WILLIAM COLE AND HENRY COLE, PETITIONERS, VS. POTENCIANA CASUGA VDA. DE GREGORIO, JOSEFINA G. HUFANO ASSISTED BY HER HUSBAND, ALFREDO HUFANO AND THE HONORABLE COURT OF APPEALS, …

Petition for review of the decision of the
Court of Appeals in CA-G.R. No.
59702-R, William Cole, et al. vs. Potenciana Casuga Vda . de Gregorio,
et al.,
affirming the judgment of the Court of First Instance of La Union in its
Civil
Case No. 2606, dismissing the complaint of herein petitioners for
“quieting of
title” (sic), specific performance and annulment of (subsequent) deed of
sale
(to another party).

For an adequate background of Our ultimate resolution of the
instant
controversy as will be made anon, the following portion of the opinion
of the
decision of the Appellate Court under review should suffice:

“This is an appeal by plaintiffs-appellants from the decision
dated March 10,
1976 of the Court of First Instance of La Union, Second Judicial
District, San
Fernando, Branch I, in Civil Case No. 2606 for quieting of title,
specific
performance and annulment of deed of sale, the dispositive portion of
which
reads as follows:

“‘IN VIEW OF ALL THE FOREGOING, the Court renders judgment
dismissing
plaintiffs’ complaint and ordering the plaintiffs to jointly and
severally pay
defendants the sum of P3,500.00 as reasonable attorney’s fees; and to
pay
costs.’

“Unhappy over the results of the case, plaintiffs-appellants
appealed,
invoking as errors the following:  (1) in finding and ruling
that the agree­ment
to buy and sell (Exhibit ‘A’) between the parents of plaintiffs and the
parents
of defendant Josefina Hufano was rescinded by the parties; (2) in
refusing to
consider and to appreciate the 2 letters of the late William Cole, Sr.,
to
Surveyor Luis Salanga as competent evidence for the
plaintiffs-appellants that
the agreement to buy and sell (Exhibit ‘A’) was not rescinded; (3) in
finding
and so ruling that the cause of action of plaintiffs-appellants has
prescribed;
and (4) in sustaining the legality and validity of the transfer and/or
sale
between defendant- appellee Potenciana Casuga Vda. de Gregorio and her
daughter
and co-defendant- appellee Josefina Hufano of the land which is the
subject
matter of the agreement to buy and sell (Exhibit ‘A’).

“On August 29, 1963, the parents of plaintiffs-appellants,
William Cole, Sr.
and Angelina Munar Cole entered into an ‘Agreement to Buy and Sell’
(Exhibit
‘A’) a parcel of land located at Bo. Dalumpinas Oeste , San Fernando ,
La Union
(also known as Bo. Urbiztondo, San Juan, La Union) with the owners of
the same,
namely, Angel Gregorio and Potenciana Casuga .  Of the
P6,000.00 consideration,
P1,000.00 was paid in advance by Angelina M. Cole and the balance of
P5,000.00
was ‘to be paid in full after the preliminary survey of the land, by a
Private
Surveyor, for the purpose of verifying whether or not said parcel of
land
contains the same area as declared in the Tax Declaration.’

“On August 31, 1963, the services of a surveyor, in the person
of Luis
Salanga was hired (Exhibit ‘E’) and he conducted a survey of the
property in
question on September 24 and October 7, 1963 and submitted his survey
plans to
the Bureau of Lands on June 22, 1964 for approval.  Thereafter
he left for the
United States and came back to the Philippines on June 6,
1965.  Upon arrival he
worked for the approval of the survey which he secured on June 29, 1965
(Exhibit
‘B’ and ‘B-1’).  The survey plans were then delivered to the
children of William
Cole, Sr., the plaintiffs-appellants, on May 31, 1966 who paid the
balance of
his fees (Exhibit ‘F’).

“Unknown to William Cole, Sr. that Luis Salanga left for the
United States
and impatient over the delay in the results of the survey as approved by
the
Bureau of Lands, the former wrote the latter two angry letters, one
dated
October 20, 1964 (Exhibit C) and the other on April 1, 1965 (Exhibit D),
eleven
days before William Cole, Sr. died on April 12, 1965.

