SANTIAGO ORTEGA, PLAINTIFF-APPELLANT, VS. ANDRES ORCINE AND DOROTEO ESPLANA, DEFENDANTS-APPELLEES.

Appeal from the decision of the Court of First Instance of Camarines Sur dismissing its
Civil Case No. 6043 – an action filed therein by herein appel­lant Santiago
Ortega, owner of a parcel of land in Iriga, Camarines Sur occupied and used
as school site by the Saint Anthony Academy, against herein appel­leesAndres
Orcine and Doroteo Esplana, for the pur­pose of enforcing an alleged right
of legal redemp­tion under Article 1622 of the Civil Code over an adjoining
4,452-square-meter parcel of land.

The appealed decision is one practically on the pleadings as may
be gleaned from the following perti­nent portions thereof:

“This case was instituted by plain­tiff to enable him to
redeem the pro­perty sold by defendant Andres Orcine
to his co-defendant Doroteo Esplana.

“Originally plaintiff’s complaint was based on Art. 1621, New
Civil Code.  Motion to dismiss was timely
presented by the defendants, opposed by the plaintiff, and this Court resolving
said motion to dismiss, issued an order dated March 3, 1966, which, among others, stated as follows:

‘x x x x x

‘From the aforesaid deci­sion it is indeed clear that the right of
legal redemption can be availed of only by ad­joining owner if the two adja­cent
lands are both rural.  The absence,
however, of an allega­tion to that effect in the com­plaint will only amount to
a vagueness or uncertainty of the complaint which will entitle the defendant to
ask for a bill of particulars but not to an outright dismissal of the case.

‘x x x The best that the plaintiff can do
is to file a complaint against the defendant vendor to compel the latter to
notify him in writing of the sale of his land.’

“It was because of that order that on March 8, 1966, defendants filed their motion for
Bill of Particulars or Motion for Clarification (p. 20, Records), and this
Court in its order dated April 21,
1966, ordered the plaintiff

‘To be specific in his plead­ing as to whether or not his land
which adjoins that upon which he wishes to exercise the legal right of
redemption is al­so rural, within 10 days from receipt of this order.’ (p. 27,
Records)

“Plaintiff obviously in obedience to the above order of this
Court, presented on April 28, 1966, an Amended Complaint (pp. 28-32, Records) –
the most notable Change in it is that plaintiff seeks now to exercise his
alleged right of legal redemption under Article 1622, (Objection to Motion to
Dismiss Amended Complaint, pp. 39-40, Records) instead of Article 1621, New
Civil Code, as was his in­tention in the original complaint.

“Defendant presented again a motion to dismiss the amended
complaint on exactly the same grounds as the former motion to dismiss, which
likewise, was denied by this Court in its order dat­ed June 21, 1966 (pp. 45-46, Records).  Motion for reconsideration was equally denied
by order of this Court dated July 25,
1966 (p. 52, Records).

“All the above proceedings were had under then presiding Judge
Jose Surtida of this Court, and all the reso­lutions
above adverted to were made by him.

“A pre-trial was had in the case.  This time under a different Judge – Judge de
la Cruz.  In the order of this Court dated
December 8, 1966, Judge de la Cruz gave the defendants ten days to file a
motion to dismiss – which the defendants did on Decem­ber 15, 1966, and was
just a reitera­tion of the reasons and arguments urged on this Court in the
previous motions to dismiss, and was also de­nied by this Court per order dated
January 4, 1967 (p. 1, Records).

“Such was the situation of this case when the undersigned
presiding Judge of this Court took over.

“This Court believes that based on the pleadings submitted in
this case by both parties, the case can be decided on the merits.  The parties and their respective counsels,
felt the same, that is why they agreed to have the case set for Oral arguments
before this Court and after such argument, the same shall be submitted for decision,
and no other proceedings shall be taken on the case.  (order dated July 13, 1967, pp. 83-84, Records)

“There is no dispute that the land sold to the defendant Esplana on March 27, 1965, for P10,000.00 by his
co-defendant Orcine was a ricefield,
an agricultural land (rural); that after the same was sold, defendant Esplana, had it filled with earth and then had it
subdivided into small lots for re­sidential purposes.  The land has then ceased to be rural, and is
now urban land.  Likewise, the land owned
by the plaintiff is adjacent to the land in question, not sepa­rated by a
creek, drain, ravines, road and apparent servitude for the benefit of other
estates, was formerly an agricultural land (ru­ral) but at the time of the sale
made by Orcine to Esplana
on March 27, 1965, the same was already u­rban, and in fact, was and is being
used and occupied as school site of St. Anthony Academy, a private
school.”

