Republic of the Philippines

SUPREME COURT
Manila
FIRST DIVISION

G.R. No. 95871 February 13, 1992
HEIRS OF OMING! T!"OR! #!. E M!CO$, re%re&e'(e) by GENEROSO M!CO$, petitioners,
vs.
HON. COURT OF !PPE!*S, +ESUS F. REI**!S !N !N!T!*I! E*ON, respondents.
Esteban C. Manuel for petitioners.
Pedro E. Bacorro for private respondents

MEI!*E!, J.:
This is a petition for revie on certiorari see!in" reversal of the decision of public respondent #ourt of $ppeals in #$%&.R. #V No. '()*(, entitled
+,esus F. Redillas et al., Plaintiffs%$ppellants v. -eirs of Do.in"a Tabora Vda. de Maco/, represented b/ &eneroso Maco/, Defendants%$ppellees,+
dated Septe.ber 0, '11), hich set aside the decision of the Re"ional Trial court of Daet, #a.arines Norte2 and its resolution dated October '3, '11),
hich denied the .otion for reconsideration.
The antecedent fact are, as follos4
Do.in"a Tabora Vda. de Maco/ as the oner of a rice land, ith an area of 5.))6( hectares, located at 7a"asbas, Daet, #a.arines Norte. -er
onership thereof as evidenced b/ T#T No. T%38() of the Re"ister of Deeds of #a.arines Norte 9pp. (3%7%(6, Records:. She ac;uired the land fro.
spouses Patrocinio and Pablo Serrano on ,anuar/ (3, '1*0, for a consideration of P'',))).)) 9p. '1', Records:. On Dece.ber (6, '13), she
e<ecuted a docu.ent hich is do.inated +Pabilihan" Mabibili%Muli+ or sale ith a ri"ht to repurchase in favor of private respondents spouses ,esus F.
Redillas and $natalia =lon, for the su. of P*,))).)) over the land 9p. 0, Records:. $.on" other thin"s, it as provided therein that the period of
repurchase is beteen Dece.ber (1, '135 and Dece.ber (1, '138.
Do.in"a Tabora Vda. de Maco/ died in Februar/, '13(, leavin" as heirs petitioners ,ulieta Maco/ Pon"co, Rufina, Francisco, Miria. and -erson
Maco/ and Teopista Maco/ de >antua. $lle"in" failure of petitioners to repurchase the land, private respondent ,esus F. Redillas e<ecuted an $ffidavit
of #onsolidation of Onership on Ma/ 5', '133 9p. (*, Records:. On ,ul/ (', '133, he and his ife filed a petition for Recordin" of #onsolidation of
Onership before the Re"ional Trial #ourt of Daet, #a.arines Norte, doc!eted as #ivil #ase No. (155 9pp. '%5, Records:.
In the trial court?s order dated ,anuar/ '*, '136, it declared petitioners in default for failure to file an anser to the petition 9p. '*, Records:. Private
respondents then presented their evidence and, on Februar/ ', '136, @ud".ent as rendered b/ the trial court orderin" consolidation of onership and
re"istration of title over the land in the na.e of private respondents 9pp. '3%'6, Records:. $ccordin"l/, T#T No. T%38() as cancelled and T#T No. T%
'0**8 as issued on Februar/ 5, '136, in the na.e of private respondent ,esus F. Redillas, .arried to private respondent $natalia =lon 9pp. '66%'61,
Records:.
On ,une '*, '136, private respondents .ort"a"ed the land to the Rural 7an! of ,ose Pan"aniban, Inc. to secure a loan of P'8,))).)). On ,ul/ '3,
'16), the/ borroed an additional a.ount of P'),)).)) fro. the ban!.
On October 0, '136, petitioners filed a petition for relief fro. the trial court?s decision alle"in" 9pp. 55%50, Records:4
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III
That respondents 9petitioners: could not possibl/ have filed their $nser to the Petition for #onsolidation of Onership and
"one to trial for the folloin" reasons4
'. Su..ons have 9sic: been i.properl/ served4
a.: The petition for #onsolidation of Onership alle"ed the respondents 9petitioners: therein is 9sic:
represented b/ one &eneroso Maco/, hen there is NO such representative of respondents
9petitioners:2
b:. Not one of the -eirs of Do.in"a Tabora Vda. de Maco/ resides at ())0 MuAoB St., Paco, Manila
andCor '13)%7 $na! 7a/an, Paco, Manila as .entioned in the Petition2
(. Not all the -eirs of Do.in"a Tabora Vda. de Maco/ ere .ade part/ respondents.
