PERPETUA GARGOLLO, PLAINTIFF AND APPELLEE, VS. ALFREDO DUERO AND JOSEFINA ESPEJO, DEFENDANTS AND APPELLANTS.

Defendants Alfredo Duero and Josefina Espejo appeal from the decision of the
Court of First Instance of Iloilo (in Civil Case No. 5042) ordering them to
vacate and deliver to plaintiff Perpetua Gargollo, a parcel of land (Lot No.
3016 of the Cadastral, Survey of Cabatuan, Iloilo).

The facts of the case are briefly stated in the decision of the lower court,
in this manner:

“From the pleadings of the parties, it clearly appears that on May 20, 1953,
the plaintiff sold to the defendants with pacto de retro a parcel of land
known as Lot No. 3016 of the Cadastral Survey of Cabatuan, Iloilo, with the
improvements thereon, for the sum of P400.00 which was subsequently increased to
P750.00; that according to the deed of sale with pacto de retro, the
plaintiff could redeem said lot on or before the year 1962; that sometime in.
September, 1958, the plaintiff verbally notified the defendants that she would
redeem the property in the following October, and on October 18, 1958, she, thru
her attorney, gave the defendants written notice to accept the redemption amount
of P750.00, but the defendants refused to accept the payment; that on October
29, 1958, the plaintiff deposited the said amount of P750.00 with the Clerk of
Court under official receipt No. 12474, advising the defendants to withdraw the
said amount; that the defendants refused to withdraw the said amount, for the
reason that, because of the promise of the plaintiff to definitely sell the land
to them for the sum of Pl,000.00, which promise was not carried out, they made
improvements on the land by planting bananas and other fruit trees and
converting a portion of the land into rice paddies, thereby incurring expenses
in the amount of not less than P200.00, aside from planting seasonal crops of
rice, corn, etc., which were not yet ready for harvest, and paying delinquent
taxes in the amount of P25.00.

“Upon pre-trial on January 24, 1959, the defendants, thru Atty. Caspe, agreed
to turn over the property in question to the plaintiff upon payment by the
latter of the purchase price of P750.00 deposited with the Clerk of Court, plus
the sum of P25.00 as reimbursement for real estate tax paid by the defendants on
the land prior to the time they took possession thereof, plus the value of the
improvements they introduced in the land to be assessed by a person whom the
defendants and the plaintiff would appoint, the said plaintiff and defendants
agreeing to abide by the finding of said person they would appoint as to the
value of the improvements introduced by the defendants in the land while the
same was in their possession.

“For one reason or another, the plaintiff, and the defendants failed to agree
as to the person to undertake said assessment, much less, as to the value of the
said improvements. Consequently, in its order dated February 14, 1959, the Court
set the case for bearing on February 21, 1959, at 10:00 o’clock a.m., solely for
the reception of the evidence of the parties regarding the value of said
improvements. The hearing was accordingly started, but, for lack of material
time, it was scheduled to be continued on June 1, 1959, at 8:30 o’clock a.m. On
June 1, 1959, however, the parties manifested in open court that they had agreed
to submit a written amicable settlement, for which reason the hearing of the
case was postponed indefinitely.

“On June 8, 1959, however, the counsel for the plaintiff filed a motion,
stating that the proposed amicable settlement failed and that in view thereof he
advised his client, the plaintiff, to manifest, as in Tact, in her attached
affidavit, she manifested her intention not to exercise the option to refund the
defendants’ expenses or pay the increase in value of the land in question as
provided in paragraph 2 of Article 546 of the Civil Code, thereby claiming the
right given her by Article 547 of the same code. The counsel for the plaintiff
consequently prayed that judgment be rendered (1) declaring the land in question
as already redeemed in view of the deposit in Court of the redemption price of
P750.00; (2) ordering the defendants to remove. all her improvements on the land
and to vacate the same; and (3) ordering the defendants to pay the costs of the
suit.

“On June 13, 1959, the defendants filed a written reply to the aforesaid
motion, stating among other things, that according to the provisions of Article
1616 of the Civil Code, the vendor cannot avail himself of the right of
repurchase without returning. to the vendee the price of the sale and in
addition: (1) the expenses of the contract, and any other legitimate payments
made by reason of the sale; (2) the necessary and useful expenses made on the
thing sold.’

“As may be seen, however, at the pre-trial of the case held on January 24,
1959, the parties reduced the question at issue to only one, to wit: the value
of the improvements introduced by the defendants in the land in question.
Although the purchase price appearing in the deed of purchase with pacto de
retro entered into between the plaintiff and the defendants was only
P400.00, it was agreed at said pre-trial that it should be P750.00, together
with the sum of P25.00 as reimbursement for delinquent real estate taxes paid by
the defendants on the land prior to the time they took possession thereof and
the value of the improvements, there being; no necessity of any expense
whatsoever for the preservation of the land. * * *.”

