G.R. Nos. L-6501 and L-6599. May 31, 1955
SIMEON AYSON AND MAURA LUMANLAN, PETITIONERS VS. THE COURT OF APPEALS AND PRIMO ARAMBULO, RESPONDENTS.
PADILLA, J.:
Lumanlan (G. R. No. L-6501) and by Primo Arambulo (G.R. No. L-6599) to review
the decision cf the Court of Appeals rendered in CA-GR No. 7358-R which is of
the following tenor:
This action was initiated in the Court of First Instance of Tarlnc on
December 29, 1942, by appellee Primo Arambulo, to compel Basilio Yalung to
execute a formal and reglsterable deed of sale of the land covered by
Certificate of Title No. 41132, replacing a private written contract executed on
November 24, 1942. Subsequently, Basilio Yalung’s sister, Paulina Yalung, was
impleaded as party defendant for being a co-owner of the land aforesaid.
Appellant spouses, Simeon Ayson nnd Maura Lumanlan, intervened in the
proceedings claiming to be vendees a retro of the land in question for
the price of P3,200.00, which amount was subsequently deposited by plaintiff
with the Cleric of Court pursuant to an order of July 27, 1944. From the
decision rendered on August 28, 1950, after reconstitution of the records,
granting the prayer of plaintiff and declaring the repurchase effective by the
judicial deposit, only the Intervenors have appealed. Defendants Basilio Yalung
(substituted by his heirs) and Paulina Yalung did not appeal.
The facts upon which the litigation arose are practically undisputed, and can
be summarized, as follows:
On November 24, 1942, Basilio Yalung signed in Manila a private document
selling to Primo Arambulo a 10-hectare parcel of land “of the vendor’s exclusive
ownership” in barrio Lawi, Municipality of Capas, Province of Tarlac, with
Torrens title No. 41132, for the price of P5,000, receipt whereof was duly
acknowledged (Exh. A-1). Shortly afterwards, the buyer entered into peaceful
possession, purchased the tenant’s house, installed a water pump and other
improvements, and placed tenants therein.
Because of the seller’s subsequent reluctance to formalize a registsrabls
deea of sale and to surrender the Certificate of Title which he claimed to be
deposited elsewhere for safekeeping, the buyer and his attorney, Victorino
Valle, were led to investigate the land records of Tarlnc. To their surprise,
they discovered that the Certificate of Title No. 41152 was still in the name of
Basilia Tambengco, mother of Basilio Yalung, and his sister Paulina. Later on it
was further ascertained that the land was originally mortgaged on December 10,
1936 by Basilia Tambengco to herein intervenors, Simeon Ayson and Maura
Lumanlan, of Angeles, Pampanga for P2,000.00 (Exh. 8); and that after tha
mortgagor’s death, her two children Basilio and Paulina Yalung expected another
notarial deed (Exh. 9) on May 15, 1941, agreeing that in consideration of the
original mortgage debt, and of the additional sum of P1,200.00, paid by the
mortgagees, the property should be deemed sold to Ayson and Lumanlan, subject to
a reserved right of repurchase of P3,200.00 within 4 years (i.e., not later than
May 15, 1945). The deed was not recorded, but the duplicate. Certificate of
Title was in possession of the vendees a retro.
In view of these unexpected developments, Arambulo and his representatives
held various conferences with the Yalungs, and therein, as found by the Court
below (and the finding is final on Paulina, who has not appealed), the sister
assented tc the sale by her brother if she would be paid an additional P500.00.
Matters dragged on, and suit was finally filed first against Basilio and later
also against Paulina, for specific performance, and a notice of lis
pendens was duly entered.
During the pendency of the suit, the intervenors-appellants sought a
preliminary injunction against the appellee, claiming that they, as vendees
a retro, were owners and possessors; that Basilio Yalung was only
allowed to plant vegetables therein, and Arambulo obtained possession without
their knowledge and consent (Rec. App. p. 26). The trial Court however denied
the injunction (Rec. App. p. 63).