Reversal of the dismissal is now sought by appel­lant upon the
claim that:

“I.    THE LOWER COURT
ERRED IN HOLDING THAT DESPITE THE CONVERSION BY APPELLEE DOROTEO ESPLANA OF THE
LAND IN QUESTION FROM RURAL TO UR­BAN LAND APPELLANT IS NOT ENTITLED TO THE
RIGHT OF REDEMPTION OR PRE-EMPTION UNDER ARTICLE 1622 OF THE NEW CIVIL CODE.

“II.   THE LOWER COURT
ERRED IN HOLDING THAT APPELLEE DOROTEO ES­PLANA DID NOT PURCHASE THE LAND IN
QUESTION FOR SPECULATIVE PUR­POSES.

“III.  THE LOWER COURT
ERRED IN HOLDING THAT APPELLANT IS NOT EN­TITLED TO WRITTEN NOTICE AS PROVI­DED
FOR UNDER ARTICLE 1623 OF THE NEW CIVIL CODE.”

The provisions of law invoked by appellant read as follows:

“Art. 1622. Whenever a piece of urban land which is so small
and so situated that a major portion thereof cannot be used for any practical
purpose within a reasonable time, having been bought merely for speculation, is
about to be re-sold, the own­er of any adjoining land has a right of
pre-emption at a reason­able price.

“If the re-sale has been per­fected, the owner of the adjoin­ing
land shall have a right of redemption, also at a reasonable price.

“When two or more owners of adjoining lands wish to exercise
the right of pre-emption or re­demption, the owner whose intend­ed use of the
land in question appears best justified shall be preferred.”

Appellant contends under his first assignment of error that under
Article 1622, above-quoted, he has the right of legal redemption over the land
in question since it is not disputed that he is the owner of the urban property
adjoining said land on the North and the latter had already been converted into
urban land by appellee Esplana
at the time he (appellant) exercised his right, hence the lower court erred in
holding that he is not entitled to such right on the ground, stated by His
Honor, that at the time of the sale of the said land by Orcine
to Esplana on March 27, 1965, the land sought to be
redeemed and his land were not of the same kind – that of appellant being urban
land while that of appellees rural.  In essence, the position of appellant is that
what governs for purposes of the redemption provided for in the law is the
nature or character of the adjoining land at the time redemption is actually
sought and not at the time of its sale to the person from whom redemption is
asked.

We believe it is idle to rule in this case on appellant’s
contention.  The legal issue he raises in­volves
many aspects which do not appear to have been dealt with by the parties whether
in their pleadings here or in the court below and without which it is not
possible to resolve properly the point in question.  Indeed, even the question alone of what is
rural and what is urban land is itself one that is not easy to resolve.  Even under Article 1523 of the Spanish Civil
Code which, incidentally, referred to rural land only, the Spanish authorities
preferred to make the needed classification only on a case to case basis.^[1]
This, notwithstanding that it was clear to them that the reason underlying the
provision is to encourage better development and utilization of agricultural
lands.  According to Manresa:

“Limitado dicho
derecho a las fin­cas rusticas, cuya cabida no exceda de una hectarea,
es visto que el es­piritu del Codigo no es otro
que fa­vorecer el desarrollo de la propiedad
territorial y de los intereses
de la agricultura. 
Una finca, cuya cabida no excede de una hectarea,
no produce, por regla
general, lo suficiente para
mantener a una familia:  su cul­tivo teniendo
que transportar por en­tre heredades
ajenas los instrumentos de labranza, no se hhace en condi­ciones economicas; lo mismo puede decirse de la saca y transporte de los frutos.  Todas estas difi­cultades desaparecen, si al venderse la finca, la compra un propie­tario que tenga tierras
colindan­tes: 
se favorece de este modo el interes publico, porque la produccion aumenta, se atiende al interes privado del retrayente y no es de apreciar ningun ostensible perjui­cio para el vendedor ni para
el comprador.” (10 Manresa,
Codigo Civil Español, 328.)