“After the death of William Cole, Sr. on April 12, 1965, Angel
Gregorio died
on June 3, 1965 followed by Angelina Munar Cole who died on January 10,
1966.

“On May 31, 1966, plaintiffs came to know that their parents
have still an
unpaid balance on the land subject matter of the instant case in the
amount of
P5 ,000.00 after they went over their papers, such as the Agreement to
Buy and
Sell (Exhibit ‘A’) and the letters of their father (Exhibits ‘C’ and
‘D’) to the
surveyor, Mr. Salanga.  Thereupon, they tried to raise the
amount needed to pay
the balance but they discovered that the property was already
transferred to the
only daughter of defendant- appellee Potenciana Casuga Vda. de Gregorio,
namely,
defendant- appellee Josefina G. Hufano.

“On the other hand, defendants- appellees contend that when the
preliminary
survey conducted by surveyor Luis Salanga on October 7, 1963, disclosed
that the
land subject of the Agreement to Buy and Sell contained only an area of
23,408
square meters instead of 32,976 square meters as stated in Tax
Declaration No.
38048, Angelina Cole rescinded the contract and Angel Gregorio returned
to her
the advance payment of P1 ,000.00.  Neither Angelina Cole nor
plaintiffs-appellants took possession of the land, nor declared the same
for
taxation or paid the taxes thereon.  The agreement was likewise
not registered
in the name of Angelina Cole in the Office of the Register of Deeds.

“In the first and second assignment of errors, appellants
assail the findings
of the trial court that the agreement to buy and sell (Exhibit ‘A’)
between the
parents of plaintiffs and that of defendant Josefina Hufano was
rescinded by the
parties and its failure to consider the significance of the two letters
of
William Cole, Sr. to surveyor Luis Salanga as competent evidence to show
that
said agreement was not rescinded.  We agree with
plaintiffs-appellants.

“There is nothing in the evidence on record showing that
plaintiff Henry Cole
deliberately admitted that the agreement to buy and sell was rescinded
by his
late mother, Angelina Cole, during her lifetime.  At most,
Henry Cole gave a
vague answer to a tricky question propounded on cross-examination
actually
calling for two different answers.

“Attas clarified by the witness in the subsequent answers given
by him –

“Q   Now, did you come to know that the P1
,000.00 advance or earnest money
delivered by your mother to Angel Gregorio was returned?  Did
you come to know
that?

“A    No, Sir.

“Q   Did she not tell you that before your
mother died?

“A    No Sir.  (Ibid.)

Not knowing, therefore, whether the P1,000.00 partial payment
was ever
returned by the Gregorios to Angelina Cole, how can Henry Cole admit
that the
contract Exhibit ‘A’ was ever rescinded when the basis of the rescission
is the
return of the P1,000.00.

“Q   Mr. Witness, do you know for a fact
whether this receipt which you
mentioned was ever rescinded or cancelled?

“A    No Sir.  (Ibid.)

“Neither could the testimony of surveyor Luis Salanga be
corroborative and
confirmatory of the testimony of Henry Cole on the alleged rescission of
the
contract that we have shown the latter did not testify to and because
said
testimony is predicated on hearsay evidence.

“Q   You said you were of the impression that
money was already returned to
the Cole by Gregorio.  Who gave you that impression?

” A    It is of public knowledge in
Lingsat and the wife of Angel Gregorio
told me that the money was returned and also Hipolito ( tsn. p. 17 S.
Sept. 11,
1975)

“Besides, if the contract was really rescinded and the
P1,000.00 returned by
the Gregorios to the Coles a few days after a surveyor was hired on
August 31,
1963 and had verified the true area of the property in question, on the
ground
that the area surveyed was much smaller than the area appearing in the
Tax
Declaration, what could have impelled William Cole, Sr. to write two
angry
letters on October 20, 1964 and April 1, 1965 (Exhibits C and D) to the
surveyor
hurrying him to finish the survey and even threatening him with legal
action if
he fails to do so.  The inevitable answer that surfaces with
clarity is that
there was no return of the partial payments made by the Coles. 

