G.R. No. L-5977. February 17, 1955

On January 22, 1947, the plaintiffs, Fernando Fernandez and Natividad
Sumatra, filed an action against the defendants, Caridad Suplido, Virgilio
Suplido, Expectacion Suplido, Eleno Niervo and Elpidio Suplido, in the Court of
First Instance of Iloilo, for the purpose of recovering possession of a lot
alleged to have been sold to the plaintiffs on November 11, 1946 by Jose
Suplido, Virgilio Suplido and Expectacion Suplido for the price of P1,500.00,
with the right on the part of the vendors to repurchase the property within two
years, the sale being evidenced by a public instrument acknowledged before
notary public Cirilo Zorrilla. The defendants, Virgilio Suplido and Expectacion
Suplido, filed an answer alleging that the transaction was in fact a loan of
P900.00 with usurious interest, secured by a mortage. After trial the Court of
First Instance of Iloilo rendered on April 20, 1950, a decision in favor of the
plaintiffs, sustaining the validity and authenticity of the document relied upon
by the plain tiffs. This decision was affirmed by the Court of Appeals on
February 18, 1952.

On March 19, 1952, the defendants filed a motion, alleging that they had
deposited with the clerk of the Court of First Instance of Iloilo the sum of
P1,545.00 covering the repurchase price plus costs of suit and other expenses,
and praying that the plaintiffs be ordered to execute a deed of resale in favor
of the defendants and the register of deeds of Iloilo to cancel the notice of
lis pendens annotated on the back of Original Certificate of Title No.
49535. The defendants invoked article 1606 of the new Civil Code which provides
that “the vendor may still exercise the right to repurchase within thirty days
from the time final judgment was rendered in a civil action on the basis that
the contract was a true sale with right to repurchase.” On April 7, 1952, the
Court of First Instance of Iloilo issued an order denying the defendants’
motion, on the ground that its decision and that of the Court of Appeals in
favor of the plaintiffs, upholding the validity of the pacto de retro
sale, had become final, and article 1606 is not applicable because the
plaintiffs had already acquired a vested right to the land in question by reason
of the defendants’ failure to repurchase within two years from November 11,
1946. From this order the defendants have appealed.

Appellants in their brief have exerted efforts to reopen the question whether
the document sued upon by the plaintiff is a pacto de retro sale or an
equitable mortgage. Said efforts are clearly out of place, in view of the
finality of the decisions of the Court of First Instance of Iloilo and the Court
of Appeals. However, appellants’ contention that they should be allowed to
redeem the property, having deposited with the clerk of the Court of First
Instance of Iloilo on March 14, 1952, or less than 30 days after the
promulgation of the decision of the Court of Appeals, is tenable. It is clear
that, after the plaintiffs had filed the present action on January 22, 1947, or
less than three months after the execution of the pacto de retro sale
on November 11, 1946, and until the decision of the Court of Appeals promulgated
on February 18, 1952, had become final, the defendants could not fairly be
expected to exercise their right of redemption, for the simple reason that they
were claiming that the transaction was not a pacto de retro sale but
merely an equitable mortgage securing a loan with usurious interest. The
appellants can not be said to have acted in bad faith, as they had a right to
wait for the final outcome of the present action. As pointed out in Ong Chua
vs. Carr, 53 Phil. 975, the pendency of an action brought in good faith
and relating to the validity of a sale with pacto de retro tolls the
term for the right of redemption. Strictly speaking, therefore, the two-year
period within which the defendants could repurchase under the sale executed on
November 11, 1946, was suspended after filing of this case on January 22, 1947,
and again , commenced to run only after the decision of the Court of Appeals had
become final, and this could not have been earlier than fifteen days after
February 18, 1952, even assuming that the defendants received notice of said
decision on the same date and they did not file any motion for reconsideration.
It follows that the deposit made by the defendants with the clerk of the Court
of First Instance of Iloilo on March 14, 1952 was well within the period
stipulated in the pacto de retro sale.

The appellants argue that they are entitled to redeem, under article 1606 of
the new Civil Code, because article 2253 provides that “if a right should be
declared for the first time in this Code, it shall be effective at once, even
though the act or event which gives rise thereto may have been done or may have
occurred under the .prior legislation, provided said new right does not
prejudice or impair any vested or acquired right, of the same origin.” In view,
however, of what we have already stated regarding the suspension of the two-year
period within which the appellants could repurchase, it is unnecessary to
discuss the applicability of article 1606.

Wherefore, the appealed order is reversed and the plaintiffs are ordered to
execute in favor of the defendants a deed reconveying the land in question,
after the amount deposited with the clerk of the Court of First Instance of
Iloilo shall have been delivered to the plaintiffs, it ibeing understood that
said amount shall cover the repurchase price plus other legal expenses; and the
register of deeds of Iloilo is hereby directed to cancel the notice of lis
pendens annotated on the back of Original Certificate of Title No.- 49535.
Without costs.

Pablo, Bengzon, Padilla, Montemayor, Reyes, A., Jugo, Bautista Angelo,
Labrador, Concepcion, and Reyes, J.B.L., concur.

Order reversed.