G.R. No. L-22571 May 25, 1973

JOSEFINA VALDEZ, JAIME VALDEZ, ROGELIO ALMONTE, RAQUEL ALMONTE and RAUL ALMONTE, the latter two minors, represented in this action by their father, FRANCISCO ALMONTE,plaintiffs-appellees,vs.TEOFILA OLORGA, by herself and in representation of minor CARMEN VALDEZ and RENATO OLORGA,defendants-appellants.

Salvador P. Socrates for plaintiffs-appellees.

Perfecto de los Reyes and Clarito A. Demaala for defendants-appellants.

MAKALINTAL,J.:The present appeal was taken by the defendants directly to this Court by record on appeal filed way back in 1964. The case, however, was submitted for decision only on September 4, 1970. In a motion dated April 25, 1973, the defendants appellants prayed that decision herein be expedited.

A reading of the brief of the appellants shows that most of the arguments advanced therein challenge the findings of fact made by the courta quo. As pointed out by the plaintiffs-appellees, such findings are no longer reviewable by this Court, its jurisdiction being limited to deciding purely legal questions.

The following facts as stated in the decision appealed from may therefore be considered established:

This is an action for partition filed by the living children and grandchildren of the late spouses Federico Valdez, Sr. and Juanita Batul against the heir and widow of Federico Valdez, Jr. The action concerns Lot No. 18, of Puerto Princesa Cadastre, covered by T.C.T. No. T-94 in the name of Federico Valdez, Jr.

Federico Valdez, Sr. died in Manila in the year 1931 and his wife, Juanita Batul, died in 1939. The spouses left the following children as their heirs: (1) Avelina Olorga, who died in 1941, leaving as her heir co-defendant Renato Olorga; (2) Elisa Valdez-Almonte, who died in 1947, leaving Rogelio, Raquel and Raul, all surnamed Almonte, as her heirs; (3) the plaintiff Josefina Valdez; (4) Federico Valdez, Jr., who died in September, 1960, leaving as his heirs defendants Teofila Olorga, his wife, and Carmen Valdez, his daughter; and (5) Jaime Valdez, co-plaintiff herein. In 1924, the spouses Federico Valdez, Sr. and Juanita Batul, bought Lot No. 18, the property now in dispute, from Dolores M. de Gutierrez for P500.00. In 1930, the old Valdez family, as vendees, occupied and lived in the premises of Lot No. 18. After the death of Federico Valdez, Sr., Juanita Batul, in the year 1936, executed a contract of lease over a portion of Lot No. 18 in favor of the protestant church of Puerto Princesa, Exhibit "A". The same Juanita Batul leased in 1939 a portion of Lot No. 18 to Mr. Gregorio Quicho.

The transfer of the lot in the name of Federico, Sr., was never done because the owner's original certificate of title was lost.

Josefina Valdez and Federico Valdez, Jr. commissioned their cousin Concepcion Castro to negotiate with the Gutierrez family (Exhibit "C") in 1948 in order that the property in question may be transferred to them. It turned out that the Gutierrez family was asking for an additional amount of P2,500.00 (Exh. "D").

Mrs. Castro came back to Puerto Princess without having realized her mission. In the same year she went back to Manila with Federico Valdez, Jr., and Mr. Gregorio Quicho. The deed was executed for the amount of P2,200.00 which was given by Mr. Gregorio Quicho, as payment for back rentals and payment for the purchase of that portion of lot No. 18 which he was renting and occupying. In executing the deed of sale, EXHIBIT "I" , the name of Federico Valdez, Jr. appeared as the only vendee. This was done pursuant to the wishes of Mr. Quicho who advanced the money, in order that he could facilitate the deed of sale between him and the Valdezes, with the understanding that Federico Valdez, Jr. will hold the same in trust for his other brother and sisters (Testimony of Mrs. Castro).

When Federico Valdez, Jr. was still living, he never attempted to exclude the herein plaintiffs from ownership of the land in question. Said plaintiffs have been in open continuous and uninterrupted possession of the premises they are occupying inside the lot in question long before the execution of the deed of sale (Exh. "I"). It was only after the death of Federico Valdez, Jr. that the widow Teofila Olorga tried to eject the plaintiffs.

As clearly stated in the memorandum for the plaintiffs the following facts are undisputed:

(1) That the land in question Lot No. 18 of the Puerto Princesa Cadastre, was originally purchased by the spouses Federico Valdez, Sr. and Juanita Batul from Dolores M. de Gutierrez for P500.00;

(2) That the parties herein, plaintiffs and defendants alike, are all successors-in-interest of the spouses Federico Valdez, Sr., and Juanita Batul, either as forced or compulsory heirs or in representation thereof;

(3) That the above-named spouses had been in open, public, peaceful and uninterrupted occupation and possession of Lot No. 18, the property in question, since the year 1930 or 1933;

(4) That in 1939, Mr. Gregorio Quicho rented a portion of the lot in question from Juanita Batul;

(5) That Mr. Quicho advanced the amount of P2,200.00 partly as purchase price of the portion purchased by him, in the final execution of the deed of sale, Exhibit "I"; and

(6) That a part of the property in question, Lot 18-B, is still registered in the name of Federico Valdez, Jr., under T.C.T. No. T-634, cancelling T.C.T. No. 75.

The following facts, although not admitted by the defendants, were not disputed:

(1) That the Valdez Family, in 1930 or 1933, entered into, possessed and occupied Lot 18, the property in question;

(2) That Juanita Batul, in 1936, entered into a contract of lease (Exh. "A") with the Baptist Church of Puerto Princesa over a portion of Lot 18;

(3) That in 1947, upon discovering that the land in question had not been transferred in the name of their parents, Josefina Valdez made efforts to have the said land transferred to them, and commissioned Mrs. Castro, together with Federico Valdez, Jr., to negotiate with the Gutierrez family for the purpose, which culminated in the execution of the deed of sale, Exhibit "I";

(4) That in the course of said negotiation undertaken by Mrs. Castro, Federico Valdez, Jr, was brought to Manila where the deed of sale was finally placed in his name alone, with the express understanding that he will hold the same in trust for his other brother and sisters;

(5) That the placing of the deed of sale in the name of Federico Valdez, Jr. alone, instead of the "Heirs of Federico Valdez, Sr." or "Heirs of Juanita Batul" was done through the suggestion of Mr. Quicho who wanted to facilitate his own deed of sale over the portion that he purchased;

(6) That at the time of the execution of the deed of sale (Exh. "I"), Valdez, Jr. was barely 21 years old, a sophomore student in the high school, and he, together with his wife, were without any lucrative trade or calling;

(7) That Josefina Valdez and her co-plaintiffs had been in continuous, public, peaceful and uninterrupted possession and occupation of the premises in question long before the death of Valdez, Jr.;

(8) That Valdez, Jr. never asserted, nor attempted to assert, during his lifetime, sole and exclusive ownership of the premises in question, against the herein plaintiffs; and

(9) That during the lifetime of Valdez, Jr. he sold a portion of the land in question and leased other portions thereof to private parties, but he did so with the consent and approval of her elder sister, Josefina Valdez.

In this connection we have to consider also the offer of evidence by the plaintiffs as matters to be testified by Mr. Gregorio Quicho were he present and able to testify and which were admitted by the defendants, such that the presentation of Mr. Quicho was waived by the plaintiffs. The testimony of Mr. Quicho which would have been given by him if he were presented and which were admitted by the defendants are as follows:

(1) That a deed of sale for a consideration of P500.00 was executed by the spouses Gutierrez in favor of the spouses Federico Valdez, Sr. and Juanita Batul, over Lot 18 of Puerto Princesa Cadastre, the very lot in question, in the year 1924;

(2) That Mr. Quicho rented and occupied since 1939, a portion of Lot 18, the lot in question, from Juanita Batul;

(3) That the amount of P2,200.00 which was paid to Dolores M. Gutierrez for the execution of the deed of sale, Exhibit "I", was delivered by Mr. Gregorio Quicho, for payment of unpaid back rentals and as advances for the purchase of the portion of Lot 18 which he finally acquired;

(4) That Mr. Quicho was instrumental in having the deed of sale executed in the name of Federico Valdez, Jr. the portion which he wanted to acquire.

The legal point raised by the appellants is that since the land in question was sold to the late Federico Valdez, Jr. in 1948 and the Transfer Certificate of Title, so he alleges, was issued in his name in 1950, the action had already prescribed when it was filed more than ten (10) years thereafter, or in 1962; that furthermore, from the date of the sale up to the time his death in 1960 he exercised exclusive ownership of the land. In other words the appellants claim both extinctive and acquisitive prescription.

Both claims are belied by the facts as found by the courta quo, which held: (1.) that when the deed of sale was executed and the name of Federico Valdez, Jr. was made to appear therein as the only vendee, "this was done pursuant to the wishes of Mr. Quicho who advanced the money, in order that he could facilitate the deed of sale between him and the Valdezes, With the understanding that Federico Valdez, Jr. will hold the same in, trust for his other brother and sisters;" and (2) that when 'Federico Valdez, Jr. was still living, "he never attempted to exclude the herein plaintiffs from ownership of the land in question, (and) said plaintiffs have been in continuous and uninterrupted possession of the premises they are occupying inside the lot in question long before the execution of the deed of sale (Exh. "I"), (and) it was only after the death of Federico Valdez, Jr. (in 1960) that the widow, Teofila Olorga, tried to eject the plaintiffs."

