Republic of the PhilippinesSUPREME COURTManila

EN BANC

G.R. No. L-9957 August 8, 1916PERFECTO DE LA VEGA, ET AL.,plaintiffs-appellees,vs.TOMAS BALLILOS (or BALIELOS),defendant-appellant.

Silvestre Apacible for appellants.P. Joya Admana for appellees.TORRES,J.:This appeal by bill of exceptions was raised by counsel for the defendant from the judgment of January 23, 1914, in which the Court of First Instance of Batangas absolved the defendant from the complaint with respect to the parcels of land Nos. 2, 3, 4, and 8 in the rough sketch admitted by agreement of the parties, and ordered him to return and deliver to the plaintiffs the parcels of land designated on the said sketch as Nos. 1, 5 and 7, upon the plaintiffs paying to the defendant the sum of P430; with the costs of the proceedings against the appellant.

By a writing of May 9, 1913, plaintiffs through their counsel filed a complaint in the Court of First Instance of Batangas, alleging as a cause of action that they were the sole heirs of their common predecessors in interest, Victor de la Vega and Ursula de Guzman, who at their deaths were in possession of a parcel of land measuring sixcavanesand a half, situated in the barrio of Dao of the pueblo of Balayan, Batangas with the metes and bounds given and described in the rough sketch specifically mentioned in Paragraph I of the complaint; that the plaintiffs had continued in the common andpro indivisopossession of the said parcel of land, which was divided into seven parts or lots, as seen by the rough sketch attached to the complaint; that about the year 1895, Fidel de la Vega, one of the coowners of the said property, in consideration of a loan of P430 which he had received from the defendant Tomas Balielos (or Ballilos) conveyed to the latter the parcels of land Nos. 1, 4, and 6, by means of a contract of antichresis, until such time as the said debtor, or some one of the coowners of the land, should return the said borrowed sum; that subsequently, to wit, in the year 1905, the plaintiffs, with the exception of Policarpo de la Vega, successively borrowed from the defendant the sums of P40, P18 and P60, under the same contract of antichresis, but this time they gave as security the lots marked Nos. 2, 3, and 7, from which lots the defendant was to collect the interest due, as in fact he did, from the date of the encumbrance of the said parcels of land up to the time the complaint was filed when they offered to pay the defendant the said sums of P430, P40, P18, and P60, a total of P548, in order to reacquire the said parcels; but that the defendant refused and still unlawfully refuses to receive the said sums and has appropriated to himself the said parcels of land. The plaintiffs therefore prayed that the defendant be ordered to deliver the restore the said parcels of land to them, after they should have paid him the sum of P548, and that he be further ordered to pay to the plaintiffs the sum of P500 for the losses and damages suffered by them, with the costs of the proceedings against the defendant.

His demurrer having been overruled, the defendant in his answer denied each and all of the allegations contained in the complaint, and in special defense set forth that the description of the parcels of land in question was that found in the map inserted in paragraph (a) of his special defense. He added that the lots Nos. 1, 4, and 6, shown in the said sketch, were sold to him in July, 1896, by Fidel de la Vega with the consent of the other plaintiffs for the price of P430 on the condition that they might be repurchased, but that no period whatever was fixed for their redemption; that as the property had not been redeemed within the legal period, the ownership of the said parcels of land had become consolidated in the purchaser by force of law; that in about the same year, 1896, Roberta de la Vega, with the consent and authorization of the other plaintiffs, also sold to the defendant, for the sum of P40, lot No. 3, a parcel which measured one-half cavan of seed; that parcel No. 2 likewise had been sold to him by Felina Alio with the consent of the plaintiffs, in or about the month of February, 1901, for the sum of P28; and, finally, that parcel No. 5 likewise had been sold to him by Felina Alio with the consent of the plaintiffs, in or about the month of February, 1901, for the sum of P28; and, finally, that parcel No. 5 was sold to him by Fidel de la Vega with the consent of the other plaintiffs, in the year 1891, for the price of P80, on condition that it might be redeemed by the vendors at the same price; that no period was fixed within which it was to be repurchased and that as it was not repurchased by the plaintiffs within the period fixed by law, the ownership of the land had consequently become consolidated in the defendant; and that the latter had for many years been in the quiet, public, and continuous possession of the parcels of the land in question as the owner thereof, to the exclusion of every other person. Defendant therefore prayed that he be absolved from the complaint, with the costs against the plaintiffs.

After the hearing and the introduction of evidence by both parties, the court rendered the aforementioned judgment to which the defendant excepted and in writing moved for a reopening of the case and a new hearing. To the order overruling his motion defendant excepted and duly filed the proper bill of exceptions which was approved and transmitted to the clerk of this court.

The appeal in this case is therefore restricted to the parcels of land Nos. 1, 5, and 7 which defendant in the judgment appealed from is ordered to deliver and restore to the plaintiffs upon payment to him of the sum of P430, and the question here raised is whether the deed of conveyance of the said parcels of land, executed by Fidel de la Vega in favor of the defendant on July 29, 1896, and found in the document Exhibit O is a contract of antichresis, as contended by the plaintiffs, or whether it is a sale underpacto de retro, as the defendant-appellant in this instance alleges it to be.

According to the stipulation of the parties, the lots referred to on this appeal are those marked Nos. 1, 5, and 7 on the rough sketch shown on page 22 of the bill of exceptions, three parcels of land that were the subject matter of the contract executed between Fidel de la Vega and the defendant and contained in the document Exhibit O, dated Balayan, Batangas, July 29, 1896.

In order to determine the nature of and to classify the said contract, the essential part of the document Exhibit O, as found at pages 16 to 18 of the bill of exceptions, is transcribed here below. The parts thereof which refer to the names of the coowners of the two parcels of land mentioned in the contract, and to the area, metes, and bounds of each one of these two parcels, have been omitted. The said essential part is as follows:

. . . . and whereas on this day I have mortgaged the two parcels of land above-mentioned to the said D. Tomas Ballilos for the sum of P430 and for the term of eight years, counting from this day, at the expiration of which I may redeem them; that should I not then do so, the said lands shall continue to be mortgaged until I have the money available wherewith the redeem them; therefore, I hereby mortgage the two parcels of land hereinabove mentioned to D. Tomas Ballilos for the said sum of P430, which I have received from him in current coin, and as the same was not received in our presence, we waive the exception of money not paid in cash; therefore, henceforth and during the period above stipulated, I grant and convey my ownership and possession in the said two parcels of land to the said D. Tomas Ballilos in order that he may manage and enjoy the same in consideration of the sum for which they are mortgaged.

There being present D. Tomas Ballilos . . . ., he stated that he had received in mortgage, to his entire satisfaction, the two parcels of tillable land above mentioned, under the conditions and for the time stipulated, for the sum of P430, which he has already delivered to the said D. Fidel de a Vega, who in turn states that the said lands are free of all charges and encumbrances and binds himself to warrant this mortgage in case of legal proceedings.

The said contract apparently records a loan of P430, secured by a mortgage of the aforementioned two parcels of land and payable within the period of eight years, or within such time as the debtor Fidel de la Vega might be able to pay his debt and redeem the said land. However, notwithstanding the terms of the document, legally there is no mortgage inasmuch as the said instrument is not of the nature of a public instrument. And even though it were, it was not recorded in the property registry as it ought to have been. Furthermore, the instrument recites that the debtor thenceforth ceded and conveyed his ownership and possession in the said two parcels of land to the creditor Ballilos in order that Ballilos might manage and enjoy the same in consideration of the sum for which the lands, free of all burden and encumbrance according to the debtor, were mortgaged.

