MIGUEL CORDOVERO AND AMBROSIA ALCAZAR, PLAINTIFFS AND APPELLANTS, VS. JOSE VILLARUZ AND MARCIANO BORROMEO, DEFENDANTS AND APPELLEES.

VILLAMOR, J.:

It might be well to remember that on September 13, 1911, the spouses Miguel
Cordovero and Ambrosia Alcazar, plaintiffs herein, sold in a public document to
Januario Borromeo an hacienda known as San Jose composed of
Cordovero and Alcazar vs. Villaruz and Borromeo three parcels, one of
which is known as Camalignon, and is the subject-matter of this case.
The price stipulated for the Hacienda de San Jose, with the
improvements described in the deed of sale was P31,000 payable as follows:
P10,000 at the signing of the document; P5,000 in April, 1912; P10,000 in July,
1913, and P6,000 in July, 1914.

On the 12th of October, 1912, Marciano Borromeo was subrogated into the
rights and obligations of his father Januario Borromeo under the contract of
sale of the hacienda; and none of the three installments of the price
having been paid, the aforesaid spouses, the sellers, brought suit against
Marciano Borromeo and the administrator of the estate of Januario Borromeo, then
deceased, for the rescission of the contract of purchase and sale of the
hacienda.

That case was adjudicated by the Court of First Instance of Capiz on February
3, 1919, holding: (a) That the obligation arising from the purchase of
the property described in the complaint, contracted by Januario Borromeo with
the plaintiffs, was novated by substitution of the original purchaser or debtor,
and transmitted to the defendant Marciano Borromeo; (b) that the latter
has not paid to the plaintiffs the twenty-one thousand pesos (P21,000) balance
remaining of the stipulated price of the sale; (c) that the plaintiffs
are entitled to rescind said sale and to recover the realty described in the
complaint; (d) that the sale and conveyance of said realty to the
claimant Jose Araneta is void and of no effect as against the plaintiff sellers;
(e) that the defendant Marciano Borromeo should return to the
plaintiffs the aforesaid realty, and he was thereby prohibited to make any
contract that might affect the said property to the damage of the plaintiffs;
(f) that the sale and conveyance of the chattels and cattle are
effective and binding against the plaintiffs; (g) that the defendant
must pay interest upon the unpaid price of twenty-one thousand pesos (P21,000)
at the stipulated rate of ten per cent (10%) until the return to the plaintiffs
of the property ordered returned, and the payment of the various amounts
included in the aforesaid sum at which the chattels and cattle described in the
complaint were valued; and that said interest shall be in lieu of the indemnity
for damages; (h) that the plaintiffs shall return to the defendant
Marciano Borromeo the sum of ten thousand pesos (P10,000), which Januario
Borromeo had paid them, with the right to retain and apply the same upon the
payment of such property as the defendant may fail to return, or the value
thereof as he cannot pay to the plaintiffs, or upon the stipulated interest
already due; (i) that the defendant Marciano Borromeo shall pay the costs to the
plaintiff spouses. On appeal, this judgment was affirmed by this court in its
entirety in a decision rendered November 20, 1920 (R. G. No. 155021 ^[1]).

The record having been remanded to the court of origin for the execution of
the judgment, two parcels of the San Jose estate were returned to the
spouses Cordovero and Alcazar, but the parcel in Camalignon was not, on
account of an opposition presented by the herein defendant Jose Villaruz, who
asserted title thereto for having acquired the same from the defendant Marciano
Borromeo on December 23, 1913, by exchange with other parcels pertaining to him,
situated in the sitio of Manamok.

These are the facts from which this case arose, wherein the plaintiffs seek
to recover the land in Camalignon described in the complaint, which is
now in the possession of the defendant Jose Villaruz, who alleges, as above
stated, that he has acquired it from his codefendant Marciano Borromeo by
exchange.

The court below rendered judgment on February 15, 1923, adjudging and
decreeing: (a) That the plaintiffs Miguel Cordovero and Ambrosia Alcazar are the
absolute owners of the parcel of land in Camalignon, hereinbefore
described, and are entitled to recover possession thereof and the title thereto;
(b) that the defendants Jose Villaruz and Marciano Borromeo are under the
obligation to return and deliver the aforesaid land in Camalignon to
the plaintiffs, with the exclusion of the improvements which belong to the first
named defendant; (c) that the document evidencing the contract between the
defendants Marciano Borromeo and Jose Villaruz, whereby Borromeo exchanged the
land in Camalignon with that of Villaruz in Manamok, is null
and void and of no effect as against the plaintiffs Miguel Cordovero and
Ambrosia Alcazar; and (d) that the defendants shall pay the costs of the
suit.

