G. R. No. L-11587. September 17, 1958
BACOLOD-MURCIA MILLING CO., INC., PLAINTIFF AND APPELLEE, VS. EULALIO DE LEON AND CONCEPCION DE LA RAMA DE VILLARUZ, DEFENDANTS. EULALIO DE LEON, APPELLANT.
FELIX, J.:
meters, was originally registered in the name of Maria Maning. On October 13,
1924, she sold a part of the said lot with an area of 7,544 square meters,
designated as lot No. 426-A, to the Bacolod-Murcia Milling Co., Inc., for the
sum of P2,000. As this sale was not reduced to writing, the vendor, upon receipt
of the purchase price, promised to execute the corresponding deed of sale but
she died without having done so. The ownership of lot No. 426 was transmitted by
descent to her daughter, Concepcion de la Rama, who was able to secure a title
therefor in her own name (Transfer Certificate of Title No. 170-R [T-1770]). The
Bacolod-Murcia Milling Co., Inc., then made a demand on said heir to execute the
deed of sale covering lot No. 426-A, but other than acknowledging the sale and
promising to do what was required of her, she made no move towards its
fulfillment. Instead, on January 20, 1949, she sold the entire lot No.
426 with right of repurchase to Jose Miraflores for the sum of P5,000.
On February 24, 1949, the Bacolod-Murcia Milling Co., Inc., filed a complaint
with the Court of First Instance of Negros Occidental (Civil Case No. 1213)
against Concepcion de la Rama-Villaruz and Jose Miraflores praying that
defendant de la Rama be ordered to execute the necessary deed of sale over Lot
No. 426-A of the Bacolod cadastre in its favor and to deelare the pacto de
retro sale made by said defendant in favor of her co-defendant Miraflores
null and void in so far as it affected Lot No. 426-A. Therein defendants filed a
“provisional answer” dated May 24, 1949, reserving their right to file an
amended answer, but as the aforesaid amended answer was actually filed only on
November 2, 1950, the Court, upon plaintiff’s objection, denied admission
thereof and a judgment on the pleadings was rendered on December 6, 1950,
ordering defendant Concepcion de la Rama to execute a deed of sale of Lot No.
426-A in favor of plaintiff Bacolod-Murcia Milling Co., Inc. However, by reason
of the absence of any allegation of bad faith in the complaint, Jose Miraflores
was considered to be a purchaser in good faith and was absolved from any
liability. On appeal to this Court, the decision of the lower court was upheld
(90 Phil., 154).
In the meantime, or on August 1, 1950, Concepcion de la Rama, assisted
by her husband Jesus Villaruz, filed a complaint with the Court of First
Instance of Negros Occidental against Jose Miraflores (Civil Case No. 1699)
alleging, among other things, that although she executed a public document dated
January 22, 1949, purporting to be a pacto de retro sale of Lot No. 426 in favor
of defendant, it was their understanding that upon payment of the sum of P1,000
or more, defendant would sign a document considering said sale as one of
mortgage to secure the payment of the amount of P4,000 which was the sum she
actually received; that on May 20, 1949, she made and was duly receipted payment
of the sum of P1,300 by defendant; that despite said partial payment, defendant
refused to execute the document considering the sale as one of mortgage as
agreed upon; that defendant encumbered the property to a relative; and as she
failed to pay the balance of P3,700, defendant secured a certificate of title
over said Lot No. 426 in his name (Transfer Certificate of Title T-1362). Thus,
it was prayed that the pacto de retro sale be considered as a contract of
mortgage; that the Register of Deeds of Bacolod be authorized to cancel the
transfer certificate of title issued in the name of defendant, and that a new
title be issued in her favor.
In his answer, Jose Miraflores disclaimed the existence of any such
understanding and contended that in view of plaintiff’s failure to exercise the
right to repurchase the lot within one year, his title over the same became
consolidated. With leave of court Eulalio de Leon intervened and filed an answer
on December 4, 1950, alleging that on June 23, 1950, he purchased Lot No. 426
from Jose Miraflores for the sum of P7,500, that Transfer Certificate Title No.