Defendants-appellants could not present any document to show receipt of
the P1
,000.00 by the Coles if the latter could not then produce the Agreement
(Exhibit
‘A’).  They should have insisted on such a receipt as a
precaution to avoid any
misunderstanding, unpleasant incidents and expensive court litigations.

“The testimony of defendants-appellants’ witnesses, namely
Josefa Espinueva
and Josefina Hufano are not only evasive and inconsistent but also
conflicting.

” Josefa Espinueva’s testimony to the effect that after Angel
Gregorio
returned the P1 ,000.00 to William Cole, Sr. and demanded a receipt, but
the
latter stated there is no need as he had already torn the receipt
Exhibit ‘A’,
and the Gregorios left, she was allegedly told by William Cole, Sr. that
he
really did not tear the receipt Exhibit ‘A’ but that it was with him and
showed
it to the witness.  William Cole, Sr. allegedly told the
witness that ‘they
thought they have fooled me.  They think they are wise, but I
am wiser.’

“If such testimony is true and the incident narrated by Josefa
Espinueva
actually took place, then it behooves said witness, as a friend of the
Gregorios
and one of their witnesses, to report such incident to them as to enable
the
Gregorios to take such action as may be necessary to protect
themselves.  Her
failure to do so renders suspect the credibility of her entire testimony
for
being unnatural and therefore not true.

“Again, while in one instance Josefa Espinueva claims that
there was no
document signed to show the return of the P1 ,000.00 by the Gregorios to
the
Coles, in another he claims there was a receipt which was signed to show
the
return of the P1,000.00 to William Cole ( tsn. pp. 17-18 S. Dec. 4,
1975).  If
there was such a receipt why was not the receipt presented by
defendants-
appellees.

“Moreover, Our attention was called to the failure of
defendants- appellees
to bring to the witness stand defendants- appellee Potenciana Casuga,
the
surviving spouse of the late Angel Gregorio.  She would have
been the best
witness to testify on the matters at issue, as she was present in all
the
incidents now being inquired into, from the time of the signing of the
agreement
to buy and sell up to the time of the alleged rescission of the
contract.  Her
non-presentation raises a presumption that if presented her testimony
would be
adverse to defendants- appellees ( Orfanel vs. People, L-26877, Dec. 26,
1969,
30 SCRA 819).

“As against defendants- appellees’ witnesses We have the
unshaken testimony
of Eduardo Caranay that the Gregorios did offer to return the P1,000.00
to the
Coles and to cancel their agreement, Exhibit ‘A’, but William Cole, Sr.
refused.  The non?cancellation of the agreement is corroborated
by the two
letters written by William Cole, Sr. to surveyor Salanga pressing for
the
termination of the survey.  Had the agreement been cancelled,
William Cole, Sr.
would not have pressed Salanga for the completion of the survey for then
he
would have no use for it.” (Pp. 25-30, Record.)

In other words, the Court of Appeals sustained and, in Our
opinion, rightly
the first two errors assigned by petitioners; hence, We can start from
the
premise that petitioners’ action had not prescribed before it was
filed.  In
this connection, We hasten to add that certain factual findings of the
Appellate
Court in the course of its ratiocination sustaining the above-mentioned
assignments of error appear to Us to be supportive of petitioners’ pose
that the
Court of Appeals should have gone full length in overruling the trial
court.

According to the Court of Appeals, “Plaintiffs-Appellants’
cause (sic, should
be causes) of action have (has), however, not only prescribed but (are
now)
barred by laches.” We do not agree.  In Our considered view, as
hereunder now to
be demonstrated, petitioners’ two causes of action have not prescribed,
much
less are they barred by laches, if not on legal grounds, on the basis of
strong
manifest equitable considerations which the courts of this country have
ample
power to enforce.

