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Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. L-28845 June 10, 1971

TEODORA GONZALES BUNYI, petitioner,


vs.
SABINA REYES, LUZ JOAQUIN, ELVIRA JOAQUIN, ROSENDO JOAQUIN, JR., LUALHATI
JOAQUIN and LOIDA VIVO and the HONORABLE COURT OF APPEALS, respondents.

Luis Teodoro for petitioner.

Anonuevo, Baez & Vasquez for private respondents.

TEEHANKEE, J.:

Appeal for certiorari from a decision of the Court of Appeals.

Petitioner Teodora Gonzales Bunyi was the defendant in an action for reconveyance, on the ground
of fraud, of a parcel of land containing 16 ares and 59 centares (Lot No. 1310 of the Friar Lands
Estate) situated in Taguig, Rizal, covered by Transfer Certificate of Title No. 43437 issued in her
name, filed by private respondents as plaintiff in the Court of First Instance of Rizal.
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Respondents filed the suit on May 30, 1961 as heirs of the previous registered owner of the land, Gil
Joaquin, who had died on June 10, 1950, leaving respondents as his heirs, namely, his surviving
spouse, Sabina Reyes; his daughter, Luz Joaquin; and his minor grandchildren, Elvira, Rosendo, Jr.
and Lualhati, all surnamed Joaquin (children of a deceased son, Rosendo), and represented by their
mother, Loida Vivo, as their guardian ad litem.

The main facts are undisputed. On September 24, 1935, Gil Joaquin executed a deed of "Venita con
Pacto de Retro", whereby for and in consideration of the sum of P100.00 paid to him. by petitioner,
he ceded and transferred to petitioner the land then titled in his name, expressly excluding the house
or houses built thereon, with the right of repurchasing the same within two years thereafter, and
assuming the payment of the land taxes and agreeing to pay an annual rental of P12.00 as lessee
thereof during the stipulated period of redemption.

On July 5, 1941, after Gil Joaquin had failed to repurchase the land, petitioner executed an affidavit
of consolidation of ownership and Joaquin's title was accordingly cancelled and a new certificate of
title issued on July 7, 1941 in petitioner's name.

The trial court, presided by the late Justice (then Judge) Angel H. Mojica, summarized the conflicting
claims of the parties per their testimonial and documentary evidence, as follows:
Plaintiff, Sabina Reyes tried to establish that the document, Exhibit A-I, does not
represent the true intention and agreement of the parties thereto; that the contents
thereof were not faithfully explained to her and her late husband; that in affixing her
thumbmark to the document, she and her late husband, Gil Joaquin, who signed the
same, were made to understand that they were merely mortgaging the land in
question to the defendant as security for the sum of P100.00 which they borrowed
from her; that the conditions stated in the document above-quoted are not true
except that portion in letter (b) whereby her late husband agreed to pay an annual
rent of P12.00, and the condition appearing in letter (c) whereby her late husband
bound himself to pay the taxes for the land; that she had been paying interest every
year to the defendant on the sum loaned; that since 1935 up to January 1961, she
had been paying the taxes for the land declared in the name of her husband under
Tax Declaration No. 947 (Exh. B); that there are houses on the land in question and
the owners thereof pay to her the corresponding rents; and that she learned for the
first time that the defendant was claiming ownership of the land only in 1961 when
the defendant caused it to be surveyed and so she consulted her present counsel.

The defendant, on the other hand, attempted to show that she is the lawful owner of
the land in question, having acquired same in virtue of the instrument "Venta Con
Pacto de Retro," Exhibit A-1, which Gil Joaquin executed in her favor on September
24, 1935; that because of the failure of Gil Joaquin and his wife, Sabina Reyes, to
repurchase the land within the period of two years and pay the rents as stipulated in
the contract, she filed an affidavit of consolidation of ownership and as a
consequence thereof, Transfer Certificate of Title No. 43437 covering the land was
issued on July 7, 1941, in her favor. She claimed that she had been paying the real
estate taxes for the land as shown by her documents, Exhibits 3 and 4, and that the
land had been registered in her name for taxation purposes since 1949 (Exh. 5). She
further testified that the notary public before whom Gil Joaquin and plaintiff Sabina
Reyes acknowledged and ratified the document (Exh. A-I) in Biñan, Laguna,
explained to them the contents thereof; that Gil Joaquin had been vice mayor of
Muntinglupa and he spoke and understood Spanish; that she did not study in any
school, although she was taught how to write her name by her father so that she
could vote; that her husband who reached the second grade did not understand
Spanish.

The trial court rendered judgment holding that the questioned deed spoke "in unequivocal terms of a
sale and the conveyance of the land with the right to repurchase. In the face of its plain terms, there
is nothing to justify our construing that contract as a mere mortgage.