If the instrument above mentioned can not be construed as a mortgage of the said two parcels of land in security for P430, the amount loaned, and for the payment of the debt within eight years or some other period, neither can it be held to be a sale underpacto de retroinasmuch as the said document contains no mention whatever of any sale with right of redemption, although it does say that the debtor ceded and conveyed to the creditor the ownership and possession of the lands in order that he might manage and enjoy them in consideration of the sum for which they were mortgaged.

As it is not shown that the said document is a contract of mortgage executed as security for a loan, still less does it appear to be a contract ofpacto de retro, in view of the terms of the agreement Exhibit O, as stipulated between the contracting parties, of the allegations of both parties, and of the findings of the court in regard to the allegations, made and proven at the trial by the contending parties, we find the classification of the said contract as one of antichresis to be correct and proper, taking into account the intention of the contracting parties as revealed by the words and terms employed by them and recorded in the said document.

Several articles of the Civil Code relating to the contract of antichresis, are as follows:

ART. 1881. By antichresis a creditor acquires a right to receive the fruits of real property of his debtor, with the obligation to apply them to the payment of interest, if due, and afterwards to the principal of his credit.

ART. 1883. The debtor can not recover the enjoyment of the real property without previously paying in full what he owes to his creditor.

But the latter, in order to free himself from the obligations imposed on him by the preceding article, may always compel the debtor to reenter upon the enjoyment of the estate, unless there be an agreement to the contrary.

ART. 1884. The creditor does not acquire the ownership of the real property by nonpayment of the debt within the term agreed upon.

Any stipulation to the contrary shall be void. But in this case the creditor may demand, in the manner prescribed in the law of civil procedure, the payment of the debtor or the sale of the reality.

ART. 1885. The contracting parties may stipulate that the interest of the debt be set off against the fruits of the estate given in antichresis.

This contract is somewhat similar to those of pledge and mortgage and for this reason article 1886 prescribed that certain articles relative to these latter contracts are applicable to contracts of antichresis, for both the former and the latter contracts are comprised in title 15, book 4, of the Civil Code.

The court's construction as to the form of the contract entered into by the parties as found in the judgment appealed from, is fully supported by the law, the pleadings, and the evidence. The contract entered into by the contracting parties which has produced between them rights and obligations is in fact one of antichresis, for article 1281 of the Civil Code prescribes among other things that if the words should appear to conflict with the evident intent of the contracting parties, the intent shall prevail. Article 1283 provides that however general the terms of the contract may be, they should not be understood to include things and cases different from those with regard to which the interested parties intended to contract; and, further, article 1284 of the same code says that if any stipulation of a contract should admit of several different meanings, that most suitable to give it effect should be applied.

In the said Exhibit O it was stipulated that even after eight years the debtor, the owner of the property, might redeem it whenever he should have the means to pay his debt and recover the lands given in antichresis to his creditor who might told them in usufruct in consideration for the money he had loaned; and as the foregoing articles of the Civil Code fixes no term for the recovery of the enjoyment of immovables given in antichresis, provided that the debtor previously pay what he owes to this creditor, the plaintiffs have an unquestionable right to recover parcels Nos. 1, 5, and 7 of the land designated in the map or plan admitted by agreement of the parties, after first paying the debt of P430 to the defendant-creditor.

By the foregoing reasons, the errors assigned by the appellant to the judgment rendered in this suit have been fully refuted, and, therefore, as the said judgment is in accordance with the law and the evidence, it should be, as it is hereby, affirmed, with the costs against the defendant. So ordered.

Republic of the PhilippinesSUPREME COURTManila

EN BANC

G.R. No. 16256 September 28, 1921DIONISIA VALENCIA, ET AL.,plaintiffs-appellants,vs.HONORIO ACALA, ET AL.,defendants-appellees.

Aurelio Palileo for appellants.Francisco Alfonso for appellees.VILLAMOR,J.:This is an action for the redemption of certain land, which is described in the complaint.

At the trial, the parties submitted to the court the following agreed statement of facts:

The parties agree that the land in question is the same lot that is the subject of litigation in civil cause No. 966 of this court; and that in the year 1891, the plaintiff herein, Dionisia Valencia, and her deceased husband, Daniel Adepueng, conveyed to one Severino Agbagala and his wife Francisca Cadapan the land in question, as evidence by the document marked Exhibit A of the plaintiffs, which is found on folio 24 of civil cause No. 966 of this court.

Later on in the year 1899 Francisca Cadapan, wife of Severino Agbagala, conveyed this same property to Juan Cagayat and Josefa Galendis, as shown by the memorandum appearing at the bottom of the document marked Exhibit A of the plaintiffs, attached to the record of the cause No. 966, folio 24.

That the possession of the land passed to Pedro Acala, who is one of the Acalas, the defendants in the present action. In the year 1912, the herein defendants Acala sold the land unconditionally to the herein defendant Bagayanan for the sum of P70.

The pertinent part of the contract Exhibit A reads thus:

We, Daniel Adepueng and Dionisia Valencia, acknowledge being indebted to Severino Agbagala in the sum of P6.75, which we will pay with the fruits of the land the possession of which we now turn over to him. We have mortgaged it for P6.75, it being covenanted that we may redeem it by paying the same price, without taking into account the fruits of the land and the interest on the money.

The memorandum mentioned in the agreement is as follows:

I, the undersigned, declare that the lot mentioned in the foregoing document (Exhibit A) was mortgaged by me to the spouses Juan Cagayat and Josefa Galendis for the same amount above-mentioned and with the same condition. Paete, December 6, 1899. Francisca Cadapan

The judgea quoheld that the contract in question was one of sale with the right of repurchase, and decided: (a) That the defendants must be absolved from the complaint; (b) that the contract (Exhibit A) and those that were successively executed involving the lot in question are contracts of sale and not of mortgage or of loan with security; (c) that the action for the redemption and annulment of the sale of the lot in question has prescribed; (d) that the defendant Apolinario Bagayanan is at present the lawful owner of the said lot; and (e) that the costs of the suit should be paid by the plaintiffs jointly and severally to the defendants.

Upon examining the record before us, and bearing in mind the fact that, when the terms of a contract are clear and leave no doubt as to the intention of the contracting parties, the literal meaning of its clauses should prevail, we are of the opinion that the contract herein above copied is a contract of antichresis and not of sale with the right of repurchase.

In the case ofDe la Vega vs. Ballilos(34 Phil., 683), this court said:

When money is loaned and the debtor places the creditor in possession of a piece of real property as security for the sum loaned in order that he may hold it in usufruct, in consideration for the said loan, the contract is not one of mortgage, notwithstanding the terms thereof, inasmuch as it is not of the nature of a public instrument, and even though it were, it does not appear to have been recorded in the property registry. Neither can such a contract be classified as one of sale underpacto de retro, notwithstanding that it is set forth therein that the debtor cedes and conveys to the creditor the ownership and possession of the said real property. Therefore, such a contract should be classified as one of antichresis, by means of which the creditor acquires the right to collect the fruits of the real property turned over to him by his debtor, but with the obligation to apply them to the payment of whatever interest is due and the contracting parties may stipulate that the interest of the debt be paid by the fruits of the property given in antichresis.

