EMILIO RUMBAOA, PLATON DAMO, ESTEBAN ASUNCION, ANTONIO ASUNCION, DIONISIO BATANGAN AND MARCIANO PASCUA, PETITIONERS, VS. IGNACIO ARZAGA AND THE COURT OF APPEALS, RESPONDENTS.

This is an appeal by certiorari from the Court of Appeals which
affirmed with some modifications the judgment of the Court of First Instance of
Ilocos Norte in a case between Ignacio Arzaga as plaintiff and Emilie Rumbaoa
and five others as defendants, regarding the sale of a piece of land.

There is little or no serious controversy as to these facts:
Ignacio Arzaga owned a parcel of land divided into 13 atares. He sold one
atare to each of the six defendants for a combined sum of P6,000, with a
provision for repurchase without term. The deed was not presented and the date
is not revealed. After that sale Arzaga encumbered the entire 13-atare
lot in favor ef Becha Lumber Co., Inc., to secure the faithful performance by
one Walter G. Jensen, an employee of Becha Lumber Co., of his obligations.
Jensen subsequently misappropriated funds or property of his employer, as a
result of which Becha Lumber Co. instituted an action against Jensen, Arzaga,
and one Mariano N. Giron, who was presumably another surety for Jensen. Neither
the pleadings nor the decisions show the nature of the suit brought by Becha
Lumber Co., whether it was a personal action or a foreclosure of mortgage. Nor
does it appear whether the undertaking executed by Jensen and his sureties was a
mortgage; the contract of suretyship was not introduced.

On October 20, 1937, the Sheriff, after proper levy en the
property in question, sold it to Becha Lumber Co. as the highest bidder for
P2,053, the amount due em the judgment to the execution creditor, and delivered
to the purchaser the required deed of sale. Thereupon, or shortly thereafter,
Becha Lumber Co. granted Arzaga 35 days to repurchase the land for the same
amount it had paid for it and expenses.

On November 9, 1937, Arzaga and the defendants, the previous
purchasers of six atares of Arzaga’s land under pacto de retro,
executed a written agreement (Exhibit A or 1) whereby Rumbaoa and his associates
undertook to repurchase from Becha Lumber Co. the whole parcel of 13
atares and promised to sell the same to Arzaga within the “plazo legal”
on payment to them of the amount they would hare paid Becha Lumber Co., plus
lawful interest on that amount, plus expenses to be incurred in the repurchase
by them, plus the P6,000 paid by them previously for six atares to
Arzaga, and plus P60 they handed Arzaga on that occasion as travelling expenses
to Manila.

On November 20, 1937, Rumbaoa et al., acting in accordance with
the above agreement, redeemed the whole parcel from Becha Lumber Co. for P2,090,
and Becha Lumber Co. on November 29 in turn executed a quitclaim deed in favor
of Rumbaoa and his fellow purchasers.

On November 8, 1941, the present action was brought “to allow
plaintiff to exercise his right to repurchase from the defendants the above
described property and to recover damages.” It was alleged that on or before
that date and before the expiration of the period within which the plaintiff was
entitled “to exercise his right of repurchase as provided for in the deed of
sale with right of repurchase” mentioned in paragraph III of the complaint, the
said plaintiff was ready to pay unto the said defendants the sum of P6,000 and
the sum of P2,090 which the defendants had paid Becha Lumber Co., or a total of
P8,090; but that each and every one of the defendants refused to accept
plaintiff’s tender of payment, denying the plaintiff’s right of repurchase. The
complaint further alleged that the plaintiff deposited with the clerk of court
P2,090 and that “the balance of the plaintiff’s account with the defendant would
fee paid at anytime upon order of the court or any time desired by the said
defendants.”

On July 28, 1944, upon the conclusion of the trial, which
commenced on June 21, 1944, the plaintiff’s counsel verbally informed the court
that his client was “now depositing in toto the balance of the amount of
repurchase as stated In the contract Exhibit A of the plaintiff and Exhibit 1 of
the defendants.” The amount was P6,060 in Japanese war notes. The court made no
comment on the proposed additional deposit.

The judgment of the trial court ordered the defendants to
deliver to the plaintiff the land in litigation and execute the necessary deed
of resale in his favor, after which they could receive from the clerk of court
the sum of P8,090 deposited by the plaintiff (P2,090 in Commonwealth money and
P6,060 in Japanese Military Notes), without special finding as to costs. The
modificatory judgment of the Court of Appeals was that “the sum of P6,060
deposited in court by appellee on July 28, 1944, shall be applied to the payment
of the amount collectible by the appellants, subject to such action as may
subsequently be taken by proper legislative enactment; that the sum of P2,090
paid by appellants to Becha Lumber Co., Inc., shall bear interest at the rate of
6 per cent per annum from November 22, 1937; that the appellee shall, also,
refund to appellants the sums of P60 and P306.34 disbursed by the latter; and
that, within 30 days from the date on which this decision shall have become
final, the appellee shall deposit in court or pay to the appellants the
difference between the amount payable to the latter and the aggregate sum of
P8,150 already deposited by the herein appellee,” also without special finding
as to costs.