Be it remembered that the case of petitioners is directed
against two
matters, (1) the non-compliance by the respondent Potenciana Casuga Vda.
de
Gregorio of hers and her deceased husband’s promise to sell the land in
question
to petitioners, and (2) the annulment of the sale of the said land to
her
co-respondents mother and son, Josefina G. Hufano and Alfredo Hufano.

True it is that the above second cause of action wherein the
Hufanos are
co-defendants is subordinate to the result of the action for specific
performance against respondent widow, Potenciana.  But it may
be advanced here
that since the transfer of the controverted property was made to the
Hufanos in
1966 or 1967, it is obvious that petitioners’ action, insofar as the
annulment
of said transfer is concerned, was filed well within the ten-year period
of
prescription.  And as regards the supposed laches, nothing in
the record shows
that petitioners were aware of any act of the Hufano’s publicly adverse
to the
right of action of petitioners before the instant action was filed.

Coming now to the pretended prescription and laches relative to
the cause of
action of petitioners as against the widow, Potenciana, the Court of
Appeals
rationalized its adverse holding as follows:

“Under the present Agreement to Buy and Sell, Exhibit ‘A’, the
mother of
plaintiffs was under obligation to pay the balance of P5,000.00 in full
‘after
the preliminary survey of the land by a Private Surveyor, for the
purpose of
verifying whether or not said parcel of land contains the same area as
declared
in the Tax Declaration.’ This portion of the agreement creates a
conditional
obligation (Article 1181, Civil Code of the Philippines).  The
accomplishment of
the preliminary survey gives rise to the acquisition of rights by the
contracting parties and the acquisition of said rights depends upon the
results
of said survey.  As the survey and the result thereof occurred
on October 7,
1963 and found to have an area of only 23,406 square meters (Stipulation
of
Facts, pp. 30-31, R. A.) the period of prescription began to run from
said date
or on August 23, 1963 when the Agreement to Buy and Sell was executed
pursuant
to Article 1187 of the Civil Code that the effects of a conditional
obligation
to give once the condition has been fulfilled, shall retroact to the day
of the
constitution of the obligation.  But whatever is the starting
date in the
computation of the period of prescription, whether from August 29, 1963
or
October 7, 1963, the filing of plaintiffs-appellants’ complaint on July
25, 1974
was way beyond the period of ten (10) years as provided for in Article
1144 of
the Civil Code and consequently barred.  The contention of
plaintiffs that the
period of prescription should be counted from 1966 when they discovered
the
agreement deserves scant consideration for when their mother, Angelina
Cole died
in 1965, the period of prescription was already running and continued to
run
even after her death ( Martir, et al. vs. Trinidad, et al., L-12057, May
20,
1959).  This is so for the cause of action accrued in favor of
their mother and
not directly in favor of the children.  The
plaintiffs-appellants cannot avail
themselves of several disabilities, unless they all existed at the time
when the
right of action accrued.” (Pp. 30-31, Record.)

x       

x         

x        
x

“But even assuming that plaintiffs-appellants’ cause of action
has not
prescribed, the same may be dismissed on the ground of laches. 
Unreasonable
delay in the enforcement of a claim is strongly persuasive of a lack of
merit,
since it is human nature to assert a right most strongly when first
invaded. 
Time inevitably tends to obliterate occurrences from the memory of
witnesses,
and even where the recollection appears to be entirely clear, the true
clue to
the solution of a case may be hopelessly lost.  These
considerations constitute
one of the pillars of the doctrine long familiar in equity jurisprudence
to the
effect that laches or unreasonable delay on the part of a plaintiff in
seeking
to enforce a right is not only persuasive of a want of merit but may,
according
to the circumstances, be destructive of the right itself (Buenaventura
vs.
David, 37 Phil. 435).

“Taking 1966 as a reference point wherein plaintiffs-appellants
claim they
first discovered the existence of the agreement Exhibit ‘A’ and wherein
the
survey plans as approved by the Bureau of Lands were first presented to
them by
the surveyor, it took them until July 25, 1974 or 9 years after before
they
filed their complaint for the vindication of their alleged rights, if
any.  It
is hard to believe that, if the plaintiffs had been convinced of the
justice of
their cause, they would have failed to assert their rights.” (Pp. 32-33,

Record.)