The legal nature of the contract in question having thus been determined, it is evident that the antichretic creditor and his successors in interest cannot acquire ownership by prescription of the realty given in antichresis.

That the defendants Acala could not sell unconditionally the same land to their codefendant Bagayanan, is proved by the agreed statement of facts according to which the possession of the predecessor in interest of the Acala people was the same precarious possession of his assignor Juan Cagayat.

The judgment appealed from is reversed, and it is ordered that the defendants return the land in question to the plaintiffs upon payment by the latter of the sum of P6,75, the redemption price of the land, without prejudice to whatever right his codefendants Acala the price he might have paid them for the land, without special finding as to costs. So ordered.

Johnson, Araullo, Street and Avancea, JJ.,concur.

Republic of the PhilippinesSUPREME COURTManila

EN BANC

G.R. No. L-45963 October 12, 1939CARLOS PARDO DE TAVERA and CARMEN PARDO DE TAVERA MANZANO,plaintiffs-appellants,vs.EL HOGAR FILIPINO, INC.,defendant-appellee.TAVERA-LUNA, INC.,defendant-appellant;VICENTE MADRIGAL,defendant-appellee.

Carlos P. de Tavera and E. Voltaire Garcia for plaintiffs and appellants.Pedro Sabido and Jose Avancea for defendant and appellant.Camus and Zavalla for appellee El Hogar Filipino.Vicente Madrigal in his own behalf.

MORAN,J.:On January 17, 1931, defendant corporation, Tavera-Luna Inc., for the purpose of constructing the Crystal Arcade building on its premises at Escolta, Manila. To secure this loan, the corporation executed a first mortgage on said premises and on the building proposed to be erected thereon. On February 11, 1932, Tavera-Luna, Inc., secured from El Hogar Filipino an additional loan of P300,000 with the same security executed for the original loan. The Tavera-Luna, Inc., thereafter, defaulted in the payment of the monthly amortizations on the loan: whereupon, El Hogar Filipino foreclosed the mortgage proceeded with the extra-judicial sale of the Crystal Arcade building, at which it was the highest bidder for P1,363,555.36. One day before the expiration of the period of redemption, Carlos Pardo de Tavera and Carmen Pardo de Tavera Manzano, in their capacity as stockholders of the Tavera-Luna, Inc., and El Hogar Filipino, Inc., to annul the two secured loans as well as extra-judicial sale made in favor of the latter. Vicente Madrigal was included as party defendant because of his having signed the second contract of loans aforementioned. From the judgment dismissing the complaint and cross-complaint, plaintiffs and cross-complainant took the present appeal.

The most important question raised by appellant is whether or not the two secured loans are null and void. It is contended that they are, on the ground that the Crystal Arcade building, given as security form the loans, is a public building. This contention is predicated upon section 171 of the Corporation Law which reads as follows:

It shall be unlawful for any building and loan association to make any loan after the date when this Act, as amended, shall become effective upon property that is able for use only as a manufacturing plant, theater, public hall, church, convent, school, club, hotel, garage, or other public building. To facilitate the investment of the idle funds of a building and loan association, however, the Bank Commissioner, with the approval of the Secretary of Finance, may, in special instances. waive the provisions of this paragraph.

We find it unnecessary to determine, in the instant case, whether the Crystal Arcade is or is not a public building, for, even if it is, the loan are valid. It may be said, in passing the evidence is sufficient to show that the Secretary of Finance and the Bank Commissioner had knowledge of the loans and of the security given therefor, and that they have impliedly approved the same. On the other hand, under the legal provision above quoted, a loan given on a property which may be considered as a public building, is not, in itself, null and void. It is unlawful to make loans on that kind of security, but the law does not declare the loan, once made, to be null and void. The unlawful taking of the security may constitute a misuser of the powers conferred upon the corporation by its charter, for which it may be made to answer in an action for ouster or dissolution; but certainly the stockholders and depositors of the corporation should not be punished with a loss of the money loaned nor the borrower be rewarded with it. As held by the Supreme Court of the United States, in a similar case:

The statute does not declare such a security void. If congress so meant, it would have been easy to say so; and it is hardly to be believed that this would not have been done, instead of leaving the question to be settled by the uncertain result of litigation and judicial decision . . ..

We cannot believe it was meant that stockholders, and perhaps depositors and other creditors, should be punished and the borrower rewarded, by giving success to this defense whenever the offensive fact shall occur. The impending danger of a judgment of ouster and dissolution was, we think, the check, and none other contemplated by congress.

That has been always the punishment prescribed for the wanton violation of a charter, and it may be made to follow whenever the proper public authority shall see fit to invoke its application. . . . (Union Nat. Bank of St. Louisvs.Matthews, 98 U.S., 621; 25 L. ed., 188.) In the same case it has been likewise held that:

Where it is a simple question of authority to contract, arising either on a question of regularity of organization or of power conferred by the charter, a party who has had the benefit of the agreement cannot he permitted, in an action founded upon it, to question its validity.

Fletcher on this matter says:

There is a direct conflict in the decisions as to the effect of a charter or statutory prohibition against discounting or lending money on certain securities. If the statute expressly declares that securities taken in violation of the prohibition shall be void, such securities cannot be enforced. Some courts have gone further and have held that the mere fact of prohibition renders them unenforceable; but this construction is not supported by the weight of authority. The better opinion is that where the charter of a corporation or some other statute prohibits it from lending money on certain kinds of security, but does not declare that prohibited securities taken by it shall be void, they are not void, and may be enforced by it. The taking of such security is a misuser of the powers conferred upon the corporation by its charter, for which the state may enforce a forfeiture, but the misuser cannot be set up by the borrower to prevent the corporation from enforcing the security. In case of a state statute prohibiting savings banks from lending their funds on the security of names alone, it has been held that a savings bank may enforce payment of a promissory note taken for money loaned in violation of the statute. (Vol. 7, Fletcher Cyc. Corp., sec. 3616, pp. 744, 745.)

It is contended that the contracts in question are not of mortgage, but of antichresis. The distinction, however, is immaterial, for even if the contracts are of antichresis, the extra-judicial foreclosure of the security is valid. Stipulations in a contract of antichresis for the extra-judicial foreclosure of the security may be allowed in the same manner as they are allowed in contracts of mortgage and of pledge. (El Hogar Filipinovs.Paredes, 45 Phil., 178; Petersonvs.Azada, 8 Phil., 432, 437.)lwphi1.ntAppellants contend that El Hogar Filipino has been given the possession and administration of the Crystal Arcade building, so that it may apply the rentals thereof to the payment of interest and the capital owed by Tavera-Luna, Inc., and that due to the negligence of El Hogar Filipino, no rental sufficient to cover the monthly amortizations on the debt had been realized therefrom. The alleged negligence is made to consist in the failure of El Hogar Filipino to advertise the rooms of the Crystal Arcade building for rent and to employ agents to solicit and attract tenants. But the evidence presented to this effect has been sufficiently contradicted by the evidence adduced by the defendant-appellant. Besides, it appears that El Hogar Filipino appointed Jose V. Ramirez as its representative in the management and administration of the Crystal Arcade building, and the appointment was made in agreement with Tavera-Luna, Inc. The ability of Ramirez to do the work entrusted to him is not disputed. As a matter of fact, Ramirez, during his management of the building, was a stockholder and director of the Tavera-Luna, Inc., and was serving that corporation as its secretary and treasurer. Under all these circumstances, we see no reason to disturb the findings of the lower court.