which reasoning was echoed by Justice Romualdez in Cortes vs. Flores,^[2]
thus:

“Hallamos acertado
este crite­rio.  La intencion de la ley al conceder este retracto es proteger
la agricultura, haciendo que los terrenos
agricolas pequeños se unan a sus colindantes
bajo un so­lo dueño para su mejor
explotacion.  Si el terreno colindante
con el que se trata de retraer no es agri­cola,
entonces es vano el retracto, no responde al proposito de la ley.

“‘Esta ajustada
a este precepto‘ dice el
Tribunal Supremo de España
en su fallo de 12 de marzo de 1902, ‘la sentencia que desestima la de­manda de retracto, cuando las dos o una sola de las
fincas, son urba­nas.'”

On the assumption then that the land in question is rural or that
in legal contemplation it continued to be such even after it was developed, for
purposes of determi­ning appellant’s right of redemption, it is obvious that
since appellant’s land is admittedly urban, the redemtion
sought cannot be allowed because it would not be in line with the
above-discussed purposes of redemption of rural land contemplated in Article
1621 of the present Civil Code. 
Incidentally, this provision which is substantially Article 1523 of the
Spanish Civil Code above-mentioned was the one firstly invoked by appellant in
the trial court.  Hence, the above ruling
in Cortes vs. Flores is applicable to this case.

On the other hand, even on the assumption that the land in
controversy is urban, still Article 1622 of present Civil Code which is now
invoked by appellant does not support his case. 
This Court has already em­phasized in previous cases,^[3]
that an owner of urban land may not redeem an adjoining urban property where he
does not allege in his complaint, much less prove at the trial, that the latter
is so small and so situated that a major portion thereof cannot be used for any
practical purpose within a reasonable time, having been bought merely for
speculation.  In Soriente
vs. Court of Appeals,^[4]
We held:

“Said Article 1622 reads:

‘Whenever a piece of urban land which is so small and so
situated that a major portion thereof cannot be used for any practical purpose
within a reasonable time, having been bought merely for speculation, is
about to be re-sold, the owner of any adjoining land has a right of
pre-emption at a reasonable price.’ (Italics supplied.)

“This provision is not in point.  It has been neither proved nor alleged,
either that the land purchased by ap­pellant from Lamberto
Reyes ‘is so small and so situated that a major portion thereof cannot be used
for any practical purpose,’ or that it has ‘been bought merely for
speculation,’ or, even, that it ‘is about to be re­sold,’ Besides, it is
alleged in ap­pellant’s answer ‘that the land sought to be redeemed by
plaintiff is x x x
sufficiently big in area and so si­tuated that the major portion or the whole
thereof can serve comfortably as workshop and storage of machine­ries and
equipments which defendant is putting up in the exercise and furtherance of his
profession as professional mechanical engineer and associate electrical
engineer;’ that ‘in fact a portion of said lot is actually used for residential
purposes x x x;’ and ‘that de­fendant has no
intention now or in the future to dispose of or sell the property subject,
matter of the present action to any person x x.’ What is more, appellee does not con­test appellant’s evidence on these allegations.  Hence, the first two assignments of error are
well taken.”

It may be mentioned here that the right of redemption of
adjoining urban land did not exist in the Spanish Civil Code, which confined
itself to the redemption of rural lands. 
It was introduced here only by the new Civil Code.  Whereas, as already observed, the objective
of the right of redemption of adjoining rural land under the old code, as
adopted in the new Civil Code, is to encourage the maximum development and
utilization of agricultural lands, it is evident that the purpose of the new
Civil Code in allowing redemption of adjoining urban land is to discourage
speculation in real estate and the consequent aggravation of the housing
problems in centers of population.  As a
matter of fact, having in view this legislative pur­pose, We are of the opinion
that whatever difficulty may exist in determining if a land is rural for the
proper application of Article 1621, as previously noted to be the view of
Spanish authorities, no such problem arises in regard to the urban lands
contemplated in Article 1622 of the Code. 
It is clear to Us that the term urban in this provision does not
necessarily refer to the nature of the land itself sought to be redeemed nor to
the pur­pose to which it is somehow devoted, but to the charac­ter of the
community or vicinity in which it is found. 
In this sense, even if the land is somehow dedicated to agriculture, it
is still urban, in contemplation of this law, if it is located within the
center of population or the more or less populated portion of a city or town.^[5]

