PEDRO TAPAS AND MARIA ORIÑA DE TAPAS, PETITIONERS, VS. COURT OF APPEALS, ROBERTO DE JESUS AND CEFERINA DE JESUS, RESPONDENTS.

Tapas versus De Jesus

The Case

This is a petition for certiorari brought by spouses Pedro Tapas and Maria Oriña de Tapas against the Court of Appeals and spouses Roberto de Jesus and Ceferina de Jesus, asking the Supreme Court to review the appellate court's decision. The petitioners had sued below to have three deeds of sale reformed and declared equitable mortgages rather than true sales. The Court of Appeals agreed with them as to two parcels of land but held that the third parcel was covered by an absolute deed of sale. The case matters because it fixes the boundaries of the vendor's right to repurchase under Article 1606 of the Civil Code, and because it restates the settled rule that the Supreme Court will not disturb the factual findings of the Court of Appeals.

Procedural History

The petitioners, as plaintiffs, filed an action in the lower court to reform certain contracts so that they would be characterized as equitable mortgages only. They lost before the trial court. They appealed to the Court of Appeals, which ruled in their favor as to two parcels of land, declaring those transactions to be equitable mortgages. As to the third parcel, however, the Court of Appeals upheld the trial court's finding that there was an absolute sale. The petitioners then came to the Supreme Court by petition for certiorari to review that decision of the Court of Appeals.

Facts

The petitioners executed a deed of sale over a parcel of land in favor of the respondents, the De Jesus spouses. The deed was prepared in the Office of the City Assessor by Eutiquio V. Guevarra, who was also a notary public. He testified that an absolute sale was precisely the intention of the parties and that the contents of the document were explained to them. Maria Oriña de Tapas claimed she was deficient in formal schooling, but she was married to an educated man, a former seminarian, who was present at the signing and who signed at the left-hand margin of the document. Her husband was never called to the witness stand.

The petitioners alleged that the price was grossly inadequate, pointing to an adjacent lot said to have commanded a higher price, but the statement was attributed to one Macario Mariano, who was never asked to verify it by being called as a witness. The Court of Appeals also found that the price was based on the assessed value. The petitioners stayed in possession of the lot, but this was explained by a lease contract duly entered into with the respondents, the vendors. Roberto de Jesus was an inspector in the Bureau of Fisheries who had to travel a great deal, and Ceferina de Jesus was a nurse without a fixed place of work, so it was to their interest to lease the lot to the petitioners. The petitioners' claim that they continued to pay the real estate taxes was not proven; on the contrary, the receipts were produced and were duly issued in the name of the respondents.

The Court of Appeals concluded that the deed reflected the true intention of the parties. The petitioners nevertheless insisted that they could still repurchase under Article 1606 of the Civil Code, which gives the vendor thirty days from final judgment to exercise the right to repurchase where the contract is found to be a true sale with right to repurchase.

Issues

• Whether or not the Supreme Court may alter or modify the factual findings of the Court of Appeals, particularly its finding that the transaction over the third parcel was an absolute deed of sale.
• Whether or not the vendor may still exercise the right to repurchase within thirty days from the time final judgment was rendered, under Article 1606 of the Civil Code, where the court finds that the contract was an absolute sale and not a true sale with right to repurchase.

Applicable Provisions

Article 1606 of the Civil Code provides:

The right referred to in article 1601, in the absence of an express agreement, shall last four years from the date of the contract. Should there be an agreement, the period cannot exceed ten years. However, the vendor may still exercise the right to repurchase within thirty days from the time final judgment was rendered in a civil action on the basis that the contract was a true sale with right to repurchase.

This provision is the sole anchor of the petitioners' plea, and the Court reads its third paragraph as requiring an express finding that the contract was a true sale with right to repurchase before the thirty-day period may be availed of.

Ruling

On the first issue, the Court held that it is not at liberty to alter or modify the facts as set forth in the decision of the Court of Appeals. The jurisdiction of the Supreme Court in cases brought from the Court of Appeals is limited to reviewing and revising errors of law, the findings of fact of the appellate court being conclusive. This is so even if the Court of Appeals disagreed with the lower court as to the weight of the evidence and reversed its findings of fact. The Court noted that the Chan versus Court of Appeals opinion cited thirty-five decisions in support of this view, and that six more decisions had since followed. The transaction therefore cannot be looked upon as other than an absolute deed of sale.

On the second issue, the Court held that the wording of Article 1606 is plain and explicit. The provision speaks clearly of a sale with right to repurchase, and the finding of the Court of Appeals was precisely to the contrary. The Court stressed that there must be such an express finding, and that the transaction must be one of pacto de retro, that is, a sale with right to repurchase. The law cannot be any clearer. The Court cited the comment of Justice Capistrano that the provision is intended to cover suits where the seller claims that the real intention was a loan with equitable mortgage but the Court decides otherwise. Here, the express finding was that an absolute deed of sale was intended, so the plea is even less persuasive. The Court also noted that where there is no controversy as to the juridical nature or character of the contract, Article 1606 cannot be applied, and that where the right to repurchase had already expired and become vested before the effectivity of the New Civil Code, the provision cannot be applied without impairing a vested right.

Doctrine

The findings of fact of the Court of Appeals are conclusive upon the Supreme Court, whose jurisdiction in cases brought from that court is limited to reviewing and revising errors of law, even where the Court of Appeals reversed the factual findings of the trial court. The thirty-day period to repurchase under Article 1606 of the Civil Code applies only where the court, in a civil action, makes an express finding that the contract was a true sale with right to repurchase, that is, a pacto de retro. Where the court finds instead that the contract was an absolute sale, the vendor has no right to repurchase under that provision, for the law requires that the transaction be one of pacto de retro.

Disposition

The petition was denied and the appealed decision of the Court of Appeals was affirmed, with costs against the petitioners.

Remember This

The one line to memorize is that the thirty-day repurchase period under Article 1606 of the Civil Code requires an express finding that the contract was a true sale with right to repurchase, and does not apply where the court finds an absolute sale. Examiners use this case to test the conclusive nature of the Court of Appeals' factual findings and the precise requisites for invoking Article 1606.