Judgment is affirmed, with costs against appellants.

Avancea, C.J., Villa-Real, Imperial, Diaz, and Concepcion, JJ., concur.Republic of the PhilippinesSUPREME COURTManila

EN BANC

G.R. No. L-6939 March 7, 1913AMOS A. DAVIS,plaintiff-appellant,vs.FRANCISCA NEYRA,defendant-appellee.

Bruce, Lawrence, Ross and Block, for appellant.Gregorio Yulo, for appellee.TRENT,J.:

The admitted facts in this case are these: Julian Palma sold the house in question on the 18th day of February, 1909, to the plaintiff, Amos A. Davis, for the sum of P1,000. According to the terms of the contract it was agreed by both parties that the vendor should remain in actual possession of the house on and after the 18th day of February, 1909, as the tenant of the vendee, by paying P15 per month rent. The vendor paid the rent as agreed upon for twelve months only. Julian Palma sold the house on June 28, 1909, with the right to repurchase the same on or before the 24th of the following month, to Emilio Esteban, for the sum of P595. Under the terms of this contract Palma was to occupy the house free of rent. On the 23rd day of September, 1909, for the consideration of P600, Palma made an absolute sale of the house to Esteban, and transferred the same on that date. On the 21st of December of the same year Esteban sold and transferred the house to one Jose Colomeda. Colomeda on the 19th day of December sold the house to the present defendant for the sum of P1,300. The defendant went into the actual possession of the house on this date, and has actually occupied the same up to the present time.

All of the above contracts of sales and transfers are evidenced by unregistered notarial public documents. The house has never been registered in the name of any person.

This action was instituted on the 19th day of October, 1910, for the purpose of recovering the possession of the house, together with rents at the rate of P15 per month. The defendant, in her answer, claimed to be the absolute owner of the house in question by virtue of the deed of purchase and sale executed in her favor by Jose Colomeda, and asked that judgment be entered dismissing the complaint with costs. The contention of the defendant was sustained by the lower court, and judgment rendered accordingly. The plaintiff appealed.

Counsel for the appellant insists that the trial court erred in holding that the defendant's title and right to possession could not be defeated by that of the plaintiff, even though the defendant were a purchaser in good faith, without notice, and for a valuable consideration. On the other hand, counsel for the appellee contends (1) that the sale made by Palma to the plaintiff was one of antichresis, and consequently by the plaintiff could not have acquired the ownership of the house, even though Palma failed to return the P1,000; (2) that the plaintiff's unregistered title cannot operate to defeat defendant's right of ownership and possession, because she is a "third party," and (3) that plaintiff never did enter into the possession of the house in question. In support of these propositions, counsel for appellee cites articles 1881, 1882, 1883, and 1473 of the Civil Code.

It is true that the defendant is a purchaser in good faith without knowledge of defect in her title and for a valuable consideration. It is also true that she entered into the actual or physical possession of the house in question on the 19th of December, 1909, and continues in such possession. Hers was an absolute purchase and sale, and she acquired all of the right, title, and interest of her vendor.

The inquiry now is, What kind of a sale was that made by Palma to the plaintiff? Was it a sale with the right to repurchase, or one of antichresis? A mere reading of the contract entered into between the plaintiff and Julian Palma is sufficient to show that the sale was one with the right to repurchase within the period of two years. This is specifically stated in the contract. The parties agreed that if Palma did not repurchase this property within two years, the plaintiff would become the absolute owner. The document itself says that the sale was one ofventa con pacto de retro. It was so treated by all of the parties, and the trial court found that the sale was one of this class. There is not the slightest room for doubt as to the intention of the parties. Neither is there room for any other construction or interpretation of the contract. The contract speaks for itself in plain, unequivocal words. This contract is defined and governed by article 1507et seq.of the Civil Code. It is here recognized as a contract ofpacto de retro. The rights and obligations of the parties of this contract are stated in those articles. The contract being a sale with the right to repurchase, it cannot be one of antichresis. The two sales are entirely different. In the former, the vendor cannot exercise the right of redemption without returning to the vendee the price of the sale, and if the vendor should not do this within the time agreed upon, the vendee irrevocably acquires the ownership of the thing sold; whereas, in the latter, the creditor only acquires a right to receive the fruits of the real property of his debtor with the obligation to apply them to the payment, first of the interest, and second of the principal of his credit. The creditor does not acquire the ownership of the real property when the sale is one of antichresis by non-payment of the debt within the term agreed upon.

After this suit was instituted, the defendant filed with the register of deeds a transfer made by Palma to Esteban for annotation only. She did nothing more. It is nor even contended that this constituted a registration of the property. The defendant had no registered title to the house, nor any registered interest therein; consequently, she was not a "third party."

On the consummation of the sale of real property (and the house in question was real property) with the right to repurchase the same, the ownership then passes to the vendee. Nothing is left in the vendor except the right to repurchase. Whether this is a real or personal right cannot affect this case. The transaction between Palma and the plaintiff constituted a sale. The house was sold to the plaintiff.

Article 1473 of the Civil Code provides:

ART. 1473. If the same thing should have been sold to different vendees, the ownership shall be transferred to the person who may have first taken possession thereof in good faith, if it should be personal property.

Should it be real property, it shall belong to the person acquiring it who first recorded it in the registry.

Should there be no entry, the property shall belong to the person who first took possession of it in good faith, and, in the absence thereof, to the person who presents the oldest title, provided there is good faith.

The house in dispute, as we have said, is real property. Neither party recorded his title. On the very day that the plaintiff bought to the house he entered into possession. Palma then became the tenant of the plaintiff. The possession of the tenant, in so far as the questions in this case are concerned, is the possession of the landlord. After the sale between Palma and the plaintiff, the former had nothing left to sell except his right to repurchase. He could not legally transfer the actual possession of the house to anyone. Such a transfer, if made, could not prejudice the title acquired by the plaintiff. The plaintiff having purchased the property and having received from the vendee the possession of the same, his title cannot be defeated by that of the defendant. The defendant, being a possessor in good faith, is relieved from the payment of rents.

For the foregoing reasons, the judgment appealed from is reversed and judgment entered in favor of the plaintiff as prayed for in his complaint, without costs.

Arellano, C.J., Torres, Mapa, Johnson, JJ.,concur.

Republic of the PhilippinesSUPREME COURTManila

EN BANC

G.R. Nos. L-32482, L-32483 March 14, 1931FELICIDAD A. DE PALAD, MATILDE, FRUCTUOSO, FRANCISCO, and LEONILA, all surnamed PALAD,plaintiffs-appellees,vs.K. SAITO and JOSE MADRAZO,defendants-appellants.

Pablo Lorenzo and Delfin Joven for appellants.Jayme and Jayme for appellees.Attorney-General Jaranilla as amicus curiae.MALCOLM,J.:An important question having to do with the application and interpretation of the law pertaining to conveyances and encumbrances made by persons belonging to the so-called non-Christian tribes, must be considered and decided in this case. The correct resolution of the question makes necessary a narration of the life history of the Bagobo Agol, who in later life went by the name of Santiago Palad.

