161069135 civ-revalida-cases

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G.R. No. 83992 January 27, 1993
RURAL BANK OF DAVAO CITY, INC. petitioner,
vs.
THE HONORABLE COURT OF APPEALS and GABRIEL
ABELLANO and FRANCISCO SEQUITAN, respondents.
DAVIDE, JR., J.:
Two (2) issues are presented for Our resolution in this petition for
review under Rule 45 of the Rules of Court, viz:(1) whether or not
the two-year redemption period fixed by the Rural Banks' Act 1 in a
foreclosure sale of property acquired through a homestead patent
superseded or repealed the
five-year repurchase period prescribed in Section 119 of the Public
Land Act 2 and (2) if it did not, whether, in the event of the
expropriation by the Government of the subject property during
the redemption or repurchase period, a homesteader, who
thereafter exercised his right to redeem or repurchase, is entitled
to the compensation for such expropriation less the redemption or
repurchase amount. The trial court ruled in the negative for the
first issue and in the affirmative for the second. The respondent
Court of Appeals affirmed the trial court. Hence, We have the
instant petition seeking for a contrary ruling.
The undisputed facts generative of this controversy are as follows:
On 18 April 1978, private respondents Gabriel Abellano and
Francisca Sequitan obtained a loan in the amount of P45,000.00
from the petitioner, a rural bank organized and existing under the
Rural Banks' Act. The terms thereof called for payment of the loan
in two (2) equal installments on 21 October 1978 and 21 April
1979.
As security for the loan, the private respondents mortgaged with
the petitioner a parcel of land, belonging to them, with an area of
one (1) hectare, more or less, located at Matina, Davao City and
covered by Original Certificate of Title No. P-7392. The land was
acquired through a homestead patent.
On 1 July 1978, the National Housing Authority (NHA) filed with the
then Court of First Instance (CFI) of Davao City a complaint for the
expropriation of several parcels of land located in Davao City to

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carry out its Slum Improvement and Resettlement Program; said
action was directed against the private respondents, with respect
to the mortgaged property, and fifteen (15) other persons. The
case was docketed as Special Civil Case No. 11157 and was raffled
off to Branch II of said court. As mortgagee, the petitioner filed
therein a motion to intervene, which the court granted.
Upon arrival of the loan's maturity dates, private respondents
failed to pay their obligation to the petitioner. The latter therefore
caused the extrajudicial foreclosure of the subject property in
accordance with Act No. 3135, as amended. During the foreclosure
sale held on 9 November 1979, the petitioner submitted the
highest bid; consequently, the Deputy Sheriff executed in its favor
a certificate of sale for the total amount of P54,883.00 which
included the unpaid interest and other charges.
The certificate of sale was registered in the Registry of Deeds of
Davao City on 7 December 1979. Private respondents, however,
failed to redeem the foreclosed property within the period of two
(2) years from the date of registration, or up to 7 December 1981,
as provided for in Section 5 of the Rural Banks' Act. Despite such
failure, the petitioner extended the period to October 1982. The
private respondents still failed to redeem the property. Petitioner
then asked for the consolidation of its title over the same. In due
course, the private respondents' certificate of title was canceled
and in lieu thereof, Transfer Certificate of Title No. T-92487 in the
name of the petitioner was issued on 3 November 1982.
On 24 February 1983, Branch II of the CFI of Davao City issued an
order in Special Civil Case No. 11157 requiring the NHA to pay the
amount of P85.00 per square meter for the properties sought to be
expropriated, which included the aforementioned foreclosed
property. This amount was subsequently reduced to P49.00 per
square meter. Thus, the price to be paid for the foreclosed
property was P490,000.00.
On 9 November 1983, private respondents notified the petitioner of
their desire to repurchase the foreclosed property pursuant to
Section 119 of the Public Land Act (C.A. No. 141). Rebuffed by the
latter, private respondents filed on 9 February 1984 with the
Regional Trial Court (RTC) of Davao City a complaint for
reconveyance of their foreclosed property under said Section 119.
The case was docketed as Civil Case No. 16693 and was raffled off
to Branch XIII of the said court.
In its Affirmative Defenses set up in the Answer to the complaint,
petitioner claimed that the private respondents' action will no
longer prosper because their right to repurchase had become moot
and academic as the property could no longer be physically,
materially and actually recovered or repurchased. This is so
because no less than the sovereign state needed the same —
pursuant to its socialized housing program under P.D. No. 875, as
amended — to be divided into smaller lots for distribution to a
greater number of recipients, and that "the right to repurchase
cannot be exercised without the actual, material and physical
recovery of the property itself, otherwise such an action, as the
instant action of the plaintiffs, is purely speculative, which our
Supreme Court, in a series of decisions, had frowned upon and
disallowed." 3
After the issues were joined, the trial court conducted a pre-trial
conference on 3 May 1984. On the same date, it issued an order
requiring the private respondents to deposit the sum of P54,883.00
as repurchase price which they complied with.
On 2 July 1984, private respondents filed a Motion to Amend the
Complaint and File Supplemental Pleading alleging therein, inter
alia, that since "there is a seeming impossibility for the plaintiffs
now to reacquire the property by reason of the order of
expropriation, justice also demands that the said amount of
P490,000.00 must be given to the plaintiffs, in lieu of the property
expropriated." Despite the petitioner's opposition, the trial court
issued on 2 August 1984 an order granting the motion and
admitting the amended complaint.
The trial court decided the case on 1 February 1985 on the basis of
the stipulation of facts submitted by the parties. The dispositive
portion of the decision reads:
WHEREFORE, decision is hereby rendered, declaring
plaintiffs entitled to the price paid by the National

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Housing Authority for the property in question and
ordering the defendant:
1. To pay or remit the (sic) plaintiffs the sum of
P435,117.00, the remaining balance of said price of
the property paid by NHA after deducting the
obligation of plaintiffs in the sum of P54,883.00;
2. To pay plaintiff's interest on the P435,117.00 at
the rate defendant grants to its depositor
commencing on the date when defendant received
the sum of P490,000.00 from NHA in payment of the
property in question until the whole obligation is fully
paid;
3. To pay plaintiffs the sum of P10,000.00 as
attorney's fee plus costs.
SO ORDERED. 4
Petitioner seasonably appealed this decision to the then
Intermediate Appellate Court on both questions of fact and law.
The case was docketed as CA-G.R. CV No. 07689.
On 30 March 1988, the respondent Court of Appeals, as the
successor of the Intermediate Appellate Court, promulgated,
through a division of five (5) (Sixteenth Division), its decision in
CA-G.R. No. 07689 affirming the decision of the trial court in Civil
Case No. 16693. 5
In affirming the trial court's decision, the respondent Court held
that Section 5 of the Rural Banks' Act, as amended, did not reduce
the period of redemption of homestead lands from the five (5)
years prescribed in Section 119 of C.A. No. 141, as amended, to
two (2) years from the date of registration of the foreclosure sale
as fixed in the former; in support of such conclusion, it
summoned Oliva vs. Lamadrid 6 wherein this Court, speaking
through then Chief Justice Concepcion, held:
It should be noted that the period of two (2) years
granted for the redemption of property foreclosed
under Section 5 of Republic Act No. 720, as amended
by Republic Act No. 2670, refers to lands
"notcovered by a Torrens Title, a homestead or free
patent," or to owners of lands "without torrens title,"
who can "show five years or more of peaceful,
continuous and uninterrupted possession thereof in
the concept of an owner, or of homesteads or free
patent lands pending the issuance of titles but
already approved," or of "lands pending homestead
or free patent titles." Plaintiff, however, had, on the
land in question, a free patent and a Torrens
title, which were issued over 26 years prior to the
mortgage constituted in favor of the Bank.
Accordingly, there is no conflict between Section 119
of Commonwealth Act No. 141 and Section 5 of
Republic Act. No. 720, as amended, and the period
of two (2) years prescribed in the latter is not
applicable to him.
Moreover, the legislative history of the bills which
later became said Republic Act No. 2670, amending
Republic Act No. 720, shows that the original
proposal was to give homesteaders or free patent
holders a period of ten (10) years within which to
redeem their property foreclosed by rural banks;
that this proposal was eventually found to be unwise,
because its effect would have been to dissuade rural
banks from granting loans to homesteaders or free
patent holders — which were (sic) sought to be
liberalized — said period of redemption being too
long, from the viewpoint of said banks; and that,
consequently, the proposal was given up, with the
specific intent and understanding that homesteaders
or holders of free patent (sic) would retain the right
to redeem within five (5) years from the conveyance
of their properties, as provided in the general law,
that is to say the Public Land Act, or Commonwealth
Act No. 141.
It is, therefore, our considered view that plaintiff
herein has the right to repurchase the property in

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question within five (5) years from the date of the
conveyance or foreclosure sale, or up to February 4,
1966, and that having exercised such right and
tendered payment long before the date last
mentioned, defendants herein are bound to reconvey
said property to him.
In said case, the mortgaged property involved was sold at a public
auction by the Sheriff on 4 February 1961.
Respondent Court further ruled that C.A. No. 141 is a special law
and must prevail. Thus:
Neither could it readily be concluded that the Rural
Banks Act is a special law and that the Public Law
(sic) Act is general. The Rural Bank Act deals with all
kinds of land while the Public Land Act relates to a
specific class of properties.
In Cassion v. BancoNacional Filipino, 89 Phil. 560,
the sole question for decision is which of the
conflicting provisions ought to prevail? Section 32
and Section 6 of Act No. 2938, which amended Act
No. 2717 (sic) creating the Philippine National Bank,
which allows the debtor only one year to redeem
property sold under a mortgage foreclosure whether
judicial or extra-judicial, or Section 117 of Act No.
2874 known as the Public Land Act, as amended,
which provides that "every conveyance of land
acquired under free (sic) patent or homestead
provisions, when proper, shall be subject to
repurchase by the applicant, his widow, or legal heirs
for a period of five years from the date of
conveyance," the Supreme Court held:
Now then, it seems plain that Section
32 of Act No. 2938 and Section 6 of
Act No. 3135 are wider in scope or
more comprehensive than Section 117
of Act No. 2874. They comprehend all
kinds of property brought within the
relations and circumstances provided
thereby, while Section 117 of Act No.
2874 relates to a specific class of
property. Stated otherwise, the
property on which the Philippine
National Bank's Charter and Act No.
3135 are operative is any property
mortgaged to the Bank, whereas, as
already stated, Act No. 2874 by its
own terms is operative only on lands
acquired under the free patent or
homestead provisions. Section 32 of
Act No. 2938 and Section 6 of Act No.
3l35 standing alone would include
homestead or free patented lands,
while Section 117 of Act No. 2874
would not embrace any property other
than that mentioned therein even if
Acts Nos. 2938 and 3135 did not exist.
To use the words of Act No. 190 and
the Rules of Court, Act No. 2874
manifests "a particular intent," the
intent to promote the spread of small
land ownership and the preservation of
public land grants in the hands of the
underprivileged for whose benefit they
are specially intended and whose
welfare is a special concern of the
State.
We therefore hold that Act No. 2874 is
controlling, that homestead constitute
an exception of Acts No. 2938 and
3135, and that the appealed decision
should be affirmed. It is so ordered
with costs against the appellant. (p.
562)
The Homestead Act is a social legislation enacted for
the welfare and protection of the poor (Patricio vs.
Bayog, 112 SCRA 42). A construction which would