Given the antecedents of the property and the fact that its acquisition by Federico Valdez, Jr. was for the benefit not of himself alone but also of his brother and sisters, although for purposes of convenience he was made to appear as the sole vendee, the juridical relation that arose among them was one of co-ownership, with the plaintiffs-appellees actually in possession of a portion of the property. Under Article 494 of the Civil Code, "No prescription shall run in favor of a co-owner or co-heir against his co-owners or co-heirs so long as he expressly or impliedly recognizes the co-ownership." Insofar as the aspect of extinctive prescription referred to in this article is concerned, it is but a restatement of Article 1965 of the Spanish Civil Code, which provides: "As between co-heirs, co-owners, or proprietors of adjacent estates, the action to demand the partition of the inheritance or of the thing held in common, or the survey of the adjacent properties, does not prescribe." And from the standpoint of acquisitive prescription, or prescription of ownership, this Court has held in numerous decisions involving fiduciary relations such as those occupied by a trustee with respect to thecestui que trustthat as a general-rule the former's possession is not adverse and therefore cannot ripen into a title by prescription. Adverse possession in such a case requires, the concurrence of the following-circumstances: (a) that the trustee has performed unequivocal acts of repudiation amounting to an ouster of thecestui que trust; (b) that such, positive acts of repudiation have been made known to thecestui que trustand (c) that the evidence thereon should be clear and conclusive.*These circumstances are not present in this case.

In view of the foregoing considerations the judgment appealed from is hereby affirmed. With costs.

Zaldivar, Castro, Fernando, Teehankee, Barredo, Makasiar, Antonio and Esguerra, JJ., concur.G.R. No. L-33580 February 6, 1931MAXIMILIANO SANCHO,plaintiff-appellant,vs.SEVERIANO LIZARRAGA,defendant-appellee.

Jose Perez Cardenas and Jose M. Casal for appellant.Celso B. Jamora and Antonio Gonzalez for appellee.ROMUALDEZ,J.:The plaintiff brought an action for the rescission of a partnership contract between himself and the defendant, entered into on October 15, 1920, the reimbursement by the latter of his 50,000 peso investment therein, with interest at 12 per cent per annum form October 15, 1920, with costs, and any other just and equitable remedy against said defendant.

The defendant denies generally and specifically all the allegations of the complaint which are incompatible with his special defenses, cross-complaint and counterclaim, setting up the latter and asking for the dissolution of the partnership, and the payment to him as its manager and administrator of P500 monthly from October 15, 1920, until the final dissolution, with interest, one-half of said amount to be charged to the plaintiff. He also prays for any other just and equitable remedy.

The Court of First Instance of Manila, having heard the cause, and finding it duly proved that the defendant had not contributed all the capital he had bound himself to invest, and that the plaintiff had demanded that the defendant liquidate the partnership, declared it dissolved on account of the expiration of the period for which it was constituted, and ordered the defendant, as managing partner, to proceed without delay to liquidate it, submitting to the court the result of the liquidation together with the accounts and vouchers within the period of thirty days from receipt of notice of said judgment, without costs.

The plaintiff appealed from said decision making the following assignments of error:

1. In holding that the plaintiff and appellant is not entitled to the rescission of the partnership contract, Exhibit A, and that article 1124 of the Civil Code is not applicable to the present case.

2. In failing to order the defendant to return the sum of P50,000 to the plaintiff with interest from October 15, 1920, until fully paid.

3. In denying the motion for a new trial.

In the brief filed by counsel for the appellee, a preliminary question is raised purporting to show that this appeal is premature and therefore will not lie. The point is based on the contention that inasmuch as the liquidation ordered by the trial court, and the consequent accounts, have not been made and submitted, the case cannot be deemed terminated in said court and its ruling is not yet appealable. In support of this contention counsel cites section 123 of the Code of Civil Procedure, and the decision of this court in the case ofNatividad vs. Villarica(31 Phil., 172).

This contention is well founded. Until the accounts have been rendered as ordered by the trial court, and until they have been either approved or disapproved, the litigation involved in this action cannot be considered as completely decided; and, as it was held in said case of Natividad vs .Villarica, also with reference to an appeal taken from a decision ordering the rendition of accounts following the dissolution of partnership, the appeal in the instant case must be deemed premature.

But even going into the merits of the case, the affirmation of the judgment appealed from is inevitable. In view of the lower court's findings referred to above, which we cannot revise because the parol evidence has not been forwarded to this court, articles 1681 and 1682 of the Civil Code have been properly applied. Owing to the defendant's failure to pay to the partnership the whole amount which he bound himself to pay, he became indebted to it for the remainder, with interest and any damages occasioned thereby, but the plaintiff did not thereby acquire the right to demand rescission of the partnership contract according to article 1124 of the Code. This article cannot be applied to the case in question, because it refers to the resolution of obligations in general, whereas article 1681 and 1682 specifically refer to the contract of partnership in particular. And it is a well known principle that special provisions prevail over general provisions.

By virtue of the foregoing, this appeal is hereby dismissed, leaving the decision appealed from in full force, without special pronouncement of costs. So ordered.

Avancea, C.J., Johnson, Street, Malcolm, Villamor, Ostrand, Johns and Villa-Real, JJ., concur.G.R. No. L-15398. December 29, 1962.]

J. M. TUASON & CO., INC., represented by its Managing Partner, GREGORIO ARANETA; INC.,Plaintiff-Appellee, v. TEODOSIO MACALINDONG,Defendant-Appellant.

Leandro Sevilla and Ramon S. Aquino, forDefendant-Appellant.

Araneta & Araneta forPlaintiff-Appellee.SYLLABUS1. APPEAL AND ERROR; RAISING QUESTIONS BELOW, ISSUES OF PRESCRIPTION AND LACHES CANNOT BE RAISED FOR THE FIRST TIME ON APPEAL. Neither prescription of appellees claim or bar of the action for recovery due to laches was averred in appellants defenses. Appellant cannot raise them now for the first time on appeal. Verily, the failure to raise the issue of prescription and laches, amounts to a waiver of such defenses (Sec. 10, Rule 98; Maxilon v. Tobacco, 9 Phil., 390; Domingo v. Osorio, 7 Phil., 405).

2. TORRENS REGISTRATION; IMPRESCRIPTIBILITY OF TORRENS TITLE; DOCTRINE OF LACHES NOT AVAILABLE AGAINST OWNER OF THE TITLE BUT AGAINST POSSESSOR. The right of the appellee to file an action to recover possession based on its Torrens Title is imprescriptible and not barred under the doctrine of laches (Art. 348, Civil Code; Francisco, Et Al., v. Cruz, Et Al., (CA) 43 Off. Gaz. 5105). On the contrary, the laws on prescription of actions and on estoppel and laches presently operate against appellant. After many years of inactionforty-four (44) years from July 8, 1914 (issuance of O.C.T. No. 735, Rizal), or nineteen (19) years from May 29, 1939 (issuance of T.C.T. No. 1267), appellant should be completely barred from assailing the decree of registration of the subject property (Tiburcio v. PHHC, 106 Phil., 477; 57 Off. Gaz. [4] 638, See also J.M. Tuason & Co. Inc., v. Bolaos 95 Phil., 106, and J.M. Tuason & Co, Inc. v. Santiago, 99 Phil., 615; 50 Off. Gaz [11] 5727, involving the same Decree).

3. ID.; ACTION FOR ANNULMENT OF TORRENS TITLE; GROUNDS. To sustain an action for annulment of a Torrens Title, for being void ab initio, it must be shown that the Land Court which had issue the pertinent decree of registration, did not acquire jurisdiction over the case.

4. ID.; ACTION FOR RECONVEYANCE; GROUNDS. To succeed in an action for reconveyance after the lapse of one year from the decree of registration, actual fraud in securing the title must be proved (Bernardo v. Siojo, 58 Phil. 89, 102).

5. ID.; POSSESSOR IS NOT BUILDER IN GOOD FAITH WHERE HE HAD PRESUMPTIVE KNOWLEDGE OF OWNERS TORRENS TITLE. It appears that appellant was not a builder in good faith. From the initial certificate of title of appellees predecessors-in-interest there is a presumptive knowledge by appellant of appellees Torrens Title (which is a notice to the whole world) over the subject premises and consequently appellant cannot, in good conscience, say now that he believed his vendor, his vendors vendor and the latters seller had rights of ownership over said lot (Francisco, Et Al., v. Cruz, supra). Appellant, had likewise, a sufficient warning from the fact that the lot, subject of his purchase, is described in his Exhibits 1, 2 and 3, to be a portion of an unnumbered and, therefore, unapproved subdivision plan. Had he investigated before buying and before building his house on the questioned lot, he would have been informed that the land is registered under the Torrens system in the name of J.M. Tuason & Co., Inc. If he failed to make the necessary inquiry, appellant is now bound conclusively to appellees Torrens Title (Sec. 51, Act 496; Emos v. Zuzuargui, 35 Phil., 144). Moreover, when appellant was trying to declare the property, the Office of the City Assessor told him he could not do so, because there was "a question to that." Lastly, appellants remedy in this regard, should have been directed against his predecessors-in-interest.

