G.R. No. 19900. December 15, 1923

Jose C. Macapinlac owned two haciendas,
one containing 2,099 hectares, situated in Pampanga, and the other 282
hectares, situated in Pangasinan. On August 22, 1916, Macapinlac sold
these two haciendas to E. M. Bachrach for P12,960 with right
of repurchase, the period of redemption to expire October 2, 1917. On
the 8th of November, 1917, E. M. Bachrach transferred to Mr. Francisco
Gutierrez Repide his rights over said two haciendas acquired from Macapinlac.

On June 17, 1920, Francisco Gutierrez Repide filed the herein
application for the registration in the registry of property of the hacienda
in Pangasinan. This application was opposed by Jose C. Macapinlac,
Carmen Sackermann, and the municipality of Bayambang. Other oppositions
were entered which are not the subject-matter of this appeal.

Jose C. Macapinlac alleges in his opposition that the deed of sale with
right of repurchase executed in favor of E. M. Bachrach is void as
being fictitious, lacks consideration, is vitiated by an error as to
the person in whose favor it was executed, and does not contain the
true agreement between the parties, for their intention was that the
property, purporting to have been sold, should stand only as security
for a debt of P12,960, all of which circumstances the applicant knew
before acquiring the rights E. M. Bachrach had over these lands.

Carmen Sackermann, on the other hand, alleges that she is the owner of the land sought to be registered.

The municipality of Bayambang also alleges that the land sought to be registered is its exclusive property.

For the better intelligence of the respective contention of each party
in this case, it might be well briefly to anticipate certain collateral
facts.

In the proceeding for the registration of the
property situated in Pampanga, Jose C. Macapinlac, on February 21,
1916, obtained a decree for the registration thereof in his name,
subject to an incumbrance in the sum of P40,000 in favor of the
Archbishop of Manila. As the period for redemption fixed in the sale
made by him of this property in favor of E. M. Bachrach expired on
November 5, 1917, E. M. Bachrach petitioned in that proceeding that his
title to said property be held consolidated, attaching to his petition
an affidavit of Macapinlac dated November 10, 1917, wherein he made a
statement to the effect that this property had been sold by him to E.
M. Bachrach, that the period for redemption had expired without having
made use of the right of redemption, and that he agreed to the
consolidation of the title of E. M. Bachrach to this property. On the
25th of April, 1918, that proceeding came up for hearing upon this
petition of E. M. Bachrach and at the hearing Macapinlac testified
under oath confirming the statement made by him in his affidavit dated
November 10, 1917. In view thereof and of the fact of E. M. Bachrach
having transferred to Francisco Gutierrez Repide on November 8, 1917,
all the rights acquired by him from Macapinlac over this property, the
trial court decreed the registration of the property in the name of
said Mr. Francisco Gutierrez Repide.

Later on Mr. Francisco
Gutierrez Repide acquired the credit of P40,000 of the Archbishop of
Manila, which, as above stated, constituted an incumbrance upon this
property, and subsequently instituted an action for the recovery of
this credit which was secured by a mortgage. In that action the proper
proceedings were taken, judgment was rendered in favor of Gutierrez
Repide and it was petitioned that this property be sold at public
auction. But on January 9, 1918, Francisco Gutierrez Repide withdrew
his petition for the sale of this hacienda on account of
having acquired the rights of E. M. Bachrach, as intimated by him in a
subsequent pleading dated the 12th of the same month.

With
reference to the opposition of Macapinlac and Sackermann, we may say
that whatever might have been the true transaction between Macapinlac
and E. M. Bachrach, as it clearly appears from the terms of the
contract that it was one of sale and not of mortgage, the question
reduces itself to whether or not Gutierrez Repide, in acquiring the
rights of E. M. Bachrach under this contract, knew that such a contract
was not one of sale with right of repurchase, but of mortgage.
Gutierrez Repide was, as regards this contract, a third person. If he
acquired in good faith the rights of E. M. Bachrach under the terms of
the contract between E. M. Bachrach and Macapinlac, he cannot be
affected by the transaction that might have really been made by E. M.
Bachrach and Macapinlac, outside and against the terms of this
contract. If he acted in bad faith and knew that the lands had not been
sold to E. M. Bachrach by Macapinlac, but simply mortgaged, then he
stands in the same situation as E. M. Bachrach, and could not have
acquired more than the very rights E. M. Bachrach had really acquired
from Macapinlac.