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carry into effect the evident policy of the law should
be adopted in favor of that interpretation which
would defeat it. A decent respect for the policy of the
law must save the Court from imputing to it a self
defeating, if not disingeneous purpose (p. 65,
Agpalo, Supra).
Since the mortgaged property is a homestead
covered by a Torrens Title, the five-year period of
repurchase should be from the foreclosure sale on
November 9, 1979 or up to November 9, 1984. NHA
filed the eminent domain proceedings on July 1,
1978 while appellees were still the owners of the
land. For this reason, they were the ones who were
made defendants therein. Although the land was
foreclosed and sold to the Rural Bank on November
9, 1979, the latter did not become the absolute
owner thereof. It never did. Under Section 119 of the
Public Land Law, plaintiff has up to November 9,
1984 within which to repurchase the property. Thus
on November 9, 1983 appellees notified appellant
bank of their desire to repurchase said property
under Section 119, CA 141, but was (sic) refused.
On February 9, 1984, appellees filed with the
Regional Trial Court of Davao City, Branch XIII, an
action for reconveyance and on May 3, 1984, the
lower court issued an order requiring appellees to
deposit the amount of P54,883.00 as the amount of
repurchase price which was complied with by the
latter, well within the period of five years from the
date of foreclosure sale. 7
As to the fact that the land had already been expropriated by the
NHA, the respondent Court observed that:
While it is true that the land in question has been
expropriated by the NHA who paid the total amount
of P490,000.00 as the just compensation for the
taking of the property, it is but fair, fitting and
proper, that this amount be paid to plaintiffs-
appellees as the just compensation for their
property. To hand over this amount to the Rural
Bank would be to unjustly enrich the rural bank at
the expense of the plaintiffs who have less in life. 8
Its motion for reconsideration of the above decision having been
denied by the respondent Court in the Resolution of 17 May
1988, 9 the petitioner availed of this recourse and reiterates the
same errors it had raised before the respondent Court, to wit:
1. THE LOWER COURT ERRED IN DECLARING THAT
PLAINTIFFS-APPELLEES ARE ENTITLED TO THE
PRICE PAID BY THE NATIONAL HOUSING AUTHORITY
FOR THE PROPERTY IN QUESTION AND IN
ORDERING THE DEFENDANT-APPELLANT TO PAY OR
REMIT TO PLAINTIFFS-APPELLEES THE SUM OF
P435,117.00, THE REMAINING BALANCE OF SAID
PRICE OF THE PROPERTY PAID BY THE NATIONAL
HOUSING AUTHORITY AFTER DEDUCTING THE
OBLIGATION OF PLAINTIFFS-APPELLEES IN THE SUM
OF P54,883.00.
2. THE LOWER COURT ERRED IN NOT HOLDING
THAT PLAINTIFFS-APPELLEES' RIGHT TO
REPURCHASE UNDER SECTION 119 OF
COMMONWEALTH ACT NO. 141, AS AMENDED,
OTHERWISE KNOWN AS THE PUBLIC LANDS (sic)
ACT, IS ONLY LIMITED TO THE LAND ITSELF.
3. THE LOWER COURT ERRED IN NOT HOLDING
THAT THE ACT OF PLAINTIFFS-APPELLEES IN
TRYING TO REPURCHASE THE PROPERTY IN
QUESTION, OR, IN THE ALTERNATIVE, IN TRYING
TO RECOVER THE PROCEEDS OF THE SALE OR PRICE
THEREOF, IS PURELY SPECULATIVE IN NATURE.
4. THE LOWER COURT ERRED IN FINDING
DEFENDANT-APPELLANT LIABLE FOR INTEREST,
ATTORNEY'S FEES AND COSTS. 10
which may be reduced to the two (2) principal issues adverted to in
the exordium of this ponencia.

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After the filing of the private respondents' Comment to the
petition, the petitioner's reply thereto and the former's rejoinder to
the reply, this Court gave due course to the petition and required
the parties to submit their respective memoranda which they
complied with.
The petition is devoid of any merit. Respondent Court of Appeals
committed no reversible error.
Section 119 of the Public Land Act (C.A. No. 141) provides:
Sec. 119. Every conveyance of land acquired under
the free patent or homestead provisions, when
proper, shall be subject to repurchase by the
applicant, his widow, or legal heirs, within a period of
five years from the date of the conveyance. 11
The policy of homestead laws and the reason behind the foregoing
provision are expressed by this Court inPascua vs. Talens 12 in this
wise:
It is well-known that the homestead laws were
designed to distribute disposable agricultural lots of
the State to land-destitute citizens for their home
and cultivation. Pursuant to such benevolent
intention the State prohibits the sale or encumbrance
of the homestead (Section 116) within five years
after the grant of the patent. After that five-year
period the law impliedly permits alienation of the
homestead; but in line with the primordial purpose
to favor the homesteader and his family the statute
provides that such alienation or conveyance (Section
117) shall be subject to the right of repurchase by
the homesteader, his widow or heirs within five
years. This Section 117 is undoubtedly a
complement of Section 116. It aims to preserve and
keep in the family of the homesteader that portion of
public land which the State had gratuitously given to
him. It would, therefore, be in keeping with this
fundamental idea to hold, as we hold, that the right
to repurchase exists not only when the original
homesteader makes the conveyance, but also when
it is made by his widows or heirs. This construction is
clearly deducible from the terms of the statute.
As pointedly stated earlier in Jocson vs. Soriano, 13 in connection
with homestead statutes:
Acts Nos. 1120 and 926 were patterned after the
laws granting homestead rights and special
privileges under the laws of the United States and
the various states of the Union. The statutes of the
United States as well as of the various states of the
Union contain provisions for the granting and
protection of homesteads. Their object is to provide
a home for each citizen of the Government, where
his family may shelter and live beyond the reach of
financial misfortune, and to inculcate in individuals
those feelings of independence which are essential to
the maintenance of free institutions. Furthermore,
the state itself is concerned that the citizens shall not
be divested of a means of support, and reduced to
pauperism. (Cook and Burgwall vs. McChristian, 4
Cal., 24; Franklin vs. Coffee, 70 Am. Dec., 292;
Richardson vs. Woodward, 104 Fed. Rep., 873; 2l
Cyc., 459).
The conservation of a family home is the purpose of
homestead laws. The policy of the state is to foster
families as the factors of society, and thus promote
general welfare. The sentiment of patriotism and
independence, the spirit of free citizenship, the
feeling of interest in public affairs, are cultivated and
fostered more readily when the citizen lives
permanently in his own home, with a sense of its
protection and durability. (Waples on Homestead and
Exemptions, p. 3)
Because of such underlying policy and reason, the right to
repurchase under Section 119 cannot be waived by the party
entitled thereto, and applies with equal force to both voluntary and
involuntary conveyances. 14 And, as early as 1951, in Cassion vs.

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BancoNacional Filipino, 15 this Court declared that such right is
available in foreclosure sales of lands covered by a homestead or
free patent. Consistently therewith, We have ruled in a number of
cases that said Section 119 prevails over statutes which provide for
a shorter period of redemption in extrajudicial foreclosure sales.
We thus have consistent pronouncements in Paras vs. Court of
Appeals, 16 Oliva vs. Lamadrid, 17 Belisario vs. Intermediate
Appellate Court 18 and Philippine National Bank vs. De los
Reyes. 19These cases, with the exception of Oliva, involved the
question of which between the five (5) year repurchase period
provided in Section 119 of C.A. No. 141 20 or the one (1) year
redemption period under Act No. 3135 should prevail.
While Oliva is the only case, among those cited, that involves the
Rural Banks' Act, the other cases reveal the clear intent of the law
on redemption in foreclosure sales of properties acquired under the
free patent
or homestead statutes which have been mortgaged to banks or
banking institutions — i.e., to resolutely and unqualifiedly apply the
5-year period provided for in Section 119 of C.A. No. 141 and, as
categorically stated inParas and Belisario, to reckon the
commencement of the said period from the expiration of the one-
year period of redemption allowed in extrajudicial foreclosures. If
such be the case in foreclosure sales of lands mortgaged to banks
other than rural banks, then, by reason of the express policy
behind the Rural Banks' Act, 21 and following the rationale of Our
ruling in Oliva, it is with greater reason that the 2-year redemption
period in Section 5 of the Rural Banks' Act should yield to the
period prescribed in Section 119 of C.A. No. 141. Moreover, if this
Court is to be consistent with Paras and Belisario, the 5-year
repurchase period under C.A. No. 141 should begin to run only
from the expiration of the 2-year period under the Rural Banks'
Act. It may be observed in this connection thatOliva was decided in
31 October 1967, before the Rural Banks' Act, as amended by R.A.
No. 2670, was further amended by R.A. No. 5939. 22 As amended
by R.A. No. 2670, the pertinent portion of Section 5 only reads as
follows:
Sec. 5. . . . Provided, That when a land not covered
by a Torrens Title, a homestead or free patent land is
foreclosed, the homesteader or free patent holder,
as well as their heirs shall have the right to redeem
the same within two years from the date of
foreclosure: . . .
As amended later by R.A. No. 5939, it reads:
Sec. 5. . . . Provided, That when a homestead or free
patent land is foreclosed, the homesteader or free
patent holder, as well as their heirs shall have the
right to redeem the same within two years from the
date of foreclosure in case of a land not covered by a
Torrens title or two years from the date of the
registration of the foreclosure in the case of a land
covered by a Torrens title: . . . .
The amendment clarifies the rather vague language of Section 5 as
amended by R.A. No. 2670. The ambiguity lies in the fact that
although the latter seems to speak of three (3) classes of lands,
namely (a) those not covered by a Torrens title, (b) homestead
lands and (c) free patent lands, the two-year redemption period
may only be enjoyed by the homesteader, the free patent holder or
their heirs. Moreover, the clause does not clarify whether the
land not covered by a Torrens title refers to unregistered land
merely, or includes land acquired by a homestead or free patent
not yet issued certificates of title under the Torrens system. As
amended, however, by R.A. No. 5939, land acquired under the free
patent or homestead patent statutes may be redeemed within a
two-year period; however, the commencement of said period is
reckoned from the date of foreclosure, if such land is not yet
covered by the Torrens title, or from the registration of the
foreclosure — meaning, the certificate of sale — if it is already
covered by a Torrens title.
Thus, following the clear intent of Oliva, since private respondents'
foreclosed property was acquired under the homestead laws, they
had two (2) years from 7 December 1979 — when the certificate of
sale was registered — or until 7 December 1981, within which to
redeem the land. And, pursuant to Section 119 of C.A. No. 141,
they had five (5) years from 7 December 1981 within which to
repurchase it. Since the private respondents' offer to repurchase
was made well within the said 5-year period, the two (2) courts
below correctly ruled in their favor.