D E C I S I O NPAREDES,J.:On September 9, 1958, plaintiff instituted Civil Case No. Q-3303 in the Court of First Instance of Rizal, against Teodosio Macalindong, alleging therein that it is the registered owner of a parcel of land, commonly known as the Sta. Mesa Heights Subdivision, located at Quezon City and covered by Transfer Certificate of Title No. 1267 (37686-Rizal) of the Registry of Deeds of Quezon City; that on or about December 5, 1955, the defendant, thru force, strategy and stealth, unlawfully entered into the possession of some 200 square meters, within said parcel of land, situated at Barrio North Tatalon, Quezon City, and constructed his house thereon; and that because of this act it suffered and will continue to suffer damages at the rate of P60.00 monthly, representing the fair rental value of the portion occupied. Defendant Answering, stated among others, that

". . . prior to 1955 and since time immemorial, he and his predecessors-in-interest have been in open, adverse, public, continuous and actual possession of the lot in question in the concept of owner and, by reason of such possession, he had made improvement thereon valued at P9,000.00."cralaw virtua1aw library

As a counterclaim, he asked an award of P25,000.00 for moral and exemplary damages and P600.00 as attorneys fees.

Defendant presented documents tending to show that the portion in question was acquired by him on June 28, 1954, thru purchase from Graciano M. Flores (Exh. 1), who in turn acquired the same from Lucia T. Teotico on April 27, 1954 (Exh. 2). The latter bought the same from Agustin de Torres on April 1, 1950 (Exh. 3), who allegedly derived his title from Telesforo Deudor, a party in the Compromise Agreement, which formed the basis of the joint decisions in Civil Cases Nos. Q- 135, 139, 174, 177 and 186, of the same court.

The court a quo rendered judgment, the pertinent portions of which read

". . . In the first place, the Court takes judicial notice of the fact that this property has been registered under the Torrens System, in the name of plaintiff since 1914, hence, the claim of possession of defendant cannot defeat the efficacy of the title of the plaintiff in the second place, as testified to by the defendant himself when he was trying to declare the property in question in the Office of the City Assessor he could not do so because he was told that there was a question to that. In fine, the documents presented by the defendant cannot be considered by the Court as to vest in him any rights over the property in question as against the title of the plaintiff which has been issued since 1914. . . .

WHEREFORE, the Court renders judgment in favor of the plaintiff and against the defendant by declaring the defendant to have no valid right of possession and title whatever in plaintiffs premises; ordering him and all persons claiming under him to vacate the premises in question and to remove his house and other construction therefrom; ordering him to pay the plaintiff the sum of P30.00 a month from the date of usurpation in 1955 until the plaintiff is restored to the possession of the same; and for him to pay the costs."cralaw virtua1aw library

Defendant presented a Motion to Reconsider and/or to Set Aside Decision, alleging that the said decision is contrary to the evidence and law. It was contended that while the plaintiff secured title over the land, the portion in question, however, had been in the adverse, open, public and continuous possession of the defendants predecessor- in-interest, since 1893. Defendant reproduced portions of the Compromise Agreement used in the Civil Cases earlier enumerated, to show the possession of his predecessors-in-interest, to wit:

"SECOND. That within the perimeter of said land is an area measuring fifty (50) quiones, over which the DEUDORS have claimed possessory rights by virtue of what purports to be an abstract of an informacion posesoria covering the latter property, which recites that at the time of issuance thereof in 1893, the Records of the Registry of Deeds of Manila (South District) showed that said property was registered in the name of the old Telesforo Deudor, predecessor-in-interest of the present Deudors who are parties hereto. . . .

"THIRD. That said DEUDORS have been in possession of the land in question and claim to be the owners thereof and during the period of possession have sold their possessory rights to various third persons;

"FOURTH. That in the middle of 1950, DEUDORS, under a mistaken impression of the nature of their rights in said property, began the following suits against the OWNERS in the Court of First Instance of Quezon City . . ."cralaw virtua1aw library

The motion for reconsideration having been denied on February 21, 1959, defendant appealed directly to this Court, claiming that the court a quo erred

(1) In not holding that plaintiff-appellees Torrens Certificate of Title is Null and Void insofar as the property in controversy is concerned;

(2) In not holding that plaintiff-appellees action has already prescribed or is already barred by laches;

(3) In not holding that defendant-appellant is a possessor in good faith and is entitled to retention until reimbursed of the value of his improvements;

(4) In ordering defendant-appellant to pay rentals to the sum of P30 per month from 1955 until plaintiff-appellee is restored to the possession of the land in controversy; and

(5) In not dismissing the complaint.

The appellees cause of action is based on its ownership of the subject land, evidenced by TCT No. 1267 of the Register of Deeds of Quezon City (Exhibit A), which was issued in appellees name on May 29, 1939 (Decree No. 17431 G.L.R.O. No. 7681), and was traceable to O.C.T. No. 735 (Rizal, issued on July 8, 1914.) Appellants defense is that he is the owner of the subject premises. His only counter-claim is for attorneys fees and moral and exemplary damages, for appellees supposedly malicious and frivolous presentation of the complaint. Nullity of appellees title and reconveyance were never set up, either as defenses or as counter-claims. Neither prescription of appellees claim or bar of the action for recovery due to laches was averred in appellants defenses. Appellant cannot raise them now for the first time on appeal. Verily, the failure to raise the issue of prescription and laches, amounts to a waiver of such defenses (Sec. 10, Rule 9; Maxilom v. Tabotabo, 9 Phil., 390; Domingo v. Osorio, 7 Phil., 405). Moreover, the right of the appellee to file an action to recover possession based on its Torrens Title is imprescriptible and not barred under the doctrine of laches (Art. 348, Civil Code; Francisco, Et Al., v. Cruz, Et Al., [CA] 43 O.G. 5105). On the contrary, the laws on prescription of actions and on estoppel and laches presently operate against appellant. After many years of inaction forty-four (44) years, from July 8, 1914 (issuance of O. C. T. No. 735, Rizal), or nineteen (19) years from May 29, 1939 (issuance of T. C. T. No. 1267), appellant should be completely barred from assailing the decree of registration of the subject property (Tiburcio v. PHHC, G.R. No. L-13429, Oct. 31, 1959; See also J. M. Tuason & Co., Inc., v. Bolaos, L-4935, May 28, 1954, and J. M. Tuason & Co., Inc. v. Santiago, G.R. No. L-5079, July 31, 1956, involving the same Decree).

We are in accord with appellants contention that Act No. 496 is not intended to shield fraud and that registration thereunder merely confirms title but does not vest any, when there is none, because registration under the Torrens system is not a mode of acquiring ownership. We are not, however, justified to apply these principles to the facts of the case and partially annul appellees Torrens Title, which, as stated above, is traceable to an original certificate of title issued way back in 1914, or over 44 years ago, and which is now incontrovertible and conclusive against the whole world (sec. 38, Act 496). To sustain an action for annulment of a Torrens Title, for being void ab initio, it must be shown that the land Court which had issued the pertinent decree of registration, did not acquire jurisdiction over the case; and to succeed in an action for reconveyance after the lapse of one year from the decree of registration, actual fraud in securing the title must be proved (Bernardo v. Siojo, 58 Phil. 89, 102). The pleadings filed by appellant before the trial court, alleged no such lack of jurisdiction and no evidence whatsoever was adduced or attempted to be adduced on the question of jurisdiction of the said land court; and the record also fails to show fraudulent acts or any knowledge of others adverse rights by the original Tuason registrants in G. L. R. O. Rec. No. 7681, or that the latter knew of Telesforo Deudors or Agustin de Torres supposed right of ownership.

Appellant mentions an informacion posesoria, subject of Compromise Agreement dated March 16, 1953, between Deudor and Tuason & Co., Inc., allegedly issued in 1893 to Telesforo Deudor, who sold a portion of his land to Agustin de Torres, who possessed it until it passed to Lucia T. Teotico, to show that he had a previous title to the land, before the appellee had obtained a Torrens Title in 1914. In the first place, the compromise agreement had already been rescinded (Deudor, Et. Al. v. J. M. Tuason & Co., Inc. L-13768, May 30, 1961). In the second place, the records do not indicate that either Telesforo Deudor or Agustin de Torres was in possession of the subject lot, at the time appellees predecessor-in-interest had obtained a Torrens Title thereto in 1914, or at any time before World War II. And there is no finding of the trial court to this effect. On the contrary, it is a fact that in December 1955, appellant entered a portion of 200 square meters of appellees land, without the consent and knowledge of appellee, and on September 9, 1958, appellee commenced the present action for recovery of possession. To this finding of fact, the parties are bound, because the appeal, according to appellant, would only raise questions of law. Moreover, if We were to give due weight to the compromise agreement which, by the way, was not presented in evidence in the case at bar, the appellant will have to concede that "The Deudors had a wrong impression of the nature of their rights" in the subject property, and perforce admit that Telesforo Deudor and Agustin de Torres had no dominical title to the property in question.

Appellant claims that he should have been declared a builder in good faith, that he should not have been ordered to pay rentals, and that the complaint should have been dismissed. Again this question is being raised for the first time on appeal. It was not alleged as a defense or counter-claim and the trial court did not make any finding on this factual issue. From the documents submitted, however, it appears that appellant was not a builder in good faith. From the initial certificate of title of appellees predecessors-in-interest issued on July 8, 1914, there is a presumptive knowledge by appellant of appellees Torrens Title (which is a notice to the whole world) over the subject premises and consequently appellant can not, in good conscience, say now that he believed his vendor (Flores), his vendors vendor (Teotico) and the latters seller (De Torres) had rights of ownership over said lot (Francisco, Et Al., v. Cruz, supra). Appellant, had likewise, a sufficient warning from the fact that the lot, subject of his purchase, is described in his Exhibits 1, 2 and 3, to be a portion of an unnumbered and, therefore, unapproved subdivision plan. Had he investigated before buying and before building his house on the questioned lot, he would have been informed that the land is registered under the Torrens system in the name of J. M. Tuason & Co., Inc. If he failed to make the necessary inquiry, appellant is now bound conclusively to appellees Torrens Title (Sec. 51, Act 496 Emas v. Zuzuarregui, 35 Phil., 144). Moreover, when appellant was trying to declare the property, the Office of the City Assessor told him he could not do so, because there was "a question to that." Lastly, appellants remedy in this regard, should have been directed against his predecessors-in-interest.