In 1886, a son was born to the Bagobos Palad and Ontas. He was given the name of Agol. Eight years later the boy was baptized with the name of Santiago Palad. In 1904, Santiago Palad was one of the Bogobos sent from Davao to the St. Louis Exposition in the United States. At that time, he had his ears pierced. While in the United States, Palad was taught by an American to write his name, but otherwise has been unable to read and write. In due time, he married another Bagobo named Oyog, according to Bagobo rites. To that marriage four children were born, Matilde, Fructuoso, Francisco, and Leonila, or to give them their Bagobo names, Inding, Olo, Oska, and Oning. After the death of his wife, Palad was married a second time to Felicidad Ambat in accordance with the ceremonies of the Roman Catholic Church.

After Palad's return from the United States, he assumed the apparel worn by Christian Filipinos. Although lacking instruction, he became a man of considerable importance in the community. In addition to the Bagobo dialect, he spoke and understood the Cebuano dialect and also some Tagalog. In an election, he made speeches for one of the candidates. In business also, Palad was unusually successful. By purchases from other Bagobos and by occupation of unclaimed land, he formed an hacienda containing over 350 hectares. Palad in executing documents was sometimes mentioned as a Bagobo and sometimes not. Palad's manner of living was such that even his attorney was apparently unaware that he was a Bagobo. The same was true of the Japanese K. Saito and the Filipino Jose Madrazo.

In the period between January, 1923, and September, 1924, Palad executed three documents which are of particular interest. The first document in point of time purported to be a contract of antichresis. Palad, in consideration of the amount of P20,925.09, ceded by way of antichresis his abaca plantation, the exception of a small part thereof, to K. Saito. The P20,925.09 was made up of the accounts of Palad with the Ohta Development Company, the Mintal Plantation Company, Vicente Uy Tan Chang, and K. Saito. The document was verified before a notary public and J. A. Sarenas, the attorney for Palad, signed as one of the instrumental witnesses. Upon the execution of the document, Palad delivered the plantation to Saito, who proceeded to cultivate and develop it. By another document, this time of sale, dated January 26, 1923, Palad transferred to Saito the buildings on the land, five hemp stripping machines, and three carabaos for the sum of P5,333.46. By the terms of the agreement this sum was to be discounted from the P20,925.09, the consideration of the contract of antichresis. On September 27, 1924, Palad executed a third document, whereby he transferred the abaca plantation to Jose Madrazo for the sum of P3,500. Saito, in turn, consented to the sale, since it was subject to the encumbrance in his favor, by virtue of the contract of antichresis. This document was acknowledged by the parties before the clerk of court of Davao. Palad received P100 in cash, and a promissory note for the remaining P3,400 was signed by K. Ohsihiro. Thereafter, Madrazo attempted to take possession of the plantation. None of these documents, it should be added, were sent to the Director of the Bureau of Non-Christian Tribes for approval.

In the year 1925, two actions were begun which concerned the three documents here described. One was initiated by Jose Madrazo against Joaquin Ferraz, Santiago Palad, and Felicidad de Palad, and had to do with the judgment rendered in case No. 32483.1The second action, which is the one before us, was instituted by Santiago Palad against K. Saito and Jose Madrazo as the principal defendants. Later, on the death of Santiago Palad, his window and the children by this first marriage succeeded him. The plaintiffs in this action sought to obtain the possession of the plantation, with damages. For this purpose two grounds for the annulment of the three documents known as Exhibits A, B, and C were alleged: First, that Santiago Palad was induced to execute the documents through fraud, deceit, and false representation on the part of the defendants, and second, that Santiago Palad was a Bagobo and, therefore, the approval of the Director of the Bureau of Non-Christian Tribed should have been obtained, and this approval was lacking. The case went to trial on these issues, and, in effect, the trial judge found with the plaintiffs on both grounds. The judgment rendered was conceived in the following language:

Wherefore, let judgment be entered declaring that lots Nos. 253 and 255 described in the plan of the cadastral proceeding No. 6, Record No. 540, of the municipal district of Guianga, Province of Davao, the boundaries of which are given in the complaint, belong in equal undivided shares to the plaintiffs Matilde, Fructuoso, Francisco, and Leonila, surnamed Palad, the children of the late Santiago Palad by his first wife, Oyog (a Bagobo), now deceased; the preliminary injunction issued in this case is hereby declared absolute and final; and the defendants K. Saito and Jose Madrazo are hereby sentenced to pay to the plaintiffs jointly and severally the sum of P33,267.66 damages, and to pay the costs.

Defendant Rafael Castillo is absolved from the complaint and the costs of the trial.

With relation to the consolidated cases, the appellants have assigned twenty-six errors. It would not be profitable to discuss separately all of this varied assortment of questions. As before intimated, the issues were two in number, and the appeal can best be considered by continuing to visualize those issues.

To dispose of the subject of fraud, only a few words are needed. There is more than a suspicion that by various means, the financial necessities of Santiago Palad were taken advantage of to his detriment for the benefit of others. The real party behind the scenes appears to have been the Japanese Saito. We would not go so far as did the trial judge when he found that a plantation worth P200,000 was secured for a very inadequate consideration, but we do conclude that Santiago Palad was overreached when he was led to execute this series of documents. We doubt very much if the Director of the Bureau of Non-Christian Tribes would ever have given his approval to these contracts.

While not inclined to disregard the findings of the trial judge on questions of fact involving allegations and denials of fraud, we prefer to consider in conjunction therewith the admitted lack of confirmation of the conveyances by the Director of the Bureau of Non-Christian Tribes.

Act No. 2874, section 118, provides: "Conveyances and encumbrances made by persons, belonging to the so-called "non-Christian tribes," when proper, shall not be valid unless duly approved by the Director of the Bureau of Non-Christian Tribes." Two questions suggest themselves. The first has to do with the scope of section 118 of Act No. 2874, and the second has to do with the interpretation of the phrase "non-Christian tribes." In relation with the latter question, we have the definition of the term "non-Christian" as given in the Organic Law for the Department of Mindanao and Sulu, Administrative Code, section 2576, paragraph 2, where it is said that it "shall include Mohammedans and pagans."

Act No. 2874 is the Public land Act. It is provided therein that the provisions of the Act shall apply to the lands of the public domain. It has been held that it was the purpose of the Legislature to limit the application of the Public Land Act to lands of the public domain, and that lands held in freehold or fee title, or private ownership, constitute no part of the public domain and cannot possibly come within the purview of said Act. (Central Capizvs.Ramirez [1920], 40 Phil., 883.) Undoubtedly the intention of the Legislature in inserting section 118 in the Public Land act was to prevent the easy transfers of public land acquired by non-Christians to other persons who may simply utilize the non-Christians in acquiring lands from the public domain. It would, therefore, be reasonable to conclude that section 118 of the Public Land Act is limited in scope to conveyances made by persons belonging to the so-called non-Christian tribes, of lands which they have acquired from the public domain in accordance with the provisions of the Public Land Act.