There is evidence in the record which
positively shows that Mr. Francisco Gutierrez Repide acquired E. M.
Bachrach’s rights over these two haciendas in the belief that
they had in fact been sold with right of repurchase to E. M. Bachrach
by Macapinlac, according to the terms of the written contract, and that
Macapinlac induced Francisco Gutierrez Repide to entertain this belief.
The contract of sale with right of repurchase between Bachrach and
Macapinlac was registered in the registry of property. The registration
of a document evidencing a contract is a notice to the public of the
existence and terms of said contract. Consequently the registration of
this contract as one of sale with right of repurchase was, so far as
Bachrach and Macapinlac were concerned, a notice that such was the
contract that they had executed and in this sense Macapinlac has, in
effect, induced Francisco Gutierrez Repide to believe in the existence
and the terms of this contract. Furthermore the affidavit presented by
Macapinlac two days after Gutierrez Repide had acquired Bachrach’s
rights, affirming that the property in Pampanga had really been sold to
Bachrach with right of repurchase and that he consented to the
consolidation of Bachrach’s title to said property in Pampanga and to
the registration of his title over said property in the name of
Gutierrez Repide, as the latter had, in turn, acquired Bachrach’s
rights, and finally the declaration of Macapinlac in the same terms
given in open court under oath on April 25, 1918, also lead us to the
conclusion that Macapinlac has, by his acts, induced Gutierrez Repide
to believe that the contract he had executed with Bachrach about these
two haciendas was one of sale with right of repurchase, and
not of mortgage. We may add to all of this the fact proven that
subsequently Macapinlac accepted and discharged the duties of an
employee of Gutierrez Repide, or his manager of the hacienda in Pampanga, performing positive acts that indicated that he regarded Gutierrez Repide to be the owner of the hacienda and considered himself as a mere employee.

The contention of the opponents Sackermann and Macapinlac that in acquiring Bachrach’s rights over these two haciendas,
Gutierrez Repide knew that they were simply mortgaged, is based on the
following grounds: First, that in the complaint of Gutierrez Repide in
the case for the recovery of the mortgage credit, which he instituted
for the foreclosure of the mortgage in favor of the Archbishop of
Manila transferred to him, he included Bachrach as one of his creditors
and in that proceeding, which was commenced after he had acquired
Bachrach’s rights on November 8, 1917, he has been urging the sale at
public auction of the estate in Pampanga for the payment of the
mortgage debt; second, that in the record of said estate in the
registry appears the partial payment that Macapinlac had made on
account of the P12,960, the purchase price therein stated; and third,
the declaration given by Macapinlac in this case.

Really it
appears that in the complaint filed by Gutierrez Repide in the
proceeding for the recovery of the mortgage credit, he included
Bachrach among the defendants as a creditor. This, however, does not
indicate that Gutierrez Repide meant that the contract had between
Bachrach and Macapinlac was a mere mortgage and not a sale with right
of repurchase, for it does not appear that he ever had acquired
knowledge thereof. And he could not learn of it unless Macapinlac or
Bachrach should have told him. The opponents have not presented any
evidence, nor do they claim, that on that date Macapinlac gave
Gutierrez Repide such an information. On the other hand he was, at that
time, and has for a long period thereafter, been, absent in the United
States. So that that complaint prepared by his attorney cannot have the
effect that the opponents now attribute to it. The attorney himself who
drew that complaint, answering the demurrer interposed thereto, stated
to the court that in filing it against those who appeared as creditors,
he had no more object than that of complying with the law which
required that all the parties who may have an interest in the property
mortgaged should be included as parties in the case, said parties
interested having the burden of proof in the determination of the
nature of their interest.

The point raised upon the fact that after Gutierrez Repide had acquired Bachrach’s rights over these two haciendas, he still urged, in the action for the recovery of the mortgage credit, that the hacienda in
Pampanga be sold to enforce payment of his mortgage, is, in our
opinion, of no importance. This case was in the hand of an attorney,
who had the duty to see that proper proceedings were taken, and
undoubtedly Gutierrez Repide had not given his attorney the proper
instructions when he acquired Bachrach’s rights over the hacienda but sometime later, and it was precisely when his attorney petitioned the suspension of those proceedings.