5. There are other factors constitutin" fraud, .ista!e, accident or e<cusable ne"li"ence hich deprived the respondents
9petitioners: of due process of la2 $TT$#-=D -=R=DIT- IS $N $FFID$VIT OF ON= OF T-= -=IRS OF DOMIN&$
T$7OR$ VD$. D= M$#OE.
IV
That this petition is bein" filed ithin si<t/ 9*): da/s after the respondents 9petitioners: have learned of the aforesaid Decision
and not .ore than si< 9*: .onths after such @ud".ent as entered2
V
That respondents 9petitioners: have "ood and substantial defense 9sic: in this action, to it4
'. The instru.ent in ;uestion is not one of Pacto de Retro but rather a Deed of $ntichresis or the least an =;uitable Mort"a"e2
(. The consideration is unconscionable2
5. There as tender of pa/.ent of the rede.ption price, and in this connection, the respondents 9petitioners: are illin" to
deposit ith the #ler! of #ourt the necessar/ a.ount to effect le"al rede.ption2
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On October '1, '136, findin" the petition .eritorious, the trial court set aside its previous order and decision and "ranted ne trial 9pp. 0)%0',
Records:. #onse;uentl/, petitioners, throu"h their representative Teopista Maco/ de >antua, filed their anser to the petition of private respondents.
The/ alle"ed that the docu.ent e<ecuted b/ the late Do.in"a Tabora Vda. de Maco/ as not a sale ith a ri"ht to repurchase but an e;uitable
.ort"a"e or a contract of antichresis. The/ alle"ed further that even assu.in" it to be a sale ith a ri"ht to repurchase the/ nevertheless had thirt/
95): da/s fro. final @ud".ent under $rticle '*)* of the #ivil #ode ithin hich to redee. the land. Durin" the trial, the trial court, upon .otion of
petitioners, ordered the Re"ister of Deeds to i..ediatel/ restore T#T No. T%38() in the Re"istr/ office 9pp. ('8%('*, Records:.
On ,ul/ '*, '16*, @ud".ent as rendered b/ the trial court in favor of petitioners. It declared the docu.ent to be in fact an e;uitable .ort"a"e on the
basis of its findin"s that the consideration thereof as inade;uate and the ta<es on the land continued to be paid under the na.e of Do.in"a Tabora
Vda. de Maco/ even up to '133. It also found that petitioner Teopista Maco/ de >antua offered to private respondents the a.ount of P*,))).)) in
order to repurchase the land but she as turned don, thus, she deposited said a.ount in court on Septe.ber '6, '16). The dispositive portion of its
decision reads 9pp. (05%(00, Records:4
D-=R=FOR=, @ud".ent is hereb/ rendered for the -eirs of Do.in"a Tabora Vda. de Maco/ ho retains onership of Fot
()5( covered b/ Transfer #ertificate of Title No. T%38() of the Re"istr/ of Deeds of #a.arines Norte b/ auto.atic operation of
la hen pa/.ent of the obli"ation has been affected hen the a.ount of P*,))).)) as deposited ith the #ler! of #ourt on
Septe.ber '6, '16)2 to pa/ defendant%heir Teopista M. >antua transportation e<penses for havin" "one to Daet fro. Manila
and fro. Manila to Daet for hearin"s since '136 up to '16* in the su. of P3,))).))2 li!eise to pa/ an additional su. of
P'0,))).)) representin" attorne/?s fees paid b/ defendant%heir Teopista M. >antua to her to 9(: counsel2 and finall/ the su.
of P'),))).)) 9as: .oral, punitive, e<e.plar/ and corrective da.a"es.