Recurring to the facts, we note that thehaciendaof Santiago Palad was formed by Palad's purchases of lands from various Bagobos and by his cultivation of about 70 hectares. Section 118 of the Public Land act would naturally apply to the 70 hectares carved out of the public domain. Further, it does not appear of record that Palad's title, if any to any part of the land has been confirmed by "judicial legalization," within the meaning of the Public Land Act.

Passing now to the second question, it is to be observed that the words "non-Christian" as descriptive adjectives, applied to "inhabitants" or "tribes" have long been recognized as awkward and unsatisfactory expressions. An authoritative judicial construction of the term "non-Christian" first became necessary in the case of Rubivs.Provincial Board of Mindoro ([1919], 39 Phil., 660). In Code, reading: "With the prior approval of the Department Head, the provincial governor of any province in which non-Christian inhabitants are found is authorized, when such a course is deemed necessary in the interest of law and order, to direct such inhabitants to take up their habitation on sites on unoccupied public lands to be selected by him and approved by the provincial board," was challenged. By a vote of five to four, the Supreme Court sustained the constitutionality of this section of the Administrative Code. Among other things, it was held that the term "non-Christian" should not be given a literal meaning or a religious signification, but that it was intended to relate to degree of civilization. The term "non-Christian" it was said, refers not to religious belief, but in a way to geographical area, and more directly to natives of the Philippine Islands of a low grade of civilization.

The Director of the Bureau of Non-Christian Tribes, in a circular dated January 22, 1925, provided instructions for conveyances of and encumbrances on land by non-Christian, and in circulars of February 1, 1924, and November 28, 1927, interpreted administratively the meaning of the term "non-Christian." The Director, in part, stated: "The term "non-Christian" should be applied to natives who, in common parlance, do not come under the classification "Christian Filipino". . . . For instance, though Manobos may have been baptized, they still remain non-Christians for the purposes of this circular." In the enforcement of section 118 of the Public Land Act, the Director of the Bureau of Non-Christian Tribes holds, according to our understanding of the matter, that any document executed by a person who by birth belongs to any of the tribal groups classified as non-Christian shall be submitted to the Bureau for action.

Whichever way we turn in attempting to enforce the law, we encounter difficulties. It would appear sound, at first blush, to concede, since the term "non-Christian" applies to individuals of a low grade of civilization, that any member of a group originally classified as non-Christian could remove himself from that group by maintaining a mode of life different from that of the group, and which is on an entirely superior plane of civilization. To illustrate by the facts before us, we find a Bagobo baptized with a Christian name, commonly known by that name, a man of considerable standing in the community, and of sufficient business acumen to acquire properties of respectable values. To require a man of such native intelligence to secure the approval of the Director of the Bureau of Non-Christian Tribes before he makes conveyances, would seem to be an unnecessary precaution. Or to take a more extreme example of a Moro highly educated and cultured, in truth, far in advance in education and culture of a multitude of Christian Filipinos in other regions of the Islands, Would it be just to force this Moro to lay his documents before the Director of the Bureau of Non-Christian Tribes for the approval of the latter? The anomaly could exist of a non-Christian becoming a Christian, but still for the purposes of the law being considered a non-Christian.

On the other hand, the prohibition of sales and conveyances for definite classes of people, as for instance, of the Indians in the United States, without the prior approval of some official, as by the Secretary of the Interior in the case of the Indians, is not uncommon and is not an undue interference with personal liberty. It is the best interests of the people affected and not possible inconvenience to individuals which must govern. Actual cases have been decided by this court which have demonstrated the wisdom of provisions requiring contracts with illiterate and ignorant people to be approved by disinterested officials. To illustrate again by the facts before us, the Bagobo was of a class of people easily duped by designing individuals, and it was to protect the patrimony of such persons that the law was enacted. The law can be made a valuable means to keep and from passing by devious means into the hands of those who have no legal right to it. As was done in Rubivs.Provincial Board of Mindoro,supra, when to advance the public welfare, the law was found to be a legitimate exertion of the police power, so in the case at bar should the courts function to work in harmony with legislative and executive officials for the advancement of the good of the greatest number. On the whole, we think that the terms of the law should be given direct application, and that when the law speaks of persons belonging to the so-called non-Christian tribes, it means the persons who by birth are non-Christians, as customarily thus classified.

Appellants rely on the principle of estoppel. As evidencing the principle, they suggest similarity between the facts before us and the facts whereby infants near the adult age who pretend to have reached their majority are not permitted to excuse themselves from the compliance with the obligations assumed by them, or to seek annulment. We do not think that the analogy holds good. By the paramount law of the land, the defendants were prohibited from taking title, and cannot, therefore, indirectly be permitted to build up one by estoppel.

In President McKinley's Instructions to the Commission of April 7, 1900, reference was made to the policy adopted by the United States for the tribes of North American Indians, and it was suggested that in dealing with the uncivilized tribes of the Islands, the Commission should follow the same course. Indeed, the analogy between the regulations and restrictions provided for the Indians in the United States and the regulations and restrictions provided for the non-Christians in the Philippines is close. In the case of the Indians, it has always been recognized that the relation of the Indian tribes living within the borders of the United States to the people of the United States, is an anomalous one and of a complex character. No all-inclusive definition of the word "Indians" has been attempted either by the courts or by Congress. It has, however, been held that the mere fact that an Indian has abandoned his nomadic life or tribal relations and adopted the manners and habits of civilized people, does not of itself make him a citizen. (Elkvs.Wilkins [1884], 112 U. S., 94.) It has also been held as to an allottee Indian, who conveyed by warranty deed before patent and during the period of suspension of alienation without the consent of the Secretary of the Interior, that he acted contrary to the policy of the law and was, therefore, not estopped to deny the validity of the deed after patent, and that the grantee acquired no rights. (Starrvs.Long Jim [1913], 227 U. S., 613.).

Reference has been made to the possible applicability to the facts of section 145 and 146 of the Administrative Code of the Department of Mindanao and Sulu. We do not think it incumbent upon us to pass the question of whether or not these sections of Administrative Code of Mindanao and Sulu are in force, first, because not put in issue in the lower court, and, second, because a resolution of the question is unnecessary for the disposition of the case. There can simply be noted a decision of the Second Division of this court, entitled Tomas Mundizvs.Saudo (Mandaya), No. 20722,2in which some attention was given to the subject.

It will be recalled that the trial judge allowed the plaintiffs damages in this case in the amount of P33,267.66, and in the companion case damages in the amount of P8,800. These sums impress us as exorbitant. The defendants have improved the plantation to the advantage of the plaintiffs. The defendants have also assumed debts of the plaintiffs amounting to somewhere near P20,000. It would not be far from justice to permit the benefits derived from the defendants to balance the damages caused by the defendants, permitting, of course, Jose Madrazo to withdraw the P3,400 which has been deposited in court.

After a decision had been handed down in this case, the original attorneys for the appellants submitted a motion for reconsideration and additional counsel for the appellants submitted another motion for reconsideration which presented for the first time questions not theretofore pressed upon the court for ruling. Counsel for the appellees was given an opportunity to answer these motions, as was the Attorney-General who, at the request of the court, intervened as amicus curiae. The motions and answers have thrown new light on the case and have resulted in a modification of certain expressions of opinion by the court. However, we are not persuaded that the decisions suffers fundamentally from any serious defects. Nor do we consider that it is imperative either to permit the Director of Lands to file a complaint in intervention or to await the conclusion of the trial of the cadastral case of the municipal district of Guianga, Province of Davao.

