WELGO DICHOSO, ET AL., PLAINTIFFS AND APPELLEES, VS. LAURA ROXAS, ET AL., DEFENDANTS. CELSO BORJA AND NELIA ALANGUILAN, DEFENDANTS AND APPELLANTS.

Appeal from the following decision of the Court of First Instance of Laguna:

“Wherefore, the Court renders judgment ordering the
plaintiffs to deposit with the Clerk of this Court for the account of
defendant Laura A. Roxas the amount of P320.00 and, upon the deposit of
the said amount, defendant Laura A. Roxas is ordered to execute a
document transferring her rights, title and interest in the land in
controversy to plaintiffs Welgo Dichoso and Emilia Hernandez within
five (5) days from such deposit. In the event that Laura A. Roxas fails
to execute the document within the aforementioned period, the same
shall be executed by the Clerk of Court in her behalf.

“Defendants Celso Borja and Nelia Alanguilan are ordered to execute a
deed of re-sale of the land in controversy and the improvements thereon
in favor of plaintiffs Welgo Dichoso and Emilia Hernandez within five
(5) days after the document of transfer has been executed by or on
behalf of Laura A. Roxas. If defendants Celso Borja and Nelia
Alanguilan fail to do so, the Clerk of Court shall execute the document
in their behalf. At any time after the execution of the deed of
re-sale, defendants Celso Borja and Nelia Alanguilan may withdraw from
the People’s Bank and Trust Company of San Pablo City the amount of
P850.00 which had been deposited by plaintiff Welgo Dichoso as
repurchase price and the People’s Bank & Trust Company is ordered
to deliver the said amount to the aforementioned defendants.

“The Court considers defendants Celso Borja and Nelia Alanguilan as
possessors in good faith and are not required to account for the fruits
that they have received from the land in controversy up to the time
this decision becomes final.

“Laura A. Roxas is ordered to
return to defendants Celso Borja and Nelia Alanguilan the amount of
P1,684.00 which she received as additional purchase price for the land
in controversy.

“All defendants are jointly and severally ordered to pay the costs.”

The complaint alleged, in substance, that on December 13, 1954
Laura A. Roxas sold to appellants for the sum of P850.00 a parcel of
unregistered coconut land with an area of 16,965 square meters and with
393 coconut trees, situated in Barrio San Diego, San Pablo, Laguna,
subject to the condition, inter alia, that the vendor could repurchase
it for the same amount within five years, but not earlier than three
years, from the date of the sale, which was evidenced by a public
document attached to the complaint as Annex A; that from November 26,
1955 to July 5, 1957, Roxas had received from appellees several sums of
money amounting to P770.00, their agreement being that after December
13, 1957 Roxas would sell the same property, by absolute sale, to
appellees for the total sum of P2,000.00, the aforesaid sum of P770.00
to be considered as initial or advance payment on the purchase price;
that out of the balance of P1,230.00, appellees would use the sum of
P850.00 to repurchase the property from appellants after December
13,1954 but within the five years stipulated for the exercise of Roxas’
right to repurchase; that on October 22, 1957, pursuant to Roxas’
request made on July 23, 1957, appellees sent her a check for the sum
of P320.00 “in full payment of the P2,000.00 consideration for the deed
of absolute sale” and thereafter they informed appellants of their
readiness to repurchase the property; that on November 29, 1957 Roxas
sent them back the check just referred to with the request that they
endorse the same to appellants when they make the repurchase, because
it appeared that, aside from the P850.00 consideration of the pacto de retro
sale, Roxas had received additional sums from appellants; that again,
after December 13, 1957, appellees made representations to appellants
that they were ready to make the repurchase, as well as to Roxas for
the latter to be ready to execute the corresponding deed of absolute
sale in their favor after they had made the repurchase; that
notwithstanding these demand and representations, Roxas and appellants
had deliberately failed to execute the corresponding deed of absolute
sale and deed of resale already mentioned.

On January 8, 1958 appellants filed a motion to dismiss the
complaint upon the ground that appellees had no cause of action against
them because their contract was not with them but with Laura A. Roxas.
After due hearing, the lower court sustained the motion and dismissed
the complaint because, according to the same, “there exists no written
contract of assignment of rights executed by Laura A. Roxas in favor of
the herein plaintiffs concerning the property which said Laura A. Roxas
sold to her co-defendants under a deed of pacto de retro
sale, and that the purpose of the present action is precisely to compel
Laura A. Roxas to execute the corresponding deed of assignment.”