On the basis of the foregoing facts, the lower court, on June 15, 1955,
rendered a decision in favor of plaintiff and against defendants, stating:

“In view of the express manifestation of the plaintiff of her intention not
to exercise the option given her by paragraph 2 of Article 546 of the Civil
Code, the Court believes that the continuation flf the hearing of this case for
the sole purpose of determining the value of the useful improvements introduced
by the defendants in the land in question has become unnecessary, for the reason
that, according to the new provision embodied in Article 547 of the Civil Code,
the defendants, as possessors in good faith are not entitled to retain the land,
but only to remove the said improvements therefrom if the same can be done
without damage thereto.

“WHEREFORE, judgment is hereby rendered—

“(a) Ordering the Clerk of this Court to turn over to the defendants
the sum of P750.00 deposited with him by the plaintiff as repurchase price of
the land in question (Lot No, 3016 of the Cadastral Survey of Cabatuan,
Iloilo);

“(b) Ordering the defendants to forthwith vacate and deliver the
aforesaid land to the plaintiff;

“(c) Ordering the plaintiff to allow the defendants and his laborers
to enter the land at reasonable hours of the day and remove all the useful
improvements introduced by them therein within the period of ninety (90) days
from the date hereof;

“(d) Ordering the plaintiff to pay the defendants the sum of P25.00 as
reimbursement for the delinquent real estate taxes paid by them prior to the
time they took possession thereof upon delivery to the plaintiff by the
defendants of the corresponding official receipts evidencing said payments.

“Without pronouncement as to costs.

“SO ORDERED.”

Their motion for reconsideration of said decision having been denied by the
court, defendants appealed directly to us.

The appeal is meritorious. It appears that the judgment of the trial court
requiring, among other things, defendants (vendees a retro) to vacate and
deliver the land in question to plaintiff (vendor a retro), is predicated
on the ground that, according to Article 547^[1] in relation to Article 546^[2] of the Civil Code, defendants “are not
entitled to retain the land, but only to remove the said improvements therefrom,
if the same can be done without damage thereto.”

The trial court has, clearly, committed a reversible error, because the
provision applicable to the instant case is not the aforecited Article 547 of
the Civil Code, which treats of possession, but Article 1616 of the same
Code, which deals specifically with conventional redemption, to wit:

“ART. 1616. The vendor cannot avail himself of the right of repurchase
without returning to the vendee the price of the sale, and in addition:

“(1) The expenses of the contract, and any other legitimate payments made by
reason of the sale;

“(2) The necessary and useful expenses made on the thing
sold.”

It seems quite clear from this provisions, that for a vendor a retro
to be entitled to exercise his right of redemption, he must reimburse the vendee
a retro, not only (1) the price of the sale, but also (2) the expenses of
the contract and any other legitimate payments made by reason of the sale, and
(3) the necessary and useful expenses made on the thing sold. Note that the
vendor a retro is given no option to require the vendee a retro to
remove the useful improvements on the land subject of the sale a retro,
unlike that granted the owner of a land under Articles 546 and 547 of the Civil
Code. Under said Article 1616, the vendor a retro must pay for the useful
improvements introduced by the vendee a retro; otherwise, the latter may
retain possession of the land until reimbursement is made.

Since, in the instant case, plaintiff (vendor a retro) is unwilling to
reimburse defendants (vendees a retro) the value of the useful
improvements introduced by the latter on the land in question, as agreed upon by
them at the pre-trial held on January 24, 1959, it stands to reason that
defendants may not lawfully be ordered nor compelled to vacate and deliver said
land to plaintiff.

Wherefore, the decision of the trial court appealed from is reversed and set
aside, and the case is remanded to said court, which is hereby directed to
continue with the hearing of the same, for the purpose of determining the value
of the useful improvements introduced by defendants on the land in question and,
thereafter, render judgment in accordance with law. Without pronouncement as to
costs. So ordered.

Bengzon, C.J., Padilla, Bautista Angelo, Labrador,
Concepcion, Reyes, J.B.L., Paredes, and Dizon, JJ., concur.

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^[1] “ART. 547. If the useful improvements
can be removed without damage to the principal thing, the possessor in good
faith may remove them, unless the person who recovers the possession exercises
the option under paragrah 2 of the preceding article.”

^[2] “ART. 546. Necessary expenses shall
be refunded to every possessor; but only the possessor in good faith may retain
the thing until he has been reimbursed therefor.

“Useful expenses shall be
refunded only to the possessor in good faith with the same right of retention,
the person who has defeated him in the possession having the option of refunding
the amount of the expenses or of paying the increase in value which the thing
may have acquired by reason thereof.”