Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-2819 May 30, 1951
MARCIANA ESCOTO, plaintiff-appellant,
vs.
BENITO M. ARCILLA, ET AL, defendants-appellees.
Artemio C. Macalino for appellant.
Eufrasio Ocampo for appellees.
TUASON, J.:
This was an action for specific performance brought in the Court of First Instance of Pampanga. The judgment was for the defendants and the plaintiff appealed. It is well to set out the history of the case in detail for a clear understanding of the issues.
On May 2, 1932, in a document (Exhibit 5) termed "Escritura de Venta con Pacto de retro", Manuel Tancungco, since deceased, purported to convey two parcels of land situated in Angeles, Pampanga, to Jacinto Hilario in consideration of P3,500. The contract provided that the vendor would remain in possession of the parcels and could repurchase them in two years, and that in the meanwhile he was to pay rent as lessee in the sum of P420 a year. On the 5th, Tancungco conveyed to Amada Hilario, Jacinto's daughter, 4/5 of another parcel, residential, under the same terms as the except that the purchase price was P2,000 and the rent was P240 yearly.
Jacinto Hilario having died, his heirs made a partition of his estate, in virtue of which his rights and interests in the two lots that were the subject matter of the first deed were assigned to Amada Hilario. Both contracts were thus consolidated in Amada's favor.
Having failed to repurchase the lands, Tancungco nevertheless continued in the possession thereof paying the agreed amounts for their use and occupation.
Amada Hilario died on October 18, 1939, leaving as heirs her husband and children who are now the defendants and appellees.
For failure to pay the stipulated "rents", Benito M. Arcilla, Amada Hilario's surviving spouse, and his children brought a possessory action in the justice of the peace of court of Angeles on July 8, 1940 for unlawful detainer. In the complaint, Arcilla asked to be appointed, and he was appointed, guardian ad litem of his children, all minors. But on July 19, the parties submitted a compromise agreement whereby the plaintiffs allowed the defendant the right to repurchase the lands in question for the sum of P7,000 within two years from the date of the said agreement, on condition that Tancungco would pay them P500 within six months "para que se puedantramitar oportunamente en el Juzgado de Primera Instancia de Pampanga elintestado de la finada Da. Amada Hilario de Arcilla y la tutela de losmenores Maria Floserfina Arcilla y sus hermaños, entendiendose que si despuesde entregada dicha cantidad de quinientos pesos (P500), deja eldemandado de hacer valer su derecho de opcion, no tendria derecho a recobrartal cantidad."
Tancungco did not pay either the sum of P7,000 or P500 within the period stipulated. However, on February 10, 1941, the parties renewed their agreement. The new agreement (known as Exhibit A and which is the basis of the present action) recited the provisions of the previous ones and stipulated that, in consideration of the sum of P500 which there and then was paid to Benito Arcilla, the latter bound himself to institute in the Court of First Instance within a reasonable time an intestate proceeding over the property of Amada Hilario and, once appointed administrator, to obtain authorization from the court to sell the lands in litigation to Manuel Tancungco upon these conditions: (a) Tancungco would pay P6,750, in addition to the P500 which he had just paid and which was to be used to defray all the expenses in the execution of the deed, etc.; (b) the purchase price (P6,750) would be paid within ten days from the date Tancungco was notified of the judicial authority for the sale in his favor; (c) Tancungco would have no right to recover the sum of P500 if, after having knowledge or notice of said judicial authorization, he failed to exercise his option of purchase within the period of above stated. It was also stipulated that should the court refuse to authorize the sale for any reason whatever, notwithstanding Arcilla's efforts, then Tancungco would make delivery of the lots to Arcilla on demand.
Accordingly, Arcilla sought appointment as administrator of his wife's estate, and on March 24, 1941, he was appointed. Subsequently, in the same proceeding, Artemio Hilario was named guardian ad litem for the minors, and qualified as such on April 2, 1941.
On August 2, 1941, Arcilla filed a motion in the intestate proceeding, through his attorney and in his capacity as administrator, setting all forth of all the antecedents hereinbefore mentioned and praying for an authority to sell the lands to Tancungco. The motion also stated that the minors, Arcilla's children, were being represented by their guardian ad-litem, and that the guardian and children were agreeable to the projected sale to Tancungco upon the above stated.
