CIRILO CASABAR. PETITIONER-APPELLANT, VS. PEDRO SINO CRUZ AND MELCHORA OCANG, RESPONDENTS-APPELLEES.

Cirilo Casabar filed an action in the Court of First Instance of
Pangasinan praying that the contract marked Annex A, which purports to
be a deed of sale, be declared merely as a contract of mortgage; that
plaintiff be declared absolute owner of the three parcels of land known
as Lot Nos. 1, 4, and 5, and that Pedro Sino Cruz and Melchora Ocang be
ordered to return the possession thereof to the plaintiff, and to pay
the sum of P3,000 as damages, and the costs of action.

The defendants in their amended answer denied that the transaction
was a loan with a mortgage and averred that Cirilo Casabar had sold to
them the five parcels of land described in the complaint “for the
amount of P610 and other additional amounts.” These additional amounts
were alleged in the special defenses it have been paid by the
defendants to the plaintiff at his request “after some few months from
August 7, 1933”, because he was then in need of money, which have
reference to the sums of P440 and P1,120 paid as additional
consideration of the sale. Defendants also alleged as special defense
that plaintiff’s action had prescribed.

After due trial, the court rendered its decision declaring that the
document in question is only one of mortgage; that the plaintiff is
entitled to redeem the three lots 1, 4, and 5 from the defendants upon
payment of the sum of P1,120, plus the sum of P4,000 which was incurred
by the defendants as improvements on the lands and that after the
payment of said amounts is effected, the defendants should execute a
deed of reconveyance of the three lots in favor of the plaintiff,
without pronouncement as to costs.

From this decision both plaintiff and defendants have appealed to
the Court of Appeals, the plaintiff from that part which orders him to
pay to the defendants the sum of P1,120 and the further sum of P4,000
for alleged expenses incurred in the improvements made on the fishponds
in question, and the defendants from the portion which declares that
the document Exhibit A is merely an instrument of mortgage and not a
contract of sale as claimed. This decision was reversed, the Court of
Appeals holding that the contract is one of sale with option to
repurchase, and this option not having been exercised within the period
stipulated, plaintiff has lost his right to recover the lots In
litigation and, furthermore, plaintiff’s right of action is already
barred it appearing that the same had accrued more than 15 years ago.

Plaintiff has interposed the present petition for review and now contends that:

“I

The Court of Appeals
erred in holding that the contract evidenced by Exhibits A, 3, and 6 is
not an equitable mortgage but a deed of sale with option to repurchase.

II

The
Court of Appeals erred in disregarding article 1602 of the Civil Code,
which had been cited and relied upon by the trial court.

III

The
Court of Appeals erred in holding that the respondents had acquired
title to the property in question by acquisitive prescription.

IV

The
Court of Appeals erred and neglected the performance of its duty in
failing and refusing to pass upon and decide the appeal of the
petitioner as plaintiff below from a specific portion of the judgment
of the trial court. The Court of Appeals erred in hot rendering
judgment modifying that of the trial court by ordering the respondents
to reconvey and deliver to the petitioner lots 1, 4 and 5 described in
transfer certificate of title No. 7978 of the register of deeds of
Pangasinan and to pay to the petitioner P3,639.00.”

This being a petition for review of a decision of the Court of
Appeals, the only questions that may be looked into are those of law,
the findings of fact made in said decision being valid and binding upon
this Court, even if the same may appear to be “sketchy and garbled” as
claimed by counsel for petitioner. Our only function is to determine if
the facts as found support the conclusions of law which form the basis
of the decision. This is more so if the evidence brought into play is
both oral and documentary and has been duly considered by the Court of
Appeals. We would therefore quote hereunder the pertinent portions of
the decision of the latter court without prejudice of pin-pointing the
facts which might have been overlooked, if any, in connection with the
arguments advanced by both parties.