The decision appealed from, is therefore, affirmed, with costs against the defendantAppellant.

Bengzon,C.J., Padilla, Bautista Angelo, Concepcion, Reyes, J.B.L., Barrera and Makalintal,JJ., concur.

G.R. No. L-18703 August 28, 1922INVOLUNTARY INSOLVENCY OF CAMPOS RUEDA & CO., S. en C.,appellee,vs.PACIFIC COMMERCIAL CO., ASIATIC PETROLEUM CO., and INTERNATIONAL BANKING CORPORATION,petitioners-appellants.

Jose Yulo, Ross and Lawrence and J. A. Wolfson for appellants.Antonio Sanz for appellee.ROMUALDEZ,J.:The record of this proceeding having been transmitted to this court by virtue of an appeal taken herein, a motion was presented by the appellants praying this court that this case be considered purely a moot question now, for the reason that subsequent to the decision appealed from, the partnership Campos Rueda & Co., voluntarily filed an application for a judicial decree adjudging itself insolvent, which is just what the herein petitioners and appellants tried to obtain from the lower court in this proceeding.

The motion now before us must be, and is hereby, denied even under the facts stated by the appellants in their motion aforesaid. The question raised in this case is not purely moot one; the fact that a man was insolvent on a certain day does not justify an inference that he was some time prior thereto.

Proof that a man was insolvent on a certain day does not justify an inference that he was on a day some time prior thereto. Many contingencies, such as unwise investments, losing contracts, misfortune, or accident, might happen to reduce a person from a state of solvency within a short space of time. (Kimball vs. Dresser, 98 Me., 519; 57 Atl. Rep., 767.)

A decree of insolvency begins to operate on the date it is issued. It is one thing to adjudge Campos Rueda & Co. insolvent in December, 1921, as prayed for in this case, and another to declare it insolvent in July, 1922, as stated in the motion.

Turning to the merits of this appeal, we find that this limited partnership was, and is, indebted to the appellants in various sums amounting to not less than P1,000, payable in the Philippines, which were not paid more than thirty days prior to the date of the filing by the petitioners of the application for involuntary insolvency now before us. These facts were sufficient established by the evidence.

The trial court denied the petition on the ground that it was not proven, nor alleged, that the members of the aforesaid firm were insolvent at the time the application was filed; and that was said partners are personally and solidarily liable for the consequence of the transactions of the partnership, it cannot be adjudged insolvent so long as the partners are not alleged and proven to be insolvent. From this judgment the petitioners appeal to this court, on the ground that this finding of the lower court is erroneous.

The fundamental question that presents itself for decision is whether or not a limited partnership, such as the appellee, which has failed to pay its obligation with three creditors for more than thirty days, may be held to have committed an act of insolvency, and thereby be adjudged insolvent against its will.

Unlike the common law, the Philippine statutes consider a limited partnership as a juridical entity for all intents and purposes, which personality is recognized in all its acts and contracts (art. 116, Code of Commerce). This being so and the juridical personality of a limited partnership being different from that of its members, it must, on general principle, answer for, and suffer, the consequence of its acts as such an entity capable of being the subject of rights and obligations. If, as in the instant case, the limited partnership of Campos Rueda & Co. Failed to pay its obligations with three creditors for a period of more than thirty days, which failure constitutes, under our Insolvency Law, one of the acts of bankruptcy upon which an adjudication of involuntary insolvency can be predicated, this partnership must suffer the consequences of such a failure, and must be adjudged insolvent. We are not unmindful of the fact that some courts of the United States have held that a partnership may not be adjudged insolvent in an involuntary insolvency proceeding unless all of its members are insolvent, while others have maintained a contrary view. But it must be borne in mind that under the American common law, partnerships have no juridical personality independent from that of its members; and if now they have such personality for the purpose of the insolvency law, it is only by virtue of general law enacted by the Congress of the United States on July 1, 1898, section 5, paragraph (h), of which reads thus:

In the event of one or more but not all of the members of a partnership being adjudged bankrupt, the partnership property shall not be administered in bankruptcy, unless by consent of the partner or partners not adjudged bankrupt; but such partner or partners not adjudged bankrupt shall settle the partnership business as expeditiously as its nature will permit, and account for the interest of the partner or partners adjudged bankrupt.

The general consideration that these partnership had no juridical personality and the limitations prescribed in subsection (h) above set forth gave rise to the conflict noted in American decisions, as stated in the case ofIn reSamuels (215 Fed., 845), which mentions the two apparently conflicting doctrines, citing one fromIn reBertenshaw (157 Fed., 363), and the other from Francisvs.McNeal (186 Fed., 481).

But there being in our insolvency law no such provision as that contained in section 5 of said Act of Congress of July 1, 1898, nor any rule similar thereto, and the juridical personality of limited partnership being recognized by our statutes from their formation in all their acts and contracts the decision of American courts on this point can have no application in this jurisdiction, nor we see any reason why these partnerships cannot be adjudged bankrupt irrespective of the solvency or insolvency of their members, provided the partnership has, as such, committed some of the acts of insolvency provided in our law. Under this view it is unnecessary to discuss the other points raised by the parties, although in the particular case under consideration it can be added that the liability of the limited partners for the obligations and losses of the partnership is limited to the amounts paid or promised to be paid into the common fund except when a limited partner should have included his name or consented to its inclusion in the firm name (arts. 147 and 148, Code of Commerce).

Therefore, it having been proven that the partnership Campos Rueda & Co. failed for more than thirty days to pay its obligations to the petitioners the Pacific Commercial Co. the Asiatic Petroleum Co. and the International Banking Corporation, the case comes under paragraph 11 of section 20 of Act No. 1956, and consequently the petitioners have the right to a judicial decree declaring the involuntary insolvency of said partnership.

Wherefore, the judgment appealed from is reversed, and it is adjudged that the limited partnership Campos Rueda & Co. is and was on December 28, 1921, insolvent and liable for having failed for more than thirty days to meet its obligations with the three petitioners herein, and it is ordered that this proceeding be remanded to the Court of First Instance of Manila with instruction to said court to issue the proper decrees under section 24 of Act No. 1956, and proceed therewith until its final disposition.

It is so ordered without special finding as to costs.

Araullo, C. J., Johnson, Street, Malcolm, Avancea, Villamor, Ostrand, and Johns, JJ., concur.G.R. No. 6906 September 27, 1911FLORENTINO RALLOS, ET AL.,plaintiff-appellee,vs.TEODORO R. YANGCO,defendant-appellant.

Mariano Escueta, for appellant.Martin M. Levering, for appellees.MORELAND,J.:This is an appeal from a judgment of the Court of First Instance of the Province of Cebu, the Hon. Adolph Wislizenus presiding, in favor of the plaintiffs, in the sum of P1,537.08, with interest at 6 per cent per annum from the month of July, 1909, with costs.

The defendant in this case on the 27th day of November, 1907, sent to the plaintiff Florentino Rallos, among others, the following letter:

CIRCULAR NO. 1.

MANILA, November 27, 1907 MR. FLORENTINO RALLOS,Cebu.

DEAR SIR: I have the honor to inform you that I have on this date opened in my steamship office at No. 163 Muelle de la Reina, Binondo, Manila, P. I., a shipping and commission department for buying and selling leaf tobacco and other native products, under the following conditions:

1. When the consignment has been received, the consignor thereof will be credited with a sum not to exceed two-thirds of the value of the goods shipped, which may be made available by acceptance of a draft or written order of the consignor on five to ten day's sight, or by his ordering at his option a bill of goods. In the latter case he must pay a commission of 2 per cent.

2. No draft or written order will be accepted without previous notice forwarding the consignment of goods to guarantee the same.

3. Expenses of freight, hauling and everything necessary for duly executing the commission will be charged in the commission.

4. All advances made under sections (1) and (3) shall bear interest at 10 per cent a year, counting by the sale of the goods shipped or remittance of the amount thereof.

5. A commission of 2 per cent will be collected on the amount realized from the sale of the goods shipped.

6. A Payment will be made immediately after collection of the price of the goods shipped.

7. Orders will be taken for the purchase of general merchandise, ship-stores, cloths, etc., upon remittance of the amount with the commission of 2 per cent on the total value of the goods bought. Expenses of freight, hauling, and everything necessary for properly executing the commission will be charged to the consignor.

8. The consignor of the good may not fix upon the consignee a longer period than four months, counting from the date of receipt, for selling the same; with the understanding that after such period the consignee is authorized to make the sale, so as to prevent the advance and cost of storage from amounting to more than the actual value of said goods, as has often happened.

9. The shipment to the consignors of the goods ordered on account of the amount realized from the sale of the goods consigned and of the goods bought on remittance of the value thereof, under sections (1) and (3), will not be insured against risk by sea and land except on written order of the interested parties.

10. On all consignments of goods not insured according to the next preceding section, the consignors will bear the risk.

11. All the foregoing conditions will take effect only after this office has acknowledged the consignor's previous notice.