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Furthermore, We wish to stress here that We are unable to read in
Section 5 of R.A. No. 720, as amended, any legislative intent to
modify or repeal Section 119 of the Public Land Act. Each speaks of
and deals with a different right. Specifically, the former merely
liberalizes the duration of an existing right of redemption in
extrajudicial foreclosure sales by extending the period of one (1)
year fixed in Act No. 3135, as amended by Act No. 4118, to two
(2) years insofar as lands acquired under free patent and
homestead statutes are concerned. The second speaks of the right
to repurchase and prescribes the period within which it may be
exercised. These two (2) rights are by no means synonymous.
Under Act No. 3135, the purchaser in a foreclosure sale has, during
the redemption period, only an inchoate right and not the absolute
right to the property with all the accompanying incidents. 23 He
only becomes an absolute owner of the property if it is not
redeemed during the redemption period. 24 Upon the other hand,
the right to repurchase is based on the assumption that the person
under obligation to reconvey the property has the full title to the
property because it was voluntarily conveyed to him or that he had
consolidated his title thereto by reason of a redemptioner's failure
to exercise his right of redemption. Thus, in Paras vs. Court of
Appeals, 25 this Court, adverting to Gonzalez vs.
Calimbas, 26 stated:
After a careful study of the point raised in the
present appeal by certiorari, we agree with the Court
of Appeals that the five-year period within which a
homesteader or his widow or heirs may repurchase a
homestead sold at public auction or foreclosure sale
under Act 3135 as amended, begins not at the date
of the sale when merely a certificate is issued by the
Sheriff or other official, but rather on the day after
the expiration of the period of repurchase, 27 when
deed of absolute sale is executed and the property
formally transferred to the purchaser. As this Court
said in the case of Gonzales (sic) vs. Calimbas and
Poblete, 51 Phil., 355, the certificate of sale issued to
the purchaser at an auction sale is intended to be a
mere memorandum of the purchase. It does not
transfer the property but merely identifies the
purchaser and the property, states the price paid and
the date when the right of redemption expires. The
effective conveyance is made by the deed of
absolute sale executed after the expiration of the
period of redemption.
As a consequence of the inchoate character of the right during the
redemption period, Act No. 3135 allows the purchaser at the
foreclosure sale to take possession of the property only upon the
filing of a bond in an amount equivalent to the use of the property
for a period of twelve (12) months, to indemnify the mortgagor in
case it be shown that the sale was made without violating the
mortgage or without complying with the requirements of the Act.
That bond is not required after the purchaser has consolidated his
title to the property following the mortgagor's failure to exercise
his right of redemption for in such a case, the former has become
the absolute owner thereof. 28
Thus, the rules on redemption in the case of an extrajudicial
foreclosure of land acquired under free patent or homestead
statutes may be summarized as follows: If the land is mortgaged
to a rural bank under R.A. No. 720, as amended, the mortgagor
may redeem the property within two (2) years from the date of
foreclosure or from the registration of the sheriff's certificate of
sale at such foreclosure if the property is not covered or is covered,
respectively, by a Torrens title. If the mortgagor fails to exercise
such right, he or his heirs may still repurchase the property within
five (5) years from the expiration of the two (2) year redemption
period pursuant to Section 119 of the Public Land Act (C.A. No.
141). If the land is mortgaged to parties other than rural banks,
the mortgagor may redeem the property within one (1) year from
the registration of the certificate of sale pursuant to Act No. 3135.
If he fails to do so, he or his heirs may repurchase the property
within five (5) years from the expiration of the redemption period
also pursuant to Section 119 of the Public Land Act.
The expropriation of the land in question by the NHA is of no
moment. The expropriation case was begun before the foreclosure
sale and was brought against the private respondents, among
other parties. The court's order for the payment of compensation
was entered and the compliance thereof by the NHA was made
within the private respondents' 5-year repurchase period. Although
the petitioner had a Transfer Certificate of Title over the lot at the

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time of payment, its right thereto was subject to the private
respondents' right to repurchase. Since the private respondents
seasonably exercised said right, the petitioner was under the
obligation to restore to the former the compensation paid by the
NHA, which in effect replaced or substituted for the land. From
such amount should be subtracted, however, the repurchase price.
The argument that the petitioner was under no obligation to deliver
the above portion of the compensation because the property was
acquired by the NHA and therefore it was legally impossible for the
former to convey the land to the private respondent, is without
merit. This is so because if, instead of having been expropriated,
the land was sold to other parties, the private respondents could
still have repurchased the same from the subsequent
vendees. 29 But since the land was expropriated by the
Government, and the private respondents could no longer
repurchase the same, reason, justice and equity demand that they
receive the compensation therefor less the amount adverted to
above, for such compensation merely substitutes for the land they
are entitled to.
WHEREFORE, the instant petition is DENIED, with costs against
petitioner.
The decision is immediately executory.
SO ORDERED.
Gutierrez, Jr., Bidin, Romero and Melo, JJ., concur.
G.R. No. 86044 July 2, 1990
VICTORINO TORRES, petitioner,
vs.
LEON VENTURA, respondent.
GANCAYCO, J.:
This nation has a wealth of laws on agrarian reform. Such laws
were enacted not only because of the constitutional mandate
regarding the protection to labor and the promotion of social
justice but also because of the realization that there is an urgent
need to do something in order to improve the lives of the vast
number of poor farmers in our land.
Yet, despite such laws, it is a fact that the agrarian problems which
beset our nation have remained unsolved. Majority of our farmers
still live a hand-to-mouth existence. The clamor for change has not
died down.
One need not go far in order to search for the reason behind this.
We all know that our beautifully-worded agrarian laws have never
really been effectively implemented. Unscrupulous individuals have
found various ways in order to get around the laws. Loopholes in
the law and the ignorance of the poor farmers have been taken
advantage of by them. Consequently, the farmers who are
intended to be protected and uplifted by the said laws find
themselves back to where they started or even in a worse position.
We must put a stop to this vicious cycle and the time to do it is
now.
This case serves to remind those who are involved in the execution
of agrarian laws that it is the farmer-beneficiary's interest that
must be primarily served. This also holds that agrarian laws are to
be liberally construed in favor of the farmer-beneficiary. Anyone
who wishes to contest the rights of the farmer to land given to him
by the government in accordance with our agrarian laws has the
burden of proving that the farmer does not deserve the
government grant.
Posed before Us for resolution in this petition for review
on certiorari is the question of to whom ownership and possession
of a certain landholding rightfully belongs: to petitioner who was
the tiller of the land when Presidential Decree No. 27 was
promulgated, or to private respondent in whose favor petitioner
transferred his rights over the land in consideration of P5,000.00.
The following facts can be gathered from the records of this case:
Petitioner was the leasehold tenant of a 4,000 square-meter parcel
of land included in the Florencio Firme Estate and located at
Caloocan, Cabatuan, Isabela. In 1972, when Presidential Decree

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No. 27 was signed into law, petitioner was the tiller of the
aforementioned piece of land and was automatically deemed owner
of the property. Under Presidential Decree No. 27, any form of
transfer of those lands within the coverage of the law is prohibited
except as otherwise provided therein.
In 1978, urgently in need of money, petitioner was forced to enter
into what is called a "selda" agreement, with private respondent,
wherein he transferred his rights of possession and enjoyment over
the landholding in question to the latter in consideration of a loan
in the amount of P5,000.00 to be paid not earlier than 1980. As
part of the agreement, petitioner signed an "Affidavit of Waiver"
whereby he waived all his rights over the property in favor of
private respondent. According to petitioner, it was also agreed
upon by them that upon the payment of the loaned amount,
private respondent will deliver possession and enjoyment of the
property back to petitioner.
Two years later or in 1980, petitioner offered to pay the loaned
amount but private respondent asked for an extension of one more
year to continue cultivating the land and enjoying its fruits.
Because of this, the money being offered by petitioner to pay for
the loan was utilized for other purposes. In 1981, though petitioner
really wanted to get the property back, he could not do so because
he lacked the necessary funds. It was only in 1985 when petitioner
was able to save enough money to make another offer but this
time private respondent categorically denied said offer and refused
to vacate the land.
Hence, petitioner filed a complaint with the barangay captain of
Magsaysay, Cabatuan, Isabela stating therein that he mortgaged
his land to private respondent and that he already wanted to
redeem it. On the scheduled date of hearing, private respondent
failed to appear.
Upon the issuance by the barangay captain of a certificate to file
action, petitioner filed a complaint with the Regional Trial Court of
Cauayan, Isabela for the recovery of possession of the parcel of
land in question. After due trial, the said court rendered a decision
in favor of petitioner with the following dispositive portion:
WHEREFORE, in view of the foregoing considerations,
judgment is hereby rendered:
(1) DECLARING the affidavit of waiver (Exh. 1)
executed by the plaintiff waiving his right as a
leasehold tenant to the defendant null and void;
(2) ORDERING the defendant, his agents, tenants or
any person or persons acting on his behalf to deliver
immediately the possession of the land in question to
the plaintiff;
(3) DECLARING the loan of P5,000.00 received by
the plaintiff from the defendant in 1979 including
interest thereon considered paid as of December 1,
1983;
(4) ORDERING the defendant to pay the plaintiff
total damages and in the amount of P5,200.00 up to
December 1, 1986; and
(5) ORDERING the defendant to pay the plaintiff 6
cavans of palay at 50 kilos per planting season from
December 1, 1986, or their equivalent at the NFA
price of P3.50 per kilo, until the possession of the
land in question is delivered to the plaintiff. 1
On appeal to the Court of Appeals, the decision of the trial
court was reversed. Hence, this petition for review
on certiorari. 2
Taking into consideration the circumstances surrounding this case
and bearing in mind the constitutional mandate on the promotion
of agrarian reform, We rule in favor of petitioner.
It is not disputed by private respondent that petitioner was in fact
the tiller of the subject land when Presidential Decree No. 27 was
promulgated in 1972. As a consequence of the law, petitioner was
granted the right to possess and enjoy the property for himself.

