ELIAS GALLAR, PLAINTIFF-APPELLEE, VS. HERMENEGILDA HUSAIN, ET AL., DEFENDANTS. BONIFACIO HUSAIN, DEFENDANT-APPELLANT.

Gallar versus Husain

The Case

This is a direct appeal from the Court of First Instance of Iloilo, and it is a quiet title case dressed in the old clothes of a pacto de retro sale. Elias Gallar sues the heirs of Teodoro Husain to compel them to execute a deed of conveyance over a hectare of rice land in Cabatuan, Iloilo, so that he can obtain a transfer certificate of title. The heirs resist, claiming the original transaction was really a mortgage and that the action is long barred. The case matters for two enduring lessons: the right of repurchase belongs only to the vendor or his transferee, and an action to quiet title brought by a plaintiff in possession does not prescribe.

Procedural History

Elias Gallar first asked the Cadastral Court in 1960 for a transfer certificate of title, but that court dismissed his petition for lack of jurisdiction, though it allowed an amendment correcting a surname on the certificate. He then filed this suit in the Court of First Instance of Iloilo on October 10, 1960, seeking a deed of conveyance and damages. The trial court found that Serapio Chichirita had sold the land to Graciana Husain, who in turn sold it to Gallar, and ordered the Husain heirs to execute the conveyance in Gallar's favor, relying on the ruling in Sapto versus Fabiana. From that judgment, Bonifacio Husain appealed directly to the Supreme Court.

Facts

On January 9, 1919, Teodoro Husain sold a parcel of rice land in Cabatuan, Iloilo to Serapio Chichirita for 30 pesos, reserving to himself the right to repurchase within six years. The deed, written in the Ilongo dialect in a private instrument, provided that if the vendor repaid the 30 pesos within six years, the vendee would execute a document of repurchase in his favor, but if he could not return the amount after that term, the document would be considered absolute and irrevocably consummated.

Teodoro Husain never redeemed. Shortly after the sale, on January 28, 1919, Chichirita transferred his right to Graciana Husain, the vendor's sister, in what purports to be a resale, and a note on the reverse of the deed spoke of the amount being received as redemption or gawad of the land. Graciana Husain later transferred her rights to Elias Gallar in exchange for one cow, recorded in a second note on the same deed, and possession of the land together with the owner's duplicate certificate of title was delivered to Gallar, who has possessed the land since then. In affidavits dated March 6, 1928, Chichirita confirmed the redemption by Graciana Husain, and Graciana confirmed having subsequently sold the land to Gallar.

When Gallar sought a transfer certificate of title in 1960, the Cadastral Court dismissed his petition for lack of jurisdiction. He then sued the heirs of Teodoro Husain. The heirs denied the sale, contended the agreement was a mortgage to secure a 30 peso loan, claimed the mortgage was discharged when Graciana paid the debt, invoked prescription, and asked for damages for palay they allegedly failed to receive. On appeal, Bonifacio Husain raised for the first time that the land sold in 1919 was not the same land now in question.

Issues

• Whether or not the appellant may raise for the first time on appeal the question of the identity of the land sold in 1919.
• Whether or not the transfer by Serapio Chichirita to Graciana Husain was a redemption on behalf of Teodoro Husain, or an acquisition in her own right.
• Whether or not the successive sales in a private instrument transferred ownership to Elias Gallar upon Teodoro Husain's failure to redeem.
• Whether or not the action to quiet title is barred by prescription.

Applicable Provisions

Article 476 of the Philippine Civil Code, on the action to quiet title, provides:

Whenever by any deed, record, or any other means, the title to or any interest in real property is clouded, the owner thereof may bring an action to quiet title.

This is the provision under which the Court characterizes Gallar's suit as one to quiet title rather than for specific performance, which in turn makes the action imprescriptible while he is in possession.

Article 1356 of the Philippine Civil Code, on the validity of contracts however entered, provides:

Contracts shall be obligatory, in whatever form they may have been entered into, provided all the essential requisites for their validity are present.

This is the provision the Court invokes to hold that the successive sales, though embodied only in a private instrument, are valid just the same.

Ruling

On the first issue, the Court held that the appellant cannot raise the identity of the land for the first time on appeal. The records on appeal do not disclose that he made such a claim at trial; the only hint was an objection to a question during the direct examination of the appellee. The only defenses he put up were that the pacto de retro sale was really a mortgage and that the action was barred by limitation. Having joined issues on those grounds, he will not now be permitted to bring up new matters on appeal, as this would constitute a changing of theory so utterly unfair to the adverse party. The Court added that an admission that the land described in the deed of sale and the lot in question are one and the same is implicit in the appellant's defense that the deed did not express the true intention of the parties.

On the second issue, the Court held that while the first note speaks of redemption, there is no evidence that Graciana Husain was acting in behalf of her brother Teodoro Husain in the exercise of his right of redemption. Unlike a debt, which a third party may satisfy even against the debtor's will, the right of repurchase may be exercised only by the vendor in whom the right is recognized by contract, or by any person to whom the right may have been transferred. Graciana Husain must therefore be deemed to have acquired the land in her own right, subject only to Teodoro Husain's right of redemption, and as the new owner she had a perfect right to dispose of the land as she did when she exchanged it for cattle with the appellee.

On the third issue, the Court held that when Teodoro Husain failed to redeem within the stipulated period, that is, on January 9, 1925, ownership became consolidated in the appellee. True, the successive sales are in a private instrument, but they are valid just the same. By the delivery of possession of the land on April 2, 1919, the sale was consummated and title was transferred to the appellee.

On the fourth issue, the Court held that the action is not for specific performance; all it seeks is to quiet title, to remove the cloud cast on the appellee's ownership as a result of the appellants' refusal to recognize the sale made by their predecessor. As the plaintiff-appellee is in possession of the land, the action is imprescriptible. The appellant's argument that the action has prescribed would be correct only if the appellants were in possession, for then the action to quiet title would be an action for recovery of real property, which must be brought within the statutory period of limitation governing such actions.

Doctrine

First, the right of repurchase in a pacto de retro sale may be exercised only by the vendor in whom the right is recognized by contract, or by any person to whom the right may have been transferred. A third party who pays the price does not thereby redeem on the vendor's behalf unless he acts for the vendor; he acquires the land in his own right, subject only to the vendor's right of redemption.

Second, a sale of real property embodied in a private instrument is valid and transfers ownership upon delivery of possession, consistent with Article 1356 of the Civil Code that contracts are obligatory in whatever form they may have been entered into.

Third, an action to quiet title under Article 476 of the Civil Code, brought by a plaintiff in possession, is imprescriptible. It is only when the defendant is in possession that the action to quiet title partakes of an action for recovery of real property and is subject to the statutory period of limitation.

Fourth, a party may not change his theory on appeal; new matters not raised and litigated below cannot be brought up for the first time on appeal.

Disposition

The Supreme Court affirmed the decision appealed from, with costs against the appellant, and Elias Gallar prevailed.

Remember This

The single line worth memorizing: the right of repurchase belongs only to the vendor or his transferee, and an action to quiet title by a plaintiff in possession never prescribes. Examiners use this case to test the distinction between redemption by a third party and acquisition in one's own right, and the prescriptibility of quiet title actions depending on who holds possession.