Facts:

In the case of Josefa Bundalian et al. vs. Juan de Vera et al., the petitioners, represented by Carolina Trivino as the guardian of the minors Josefa, Bienvenida, and Buenaventura Bundalian, filed a petition on June 30, 1931, before the Court of First Instance of Laguna. The petition sought authority to mortgage a parcel of land belonging to her wards for the amount of P6,000. The court granted this petition. Subsequently, on the same day, Trivino filed a motion requesting permission to sell the land under a pacto de retro, citing the inability to secure the necessary funds through a mortgage. This request was also granted.

On September 25, 1931, Trivino entered into a contract with the respondent Juan de Vera, selling the land for P5,000, with the stipulation that if the guardian repaid this amount within two years from the court's approval of the sale, the transaction would be rescinded; otherwise, it would remain valid. The court approved the deed of sal...

Facts:

1. Initial Petition for Mortgage:
Carolina Trivino, as the guardian of the minors Josefa, Bienvenida, and Buenaventura Bundalian, filed a petition before the Court of First Instance of Laguna seeking authority to mortgage a parcel of land belonging to her wards for P6,000. The court granted this petition.

2. Motion to Sell Under Pacto de Retro:
On June 30, 1931, Carolina Trivino filed a motion to sell the land under pacto de retro (sale with the right to repurchase) instead of mortgaging it, as she could not secure a mortgage. The court approved this motion.

3. Execution of the Pacto de Retro Contract:
On September 25, 1931, Carolina Trivino entered into a contract with Juan de Vera, selling the land for P5,000 under pacto de retro. The contract stipulated that if the guardian repaid the P5,000 within two years from the court's approval of the deed, the sale would be rescinded; otherwise, it would remain in full force.

4. Court Approval and Registration:
The guardian submitted the contract to the court for approval, stating that the maximum price obtainable for the land was P5,000 due to the decline in coconut land prices. The court approved the deed, and on September 30, 1931, the guardian executed a final deed of sale with the right to repurchase in favor of Juan de Vera. The deed was duly registered.

5. Failure to Repurchase and Subsequent Transactions:
The guardian failed to repurchase the property within the stipulated two-year period. Juan de Vera granted her a one-year extension, which she also failed to utilize. De Vera then executed an affidavit of consolidation and registered it. Later, he sold the land to Jacinto Alvero and Carmen Alvero, who subsequently mortgaged the property to the People's Bank & Trust Company.

6. Filing of the Case:
On March 13, 1936, Carolina Trivino (as guardian) and Josefa Bundalian filed an action to annul the sales between Trivino and De Vera, and between De Vera and the Alveros, as well as the mortgage executed by the Alveros in favor of the People's Bank & Trust Company. The Court of First Instance of Laguna ruled in favor of the defendants, and the Court of Appeals affirmed this decision on May 31, 1940.

Issue:

1. Whether the contract between Carolina Trivino and Juan de Vera was a mortgage or a sale with pacto de retro.
2. Whether the order of the Court of First Instance of Laguna authorizing the sale by the guardian was valid, considering the alleged non-compliance with Section 569 of the Code of Civil Procedure.
3. Whether the rights of innocent third parties (the Alveros and the People's Bank & Trust Company) should be protected.

Ruling:

The Supreme Court dismissed the petition and affirmed the decision of the lower courts. The contract between Carolina Trivino and Juan de Vera was held to be a valid sale with pacto de retro, not a mortgage. The court also found that the alleged irregularities in the lower court's approval of the sale were not sufficiently proven. Additionally, the rights of innocent third parties (the Alveros and the People's Bank & Trust Company) were upheld, as they were found to be purchasers and mortgagees in good faith.

Ratio:

1. Construction of Contracts: In interpreting contracts, the court must give effect to the intention of the parties as expressed in the deed. The contract in question was explicitly denominated as a "sale with pacto de retro," and the terms of the deed clearly indicated this intention.

2. Validity of the Court's Approval: The alleged non-compliance with Section 569 of the Code of Civil Procedure was not distinctly or clearly alleged in the complaint, nor was it proven during the trial. The court found no reason to invalidate the lower court's approval of the sale.

3. Protection of Innocent Third Parties: The court emphasized the importance of protecting the rights of innocent third parties who acted in good faith. The Alveros and the People's Bank & Trust Company were found to be purchasers and mortgagees in good faith, and their rights were upheld.