However, on July 31, 1958, over appellants’ objection, the lower
court admitted the amended complaint previously filed by appellees. The
principal amendment introduced consisted in the allegation that on July
5, 1957, for the sum of P770.00, Laura A. Roxas had ceded to appellees
her right to repurchase the property from appellants; that on November
29, 1957 Roxas had “ordered and authorized the said plaintiffs spouses
to repurchase the said parcel of land from the defendants
vendee-a-retro after the 3 years period, which would terminate on
December 13, 1957,” and that on December 13, 1957 appellees tendered to
appellants the required sum with which to effect the repurchase, but
that the latter refused to accept the same, thus compelling appellees
to consign the amount with the Office of the Clerk, Court of First
Instance of Laguna.

Upon petition of appellants the lower court, on August 18, 1958,
ordered appellees to furnish, and the latter furnished appellants, with
a copy of the alleged deed of assignment dated July 8, 1958 referred to
in paragraph 4 of the amended complaint, which deed reads as follows:

“TALASTASIN NG SINO MAN:

Tinangap ko
ngayong Julio 6, 1957 ang halagang Pitong Daan at Pitong Pong (P770.00)
peso cuartang pang kasalukuyan sa mag-asawa ni Welgo Dichoso at Emilia
Hernandez, bilang paunang bayad sa isang puesto kong lupa humigit
kumulang sa apat na raang tanim na niog.

Ang aming
pinagkasondoan pag dating ng halagang dalawang libong (P2,000.00)
pesong pagkakautang pate tubos na walong daan at limang pong (P850.00)
peso sa pagka pagbili na mabibiling muli (o sanla) sa magasawa ni Celso
Borja at Nelia Alanguilan ay mag gagawaan ng documento o kasulatan na
bilihang toloyan o bintarial absoluta sa halagang dalawang libong
(P2,000.00) peso na nasabe sa itaas nito.

Ang nasabing lupa
ay nakatayo sa Salang lupa kung tawagin Bo. San Diego sakop ng Ciudad
ng San Pablo. Sa katonayan na hinde ako sisira sa mga pinagusapan ay
lumagda ako ng pangalan at apellido na kaharap ang isang testigo.

A motion to dismiss the amended complaint was denied by the lower
court for the reason that the grounds relied upon therein did not
appear to be indubitable and their consideration was deferred until
after trial on the merits. Thereafter appellants filed their answer in
which, after making specific denial of some facts averred in the
amended complaint, they alleged the following affirmative defenses:

“1. That the alleged transfer of right to
repurchase supposedly executed by defendant Laura A. Roxas in favor of
plaintiffs herein is not in any manner a transfer of right to
repurchase but at most a receipt of indebtedness;

“2. That
even assuming although not admitting that there was a transfer of right
to repurchase made by the defendant Laura Roxas in favor of the
plaintiffs regarding the property in question, yet said right to
repurchase could not be exercised by the plaintiffs considering that
before December 13, 1957 arrived, the period within which the
repurchase might be made, said land in question had already become the
absolute and exclusive property of the answering defendants herein.

“3. That defendants spouses in the exercise of the rights of dominion
over the property, had since December 13, 1957 harvested and are
harvesting the fruits to date; and paid the taxes therefor; and had
attended to the disposition of the proceeds therefrom;

“4.
That whatever alleged agreement .may have been entered into between
plaintiffs and defendant Laura Roxas cannot in any way affect third
persons like defendant spouses Gelso Borja and Nelia Alanguilan, unless
the same is in a public document;

“5. That even assuming,
although not admitting, that the plaintiffs tendered into the answering
defendants the repurchase price of the land in question on or
immediately after December 13, 1957, yet the answering defendants have
all the reasons and are justified in refusing to accept the said
repurchase price considering that before said date of December 13,
1957, answering defendants were already the absolute and exclusive
owners of the land in question, subject to no other conditions.”