It appears further that in July, 1943, while the case was pending, the
vendees a retro managed to record the sale in their favor, and to have
Certificate of Title No. 41132 cancelled and replaced by Certificate No. 19408
in their names, subject however to the lis pendens of appellees.
As the period of redemption was about to expire, plaintiff Arambulo on May
10, 1944 asked the Court to order the intervenors to allow the plaintiff to
repurchase the land and to pay P500.00 to Paulina Yalung (Rec. App. p. 95); and
after various pleadings the Court entered an order as follows:
“This is a motion filed by counsel for the plaintiff herein in which he prays
that he be allowed to repurchase from the intervenors the land in litigation by
paying to them the sum of P3,200 at which it should be resold by them, according
to their contract with the defendants; and that he be likewise allowed to
consign in this court the amount of P500 which is averred by defendant Basilio
Yalung to be the money value of the participation therein of defendant Paulina
Yalung.“To this motion the other parties herein formally objected. But at its
hearing the intervenors withdrew their opposition thereto upon condition that
the two sums aforementioned would be consigned in this court. The defendants
likewise withdrew their objection provided that their withdrawal thereof should
not be understood as a recognition of plaintiff’s right to repurchase that
property from the intervenors.After due consideration of this matter, taking into account the fact that the
period within which the repurchase thereof from the intervenors continues to run
notwithstanding the filing of this action; that it is necessary that the running
of the said period be tolled or suspended pending the final determination of the
issues raised herein, the court has come to the conclusion that, in the interest
of the administration of justice, the motion aforementioned should be
granted.“WHEREFORE, plaintiff is hereby ALLOWED and AUTHORIZED to repurchase from the
intervenors ths land in controversy by racking a consignation in this court of
the amount of P3,200, and to offer the payment of P500 to plaintiff Paulina
Yalung by likewise consigning the said sum. This authorization, however, shall
not be understood as a resolution on the issues raised by the parties herein but
witnout prejudice to the plaintiff and to the defendants’ continuing to litigate
the controversy between them.“SO ORDERED.” (Rec. App. pp. 102-104)
In view of this order, plaintiff Arambulo remitted the amount of P3,700.00 to
the Clerk of Court by a cashier’s check of the Philippine National Bank and a
money order for the Clerk’s deposit fees of P18.50 (Exhs. V and W), with a
request that the intervenors and Paulina Yalung be notified thereof.
In its decision on the merits, the Court below ultimately ordered:
“IN VIEW OF ALL THE FOREGOING, the Court renders judgment to the following
effect:“a. Dismissing plaintiff’s action for specific performance against
defendants, as well as his action for money claims against defendant Basilio
Yalung.“b. Dismissing intervenors’ claim for indemnity and damages against
plaintiff.“c. Declaring plaintiff absolute owner of the whole of the land in Question
by virtue of the constructive repurchase of the said land in question from the
intervenors.“d. Ordering the Register of Leeds of Tarlac to cancel Transfer Certificate
of Title No. 19408, and issue in lieu thereof a transfer certificate of title in
the names of the plaintiff Primo Arambulo ana his spouse. Loreta Sevilla de
Arambulo; the property here in Question having been acquired by the said spouses
as conjugal property.“The Court makes no special pronouncement as to costs.”
“SO ORDERED.” (Rec. App., pp. 152-153)
From this decision the intervenors, Ayson and Lumanlan, duly appealed to this
Court, making four assignments of error.
Under the first assignment, it is contended that the execution of the
notarial deed of sale a retro, Exhibit 9, constituted symbolic delivery
of the land sold to tne intervenors-appellants, who should be regarded as having
acquired title and possession of land in dispute as of May 15, 1941, when said
Exhibit was ratified, This argument is not tenable, because the land object of
the contract was covered by a Torrens Title, and sec. 50 of Act 496 is very
clear that “no deed xxx purporting to convey or affect registered land, shall
take effect as a conveyance or bind the land” until actually registered, and
“the act of registration shall be the operative act to convey and affect the
land.” “In accordance with this section,” said the Supreme Court in Tuason
vs. Raymundo, 28 Phil. 635, 637, “no act of the parties themselves can
transfer the ownership of real estate under the Torrens system. That is done by
the act of registration of the conveyance which the parties have made.”