12. All other conditions and details will be furnished at the office of the undersigned.

If you care to favor me with your patronage, my office is at No. 163 Muelle de la Reinna, Binondo, Manila, P. I., under the name of "Teodoro R. Yangco." In this connection it gives me great pleasure to introduce to you Mr. Florentino Collantes, upon whom I have conferred public power of attorney before the notary, Mr. Perfecto Salas Rodriguez, dated November 16, 1907, to perform in my name and on my behalf all acts necessary for carrying out my plans, in the belief that through his knowledge and long experience in the business, along with my commercial connections with the merchants of this city and of the provinces, I may hope to secure the most advantageous prices for my patrons. Mr. Collantes will sign by power of attorney, so I beg that you make due note of his signature hereto affixed.

Very respectfully,

(Sgd.) T. R. YANGCO.

(Sgd.) F. COLLANTES.

Accepting this invitation, the plaintiffs proceeded to do a considerable business with the defendant through the said Collantes, as his factor, sending to him as agent for the defendant a good deal of produce to be sold on commission. Later, and in the month of February, 1909, the plaintiffs sent to the said Collantes, as agent for the defendant, 218 bundles of tobacco in the leaf to be sold on commission, as had been other produce previously. The said Collantes received said tobacco and sold it for the sum of P1,744. The charges for such sale were P206.96. leaving in the hands of said Collantes the sum of P1,537.08 belonging to the plaintiffs. This sum was, apparently, converted to his own use by said agent.

It appears, however, that prior to the sending of said tobacco the defendant had severed his relations with Collantes and that the latter was no longer acting as his factor. This fact was not known to the plaintiffs; and it is conceded in the case that no notice of any kind was given by the defendant to the plaintiffs of the termination of the relations between the defendant and his agent. The defendant refused to pay the said sum upon demand of the plaintiffs, placing such refusal upon the ground that at the time the said tobacco was received and sold by Collantes he was acting personally and not as agent of the defendant. This action was brought to recover said sum.

As is seen, the only question for our decision is whether or not the plaintiffs, acting in good faith and without knowledge, having sent produce to sell on commission to the former agent of the defendant, can recover of the defendant under the circumstances above set forth. We are of the opinion that the defendant is liable. Having advertised the fact that Collantes was his agent and having given them a special invitation to deal with such agent, it was the duty of the defendant on the termination of the relationship of principal and agent to give due and timely notice thereof to the plaintiffs. Failing to do so, he is responsible to them for whatever goods may have been in good faith and without negligence sent to the agent without knowledge, actual or constructive, of the termination of such relationship.

For these reasons the judgment appealed from is confirmed, without special finding as to costs.

Torres, Mapa, Johnson and Carson, JJ.,concur.

EN BANC

G.R. No. 2962 February 27, 1907B. H. MACKE, ET AL.,plaintiffs-appellees,vs.JOSE CAMPS,defendant-appellant.

Manuel G. Gavieres for appellant.Gibbs & Gale for appellees.CARSON,J.:The plaintiffs in this action, B. H. Macke and W. H. Chandler, partners doing business under the firm name of Macke, Chandler & Company, allege that during the months of February and March, 1905, they sold to the defendant and delivered at his place of business, known as the "Washington Cafe," various bills of goods amounting to P351.50; that the defendant has only paid on account of said accounts the sum of P174; that there is still due them on account of said goods the sum of P177.50; that before instituting this action they made demand for the payment thereof; and that defendant had failed and refused to pay the said balance or any part of it up to the time of the filing of the complaint.

B. H. Macke, one of the plaintiffs, testified that on the order of one Ricardo Flores, who represented himself to be agent of the defendant, he shipped the said goods to the defendants at the Washington Cafe; that Flores later acknowledged the receipt of said goods and made various payments thereon amounting in all to P174; that on demand for payment of balance of the account Flores informed him that he did not have the necessary funds on hand, and that he would have to wait the return of his principal, the defendant, who was at that time visiting in the provinces; that Flores acknowledged the bill for the goods furnished and the credits being the amount set out in the complaint; that when the goods were ordered they were ordered on the credit of the defendant and that they were shipped by the plaintiffs after inquiry which satisfied the witness as to the credit of the defendant and as to the authority of Flores to act as his agent; that the witness always believed and still believes that Flores was the agent of the defendant; and that when he went to the Washington Cafe for the purpose of collecting his bill he found Flores, in the absence of the defendant in the provinces, apparently in charge of the business and claiming to be the business manager of the defendant, said business being that of a hotel with a bar and restaurant annexed.

A written contract dated May 25, 1904, was introduced in evidence, from which it appears that one Galmes, the former owner of the business now know as the "Washington Cafe," subrented the building wherein the business was conducted, to the defendant for a period of one year, for the purpose of carrying on that business, the defendant obligating himself not to sublet or subrent the building or the business without the consent of the said Galmes. This contract was signed by the defendant and the name of Ricardo Flores appears thereon as a witness, and attached thereto is an inventory of the furniture and fittings which also is signed by the defendant with the word "sublessee" (subarrendatario) below the name, and at the foot of this inventory the word "received" (recibo) followed by the name "Ricardo Flores," with the words "managing agent" (el manejante encargado) immediately following his name.

Galmes was called to the stand and identified the above- described document as the contract and inventory delivered to him by the defendant, and further stated that he could not tell whether Flores was working for himself or for some one else that it to say, whether Flores was managing the business as agent or sublessee.

The defendant did not go on the stand nor call any witnesses, and relies wholly on his contention that the foregoing facts are not sufficient to establish the fact that he received the goods for which payment is demanded.

In the absence of proof of the contrary we think that this evidence is sufficient to sustain a finding that Flores was the agent of the defendant in the management of the bar of the Washington Cafe with authority to bind the defendant, his principal, for the payment of the goods mentioned in the complaint.

The contract introduced in evidence sufficiently establishes the fact that the defendant was the owner of business and of the bar, and the title of "managing agent" attached to the signature of Flores which appears on that contract, together with the fact that, at the time the purchases in question were made, Flores was apparently in charge of the business, performing the duties usually entrusted to managing agent, leave little room for doubt that he was there as authorized agent of the defendant. One who clothes another apparent authority as his agent, and holds him out to the public as such, can not be permitted to deny the authority of such person to act as his agent, to the prejudice of innocent third parties dealing with such person in good faith and in the following preassumptions or deductions, which the law expressly directs to be made from particular facts, are deemed conclusive:

(1) "Whenever a party has, by his own declaration, act, or omission, intentionally and deliberately led another to believe a particular thing true, and to act upon such belief, he can not, in any litigation arising out such declaration, act, or omission, be permitted to falsify it" (subsec. 1, sec. 333, Act no. 190); and unless the contrary appears, the authority of an agent must be presumed to include all the necessary and usual means of carrying his agency into effect. (15 Conn., 347; 90 N. C. 101; 15 La. Ann, 247; 43 Mich., 364; 93 N. Y., 495; 87 Ind., 187.)

That Flores, as managing agent of the Washington Cafe, had authority to buy such reasonable quantities of supplies as might from time to time be necessary in carrying on the business of hotel bar may fairly be presumed from the nature of the business, especially in view of the fact that his principal appears to have left him in charge during more or less prolonged periods of absence; from an examination of the items of the account attached to the complaint, we are of opinion that he was acting within the scope of his authority in ordering these goods are binding on his principal, and in the absence of evidence to the contrary, furnish satisfactory proof of their delivery as alleged in the complaint.

The judgment of the trial court is affirmed with the costs of his instance against the appellant. After expiration of twenty days judgment will be rendered in accordance herewith, and ten days thereafter the case remanded to the lower court for proper action. So ordered.

Arellano, C.J., Torres and Willard, JJ.,concur.Tracey, J.,dissents.

The Lawphil Project - Arellano Law Foundation

HYPERLINK "http://www.lawphil.net/judjuris/juri1907/feb1907/gr_2962_1907.html" \l "top"

G.R. No. L-22331 June 6, 1967IN RE: PETITION FOR CONSOLIDATION OF TITLE IN THE VENDEES OF A HOUSE AND THE RIGHTS TO A LOT.MARIA BAUTISTA VDA. DE REYES, ET AL.,vendees-petitioners-appellees.RODOLFO LANUZA,vendor,vs.MARTIN DE LEON,intervenor-appellant.

Erasmo R. Cruz and C. R. Pascual for intervenor-appellant.Augusto J. Salas for vendees-petitioners-appellees.REGALA,J.:Rodolfo Lanuza and his wife Belen were the owners of a two-story house built on a lot of the Maria Guizon Subdivision in Tondo, Manila, which the spouses leased from the Consolidated Asiatic Co. On January 12, 1961, Lanuza executed a document entitled "Deed of Sale with Right to Repurchase" whereby he conveyed to Maria Bautista Vda. de Reyes and Aurelia R. Navarro the house, together with the leasehold rights to the lot, a television set and a refrigerator in consideration of the sum of P3,000. The deed reads:

DEED OF SALE WITH RIGHT TO REPURCHASE KNOW ALL MEN BY THESE PRESENTS:

That I, RODOLFO LANUZA, Filipino, of legal age, married to Belen Geronimo, and residing at 783-D Interior 14 Maria Guizon, Gagalangin, Tondo, Manila, hereby declare that I am the true and absolute owner of a new two storey house of strong materials, constructed on a rented lot Lot No. 12 of the Maria Guizon Subdivision, owned by the Consolidated Asiatic Co. as evidenced by the attached Receipt No. 292, and the plan of the subdivision, owned by said company.

