MIGUEL GERMANO, ET AL., PLAINTIFFS AND APPELLANTS, VS. ERENEO SURITA AND CANDIDA JUNDIS, DEFENDANTS AND APPELLEES.

This
is an appeal from the order of the Court of First Instance of Leyte (in
Civil Case No. R-464-0), dismissing the complaint filed therein on the
ground of prescription of cause of action.

On February 24, 1961, Miguel Germano, et al.,
sought to cover from defendants Candida Jundis and Ereneo Surita, a
one-third portion of a parcel of land situated in Lunang, Hiloñgos,
Leyte, covered by Tax Declaration No. 11092 in the name of Serapion
Zarco, allegedly belonging to their deceased mother, Silvestra Zarco,
and possession of which was delivered by the latter to Teodoro Jundis
sometime in 1939, to secure an indebtedness in the sum of P60.00. It
was further averred in the complaint that after World War, plaintiffs
tendered payment of the indebtedness to the five heirs of Jundis, two
of whom received the amount of P24.00, but the defendants (who were in
possession of the property) refused to accept their share.

In
August 1959, plaintiffs deposited the sum of P36.00 in the Justice of
the Peace Court of Hiloñgos, Leyte. As defendants still refused to
deliver possession of the land, plaintiffs-appellants filed the present
action for recovery of the property, on the ground that their
obligation had already been extinguished, and, therefore, were entitled
to the return and possession of the lot given as security.

Defendants set up the defense of lack of cause of action,
alleging that the transaction between plaintiffs’ mother and
their predecessor-in-interest was one of sale and not mortgage;
of prescription of cause of action and laches, the defendants
having been in continuous, open, peaceful possession of the land
in the concept of owners, by themselves and through their predecessors, since 1939.

When the case came up for hearing, the same was submitted
for decision without the parties presenting any evidence, testimonial or documentary. Whereupon, the trial court entered
the following:

“ORDER

“When this case was called for hearing, tbe
defendants reiterated their special and affirmative
defenses to the effect that on the basis of the
allegations in the complaint, the action filed by
the plaintiffs has already prescribed.

“Paragraphs 4, 5, 6 and 7 of plaintiffs’ complaint reads as follows:

‘4. That sometime in 1939 the possession of the aforesaid property was delivered
by Silvestra Zarco to the late Teodore Jundis
as a security of an indebtedness in the amount
of Sixty Pesos (P60.00); that the said property
shall continue to be in the possession of creditor Teodoro Jundis until the said indebtedness
shall have been fully paid.

‘5. After the World War II, several tender
of payments were made by the plaintiffs to
the five heirs of Teodoro Jundis, two of whom
received the amount of P24.00; but the defendants herein refused to accept the said tendered
payments and continued to possess the land
in question.

‘6. In August, 1959 the plaintiffs
through their aunt Encarnacion Zarco, tendered payments in the amount of Thirty Six
Pesos (P36.00) in the Justice of the Peace
Court of Hilongos, Leyte which was duly acknowledged by the Honorable Justice of the
Peace of Hilongos for the purpose of extinguishing their obligation or indebtedness to
the said defendants herein, but defendants
continued to refuse to accept said tendered
payments. The amount of Thirty Six Pesos
(P36.00) is now in the Justice of the Peace
Court of Hilongos, Leyte.

‘7. On January 24, 1961, the plaintiffs
came to Hiloñgos, Leyte and demanded for the
return of the possession of the land now in
question, but defendants refused and still
refuse to deliver the possession of the land
unless the plaintiffs could pay the said defendants the sum of Three Hundred Pesos (P300.00),
in lieu of the P60.00, the original indebtedness.’

“Since 1939 up to February 24, L961, date of the
filing of the complaint, and up to the present time,
the defendants have been in the quiet, peaceful and
continuous possession of the said parcel of land described under tax declaration No. 11092 in the
name of Serapio Zarco which is situated at Lunang,
Hiloñgos, Leyte valued at P40.00.

“The mere fact that there was a tender of payment made by the plaintiffs to the defendants which
was not accepted sometime during World War II will
not stop the running of the prescriptive period
especially taking into account the fact that the
tender of payment was not accepted by the defendants.

“Although there was a consignation in the
Justice of the Peace of Hiloñgos, Leyte sometime
in 1959, it is apparent that the said consignation and tender of payment, twenty years after the
transaction occurred, does not revive the period
of prescription provided by both article 1132 and
1134 of the New Civil Code and also by the provisions of the Old Code of Civil Procedure.

“In the argument by counsel for the plaintiffs,
it was averred that the late filing of this action
was due to the fact that the debtors plaintiffs
were living in Cotabato and only the heirs were in
the province of Leyte. The residence of any party
cannot be a ground for extending the period of
prescription.

“WHEREFORE, finding that the cause of action
of the plaintiffs has already prescribed and that
the defendants have been in continuous, open and
exclusive possession of the land per allegation in
the complaint, this case is hereby dismissed without pronouncement as to costs, with notice to At-
torneys Potot and Mendaza in open court.”

In due time, plaintiffs filed a motion for reconsideration,
contending that Articles 1134 and 1142 of the Civil Code cited
by the trial judge are not applicable, as the possession of
defendants as mortgagees is not in the concept of owner, and
the action is not a mortgage action by the mortgagee, but a
suit by the mortgagor to recover possession of the property
given to secure a loan. Plaintiffs also prayed that the case
be tried on the merits to enable the parties to present their
evidence and also to aid the court in the appreciation of the
facts of the case in the interest of justice. This motion was
denied by the court a quo.

From this order, as well as the order of dismissal,
plaintiffs instituted this appeal, claiming that the lower
court erred in applying the prescriptive period provided in
Article 1132 (Art. 1142) and 1134 of the new Civil Code, although defendants’ possession was not in the concept of owner
but only as mortgagees.

A
review of the Record on Appeal discloses that on the date of the
hearing the case was in effect submitted for decision on the pleadings,
the parties desisting from presenting any evidence whatsoever. But the
complaint and the answer pose a question of fact, that is, whether the
transaction had between the respective predecessors of the parties was
an equitable mortgage or a sale. Upon the determination of this factual
issue depends the respective rights of the parties. The motion for
reconsideration filed by the plaintiffs praying that the case be reset
for hearing on the merits to enable the parties to present evidence in
support of their respective contentions should have been granted in the
interest of justice.

Under the circumstances, we rule that the order of dismissal appealed from be set aside and the case remanded to the
court a quo for further appropriate proceedings. No costs.

SO ORDERED.

Bengzon, C.J., Bautista Angelo, Concepcion, Reyes, J.B.L., Dizon, Regala, Makalintal, Bengzon, J.P., and Sanchez, JJ., concur.