FRANCISCO CRISOLOGO AND CONSOLACION FLORENTINO CRISOLOGO, PETITIONERS-APPELLANTS, VS. ISAAC CENTENO AND ASUNCION AQUINO CENTENO, OPPOSITORS-APPELLEES.

On January 18, 1955, the spouses Francisco Crisologo and Consolation Fiorentino
filed in the Court of First Instance of Ilocos Sur an ex parte petition for consolidation of
ownership in them as vendees a
retro of two parcels of land situated at Barrio Lapting, Lapog, Ilocos Sur, on
the ground that the vendors, the spouses Isaac Centeno
and Asuncion Aquino, have failed to exercise their
right of repurchase within the periods stipulated in the two contracts
of sale with pacto de retro.  On January
28, 1955, after
hearing at which the petitioners presented evidence in support of the petition,
the court a quo, through Judge Francisco Geronimo,
granted the petition.  On July 19, 1956, the vendors filed a motion
to set aside the Order of January 28, 1955, and on July 27, 1956, the court a
quo, through Judge Felix Q. Antonio,
granted the motion on the ground that the movants had
not been duly notified of the hearing.  On motion by the petitioners to set aside the
Order of July 27, 1956, on the ground that the vendors had been notified by registered
mail of the hearing, the lower court, by its Order of February 27,
1957, granted the motion and set aside the Order of July 27, 1956.  The vendors appealed the Order of February 27, 1957 to the Court of Appeals. 
On June 27, 1958, the Court of Appeals rendered judgment in the
appeal setting aside the lower court’s Order of February 27, 1957, after holding that the vendors had not been
legally notified of the petition and the hearing, and that the Order of January
28, 1955, was a
patent nullity.  The Court of Appeals
remanded the record to the lower court for reopening and for further
proceedings.  Accordingly, after the
vendors had been duly summoned as respondents, they filed their answer alleging
that the two contracts of sale with pacto
de retro were really intended as
equitable mortgages as
securities for usurious loans.  After trial, the lower court rendered its
decision on October 26, 1960, holding that respondents’ allegation was
substantiated by their evidence. 
Judgment was rendered in favor of their respondents as follows:

“WHEREFORE, in view of the foregoing, the Court hereby renders
judgment declaring that Exhibits 2 and 3
are actually intended by the parties to be Deeds of Equitable Mortgage,
and as such respondents are entitled to redeem the lands described therein, by
paying to the petitioners whatever balance remains of the principal and
interest thereon at 12%, after deducting therefrom
the excess interest paid on November 11, 1952 and September 10, 1953, and the value of the produce
taken from those properties by petitioners in accordance with the above
findings from 1955 until the
possession of these properties are returned to respondents, and upon such
settlement, the petitioners are ordered to execute the corresponding release of
mortgage.

“Petition for consolidation of title is therefore denied, with costs against petitioners.”

The petitioners appealed to the Supreme
Court on questions of law.

Appellants contend that the lower court erred in not finding that
the Order of January 28, 1955, was valid, final and executory,
and that all proceedings thereafter taken, including the vendors’ appeal to the Court of Appeals and its
decision rendered in said appeal setting aside the Order of February 27, 1957, and remanding the case for reopening and further proceed­ings, as well as the proceedings thereafter taken including
the decision of October 26, 1960, are null and void.  The contention is untenable in view of the
following considerations:

(1) Article 1607 of the Civil Code which provides that:

“In case of
real property, the consolidation of ownership in the vendee by virtue of the
failure of the vendor to comply with the provisions of article 1616 shall not
be recorded in the Registry of Property without a judicial order, after the
vendor has been duly heard.”

contemplates a
contentious proceeding wherein the vendor a retro must be named
respondent in the caption and title of the petition for consolidation of
ownership and duly summoned and heard.

In the instant case, the caption and title of the petition for
consolidation of ownership named the vendees as petitioners, but did not name
the vendors’ as respondents and said
vendors were not duly summoned and heard. 
In view thereof, the Order of January 28, 1955, was a patent nullity having been issued contrary to the
contentious proceeding contemplated in Article 1607 of the Civil Code, and the
lower court not having acquired jurisdiction over the persons of the vendors;

(2) The judgment of the Court of Appeals setting aside the Order of
February 27, 1957, and in
consequence thereof the Order of January 28, 1955, as a patent nullity on the
ground that the lower court did not acquire jurisdiction over the persons of
the vendors because they had not been duly summoned is res
judicata, on the question of nullity of said
orders; and

(3) After the remand to the court below, the proceedings further
taken wherein the vendors were named as respondents
and duly summoned and heard, after which on October 26, 1960, the
appealed judgment was rendered in favor of the respondents, were valid, being
in accordance with the contentious proceeding provided for in Article 1607 of
the Civil Code.

IN VIEW OF ALL THE FOREGOING, the judgment of the lower
court of October 26, 1960, is hereby affirmed in all its parts, with costs
against the petitioners-appellants.

Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Zaldivar, Sanchez, Castro and
Fernando, JJ., concur.