The Re"ister of Deeds of #a.arines Norte is hereb/ ordered to cancel the annotation of the sale ithpacto de retro dated
Dece.ber (6, '13) upon Transfer #ertificate of Title No. T%38() on the "round that the repurchase therein .entioned as
effected le"all/ on Septe.ber '6, '16), in spite of petitioners? refusal to allo defendant%heirs to e<ercise their ri"ht to
repurchase reserved to their .other Do.in"a Tabora Vda. de Maco/ in the docu.ent.
Dith costs.
Fet copies of this Decision be served upon the Re"ister of Deeds of Daet, #a.arines Norte, and the National Fand Titles and
Deeds Re"istration $d.inistration, Ministr/ of ,ustice.
SO ORD=R=D.
Fro. this @ud".ent, private respondents appealed to public respondent #ourt of $ppeals. On Septe.ber 0, '11), respondent court reversed the trial
court?s decision, the dispositive portion of hich, reads 9p. 5*, Rollo:4
D-=R=FOR=, the decision appealed fro. is R=S=RV=D and @ud".ent is hereb/ rendered "rantin" consolidation of
onership in favor of the plaintiff%appellants and the Re"ister of Deeds of #a.arines Norte is ordered to cancel T#T No. T%(8()
9sic: in the na.e of Do.in"a Tabora Vda. de Maco/ and issue a ne one in the na.es of the plaintiff%appellants.
#osts a"ainst the defendant%appellees.
SO ORD=R=D.
On October '3, '11), the .otion for the reconsideration as denied for lac! of .erit 9p. 85, Rollo:. -ence, the present petition.
Petitioners raise the folloin" errors co..itted b/ respondent court4
': it set aside their petition for relief fro. @ud".ent2 and
(: it held that the transaction in ;uestion as a pacto de retro sale.
The/ asseverate that the findin" of the trial court relative to the invalidit/ of the service of su..ons on the. is vital and .ust be respected.
The respondent court should have treated their petition for relief fro. @ud".ent as an action for annul.ent of @ud".ent since it as ai.ed
at annullin" the trial court?s decision. =ven assu.in" that the transaction as pacto de retro, the/ have validl/ e<ercised their ri"ht to
repurchase the land. The consideration in the transaction as inade;uate because hen the land as ac;uired for P'',))).)) in '1*0, its
.ar!et value had increased considerabl/ at the ti.e of the e<ecution of the docu.ent in '13). In fact, private respondents had obtained a
loan for P(8,))).)) usin" it as collateral. The fact that in the receipts of pa/.ent there is no shoin" that the real estate ta<es ere paid b/
private respondents, as is usuall/ ritten across the bod/ of the receipts if so paid b/ a person other than the oner na.ed thereon, shos
that Do.in"a Tabora Vda. de Maco/ paid the ta<es durin" the period of repurchase.
On the other hand, private respondents contend that the su..ons served on petitioner Teopista Maco/ de >antua, throu"h her sister petitioner Miria.
Maco/, ho both live in the sa.e address, is valid. $rticle '*)*, para"raph 5, of the #ivil #ode is not applicable, as held in the case of Felicen, Sr., et
al. v. Orias, et al., &.R. No. F%55'6(, Dece.ber '6, '163, '8* S#R$ 86*. There are absolutel/ no indications fro. hich to dra the conclusion that
the transaction is one of e;uitable .ort"a"e. The price of the sale, hich is .ore than one half 9'C(: of the ac;uisition cost is not inade;uate. Private
respondents have paid the real estate ta<es fro. the ti.e the/ too! possession thereof up to '133.
The trial court, in settin" aside its ,anuar/ '*, '136 order and Februar/ ', '136 decision, rationaliBed 9pp. 0)%0', Records:4
. . . since Miria. is not the representative of the heirs of the late Do.in"a Tabora Vda. de Maco/, her receipt if 9sic: the
su..ons, if at all, is valid onl/ in so far 9sic: as it concerns her. It cannot bind the other heirs of the deceased Do.in"a Tabora
Vda. de Maco/. #onse;uentl/, since no valid service of su..ons as effected on Teopista Maco/ de >antua, ,ulieta,
Francisco, Rufina, and -erson Maco/, the order of this #ourt declarin" the. in default and the conse;uent @ud".ent a"ainst
the. is null and void for lac! of due process.