In their brief filed with this Court, the
petitioners-appellants make the following assignments of error:

“1. Al sostener, apesar de los hechos relatados en la
exposicion de hechos, los cuales se desprenden de la decision y de los autos del
expedinete de esta causa, que el ‘plazo legal’ fijado en el Exhibit A, que es al
mismo tiempo Exhibit 1, dentro del cual Arzaga podia redimir, era de 4 años
contados desde la fecha de dicho Exhibit A, 9 de Nov. de 1937, y no 12 meses
contados desde la fecha de la subasta, 20 de Octubre de 1937.

“2. Al concluir que hubo of recimiento de rescate, apesar de
los hechos relatados en la exposicion de hechos, los cuales se desprenden de su
decision y de los autos del expediente de esta causa.

“3. Al sentenciar en 16 de Abril de 1947, tiempo de la
Republica que los recurrentes deben de dar de rescatar los 13 atares y recibir a
cuenta del rescate los P6, 060 en dinero japones, que el recurrido deposito a
motu proprio varios años despues de haber expirado, segun su propio
computo, su plazo para rescatar.”

The question raised in the first assignment of error hinges on
the scope of the phrase “plazo legal”, in Exhibit A and 1, within which Arzaga
could repurchase the land from Rumbaoa and his associates. These contend that
the above term means the period of 12 months prescribed in section 465 of the
Code of Civil Procedure for the redemption of property sold to satisfy judgment
la ordinary civil cases, and that such one-year period in this case ended on
October 20, 1938, the sale in favor of Becha Lumber Co. having taken place on
October 20 of the previous year. Accordingly, they conclude, Arzaga’s alleged
attempt to repurchase oa November 9, 1942, was out of time. The plaintiff
contends on the other hand that by “plazo legal” was meant the period to
repurchase in pacto do retro sales provided in the Civil Code, which is,
in the absence of an express agreement, four years.

The issue involves mainly the intention of the parties. The
Court of First Instance and the Court of Appeals sustained the latter theory and
based their conclusions on the conduct of the parties, on statements in the
various documents offerred in evidence, and other circumstances of the
transactions. These conclusions being of fact, we are not at liberty to
interfere with them. The Court of Appeals properly probed into the nature of
Becha Lumber Company’s action as a way of arriving at said conclusions.

The second assignment of error is, even more than the first, a
question of fact, resting solely en the relative credibility of the witnesses.
Both courts found from the testimony of the witnesses that there was such an
offer to repurchase as tags plaintiff claims, at the time mentioned by him and
his attorney, namely, October or early November, 1941. This finding is also
conclusive regardless of our own appraisal of the evidence.

But the third assignment of error has merits as to the deposit
of Japanese Military notes. Assuming that Arzaga, as the two courts found, had
four years within which to repurchase the property from the defendants, that
period expired in November, 1941. Consequent with his allegations that he
offered to make the repurchase in October or early part of November, 1941, and
that he had cash in the necessary amount ready, the plaintiff should have
deposited the full amount in court, not one-fourth or less; not that deposit or
consignation was legally essential to preserve his reserved right of redemption
or repurchase, but because the full amount was ready due and payable te his
creditors. Under the circumstances, he should be regarded as having done that
which he said he wanted to do, or should have done, to fulfill his obligation
and to terminate the rights of the defendants over the property.

The fact that it was enough for him to make a tender of payment
to keep alive his option to repurchase did not carry with it the right to pay
with a different currency three years later, a currency not even imagined in the
agreement. Stated otherwise, the plaintiff occupied the position of depository
of the Balance of the repurchase price, which, in the normal course of events,
to should have deposited with the court, did the initial P2,090, to await the
final outcome of the case. If instead of depositing the balance he kept it, he
should be considered as its receiver for the benefit of the defendants, placing
upon himself the risk for its loss. From this point of view, the amount ceased
to be a debt and became a deposit from the time it was tendered and the period
of repurchase lapsed. Being a depositary, he would be relieved from
responsibility for the loss of the money only if the less occurred through
fortuitous event and no fault was lmpufeable to him. Here, there is not so much
as a claim that the money was lost. Of course the defendant should shoulder any
less oecasloaed by the depreciation of the thing or money on deposit, but in the
case at bar, depreciation is not involved. What the plaintiff did or wants to do
is completely to substitute the genuine money he promised to hold awaiting the
court’s order or defendants’ acceptance of it, with different and depreciated
military notes.