“El 7 de agosto de 1933, Cirilo Casabar y Valentina
S. Cruz otorgaron la escritura de venta absoluta Exh. A, de cinco
parcelas de terreno cuyas descripciones techicas aparecen en el
Certificado de Transferencia de Titulo No. 7978, de la Oficina del
Registrador de Titulos de la provincia de Pangasinan, que el dia
siguiente se expidio a nombre de Pedro Sino Cruz, casado con Melchora
Ocang. En la misma fecha 7) de agosto de 1933) Pedro otorgo la
escritura de opcion de compra, Exh. 3 de las citadas parcelas de
terreno a favor de Saturnina Casabar, hija de Cirilo, dentro del plazo
de cinco anos. Algun tiempo despues, Cirilo obtuvo de Pedro y Melchora
un aumento de P440.00 y, en 19 de mayo de 1933) otra cantidad adicional
de P1,120.00, que Pedro pido agenciar, vendiendo con pacto de retro al
Dr. Gonzalo Montemayor las parcelas 1, 3 y 5 por dicta cantidad de
1,120.00, que entrego a Cirilo anulandose en virtud de este pago
adicional la escritura de opcion de compra Exh. 3 a favor de
Saturniria, pero otorgandose, en sujsustitucion, por Pedro otro
documento a favor de Cirilo, permitiendo 4 este recomprar las repetidas
cinco parcelas, detrodel plazo de seis meses, desde el 19 la cantidad
total de P2,170. Transcurrido este plazo de de 1939, (6 y 6-A). es, sin
que Cirilo hiciera uso de su derecompra, Pedro y Melchora el 20 y 30 de
de mayo 00 (Exhs seis mes recho de diciembre de 1939 vendieron y
transfirieron la parcela segunda a favor de Valentina S. Cruz y los
esposos Severino Cruz y Feliciana Casabar y la tercera a favor de
Valentina S. Cruz, por los precios de P600,00 y P300.00 respectivamente
(Record on Appeal, pp. 22 al 25). Desde el 7 de agosto de 1933) en que
Cirilo y Valentina otorgaron a favor de los eposos Pedro y Melchora la
escritura de venta absoluta Exh. A, estos han estado continuamente en
la posesion y el disfrute de la pareelas en cuestion, primera, euarta y
quinta, sin haber sido en lo minimo molestados por Cirilo sino ya en, segun Valentina, despues que se terminara el asunto que aquel
tenia contra Turner.

“Cirilo y Valentina otorgaron la
escritura de venta absoluta Exh. A con pleno conocimiento de su
eontenido, significado y consequenqias. Asi, Valentina dice:

Q.	So that consigned Exhibit ‘A’, document deed of sale in favor of defendant, Pedro Sino Cruz on August 7, 1933, you know pretty well that the document signed by you was an absolute deed of sale of that 5 parcels of land and not a loan with security or mortgage?
A.	Well, it was made to appear as an absolute sale, but our agreement was entrusting only.1 (t.n.t., p. 25);

y, Cirilo, a su vez, declara:

Q.	Do you mean to say that it was a common agreement between you and Pedro Sino Cruz to make a deed of sale and not a mortgage in order to save your lands in Lingayen from being attached by Mr. Turner, is that what you mean?
A.	We have agreed with my brother-in-law to have that document prepared as deed of sale in order that the parcels of land therein described will be saved from Mr. Turner so that we have anywhere) to stay in case we lose the case against him and those lands were just entrusted to him.’ (t.n.t., p. 73).

 

“En La escritura de venta Exh. A se dice que Valentina era soltera, pero, segun ella, se caso con Cirilo, probablemente despues.

“Se
lentina, tres par vera en el testimonio de ambos, Cirilo y Vaque ellos
nunca ham tratadp de hipoteear les selas en litigio a favor de los
esposos Pedro y Melchora, sino que, en todo caso, usando sus mismas
palabras ‘just entrusted to him’, ‘entrusting him’. Teniendo en cuenta
que Cirilo trataba de prevenir las consecuencias de una ejocucion que
contra el pudiera conseguir Turner, es posible que su idea era poner
las cincos parcelas del Certificado de Transferencia de Titulo No. 7978
a nombre de los esposos Pedro y Melchora, por el actual modico precio
que estos pudieron pagar de P610.00, pero reservando para su hija
fiaturnina la opcion de compra de las mismas, dentro del plazo de cinco
anos. Mas, ocurrio que tuvo necesidad de mis fondos, y los ha ido
pidiendo, en concepto deprecios dicionales, a los esposos Pedro y
Melchora, * * *.”

There is no dispute that the contract Exhibit A is a deed of sale
whereby, on August 7, 1933, Cirilo Casabar and Valentina S. Cruz sold,
transferred, and conveyed to Pedro Sino Cruz the five parcels of land
therein described in consideration of the sum of P610 and that from the
date of the sale, the possession of the lands was then and there
transferred to the purchaser. This is what clearly appears on the face
of the document. There is also no dispute that on the same date, August
7, 1933, another document, Exhibit A-1, was executed, entitled “Opcion
de Hecompra”, whereby Pedro Sino Cruz, in consideration of the sum of
P1.00, granted to Saturinina Casabarv petitioner’s daughter, an option
to repurchase the same five parcels of land for the same price of P610
within five years from said date. This also clearly appears on the face
of said document. Then, additional sums totalling P1,560 were taken by
petitioner from respondents, the result being that the option to
repurchase given to Saturnina was cancelled and another option was
granted to petitioner to redeem the lands for a period of six months.
Because of these facts, and some Evidence aliuhde appearing in the
record, the Court of Appeals concluded that the real transaction
between the parties is one of sale with pacto de retro and not merely an equitable mortgage.