We hold that fraud was present in the securing of the execution of the challenged documents, and that such fraud, in conjunction with the lack of approval of the conveyances, renders the documents voidable. We hold that section 118 of the Public Land Act refers to conveyances and encumbrances made by persons belonging to the so-called non-Christian tribes, of lands which they have acquired from the public domain in accordance with the provisions of the Public Land Act. We hold that the Bagobo Agol, or Santiago Palad, was a person belonging to a non-Christian tribe within the meaning of section 118 of the Public Land Act. We hold that Santiago Palad was not estopped to deny the validity of the contracts. We hold finally that the damages due and claimed by either party offset each other.

It follows that the judgment of the trial court will be affirmed, with the elimination therefrom of so much as condemns the defendants, jointly and severally, to pay the plaintiffs the amount of P33,267.66. The motions of reconsideration will be denied. So ordered, without express pronouncement as to costs in this instance.

Avancea, C.J., Street, Villamor, Ostrand, Johns, and Villa-Real, JJ., concur.Separate OpinionsJOHNSON,J.,dissenting:

There is absolutely no analogy between the relation of the non-Christian people of the Philippine Islands to the Philippine Government as compared with the relation of the American Indians to the American Government. The Philippine Government is without authority to impose upon any of its inhabitants a condition that he must secure the consent or permission of the Director of the Bureau of Non-Christian Tribes or any other person to sell or disposed of his private property acquired from the public domain or otherwise. (Cariovs.Insular Government, 7 Phil., 132; Cariovs.Insular Government, 212 U. S., 449; 53 Law, ed., 594; 41 Phil., 935.)

A citizen of the Philippine Islands, whether non-Christian or Christian, has a perfect right to dispose of his private property freely and without the necessity of securing the consent of any person or of the Government. To hold otherwise, would be tantamount to holding that private property is held by the citizens of the Philippine Islands with the restriction upon their ownership, that they cannot dispose of the same without first securing the consent of the Director of the Bureau of Non-Christian Tribes or some other person. Hundreds and thousands of the non-Christian people of the Philippine Islands have, through their industry and intelligence, become the absolute owners of private property. Any restraint upon their right to dispose of such property is illegal and contrary to the provisions of the Organic Act of the Philippine Islands. Any restraint or obstacle imposed upon the private owner of property to freely dispose of the same is illegal and unconstitutional. A restriction upon the right of one to dispose freely of his private property is, to a degree, a deprivation of the right to freely enjoy his own property.

In the United States the Government distributed lands freely to the American Indians and the only condition which was imposed upon that gift was the fact that they were not permitted to dispose of the same without the consent of the Secretary of the Interior. The Government having given to the Indian his land without a cost, it had a perfect right to impose such condition upon the disposition of the same as the Government might deem wise. In the Philippine Islands, however, the non-Christian people have never been given land by the Government. They are therefore under no obligation to the Government with reference to the lands they acquire.

Act No. 2874 refers to public lands only and has no application whatever to private property. (Central Capizvs.Ramirez, 40 Phil., 883.) The moment that it appears that the land involved in a litigation is private property, said Act can have no application thereto. Section 118 of said Act must also refer to public lands only. In the present case the record clearly shows that the land in question is private property and therefore Act No. 2874 or any of its provision can have no force or effect.

Republic of the PhilippinesSUPREME COURTManila

EN BANC

G.R. No. L-18589 October 31, 1962BALDOMERO BAUTISTA, ANDRES BAUTISTA, ANGELO BAUTISTA, EUFEMIA BAUTISTA, VALERIANO BAUTISTA and JOSE BAUTISTA,plaintiffs-appellants,vs.ALEJANDRO CABLAY, JUANA TUASON, FELISA TUASON, MAGDALENA TUASON, FILOMENA TUASON, JOSE TUASON, ALBERTO TUASON, DANIEL FRIANEZA, GRACIANO BARROSO, MARGARITA DE VEYRA and TEOFILO DE VEYRA,defendants appellees.

Joaquin M. Trinidad for plaintiffs-appellants.Fernando B. Ferrer for defendants-appellees.CONCEPCION,J.:Appeal from an order of the Court of First Instance of Pangasinan dismissing this case with costs against the plaintiffs.

Plaintiffs Baldomero, Andres, Angelo, Eufemia, Valeriano and Jose, all surnamed Bautista, as well as the deceased Paula Bautista who was survived by her children Margarita and Teofilo, both surnamed De Veyra, who should be joined as parties plaintiffs, but are named as defendants, because plaintiffs do not know their whereabouts, and have been unable, therefore, to contact them allege, in their amended complaint; that they are the legitimate children of Alberto Bautista, deceased, from whom they inherited two (2) parcels of riceland, with an aggregate area of about 204,954 square meters, situated in the Barrio of Nantangalan, Municipality of Pozorubio, Province of Pangasinan, and more particularly described in said pleadings; that the aforementioned riceland was mortgaged by said Alberto Bautista, during his lifetime, to secure the payment of a debt in the sum of P1,500, to Anastacio Tuason, who had held the aforementioned property and received the products thereof, netting about P2,000 a year, with the obligation to apply the same to the payment of said debt, which has thus been more than fully settled; that, upon the death of Anastacio Tuason, his widow, defendant, Alejandra Cablay, their children, defendants, Juana, Felisa, Magdalena, Filomena, Jose and Alberto, all surnamed Tuason, as well as defendants Daniel Frianeza and Graciano Barroso, succeeded the deceased in the aforesaid possession; and that, despite repeated demands, the defendants have refused and still refuse, without just cause, to surrender said possession to plaintiffs herein who, accordingly, prayed that judgment be rendered declaring that the said debt of Alberto Bautista in favor of Anastacio Tuason has been fully paid; that the entry of the aforementioned mortgage in the office of the Register of Deeds of Pangasinan be ordered cancelled; and that the defendants be ordered to render accounts of the fruits of the property above referred to respectively received by that and to turn over to plaintiffs the value of said fruits, after deducting the sum of P1,500, representing the original final debt of Alberto Bautista, as well as the possession of said property and to pay damages.

In due course, defendants filed an answer to the amended complaint admitting some of its allegations, denying other allegations thereof and alleging by way of affirmative and special defenses that plaintiffs have no cause of action and that their cause of action, if any, is barred by the statutory of limitations. In view of these special defenses, the lower court set the case for preliminary hearing and the reception of evidence in connection with the said special defenses. Plaintiffs objected thereto, but the lower court overruled the objection and, after the reception of the aforementioned petitioned evidence, issued the order complained of upon the ground of prescription of action.

Hence, this appeal by the plaintiffs, who maintain that a dismissal upon said ground is proper only when it is borne out by the allegations of the complaint; that such is not the situation obtaining in the case at bar, and the lower court labored under the impression that the contract between Alberto Bautista and Anastacio Tuason was an ordinary mortgage, which is erroneous, because it is alleged in the amended complaint that the land was held by Anastacio Tuason with the obligation to apply its products to the payment of his credit against Alberto Bautista, and, hence, under a contract of antichresis; and that an action to recover a land held under such contract does not prescribe.