The deed Exhibit 9 not having been recorded until 1943, It did not transfer
to the appellants any ownership or real right of possession before the land was
sold to appellee. The provisions of the Civil Code regarding passing of title
upon delivery by execution of public instrument (old Civ. Code., art. 1462) must
be deemed modified by the provisions of Act 496 in so far as registered land is
concerned.
It follows from the foregoing considerations that when the appellee purchased
the land in 1942 from Basilio Yalung and physically entered the lot, introduced
improvements and worked on it, he becaue a possessor in good faith, as held by
the Court below. It is undeniable from the evidence that the appellee did not
suspect at the tiae that thp iand was already sold to intervenors-appellants,
whose deed was not recorded; nor did he invade any possessory right of said
parting, since they were not in possession, actually or legally, The
intervenors-appellants therefore are not entitled to the damages they claim
under their third assignment of error, inasmuch as the appellee committed no act
of dispossession concerning then.
The subsequent registration of the pacto de retro sale in 1943 did
not improve the position of the appellants as against the appellee, for the
reason that the registration of their right was made subject to the lis
pendens notice recorded in behalf of the herein appellee.
The claim that the possession in good faith of the plaintiff-appellee ceased
at all events when he learned of the pacto de retro sale in favor of
+hs appellant-intervenors, must be disallowed. First, because as already pointed
out, the sale to intervenors not having been recorded, the same did not confer
possession in them, and therefore, the deed of sale in their favor was not a
defect that invalidated the possession of the plaintiff Arambulo; and Article
433 of the old Civil Code makes good faith depend upon ignorance of a flaw that,
invalidates the title to the possession. Secondly, because there being no
registration of the deed in favor of the intervenors, nor of the one in favor of
the plaintiff, the latter was entitled to preference as prior actual (physical)
possessor (old Civil Code, Art. 1473, p. 3, first part). In the third place, the
appellants-intervenors expressly admitted having allowed Basilio Yalung to
remain in possession, and this right, of possession was transferred to
plaintiff. Their allegation that Yalung was only given a possession at will,
terminable at their discretion, was not adequately proved.
It is urged in appellants’ fourth assignment of error that appellee should be
awarded only one-half of the land, because no sale in his favor was made by
Paulina Yalung. The Court below, however, expressly found that Paulina ratified
the sale to the plaintiff of the whole land, upon payment of P500.00
subsequently deposited in Court; and Paulina Yalung not having appealed from
this finding, it is conclusive upon her and appellants can no longer question
the fact, since they are not parties to the contract and transactions had
between Arambulo and the Yalungs. It is elementary that the annulment of a
contract can only be asked by those who are parties thereto, principally or
subsidiarily (old Civ. Code, Art. 1302; new Civil Code, Art. 1397; Wolfson
vs. Martinez, 20 Phil, 340; Martell 0ng vs. Jariol, 17 Phil.
244).
The same consideration bars these appellants from invoking the Statute of
Frauds against the conveyance by Paulina Yalung, based on the absence of a
sufficient written memorandum. In the first place, it nowhere appears on the
record that Paulina ever invoked the Statute as a defense, before or after
trial; and in the secona piece, the defense of noncompliance with the Statute
can not be invoked by strangers to the oral contract (49 Am. Jur. p. 896, et
seq.)
There remains the question whether the consignation in Court of the
redemption price of P3,200 pursuant to the order of July 27, 1944 was a valid
one, and amounted to a repurchase. In their second assignment of error,
appellants assail such consignation on the theory that it did not comply with
the legal requisites, because (1) the deposit was by check and not in legal
tender; (2) it lacked P18.50, the Clerk’s fees (which was subsequently remitted
by money order, Exh, W); and (3) no notice was given to the creditors.
