MARIA MACAPINLAC AND EUFROSINA MACAPINLAC LORENZO, PETITIONERS, VS. THE COURT OF APPEALS (FIRST DIVISION) AND AVELINA BALLESTEROS, RESPONDENTS.

It appears that the petitioners, Maria Macapinlac and Eufrosina
Macapinlac-Lorenzo, were indebted to the respondent, Avelina
Ballesteros in the sum of P500. To secure the payment of this debt,
petitioners mortgaged a piece of land in Tuguegarao, province of
Cagayan, executing for that purpose, on November 29, 1937 a deed
entitled “Mortgage with Option to;Buy” and containing the following
stipulations:

“It is further agreed, that in default of the
Mortgagors in the performance of any of their obligations above stated
within two (2) years the Mortgagors will sell the same to the amount
not to exceed (P1,000) one-thousand pesos, Philippine Currency, or in
case the Mortgagors will sell the same to third persons, the Mortgagee
will be given preference to buy the same provided that the above price
will not be exceeded.”

As the petitioners failed to pay I within the stipulated period of
two years not only the original debt of P500 but also the additional
sums, totalling P470, later taken by them, an action was brought
against them by the respondent on January 13, 1940 in the Court of
First Instance of Cagayan for the recovery of the total sum due, the
complaint being later amended so as to convert the action into one for
specific performance, that is to say, to compel petitioners to deed
over to respondent the property covered by the mortgage on the theory
that the mortgage deed gave the mortgagee the option to buy the
mortgaged property. Answering the complaint, petitioners put up the
defense that although entitled “Mortgage with Option to Buy”, the
mortgage deed did in fact give to petitioners the option to sell, and
to the respondent a mere preferred right to purchase the property
mortgaged. After trial the lower court rendered a decision upholding
petitioners’ contention, and finding that petitioners had theretofore
consigned in court the sum of P1,100 for the payment of the debt
(though according to respondent it was for the purpose of lifting the
writ of attachment}, declared the mortgage discharged and the
petitioners absolved from,the complaint.

Notified of the decision on April 10, 1944, respondent on the
following day filed notice of her intention to appeal, followed
sometime later by a cash deposit of P60 as appeal bond. Then on May 3,
1944, she filed her record on appeal. Objected to on the ground that it
did not conform to the Rules, the record on appeal was disapproved, but
respondent was given ten days within which to present an amended one,
which she did. As the court still refused to approve the amended record
on appeal, respondent filed a petition with the Court of Appeals (for
Northern Luzon) to compel the lower court to approve the said record on
appeal and give the appeal due course. The case was at this stage when
its record both in the Court of Appeals (for Northern Luzon) and in the
Court of First Instance of Cagayan were destroyed in the battle for
Liberation in 1945.

On November 26, 1945, respondent ‘sought to have the record of the
case reconstituted by filing a petition for that purpose, in the Court
of First Instance of Cagayan. But after hearing, the court, ion October
23, 1946, declared the reconstitution a failure and ordered it given up
without prejudice to the filing of a new action. The order was couched
in the following terms:

“Sin perjuicio del ejercicio de otra nueva accion,
si asi lo creyere conveniente la promovente, el Juzgado declarando
fracasada esta reconstitucion, da por desistida de la misma aaquella,
sin costas.”

In consonance with this order, respondent, on October 28, 1946,
filed in the Court of First Instance of Cagayan a new action for
specific performance (Civil Case No. 27). Petitioners moved for the
dismissal of this new action on the theory that the same was barred by
the judgment rendered in the former case (civil case No. 2382). The
lower court denied the motion but reserved to petitioners the right to
set up in their answer the defense of res judicata. Not willing to go further without the issue of res judicata
being first decided, petitioners came to this Court with a petition for
a writ of prohibition to enjoin the lower court from proceeding with
the trial of the case. But the petition was dismissed on the ground
that petitioners had a remedy by appeal in case the lower court “should
erroneously or illegally overrule the point of res judicata” which they were allowed to set up in their answer in said Civil Case No. 27 of said court.