Both parties took an exception to this judgment and moved for new trial on
the ground that the judgment was against the law and the weight of the evidence.
And on March 10, 1923, the trial court rendered an amended decision, the
dispositive clause of which is as follows:

“For the foregoing reasons, the court believes that in justice it must
reconsider its decision entered February 15th of this year, and render this one,
holding that the exchange made in the month of December, 1913, between the lands
in Manamok and Camalignon is valid and effective against the
plaintiffs; that the defendant Jose Villaruz is not affected by the judgment
entered in case No. 875 as to his title and possessory rights over the lands in
litigation; that he is not affected either by the notice of litis pendentia
given by the plaintiffs, inasmuch as said notice was given after the
acquisition by said defendant Jose Villaruz of his rights over the property in
question.

“Wherefore, the defendant Jose Villaruz is absolved from the complaint with
the costs against the plaintiffs; and with regard to the defendant, Marciano
Borromeo, the court is also of the opinion that he did not incur any liability
by the execution of the contract of exchange evidenced by Exhibit 8, and,
consequently, he is also absolved from the complaint.”

Under the first assignment of error, the appellants maintain two
propositions: First, that the trial judge, the Honorable Fernando Salas, had no
jurisdiction, having rendered his amended decision during vacation, as at that
time the Honorable Francisco Santamaria was on duty as vacation judge, in the
court of Capiz. This proposition is untenable. Under section 13 of Act No. 867,
the judges of first instance have the power to render and sign their decisions
after the holding of the trial and after hearing the parties and their attorneys
in the respective province, provided that the judge rendering the decision signs
it within the jurisdiction of the Philippine Islands. Furthermore, according to
section 129 of the Administrative Code, in order to collect their salaries the
judges of first instance must certify to having dispatched and decided all “the
cases submitted for judgment within the period of ninety days, without excluding
from the computation the vacation period, as was held by this court in the case
of In re Impeachment of Judge Flordeliza (44 Phil., 608).

The second proposition maintained by the appellants is that, after a motion
for new trial is presented under section 145, subsection 3, of the Code of Civil
Procedure, the court below cannot enter an amended decision. This proposition is
also untenable. The filing of said motion does not deprive the court of the
power granted by section 11 of the same Code to alter, modify or change its
decrees and decisions, as law and justice may demand, provided that said
decisions and decrees have not become final. As a matter of fact, what the
appellants seek in the motion of February 21, 1923, is that “the part of the
decision of February 15, 1923, be reconsidered which denies the allowance of
damages to the plaintiffs, and a new trial be granted in this respect on the
ground that the evidence does not justify the decision of the court in not
allowing damages to the plaintiffs.” Simultaneously with the foregoing motion,
the defendants filed a separate motion for new trial on the ground that the
judgment of December 15, 1923, was against the weight of the evidence of record
and the law. After a hearing upon these motions, the court rendered the amended
decision here in question.

It does not appear that the trial court has expressly passed upon the
plaintiff’s motion, but in its order of August 11, 1923, whereby the bill of
exceptions was ordered amended, it is stated that its amended decision of May
10, 1923, was in effect a ruling upon the motion for new trial of the
plaintiffs. Under such circumstances it clearly appears that the lower court
reconsidered its original decision, as prayed for in the motion of the
plaintiffs, which is perfectly within the power and authority of the court
below, and after reconsidering it, that court deemed it necessary to amend the
same as it did. The court did not grant a new trial, and we believe this was no
error, since by the very terms of the motion of the appellants, no evidence was
offered outside of the evidence already in the record, and the whole thing was
merely a question as to whether or not such evidence was sufficient to justify
the awarding of damages.

Section 145 of the Code of Civil Procedure, as amended by Act No. 2347,
provides:

“Within thirty days after notice of a decision rendered by a Court of First
Instance, the judge thereof may at the petition of the party aggrieved, and
after due notice to the adverse party, set aside the judgment and grant a new
trial, provided the petition is based on any of the following causes materially
affecting the legitimate rights of the petitioner:

“1. Accident or surprise which ordinary prudence could not have guarded
against and by reason of which the party applying has probably been impaired in
his rights.

“2. Newly discovered evidence, material to the party mak- ing the
application, which he could not, with reasonable diligence, have discovered and
produced at the trial.