But in an order dated August 11, 1941, Judge Pedro Magsalin, after reciting the grounds of the petition and the fact that the guardian ad-litem of the children had expressed their conformity thereto, and although convinced that the proposed sale would redound to the benefit of Amada Hilario's estate, said that he could not sanction the sale because Tancungco was a Chinese citizen, and so denied the request.
On August 18, 1941, Arcilla notified Tancungco of Judge Magsalin's order and, in view thereof, demanded, on September 9, 1941, that Tancungco vacate the properties with a warning that if he did not he would be charged beginning October a monthly rent of P150 instead of P55.
Tancungco instead of seeking reconsideration of Judge Magsalin's order filed a manifestation on November 17 wherein he stated that, since he was a Chinese citizen and the court would not authorize the sale in his favor, he, Tancungco for valuable consideration had conveyed his right to acquire the three lots to one Dr. Magdaleno Bundalian, a Filipino citizen, who was ready and willing to buy said lands for the price of P6,750 under the conditions specified in Arcilla's application for authority to sell.
Manuel Tancungco died on May 12, 1943, and his widow was appointed administratrix of his estate. After qualifying as administratrix she applied for an order to Arcilla "to comply with the agreement as to the sale of the property in question in favor of the heirs of Tancungco." The court, this time presided over by Judge Pablo Angeles David, in an order of December 6, 1943, authorized Arcilla as administrator of his wife's estate to sell the lands under consideration to Tancungco's widow within the period of ten days for the sum of P6,750. As Arcilla paid no heed to Judge Angeles David's order, on February 29, 1944, His Honor made a peremptory direction to Arcilla to execute a deed of conveyance in favor of Tancungco's estate. Not satisfied with Judge Angeles David's orders, Arcilla instituted certiorari proceedings before the Supreme Court attacking their validity on the grounds that the heirs of Amada Hilario had not been notified of the proposed sale required by the Rules of Court, and this court granted the writ.
Of April 16, 1947, Tancungco's widow, as administratrix of her husband's estate, commenced this action against Benito M. Arcilla alone, to compel Arcilla to get from the court authority to sell the lands to Tancungco's heirs for the sum of P6,750. By order of the court, the complaint was amended on July 18, 1948, by including Amada Hilario's children as Arcilla's co-defendants.
The court dismissed the action and as a corollary ordered the plaintiff to deliver the possession of the disputed lots to Arcilla, with costs. Several grounds, which will be discussed separately, were adduced in support of the decision.
Chief ground for the dismissal was that Tancungco was a Chinese citizen and therefore disqualified by the Constitution from acquiring real estate. The argument assumes that the lots which Arcilla agreed to convey were his wife's, or belonged to his wife's estate, in fee simple.
Our considered opinion is that the trial court took a strict too legalistic view of Exhibit "A", entirely overlooking its antecedents. The view that, in our judgment, best accords with good conscience and with the intention of parties is that this compromise was a part of the original contract of pacto de retro sale. It directly stemmed from the original sale and was executed in consideration of Tancungco's recognized equities in the lands. Exhibit "A" and the compromise agreement in the justice of the peace court were in point of fact and in spirit an extension and continuation of the period of repurchase provided in the initial contract. The fact that period had expired was no legal obstacle to the granting to the seller, if the purchaser so wished, of a renewed opportunity to redeem or repurchase the subject matter of the sale, so long as the combined period did not exceed ten years.
From this standpoint, Exhibit A does not infringe the Constitution. Tancungco was exercising a property right which antedated the Constitution and which the fundamental law expressly respects and ratifies. Tancungco was not an ordinary purchaser acquiring new property, nor was Arcilla attempting to part with one in which his deceased wife's estate had absolute, unfettered title in fee.
As a matter of fact, the so-called pacto de retro sale possessed many characteristics of loans with security. The so-called rents of the lands were the exact equivalent of a 12 per cent interest per annum on the amounts paid and received. By agreement, Tancungco was to remain, and did remain, in possession of the lands and had exclusive use thereof. By agreement, Tancungco paid the taxes on the properties and, although the stipulated period of two years had long ago lapsed, he kept the lands and continued paying the interest or rents thereon. And the supposed buyers a retro and their successors in interest showed more concern in getting their money back than in having the lands. They told the court that the former arrangement was more advantageous to their interest. It was not till they saw the value of the property going up that they made up their minds to stick to the letter of the various agreements, taking advantage of Judge Magsalin's refusal.