There is no merit in this appeal. It is not true that the special defense of prescription of action may be upheld only when borne out by the allegations of the complaint. Appellants' pretense would have some color of validity had the order appealed from been issued upon a motion to dismiss, without taking any evidence on the plea of prescription. In the case at bar, the plea has been made in the answer and evidence has been introduced in support thereof.

Upon the other hand, and regardless of whether or not the allegations of the complaint amount to an averment of antichresis, it appears from the evidence on record that, in Civil Case No. 6410 of the Court of First Instance of Pangasinan, entitled "Rufino Toralba and Anastacio Tuason vs. Alberto Bautista", decision (Exhibit 7) was rendered on January 12, 1933, sentencing Alberto Bautista to pay to Rufino Toralba and Anastacio Tuason the sum of P1,500, with interest and costs; that, in compliance with a writ of execution (Exhibit 8) of said decision, issued on May 31, 1933, three (3) parcels of land of Alberto Bautista, including the property involved in this case, were, on July 26, 1933, sold at public auction to Anastacio Tuason and Rufino Toralba (see Exhibit 10) in whose favor the corresponding final deed of sale (Exhibit 13) was executed by the Provincial Sheriff of Pangasinan, on April 3, 1935; that no redemption having been effected within the reglementary period, Anastacio Tuason and Rufino Toralba were placed in possession of said land in pursuance of a writ of possession (Exhibit 12) dated May 7, 1935; that Anastacio Tuason and Rufino Toralba remained in possession of said land since then up to December 5, 1941, when they sold the land to defendant Daniel Frianeza (Exhibit 14), who, in turn, conveyed the same, on January 12, 1950, to defendant Graciano Barroso (Exhibit 15).

Inasmuch as the latter and his predecessors in interest have been in possession of said land, continuously, peacefully and adversely to the whole world, from May 7, 1935 to November 5, 1958, when the original complaint herein was filed, or for over 33 years, it is clear that, independently of the title transmitted to them by virtue of the final deed of sale executed by the Provincial Sheriff on April 3, 1935, plaintiffs' cause of action is barred by the statute of limitations.

WHEREFORE, the order appealed from is hereby affirmed, with costs against plaintiffs-appellants. It is ordered.

Bengzon, C.J., Padilla, Bautista Angelo, Labrador, Reyes, J.B.L., Paredes, Dizon, Regala and Makalintal,concur.Barrera, J.,took no part.

Republic of the PhilippinesSUPREME COURTManila

EN BANC

G.R. No. L-4135 November 29, 1951SEVERINA ROSALES AND PUREZA CONGZON,plaintiffs-appellants,vs.LOECADIO S. TANSECO, ET AL.,defendants-appellees.

Jacinto C. Bohol and Jorge C. Cascayan for plaintiffs-appellants.Vicente C. Santos for defendants-appellees.BENGZON,J.:This is an appeal from the order of the Court of First Instance of Samar, dismissing the plaintiffs' complaint mainly on the ground of prescription. The order was issued upon motion of the defendants, who pointed out that the action sought the annulment of certain documents, the latest of which had been executed in 1936, i.e. more than ten years before the institution of the proceedings.

The complaint, filed in May 1947, is divided into three causes of action and makes the following material averments.

Plaintiffs are the widow and daughter, respectively, of Eustaquio Congzon, who owned with his wife a piece of land with improvements in Catbalogan, Samar. On August 15, 1927, defendant Loecadio S. Tanseco prepared fictitious mortgage of the land in favor of Tan Tay San, which he made Eustaquio Congson sign without consideration. That document was subsequently cancelled to be substituted in May 30, 1930 by another "mortgage"1for P26,000 in favor of defendant Tan Sun, which Eustaquio Congzon again signed thru fraud and without consideration. On March 30, 1932 Tan Sun transferred all his rights to defendant Tan Tay San, who in turn assigned his interests to defendant Leocadio Tanseco in April, 1936.

For second cause of action the complaint incorporates the pertinent allegations of the first, and asserts that the buildings on the lot were totally burned in June 1942; that said buildings have always been occupied by the mortgagees, and never by Eustaquio Congzon; but that the plaintiffs, who never enjoyed the possession and fruits of their land, did satisfy taxes thereon amounting to P39,480.75.

In their third cause of action, the plaintiffs stated that from and after the destruction of the buildings on June 8, 1942, they were in actual and quiet possession of the lot until June 1, 1946, when defendant Leocadio Tanseco, thru force, intimidation and strategy, and without their consent, occupied the property and constructed thereon a house, all to their damage prejudice.

Plaintiffs prayed that they be declared owners of the lot, that the "mortgage" documents and assignments be annulled, and that Leocadio Tanseco be ordered to vacate and pay damages and costs.

After some unimportant procedural incidents, the defendants submitted a motion to dismiss, arguing that it was too late for plaintiff to question the validity of the "mortgage" and the assignments (more than ten years had elapsed) and as the said mortgage had not been paid, the sustained the defendants' position. Hence this appeal.

His honor was right in holding that, due to prescription, plaintiffs are precluded from seeking avoidance of the "mortgage" and its assignments on the ground of fraud or lack of consideration.

But the second cause of action, although incompletely stated, makes out a good case if construed in relation to the applicable legal provisions.

As submitted to the court the "mortgage" in favor of Tan Sun contained, in addition to ordinary stipulations, the following agreement:

"Que el deudor hipotecario no pagara intereses por la cantidad adeudada, cediendo sin embargo su uso al acreedor hipotecario sin ninguin alquieler, y teniendo diccho acreedor hipotecario derecho a percibir todos los alquileres de la finca, mientras el deudor hipotecario no pagare o hiciere pagar a Tan Sun totalmente su deuda."

Therefore the contract although entitled "Escritura de Hipoteca" was in reality a contract of antichresis.2In a contract of antichresis the creditor is obliged to pay the taxes on the property, unless the contract says otherwise (Art. 1882 Civil Code). The contract between Eustaquio Congzon and Tan Sun said nothing about taxes. Hence it was the obligation of the creditor or creditors to pay the taxes on the property at issue herein.

Now, the second cause of action states that the debtor has paid for taxes on the property the amount of P39,480.75.

Bearing in mind that the credit was only P26,000 it is plain to see that under the second cause of action the plaintiffs affirmed in effect that they had already discharged their debt (by advancing the taxes which the creditor should have paid) and are entitled to the return of their property free from all encumbrance. At least there was good ground for accounting. Consequently, it was error to dismiss upon a mere motion filed before the answer.

Furthermore the third cause of action, posed the question: Where the antichretic debtor peacefully in possession of the premises given as guaranty is ejected thru force or strategy by the antichretic creditor does he have a right of action?

Under the Civil Code every possessor is entitled to be respected in his possession: and should he be disturbed therein he shall be protected, or possession shall be restored to him, by the means established by the laws of procedure (Art. 446). And a possessor, however he may acquired thereof without legal proceedings.3Nevertheless we shall not further pursue this line of inquiry, being sufficiently convinced that plaintiffs have a valid claim under their second cause of action, the allegations of which were provisionally admitted by the motion to dismiss.

Wherefore the appealed order will be reversed and the record remanded to the courta quofor further proceedings. Costs against appellees.

Pablo, Padilla, Tuason, Reyes, Jugo and Bautista Angelo, JJ.,concur.