Case Summary (G.R. No. 150913)
Applicable Law and Constitutional Basis
Governing constitutional framework: 1987 Philippine Constitution (case decision rendered in 2003). Relevant statutory provisions and doctrines applied: Civil Code provisions on repurchase and related obligations (Arts. 1544, 1606, 1616, 2199, 2208, 2232, 2234), and established jurisprudential requirements for consignation and tender of payment as reflected in cited authorities (e.g., Soco v. Militante; Sia v. Court of Appeals; China Insurance and Surety Co. v. B.K. Berkenkotter; and other cases cited in the decision).
Material Facts
On 1 September 1957 the Tazals sold the three parcels to Mamerto Reyes with a two‑year right of repurchase; Mamerto took possession and paid taxes. Two parcels were sold again by Francisco Tazal on 24 December 1958 to Blas Rayos without prior repurchase; the two‑year redemption period lapsed on 1 September 1959 without repurchase. Francisco Tazal later attempted to repurchase, asserted the 1957 deed was an equitable mortgage, and on 9 May 1960 filed Civil Case No. A‑245 seeking declaration of equitable mortgage status and reconveyance; P 724.00 was deposited in court on 31 May 1960. While A‑245 was pending, the third parcel was sold on 22 June 1961 to petitioners and the two other lots were bought by petitioners on 1 July 1961 from Blas Rayos. Parties stipulated certain facts in A‑245; on 5 January 1963 the trial court declared the 1957 deed a sale with right to repurchase (not an equitable mortgage) and allowed repurchase within 30 days from finality upon payment of P 724.00 plus expenses incident to reconveyance (per Art. 1616).
Procedural History
Mamerto Reyes appealed; the appeal progressed to the Supreme Court but Mamerto died in 1986. The case was administratively closed in May 1990 and the 1963 judgment in A‑245 became final and executory on 20 June 1990. Petitioners did not repurchase within thirty days after finality, claiming the earlier consignation perfected repurchase. Respondents (as heirs) executed affidavit of adjudication and registered the 1957 deed in 1993. Respondents sued petitioners in Civil Case No. A‑2032 (Regional Trial Court) for recovery of ownership and possession and damages. The RTC (15 November 1996) declared the subsequent deeds of sale to petitioners void insofar as transferring ownership, awarded respondents ownership and possession, and awarded damages. The Court of Appeals affirmed (31 May 2001). Petitioners sought review; the Supreme Court denied the petition (20 February 2003) but deleted and set aside awarded damages.
Issues Presented
- Whether the consignation (deposit) of P 724.00 in Civil Case No. A‑245 perfected repurchase of the three parcels in favor of the Tazals/petitioners.
- Whether respondents’ action to recover ownership and possession was barred by estoppel or laches.
- Whether petitioners were purchasers in good faith and for value entitled to protection (and whether Art. 1544 applies).
- Whether damages, attorney’s fees and exemplary damages were properly awarded.
Supreme Court Disposition
The petition for review was denied. The Supreme Court affirmed the RTC and Court of Appeals decisions declaring the deeds of absolute sale executed by Francisco Tazal (to Blas Rayos and to Teofilo Rayos) and the deed by Blas Rayos to Teofilo Rayos void insofar as transferring ownership and possession to petitioners, and proclaiming respondents (heirs of Mamerto) as absolute owners free of encumbrances. The award of actual damages, attorney’s fees, and exemplary damages was deleted and set aside. No costs were imposed.
Reasoning — Consignation and Tender of Payment
The Court reiterates the established requisites for effective consignation: (a) a debt due; (b) consignation made because the creditor refused valid tender; (c) prior notice to the person interested of the debtor’s intention to consign; (d) placing the amount at the court’s disposal; and (e) notification to the interested person after consignation. Petitioners failed to satisfy these requirements: the tender was conditional and therefore invalid; they did not give prior notice of intention to deposit the amount with the court; and there was no acceptance by the creditor (Mamerto) nor an express judicial approval of the consignation as complying with all requisites. The tender was premised on asserting the 1957 deed was an equitable mortgage — a conditional payment made to evade the fixed two‑year redemption period — and thus Mamerto properly refused it. The trial court’s judgment in A‑245 expressly declared the deed a sale with right to repurchase and allowed repurchase within thirty days from finality upon payment of P 724.00 plus expenses (including taxes and necessary and useful expenditures). That directive necessarily implied the consignation had not perfected redemption. Where prerequisites for consignation are not clearly met and the obligee contests the consignation, the burden is on the obligor to secure a judicial declaration that the consignation was valid; absent such declaration, consignation is ineffective and the debtor remains liable.