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The conflict arose when petitioner, by force of circumstances,
transferred possession of his land to private respondent in
consideration of a sum certain. As to what was actually the
contract that was entered upon is being contested by the two
parties herein. Petitioner has insisted from the very beginning that
the agreement entered into between him and private respondent
was one of mortgage and that private respondent promised to give
back to him his landholding upon payment of the loaned amount.
The stand of private respondent, on the other hand, is that
petitioner relinquished all his rights over the property in his favor,
as expressly written in the Affidavit of Waiver that petitioner
signed.
In its decision, the trial court ruled in favor of petitioner having
found his version more convincing than that of private respondent
whose evasive attitude did not go unnoticed therein. The trial court
further ruled that the transfer of property from petitioner to private
respondent is null and void for being violative of Presidential
Decree No. 27. The Court of Appeals, on the other hand, believed
that petitioner completely waived his rights over the land as
evidenced by the Affidavit of Waiver he executed. According to the
Court of Appeals, the said Affidavit of Waiver is valid because at
the time of its execution, petitioner was not yet the owner of the
land there having been no title issued to him yet. As such,
continued the Court of Appeals, the Affidavit of Waiver did not
violate Presidential Decree No. 27. The Court of Appeals further
added that petitioner abandoned his landholding and received
benefits under the agreement, hence, should not be rewarded at
the expense of private respondent.
After a careful scrutiny of the two conflicting decisions and an
exhaustive study of the laws and jurisprudence applicable to this
case, We affirm the judgment of the trial court. First, of all, We
have given much weight to the finding of the trial court that what
was entered upon by the parties herein was a contract of
mortgage. It need not be stressed that in the matter of credibility
of witnesses, We rely heavily on the findings of the trial court
because it had the opportunity to meet them face to face. As the
trial court observed, petitioner's version is more convincing
because of the apparent evasive attitude of private respondent as
compared to the candid testimony of the petitioner. 3
Indeed, We find it hard to believe that petitioner, who has been
tilling the land in question for a long, long time would suddenly
lose interest in it and decide to leave it for good at a time when he
knew that full ownership over the same was soon going to be in his
hands. Furthermore, if the situation were otherwise, petitioner
would not have made repeated offers to pay for the amount he
borrowed from private respondent and demand from the latter the
possession of the land. He would not have even thought of bringing
an action for the recovery of the same if he honestly believed that
he had already given it up in favor of private respondent.
Petitioner, or anyone in his right mind for that matter, would not
waste his time, effort and money, especially if he is poor, to
prosecute an unworthy action. If at all, petitioner is an example of
a poor tenant farmer who, due to sheer poverty, was constrained
to mortgage his only land 4 to somebody else 5 — situation which
Presidential Decree No. 27 sought to prevent by providing an
explicit prohibition on transfers.
The above finding notwithstanding, and assuming that petitioner
really waived his tenancy rights in favor of private respondent, this
case should still be resolved against private respondent. The
transfer would still be void for being made in violation of
Presidential Decree No. 27.
We shall now take a closer look at the law.
Presidential Decree No. 27 was signed into law in view of the fact
that the old concept of land ownership by a few has spawned valid
and legitimate grievances that gave rise to violent conflict and
social tension. 6 The law points out that reformation must start
with the emancipation of the tiller from the bondage of the soil. 7
The fundamental policy of the law is reflected in its title, to wit:
PRESIDENTIAL DECREE NO. 27 — DECREEING THE EMANCIPATION
OF TENANT FROM THE BONDAGE OF THE SOIL, TRANSFERRING TO
THEM THE OWNERSHIP OF THE LAND THEY TILL AND PROVIDING
THE INSTRUMENTS AND MECHANISM THEREFOR. This policy is
intended to be given effect by the following provisions:
xxxxxxxxx

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The tenant farmer, whether in land classified as
landed estate or not, shall be DEEMED OWNER of a
portion constituting a family size farm of five (5)
hectares if not irrigated and three (3) hectares if
irrigated; (Emphasis supplied).
xxxxxxxxx
TITLE TO LAND ACQUIRED PURSUANT TO THIS
DECREE OR THE LAND REFORM PROGRAM OF THE
GOVERNMENT SHALL NOT BE TRANSFERABLE except
by hereditary succession or to the Government in
accordance with the provisions of this Decree, the
Code of Agrarian Reforms and other existing laws
and regulations; (Emphasis supplied).
xxxxxxxxx 8
The law is clear and leaves no room for doubt. Upon the
promulgation of Presidential Decree No. 27 on October 21, 1972,
petitioner was DEEMED OWNER of the land in question. As of that
date, he was declared emancipated from the bondage of the soil.
As such, he gained the rights to possess, cultivate, and enjoy the
landholding for himself. Those rights over that particular property
were granted by the government to him and to no other. To insure
his continued possession and enjoyment of the property, he could
not, under the law, make any valid form of transfer except to the
government or by hereditary succession, to his successors.
Yet, it is a fact that despite the prohibition, many farmer-
beneficiaries like petitioner herein were tempted to make use of
their land to acquire much needed money. Hence, the then Ministry
of Agrarian Reform issued the following Memorandum Circular:
Despite the above prohibition, however, there are
reports that many farmer-beneficiaries of PD 27
havetransferred the ownership, rights, and/or
possession of their farms/homelots to other persons
or have surrendered the same to their former
landowners. All these transactions/surrenders are
violative of PD 27 and therefore, null and
void. 9 (Emphasis supplied.)
We do not agree with the Court of Appeals when it ruled that
petitioner's land is not included in the legal prohibition since
petitioner has not yet acquired absolute title to the land having
failed to comply with all the conditions set forth by the law. With
regard to the legal prohibition, We hold that title refers not only to
that issued upon compliance by the tenant-farmer of the said
conditions but also includes those rights and interests that the
tenant-farmer immediately acquired upon the promulgation of the
law. To rule otherwise would make a tenant — farmer falling in the
category of those who have not yet been issued a formal title to
the land they till — easy prey to those who would like to tempt
them with cash in exchange for inchoate title over the same.
Following this, absolute title over lands covered by Presidential
Decree No. 27 would end up in the name of persons who were not
the actual tillers when the law was promulgated.
Furthermore, the evidence on hand shows that Certificate of Land
Transfer No. 096267 covering the land in question is in the name
of petitioner Victorino Torres. 10 This is admitted by private
respondent. 11 In Gloria de Oliver vs. Sisenando Cruz, et al., 12 the
Court of Appeals correctly ruled that:
The rights and interests covered by the Certificate of
Land Transfer are beyond the commerce of man.
They are not negotiable except when it is used by
the beneficiary as a collateral for a loan with the
rural bank for an agricultural production.
Having settled that the contract of transfer entered into between
petitioner and private respondent is void ab initio, We now go to
the issue of whether or not the principle of pari delicto 13 applies to
this case. We rule in the negative. Public policy and the policy of
the law must prevail. To hold otherwise will defeat the spirit and
intent of Presidential Decree No. 27 and the tillers will never be
emancipated from the bondage of the soil.
In Catalina de los Santos vs. Roman Catholic Church, 14 this Court
ruled that the pari delicto doctrine is not applicable to a homestead

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which has been illegally sold in violation of the homestead law. One
of the reasons given by this Court for the ruling is that the policy of
the law is to give land to a family for home and cultivation.
In Acierto, et al. vs. De los Santos, et al., 15 where the principle
was reiterated, this Court, through Justice Alex Reyes, made the
following pronouncement:
Appellants, however, contend that the voiding
provision of the Act may not be invoked in favor of
plaintiffs as their predecessor in interest was in pari
delicto, and that, since the same provision says the
illegal sale shall have the effect of annulling the
grant and cause the reversion of the property and its
improvements to the State, plaintiffs may no longer
claim the homestead. Similar contentions were made
in the case of Catalina de los Santos vs. Roman
Catholic Church of Midsayap et al., G.R. No.
L-6088, decided February 25, 1954, but they were
there overruled, this Court holding that
the paridelictodoctrine may not be invoked in a case
of this kind since it would run counter to an avowed
fundamental policy of the State, that the forfeiture of
the homestead is a matter between the State and
the grantee or his heirs, and that until the State had
taken steps to annul the grant and asserts title to
the homestead the purchaser is, as against the
vendor or his heirs "no more entitled to keep the
land than any intruder. 16
The pronouncements in the two above-mentioned cases were
adopted by this Court in Angeles, et al. vs. Court of Appeals, et
al., 17 wherein We ruled that the sale of the homestead by the
homesteader is null and void and his heirs have the right to
recover the homestead illegally disposed of.
In view of all the foregoing, We hold that the contract, being
void ab initio, must be given no effect at all. The parties in this
case are to be placed in status quo which was the condition
prevailing prior to the execution of the void contract.
WHEREFORE, the Decision of the Court of Appeals in CA-G.R. CV
No. 15482 is REVERSED AND SET ASIDE. The Decision of the
Regional Trial Court of Cauayan, Isabela in Civil Case No. Br. XIX-
167 is hereby ordered REINSTATED. Costs against private
respondent.
SO ORDERED.
Narvasa, C.J., Cruz, Griño-Aquino and Medialdea, JJ., concur.
G.R. No. L-48458 November 7, 1941
THE PEOPLE OF THE PHILIPPINES, plaintiff-appellee,
vs.
FIDEL FORTUNO, defendant-appellee.
Armando Magpayo for the appellant.
Acting First Assistant Solicitor-General Amparo and Assistant
Solicitor-General Kapunan, for the appellee.
MORAN, J.:
Defendant Fidel Fortuno rented from "El Hogar Filipino" a room in
the Crystal Arcade; and the rental having become due, he issued in
favor of the latter a check for P60 drawn against the Bank of the
Commonwealth. This check was, upon representation to the bank
for payment, dishonored for lack of funds. An information
for estafawas presented against the defendant in the municipal
court of Manila where, upon a plea of guilty, he was sentenced to
two months and one day of arresto mayor and to pay an indemnity
of P60 with subsidiary imprisonment in case of insolvency.
Defendant appealed to the Court of First Instance where, after
entering a plea of not guilty and thereafter substituting the same
with the plea of guilty, he was sentenced to the same penalty
imposed by the municipal court. Defendant interposed appeal from
this judgment.
The issuance of a check with knowledge on the part of the drawer
that has no funds to cover its amount and without informing the
payee of such circumstance, does not constitute the crime