It is beyond the power of this court to give judgment for the plaintiff under the pleadings on the theory of equitable mortgage. As the defendants and appellees correctly say, this theory was not advanced in the Court of First Instance, and the plaintiffs may not be allowed to change their ground or cause of action on appeal.
Nevertheless, as reflecting the contractual relation between the parties, the circumstances before noted have an important bearing on the applicability of the constitutional provision invoked to defeat the action. Those circumstances serve to give impetus to the proposition that the contract is outside the constitutional prohibition which bothered some of the judges who handled the case in the lower court and stopped Judge Magsalin from sanctioning the contemplated sale, although in his opinion it would be beneficial to all parties concerned. The facts that Tancungco's widow has recovered her Philippine citizenship and her surviving children are likewise Filipino citizens now, following the reacquired nationality of their mother, has completely removed all objections to the conveyance on constitutional considerations and is one more reason for relaxing the rigid rules of law which the court below thought were in the way of plaintiff's prayer for relief. If the widow became a Filipino citizen again only after she had begun the suit and the court believed that by reason of the delay her reversion to Philippine citizenship did not operate to change the rights and obligations of the parties — granting the reasoning to be correct, the fault could have been cured by amendment of the pleadings.
Anent the contention that "Benito M. Arcilla had duly complied with his obligation as provided for in the agreement, "having" instituted an intestate proceedings of the land of Amado Hilario within a reasonable time" and "filed the necessary motion in court requesting authority to dispose of the properties in question in favor of Manuel Tancungco," the decision fell into the same error of looking to the form and ignoring the substance of the commitment. There is no gain saying that the steps which Arcilla has taken were embodied in the contract simply as a means to an end. The end, the over-all purpose of the parties, was to give back to Tancungco the properties free from all liens and encumbrances upon payment by him of the price of repurchase and other amounts due for rents or interest and expenses. The defendants' obligation was not extinguished until that end was achieved or all hope of achieving it was lost. Judge Magsalin's refusal to sanction the contract did not write finish to the contract or exhaust the remedy.
As a matter of fact, another Judge, Judge Magsalin's successor, following a more realistic and equitable approach to the case, not only authorized but decreed compliance with the agreement. It was due to the present defendants' attitude that Judge Angeles David's orders came to naught. They themselves demurred to those orders and carried their opposition to this court where they succeeded on pure technicalities of procedure. In the light of their action, the defendants can not well plead that they did all they could, and shift the blame to the court or the constitution for the non-fulfillment of their solemn promise. It is idle for them to deny that not the court but they blocked the consummation of the agreement on a formal defect of practice which they could have waived by mere silence. The defect did not alter the terms of the contract, or harm the interest of the estate, or violate good morals.
It is said that the minors were not parties to Exhibit "A." However, it has been seen that through their duly appointed guardian ad litem they ratified that compromise in open court, when not only the guardian but the oldest two of the children as well personally appeared and expressed their conformity to the proposed sale. This ratification validated the agreement as effectively as if the minors or their guardian ad litem had signed it.
Lastly, it said that Tancungco sold his right to the lands in litigation to Dr. Bundalian and that he or his heirs no longer have any share or interest in his properties.
Beyond Tancungco's written manifestation referred to the statement of facts, there is nothing in the record showing that this alleged sale was carried out. The filing of the present suit is a good indication that the transaction has been abandoned or unmade. But assuming the opposite to be the case, yet it is the duty of Tancungco's personal representative to give the purchaser a clean title, and it is legitimate on her part to institute his action and to push it through to its final conclusion to accomplish that objective. So if the sale to Bundalian still stands, and if it is not a sham, the plaintiff retains sufficient interest in the subject of the litigation to demand performance of Exhibit "A" by the defendants.
Wherefore, the judgment of the Court of First Instance of Pampanga is reversed on the defendants are ordered to execute a deed of conveyance covering the lots described in the complaint in favor of the plaintiff upon payment by her of P6,750 which she shall make within thirty days from the date this decision becomes final, and to pay the cost.
Paras, Bengzon, C.J., Feria, Montemayor and Jugo, JJ., concur.
PARAS, C.J.:
Mr. Justice Bautista Angelo voted with the majority.
Separate Opinions
PABLO, M., disidente:
En 2 de mayo de 1932, Manuel Tancungco vendio, con pacto de retro dentro de dos años, dos parcelas de terrenoa Jacinto Hilario por la suma de P3,500. El dia 5 delmismo mes Tancungco vendio a Amada Hilario, hijade Jacinto, 4/5 partes de una parcela residencial bajo losmismos terminos de la primera escritura al precio de P2,000.