Stated differently and briefly, the Appellate Court’s view is
that the
computation of the prescriptive period of the cause of action of
petitioners was
the date of the deed of promise to buy and sell on August 23, 1963 or at
the
latest when “the survey and the result thereof occurred on October 7,
1963.”

In this connection, it has to be underscored that according to
the deed of
promise to buy and sell, the balance of P5,000 of the purchase price of
what
petitioners’ parents must have believed were more than three hectares of
land
(32,976 sq. m.) per tax declaration of the Gregorios, but which turned
out to
be, by actual survey, only more than two hectares (23,408 sq. m.) or
9,568 sq.
m. short of what it appeared to be, was “to be paid in full after the
preliminary survey of the land by a Private Surveyor, for the purpose of

verifying whether or not said parcel of land contains the same area as
declared
in the Tax Declaration.” (p 26, Rec., p. 2, CA Decision). 
Surely, this
particular stipulation removed entirely the possibility of the
prescriptive
period of petitioners’ action having started on the date of deed (August
23,
1963).

Needless to state, prescription of actions run with the mere
lapse of time
(Art. 1139, Civil Code).  But it is elementary that the
computation of the
period of prescription of any cause of action, which is the same as
saying
prescription of the action, should start from the date the cause of
action
accrues or from the day the right of the plaintiff is
violated.  In the language
of Article 1144 of the Civil Code which is the one pertinently
applicable to
this case, “the action must be brought within ten years from the time
the right
of action accrues:  (1) upon a written contract.”

This is as it should be.  A cause of action has three
elements, namely:  (1)
a right in favor of the plaintiff by whatever means and under whatever
law it
arises or is created; (2) an obligation on the part of the named
defendant to
respect or not to violate such right; and (3) an act or omission on the
part of
such defendant violative of the right of the plaintiff or constituting a
breach
of the obligation of the defendant to the plaintiff.  It is
only when the last
element occurs or takes place that it can be said in law that a cause of
action
has arisen.  Translated in terms of a hypothetical situation
regarding a written
contract, no cause of action arises until there is a breach or violation
thereof
by either party.  It is not, therefore, from the date of the
instrument but from
the date of the breach that the period of pres­cription of the action
starts.

In the case at bar, although the agreement to buy and sell was
executed in
1963 and the survey allegedly was finished on October 7, 1963, the Court
of
Appeals itself has found that the survey plan approved by the Bureau of
Lands
came to the knowledge of petitioners only on May 31, 1966 (p. 26, Rec.,
p. 2, CA
Decision).  Indeed, there is no indication at all anywhere in
the record that
they had any knowledge thereof earlier.  In fact, they became
aware of the
agreement to buy and sell and of the outstanding balance they had to pay
only
then, that is why they promptly made every effort, even to the extent of

borrowing from their own lawyers to be able to pay.  To their
dismay, however,
they discovered that respondent widow Potenciana had already sold the
property
to her co-respondents herein.

In its resolution of the first two assignments of error of
petitioners, as
observed above, the Court of Appeals relied heavily on the letters,
Exhibits C
and D, the letters of the late William Cole, Sr. of October 24, 1964 and
April
1, 1965, respectively, as proof that notwithstanding the substantial
discrepancy
in the area of the land in dispute, as discovered after the survey, from
the
area stated in the agreement to buy and sell, the respondents’ evidence
that the
Coles had rescinded the said agreement by receiving back the P1,000 they
had
paid as down payment, cannot be believed.  Which finding, We
are convinced is
correct.

In other words, the above conclusion of the Court of Appeals
proves that the
Cole couple was in the dark up to their death about the result of the
survey. 
It was not until May, 1966, and importantly, it was already the
petitioners
(precisely because the Cole couple had already died) who were notified
thereof
by the surveyor Salanga.  Under these circumstances, it is
incomprehensible how
petitioners could be charged with laches.