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of estafa if the check was intended as payment of a pre-existing
obligation, as in the instant case. The reason for this rule is that
deceit, to constitute estafa, should be the efficient cause of the
defraudation and as such should be prior to, simultaneous with, the
act of fraud. (Cf. People vs. Liluis, 59 Phil., 339, 342;
People vs. Quesada, 60 Phil., 515 520.)
Defendant's plea of guilty is of no moment. Such plea constitutes a
mere admission of the material allegations of the information but
not that the facts thus alleged constitute an offense.
Judgment is reversed and the defendant is hereby acquitted with
costs de oficio.
Abad Santos, Diaz, Horilleno, and Ozaeta, JJ., concur.
G.R. No. L-19012 October 30, 1967
VICTORIA JULIO, plaintiff-appellant,
vs.
EMILIANO DALANDAN and MARIA DALANDAN, defendants-
appellees.
Pedro Magsalin and O.M. Herrera for plaintiff-appellant.
Cornelio R. Magsarili for defendants-appellees.
SANCHEZ, J.:
Disputing the correctness of the lower court's order of April 29,
1961 dismissing the complaint, plaintiff elevated the case1 to this
Court on appeal.
Plaintiff's complaint — which defendants, by a motion to dismiss,
successfully overturned in the court below — is planted upon a
document Annex "A" of the complaint, labeled in the national
language "SALAYSAY" (Statement). It was in the form of an
affidavit subscribed and sworn to by one Clemente Dalandan on
September 8, 1950. By the terms of this writing, Clemente
Dalandan, deceased father of defendants Emiliano and Maria
Dalandan, acknowledged that a four-hectare piece of riceland in
Las acknowledged that a four-hectare piece of riceland in Las
Piñas, Rizal belonging to Victoriana Dalandan, whose only child and
heir is plaintiff Victoria Julio, was posted as security for an
obligation which he, Clemente Dalandan, assumed but, however,
failed to fulfill. The result was that Victoriana's said land was
foreclosed. The key provisions of said document are:2
3. Na anglupangpalayangitonapagaarini VICTORIANA
DALANDAN at sakasalukuyan ay walangibangtagapagmana
kung di si VICTORIA JULIO, ay napafianzasa akin
nuongbago pa dumatinganghulingdigmaan at
dahilsahindiakonakatupadsaakingpananagutangnasasagutan
ngbukidniyangito ay naembargoangnasabiniyanglupa;
[That this riceland owned by VICTORIANA DALANDAN
whose sole heir is VICTORIA JULIO was posted as security
for an obligation assumed by me even before the outbreak
of the last war and because I failed to fulfill the obligation
secured by her said farm the same was foreclosed;]
4. Na dahildito ay akosamakatuwid ay nanagotsakanya
(VICTORIA JULIO), sapagkakaembargonglupaniyangiyong
kung kaya'tnagkasundo kami naako ay
nanagotsakanyasapagkaembargongiyon at
ipinangakokosakanyanaanglupaniyangiyonnanaembargongd
ahilsaakingpananagutan ay akingpapalitanngbukid din na
may mahigitna APAT (4) nahectarea (o humigitkumulangsa
APAT NA KABANG BINHI);
[That because of this, and as agreed upon between us, I
accordingly held myself liable to Victoria Julio for the
foreclosure of her said land, and I promised her that I would
replace her aforesaid land which was foreclosed because of
my obligation with another farm of more than four; (4)
hectares, that is, one planted to four cavanes of seedlings,
more or less;]
5. Na hindimaaringpilitinangakingmgaanak (EMILIANO AT
MARIA DALANDAN),
nahinginanganingbukidnanabangitsaitaasngsalaysaynaito;

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[That my children (EMILIANO AND MARIA DALANDAN) may
not be forced to give up the harvest of the farm herein
above mentioned;]
6. Na
hindirinmaaringhinginkaaggadsalalongmadalingpanahonang
kapalitngbukidna may apatnakabangbinhi;
[That neither may the land — which was exchanged for the
farm with four cavanes of seedlings — be demanded
immediately;]
Victoria Julio, in turn, joined Clemente Dalandan in the execution
of, and also swore to, the said document, in this wise:
Na, ako VICTORIA JULIO,
nabinabanggitsaitaasnitosasalaysayni CLEMENTE
DALANDAN, ay
nagpapatunaynatutoonglahatangkanyangsalaysaynaiyon at
tinatanggapkoangkanyangmgasinasabi.
[That I, VICTORIA JULIO, mentioned in the above statement
of CLEMENTE DALANDAN, attest to the truth of, and accept,
all that he stated therein.]
Back to the complaint herein. Plaintiff went on to aver that the land
of Clemente Dalandan set forth in the document, Annex "A" of the
complaint, referred to six small parcels described in paragraph 4
thereof with a total area of barely two hectares — "the only land
owned by Clemente Dalandan at the time of the execution of the
document" — except fifty plots or "banigan" (saltbeds), which were
previously conveyed to plaintiff's mother by mean of pacto de
retro sale and title to which had already been vested in the latter;
that after the death of Clemente Dalandan, plaintiff requested from
defendants, Clemente's legitimate and surviving heirs who
succeeded in the possession of the land thus conveyed, to deliver
the same to her; that defendants "insisted that according to the
agreement", neither delivery of the land nor the fruits thereof could
immediately be demanded, and that "plaintiff acceded to this
contention of defendants and allowed them to continue to remain
in possession" thereof; that demands have "been made upon
defendants to fix the period within which they would deliver to the
herein plaintiff the above-described parcels of land but defendants
have refused and until now still refuse to fix a specific time within
which they would deliver to plaintiff the aforementioned parcels of
land." Predicated upon the foregoing allegations, plaintiff prayed
for judgment against defendants:
(a) Adjudging the herein plaintiff as owner of the land
described in paragraph 4 hereof;
(b) Fixing a time within which defendants should deliver the
said parcels of land to the herein plaintiff as well as the
fruits thereof;
(c) Adjudging that upon the expiration of the said time
defendants convey and deliver to the herein plaintiff the
said parcels of land as well as the fruits thereof;
(d) Ordering the defendants to pay the plaintiff the sum of
P2,000.00 as attorneys' fees;
(e) Ordering the defendants to pay the costs of the suit;
and granting such other relief and remedy as may be just
and equitable in the premises.
Defendants met the complaint with a motion to dismiss grounded
on: (1) prescription of plaintiff's action; (2) pendency of another
suit between the same parties for the same cause; and (3) release
and/or abandonment of the claim set forth in plaintiff's complaint.
By its order of April 29, 1961, the lower court ruled that plaintiff's
suit, viewed either as an action for specific performance or for the
fixing of a term, had prescribed. Reason: the 10-year period from
the date of the document had elapsed. The lower court found it
unnecessary to pass upon the other grounds for the motion to
dismiss. Hence, this appeal.
1. The threshold problem, basic to an understand of the issues
herein involved, is the meaning to be attached to the document
now under review. Undoubtedly, bad more felicitous terms been
employed, the intention of the parties could easily be read.

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Unfortunately, ineptness of expression exacts of us an examination
of the document. Familiar rules of interpretation of documents tell
us that in ascertaining the intention of the parties, the contents
thereof should not be interpreted piecemeal; all parts, provisions or
terms are to be considered; each paragraph clause or phrase must
be read not in isolation, but in the light of the entire writing;
doubtful ones should be given that sense which may result from all
of them, considered as a whole. Such construction will be adopted
as will result from an overall view of the document itself.
It is, in this perspective that we now look into the writing.
Adverting to paragraph 4 of the deed, defendants take the position
that the deceased Clemente Dalandan simply "promised" to
Victoria Julio a farm of about four hectares to replace the land of
Victoriana Dalandan (mother of Victoria Julio) which was
foreclosed. But this view loses sight of the later provisions thereof.
By paragraph 5, Clemente's children may not be forced to give up
the harvest of the farm mentioned in the deed. This was followed
by paragraph 6 which states that Victoria Julio may not
immediately demand the substitute (kapalit) for the forfeited land.
These last two statements in the deed express the dominant
purpose of the instrument. They convey the idea that the naked
ownership of the land in substitution was, indeed, transferred to
Victoria Julio. Else there would have been no sense in the proviso
that the fruits as well as the physical possession of the land could
not immediately be demanded by Victoria Julio from Clemente's
children, the herein defendants. For, the right to demand fruits and
physical possession of property has been known to be attributes of
ownership.
The disputed complaint in paragraphs 6 and 7 thereof, in essence,
avers plaintiff's request for the delivery of the real property;
defendants' answer that "according to the agreement" neither land
nor fruits thereof could immediately be taken away from them, and
plaintiff's conformity thereto; and plaintiff's demands that the
period for delivery be fixed and defendants' refusal.
The allegations of the complaint just noted carry us to another
aspect of the document: defendants' rights over the land vis-a-
visplaintiff's. What rights were transmitted to defendants by their
father, Clemente Dalandan? Paragraphs 6 and 7 of the document
supply the answer. They are usufructuaries for an undetermined
length of time. For so long as that period has not been fixed and
has not elapsed, they hold the property. Theirs is to enjoy the
fruits of the land and to hold the same as trustees of Victoria Julio.
And this because, by the deed, Clemente Dalandan divested
himself of the ownership — qualified solely by withholding
enjoyment of the fruits and physical possession. In consequence,
Clemente Dalandan cannot transmit to his heirs, the present
defendants, such ownership.3 Nemodat quod non habet. And then,
the document is a declaration by Clemente Dalandan, now
deceased, against his own proprietary interests. Such document is
binding upon his heirs.4
2. But, defendants aver that recognition of the trust may not be
proved by evidence aliunde. They argue that by the express terms
of Article 1443 of the Civil Code, "[n]o express trusts concerning an
immovable or any interest therein may be proved by parol
evidence." This argument overlooks the fact that no oral evidence
is necessary. The express trust imposed upon defendants by their
predecessor appears in the document itself. For, while it is true
that said deed did not in definitive words institute defendants as
trustees, a duty is therein imposed upon them — when the proper
time comes — to turn over both the fruits and the possession of
the property to Victoria Julio. Not that this view is without statutory
support. Article 1444 of the Civil Code states that: "No particular
words are required for the creation of an express trust, it being
sufficient that a trust is clearly intended." In reality, the
development of the trust as a method of disposition of property, so
jurisprudence teaches, "seems in large part due to its freedom
from formal requirements."5 This principle perhaps accounts for the
provisions in Article 1444 just quoted. For, "technical or particular
forms of words or phrases are not essential to the manifestation of
intention to create a trust or to the establishment thereof."6 Nor
would the use of some such words as "trust" or "trustee" essential
to the constitution of a trust as we have held in Lorenzo vs.
Posadas, 64 Phil. 353, 368. Conversely, the mere fact that the
word "trust" or "trustee" was employed would not necessarily
prove an intention to create a trust. What is important is whether
the trustor manifested an intention to create the kind of
relationship which in law is known as a trust. It is unimportant that
the trustor should know that the relationship "which he intends to
create is called a trust, and whether or not he knows the precise