That for and in consideration of the sum of THREE THOUSAND PESOS (P3,000.00) which I have received this day from Mrs. Maria Bautista Vda. de Reyes, Filipino, of legal age, widow; and Aurelia Reyes, married to Jose S. Navarro, Filipinos, of legal ages, and residing at 1112 Antipolo St., Tondo, Manila, I hereby SELL, CEDE, TRANSFER, AND CONVEY unto said Maria Bautista Vda. de Reyes, her heirs, succesors, administrators and assigns said house, including my right to the lot on which it was constructed, and also my television, and frigidaire "Kelvinator" of nine cubic feet in size, under the following conditions:

I hereby reserve for myself, my heirs, successors, administrators, and assigns the right to repurchase the above mentioned properties for the same amount of P3,000.00, without interest, within the stipulated period of three (3) months from the date hereof. If I fail to pay said amount of P3,000.00, within the stipulated period of three months, my right to repurchase the said properties shall be forfeited and the ownership thereto shall automatically pass to Mrs. Maria Bautista Vda. de Reyes, her heirs, successors, administrators, and assigns, without any Court intervention, and they can take possession of the same.1wph1.tIN WITNESS WHEREOF, we have signed this contract in the City of Manila, this 12th day of January, 1961.

s/t RODOLFO LANUZAVendors/t MARIA BAUTISTA VDA. DE REYESVendee

s/t AURELIA REYESVendeeWITH MY MARITAL CONSENT:s/t JOSE S. NAVARRO

When the original period of redemption expired, the parties extended it to July 12, 1961 by an annotation to this effect on the left margin of the instrument. Lanuza's wife, who did not sign the deed, this time signed her name below the annotation.

It appears that after the execution of this instrument, Lanuza and his wife mortgaged the same house in favor of Martin de Leon to secure the payment of P2,720 within one year. This mortgage was executed on October 4, 1961 and recorded in the Office of the Register of Deeds of Manila on November 8, 1961 under the provisions of Act No. 3344.

As the Lanuzas failed to pay their obligation, De Leon filed in the sheriff's office on October 5, 1962 a petition for the extra-judicial foreclosure of the mortgage. On the other hand, Reyes and Navarro followed suit by filing in the Court of First Instance of Manila a petition for the consolidation of ownership of the house on the ground that the period of redemption expired on July 12, 1961 without the vendees exercising their right of repurchase. The petition for consolidation of ownership was filed on October 19. On October 23, the house was sold to De Leon as the only bidder at the sheriffs sale. De Leon immediately took possession of the house, secured a discharge of the mortgage on the house in favor of a rural bank by paying P2,000 and, on October 29, intervened in court and asked for the dismissal of the petition filed by Reyes and Navarro on the ground that the unrecordedpacto de retrosale could not affect his rights as a third party.

The parties1thereafter entered into a stipulation of facts on which this opinion is mainly based and submitted the case for decision. In confirming the ownership of Reyes and Navarro in the house and the leasehold right to the lot, the court said:

It is true that the original deed of sale withpacto de retro, dated January 12, 1961, was not signed by Belen Geronimo-Lanuza, wife of the vendora retro, Rodolfo Lanuza, at the time of its execution. It appears, however, that on the occasion of the extension of the period for repurchase to July 12, 1961, Belen Geronimo-Lanuza signed giving her approval and conformity. This act, in effect, constitutes ratification or confirmation of the contract (Annex "A" Stipulation) by Belen Geronimo-Lanuza, which ratification validated the act of Rodolfo Lanuza from the moment of the execution of the said contract. In short, such ratification had the effect of purging the contract (Annex "A" Stipulation) of any defect which it might have had from the moment of its execution. (Article 1396, New Civil Code of the Philippines; Tang Ah Chan and Kwong Koon vs. Gonzales, 52 Phil. 180)

Again, it is to be noted that while it is true that the original contract of sale with right to repurchase in favor of the petitioners (Annex "A" Stipulation) was not signed by Belen Geronimo-Lanuza, such failure to sign, to the mind of the Court, made the contract merely voidable, if at all, and, therefore, susceptible of ratification. Hence, the subsequent ratification of the said contract by Belen Geronimo-Lanuza validated the said contract even before the property in question was mortgaged in favor of the intervenor.

It is also contended by the intervenor that the contract of sale with right to repurchase should be interpreted as a mere equitable mortgage. Consequently, it is argued that the same cannot form the basis for a judicial petition for consolidation of title over the property in litigation. This argument is based on the fact that the vendorsa retrocontinued in possession of the property after the execution of the deed of sale withpacto de retro. The mere fact, however, that the vendorsa retrocontinued in the possession of the property in question cannot justify an outright declaration that the sale should be construed as an equitable mortgage and not a sale with right to repurchase. The terms of the deed of sale with right to repurchase (Annex "A" Stipulation) relied upon by the petitioners must be considered as merely an equitable mortgage for the reason that after the expiration of the period of repurchase of three months from January 12, 1961.

Article 1602 of the New Civil Code provides:

"ART. 1602. The contract shall be presumed to be in equitable mortgage, in any of the following cases;

x x x x x x x x x

"(3) When upon or after the expiration of the right to repurchase another instrument extending the period of redemption or granting a new period is executed.

x x x x x x x x x

In the present case, it appears, however, that no other instrument was executed between the parties extending the period of redemption. What was done was simply to annotate on the deed of sale with right to repurchase (Annex "A" Stipulation) that "the period to repurchase, extended as requested until July 12, 1961." Needless to say, the purchasersa retro, in the exercise of their freedom to make contracts, have the power to extend the period of repurchase. Such extension is valid and effective as it is not contrary to any provision of law. (Umale vs. Fernandez, 28 Phil. 89, 93)

The deed of sale with right to repurchase (Annex "A" Stipulation) is embodied in a public document. Consequently, the same is sufficient for the purpose of transferring the rights of the vendorsa retroover the property in question in favor of the petitioners. It is to be noted that the deed of sale with right to repurchase (Annex "A" Stipulation) was executed on January 12, 1961, which was very much ahead in point of time to the execution of the real estate mortgage on October 4, 1961, in favor of intervenor (Annex "B" Stipulation). It is obvious, therefore, that when the mortgagors, Rodolfo Lanuza and Belen Geronimo Lanuza, executed the real estate mortgage in favor of the intervenor, they were no longer the absolute owners of the property since the same had already been sold a retro to the petitioners. The spouses Lanuza, therefore, could no longer constitute a valid mortgage over the property inasmuch as they did not have any free disposition of the property mortgaged. (Article 2085, New Civil Code.) For a valid mortgage to exist, ownership of the property mortgaged is an essential requisite. A mortgage executed by one who is not the owner of the property mortgaged is without legal existence and the registration cannot validate. (Philippine National Bank vs. Rocha, 55 Phil. 497).

The intervenor invokes the provisions of article 1544 of the New Civil Code for the reason that while the real estate mortgage in his favor (Annex "B" Stipulation) has been registered with the Register of Deeds of Manila under the provisions of Act No. 3344 on November 3, 1961, the deed of sale with right to repurchase (Annex "A" Stipulation) however, has not been duly registered. Article 1544 of the New Civil Code, however, refers to the sale of the same property to two or more vendees. This provision of law, therefore, is not applicable to the present case which does not involve sale of the same property to two or more vendees. Furthermore, the mere registration of the property mortgaged in favor of the intervenor under Act No. 3344 does not prejudice the interests of the petitioners who have a better right over the property in question under the old principle of first in time, better in right. (Gallardo vs. Gallardo, C.B., 46 O.G. 5568)

De Leon appealed directly to this Court, contending (1) that the sale in question is not only voidable but voidab initiofor having been made by Lanuza without the consent of his wife; (2) that the pactode retrosale is in reality an equitable mortgage and therefore can not be the basis of a petition for consolidation of ownership; and (3) that at any rate the sale, being unrecorded, cannot affect third parties.

We are in accord with the trial court's ruling that a conveyance of real property of the conjugal partnership made by the husband without the consent of his wife is merely voidable. This is clear from article 173 of the Civil Code which gives the wife ten years within which to bring an action for annulment. As such it can be ratified as Lanuza's wife in effect did in this case when she gave her conformity to the extension of the period of redemption by signing the annotation on the margin of the deed. We may add that actions for the annulment of voidable contracts can be brought only by those who are bound under it, either principally or subsidiarily (art. 1397), so that if there was anyone who could have questioned the sale on this ground it was Lanuza's wife alone.

We also agree with the lower court that between an unrecorded sale of a prior date and a recorded mortgage of a later date the former is preferred to the latter for the reason that if the original owner had parted with his ownership of the thing sold then he no longer had the ownership and free disposal of that thing so as to be able to mortgage it again. Registration of the mortgage under Act No. 3344 would, in such case, be of no moment since it is understood to be without prejudice to the better right of third parties.2Nor would it avail the mortgagee any to assert that he is in actual possession of the property for the execution of the conveyance in a public instrument earlier was equivalent to the delivery of the thing sold to the vendee.3But there is one aspect of this case which leads us to a different conclusion. It is a point which neither the parties nor the trial court appear to have sufficiently considered. We refer to the nature of the so-called "Deed of Sale with Right to Repurchase" and the claim that it is in reality an equitable mortgage. While De Leon raised the question below and again in this Court in his second assignment of error, he has not demonstrated his point; neither has he pursued the logical implication of his argument beyond stating that a petition for consolidation of ownership is an inappropriate remedy to enforce a mortgage.