“3. Because the judge has become satisfied that excessive damages have been
awarded, or that the evidence was insufficient to justify the decision, or that
it is against the law.”

Said section 145 enumerates the cases wherein a new trial may be granted.
Section 146 provides that the ruling granting or denying this motion for new
trial cannot be the subject of an exception, it being considered to be a matter
addressed to the discretion of the judge, as stated in the second part of
section 141. However, said section 146 provides also that if the motion for new
trial is on the ground that the evidence does not sufficiently justify the
decision of the court, an exception may be taken to the order overruling said
motion, as in other cases (Vergara vs. Laciapag, 28 Phil., 439), and
this is so in order that this court may have jurisdiction to review the evidence
in case of appeal.

In the case of Soriano vs. Aquino (31 Phil., 176), this court held:
“Counsel for the applicant moved for a new trial on the ground that said
judgment of September 3, 1912, was not in accordance with the facts and the law,
and, as this is one of the cases in which, according to section 145 of the Code
of Civil Procedure, the judge may, on petition of the party aggrieved, set aside
the judgment and grant a new trial when he has become satisfied that the
evidence was insufficient to justify the decision or that it is contrary to law,
the trial judge acted in conformity with the provisions of said section in
setting aside the first judgment rendered by him and in ordering or granting the
taking of new evidence when he declared the trial again open, for otherwise such
trial would have had no object, since the setting aside of the judgment rendered
in the previous trial was necessarily a condition precedent to declaring the
case to be reopened.” According to this, the granting of new trial for the
introduction of further evidence necessarily requires the previous revocation of
the prior decision. The doctrine laid down does not, however, mean that in
revoking its original decision by amending the same, upon the motion of a party,
or upon its own initiative, the court must necessarily order the holding of a
new trial. Under section 145 of Act No. 190, the judge may correct errors in his
decision. (Palomata vs. Villareal, 40 Phil., 641.)

In the instant case, the amendment of the original decision was a correction
of an error in the weighing of, the evidence introduced by the parties. The
holding of a new trial was useless inasmuch as the appellants had not suggested
or proposed any other evidence to be presented at the new trial, and it does not
appear, on the other hand, that the court was in need of any further evidence in
order to establish the conclusion it reached. The discretionary power granted to
judges by section 145 of the Code of Civil Procedure to revise or amend their
decisions before they have become final may be exercised upon a motion based on
the third paragraph of section 145, either separately from, or jointly with, the
power to grant a new trial; but the exercise of the power to grant new trial
requires the revocation of the former decision.

Let us now discuss the question on its merits. By virtue of that judgment of
the lower court, affirmed by this court, about the rescission of the contract of
purchase and sale of the San Jose estate, the defendant Borromeo was
under the obligation to return the San Jose estate to the plaintiffs,
including the land in Camalignon, and consequently the right of the
plaintiffs to have said lands returned to them was sanctioned. Hence the action
brought by the plaintiffs to recover the land in Camalignon. But Jose
Villaruz, one of the herein defendants, alleges having acquired the land in
Camalignon from his codefendant Marciano Borromeo by exchange with his
lands in Manamok. And this was in December, 1913, according to the
notarial document Exhibit 8, of which a precautionary note was made in the
registry of property on November 22, 1916.

The record shows certain facts which raise serious suspicion that such a
contract of exchange was simulated. Such facts are: (a) The execution
by Borromeo of mortgages in favor of Siuliong & Co. on July 15, 1924, and in
favor of Jose Araneta on September 4, 1915, and the making of the sale in favor
of Jose Araneta on November 1, 1916 (Exhibit X-2), all of which included the
land in Camalignon; (b) the filing of the claim (Exhibit A) of
February 17, 1917, by Jose Araneta, wherein he alleges himself to be the owner
of the land in Camalignon; (c) the silence of the defendant
Jose Villaruz in the case for the rescission of the purchase and sale of the
San Jose estate, knowing that the land in Camalignon was
included in the litigation, for on October 17, 1916, a note was made in the
registry of property of the litis pendentia concerning the San
Jose estate; and (d) the fact that the consent of the plaintiffs
does not appear in the document Exhibit 8. It is indeed difficult to understand
how Borromeo could have mortgaged, and even sold the San Jose estate
with the land in Camalignon after the alleged exchange with the land in
Manamok, if said exchange was effective. Jose Araneta intervened as a
third party claimant in the case for rescission of the sale of the San
Jose estate, claiming the estate as his, of which the land in
Camalignon is a part. And yet the defendant Jose Villaruz did not
attempt to defend his alleged right under the supposed exchange.