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characteristics of the relationship which is called a trust."7 Here,
that trust is effective as against defendants and in favor of the
beneficiary thereof, plaintiff Victoria Julio, who accepted it in the
document itself.8
3. Plaintiff is not to be handicapped by a lack of a clear statement
as to the actual description of the land referred to in the trust
deed, basis of plaintiff's cause of action. Obviously, the document
was not prepared by a learned scrivener. It imperfectly speaks of a
"farm of more than four (4) hectares." But averment in the
complaint is not lacking to clear the uncertainty as to the identity
of the land mentioned in that document. Plaintiff points out in
paragraph 4 of her complaint that while said deed does not
specifically define its boundaries "the parties to the said document
actually refer" to the land which was "the only land owned by
Clemente Dalandan at the time of the execution" thereof, and
which is set forth in small parcels under said paragraph. This
allegation in the complaint does not add any new term or
stipulation to the writing. Rather, it explains an obscurity
occasioned by lack of precision in a clumsily prepared document.
Thus it is, that authorities are not wanting in support of the view
that "in so far as the identity of land involved" in a trust is
concerned, "it has also been held that the writings, in being
considered for the purpose of satisfying the statute of frauds, are
to be considered in their setting, and that parol evidence is
admissible to make clear the terms of a trust the existence of
which is established by a writing, . . ."9
4. This case having been brought before us on a motion to dismiss,
we need but stress that we are to be guided solely by the
averments of the complaint. So guided, we must say that there is
sufficient showing in the complaint that there is an
acknowledgment on the part of defendants that they hold the
property not as their own, but in trust. There is no statement in the
complaint intimating disavowal of such trust; the complaint alleges
refusal to deliver possession. In the sense in which we understand
the complaint to be, it cannot be said that plaintiff's action to
recover the property thus held in trust has prescribed. Given the
fiduciary relation which according to the complaint is recognized by
defendants, the latter may not invoke the statute of limitations as
a bar to plaintiff's action.10
5. Even on the assumption that defendants have not been
constituted as trustees under the document in question, still we
arrive at the same conclusion. For, plaintiff's action is aimed, by an
alleged owner of real property at recovery of possession thereof,
conditioned upon the fixing of the period therefor. Since plaintiff
claims ownership, possession, in the words of this Court "is a mere
consequence of ownership."11 It may not be said that plaintiff's suit
is barred by the statute of limitations. She is protected by Article
1141 of the Civil Code, which reads: "Real actions over immovables
prescribe after thirty years." We take this view for the obvious
reason that defendants' motion to dismiss on this score is directed
at the prescription of plaintiff's action — not on acquisitive
prescription.
6. Defendants in their brief draw attention, by way of counter-
assignment of error, to their claim that this case should also be
dismissed upon the ground that there exists another action
pending between the same parties for the same cause, and on the
further ground of release and/or abandonment.
The facts bearing on this issue are: In Land Registration Case N-
706, G.L.R.O. Record No. N-7014, Court of First Instance of Rizal,
defendants are applicants. That case — so defendants aver —
covers the very same land set forth in plaintiff's complaint. In their
opposition to that application, herein plaintiff prayed that the same
land — the subject of this suit — (covered by Plan PSU 129514) be
registered "in the names of the herein applicants and oppositor
with the specific mention therein that the herein oppositor owns
fifty salt beds therein and having an absolute right to the use of
the depositories." Defendants argue that if plaintiff was the real
owner of the entire area, opposition should have been presented
on the whole, not merely as to fifty salt beds.
Parenthetically, the question of ownership over the portion of fifty
salt beds had already been resolved by this Court in a decision
promulgated on February 29, 1964 in L-19101
(EmilianoDalandanand Maria Dalandan, plaintiffs, vs. Victoria Julio,
et al., defendants). There, this Court affirmed the order dismissing
the complaint filed by defendants herein, plaintiffs therein, for the
repurchase of fifty salt beds which were the subject of a sale

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withpacto de retro executed on September 24, 1932 by Clemente
Dalandan in favor of Victoriana Dalandan, predecessor of plaintiff.
There is no point in the argument that an action is pending
between plaintiff and defendants. Because, with the exception of
the fifty salt beds — which according to the complaint is not
included in the deed — plaintiff filed no opposition to defendants'
application for land registration. Failure to so object in reference to
the registration of a bigger portion of the land, simply means that
there is no case between the parties in reference thereto in the
land registration proceeding.
Not that plaintiff released or abandoned the claim to that bigger
portion. For, there is an averment in the complaint that an
agreement exists between plaintiff and defendants to defer delivery
thereof; and that defendants thereafter refused to fix the period for
such delivery. So that, on the assumption that defendants should
succeed in obtaining title to the property in the land registration
case, such would not bar Victoria Julio from requiring them to
execute a conveyance of the property in her favor, in the event she
(plaintiff herein) prevails in the present case. And this, because
defendants could here be declared as mere trustees of plaintiff, if
the averments of the complaint are found to be true."12
For the reasons given, the order of the Court of First Instance of
Rizal dated April 29, 1961 dismissing the complaint is hereby
reversed and set aside, with instructions to remand the case to the
court below for further proceedings.
Costs against defendants-appellees.So ordered.
Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Bengzon, J.P.,
Zaldivar, Castro, Angeles and Fernando, JJ.,concur.
G.R. No. L-14714 April 30, 1960
ARISTON ANDAYA, ET AL., plaintiffs-appellees,
vs.
DR. MELENCIO MANANSALA, defendant-appellant.
Constante R. Ayson for appellees.
Jose V. Manansala for appellant.
REYES, J. B. L., J.:
Originally brought to the Court of Appeals, this appeal was
forwarded to us by said court because it raises only legal
questions.
There is no dispute as to the antecedents of the case, which the
lower court found to be as follows:
On June 13, 1934, one Isidro Fenis sold the land in question
to EustaquiaLlanes, with right of repurchase within a period
of five years. After the expiry of said period, and without
repurchasing the said property, Isidro Fenis sold it again to
Maria Viloria on January 13, 1944. Seven months later, or
on August 21, 1914, Maria Viloria sold by way of sale with
right to repurchase within a period of one year, the said
property together with another parcel of land to the herein
defendant MelencioManansala. On August 1, 1946, upon the
expiry of the said period, Manansala registered with the
Register of Deeds an affidavit consolidating his title on the
property. A year later, or on September 28, 1947, Maria
Viloria sold by way of absolute sale the same property to
CiriacoCasiño, Fidela Valdez, and the plaintiff spouses
Ariston Andaya and MicaelaCabrito, for P4,800.00, which
deed contained the following stipulation:
The following month, or on October 18, 1947,
EustaquiaLlanes, instituted Civil case No. 399 to quiet title
and to recover possession of said parcel from CiriacoCasiño.
Eight months later, or on June 9, 1949, a defendant
MelencioManansala sold by way of absolute sale, the
property in question to the spouses CiriacoCasiño and Fidela
Valdez, and the plaintiffs for P1,500.00, which deed
contained the following stipulation:
That from and after this date, the vendee herein named are
the lawful owners of the land herein sold which I warrant to
be free from all kinds of liens and encumbrances whatever

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and in case of eviction, I promise, agree and covenant to
answer to and for the vendee in the form and manner
provided by law.
This document of conveyance was recorded in the Register
of Deeds under Act No. 3344, on June 9, 1948.
In the meantime, on September 28, 1948, EustaquiaLlanes,
included as co-defendant in Civil Case No. 399,
MelencioManansala (Annex C), and on September 2, 1950,
as additional defendants, Fidela Valdez and the spouses
Ariston Andaya and MicaelaCabrito (Annex D). The said
defendant filed a joint answer to the second amended
complaint, claiming title on said property on the basis of the
conveyance made in favor of Manansala, and from the latter
to the other defendants. Judgment was rendered in that
case in favor of EustaquiaLlanes, and on October 17, 1955,
the said judgment having become final, a writ of execution
was issued against Ciriaco Casino, Fidela Valdez, Ariston
Andaya and MicaelaCabrito. In the enforcement of said writ,
the properties of Fidela Valdez were attached and sold at
public auction to cover the damages, representing the value
of the produce of the land, amounting to P676.00, costs of
the suit in the amount of P33.20, or a total of P709.20
(Annex H-1).
On March 23, 1956, plaintiffs spouses Ariston Andaya and
MicaelaCabrito commenced this case in the Court of First Instance
of Ilocos Sur against defendant MelencioManansala to recover
damages suffered by them by reason of the latter's breach of his
warranty of title or against eviction embodied in his sale of the land
in question to plaintiffs. Defendant Manansala denied liability for
the damages claimed, and alleged that it was plaintiffs and their
co-purchasers who pleaded with him to sell said land to them at a
low price after they had been sued by EustaquiaLlanes in Civil Case
No. 399, considering that Manansala had registered the land in his
name with the office of the Register of Deeds. After the case was
submitted for a summary judgment and the parties had agreed on
a statement of facts, the lower court entered the following
decision:
Considering that the same land was already sold to the
plaintiffs and their co-vendee, CiriacoCasiño and Fidela
Valdez, it is obvious that their only purpose in acquiring the
same land from the defendant at the low price of P1,500.00
was to enable them to register the prior deed of sale
executed by Maria Viloria. This is true, because the title of
the defendant had already consolidated pursuant to Article
1509 of the Spanish Civil Code as shown by an affidavit of
the defendant registered with the Register of Deeds of this
province. This was clearly the understanding of the parties,
and the plaintiffs apparently knew that the stipulation on
warranty in the deed was made pro forma and could not
have been intended, considering the above circumstances
from the fact that said property was then subject of a
pending litigation as an actual warranty on the title and
possession of the purchasers. This being so, it would be
inequitable now to hold that the defendant is liable under
the provisions of Article 1555 of the new Civil Code or under
Act 1478 of the Spanish Civil Code which is the law that
should be applied, the said transaction being before August
30, 1950.
In determining therefore the obligations of the defendant,
those applicable to a vendor in cases of rescission of a
contract should be applied.
WHEREFORE, the Court renders judgment sentencing the
defendant to return to the plaintiffs the sum of P750.00
which represent one-half of the purchase price with interest
at 6% from June 9, 1948 until fully paid, and to pay the
costs of this suit.
From the above decision, defendant MelencioManansala appealed,
claiming that after finding that he was not liable to plaintiffs-
appellees for breach of warranty against eviction, the lower court
erred in holding him liable as in rescission of sale and ordering him
to return to plaintiffs-appellees the price of the land in question
with interests.
There is merit in the appeal.