Al fallecer Jacinto Hilario, sus herederos se repartieronlos bienes relictos, y los tres lotes que habia compradocon pacto de retro, fueron heredados por Amada Hilario. Tancungco no ejercito el derecho de retracto.
Amada Hilario fallecio en 18 de octubre de 1939, dejandocomo herederos a su esposo Benito M. Arcilla e hijosque son los hoy demandados.
En 19 de julio de 1940, a raiz de un asunto de desahuciopresentado en el Juzgado de Paz en Angeles, Pampanga, para recobrar de Tancungco los tres lotes compradoscon pacto de retro, las partes tuvieron un arreglo envirtud del cual los demandantes dieron opcion al demandadopara recomprar los terrenos por la suma de P7,000 dentro de dos años a contar de la fecha del contrato, conla condicion de que Tancungco les pagaria P500 dentrode seis meses.
Tancungco no pago ni los P7,000 ni los P500 dentrodel periodo convenido.
En 10 de febrero de 1941, Benito M. Arcilla otorgoel Exhibito A que dispone que en consideracion a la sumade P500 que ha recibido, Arcilla se obliga a instituir enel Juzgado de Primera Instancia, dentro de un plazo razonable, el intestado de Amada Hilario y, despues de nombradoadministrador, pediria autorizacion del Juzgado paravender los tres lotes a Manuel Tancungco bajo las siguientescondiciones: (a) Tancungco pagaria P6,750 en adicion alos P500 que ya habia pagado; (b) que la cantidad de P6,750 seria pagada dentro de 10 dias desde la fecha enque Tancungco fuese notificado de la autorizacion judicialpara la venta a su favor; y (c) Tancungco no tendriaderecho a recobrar la suma de P500 si, despues de tenerconocimiento y aviso de la autorizacion judicial, dejare deejercitar su derecho de opcion para comprar dentro delperiodo convenido. Se estipulo, ademas, que si el juzgadorehusase conceder la autorizacion de la venta por cualquierrazon, a pesar de los esfuerzos de Arcilla, Tancungco entregariala posesion de los tres lotes a Arcilla al requerimientode este. Arcilla fue nombrado administrador delos bienes de su esposa en 24 de marzo de 1941; despues, Artemio Hilario fue nombrado curador ad litem de loshermaños Arcilla, todos menores y se cualifico como talen 2 de abril del mismo año.
En 2 de agosto de 1941, Benito M. Arcilla presento lamocion ya convenida, pero en 11 de agosto del mismo año, el Hon. Juez Magsalin dijo que, aunque estaba convencidode que la venta pedida redundiaria en beneficio del intestadode Amada Hilario, no la podia sancionar porque Tancungcoes un ciudadaño chino.
En 18 de agosto, Arcilla notifico a Tancungco de la ordendenegatoria y le requirio en 9 de septiembre que, de acuerdocon el Exhibito A, desalojara lot tres lotes y que, si nolo hiciere, pagaria un alquiler mensual de P150 en vez de P55, desde el mes de octubre.
El 17 de noviembre, Tancungco presento en el juzgadouna manifestacion "que porque el juzgado no autorizabala venta a su favor porque era chino, el, por consideraciondebidamente recibida, traspaso los derechos que tiene sobrelos tres lotes al Dr. Magdaleno Bundalian, un ciudadañofilipino, quien esta dispuesto a pagar por los mismos terrenosel precio de P6,750 bajo las condiciones especificadasen la mocion de Arcilla que pedia autorizacion para vender.
En 12 de mayo de 1943, Manuel Tancungco fallecio ysu esposa fue nombrada administradora de su intestado. Despues de cualificarse como tal, Marciana Escoto presentouna mocion pidiendo que Benito M. Arcilla sea ordenadopor el juzgado a cumplir con el acuerdo de que el venderialos lotes en cuestion a los herederos de Tancungco. ElHon. Juez Angeles David dicto una orden en 6 de diciembrede 1943 autorizando a Arcilla, como administrador delos bienes de su difunta esposa, a vender los lotes a laviuda de Tancungco por la cantidad de P6,750 dentro delperiodo de 10 dias. Arcilla no cumlio la orden y el JuezAngeles David en 29 de febrero de 1944, dicto una ordenperentoria obligando a Arcilla que otorgue la escritura detraspaso a favor del abintestato de Tancungco.