But supposing that said contract of exchange was really executed by and
between tlie two defendants, whereby Borromeo transferred the-land in
Camalignon to Villaruz in exchange of the lands of Villaruz known as
Manamok, such a contract, which does not appear recorded in the
registry of property, cannot prejudice third persons, like the plaintiffs. And
it is no argument against this that a precautionary note was made in the
registry of property of the contract of exchange on November 22, 1916, for aside
from the fact that said notation was subsequent to the note of lis
pendens in this case, which was made on December 27, 1916, it does not
appear that the defect of the document noted by the registrar of deeds was
straightened up, and therefore that precautionary notation has lost its effect
after the sixty days following the date thereof under article 104 of the
Mortgage Law.

Article 1295 of the Civil Code provides:

“Rescission makes necessary the return of the things which were the
subject-matter of the contract, with their fruits, and of the price paid, with
interest thereon. Therefore, it can only be effected when the person who seeks
the rescission is able to return that which, on his part, he is bound to
restore.

“Neither shall rescission take place when the things which are the
subject-matter of the contract are lawfully in the possession of third persons
who have not acted in bad faith.

“In such case, damages may be recovered from the person who caused the
lesion.”

Commenting on this article, Manresa says, among other things:

“The acquisition by a third person is an obstacle to the efficaciousness of
the action for rescission, where the following two circumstances are present, to
wit, that such third person is in lawful possession of the realty, that is to
say, that he is protected by the law against said action by the registration in
the registry, and that he did not act in bad faith.”

Not having registered the right he alleges to have over the land in
Camalignon, Villaruz cannot be protected against the effects of the
judgment rendered in the action for rescission, not precisely for having been a
party to that action, but by reason of the principle that res ubicumque sunt
pro domino suo clamant. And this is not affected by the fact that the
plaintiffs have no registered title, because section 194 of Act No. 2711, as
amended by Act No. 2837, provides:

“No instrument or deed establishing, transmitting, acknowledging, modifying
or extinguishing rights with respect to real estate not registered under the
provisions of Act Numbered Four hundred and ninety-six, entitled ‘The Land
Registration Act,’ and its amendments, shall be valid, except as between the
parties thereto, until such instrument or deed has been registered, in the
manner hereinafter prescribed, in t!he office of the register of deeds for the
province or city where the real estate lies.”

In his answer to the complaint, the defendant Villaruz alleges that by their
coetaneous and subsequent acts, the plaintiffs have given their consent to said
contract. But after examining the evidence, we are convinced that such consent
was not given. The most conclusive proof that it was not is Exhibit 8 itself,
wherein it appears that the plaintiffs did not intervene in the contract of
exchange. The record discloses circumstances which apparently tend to indicate
the plaintiffs’ consent, but which in fact cannot mean any such consent. For
instance, the defendant Borromeo filed an application in the Court of First
Instance of Capiz on December 22, 1915, for the registration of a parcel of land
in the barrio of Lugtugan, municipality of Capiz, acquired by purchase from
Januario Borromeo, according to said application, and mortgaged to Jose Araneta.
As appears in Exhibit A, said application was opposed by the plaintiffs
Cordovero and Alcazar, alleging themselves to be the owners of the lands sought
to be registered, as they had not received complete payment therefor from the
purchaser Januario Borromeo. The appellants say in their brief that there is
nothing in the application for registration that tends to indicate that the land
in Manamok was included, and accepting this statement as true, we
believe that the opposition of the appellants to said application does not mean
their assent to the exchange in question, although later on the land in
Manamok proved to have been included in the plan Exhibit 7.

It is further argued that Cordovero knew that Jose Villaruz was in possession
of the land in Camalignon and Borromeo of that in Manamok.
Granting this as a fact, it does not mean that the appellants gave their consent
to the contract of exchange, for until the rescission of the sale of the San
Jose estate, Cordovero could not intervene in the management thereof. While
the contract of purchase and sale of the hacienda subsisted, Borromeo
could. of course, exchange, mortgage, or lease it, subject to the action for
rescission of the vendors in case of non-payment of the installments of the
price.