Reasoning — Treatment of Necessary and Useful Expenses
The court emphasized that Art. 1616 requires the repurchaser to pay not only the purchase price but also the expenses incident to reconveyance, which include necessary and useful expenses incurred by the vendee (e.g., taxes paid by Mamerto from 1958 onward). The trial court’s direction that the repurchase required payment of P 724.00 “plus all expenses incident to reconveyance” showed that the single deposit did not satisfy the full redemption price demanded by the vendee and recognized by the trial court.
Reasoning — Estoppel and Laches
The Court rejected arguments that respondents were estopped or had slept on their rights. Estoppel and laches require unreasonable delay and neglect to assert a right when due diligence should have been exercised. Respondents and their predecessor Mamerto actively resisted attempts to treat the 1957 sale as an equitable mortgage in A‑245; they prudently awaited finality of that suit before initiating recovery in A‑2032. Their forbearance pending resolution of the earlier suit was reasonable and did not warrant application of estoppel or laches to bar their claim.
Reasoning — Good Faith Purchasers, Unregistered Land, and Double Sales
The Court reiterated that the protection afforded to purchasers in good faith for value, particularly under the double‑sale rule (Art. 1544), is primarily applicable to registered land transactions where reliance on registry entries is protected. Here the parcels were unregistered; therefore petitioners purchased at their peril. Petitioners failed to prove the requisite good faith and for value: facts such as payment by Mamerto of taxes prior to and at the time of petitioners’ purchases indicated prior possession and an interest that should have prompted inquiry. Because petitioners did not discharge the burden of proving good faith, they are not protected. Even if Art. 1544 were applied, respondents (or their p
...continue readingCase Syllabus (G.R. No. 150913)
Case Caption and Citation
- Supreme Court of the Philippines, Second Division, G.R. No. 150913, Decision promulgated February 20, 2003; reported at 446 Phil. 32.
- Parties: Spouses Teofilo and Simeona Rayos, and George Rayos (petitioners) versus Donato Reyes, Saturnino Reyes, Tomasa R. Bustamante and Toribia R. Camelo (respondents).
- Opinion penned by Justice Bellosillo. Justices Mendoza, Quisumbing, Austria-Martinez, and Callejo, Sr. concurred.
Subject Matter and Core Controversy
- Ownership and possession of three (3) parcels of unregistered land totaling approximately 130,947 square meters situated in Brgy. Sapa, Burgos, Pangasinan.
- Central factual dispute: character and legal effect of the 1 September 1957 deed involving spouses Francisco and Asuncion Tazal and one Mamerto Reyes, described therein as a "Deed of Sale with Right to Repurchase" and whether subsequent transactions and judicial consignation effected repurchase or otherwise transferred ownership to petitioners.
Material Facts — Chronology of Transactions and Acts
- 1 September 1957: Francisco and Asuncion Tazal executed a deed of sale with right to repurchase of three parcels to Mamerto Reyes for P 724.00, with a two-year right of repurchase (conventional redemption) by paying the purchase price plus expenses incident to reconveyance.
- After the 1957 sale: Mamerto Reyes took physical possession and paid taxes on the properties (tax payments recorded 1958–1962).
- 24 December 1958: Two of the three parcels were sold by Francisco Tazal to Blas Rayos for P 420.00 without first exercising any right to repurchase.
- 1 September 1959: The conventional right of redemption in favor of the Tazals expired without exercise by either the Tazals or Blas Rayos.
- Post-1959: Francisco Tazal sought again to reclaim the properties, asserting the 1957 deed was an equitable mortgage and offering P 724.00 as payment of the alleged debt; Mamerto Reyes refused.
- 9 May 1960: Francisco Tazal filed Civil Case No. A-245 in the Court of First Instance of Pangasinan seeking declaration that the 1957 transaction was an equitable mortgage and praying that the deposited P 724.00 (consigned on 31 May 1960) be accepted as full payment, with cancellation of the alleged mortgage and reconveyance.
- 22 June 1961: Francisco Tazal sold the third parcel to petitioners Teofilo and Simeona Rayos for P 400.00.
- 1 July 1961: Petitioners Teofilo and Simeona Rayos bought from Blas Rayos the two lots previously conveyed to him by Tazal for P 400.00.
- 26 September 1962: Parties in Civil Case No. A-245 submitted a stipulation of facts admitting genuineness of the 1957 deed, acknowledging the 31 May 1960 consignation of P 724.00, and acknowledging taxes paid by Mamerto Reyes from 1958 to 1962.