1362 in the name of Miraflores contained noannotation of any lien or encumbrance
affecting the aforesaid Lot No. 426 and had secured a title in his name Transfer
Certificate of Title T-6280). Claiming that he was an innocent purchaser for
value, intervenor prayed for the dismissal of the complaint with costs against
the plaintiffs.
As the lower Court, in its decision of February 10,1951, dismissed the
complaint, plaintiffs brought the case on appeal to the Court of Appeals and was
docketed as CA-G. R. No. 8149-R. On July 17, 1953, the appellate court rendered
judgment holding that the established facts tend to show that the disputed
contract did not reflect the true intention of the parties and that the
intervenor might not be considered a purchaser in good faith. Thus, the record
of the case was ordered remanded to the court a quo in order that the
evidence for the defendant and the intervenor may be received. Notwithstanding
the instructions of the Court of Appeals, neither defendant Jose Miraflores nor
intervenor Eulalio de Leon presented evidence to rebut plaintiff’s contentions
and evidence. Instead, in a contract executed on September 17, 1954,
Concepcion de la Rama-Villaluz sold, transferred, assigned and conveyed Junto
Eulalio de Leon, his heirs, assigns, successors and administrators all her
rights, interests, title and participation in Lot No. 426, in consideration of
the sum of P29,000. Under the same instrument, Soledad de Leon de
Miraflores, widow of the deceased defendant and administratrix of the latter’s
estate, declared and admitted that the estate of Jose Miraflores had no more
interest, right and title over Lot No. 426 as it was already sold by her husband
during the latter’s lifetime to Eulalio de Leon (Exh. K). This document was duly
registered and annotated at the back of Transfer Certificate Title T-6280
already issued in the name of Eulalio de Leon.
The Case.—On March 23, 1955, the Bacolod-Murcia Milling Co., Inc., instituted
Civil Case No. 3374 of the Court of First Instance of Negros Occidental against
Eulalio de Leon and Concepcion de la Rama-Villaruz to obtain from them the
satisfaction of the obligation imposed by the decision in Civil Case No. 1213,
wherein Conception de la Rama-Villaruz was sentenced to execute a deed of sale
of Lot No. 426-A in favor of the Bacolod-Murcia Milling Co., Inc., that had been
in possession of the property since its purchase from the former owner, Maria
Maning. Defendant Eulalio de Leon answered claiming that the ownership of the
entire Lot No. 426 had already been decided in Civil Case No. 1213 when his
predecessor-in-interest, Jose Miraflores, was declared a purchaser in good
faith, and contended that said decision constituted res judicata on the matter.
As counterclaim, this defendant demanded from plaintiff rental for the use of
Lot No. 426-A at the rate of P4.00 per square meter or a total of P30,176
annually starting February 24, 1949.
Defendant Concepcion de la Rama failed to file any answer and was
consequently declared in default.
On March 27, 1956, the Court rendered judgment finding that although the
legality and validity of the pacto de retro sale over Lot No. 426 was
already passed upon and threshed in Civil Case No. 1213, yet in Civil Case No.
1699 involving the same issue, defendants failed to invoke the doctrine of
res judicata and that their failure to raise this defense therein
constituted a renunciation of their right to interpose the same. Furthermore,
the trial Judge observed that the obligation imposed upon Concepcion de la Rama
in Civil Case No. 1213 was duly annotated at the memorandum of incumbrances for
Transfer Certificate of Title No. T-6280 and defendant Eulalio de Leon should
have been aware of the claims and liens on said property. Hence, the Court
ordered defendants to execute the corresponding deed of sale of Lot No. 426-A in
favor of plaintiff within 30 days from receipt of said decision. From this
ruling, defendant Eulalio de Leon appealed to this Court assigning several
errors allegedly committed by the lower Court.