It is no argument against Cordovero that he redeemed from the Government the
San Jose estate which had been confiscated with the land in
Manamok for non-payment of the land tax by the defendant Borromeo. This
was the condition of the estate at the time of the execution of the judgment
rendered in the aforesaid case for rescission, and Cordovero could not redeem
only what was his, but had to redeem the whole parcel which appeared declared in
the name of Borromeo and seized from him for non-payment of the land tax. And if
subsequently a new tax declaration was made of all the parcel in which the land
of Manamok appears to have been included, it was done by the provincial
assessor and not by Cordovero. We hold that the redemption made by Cordovero of
the land in which the land in Manamok was included and the new tax
declaration do not prove that the appellants consented to the contract of
exchange in dispute. It is said, and that seems to be true, that Cordovero
caused an attachment to be levied on the palay planted by Borromeo in
Manamok, This does not, however, prove his consent, for the object of
the attachment was to collect a debt of Borromeo.

Moreover, the record contains circumstantial proof of the fact that the
defendant Villaruz knew or ought to have known that the right of his codefendant
Borromeo over the land in Camalignon was subordinate to the payment of
the price at the time of making the exchange.

The validity and efficaciousness of the exchange necessarily depends upon the
respective right of the parties to the contract over the things exchanged.

Our conclusion, therefore, is that the exchange of the land in
Camalignon and Manamok, not having been registered in the
registry of property, cannot prejudice the right of the plaintiffs to recover
said land in Camalignon as a part of the San Jose estate, the
sale of which had been rescinded by a final judgment.

As to the damages claimed by the appellants, it must be noted, in the first
place, that their assignment of error has reference to the original judgment of
the lower court, which is not in question in this appeal, and secondly, that the
witness Lazaro Talamillo intimated that one Engilberto Cabanus, nephew of the
plaintiff Cordovero, sowed palay in 1922 on the land in
Manamok, the person being unknown from whom he obtained permission for
doing so. At any rate, it appears that the evidence presented by the appellants
as to the amount of the damages claimed are of a speculative nature, and is not
therefore sufficient to justify a judgment for damages.

For all of the foregoing, the judgment appealed from is reversed, and the
defendants Jose Villaruz and Marciano Borromeo are hereby sentenced to deliver
to the plaintiffs the land in Camalignon described in the complaint,
without special pronouncement as to costs. So ordered.

Johnson, Street,
Malcolm, and Romualdez, JJ., concur.

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^[1] Cordero and alcazar vs. Lopez
Vito, not reported.

---

DISSENTING OPINION

OSTRAND, J.:

I am unable to give my assent to the disposition made by the court of the
present case. It is not disputed that at the time the exchange was made,
Marciano Borromeo held the legal title to Camalignon and had a right to
dispose of the same and that the possession given Jose Villaruz was legal. The
second paragraph of article 1295 of the Civil Code reads as follows:

“Neither shall rescission take place when the things which are the
subject-matter of the contract are lawfully in the possession of third persons
who have not acted in bad faith.”

Under this paragraph it is clear that the right of Cordovero to rescind the
sale to Borromeo could not affect the rights of Villaruz, if the latter acted in
good faith in regard to the contract of exchange of the Camalignon land
for Manamok.

As far as I can see there is no evidence of bad faith on Villaruz’ part. The
two parcels exchanged were about of equal value, Manamok being slightly
larger than Camalignon. The former was well adapted to the production
of sugarcane, which suited Borromeo’s purpose as a sugar planter;
Camalignon was better adapted to rice cultivation and therefore
suitable for Villaruz, who is a rice grower. Borromeo went into possession of
Manamok and in having the San Jose Plantation surveyed for
land registration, he included Manamok in the plan as part of the
plantation and excluded Camalignon. That he cultivated Manamok
and that Cordovero knew that he was doing so, ,is shown by the fact that
Cordovero caused the crop on the land to be levied upon under an execution
against Borromeo.

Villaruz remained in possession of Camalignon for nine years before
the present action was brought and kept the land under cultivation, built houses
on it and made other valuable improvements. What better evidence of the exchange
being a bona fide transaction can be required?

That Borromeo in executing the mortgage on the plantation included
Camalignon in the description of the land may have been purely
accidental; the description of the land in the’ mortgage may have been taken
from the title papers antedating the exchange and in which the land description
naturally would embrace Camalignon. In any event, Villaruz had nothing
to do with the execution of the mortgage and the bad faith, if any, in that
connection cannot be laid at his door.

The bad faith in this case, seems to me, to be on Cordoverb’s side. He knew
that Villaruz was in possession of Camalignon but did not make him a
party to the action of rescission brought in 1916. He stood by and saw Villaruz
make valuable improvements on the land, yet gave no indication that he intended
to lay claim to the same for himself. Under the circumstances, he should be held
estopped from bringing the present action.

The judgment appealed from should have been affirmed.