- 5 January 1963: Trial court in Civil Case No. A-245 ruled the 1957 instrument was a true sale with right to repurchase (not an equitable mortgage) but allowed plaintiffs to repurchase within thirty (30) days from finality of judgment by paying P 724.00 and all expenses incident to reconveyance, including expenses of contract and necessary and useful expenses (citing Art. 1616, Civil Code).
- Mamerto Reyes appealed the A-245 decision to the Court of Appeals and thereafter to the Supreme Court (appeal elevated because only questions of law were involved).
- Mamerto Reyes died in 1986. After his death, petitioners Teofilo and Simeona Rayos took physical possession of the disputed properties from Reyes’ heirs.
- 16 May 1990: The Supreme Court considered the earlier appeal closed/terminated for failure of parties to manifest interest; 20 June 1990: Judgment in Civil Case No. A-245 became final and executory.
- Petitioners did not repurchase within 30 days from finality of judgment, contending that the consignation of P 724.00 had perfected repurchase.
- 6 July 1992: Respondents, as heirs of Mamerto Reyes, executed an affidavit of adjudication and declared the properties in their names for tax assessment.
- 19 January 1993: Respondents registered the 1 September 1957 deed of sale with right of repurchase with the register of deeds.
- 8 July 1993: Respondents filed Civil Case No. A-2032 in RTC Alaminos, seeking recovery of ownership and possession and damages against petitioners and George Rayos as administrator. Respondents alleged neither petitioners nor their predecessors had validly repurchased prior to their acquisitions or upon finality of the A-245 judgment.
Procedural History — Trial Court, Court of Appeals, Supreme Court
- Civil Case No. A-245 (C.F.I. Pangasinan): Judgment dated 5 January 1963 declared instrument a sale with right to repurchase and granted 30-day redemption period from finality; dispositive pronounced by Judge Gregorio A. Legaspi.
- Civil Case No. A-2032 (RTC Branch 54, Alaminos, Pangasinan): On 15 November 1996, RTC (Judge Jules A. Mejia) declared the separate deeds of absolute sale to Blas Rayos and to petitioners void insofar as they transferred ownership and possession; ordered petitioners and Francisco Tazal to vacate and reconvey to respondents; awarded P 20,000 actual damages for litigation expenses, P 10,000 attorney’s fees, exemplary damages of P 50,000 plus costs.
- Appeal to Court of Appeals (CA-G.R. CV No. 55789): On 31 May 2001, Court of Appeals affirmed the RTC decision in toto (opinion penned by Associate Justice Presbitero J. Velasco Jr., concurred by Justices Bienvenido L. Reyes and Juan Q. Enriquez Jr.).
- Petition for Review to the Supreme Court (G.R. No. 150913): Petition denied in large part; Supreme Court affirmed the Court of Appeals and RTC decisions except deleting and setting aside the awards of actual damages for litigation expenses, attorney’s fees and exemplary damages; declared respondents heirs of Mamerto Reyes as absolute owners and ordered possession returned; no costs. Opinion penned by Justice Bellosillo.
Issues Presented
- Whether the consignation (deposit) of P 724.00 in Civil Case No. A-245 by Francisco Tazal perfected repurchase or otherwise extinguished respondents’ title so that subsequent sales to Blas Rayos and to petitioners conveyed ownership.
- Whether the 1 September 1957 instrument was an equitable mortgage or a sale with right to repurchase.
- Whether petitioners and their predecessors-in-interest successfully repurchased within the lawfully granted period and satisfied Article 1616 requirements (purchase price plus expenses of contract and necessary/useful expenses).
- Whether respondents’ claims in Civil Case No. A-2032 were barred by estoppel or laches based on their inaction.
- Whether petitioners were purchasers in good faith and for value, and whether they are protected by doctrines applicable to buyers in good faith.
- Whether respondents proved entitlement to actual damages for litigation expenses, attorney’s fees, and exemplary damages.
Parties’ Contentions (as Presented)
- Petitioners:
- The consignation of P 724.00 in Civil Case No. A-245 constituted evidence and effect of repurchase of the three parcels.
- The consignation was admitted in the stipulation of facts and implicitly approved by the trial court when it characterized the 1957 transaction as a sale with right to repurchase.
- Respondents failed to prove existence of additional expenses required by Art. 1616 to be paid aside from the P 724.00.
- Mamerto Reyes (respondents’ predecessor) was guilty of estoppel and laches for not opposing the sales to B