As counterclaim, appellants alleged in their answer the following facts:

“1. That the answering defendants incorporate and make part hereof paragraph 1 of the plaintiffs’ amended complaint;

“2. That before this case was filed, plaintiffs knew fully well that
the property in question is already owned absolutely by answering
defendants; and which, therefore, cannot be the subject of repurchase
anymore;

“3. That plaintiff Welgo Dichoso was the agent who
was responsible for the consummation of the sale with right to
repurchase as a matter of fact he was the witness to the said document;

“4. That a parcel of land abutting this parcel in question was likewise
offered by plaintiff Welgo Dichoso to defendant spouses who acceded to
buy the same on the representation by the former (Dichoso) that
inasmuch as answering defendants are now the owners of the land in
question, this smaller one if united with the bigger piece of property
here in question would not only enhance agriculture but would afford
them greater benefits as the two parcels are adjoining to each other;

“5. Defendant spouses would not have bought the property, in question
if not for the assurance of Welgo Dichoso that co-defendant would
sooner or later sell same to them by way of absolute sale;

“6. That in filing this case, plaintiffs have acted with evident bad
faith, considering that this case was only intended to harass answering
defendants who are his first cousins and, therefore, must be required
to pay answering defendants the amount of P500.00 as exemplary damages;

“7. That because of the unwarranted and unjustified filing of this
case, the answering defendants suffered damages in the amount of
P500.00 and will continue to suffer the same by way of litigation
expenses; and at the same time were compelled to retain the services of
counsel and are obliged to pay the amount of P1,000.00 in the concept
of attorney’s fees.”

On September 19, 1958 appellees filed a reply in which they
alleged, inter alia, that when they offered to repurchase the property
from appellants, on behalf of Laura A. Roxas, appellants had not become
absolute and exclusive owners of the property in question; that after
the offer to repurchase made on December 13, 1957, appellants became
possessors in bad faith and were in duty bound to account for the
fruits of the property; that although the agreement between appellees,
on the one hand, and Roxas, on the other, was not contained in a public
instrument, appellants were bound by it because they knew of the
agreement. Appellees also denied the facts alleged in the counterclaim.

On April 1, 1959 appellees filed a supplementary complaint wherein,
on the claim that after July 23, 1958 the price of coconuts had
considerably gone up, they prayed that the judgment for damages they
sought in the amended complaint be increased in amount accordingly.

After trial upon the issues stated above, the lower court rendered
the appealed judgment, from which the Borja spouses appealed claiming
that the court committed the following errors:

“1. In not finding defendants-appellants Celso
Borja and Nelia Alangujlan as the true, lawful and absolute owners of
the land in question, their title thereto being evidenced by public and
private documents coupled by possession in good faith and for value.

“2. In not finding appellants Celso Borja and Nelia Alanguilan
possessors as absolute owners from December 8, 1957, the date of the
execution of the deed of absolute sale (Exh. ‘7’) in their favor.

“3. In not giving weight to the deed of confirmation (Exh. ‘8’) a public document executed to cure defects in proof only.

“4. In construing Exhibit 1′ (a private document) as a document of sale
and in extending its effects to third parties (appellants) who are
total strangers to it.

“5. In not sustaining the plea of res adjudicata by the defendants-appellants.”

The pertinent portions of the decision appealed from are the following:

“It appears from the evidence that Laura A. Roxas
had sold her rights to the land in controversy to two different
parties. The first one was on July 5, 1957 in favor of the plaintiffs
Welgo Dichoso and Emilia Hernandez (Exhibit T), and the second one
allegedly of December 8, 1957 in favor of defendants Celso Borja and
Nelia Alanguilan (Exhibit ‘7’). The principal question to be determined
is which of these two documents shall prevail. Both the documents in
favor of the plaintiffs Exhibit ‘I’ and that in favor of the defendants
Exh. ‘7’ are private documents same not having been acknowledged before
a Notary Public.

“The Court is of the opinion that the
document in favor of the plaintiffs being of an earlier date than the
document in favor of the defendants shall prevail in accordance with
the provisions of paragraph 3 of Article 1544 of the Civil Code of the
Philippines which read as follows:

“While it may be true that the defendants were in
possession of the land in controversy at the time Laura A. Roxas
executed the deed of sale in favor of the plaintiffs, such possession
was merely that of a ‘vendee a retro‘ and not as vendee in an
absolute sale. It has also been held that with reference to
unregistered lands, an earlier instrument, be it a sale or a mortgage,
shall prevail over a later one, and the registration of any one of them
is immaterial (Nisce vs. Milo, G.R. No. 42546, Jan. 1936; Nota vs. Concepcion, 56 Phil. 712, cited in Noblejas, ‘Land Titles and Deeds, 1955 ed., P. 207).