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The vendor's liability for warranty against eviction in a contract of
sale is waivable and may be renounced by the vendee (last par.,
Art. 1475, Old Code; last par., Art. 1548, New). The contract of
sale between herein appellant and the appellees included a
stipulation as to the warranty; but the lower court found that the
parties understood that such stipulation was merely pro forma and
that the appellant vendor was not to be bound thereby, in view of
the fact that the same land had been previously bought by
appellees from Maria Viloria and that their only purpose in buying
the same again from appellant was to enable them to register their
prior deed of sale; and the further fact that when the sale between
appellant and appellee was made, the property was already the
subject of a pending litigation between appellees and one
EustaquiaLlanes, who claimed its title and possession by virtue of
an earlier sale from the original owner, and it was by final
judgment in this litigation that appellees were evicted from and
land. Not having appealed from the decision of the court below,
appellees are bound by these findings, the implication of which is
that they not only renounced or waived the warranty against
eviction, but that they knew of the danger of eviction and assumed
its consequences.
Now, according to Article 1477 of the old Code (the law applicable
when the contract in this case was made),
When the vendee has waived the right to warranty in case
of eviction, and eviction shall occur, the vendor shall only
pay the price which the thing sold had at the time of the
eviction, unless the vendee has made the waiver with
knowledge of the danger of eviction and assumed its
consequences. (Same as Art. 1554 of the new Code)
As already stated, appellees knew of the danger of eviction at the
time they purchased the land in question from appellant, and
assumed its consequences. Therefore, the appellant is not even
obliged to restore to them the price of the land at the time of
eviction, but is completely exempt from liability whatsoever.
Neither may appellant be condemned to return the price received
from appellees on the theory of rescission of their contract of sale,
as held by the court below. In the first place, the remedy of
rescission contemplates that the one demanding it is able to return
whatever he has received under the contract; and when this can
not be done, rescission can not be carried out (Art. 1295, Old
Code; Art. 1385, New). It is for this reason that the law on sales
does not make rescission a remedy in case the vendee is totally
evicted from the thing sold, as in this case, for he can no longer
restore the thing to the vendor. It is only when the vendee loses "a
part of the thing sold of such importance, in relation to the whole,
that he would not have purchased it without said part" that he may
ask for rescission, but he has "the obligation return the thing
without other encumbrances than those which it had when he
acquired it" (Art. 1479, old Code; 1556, New). In the second place,
appellees, as already stated, assumed the risk of eviction, which
stops them from asking for rescission even were it possible for
them to restore what they had received under the contract.
On their part, appellees claim that in view of the eviction from the
land in question, they are entitled to recover from appellant more
items of damages under Article 1555 of the New Code than the
mere return of the price with interests as ordered by the trial court.
The claim is untenable, not only because appellant, as we have
held, is exempt from any liability for appellees eviction, but also
because not having appealed from the decision of the court below,
appellees can not ask for a modification thereof or an award of
damages not included therein (Davidvs. De la Cruz, 103 Phil., 380;
54 Off. Gaz. [35] 8073; Pineda &Ampil Mfg. Co. vs. Bartolome, 95
Phil., 930; Gorospe vs. Peñaflorida, 101 Phil., 886).
Wherefore, the decision appealed from is reversed and the
complaint dismissed, with costs against appellees Ariston Andaya,
et al.
Paras, C.J., Bengzon, Montemayor, Bautista Angelo, Labrador,
Concepcion, Endencia and Gutierrez David, JJ.,concur.
G.R. No. L-17384 October 31, 1961
NESTOR RIGOR VDA. DE QUIAMBAO, ET AL., petitioners,
vs.
MANILA MOTOR COMPANY, INC., and the HON. COURT OF
APPEALS, respondents.

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Manuel Y. Macias for petitioners.
Ozaeta, Gibbs and Ozaeta for respondents.
REYES, J.B.L., J.:
This petition for certiorari brings to this Court for review the
decision of the Court of Appeals in its CA-G.R. No. 17031-R,
reversing that of the Court of First Instance of Manila and
dismissing petitioners' complaint.
The facts are not in dispute. On March 7, 1940, Gaudencio R.
Quiambao, deceased husband of petitioner Nestora Rigor
Vda.deQuiambao and father of the other petitioners, bought from
respondent Manila Motor Company, Inc. one (1) Studebaker car on
the installment plan. Upon default in the payment of a number of
installments, respondent company sued GaudencioQuiambao in
Civil Case No. 58084 of the Court of First Instance of Manila. On
December 4, 1940, judgment was entered in said case, awarding in
favor of the plaintiff the sum of P3,054.32, with interest thereon at
12% per annum, and P300.00 attorney's fees.
On July 14, 1941, the court issued a writ of execution directed to
the Provincial Sheriff of Tarlac, who thereupon levied on and
attached two parcels of land covered by Transfer Certificate of Title
No. 18390 of the Office of the Register of Deeds for Tarlac. On
August 27, 1941, Attorney Felix P. David, then counsel for the
Manila Motor Company, accompanied by the sheriff, personally
apprised GaudencioQuiambao of the levy. The latter pleaded to
have the execution sale suspended and begged for time within
which to satisfy the judgment debt, proposing that in the
meanwhile, he would surrender to the company the Studebaker
car. This proposition was accepted, accordingly,
GaudencioQuiambao delivered the car to the company, and
Attorney David issued a receipt therefor that reads:
August 27, 1941
Received from Mr. GaudencioQuiambao, Studebaker
President Sedan License No. 45-368 pending settlement of
the judgment in Civil Case No. 58043 CFI Manila rendered
in favor of Manila Motor Company.
DAVID AND ANGELES
by (Sgd.) Felix P. David.
Attorneys for Manila Motor Company
On October 16, 1941, GaudencioQuiambao remitted to the
company, on account of the judgment, the sum of P500.00; he,
however, failed to make further payments, thus leaving a balance
still unsettled of P1,952.47, with interest thereon at 12% per
annum from March 6, 1940.
In the meantime, the Pacific war broke out, and when the Japanese
forces occupied the country shortly thereafter, the invaders seized
all the assets of the Manila Motor Company, Inc., as enemy
property.
After the war, the company filed with the Philippine War Damage
Commission, among other things, a claim for its mortgage lien on
the car of GaudencioQuiambao and was awarded the sum of
P780.47, P409.75 of which amount had already been paid.
On October 12, 1949, the company addressed a letter to
GaudencioQuiambao asking him to fill a blank form relative to the
lost car. Quiambao having since died, his widow, Nestora Rigor
Vda.deQuiambao, returned the form with the statement that the
questioned car was surrendered to the company for storage. On
May 18, 1953, a demand was made on the widow to settle the
deceased's unpaid accounts, but in view of her refusal, the
company urged the Provincial Sheriff of Tarlac to carry out the pre-
war writ of execution issued in Civil Case No. 58043. Although the
records of that case had been lost during the war, and have not
been reconstituted, a copy of said writ of execution kept on file by
the provincial sheriff was saved. Accordingly, the latter advertised
for sale at public auction the properties levied upon. Notified of the
sheriff's action, the heirs of the deceased Quiambao filed this suit
to annul and set aside the writ of execution and to recover
damages. Judgment was rendered by the Court of First Instance of
Manila in favor of plaintiffs-petitioners, but on appeal to the Court

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of Appeals, the decision was reversed and another entered
dismissing the complaint. Hence, this appeal by writ of certiorari.
Briefly, the issues are:
(a) Did the delivery of the Studebaker car to respondent company
produce the effect of rescinding or annulling the contract of sale
between the company and the deceased GaudencioQuiambao and
of barring the former from executing its pre-war judgment in Civil
Case No. 58043?
(b) Did the payment to respondent company and the latter's
acceptance of war damage compensation for the lost car amount to
a foreclosure of the mortgage covenated in its favor? and
(c) Was the pre-war judgment already prescribed taking into
account the moratorium laws?
Anent the first issue, petitioners, citing the case of H.E. Heacock
Company vs. Buntal Manufacturing Company, et al., 66 Phil. 245-
246, maintain that the "taking of the automobile by respondent
company from GaudencioQuiambao ... amounted to a waiver of
said company's right to execute its judgment in Civil Case No.
58043 and clearly constituted a cancellation or rescission of the
sale," which, under the first paragraph of Article 1454-A of the old
Civil Code1, then applicable, bars any further claim for unpaid
installments. There is no merit in this claim. Unlike situation that
arose in the H.E. Heacock Company case wherein the vendor
demanded the return of the thing sold and thereby indicated an
unequivocal desire on its part to rescind its contract with the
vendee, here it was the buyer (deceased GaudencioQuiambao) who
offered, indeed pleaded, to surrender his car only in order that he
might given more time within which to satisfy the judgment debt,
and suspend the impending execution sale of the properties levied
upon. The very receipt issued then by the company, and accepted
without objection by the deceased (GaudencioQuiambao), indicated
that the car was received "pending settlement of the judgment in
Civil Case No. 58043." Other circumstances that militate against
petitioners' theory of rescission or annulment of the contract of
sale and waiver of the judgment of debt and, conversely,
strengthen the proposition that the delivery of the car to
respondent company was merely to postpone the satisfaction of
the judgment amount, are that the deceased still paid the further
sum of P500.00 on account of his indebtedness about two months
after the car was surrendered, and that despite respondent
company's acceptance of the car, the company made repeated
demands against the petitioners to settle the deceased's unpaid
accounts.
Since respondent company did not receive the car for the purpose
of appropriating the same, but merely as security for the ultimate
satisfaction of its judgment credit, the situation under
consideration could not have amounted to a foreclosure of the
chattel mortgage as petitioners imply.
Petitioners next argue that "the payment of war damage
compensation to respondent company . . . produced the same and
equal legal effect as formal foreclosure," and in view of the second
paragraph of Article 1454-A2 of the Spanish Civil Code, the latter is
now precluded from claiming unpaid installments. We do not agree.
Having been the party who was last in possession of the lost car,
the company was well within its rights, or better still, under
obligation, to protect the interest of the car owner, as well as its
own, by claiming, as it did, the corresponding war damage
compensation for the car. Such action of the company can not
reasonably be construed as a constriction of its rights under the
pre-war judgment.
Furthermore, in Manila Motor Company, Inc. vs. Fernandez, 52 Off.
Gaz. No. 16, 6883, 6885, we held:
. . . At any rate, it is the actual sale of the mortgaged
chattel in accordance with section 14 of Act No. 1508 that
would bar the creditor (who chooses to foreclose) from
recovering any unpaid balance (Pacific Commercial
Company vs. De la Rama, 72 Phil. 380).
But perhaps the best reason why respondent company may not be
construed as having rescinded or cancelled the contract of sale or
foreclosed the mortgage on the automobile in question is precisely
because it brought suit for specific performance, and won, in the
pre-war Civil Case No. 58043.

