G.R. No. L-26768 - Gojo vs. Goyala

Case Summary (G.R. No. L-26768)

Factual Background

On May 26, 1951, SEGUNDO GOYALA and his then wife ANTONINA ALMOGUERA executed a document styled as a Deed of Pacto de Retro Sale conveying approximately two and one-half hectares to FAUSTINO GOJO for P750.00 with a repurchase term of one year. The instrument recorded additional payments in July of 1951. The vendee, FAUSTINO GOJO, retained possession and thereafter asserted consolidation of ownership when the repurchase period expired, leading him to file a petition in 1961 seeking judicial recognition of consolidation and authority to record the same in the Registry of Property.

Pleadings and Counterclaim

In his answer and opposition filed May 26, 1961, SEGUNDO GOYALA denied the pacto de retro characterization and alleged the parties intended a loan secured by a mortgage aggregating P810.00, comprising P750.00 plus later advances of P50.00 and P10.00. He alleged that on May 26, 1952 he tendered P810.00 to redeem the property but was refused, and he counterclaimed for relief including declaration that the deed was a mortgage, cancellation of the document, acceptance of the P810.00 tendered, damages measured by annual produce, and, alternatively, repurchase under Art. 1606 third paragraph of the Civil Code if the instrument were held a true pacto de retro sale.

Proceedings After Death of Antonina and Order to Amend

Counsel for SEGUNDO GOYALA notified the trial court on December 1, 1962 that ANTONINA ALMOGUERA had died on March 27, 1959, and identified her heirs. Instead of directing substitution of legal representatives or heirs under Rule 3, Sec. 17, Rules of Court, the trial court on December 4, 1962 ordered the plaintiff to submit an amended complaint substituting the deceased defendant's successors in interest within the reglementary period. The plaintiff received a copy December 13, 1962 and did not file the amendment.

Dismissal and Default on Counterclaim; Reception of Evidence

On January 26, 1963 the defendants moved to dismiss the complaint for failure to comply with the December 4 order, and on February 15, 1963 the trial court dismissed the complaint without prejudice. Subsequently, the trial court declared FAUSTINO GOJO in default on the counterclaim on July 11, 1963 and commissioned the Clerk of Court to receive the evidence of SEGUNDO GOYALA, after which the clerk did receive evidence.

Trial Court's Judgment

On November 15, 1963 the trial court rendered judgment on the counterclaim in favor of SEGUNDO GOYALA and the heirs of ANTONINA ALMOGUERA, holding that the instrument was an equitable mortgage, allowing redemption, ordering FAUSTINO GOJO to withdraw the P810.00 deposited with the clerk in full settlement, and cancelling the deed of pacto de retro sale. The judgment was amended December 19, 1963 to direct restoration of possession to the defendants upon execution.

Issues Presented on Appeal

In his appeal the petitioner assigned three errors: (1) that the trial court erred in declaring the plaintiff in default with respect to the counterclaim; (2) that the trial court erred in deputizing the Clerk of Court to receive the defendant's evidence; and (3) that the trial court erred in rendering judgment allowing redemption for P810.00.

Supreme Court's Analysis and Legal Reasoning

The Court first addressed whether the counterclaim was a compulsory one and whether the plaintiff could properly be declared in default for failure to answer it. The Court held that the counterclaim was compulsory because it arose out of the same transaction and directly controverted the complaint's central allegation that the right to repurchase had expired. The Court applied the principle that a plaintiff who fails or elects not to answer a compulsory counterclaim may not be declared in default since the complaint's allegations operate as the answer to the counterclaim, citing authorities so noted in the record. The Court then examined the trial court's order requiring amendment of the complaint in lieu of the substitution mandated when a party dies. The Court held that the December 4, 1962 order was void because upon notice of death the court should have ordered the substitution of legal representatives or heirs pursuant to Rule 3, Sec. 17, Rules of Court, as established i

Case Syllabus (G.R. No. L-26768)

Parties and Procedural Posture

Faustino Gojo was the petitioner-appellant who originally instituted the action in the Court of First Instance of Sorsogon seeking consolidation of ownership of a parcel of agricultural land.
Segundo Goyala and Antonina Almoguera were the respondents-appellees who were the vendors in a disputed instrument styled as a Deed of Pacto de Retro Sale.
The trial court dismissed the petition of Faustino Gojo for failure to file an amended complaint as ordered, declared him in default on the respondents' counterclaim, and entered judgment on that counterclaim in favor of Segundo Goyala and the heirs of Antonina Almoguera.
The case was appealed and the Court of Appeals certified the appeal to the Supreme Court on the ground that the appeal presented purely questions of law.

Key Factual Allegations

The parties executed a Deed of Pacto de Retro Sale dated May 26, 1951, conveying a parcel of land for P750.00 with a repurchase period of one year.
The vendee paid an additional P100.00 on July 4, 1951, and additional sums of P50.00 and P10.00 were later credited for a total asserted indebtedness of P810.00.
On April 12, 1961, the vendee filed a petition for consolidation of ownership alleging that the one-year repurchase period expired on May 26, 1952 and that ownership had consolidated in him.
Segundo Goyala answered and counterclaimed that the instrument was in truth a mortgage to secure a loan of P750.00 plus additional advances aggregating P810.00 and that he tendered P810.00 on May 26, 1952 but was refused.

Procedural History

Counsel for Segundo Goyala notified the trial court on December 1, 1962 of the death of Antonina Almoguera on March 27, 1959 and identified her surviving heirs.
The trial court on December 4, 1962 ordered the plaintiff to submit an amended complaint substituting the heirs for the deceased defendant within the reglementary period.
Segundo Goyala moved to dismiss the complaint on January 26, 1963 for failure to comply with the December 4, 1962 order, and the trial court dismissed the complaint without prejudice on February 15, 1963.
On July 10, 1963 Segundo Goyala moved to have the plaintiff declared in default on the counterclaim, and the trial court declared the plaintiff in default on July 11, 1963 and commissioned the Clerk of Court to receive the defendant's evidence.
The trial court rendered judgment on November 15, 1963 declaring the deed an equitable mortgage, allowing redemption upon payment of P810.00, ordering cancellation of the deed, and later amended the dispositive portion on December 19,