In the case at bar, appellant himself submits that the land in
question should be considered as urban. 
Actually, the facts on record do not sufficiently show where it is
situated.  In view, however, of the facts
that:  (1) the land of appellant is a
school site and (2) the one in question has been filled with earth, developed
and sub­divided into small lots for residential purposes, it is quite safe to
conclude that both lands are in the popu­lated section of the town and are
accordingly urban.

Now, considering that the land which appellant seeks to redeem is
4,452 square meters in area, which is far from being “so small and so
situated that a major por­tion thereof cannot be used for any practical purpose”
for quite the contrary, it has been made a subdivision, and also that it cannot
be said that appellee Esplana
bought the same “merely for speculation”, since in less than eight
months, from March 27, 1965 when he bought it, to December 7, 1965 when the
present complaint was filed, he had developed the same into a subdivision for
re-sale, which shows that he must have had that definite purpose in mind in
buying the same, it is Our holding that appellant cannot invoke Article 1622 of
the Civil Code.  We cannot hold that such
purpose is speculative.  As appellees aptly point out, according to Webster’s
International Dictionary to speculate means:

“To enter into a business trans­action or venture from which
the profits or return are conjectural because the undertaking is outside of the
ordinary course of business; to purchase or sell with the ex­pectation of
profiting by antici­pated, but conjectural, fluctua­tions in price; often in a
somewhat depreciative sense, to engage in hazardous business transaction for
the chance of an unusually large profit; as to speculate in coffee, in sugar or
in bank stock.” (2nd Edition p. 2417, Webster’s Inter­national
Dictionary.)

Consequently, all of appellant’s
assignments of error must be as they are hereby overruled.

WHEREFORE, the decision appealed from is affirmed with
costs against appellant.

Concepcion,
C.J., Reyes, Dizon, Makalintal,
Zaldivar, Ruiz Castro, Fernando, and Teehankee, JJ., concur.

^[1]
10 Manresa,
Codigo Civil Español, pp.
328-329.

^[2]
47 Jurisprudencia Filipina, 1048, 1049.

^[3]
De la Cruz vs. Cruz, et al., L-27759, April 17, 1970, 32 SCRA 307, 311; Soriente
vs. Court of Appeals, et al., L-17343, Aug. 31, 1963, 8 SCRA 750, 755.

^[4] Supra.

^[5]
In this connection, it may be noted that despite Manre­sa‘s
comment that it is not very easy to make the cor­rect classification of rural
land under Article 1523 of the Spanish Civil Code, he nevertheless mentions
deci­sions of the Supreme Court of Spain indicating broad criteria, at least,
in determining the question thus:

“Jurisprudencia
– En las sentencias de 26
de Noviembre de 1895, 12 de Marzo
de 1902 y 18 de Julio de 1903, el Tribunal Supremo muestra su criterio
acerca de lo que debe entenderse por fincas rusticas,
exigiendo que sears tierras destinadas a la explotacion agricola, y negando esa consideracion
a las huertas y hardines anejos a edificios sitos dento de pob­lado, y a los terrenos destinados
al apro­vechamiento de aguas
medicinales.

“Extremando
este mismo criterio, la de 14 de Diciembre
de 1905 conceptua como fincas urbanas, que caresen de las condiciones que el legislador tubo presentes al establicer el retracto de aledaños, las fincas
inmediatas a poblacion, de
la que unicamente las separa un estretcho
camino, por ser utilizadas facilmente como huertos accesorios
de las ca­ses.” (10 Manresa, Codigo
Civil Español, p. 332.)