De Leon based his claim that thepacto de retrosale is actually an equitable mortgage on the fact that, first, the supposed vendors (the Lanuzas) remained in possession of the thing sold and, second, when the three-month period of redemption expired the parties extended it. These are circumstances which indeed indicate an equitable mortgage.4But their relevance emerges only when they are seen in the perspective of other circumstances which indubitably show that what was intended was a mortgage and not a sale.These circumstances are:

1.The gross inadequacy of the price. In the discussion in the briefs of the parties as well as in the decision of the trial court, the fact has not been mentioned that for the price of P3,000, the supposed vendors "sold" not only their house, which they described as new and as being made of strong materials and which alone had an assessed value of P4,000, but also their leasehold right television set and refrigerator, "Kelvinator of nine cubic feet in size." indeed, the petition for consolidation of ownership is limited to the house and the leasehold right, while the stipulation of facts of the parties merely referred to the object of the sale as "the property in question." The failure to highlight this point, that is, the gross inadequacy of the price paid, accounts for the error in determining the true agreement of the parties to the deed.

2.The non-transmission of ownership to the vendees. The Lanuzas, the supposed vendors did not really transfer their ownership of the properties in question to Reyes and Navarro. What was agreed was that ownership of the things supposedly sold would vest in the vendees only if the vendors failed to pay P3,000. In fact the emphasis is on the vendors payment of the amount rather than on the redemption of the things supposedly sold. Thus, the deed recites that

If I (Lanuza) fail to pay said amount of P3,000.00 within the stipulated period of three months, my right to repurchase the said properties shall be forfeited and the ownership thereto automatically pass to Mrs. Maria Bautista Vda. de Reyes . . . without any Court intervention and they can take possession of the same.

This stipulation is contrary to the nature of a truepacto de retrosale under which a vendee acquires ownership of the thing sold immediately upon execution of the sale, subject only to the vendor's right of redemption.5Indeed, what the parties established by this stipulation is anodious pactum commissoriumwhich enables the mortgages to acquire ownership of the mortgaged properties without need of foreclosure proceedings. Needless to say, such a stipulation is a nullity, being contrary to the provisions of article 2088 of the Civil Code.6Its insertion in the contract of the parties is an avowal of an intention to mortgage rather than to sell.73.The delay in the filing of the petition for consolidation. Still another point obviously overlooked in the consideration of this case is the fact that the period of redemption expired on July 12, 1961 and yet this action was not brought until October 19, 1962 and only after De Leon had asked on October 5, 1962 for the extra-judicial for closure of his mortgage. All the while, the Lanuzas remained in possession of the properties they were supposed to have sold and they remained in possession even long after they had lost their right of redemption.

Under these circumstances we cannot but conclude that the deed in question is in reality a mortgage. This conclusion is of far-reaching consequence because it means not only that this action for consolidation of ownership is improper, as De Leon claims, but, what is more that between the unrecorded deed of Reyes and Navarro which we hold to be an equitable mortgage, and the registered mortgage of De Leon, the latter must be preferred. Preference of mortgage credits is determined by the priority of registration of the mortgages,8following the maxim "Prior tempore potior jure" (He who is first in time is preferred in right.)9Under article 2125 of the Civil Code, the equitable mortgage, while valid between Reyes and Navarro, on the one hand, and the Lanuzas, on the other, as the immediate parties thereto, cannot prevail over the registered mortgage of De Leon.

[G.R. No. L-29388. December 28, 1970.]

VINCENT P. DAYRIT,Petitioner, v. THE COURT OF APPEALS, HON. FRANCISCO ARCA, Judge of the Court of First Instance of Manila, Branch I, MOBIL OIL PHILIPPINES, INC., and ELADIO YLAGAN, Special Sheriff,Respondents.

Ramon Quisumbing, Jr., forPetitioner.

Faylona, Cruz, Berroya, Norte & Nentanilla for respondent Mobil Oil Philippines, Inc.D E C I S I O NCASTRO,J.:Petition forcertiorariby way of appeal from the Court of Appeals minute resolution of June 14, 1968 dismissing the petition forcertiorariin CA-G.R. No. 41359-R, as well as its resolutions of July 9, 1968 and August 5, 1968 denying the first and second motions for reconsideration, respectively, in the same case.

On July 21, 1965, the defendants Vincent Dayrit, Leonila T. Sumbillo and Reynaldo Angeles entered into a contract with the Mobil Oil Philippines, Inc., entitled "LOAN & MORTGAGE AGREEMENT," providing, among others, that:jgc:chanrobles.com.ph

"(a) For and in consideration of Sales Agreement dated July 21, 1965 among, the parties herein, Mobil grants a loan of P150,000 to borrowers.

"(b) Defendants-Borrowers shall repay Mobil the whole amount of P150,000 plus 10% interest per annum on the diminishing balance for 48 months.

"(c) To secure the prompt repayment of such loan by defendants-borrowers to Mobil and the faithful performance by Borrowers of that Sales Agreement, Defendants-Borrowers hereby transfer in favor of Mobil by way of first mortgage lands covered by TCT No. 45169 and TCT No. 45170, together with the improvements existing in said two (2) parcels of land.

"(d) In case of default of Defendants-Borrowers in payment of any of the installments and/or their failure to purchase the quantity of products stated therein Mobil shall have the right to foreclose this mortgage.

"(e) Mobil, in case of default and foreclosure, shall be entitled to attorneys fees and cost of collection equivalent to not less than 25% of total indebtedness remaining unpaid.

"(f) All expenses in connection with the preparation and registration of this mortgage as well as cancellation of same shall be for the account of Defendants-Borrowers.

"(g) If Defendants-Borrowers shall perform the full obligation above stated according to the terms thereof, then this obligation shall be null and void, otherwise, it shall remain in full force and effect."cralaw virtua1aw library

The defendants violated the Loan & Mortgage Agreement, they having paid but one installment in the amount of P3,816, of which P1,250 was applied to interest, and the remaining P2,566 to the principal obligation. The defendants likewise failed to buy the quantities of products as required in the Sales Agreement (exh. D). The plaintiff made due demand (exh. I), which the defendant Dayrit answered, acknowledging his liability in his letter exh. I-1.

On November 17, 1967, after trial and after the parties had submitted their memoranda, 1 the trial court rendered its decision, the dispositive portion of which reads:jgc:chanrobles.com.ph

"WHEREFORE, judgment is hereby rendered in favor of the plaintiff and against the defendants Vincent Dayrit, Leonila T. Sumbillo and Reynaldo Angeles, ordering them to pay to the plaintiff one-third each of the sum of P147,434.00 with interest of 10% per annum from the time it fell due according to agreement, and in default of such payment, the properties put up in collateral shall be sold in foreclosure sale in accordance with law, the proceeds to be applied in payment of the amount due to the plaintiff from the defendants as claimed in the complaint provided that, as to Dayrit, his liability shall in no case exceed 1/3 of the total obligation.

"The defendants are likewise ordered to pay to the plaintiff, in the same proportion of 1/3 each, 25% of the obligation as attorneys fees as provided in the contract; and P300.60 for the registration of the contract.

xxx

"Each of the three said defendants shall also pay 1/3 of the costs."cralaw virtua1aw library

No appeal having been interposed by the defendants, the above decision became final and executory.

An undated Mobils motion for execution of the decision and for the appointment of Eladio Ylagan as special sheriff (annex D) was received by the herein petitioner Dayrit on February 8, 1968. Whereupon, he filed his opposition and motion to stay execution, alleging that before the finality of the aforesaid judgment, he and the plaintiff had agreed not to appeal and/or file any motion for reconsideration, the petitioner offering to pay his one-third share with a reasonable discount, if possible, in so far as the interests and the award for attorneys fees were concerned, with the corresponding release of the mortgage on all his properties, and praying, in view thereof, for a 30-day grace period within which to pay the plaintiff. The 30-day grace period was granted by the court in its order of February 24, 1968.

On March 25, 1968 the petitioner filed another motion for 20 days extension within which to pay his one-third share of the judgment obligation and to submit the corresponding compromise agreement for the satisfaction of the judgment. The said motion was granted on April 1, 1968.

Thereafter, the respondent Mobil filed an "Urgent Reply to Opposition and Motion to Stay Execution dated Feb. 21, 1968 and Motion dated March 25, 1968," alleging therein that the respondent agreed to release the mortgage or collateral for the entire judgment obligation only if "the whole principal mortgaged debt plus the whole accrued interest" were fully paid. Mobil further prayed for a writ of execution to be issued against the petitioner after the lapse of 20 days from March 25, 1968, if by then the parties shall not have submitted to compromise agreement for the satisfaction of the judgment; Mobil also reiterated its prayer for the appointment of respondent Eladio Ylagan as special sheriff.

On April 3, 1968 the petitioner filed a manifestation and motion, praying that he be allowed to deposit with the Clerk of Court the amount corresponding to his one-third share of the obligation under the decision of November 17, 1967, and that thereupon the collateral or mortgage over petitioners properties or lands be ordered released or cancelled.

On April 10, 1968 the court a quo ordered all pending incidents set for hearing on April 19, 1968, "so that the Court may have the opportunity to confer with the parties to thresh out the settlement of this case." At this hearing Mobil did not appear; the court reset the hearing for May 23, 1968.