It is noteworthy to mention that appellant’s defense in this appeal rests
upon the principle of res judicata, said defendant claiming right under
his contract with Jose Miraflores. It is noticeable, therefore, that he
minimized the importance of his contract with Concepcion de la Rama of September
17, 1954, and even admitted that there was actually no necessity for him to
purchase the rights and interest of the latter as he was already the
successor-in-interest of Jose Miraflores. Going on further, appellant states
that what was purchased from De la Rama was all her rights and interests which
were non-existing, and yet it must be remembered that for said “non-existing
rights and interests”, appellant paid the sum of P29,000.
Admitting arguendo that appellant is the successor-in-interest of Jose
Miraflores, the decisive question in the case at bar devolves on whether or not
the declaration of the lower Court in Civil Case No. 1213, as affirmed by the
Supreme Court in G. R. No. 4256, constitutes also res judicata on the
present action which is one to enforce the obligation imposed by the judgment in
Civil Case No. 1213 upon Concepcion de la Rama. There is no question that
although Jose Miraflores who purchased the whole Lot No. 426 was adjudged
a purchaser in good faith, said decision in the same breath required Concepcion
de la Rama to execute a deed of sale of Lot No. 426-A, which is a part of Lot
No. 426. This pronouncement leads to the inevitable conclusion that while the
right of Jose Miraflores was acknowledged, same was made subject to the right of
the Bacolod-Murcia Milling Co., Inc., over Lot No. 426-A. But events still took
another turn; Civil Case No. 1699 was instituted wherein the validity of the
pacto de retro sale of Lot No. 426 was directly assailed by the vendor a retro,
and on appeal, the Court of Appeals ruled that Eulalio de Leon, Miraflores’
successor-in-interest, could not be considered as a purchaser in good faith.
This must have prompted Eulalio de Leon to acquire by purchase from Concepcion
de la Rama the latter’s “rights, interests, title and participation in said Lot
No. 426 with all the improvements existing thereon, free from all liens and
encumbrances, except those noted on Transfer Certificate of Title No.
T-6280″ (Exh. K). And one of the encumbrances noted in said certificate of
title (which was issued in the name of Eulalio de Leon) was:
“Entry No. 8751.—Decision.—In favor of Concepcion de la Rams, et al.—Decision
rendered by the Court of First Instance of Negros Occidental in Civil Case No.
1213 entitled Bacolod-Murcia Milling Co., Inc. (Plaintiff) vs. Concepcion de la
Rama de Villaruz and Jose Miraflores (defendants) absolving defendants, Jose
Miraflores of the complaint and ordering Concepcion de la Rama to execute a
deed of sale of a portion of the lot described in this title to be known as Lot
No. 426-A in favor of the Bacolod-Murcia Milling Co., Inc.” (Exh. F).
Under the foregoing circumstances, We are forced to conclude that De Leon
merely acquired from Miraflores all the rights which the latter may have over
Lot No. 426, subject to the right of the Bacolod-Murcia Milling Co., Inc., over
Lot No. 426-A. He could not claim otherwise for appellant could not acquire more
than what the vendor could convey. His subsequent action in effecting a purchase
of all the rights of Concepcidn de la Rama over the same property, which implies
the uncertainty of his title over the same, does not in anyway affect the
superior right of the Bacolod-Murcia Milling Co., Inc., which was already
recognized in Civil Case No. 1213 and affirmed by this Court, specially if We
further consider the fact that such right was respected by the very deed of sale
executed by Concepcion de la Rama on September 17,1954, when it provided that
the encumbrances annotated on Transfer Certificate of Title No. 6280 shall not
be included in said sale. Consequently, the judgment in favor of the
Bacolod-Murcia Milling Co., Inc. in Civil Case No. 1213 should be executed by
ordering appellant Eulalio de Leon to execute the deed of sale of Lot No.
426-A.
Wherefore, the decision appealed from is hereby affirmed, with costs against
appellant Eulalio de Leon. It is so ordered.
Paras, C. J., Bengzon, Padilla, Montemayor, Reyes, A., Bautista
Angelo, and Endencia, JJ., concur.