Porque no estaba conforme con estas ordenes, Arcillaacudio ante este Tribunal en un recurso de certiorari, alegandoque los herederos de Amada Hilario no habian sidonotificados de la propuesta venta como requiere el Reglamento,y este Tribunal concedio el recurso, anulando lasdos ordenes de 6 de diciembre de 1943 y 29 de febrerode 1944, porque Benito M. Arcilla no habia notificadoal curador ad litem de los menores, Artemio Hilario, desus mociones. (44 G. O. 71).
En 16 de abril de 1947, la administradora del intestadode Tancungco presento la demanda en la presente causacontra Benito M. Arcilla solamente, pidiendo que se leordenase a que obtenga del Juzgado autorizacion para revenderlos terrenos a los herederos de Tancungco por lasuma de P6,750. Por orden del Juzgado, la demanda seenmendo en 18 de julio de 1948, incluyendo como codemandadosa los hijos de Amada Hilario. Los hijos de Amada Hilario, en esta contestacion, impugnan la legalidad del Exhibito A. Despues de la vista correspondiente, el Juzgadosobreseyo la demanda y ordeno a la demandante quehaga entrega de los lotes a los demandados, con costas.
El derecho de retracto convenido en la escritura del 2 de mayo de 1932, expiro en 3 de mayo de 1934. Desdetal fecha la venta con pacto de retro se convirtio en definitivay absoluta.
Si, posteriormente, en 19 de julio de 1940, a raiz dela causa No. 731 de desahucio en el Juzgado de Paz, losdemandantes concedieron al demandado Manuel Tancungco opcion para recomprar las fincas que eran objeto de litigiopor la suma de P7,000, dentro del periodo de dos añosa partir desde dicha fecha 19 de julio de 1940, con la condicionadicional de que Tancungco pagase a los demandantesla cantidad de P500 dentro del plazo de seis meses,ello no significa extension del plazo de retracto convenidoen mayo de 1932, porque dicho plazo ya habia vencido. La opcion para comprar dada a Manuel Tancungco en 19 de julio de 1940, es un nuevo contrato, cuyas condicionestampoco cumplio.
Y si en 10 de febrero de 1941, Benito M. Arcilla concediootro plazo a Manuel Tancungco para comprar las tresparcelas bajo las condiciones estipuladas, dicho tercer plazono debe considerarse como extension del derecho de retractoestablecido en la escritura del 2 de mayo de 1932 porque ya habia expirado, sino un tercer contrato nuevo.
Por otra parte, Benito M. Arcilla, cuando otorgo laescritura Exhibito A en 10 de febrero de 1941, no era curador ad litem de los menores Floserfina, Rosalina, Fredesvinda, Efren, Zenaida y Teresita. Como padre, erasolamente tutor natural de la persona de los menores, nopodia disponer de los bienes de estos. No estaba legalni judicialmente autorizado para otorgar la escritura de10 de febrero de 1941. No podia ser nombrado curador ad litem en la fecha del otorgamiento del Exhibito A porqueel intestado de Amada Hilario se inicio mas tardey fue nombrado administrador el 4 de marzo de 1941 y Artemio Hilario fue nombrado curador ad litem de dichosmenores. Artemio Hilario no tomo parte en el otorgamientode la escritura de 10 de febrero de 1941 (ExhibitoA) ni fue notificado de las mociones de Benito M. Arcilla cuando pedia autorizacion para verder los tres lotes a laviuda de Tancungco y por tales motivos se revocaron poreste Tribunal las ordenas del Hon. Juez Angeles David queordenaban la venta. El convenio otorgado por Benito M. Arcilla no puede obligar a sus hijos menores, que son losduenos, por ministerio de la ley de sucesion, de los treslotes, por haberlos heredado de su madte Amada Hilario. Benito M. Arcilla no tiene ninguna participacion en estastres parcelas de terreno fuera del derecho de usufructodispuesto por la ley. Y eso es lo unico que podia disponero vender. El intestado, por tanto, de Tancungco solotiene derecho al usufructo vidual sobre los tres lotes yno tiene derecho la demandante a pedir que Benito M. Arcilla, en perjuicio de los verdaderos duenos, pida autorizacionjudicial para venderlos.
Debe dictarse, por tanto, una decision ordenando a Benito M. Arcilla a otorgar una escritura cediendo al intestadode Manuel Tancungco el usufructo vidual que tiene sobrelos lotes en litigio.
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