Taking its regular course, the new action went to trial, and on
May 21, 1947, judgment; was rendered in favor of plaintiff (respondent
herein) ordering the defendants (herein petitioners) to execute a deed
of absolute sale conveying the property in question to plaintiff. The
new judgment is thus a reversal of the one rendered in the former case
whose record the parties were not able to reconstitute.

On appeal to the Court of Appeals this new judgment was affirmed,
and it is the confirmatory decision of that Court that has been brought
here for review through a petition for a writ of certiorari.

The first question presented is whether the action in which the
judgment under review was rendered is barred by the judgment in the
former case, the record of which both in the Court of First Instance
and in the Court of Appeals no longer exists. In the determination of
this question, notice must be taken of.the fact that at the time the
new action was filed the former judgment had not yet attained the stage
of finality, as the same was still in the process of appeal to a higher
court. We cannot assume that appellant had meant to abandon her appeal
by not asking for the reconstitution of her petition for mandamus to
compel the trial court to elevate the record of the case to the
appellate court. It would be unjust to entertain that assumption in the
teeth of the fact that appellant did precisely ask for the
reconstitution of the record in the Court of First Instance in order,
according to her, that “there may be a record to be certified or
remanded by the Court of First Instance should mandamus be held
tenable.” Why take the trouble of having that record reconstituted if
the intention was to give up the appeal? Moreover, no inference
unfavorable to respondent can be drawn from the fact that she has not
asked for the reconstitution of the record of the mandamus case in the
Court of Appeals. Under the law (Section 29 of Act No. 3110) a party
who has waived reconstitution by failing to petition for the same
within the prescribed period may still file his action anew. Respondent
in this case is, therefore, still free to renew her action for
mandamus. But that move would be to no purpose in the absence of any
record that could be certified to the Court of Appeals in the event the
petition was granted. In the last analysis, then, the reconstitution of
the record in the Court of First Instance was essential to the renewal
of any attempt to prosecute the appeal already begun by respondent when
the record was destroyed. But as such reconstitution, at the time it
was attempted, proved to be a failure, the only practical solution to
the problem was for respondent herein to file her action anew. This is
sanctioned by section 30 of Act No. 3110, and it is precisely what the
Court of First Instance authorized her to do in the order hereinbefore
quoted.

From the foregoing it is clear that the judgment, whose
reconstitution w,as unsuccessfully sought, has not become final, so
that res judicata may not be set up.

There is nothing to the suggestion that this Court has already upheld petitioners’ defense of res judicata
when, in dismissing their petition for a writ of prohibition to enjoin
the Cornet of First Instance from proceeding with the trial of the new
case, it declared that they had a remedy by appeal in case the said
court “should erroneously or illegally overrule the point of res judicata”
which they were allowed to set up in their answer. By this
pronounce merit, this Court did not necessarily mean to say that the
defense of res judicata had to be upheld, thereby closing the door to
a contrary decision. What was meant was that this court should not be
called upon to decide that question until it had been passed upon by
the trial court.

It only remains to consider whether or not the Court of Appeals
erred in holding that the deed of mortgage gave respondent Avelina
Ballesteros the option to purchase the property mortgaged. We note,
however, that in arriving at that conclusion the respondent court took
into account not only the provisions of the deed but also the
subsequent acts of the parties, especially the receipts issued for the
additional sum taken by petitioners from the mortgagee. The conclusion
is based upon an analysis of the evidence, so that whether the said
conclusion is correct or not is essentially a question of fact which
can not be reviewed by this Court on appeal.

There being no reversible error in the decision appealed from, the same is hereby affirmed, with costs against the petitioners.

Moran, C.J., Ozaeta, Pablo, Bengzon, and Tuason, JJ., concur.