“The deed of confirmation of sale executed by Laura A. Roxas in favor
of defendants Celso Borja and Nelia Alanguilan on September 5, 1958,
Exh, ‘8’, cannot in any manner prejudice the rights of the plaintiffs
because the said deed of confirmation was made more than nine (9)
months after this case was filed. If the execution of the said deed of
confirmation proves anything at all it is the awareness of defendants
Celso Borja and Nelia Alanguilan of the weakness of their position
under the facts as they existed at the time of the execution of said
deed of confirmation. It also proves the joint efforts of all the
defendants to circumvent the effects of the document, Exh. ‘I’,
executed by Laura A. Roxas in plaintiffs’ favor.”

It is obvious that, in deciding the case, the lower court failed to
give due weight to the private document Exhibit 7 (deed of absolute
sale) executed by Laura A. Roxas in favor of appellants on December 8,
1957—in effect superseding the pacto de retro sale mentioned heretofore— for a total consideration of P1,684.00, of which the amount of P850.00 paid as consideration for the pacto de retro
sale was considered as a part. There is no dispute at all as to the
genuineness of this private deed of absolute sale nor as to its
execution on December 8, 1957, that is, five days prior to December 13,
1957, when, according to appellees themselves, they made the first
attempt to repurchase the property in question, and on which occasion
appellants refused to allow the repurchase “because Laura A. Roxas was
not with them”, according to the lower court. After December 8, 1957
appellants’ rights were no longer based on the superseded pacto de retro
sale but on the aforesaid deed of absolute sale—which was a perfectly
valid contract as between the parties. In plain words, after that date
Laura A. Roxas no longer had any right to repurchase the property.

Upon the other hand, appellees’ contention that appellants were
aware of their agreement with Laura A. Roxas has not been sufficiently
substantiated. Appellees’ own evidence shows that appellants became
aware of their claim to the property when they tried, for the first
time, to exercise the right to repurchase on December 13, 1957— five
days after the deed of absolute sale in favor of said appellants.

After a careful consideration of the issues and the evidence, we
believe that the lower court also erred in considering Exhibit I,
executed on July 5, 1957, as a deed of sale of the land in question in
favor of appellees.

In the first place, the phraseology employed therein shows that the
contract between the parties was a mere promise to sell, on the part of
Roxas, because the latter merely promised to execute a deed of absolute
sale upon appellees’ completing payment to her of the total sum of
P2,000.00, of which the P850.00 to be paid to appellants for the
repurchase of the property would,be an integral part. This repurchase
had not yet been made on July 5, 1957 when this Exhibit I was executed.
In the second place, on that date all that Roxas could possibly sell or
convey in relation to the pfcdperty in question was her right to
repurchase the same from appellants. Consequently, the best
consideration that could be given to the private document Exhibit I is
that it was an assignment by Roxas to appellees of her right to
repurchase of which— according to the evidence—appellants had no
knowledge until December 13, 1957 when appellees attempted to make the
repurchase. Such being its condition, it could not possibly give rise
to the case of one and the same property having been sold to two
different purchasers. The sale in favor of appellants was of the
property itself, while the one in favor of appellees, if not a mere
promise to assign, was at most an actual assignment of the right to
repurchase the same property. The provisions of paragraph 3, Article
1544 of the Civil Code of the Philippines do not, therefore, apply.

Having arrived at the above conclusions, we are constrained to hold
that, upon the facts of the case, appellees are not entitled to the
reliefs sought in their amended complaint and that whatever remedy they
have is exclusively against Laura A. Roxas to recover from her, among
other things, what they paid as consideration for the execution of the
private document Exhibit I.

Wherefore, the decision appealed from is reversed, with the result
that this case is dismissed, with costs, reserving to appellees,
however, the right to file a separate action against Laura A. Roxas to
enforce whatever rights they may have against her in consonance with
this decision.

Bengzon, C. J., Bautista Angelo, Labrador, Concepcion, Barrera, Paredes, Regala, and Makalintal, JJ., concur.