The fact that the si<%.onth period has alread/ e<pired under Rule 56 of the Rules of #ourt is of no .o.ent because a void
@ud".ent never ac;uires finalit/. It can be attac!ed an/ti.e.
The respondent court vieed the validit/ of the service of su..ons and the propriet/ of the petition for relief fro. @ud".ent differentl/. $ccordin" to it
9pp. 50%58, Rollo:4
. . . For the fact is that Miria. is a sister of Teopista Maco/ and one of the heirs of Do.in"a Tabora Vda. de Maco/. . . .
. . ., Teopista Maco/ ad.itted that she learned of the @ud".ent rendered on Februar/ ', '136 in Februar/ '136 9TSN, p. '*,
Nov. 8, '16): but her petition as filed onl/ on October 0, '136. . . .
De adopt the findin" of the trial court that no valid service of su..ons as effected on the other petitioners. Therefore, its Februar/ ', '136 decision is
void. Service of su..ons upon the defendant is the .eans b/ hich the court ac;uires @urisdiction over his person. This process is for the benefit of
the defendant, and is intended to afford the latter an opportunit/ to be heard on the clai. a"ainst hi. 9Geister v. Navarro, &.R. No. F%(1)*3, Ma/ 5',
'133, 33 S#R$ ()1:. In the absence of such service or a valid aiver thereof, the trial and @ud".ent are void 9VenturanBa, et al., v. -on. #ourt of
$ppeals, et al., &.R. No. 333*), Dece.ber '', '163, '8* S#R$ 5)82 Fil.erco #o..ercial #o., Inc., et al. v. -on. Inter.ediate $ppellate #ourt, &.R.
No. 3)**', $pril 1, '163, '01 S#R$ '152 #onsolidated Pl/ood Industries, Inc. v. 7reva, et al., &.R. No. 6(6'', October '6, '166, '** S#R$ 8612
Phil. National #onstruction #orp. v. Ferrer%#alle@a, et al., &.R. No. 6)068, Nove.ber '', '166, '*3 S#R$ (10:.
There is no debate that the petition for relief fro. @ud".ent as filed b/ petitioners be/ond the re"le.entar/ period prescribed b/ Rule 56, Section 5,
of the Rules of #ourt. -oever, inas.uch as the petition as ai.ed at annullin" the Februar/ ', '136 decision based on lac! of @urisdiction over
petitioners 9p. 50, Records:, De treat it as an action for annul.ent of @ud".ent. $nd, an action to declare the nullit/ of a void @ud".ent does not
prescribe 9$n" Fa. v. Rosillosa and Santia"o, 6* Phil. 0032 Palua"an n" 7a/an Savin"s 7an! v. Gin", et al., &.R. No. 36(8(, $pril '(, '161, '3(
S#R$ *):.
The fore"oin" discussions lead Hs to no other conclusion that the trial court as correct in settin" aside its Februar/ ', '163 decision. Eet, De re"ret
that Our favorable action on this petition ends here. $fter a @udicious consideration of the .erits of this case. De find that respondent court did not
co..it an/ reversible error in "rantin" consolidation of onership in favor of private respondents.
De ;uote hereunder the bod/ of the ;uestioned docu.ent 9p. 0, Records:4
D$P$T M$F$M$N N& SINOM$N& M$G$7$7$S$ NITO4
Iton" P$7IFI-$N& M$7I7IFI%MHFI 9Pacto-de-retro Sale: na ito a/ "inaa nina4 DOMIN&$ T$7OR$ VD$. D= M$#OE, .a/
sapat na "ulan", balo, naninirahan sa ())0 MuAoB St., Paco, Manila, na tataa"in sa !asulatan" ito na N$&P$7IFI, at ,=SHS
F. R=DIFF$S, .a/ sapat na "ulan", Pilipino, asaa ni $natalia =lon, naninirahan sa Daet, #a.arines Norte, natataa"in sa
!asulatan" ito na 7HMIFI.
