Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. L-9957

August 8, 1916

PERFECTO 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 six cavanes and 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 and pro indiviso possession 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 under pacto 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 abovementioned 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 under pacto de retro inasmuch 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 of pacto 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 Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. 16256

September 28, 1921

DIONISIA 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 judge a quo held 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 of De 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 under pacto 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 Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. L-45963

October 12, 1939

CARLOS PARDO DE TAVERA and CARMEN PARDO DE TAVERA MANZANO, plaintiffsappellants,

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. Louis vs. 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 Filipino vs. Paredes, 45 Phil., 178; Peterson vs. Azada, 8 Phil., 432, 437.)
lwphi1.nt

Appellants 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 Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. L-6939

March 7, 1913

AMOS 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 of venta 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 1507 et 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 Philippines

SUPREME COURT
Manila
EN BANC
G.R. Nos. L-32482, L-32483

March 14, 1931

FELICIDAD 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. 1 The 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 Capiz vs. 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 socalled 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 the hacienda of 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 Rubi vs.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 NonChristian 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
Rubi vs. 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. (Elk vs. 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. (Starr vs. 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 Mundiz vs.Saudo (Mandaya), No. 20722,2 in 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 Opinions
JOHNSON, 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. (Cario vs. Insular Government, 7 Phil., 132; Cario vs. 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
Capiz vs.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 Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. L-18589

October 31, 1962

BALDOMERO 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 Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-4135

November 29, 1951

SEVERINA 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" 1 for 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.2

In 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 court a quo for
further proceedings. Costs against appellees.
Pablo, Padilla, Tuason, Reyes, Jugo and Bautista Angelo, JJ., concur.