PRIMITIVO PAGUIO ET AL., PLAINTIFFS AND APPELLANTS, VS. TOMASA MANLAPID ET AL., DEFENDANTS AND APPELLEES.

During her lifetime Maria Monzon was the owner of a certain
parcel of land with the certificate of title No. 962. On November 23, 1914, she
sold it to Felipe Banzon by a private instrument for P2,000, subject to right of
repurchase without any definite period, and this instrument she later ratified
before a notary on December 29, 1915. 

After she died, her children, the present plaintiffs, filed
this action praying that that deed of sale with right to repurchase be declared
a mere mortgage.

Prior to this suit, Tomasa Manlapid and others had instituted
an action for unlawful detainer of this land against Eusebio Paguio, the father
of the plaintiffs herein; judgment was rendered in favor of the defendant and
upon appeal, was affirmed by this court.^[1] Plaintiffs herein likewise pray that
that judgment on possession be set aside because the action was brought in bad
faith, and the trial court was without jurisdiction to try it.

The appealed judgment absolved the defendants from the
complaint.

The only question for our decision is, to our mind, whether the
contract upon this land entered into by and between Maria Monzon and Felipe
Banzon, the predecessor in interest of the defendants, was a sale with a right
to repurchase or merely a mortgage. In our opinion it was a sale. The terms of
the instrument are clearly and unequivocally to that effect. There is nothing in
the record to justify our construing that contract as a mere mortgage in the
face of its plain terms. The appellants attempted to present two documents, one
signed by Y. M. Valero and the other by Encarnacion Tuason which the court below
did not admit, to show that certain amounts were paid as interest on account of
that contract. We believe the trial court did right in refusing to admit these
documents, for not having been signed by Felipe Banzon or his representative, or
by the administratrix of his property after his decease. It must be borne in
mind that after the sale of this land Maria Monzon, the vendor, remained in
possession as a lessee, and the appellees hold that the amounts she paid were
rents and not interest. The fact that these amounts were actually received by
Felipe Banzon during his lifetime, and by the administratrix of his estate after
his death, does not show that they were received as interest, although the
receipts issued so state, since they were not signed either by Felipe Banzon or
by the administratrix. While it is true that the plaintiffs have presented
evidence to show that the issuance of these receipts was ordered by Felipe
Banzon, during his lifetime, and by Tomasa Manlapid, his widow, after his death,
yet there is no evidence that they gave directions that receipt be issued
expressly acknowledging receipt of said amounts as payment of interest.

The appellants assert that the appellees did not testify,
according to their contention, that the sums paid were for rent and not
interest. This is correct. But the appellees presented other evidence to this
effect, which, although it was presented in the other case for unlawful detainer
was, nevertheless, adduced as evidence in the instant case. (Exhibit O.) We may
add that the appellant Eusebio Paguio himself, in his testimony in the other
case which was also presented as evidence in the present one, while he stated
that the amounts paid were interest, yet did not seem to be sure on this point,
for in other paragraphs he stated that the contract was a sale, and that the
instrument dated November 23, 1914, expressed the real contract.

We do not consider that the attempted compromise made in this
case, which has not been carried into effect, supports the plaintiffs’
contention.

The judgment of this court in the case of unlawful detainer of
the same land, mentioned at the beginning, held that the instrument of November
23, 1914 really evidenced a sale with the right to repurchase, and not merely a
mortgage. With respect to Eusebio Paguio; who was a party to that, such ruling
is res adjudicata. Although the same cannot be said of the other appellants, who
were not parties therein, yet, we cannot but consider that the evidence which
justified that ruling, is also evidence in the case before us. But even without
taking into account that judgment of the trial court which was affirmed by this
court and confining ourselves to the merits of the case at bar, we find that
said instrument did in fact evidence a sale and not a mere mortgage. For this
reason, there is no need to consider the other questions raised by the
appellants with respect to that judgment, which was rendered with jurisdiction
and there is no evidence that it was obtained by fraud.

The fact that, after the sale and during the legal period of
redemption, that is, on October 2, 1915, during the hearing of the cadastral
case in which this land was claimed by Maria Monzon, and that on October 5,
1917, when the proper decree was issued in her favor, Felipe Banzon did not
appear to have this sale recorded, affects neither his rights nor those of his
heirs. In the case of Cabanos vs. Register of Deeds of Laguna and Obiñana (40
Phil., 620), which is a similar case, this court held:

“However, the contract of sale with pacto de retro entered into
between the parties still subsists without any alteration, nor has it been
rescinded by the certificate of title subsequently obtained by the vendor over
the lands sold, inasmuch as the issuance in his favor of said title does not
destroy the validity of the executed contract and does not exempt him from the
obligation of complying with it in accordance with the provision of articles
1446 et seq. of the Civil Code, for it would then be highly unjust that the
defendant, who received the price of the sale of the lands sold, would still
remain with said lands thereby enriching himself at the expense and to the great
prejudice of the purchaser. The registration of the lands already sold by the
vendor cannot serve him as a protecting mantle to cover and shelter his bad
faith to the prejudice of the innocent purchaser.

“Said purchaser has no right to institute a real action for the
recovery of said lands based upon the consolidation of his ownership thereof due
to vendor’s failure to exercise the right of repurchase for the latter
subsequently obtained the registration; but the purchaser notwithstanding the
title obtained by the vendor, has a right and a corresponding subsisting
personal action, also arising out of the same contract of purchase and sale, to
ask for its compliance and the delivery of the lands sold, after the execution
of a document of the absolute sale thereof, which should be annotated in the
certificates of title issued to the vendor, the latter being bound on his part
to deliver these certificates to the purchaser who thereby becomes the owner of
the lands sold, there being no lawful or just reason authorizing the vendor to
retain them in his hands after having received their purchase price from the
purchaser who claims them with more than sufficient right.”

Furthermore, the petition for a new trial on account of the
discovery of new evidence must be denied because such evidence is immaterial.

The judgment appealed from is affirmed, with costs against the
appellants. So ordered.

Johnson, Street, Malcolm, Villamor, Ostrand, Romualdez, and
Villa-Real, JJ., concur.

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[1] Manlapid vs. Paguio, G. R. No. 23876, promulgated November 7, 1925, not reported.