Petitioner, however, contends that this finding is erroneous because
it is contrary to what petitioner and his wife had testified and to
what was found by the trial court that the aforesaid documents were
merely executed as a scheme to hide the aforesaid parcels of land from
E. G. Turner who was then expected to bring suit against said spouses
to collect a huge indebtedness and not with the real intention of
parting with the ownership of said properties. Thus, speaking on the
alleged scheme, Cirilo Casabar and his wife Valentina S. Cruz testified
that they agreed with Pedro Sino Cruz that the document Exhibit 1 be
prepared “as deed of sale in order that the parcels of land therein
described will be saved from Mr. Turner so that we I have anywhere to
stay in case we lose the case against him, and those lands were just
entrusted to him” (Pedro Sino Cruz); and, it is contended, this was
found by the trial court to be a correct picture of the situation
because “on the same date Pedro Sino Cruz executed in favor of
Saturnina Casabar, daughter of the plaintiff and not to the plaintiff,
an option to repurchase these 5 parcels of land within 5 years, marked
Exhibit A-1, for the purpose of better concealing the real nature of
their contract.” And to bolster up this claim, counsel for petitioner
makes the additional plea that the Court of Appeals erred in not
considering Article 1602 of the new Civil Code which prescribes certain
rules whereby the court may be glided in determining when a contract
should be presumed to be an equitable mortgage.

While the transaction under consideration took place in 1933 and our
new Civil Code came into effect only on August 30, 1950, and for that
reason the provisions of this Code can not apply to that transaction
unless they are given retroactive effect expressly or impliedly, there
is merit in the claim that Article 1602 of said Code may be considered
in determining the nature of the transaction in question if the court
thinks it necessary It being remedial in nature land not one which
creates or takes away new or vested rights. The rule is that “remedial
statutes, or statutes relating to remedies or modes of procedure, which
do not create new or take away vested rights, but only operate in
furtherance of the remedy or confirmation of rights already existing,
do not come within the legal conception of a retrospective law, or the
general rule against the retrospective operation of statutes. To the
contrary, statutes or amendments pertaining to procedure are generally
held to operate retrospectively, where the statute or amendment does
not contain language clearly showing a contrary intention.” (50 Am.
Jur., Section 482, pp. 505-506) But, has the Court of Appeals erred in not taking into account
Article 1602 of the new Civil Code in the same manner as the trial
court did in determining the nature of the contract under consideration?

We are not prepared to answer the question in the affirmative
considering that, among the rules prescribed in said article which may
be considered as guide in determining the nature of a given contract,
none could properly apply if we are to take into account strictly the
facts proven in this case. As to the inadequacy of the price, the
evidence on the matter does not appear clear, even if the lower court
has made a finding based on a mere estimate, which is probably the
reason why the Court of Appeals did not deem it necessary or pertinent
to look into the matter. But the fact however is that the consideration
of the sale is not merely the sum of P610, as was made to appear in the
document Exhibit A, but , the sum of P2,170, which represents the
totality of all the sums given by the defendants to the plaintiff as
the consideration of the sale. Whether this is adequate or not the
record or the evidence does not appear clear and so rule 1 of Article
1602 of the new Civil Code cannot apply.^[1]
The only possible rule that may have some application is No. 2 which
provides: “When the vendor remains in possession as lessee or
otherwise”, but even as to this there is some conflict in the evidence,
for while there is some testimonial evidence to the effect that the two
residential lots remained in possession of the vendor after the sale,
this testimony is belied by the very document Annex A wherein it was
made emphatically clear that the five parcels of land subject of the
sale were placed in the[possession of the vendee on the very day of the
sale. And much less can be said with regard to rule No. 3 which
provides, “When upon or after the expiration of the right to repurchase
another instrument extending the period of redemption or granting a new
period is executed”, for we have here a clear instance derogatory of
the rule when the vendee executed the document Exhibit 6 granting
petitioner merely a period of six months within which to repurchase the
lands after the option granted to his daughter for a period of five
years had been cancelled. This situation is very revealing, for instead
of giving petitioner more days of grace, the period was cut short. We
cannot therefore blame the Court of Appeals for not making use of said
Article 1602 as a guide in the form and manner desired by counsel for
petitioner.