On the contrary, We feel it was rather inconsiderate and unkind
inconsistent
with the compassionate society among our people today – for the Court of
Appeals
to have failed to appreciate, considering the apparent financial
situation of
petitioners, their efforts to raise the money they discovered only in
1966 was
due private respondent widow, Potenciana Vda. de Gregorio. 
After all, there is
no evidence to which Our attention has been called that a demand had
been
previously made for such payment, hence petitioners, strictly speaking,
could
not be considered as in technical default.  What, on the other
hand, is verily
condemnable was the act of said respondent widow to sell the same
property to
her co-respondents without even notifying petitioners of her intention
to do so,
taking advan­tage perhaps of the fact that Cole Sr. had already died in
1965 and
Mrs. Cole died in January 1966.

Laches is predicated on inaction, inattention, indifference or
apathy or
failure to do anything directed towards the assertion of a
right.  We cannot say
any such attitude appears to be attributable to petitioners. 
Up to eleven days
before he died on April 12, 1965, Cole Sr. was still berating Surveyor
Salanga
about not finishing the awaited survey, upon the completion of which
their
obligation to pay the balance of the purchase price agreed upon
depended.  It
was only after he and even his wife had died, that Salanga delivered the
survey
plan to petitioners.  Thereafter, petitioners immediately
sought legal course
and money.  To perceive laches in such a milieu of
circumstances is to miss the
point of that principle of equity altogether.

Considering all the foregoing, We hold that the Court of
Appeals erred in
finding petitioners guilty of laches and in holding that their causes of
action,
first, for specific performance, and second, for annulment of the sale
to the
Hufanos have prescribed.  The right of the vendors to collect
the balance of the
purchase price having arisen only in 1966, their cause of action to
recover
arose only then.  On the other hand, petitioners’ right to
demand consummation
of the sale by an action of specific performance also arose only in
1966, after
the survey’s completion was brought to their attention.  The
portion of the
stipulation of facts at the pre-trial in the court below to the effect
that “the
property (in question) was surveyed on October 7, 1963 and found to have
an area
of 23,406 sq. m.” is of no moment, absent any admission or proof that
the Coles
were informed thereof before 1966 (which would have been included in the

stipulations if such indeed were the fact).  We hold that the
finding of the
Court of Appeals that respondent Potenciana’s pretense that the deceased
Mrs.
Cole received back the P1 ,000 down payment is not supported by the
evidence on
record, shows that the herein respondent widow lacked candidness to the
Court. 
Withal, it appears that said respondent even before the condition
precedent,
namely the completion of the survey, had hardly materialized, sold
without
previously demanding from the Coles the payment of the balance of the
purchase
price, the property to her co-respondents, the Hufanos.

One last point.  In the decision of the trial court,
there is a finding that
the respondent Josefina Hufano mortgaged the property in question to the

Philippine National Bank on November 29, 1967 and to the Rural Bank of
Aringay
on June 30, 1972.  Whether or not the banks acted in bad faith
in said mortgages
may well be determined in the proceedings for the execution of this
judgment. 
In any event, petitioners are entitled to the specific performance
prayed for in
their complaint, with the property being delivered to them upon their
payment of
the purchase price or P5 ,000 without interest because it is evident
respondent
Vda. de Gregorio acted in bad faith in double selling said property,
hence the
said respondent is under obligation to pay the banks the loans covered
by said
mortgages.  The sale to the Hufanos for obvious reasons is
hereby declared null
and void.

PREMISESCONSIDERED,
judgment is hereby
rendered reversing the decision of the Court of Appeals in the sense
that the
action of petitioners is hereby declared as not having yet prescribed
when they
filed the same, that they are not guilty of laches, that the sale by
respondent
Potenciana Casuga Vda. de Gregorio of the property in issue to her
co-respondents, the Hufanos, is null and void and that, the respondent
should
pay to the banks the loans covered by the mortgages aforementioned and
all
private respondents are to deliver possession of the said property to
petitioners free from all liens and encumbrances.

Costs against private respondent Potenciana Casuga Vda . de
Gregorio.

Aquino, Concepcion, Jr., De
Castro, and Escolin,
JJ.,concur.
Guerrero
and Abad Santos, JJ.,no part.