paid the loan in full,
then she could redeem the property from Cabuenas. She never
intended to sell the land to Cabuenas. The only reason why it took
so long for her to institute a suit against defendants-appellees is
that all the while, she did not have enough money to pay Cabuenas
for her loan36 thus, she still thought that the mortgage contract
between her and Cabuenas was still in effect.

Once she did finally have enough money to pay her loan to
Cabuenas in the year 2000 she finally took steps to release the land
from the mortgage. That was when she found out, after going to the
Assessor’s Office to inquire about the status of her land, that the
Tax Declaration was now in the name of defendant-appellee
Cabuenas, because all the while from the time of their transaction in
1962 until 2000, it was Cabuenas who was paying the real property
taxes of the land and now, he is claiming to be the owner of the said
land. Thus, it was only in 2000 when plaintiff-appellant Codilla found
out of the deprivation of her property could she have instituted a
case against defendants-appellees, as all the while, she honestly
believed in good faith, that she and her children still owned the land,
only that it was mortgaged to defendant-appellee Cabuenas.37

Thus, the length of time and the delay of the action is not only
well-explained but even excusable on the part of
plaintiffs-appellants, because of their lack of knowledge and
education about the intricacies of the transaction they entered into
with defendants-appellees, and also because of the honest
belief on the part of the plaintiffs-appellants that they never lost
ownership of the land despite the transaction they entered into with
defendants-appellees.

Relief

Wherefore, the premises considered, Plaintiffs-Appellants

respectfully pray that this Honorable Court:

36 Records at p. 58
37 Records at p. 58

17
1. REVERSE and SET ASIDE the decision of the Regional Trial
Court dated September 14, 2006

2. Other just and equitable remedies as may be appropriate

Cebu City, November 20, 2006

By: Plaintiffs-Appellant’s Counsel

ASENTISTA, BANGOY, LI, VILLA LAW OFFICE

Counsel for plaintiffs
Rm. 310, WDC Building
Juan Luna cor. P. Burgos Sts.
6000 Cebu City
Telephone No. (032) 253-9915

By:

ATTY. RUSELO RIVA ASENTISTA

PTR No. 1456978;1-6-18
IBP O.R. No.003174;5-10-17
Roll of Attorney No.66824
MCLE-Admitted to the Bar on 2017

ATTY. FRANCIS RENZO BANGOY

PTR No. 1456968;1-6-18
IBP O.R. No.003174;5-10-17
Roll of Attorney No.66825
MCLE-Admitted to the Bar on 2017

ATTY. JINNELYN LI
PTR No. 1456968;1-6-18
IBP O.R. No.003174;5-10-17
Roll of Attorney No.66826
MCLE-Admitted to the Bar on 2017

ATTY. HOREB FELIX VILLA

PTR No. 1456965;1-6-18
IBP O.R. No.003174;5-10-17
Roll of Attorney No.66821

18
MCLE-Admitted to the Bar on 2017

19