But the pivotal question which is now pressed before us for
determination does not merely hinge on a mere appreciation of
documentary evidence or of the conclusion that should be drawn from its
contents, but rather on a matter which touches the credibility of
witnesses, as may be inferred from the findings made by the Court of
Appeals. Indeed, the question to be determined is not so much of how
the documents Exhibits A, 3, and 6 should be appreciated or
interpreted, because in so far as these documents are concerned, their
contents are not disputed and their terms are clear and unambiguous,
but whether the testimony of petitioner and his wife as to the
circumstances surrounding the execution of said documents should be
given credit even in derogation of the nature and validity of said
documents. And if such is the ease, which apparently is the stand taken
by the Court of Appeals, as reflected throughout the length and breadth
of its decision, we are of the opinion that the conclusions reached by
that court on the matter are conclusive and are not now open for review.

Analyzing the decision of the Court of Appeals, we find that, after
stating the facts as may be inferred from the evidence which appear to
be undisputable, that court made the finding that petitioner did not
really intend to mortgage the lands in question to respondents but
merely “just entrusted to him” or “entrusting him”, and considering
that the purpose of that scheme is to prevent the consequences of an
adverse action that may be taken against the petitioner by his creditor
Turner, – the court said, – it is possible that his idea be merely to
put the lands or their title in the name of respondents for the nominal
sum of P610 by reserving to his daughter Saturnina the right to
repurchase the land within five years. Later, however, petitioner found
himself in need of money and demanded additional sums from respondents
who gladly agreed to help him by giving him the additional sums of P440
and P1,120, or a total of P1,560. And to put things aright, the
document Exhibit 6 or 6-a was executed giving petitioner the right to
repurchase the lands within a period of 6 months. From that time on,
according to the court, the transaction became truly one of sale with pacto de retro,
and as the vendor failed to exercise his right to repurchase within the
period stipulated, he forfeited such right and the lands became
consolidated in favor of the vendee. These are findings of the Court of
Appeals that said court drew not only from the documentary evidence
that had a bearing on the transaction but especially from the testimony
given by the parties of this case. We feel that we are not now in a
position to review nor disturb these findings as we are now urged by
counsel for petitioner.

Another factor which should not be overlooked is the motive or
purpose why, according to petitioner, the scheme allegedly represented
by the execution of the three documents has been adopted which is to
place the lands in question beyond the reach of E.G. Turner who was
then threatening to institute an action to collect a credit he had
against petitioner. Even if this were true, it appearing that the
transaction was done with an improper design, the same should not be
looked with favor by this Court. A litigant should come to court with
clean hands.

It is true that the Court of Appeals did not make any mention in the
body of its decision of the merits of the appeal of petitioner as
plaintiff from a portion of the judgment of the trial court, although
it took notice of the fact that both parties have appealed from that
judgment, and that such failure is now assigned as error which might
necessitate the remand of this case to the Court of Appeals with
appropriate instructions to make a finding and enter a judgment on this
branch of the case. Bui while this is true, we find that the only
mistake, if any, the Court of Appeals may be deemed to have committed
lies in not making clearer its position by stating even in a short
paragraph that to pass upon such appeal of petitioner would not be
necessary considering the conclusion reached by the court in its
decision. We can surmise that this is the only reason for such apparent
disregard of a clear procedural duty and in this sense we find: the
stand of the Court justified, for, having reached the (Conclusion that
the nature of the transaction is one of sale with pacto de retro and
the plaintiff has already lost his right to redeem the lands, the only
alternative is to declare respondents owners of the lands and dismiss
the action taken against them. There would then be no need for any
further determination of the value of the repairs or improvements that
may have been made on said lands for after all they would redound to
the benefit of respondents. There is therefore no consequence or
prejudice Resulting from the silence of the court and, hence, this
error does not merit consideration.

Having reached the foregoing conclusion, we deem it unnecessary to
discuss the other points raised by counsel for petitioner in his brief.

The decision appealed from is hereby affirmed, without pronouncement as to costs.

Paras, C.J., Pablo, Bengzon, Padilla, Montemayor, Reyes, Jugo, and Concepcion, JJ., concur.

Reyes, J.B.L., J., in the result.

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^[1] The only evidence on the
value of the land is one transaction in 1930 and another in 1939. These
transactions are inapplicable because the contract in question took
place in 1933.