Under date of May 8, 1968, Mobil filed an addendum to its reply dated April 1, 1968 and opposition to petitioners motion dated April 3, 1968, praying that the motion of petitioner Dayrit that the entire mortgaged collateral be released upon his payment of mere 1/3 of the loan obligation, be denied and instead a writ of execution against him in accordance with the dispositive portion of the decision and sections 2 and 3 of Rule 68 of the Revised Rules of Court be issued.

On May 18, 1968 the petitioner filed his rejoinder to respondent Mobils aforesaid addendum and opposition.

On May 23, 1968, after hearing oral argument, the court denied the manifestation and motion of Dayrit filed thru counsel and dated April 3, 1968; the court further ruled that "There is no further need to issue an order for the issuance of a writ of execution and appointment of special sheriff . . . considering that the Court, in its order of February 24, 1968, has already ordered the issuance of a writ of execution for the satisfaction of the judgment."cralaw virtua1aw library

The petitioner then filed his petition forcertiorariwith the Court of Appeals, dated May 30, 1968, alleging that "respondent Judge Arca acted without or in excess of his jurisdiction and/or with grave abuse of discretion, in denying petitioners motion to allow him to pay or deposit his one-third share of the judgment obligation" as well as the consequent release or cancellation of the mortgage on his properties.

The Court of Appeals, however, in its minute resolution of June 14, 1968, dismissed the petition forcertiorari, in the following words:jgc:chanrobles.com.ph

"Upon consideration of the petition forcertiorarifiled in this case, the Court RESOLVED TO DISMISS the petition, there being no abuse of discretion in ordering the execution of a final judgment. Details of execution for satisfaction of Vincent Dayrits liability will be worked out in connection with the sale of the collateral for mortgaged debt, and the judgment in Civil Case No. 64138 of the CFI-Manila will control the disposition and application of the collateral."cralaw virtua1aw library

The petitioner filed a motion for reconsideration dated June 9, 1968 which the Court of Appeals denied in its resolution of July 9, 1968, as follows:jgc:chanrobles.com.ph

"Both the petition and the motion for reconsideration are based on a misapprehension of the terms of the judgment. The mortgage obligation is one and indivisible. it was executed to assure payment of the total indebtedness of the three defendants in Civil Case No. 64138, and not merely one-third (1/3) thereof corresponding to petitioner Vincent P. Dayrits liability."cralaw virtua1aw library

The petitioners second motion for reconsideration of July 25, 1968 was summarily dismissed on August 5, 1968, for lack of merit.

The petitioner, in his present petition, tenders the following issues for resolution:jgc:chanrobles.com.ph

"1) Whether or not respondent Judge [CFI-Manila] acted without or in excess of his jurisdiction, and/or with grave abuse of discretion in denying petitioners motion to allow him to exercise his clearly legal right to pay or deposit his one-third share of the judgment obligation;

"2) The next issue was that brought about by the Court of Appeals resolution dismissing the petition forcertiorari, and which was raised in petitioners motion dated June 19, 1968 for reconsideration of said resolution, contending that the ground for dismissal did not jibe with the issue raised in the petition forcertiorari

"3) And lastly the Court of Appeals resolution of July 9, 1968 denying said motion for reconsideration injected the issue of alleged misapprehension on the part of petitioner of the terms of the judgment of respondent judge."cralaw virtua1aw library

1. The question raised by the respondent Mobil that the present petition forcertiorariwas filed way beyond the reglementary period of 15 days from appellants receipt of notice of judgment or of the denial of his motion for reconsideration pursuant to section 1, Rule 45 of the Revised Rules of Court, 2 needs to be resolved before consideration of this case on the merits. Admittedly, the ex parte first motion for reconsideration filed by the herein petitioner was denied, and copy of such denial was received by the petitioner on July 15, 1968. Still not satisfied, petitioner filed another ex parte motion for reconsideration on July 26, 1968, notice of the denial of which, under CA resolution dated August 5, 1968, was received by said petitioner on August 9, 1968.

Respondent Mobil contends that the second motion for reconsideration filed by the petitioner was a mere scrap of paper and pro-forma since it was filed ex parte and without express leave of court, contrary to the mandate of section 1, Rule 52 of the Rules of Court. 3

The rule appears to be inflexible in the sense that no more than one motion for reconsideration shall be filed without express leave of court. The requirement that the second motion for reconsideration must be presented, with leave of court, within fifteen days from notice of the order or judgment, deducting the time during which the first motion was pending, is to afford the court sufficient time to evaluate whether there is prima facie merit therein, so that, "if the court finds merit prima facie in the motion for re-hearing or reconsideration, the adverse party shall be given time to answer, after which the court, in its discretion, may set the case for oral argument." 4 And only upon compliance with the above stated requirements may the second motion for reconsideration stay the final order or judgment sought to be re-examined. 5

The Court of Appeals gave due course to the second motion for reconsideration of the herein petitioner, but nevertheless, dismissed the same summarily for lack of merit.

However, even assuming, that the ex parte second motion for reconsideration was properly filed so as to toll the reglementary period within which to appeal, it appears that the petition forcertiorarifiled with this Court on August 20, 1968 was time-barred. From the date of denial of the petitioners ex parte first motion for reconsideration received by him on July 15, 1968 assuming that the period was interrupted by the ex parte second motion for reconsideration from July 26, 1968 to August 9, 1968 (15 days) to the elevation of the said case to this Court on August 20, 1968, 36 days had elapsed. Deducting the 15 days during which the ex parte second motion for reconsideration was pending from the total period of 36 days leaves 21 days. This means that the present petition was filed with this Court six days late, contrary to and in violation of section 1, Rule 45, which specifically provides that a petition forcertiorariunder such Rule should be filed within 15 days from notice of judgment or denial of motion for reconsideration. Hence, the present petition may be dismissed on the aforestated ground.

But we opt, nevertheless, to consider the merits of this case, if only to demonstrate to the petitioner his error.

2. The decision of the lower court, let it not be forgotten, has admittedly become final and executory. The controverted judgment ordered the defendants (Dayrit, Sumbillo and Angeles) "to pay to the plaintiff one-third each of the sum of P147,434.00 with interest of 10% per annum from the time it fell due according to agreement, and in default of such payment, the properties put up in collateral shall be sold in foreclosure sale in accordance with law, the proceeds to be applied in payment of the amount due to the plaintiff from the defendants as claimed in the complaint, provided that, as to Dayrit, his liability shall in no case exceed 1/3 of the total obligation."cralaw virtua1aw library

In sum, the issue that must be resolved in the instant case is, whether or not the Court of First Instance of Manila erred in ordering the sale at public auction of the mortgaged properties to answer for the entire P147,434 principal obligation after the defendants (Dayrit, Sumbillo and Angeles) had failed to pay their respective one-third shares of the obligation to the respondent Mobil; otherwise stated, whether or not the respondents Court of First Instance and the Court of Appeals erred in refusing to allow the alleged proposed deposit of a sum equivalent to 1/3 of the loan agreed upon and in refusing to release forever the collaterals owned by Dayrit, although the other 2/3 portion of the loan obligation had not been satisfied due to insolvency of the other two co-defendants.

To begin with, the prayer of the complaint filed with the respondent Court of First Instance recites as follows:jgc:chanrobles.com.ph

"WHEREFORE, it is respectfully prayed that judgment be rendered

"a) Ordering the defendants to pay the sum of P147,434 with 10% interest per annum from the time it fell due as agreed upon and that in default of such payment, the above described properties be sold and the proceeds of sale be applied to the payment of the amount due to the plaintiff from the defendant under this complaint."cralaw virtua1aw library

The complaint, in effect, is a collection suit with damages and foreclosure of mortgage against the three defendants, Leonila Sumbillo, Reynaldo Angeles and Vincent Dayrit. Although the Loan and Mortgage Agreement was signed by the three defendants as mortgagors, the properties being foreclosed belong solely to, and are registered solely in the name of, the petitioner Vincent Dayrit.

The pertinent dispositive portion of the decision rendered by the lower court reads:jgc:chanrobles.com.ph

"WHEREFORE, judgment is hereby rendered in favor of the plaintiff and against the defendants Vincent Dayrit, Leonila T. Sumbillo and Reynaldo Angeles, ordering them to pay to the plaintiff one-third each of the sum of P147,434 with interest of 10% per annum from the time it fell due according to agreement, and in default of such payment, the properties put up in collateral shall be sold in foreclosure sale in accordance with law, the proceeds to be applied in payment of the amount due to the plaintiff from the defendants as claimed in the complaint, provided that, as to Dayrit, his liability shall in no case exceed 1/3 of the total obligation."cralaw virtua1aw library

The petitioner contends that the said judgment is a simple money judgment and not a foreclosure judgment, and that because the respondent Mobil resorted to the remedy of enforcing his right by a complaint against the defendant-petitioner for collection of a sum of money, with the consequent simple money judgment, the satisfaction of his 1/3 share of the joint obligation would release all the mortgaged properties put up as collateral to secure the payment of the whole obligation. The reason advanced by the petitioner is that the decision rendered being a simple money judgment and not a mortgage-foreclosure judgment, the distinction in its execution is decisive, that is, whereas in mortgage foreclosure the judgment should conform to the requirement, embodied in section 2, Rule 68 of the Rules of Court, that the order of payment be made into the court "within a period not less than ninety (90) days . . . and in default of such payment, the property mortgaged be sold to realize" the indebtedness, in a simple money judgment, upon satisfaction of part in the instant case his 1/3