NAPAPA!O!OO
Na an" N$&P$7IFI alan"%alan" sa hala"an" $NIM N$ FI7ON& PISO 9P*,))).)):, salapin" Pilipino! 9sic:, na 9sa: !ani/an"
tinan""ap n" 9sic: buon" !asi/ahan "alin" sa 7HMIFI, sa pa.a.a"itan n" !asulatan" ito a/ !ani/an" ipina"bibili, inililipat at
ipinauuba/a sa paraan" bilihan"%.abibili .uli 9pacto-de-retro: sa nasabin" 7HMIFI, sa !ani/an" .aA"a ta"pa".ana at
lilipatan, and lahat ni/an" pa"!a.a/ari at pa!iala. sa su.usunod na parsolan" lupain4
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at an" nasabin" lupain a/ pinana"utan !o 9D$RR$NTE: na alan" ano .an" lin"aton" o pa"!a!autan" !ahi?t !anino .an"
tao.
Datapa?t !on" 9sic: a!o, an" N$&P$7IFI, a/ .atubos !o an" nasabin" lupain sa datin"hala"an" 9sic: P*,))).)) pa"!alipas
n" tatlon" taon si.ula n"a/on I n"uni?t hindi na.an lilipas sa li.an" taon .ula n" 9sic: la"daan n" !asulatan" ito I an"
usapan" ito a/ .aaalan n" bisa at !abuluhan2 n"uni?t !un" hindi !o na.an .atubos ito sa tanin" napanahon na a.in"
pina"!asunduan, an" do!u.enton" ito a/ .a"!a!aroon n" bisa alinsunod sa ipina"uutos n" 7atas. Sa.a!atuid, an" lupain"
ito a/ .atutubos la.an" n" N$&P$7IFI sa 7HMIFI si.ulan" Des/e.bre "#, '135 at hindi lilipas sa Des/e.bre "#, '138.
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Hnder $rticle '*)( of the #ivil #ode, the contract shall be presu.ed to be an e;uitable .orta"a"e, in an/ of the cases4
9': Dhen the price of a sale ith ri"ht to repurchase is unusuall/ inade;uate2
9(: Dhen the vendor re.ains in possession as lessee or otherise2
95: Dhen upon or after the e<piration of the ri"ht to repurchase another instru.ent e<tendin" the period of rede.ption or "rantin" a ne period is
e<ecuted2
90: Dhen the purchaser retains for hi.self a part of the purchase price2
98: Dhen the vendor binds hi.self to pa/ the ta<es on the thin" sold2
9*: In an/ other case here it .a/ be fairl/ inferred that the real intention of the parties is that the transaction shall secure the pa/.ent of a debt or the
perfor.ance of an/ other obli"ation.
7ased on the evidence on record, none of the afore.entioned instances is present in this case. Rather, evident .anifestations of a "enuine sale ith
ri"ht to repurchase e<ist. The price of the sale is not unusuall/ inade;uate. The price fi<ed in a pacto de retro sale is not necessaril/ the true value of
the land sold 9De Oca.po, et al., v. Fi., 56 Phil. 831:. The reason is that the vendor has the ri"ht to repurchase the land. The practice is to fi< a
relativel/ reduced price 9but not a "rossl/ inade;uate one: in order to afford the vendor a retro ever/ facilit/ to redee. the land, unli!e in an absolute
sale here the vendor, in per.anentl/ "ivin" aa/ his propert/, tries to "et, as co.pensation, its real value 9Feliciano v. Fi.@uco, et al., 0' Phil. '032
#laridad v. Novella, ')8 Phil. 38*2 Vda. de Facson, et al., v. &ranada, et al., ''' Phil. 0332 $.i"o, et al. v. Teves, 1* Phil. (8(:. Do.in"a Tabora Vda.
de Maco/ did not bind herself to pa/ the real estate ta<es on the land 9see Vda. de >ulueta v. Octaviano, et al., &.R. No. 8858), March (6, '165, '('
S#R$ 5'0:. There is not even an/ proof that she paid the real estate ta<es thereon since the ti.e of the sale. On the contrar/, =<hibit +=+ 9p. 5',
Records: shos that the private respondent $natalia =lon paid the real estate ta<es thereon for the calendar /ears '130%'133. Inas.uch as the
docu.ent is plainl/ a pacto de retro sale, it cannot be considered a loan ith .ort"a"e 9International 7an!in" #orporation v. MartineB, et al., ') Phil.