As to the entry in the registry of the partial payment made by
Macapinlac on account of the P12,960, neither can we consider it to be
of any importance. In this entry it is stated that that payment was
made on account of the contract of sale with right of repurchase of the hacienda
in Pampanga, and not of the mortgage between Macapinlac and Bachrach. A
partial payment by the vendor within the period of redemption is not
incompatible with the hypothesis that the contract is one of purchase
and sale. It is not strange that the vendor with right of repurchase
should, during the period of redemption, advance payment of a part of
the price of redemption. The testimony of Macapinlac is, of the grounds
of the opposition, the one having the least weight. Macapinlac
testified in this case that before Gutierrez Repide acquired Bachrach’s
rights over these two haciendas, he told him that he would
question the right of Bachrach. We cannot admit that Macapinlac really
told Gutierrez Repide such a thing, for it appears that two days after
the contract between Bachrach and Gutierrez Repide, he made that sworn
declaration of November 10, 1917, stating that the contract entered
into by and between him and Bachrach was one of sale with right of
repurchase, that he had not made use of his right of redemption within
the period fixed, and that he agreed to the consolidation of Bachrach’s
title to the hacienda in Pampanga and the transfer of his
title in the name of Bachrach. In weighing the testimony of Macapinlac,
we cannot lose sight of the fact that, notwithstanding having
subscribed and sworn to a public document of purchase and sale,
registered the same afterwards or consented its registration in the
registry of property, affirmed in his sworn declaration of November 10,
1917, and declared under oath before the Court of First Instance that
such was the contract he executed, he should now say that this is all
false. We may add that, in connection with other incidents of this case
which are not the subject of this appeal, he also affirmed having
subscribed a deed of sale in favor of Mr. Boomer of the same hacienda in Pampanga and admitted that this was only a simulated contract.

It is intimated in the decision of the lower court that the contract
between Bachrach and Gutierrez Repide lacks consideration. It is stated
in the contract that Gutierrez Repide acquired Bachrach’s rights in
consideration of a value received. The trial court says that Gutierrez
Repide has not explained what and how much this value received was. But
this question as to want of consideration of the contract between
Bachrach and Gutierrez Repide was not raised in the opposition filed by
the opponents. It must also be noted that Gutierrez Repide died before
the closing of the evidence in this case and it cannot be said that had
he lived up to that time, he should not have explained this point. At
any rate the law presumes a consideration in all contracts and he who
denies it has the burden of proof, and the opponents have not proven
that it did not exist.

As to the opposition of Carmen Sackermann, it appears from the record that on March 7, 1917, Macapinlac sold this hacienda
in Pangasinan to John Macleod, and in the original deed of sale the
mortgage in favor of Bachrach in the sum of P10,000 was stated as an
incumbrance upon this property. This document was corrected on the 23d
of April of the same year through another public document registered
and signed by John Macleod, wherein it was stated that this hacienda
had been sold to Bachrach with right of repurchase in the sum of
P12,960. In this last document John Macleod stated that the purchase of
this estate was subject to said contract of purchase and sale with
right of repurchase in favor of Bachrach. Subsequently the rights of
John Macleod, acquired by virtue of this contract, were transferred to
other persons and lastly to the opponent, his widow Carmen Sackermann.
When John Macleod purchased this hacienda, the right of
redemption of Macapinlac under his contract with Bachrach was still in
force, but Macleod did not make use of this right of redemption within
the period stipulated. John Macleod having recognized this contract of
purchase and sale between Macapinlac and Bachrach, his successor in
interest, the opponent Carmen Sackermann, cannot question the rights of
the applicant Gutierrez Repide derived from that sale and acquired by
Bachrach in good faith.

As to the opposition of the
municipality of Bayambang, accepting the findings made by the trial
court in the judgment appealed from, we hold that this opposition must
be overruled.

For all of the foregoing the judgment appealed
from is reversed, the oppositions entered by Jose C. Macapinlac, Carmen
Sackermann and the municipality of Bayambang are overruled, and the
applicant is declared entitled to have the land described in the
application registered, and the registration of said land is ordered
made in his name and the case remanded to the lower court for further
proceedings, without special finding as to costs. So ordered.

Araullo, C. J., Johnson, Malcolm, Villamor, and Romualdez, JJ., concur.
Street, J., with whom concurs Johns, J., dissenting: I dissent, as the judgment in my opinion should be affirmed.