It was proved that thc P3,700.00 (including the P500.00 for Paulina Yalung
who has not appealed) was remitted to the Clerk of Court in the form of a
Philippine National Bank Cashier’s Check No. 57862 (Exh. V) hence, the
consignation must be deemed invalid, since the law requires that it should
follow the rules of payment, and one of those is that payment should be made in
legal tender (Cuaycong vs. Rius, L-333, April 21, 1950; Villanueva
vs. Santos, Off. Gaz., March 8, 1941, p. 681). We do not believe that
the letter of the Clerk of Court (Exh. V) informing the counsel for plaintiff of
his receipt of the oheck, and of the fact that “the amount of P18.50
representing the commission of this office was abducted from the sum of
P3,700.00 which was sent by you to this office through the Philippine Notional
Bank of Tarlac,” constitutes proof that the check was actually cashed by the
clerk, as found, by the Court below, “for otherwise he could not have deducted
the sum of P18.50 representing his commission” (Rec. App. p. 142); the Clerk
there evidently meant that plaintiff could not, bc creditea with a deposit of
P3,700.00 but only of P3,681.50. The “was deducted” could have been done in the
account books of the Clerk of Court.
It follows, therefore, that the actual payment of the repurchase money can
not be deemed legally made at the time the deposit was made. On the other hand,
the pendency of the suit prevented a consolidation of the title for
non-redemption (Ong Chua vs. Carr, 53 Phil. 975).
In view of the foregoing, the decision appealed from is modified and
plaintiff-appellant is given thirty (30) days from the time final judgment is
entered, to pay the appellants P3,200.00 in legal tender; whereupon, appellants
shall execute a proper deed of reconveyance of the land in question to the
appellee, without costs in this instance.
In G. R. No. L-6501 the petitioners contend that (1) the Court of appeals
erred in holding that the sale of a parcel of land with a right reserved by the
vendors to repurchase it executed on 15 May 1941 in favor of the vendees a
retro and registered only in July 1943 was subject to a notice of lis
pendens caused to be recorded on 29 December 1942 in the registry of deeds
of Tarlac by Primo Arambulo on the Torrens certificate of title of the parcel of
land sold a retro to the a (petitioners), arising from an action for
specific performance brought in the Court of First Instance of Tarlac by Primo
ioruubulo against Basllio T. Yalung et al. (civil case No. 7); (2) the Court of
appeals erred in holding that the recorded notice of lis pendens
against the share in a parcel of land of a co-owner who sold it subjected also
that of the other co-owner who did not sell hers; (3) the Court of Appeals erred
in holding that the defense based on the statute of frauds that may be set up by
a co-owner is personal and may not be availed of by them (petitioners) who claim
to be the successors-in-lnterest of said co-owner; (4) the Court of Appeals
erred in holding that Primo Arambulo continued to be a possessor in good faith
after he had found out that the vendor of the parcel of land owned only one-half
thereof and that the owners of the parcel of land had sold it to them
(petitioners); (5) the Court of Appeals erred in holding that the commencement
of the action for specific performance referred to prevented the consolidation
of the title to the parcel of land in their (petitioners’) favor; and (6) the
Court of Appeals erred in not awarding them (petitioners) the sum of P1,000 a
year as damages until the end of the litigation as prayed for by them in their
complaint in intervention.
In G. R. No. L-6599 the petitioner claims that the deposit or consignation
made by him in court of the sum of money to repurchase the parcel of land from
the vendees a retro, the intervenors in the court of first instance, in
compliance with its order entered on 27 July. 1944, is valid and releases it
from the lien of the vendees a retro.