(8(:. De reiterate that the contract is the la beteen the parties. Dhen the ords of a contract are clear and readil/ understandable, there is no roo.
for construction 9Dihiansan, et al. v. #ourt of $ppeals, et al., &.R. No. F%01851, Sept. '0, '163, '85 S#R$ 3'(:. The freedo. of contract .ust be
.aintained and respected.
$rticle '*)*, para"raph 5, of the #ivil #ode provides that4
-oever, the vendor .a/ still e<ercise the ri"ht to repurchase ithin thirt/ da/s fro. the ti.e final @ud".ent as rendered in a
civil action on the basis that the contract as a true sale ith the ri"ht to repurchase.
Petitioners invo!e this provision as an alternative le"al re.ed/ in the event that the docu.ent be finall/ declared a pacto de retro sale. 7ut
Our ;uer/ is I can the/ avail of this provisionJ The case of Felicen, Sr., et al., v. Orias, et al. 9supra:, hich as cited b/ private
respondents, supplies the anser. De ere distinct in Our pronounce.ent therein that 9at pp. 861%81':4
The application of the third para"raph of $rticle '*)* is predicated upon the bona fides of the vendora retro. It .ust appear that
there as a belief on his part, founded on facts attendant upon the e<ecution of the sale ith pacto de retro, honestl/ and
sincerel/ entertained, that the a"ree.ent as in realit/ a .ort"a"e, one not intended to affect the title to the propert/ ostensibl/
sold, but .erel/ to "ive it as securit/ for a loan or other obli"ation. In that event, if the .atter of the real nature of the contract is
sub.itted for @udicial resolution, the application of the rule is .eet and proper2 that the vendor a retro be alloed to repurchase
the propert/ sold ithin 5) da/s fro. rendition of final @ud".ent declarin" the contract to be a true sale ith ri"ht to repurchase.
#onversel/, if it should appear that the parties? a"ree.ent as reall/ one of sale I transferrin" onership to the vendee, but
acco.panied b/ a reservation to the vendor of the ri"ht to repurchase the propert/ I and there are no circu.stances that .a/
reasonabl/ be accepted as "eneratin" so.e honest doubt as to the parties? intention, the proviso is inapplicable. The reason is
;uite obvious. If the rule ere otherise, it ould be ithin the poer of ever/ vendor a retro to set at nau"ht a pacto de retro,
or resurrect an e<pired ri"ht of repurchase, b/ si.pl/ institutin" an action to refor. the contract I !non to hi. to be in truth a
sale ith pacto de retro I into an e;uitable .ort"a"e. $s postulated b/ the petitioner, +to allo herein private respondents to
repurchase the propert/ b/ appl/in" para"raph . . . to the case at bar despite the fact that the stipulated rede.ption period had
alread/ lon" e<pired hen the/ instituted the present action, ould in effect alter or .odif/ the stipulation in the contract as to
the definite and specific li.itation of the period for repurchase 9( /ears fro. date of sale or onl/ until ,une (8, '186: thereb/ not
si.pl/ increasin" but in realit/ resuscitatin" the e<pired ri"ht to repurchase . . . and li!eise the alread/ ter.inated and
e<tin"uished obli"ation to resell b/ herein petitioner.+ The rule ould thus be .ade a tool to span, protect and even reard
fraud and bad faith, a situation surel/ never conte.plated or intended b/ the la.
This #ourt has alread/ had occasion to rule on the proper interpretation of the provision in ;uestion. In Adorable v. $nacala,
here the proofs established that there could be no honest doubt as to the parties? intention, that the transaction as clearl/
and definitel/ a sale ith pacto de retro, the #ourt ad@ud"ed the vendor a retro not to be entitled to the benefit of the third
para"raph of $rticle '*)*.
$##ORDIN&FE, the petition is hereb/ D=NI=D. The decision of the #ourt of $ppeals dated Septe.ber 0, '11) and its resolution dated October '3,
'11) are hereb/ $FFIRM=D.
SO ORD=R=D.
Narvasa, C.%., Cru& and ri'o-A(uino, %%., concur.