It is important to remember that the P6,060 Japanese war notes
were deposited in court by the plaintiff of his own accord before judgment was
rendered and without any express court sanction. For this reason, it did not
acquire any juridical standing and remained under his control and discretion to
withdraw. As far as the defendants were concerned, the notes might just as well
have remained in plaintiff’s possession or been deposited in a bank. If he had
done that, there could not be any pretense that the defendants were bound to
receive Japanese notes; as there is no pretense that the defendants are bound,
now, to accept such notes in payment of the difference between P8,150 and the
amount found by the Court of Appeals to be due.

There is another reason why the deposit in July, 1944, could
not carry any local effect unless it was made in the same legal tender
prevailing in November, 1941. Deposit of the balance in that legal tender would
have been in pursuance of the plaintiff’s manifestation in his complaint—that he
was holding the said balance to “be paid at any time upon order of the court or
at any time desired by the said defendants”—and would be considered as part of
the initial deposit and relate back to the date the action was commenced. But
the deposit in a now currency, never contemplated by the parties, operated as a
new deposit detached from and unrelated to the attempted payment before the
expiration of the plaintiff’s right of repurchase. Thus viewed, the second
deposit was out of time. Shis is all the more so because, as has been seen, the
deposit was a departure from the plaintiff’s above-quoted pledge in his
complaint. As has been pointed out, there was no court order requiring a deposit
to be made.

Even if there had been such order, the effect ef it would have
been held in abeyance pending final judgment by the court of last resort. That
is the case with regard to the effect of the trial court’s decision, recognizing
the second deposit as valid part payment.

The premise here laid down, that the plaintiff is a depositary
of the balance of the amount in Philippine legitimate money he offerred to pay
in November, 1941, may be a fiction. If it is, the assumption is necessary and
justified for purposes of justice. Points may be strained and equitable maxims
summoned, if necessary, to prevent injustice. Equity in this case is decidedly
on the side of the defendants. There are factors that compel the application, if
need be, more of the precepts of justice and fair dealing and less of positive
law. In the first place, the land, including the 6 atares sold to the
defendants, was mortgaged to Becha Lumber Co. by the plaintiff apparently
without the defendants’ knowledge or consent. In the second place, the plaintiff
had only 30 days’ option, gratuitously granted him by Becha Lumber Co., to
repurchase the property from the buyer at the execution sale, and Arzaga, it
would seem, was not in a position to make the repurchase within what remained of
that period after the execution of Exhibit A and Exhibit 1, the second agreement
between the parties. Had not the defendants come to his rescue, Becha Lumber Co.
would have become the absolute owner of the property in a few days and the
plaintiff would have had to account for his unauthorized alienation of the
defendants’ portion of the land. It was as much to protect his interest as to
protect their own that the defendants were forced to repurchase the land from
Becha Lumber Co. Paragraph 4 of Exhibits A and 1 distinctly says this:

“Que, los aqui otorgantes de la segunda parte de este contrato,
deseando salvar la fama, honra y reputacion del Sr. D. Ignacio Arzaga, de la
primera parte, asi como nuestros respectivos derechos e intereses, nosotros los
de la segunda parte, sobre el referido terreno embargado y vendido en publica
subasta, por la presente nos comprometemos a arbitrar la cantidad o cantidades
de dinero necesarias para cubrir el precio de recomprar de la Comañia ejecutante
y compradora, etc.”

This decision should not be confused with cases in which when
deposit or consignation was effected in Japanese money the obligation of the
payee or creditor to receive payment had not yet lapsed or been extinguished. As
to such eases we express no opinion.

The appellants call attention to the fact that the plaintiff,
upon his own showing deposited less than what he had to pay as the price of
repurchase. This is true, and if the plaintiff’s failure to deposit the entire
amount were deliberate and in bad faith, the appellant’s point would be well
taken. But there is no evidence or finding that such was the case. The shortage,
the amount which the plaintiff failed to offer to the defendants or deposit,
covers unliquidated interest, expenses and taxes.

The judgment of the Court of Appeals is modified so that the
appellants shall reconvey to the appellee the land described in the pleadings,
on payment by the latter, within 30 days from the date of final entry of this
judgment, (a) P6,060 in Republic currency in lieu of the Japanese war
notes deposited by him on July 28, 1944 this, in addition to the sum of P2,090
in genuine currency deposited upon the filing of the complaint; (b)
interest on the latter amount at the rate of 6 per cent per annum from the date
of redemption from Becha Lumber Co. to idle date of the filing of the present
action; and (c) the sums of P60 and P306.34 disbursed by the defendants
for plaintiff’s expenses and for taxes. Failure by the plaintiff to pay any of
these amounts within the period herein stated will work as a forfeiture of his
right to repurchase the herein-mentioned land. Costs will be charged against the
plaintiff-appellee.

Moran, C.J., Ozaeta, Paras, Feria, Bengzon, Padilla,
Reyes, and Torres, JJ., concur.