Let us take up the question raised by the petitioner in the last mentioned
case. Despite the fact that the plaintiff in tne court of first instance,
appellee in the Court of Appeals and petitioner herein, upon his petition, was
authorized by the trial court to deposit in court the sum of P3,200 owed to the
vendees a retro, the. intervenors in the court of first instance,
appellants in the Court of Appeals and petitioners in G. R. No. L-6501, together
with the sum of P500 which Paulina Yalung was agreeable and willing to accept as
the consideration or price for the conveyance of her share in the parcel of land
to Primo Arambulo, to forestall the consolidation of title to the parcel of land
upon expiration of the period stipulated for the repurchase of the property from
the vendees a retro, intervenors in the court of first instance; that
the sum deposited by the plaintiff as authorized by the trial court was made by
means of a manager’s check; that from all indications the clerk of court cashed
or collected it from the Tarlac branch of the Philippine National Bank and de
posited it in the provincial treasury to pay not only the sum of P3,200
stipulated for ths repurchase of the parcel of land from the vendees a
retro but also the price of the other half thereof belonging to Paulina
Yalung, still the provisions of the law on consignation have not been complied
with, as correctly ruled by the Court of Appeals, because no notice of such
deposit made in court was served upon the. vendee a retro, intervenors
in the court of first instance, appellants in the Court of appeals and
petitioners in G.R. No, L-6501, as required by article 1178 of the Civil
Code[1] Notice of the deposit made by the
obligor or debtor to the obligees or creditors was necessary to protect their
interrest. As soon as they were notified of the deposit they might pray the
court to allow them to withdraw the amount deposited; but no such step could be
taken by them without the knowledge that the deposit had been made.
Let us now take up the points raised by the petitioners in G. R. No. L-6501,
The notice of lis pendens caused to be recorded by the petitioner in G.
R. No. L-6599 subjected the parcel of land to the result of the litigation, As
aptly stated by the Court of Appeals the registration of the deed of sale of a
parcel of land registered under the Torrens System with a right reserved by the
vendors to repurchase it was the operative act of conveying and affecting the
parcel of land sold. By their unrecorded contract of sale with a right to
repurchase the vendees a retro could bind the vendors a retro
but not third parties who were not aware of such contract. The notice of lis
pendens recorded on the certificate of title of the parcel of land did not
deprive the vendees a retro of their right to the same. It only meant
that if the plaintiff, the purchaser of the parcel of land, should secure a
judgment in his favor, he would step into the shoes of the vendors who had
reserved the right to repurchase the parcel of land from the vendees a
retro within the stipulated period.
The second and third points raised by the petitioners are meritless, because
as found by the Court of Appeals Paulina Yalung, the owner of an undivided half
share in the parcel of land sold by her brother Basilio T. Yalung, was
agreeable, and willing to transfer and oonvey her share to Primo Arambulo for
and in consideration of P500. The predecessor-in-interest of the vendees a
retro having waived her right to object to the conveyance of her share on
the ground of lack of a written memorandum, the vendees a retro, her
successors-in-interest, cannot invoke the statute of frauds waived by their
predecessor-in-interest.
The claim that the vendee Primo Arambulo could not be deemed a possessor in
good faith of the parcel of land after finding out that the one who had sold it
to him owned only one-half thereof and that on 15 May 1941 the vendor and her
sister had sold the same parcel of land to the vendees a retro, is
unmeritorious. Such finding subsequent to the purchase of the parcel of land
made by Primo Arambulo cannot make or convert him into a possessor in bad faith
of the same, because he tried to compel the part owner who had sold him the
parcel of land to legalize the sale and succeeded in having the co-owner sell
her share to him for and in consideration of P500.
The contention that the title to the parcel of land was consolidated in the
vendees a retro is without foundation in law, because although the
deposit or consignation was invalid, yet a period of thirty days is granted to
the vendors a retro or their successor-in-interest “from the time final
judgment was rendered in a civil action on the basis that the contract was a
true sale with the right to repurchase, “[2] within which to exercise the right to
repurchase. And the application of the provisions of article 1606 of the new
Civil Code is authorized by article 2253 of the same Code. The right of the
vendees a retro to consolidate title to the parcel of land sold to them
hinges on the invalidity of the consignation made by the successor-in-interest
of the vendors a retro to repurchase the parcel of land, and such
invalidity is not final until after the judgment declaring it invalid becomes
final and executory.
The judgment under review is affirmed, without pronouncement as to costs.
Bengzon, Bautista Angelo, Labrador, and Concepcion, JJ.,
concur.
Pablo, J., conforme con la parte dispositiva;
Paras, C.J., Montemayor, Jugo, and J.B.L., Reyes, JJ., took
no part.
[1] Article 1258, new Civil Code.
[2] Article 1606, new Civil Code.