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There is likewise no merit in the contention that the pre-war
judgment had already prescribed. Said judgment was entered on
December 4, 1940, and on July 14, 1941, a writ of execution was
issued. Respondent company took no further step to enforce the
judgment until May 19, 1954, on which date, respondent scheduled
two (2) parcels of land owned by the petitioners for sale at public
auction pursuant to the writ of July 14, 1941. From the entry of the
judgment to May 19, 1954, a period of 13 years, 5 months and 15
days had elapsed. From this term we must deduct the period
covered by the debt moratorium under Executive Order No. 32
(which applied to all debts payable within the Philippines), from the
time the order took effect on March 10, 1945, until it was partially
lifted by Republic Act No. 342 on July 26, 1948.
Deducting the period during which Executive Order No. 32 was in
force, which is 3 years, 4 months and 16 days, from 13 years, 5
months and 15 days, the period covered from the entry of the pre-
war judgment to the time respondent company attempted to sell
the levied properties at auction, there is still left a period of 10
years and 29 days. But as held in Talens vs. Chuakay& Co., G.R.
No. L-10127, June 30, 1958, this Court may take judicial notice of
the fact that regular courts in Luzon were closed for months during
the early part of the Japanese occupation until they were
reconstituted by order of the Chairman of the Executive
Commission on January 30, 1942.3 This interruption in the
functions of the courts has also been held to interrupt the running
of the prescriptive period (see also Palma vs. Celda, 81 Phil. 416).
That being the case, respondent company could not be barred by
prescription from proceeding with the execution sale pursuant to
the levy and writ of execution issued under the pre-war judgment,
considering that even the minimum period of from December 8,
1941, the outbreak of the Pacific War to January 30, 1942 is
already a term of one (1) month and 23 days.
Petitioners raised the issue whether or not the pre-war writ of
execution and levy may still be enforced by sale of the levied
property after the lapse of the five-year period within which a
judgment may be executed by motion. On this point, this Court has
held:
We are of the opinion that a valid execution issued and levy
made within the period provided by law may be enforced by
a sale thereafter. . . . The sale of the property by the sheriff
and the application of the proceeds are simply the carrying
out of the writ of execution and levy which when issued
were valid. This rests upon the principle that the levy is the
essential act by which the property is set apart for the
satisfaction of the judgment and taken into custody of the
law, and that after it has been taken from the defendant,
his interest is limited to its application to the judgment,
irrespective of the time when it may be sold (Southern Cal.
L. Co. vs. Hotel Co., 94 Cal. 217, 222). (Government of P.I.
vs. Echaus, 71 Phil. 318)..
The case of Ansaldo vs. Fidelity and Surety Company of the
Philippine Islands, G.R. No. L-2378, April 27, 1951, invoked by the
petitioners, is not in point, for there the judgment creditor
attempted to carry out the writ of execution 10 years after entry of
judgment. As correctly observed by the appellate court below, both
cited cases —
. . . affirm the fundamental principles that a valid judgment
may be enforced by motion within five years after its entry,
and by action after the lapse of said period but before the
same shall have been barred by any statute of limitations,
and that a valid execution issued and levy made within the
five-year period after entry of the judgment may be
enforced by sale of the property levied upon thereafter,
provided the sale is made within ten years after the entry of
the judgment.
The petitioners should, however, be credited the amount of
P409.75 which the respondent Manila Motor Company actually
received from the Philippine War Damage Commission on account
of the car of GaudencioQuiambao that had been seized from it by
the enemy occupant during the war. This should reduce the
principal amount still due the respondent from the petitioners to
the sum of P1,542.72.
IN VIEW OF ALL THE FOREGOING, the judgment of the Court of
Appeals appealed from is affirmed, with costs against petitioners.

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Bengzon, C.J., Padilla, Bautista Angelo, Labrador, Concepcion,
Paredes, Dizon and De Leon, JJ., concur.
Barrera, J., took no part.
Footnotes
1 The provision reads:
"In a contract for the sale of personal property payable in
installments, failure to pay two or more installments shall
confer upon the vendor the right to cancel the sale or
foreclose the mortgage if one has been given on the
property, without reimbursement to the purchaser of the
installments already paid, if there be an agreement to this
effect."
2 The paragraph reads:
"However, if the vendor has chosen to foreclose the
mortgage he shall have no further action against the
purchaser for the recovery of any unpaid balance owning by
the same, and any agreement to the contrary shall be null
and void."
3 In Alcantara vs. Chico, 49 O.G. 150, the Court of Appeals
estimated that in Bulacan, courts were not opened for
nearly five (5) months.
G.R. No. L-13435 July 27, 1960
EUSEBIO MANUEL, plaintiff and appellant,
vs.
EULOGIO RODRIGUEZ, SR., ET AL., defendants and appellees.
Sumulong, Hialo and Vidanes for appellant.
Generoso, Tolentino, Garcia and Cruz for appellee E. Rodriguez, Sr.
Celestino L. de Dios for appellee Llanos Vda. deLandahl.
REYES, J.B.L., J.:
Eusebio Manuel appeals from the judgment of the Court of First
Instance of Rizal, promulgated on October 31,1957, dismissing his
complaint.
Questions of law and of fact are involved, but the property being
worth over P2,000,000.00, the appeal was directly taken to this
Court.
The complaint seeks to have plaintiff Eusebio Manuel declared
absolute owner of Lot 51, Plan Psu-32606, situated in San Mateo,
Rizal; to compel defendants to execute a deed of absolute sale of
said lot in favor of said plaintiff and to receive the unpaid balance
of the purchase price thereof; and to declare the subsequent sales
of said lot null and void and to cancel the transfer certificates of
title issued to the transferees. The cross-claim by defendant
Eulogio Rodriquez against his co-defendant Dolores
Vda.deLandahl(as Administratrix of the intestate estate of John
Landahl)having been dismissed, and there being no appeal
therefrom, the facts pertaining thereto will be omitted.
It appears that Januaria Rodriguez was the original registered
owner of a big tract of land (part of which is the land in question),
embraced by Transfer Certificate of Title No. 8821 of the Register
of Deeds of Rizal. In 1924, Januara Rodriguez ceded and
transferred said land to the Payatas Subdivision Inc., to be
administered by said firm, subdivided, sold, leased or otherwise
disposed of (Exhibit "A"-1). Defendant-appellee Eulogio Rodriguez
was then the Secretary-Treasurer of said Payatas Subdivision Inc.
Sometime in April, 1926, plaintiff-appellant offered to buy the lot in
question (about 248,310 sq. meters in area).The Company agreed
to sell said lot (Lot 51) for P2,240 in cash, or by installments with
10% interest (Exhibit "C"). Plaintiff-appellant made a counter-offer
for P2,000, which the Payatas Subdivision accepted, provided it
was paid in each (Exhibit "E"). Plaintiff-appellant wanted to pay in
installments, and on August 2, 1926, the Company wrote him that
it was agreeable to a down-payment of P1,500, the balance to be
paid within 9 to 10 months without interest, or if the down-
payment be less than P1,500, with interest at 10% on the balance

of 52
(Exhibit "F"). Plaintiff-appellant then requested that the down-
payment be reduced to P1,300, and through the intercession of
defendant-appellee Eulogio Rodriguez, Sr., who was plaintiff-
appellant's friend, this was granted. After making the initial
payment of P1,300, a provisional receipt was issued, which, on
August 25, 1926, was substituted by the official receipt sent by
Casiano M. de Vera, the Company's bookkeeper (Exhibits "G" &
"G"-1). Soon after, plaintiff-appellant was placed in the possession
of the lot.
It also appears that plaintiff-appellant did not make any payments
within the 9 to 10-month period mentioned in Exhibit "F", so that
on April 30, 1928, the Payatas Subdivision Inc. sent him a letter
urging immediate payment of his unpaid account with the
Company, which, including interest, amounted to P819.23, and
asking him to answer within 10 days (Exhibit "H"). Thereafter,
plaintiff-appellant made another payment of P300 for which a
receipt dated June 20, 1928 was issued to him (Exhibit "I"). So far
as the record discloses, this appears to be the last payment made
by plaintiff-appellant on Lot 51, the property in question. On April
24, 1929, the Payatas Subdivision Inc. sent plaintiff-appellant a
detailed statement of his unpaid account which, including interest
and taxes, amounted to P596.21, urging immediate payment
thereof, so that title could be transferred to him as per agreement,
and requesting answer within 10 days (Exhibit "J"). Still, plaintiff-
appellant did not pay his account, despite the fact that thereafter,
on several occasions, the Company sent to his residence its acting
secretary, Conrado Vicente, to collect the balance.
Defendants-appellees advance the theory that in view of plaintiff-
appellant's repeated default in paying his outstanding account, the
Payatas Subdivision Inc. then considered his contract cancelled and
extinguished, and the amounts already paid (P1,600), forfeited to
the Company, the transaction being merely a contract to sell or
promise to sell; that sometime in 1939, the Payatas Subdivision
Inc., having sold all its properties (except some properties it was
administering for Januaria Rodriguez), was extrajudically dissolved,
but its papers of dissolution were lost or destroyed during the war;
that after said dissolution, all unsold properties belonging to
Januaria Rodriguez were returned to her.
Sometime in 1941, Januaria Rodriguez, who was the aunt of
defendant-appellee Eulogio Rodriguez, sold several properties to
the latter, including Lot 51 in question, in consideration of the
monthly advances, support, services, care, maintenance, medical
expenses, etc. which she received from the said Eulogio Rodriguez
(Exhibit "U").Pursuant to such sale, Transfer Certificate of Title No.
44709 was issued to Eulogio Rodriguez, Sr. (Exhibit 21-a).
Likewise, it appears that on February 4, 1941, Eulogio Rodriguez,
Sr., then Mayor of Manila, instructed his secretary to write plaintiff-
appellant to urge him to pay his unsettled account with the Payatas
Subdivision, Inc. As per instructions, his secretary wrote plaintiff-
appellant (Exhibit "O"). Still, there was no payment.
On August 5, 1944, Eulogio Rodriguez, Sr. sold Lot 51(among
others) to John Landahl (represented in the transaction by Carlos
Landahl as attorney-in-fact), for and in consideration of
P157,192.80, in Japanese war notes (Exhibit 1-Landahl). The sale
was duly registered and Transfer Certificate of Title No. 46521 was
issued in Landahl's name (Exhibit 3-Landahl).
On April 6, 1949, or just a little less than 23 years after the alleged
sale to him of Lot 51 in 1926, plaintiff-appellant brought the
instant case, as aforesaid, to compel the execution of a formal
deed of conveyance in his favor covering the purported sale in
1926; to compel receipt of the unpaid balance of the price which
plaintiff-appellant consigned in court; and to annul the subsequent
sales to Eulogio Rodriguez and to John Landahl, and the
corresponding transfer certificates to title issued to them.
The decision of the trial court dismissing the complaint is
predicated on two main findings —
Firstly. — That the transaction in 1926 was mere contract to sell or
promise to sell of Lot 51 to plaintiff-appellant, the understanding
being that upon failure to pay the installments as demanded, the
vendor corporation had the right to consider the contract cancelled
and the amounts already paid, forfeited.
Secondly. — That even under plaintiff-appellant's theory that his
contract with defunct Payatas Subdivision Inc. was an absolute

161069135 civ-revalida-cases

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