Passing upon the contrary claim of respondents, the trial court found the uncorroborated and lone
testimony of Sabina Reyes to be inadequate and incredible: "(W)e find the uncorroborated testimony
of plaintiff Sabina Reyes to the effect that she and her late husband, Gil Joaquin, were induced to
sign the original of said document because of their belief that they were merely mortgaging the land
in question as security for the sum of P100.00 which they borrowed from her to be incredible. Her
lone and biased testimony is not sufficient to overcome the aforesaid document which is a sale with
Right to repurchase (venta con pacto de retro). Deeply embedded in our jurisprudence is the rule
that 'mere preponderance of providence is not sufficient to overthrow a certificate of a notary public
to the effect that a grantor executed a certain document and acknowledged the fact of its execution
before him. To accomplish this result, the evidence must be so clear, strong and convince as to
exclude all reasonable controversy as to the falsity of the certificate, and when the evidence is
conflicting, the certificate will be upheld.' (Robinson vs. Villafuerte, 18 Phil. 171; Jocson vs. Estacion,
60 Phil. 1055; V.L.J. 784; Villafuerte vs. Reyes, et al., CA-G.R. No. 1637-R, Sept. 27, 1950). In this
case we find that plaintiffs failed to produce 'clear strong and convincing evidence to overcome the
positive value of said document. Mere denials on the part of plaintiff Sabina Reyes can not offset or
defeat said notarial documents" 2

The trial court further ruled out the applicability of Articles 1602 to 1605 of the Civil Code of the
Philippines invoked by respondents as warranting the construction of the contract as an "equitable
mortgage", ruling that the applicable provisions were those of the old Civil Code then in force.

The trial court further found the belated claims of respondents to be unsupported by the evidence,
thus: "(I)t will be noted that the plaintiffs are attempting to defeat the effect of the deed of the late Gil
Joaquin, their predecessor in interest, twenty six years after the execution of the instrument. After so
long a period the charges of fraud must be clearly and in controvertibly proved. It is our sense that
the delay of plaintiffs in seeking relief in court 'speaks against the probability of the wrong
complained of.' Plaintiff Sabina Reyes failed to produce any receipt tending to prove her claim that
she had regularly paid the interests on the alleged 'loan' since 1935 up to the filing of the complaint.
She declared that she had religiously paid the taxes for the land, yet she failed to substantiate her
testimony with the best evidence. The records show that she paid the real estate taxes for the years
1949 to 1959 on December 22, 1960 only (Exhs. C and C-1), that is, five months before the filing of
the complaint. Why the belated payment if she believes to be still the owner of the property?" 3

The trial court finally upheld petitioner's defense of laches and prescription on the basis of the
following considerations: "(L)astly, it appears that Gil Joaquin who died on June 10, 1950 had been
Vice Mayor of Muntinglupa, he spoke, and understood Spanish; it is hard to be that he signed the
document, Exhibit A-1, without understanding its contents. If he were really defrauded why did he
not exercise his right of action? Why did he not repurchase the land and/or file an action for
annulment of the aforesaid document during his lifetime? And why did plaintiffs sleep on their
rights until May 30, 1961, when they instituted this action? The delay in the commencement of this
action strongly casts a doubt in our mind as to the verity of their complaint. It is our conviction that
the action has already prescribed." 4

Respondents appealed the trial court's decision to the Court of Appeals. The appellate court did not
make any factual findings of its own, much less overturn those of the trial court.

It, however, pitted the lone testimony of petitioner as against that of respondent Sabina Reyes, and
declared that under Article 1332 of the Philippine Civil Code, the burden was on petitioner as vendee
a retro to show that the Joaquin spouses fully understood the contents of the deed and that her
"bare testimony" was not sufficient to discharge the burden. It held that petitioner had consolidated
her ownership in a "surreptitious manner" and that "under the facts, defendant [petitioner] has not
discharged the burden of proof, hence presumption of mistake, if not fraud, under the law stands
unrebutted and controlling" and that the consent to the Joaquin spouses to the deed was therefore
null and void, as was the deed itself. It finally held the respondents' action to be "one for declaration
of the inexistence of the contract which does not prescribe."

The appellate court therefore reversed the trial court's judgment and granted the reconveyance of
the land as prayed for in respondents' complaint, per its following brief opinion:

Plaintiff Sabina Reyes having alleged and testified that she and her late husband Gil
Joaquin thumbmarked and signed the deed, Exhibit A, drawn on Spanish which they
did not understand and that they were induced to sign the document on
representation of defendant that it was the deed of mortgage, the burden of proof is
on the defendant to allow pursuant to Article 1332 of the new civil code, that the
Joaquin spouses fully understood the content thereof ... Only defendant testifies on
this score. She declared pertinently that it is Gil Joaquin 'who asked the preparation
of that document,' Exhibit A: that after the document was prepared by the notary
public, the latter translated the contents into tagalog before it was signed by the
Joaquin spouses in Biñan, Laguna; that she did not have any schooling, although her
late husband reached sixth grade: that the notary gave a copy of the deed to the
Joaquin spouses. Her bare testimony is not sufficient to establish by preponderance
of evidence that the Joaquin spouses fully know the contents of the document,
Exhibit A, to be Sale with right to repurchase, especially considering the
countervailing testimony of plaintiff Sabina Reyes that she and her husband did not
understand Spanish, she being illiterate and her husband having reached grade 3
only, according to him; that they signed the deed in Muntinglupa in the belief it was a
deed of mortgage and that they did not appear before the notary public in Biñan,
Laguna. Moreover, plaintiffs' theory finds confirmation in the surreptitious manner
[that] defendant made and filed the affidavit of consolidation of ownership, Exhibit 2-
A, and secured a new certificate of title in her name, Exhibit 1, on July 7, 1941, since
the change in the status of the property was not reflected in the tax roll of the
municipality of Muntinglupa until August 28, 1961, as per annotation on TD 947,
Exhibit D-1 when plaintiffs TD was cancelled, and in defendant's allowing plaintiffs to
continue in possession of the lot after 1941 despite said change in ownership. Under
the facts, defendant has not discharged the burden of proof, hence, presumption of
mistake, if not fraud, under the law stands unrebutted and controlling .... It follows
that the consent of spouses Gil Joaquin and Sabina Reyes to the document, Exhibit
A, is null and void, and so is the contract .... The circumstances that Exhibit A is a
public document executed prior to the effectivity of the new Civil Code do not
preclude the application of Article 1332 aforesaid ..., which is procedural in nature,
affecting burden of proof ..., there being no vested right in the rules of evidence ....

Having found that the deed of sale, Exhibit A, null and void, it follows that the present
action may be treated as one for declaration of the inexistence of the contract which
does not prescribe ....

Petitioner in turn filed this appeal, which the Court finds meritorious.

1. The appellate court's error was in applying Article 1332 of the New Civil Code and declaring that
thereunder petitioner had the burden which she failed to discharge as defendant — of showing that
the Joaquin spouses fully understood the contents of the "Venta con Pacto de Retro", when the
pertinent factual basis for application of said Article 1332 had not been duly established.

Article 1332, which was designed for the protection of illiterates and of a party to a contract who "is a
disadvantage on account of his ignorance, mental weakness or other handicap," provides that: 5

Art. 1332. When one of the parties is unable to read, or if the contract is in a
language not understood by him, and mistake or fraud is alleged, the person
enforcing the contract must show that the terms thereof have been fully explained to
the
former. (n)

For the proper application of said article to the case at bar, it has first to be established convincingly
by respondents that Gil Joaquin could not read or that the contract was written in a language not
understood by him. This factual basis was far from shown. On the contrary, the trial court duly found
— and the appellate court made in contrary finding — that "Gil Joaquin, ... had been vice mayor of
Muntinglupa; he spoke and understood Spanish; it is hard to believe that he signed the document
Exhibit A-1 without understanding its contents." The appellate court still made mention of another
relevant factor testified to by petitioner — not mentioned by the trial court — that "it was Gil Joaquin
who 'asked the preparation of that document', Exhibit A, "by the notary public, who translated the
contents into tagalog before the Joaquin spouses signed the same — which completely relieved
petitioner of any burden of proof, since the further presumption arose that the deed was prepared in
accordance with Gil's understanding and instructions, since he caused its preparation.

The trial court, therefore, properly ruled that it was respondents, as plaintiffs, who failed to overcome
by clear, strong and convincing evidence the positive value and effect of the notary's certificate that
the Joaquin spouses duly executed the "Venta con Pacto de Retro" and acknowledged the fact of its
execution of their sworn and free will before him.

2. The appellate court merely concluded that petitioner had consolidated ownership of the land on
July 7, 1941 in a "surreptitious manner" on the assumption, without reference to the evidence of
record, that petitioner's ownership of the land was not reflected in the municipality's tax roll "until
August 28, 1961, as per annotation on TD-947, Exhibit D-1, when plaintiffs' TD was cancelled and
that petitioner "allowed plaintiffs to continue in Possession of the lot after 1941 despite said change
of ownership." These assumptions of the appellate court are not supported by the evidence of record
cited 'in the trial court's decision that petitioner "had been paying the real estate taxes for the land as
shown by her documents, Exhibits 3 and 4, and that the land had been registered in her name for
taxation purposes since 1949 (Exh. 5);" and that on the other hand, "Plaintiff Sabina Reyes failed to
produce any receipt tending to prove her claim that she had regularly paid the interests and the
alleged `loan' since 1935 up to the filing of the complaint. She declared that she had religiously paid
the taxes for the land, yet she failed to substantiate her testimony with the best evidence. The
records show that she paid the real estate taxes for the years 1949 to 1959 on December 22, 1960
only (Exhs. C and C-1), that is, five months before the filing of the complaint." Petitioner's brief
further cites as to the fact of possession that "it was admitted by Luz Joaquin herself (one of the
respondents and daughter of Gil Joaquin) that after World War II, she removed her house from the
same lot, (S. T. N. of August 1962 p. 8 and S. T. N. of February 27, 1963, p. 2) while one of the
daughters of the petitioner, Fortunata Bunyi has a house on the same lot since 1959 (S. T. N. of
October 26, 1962, pp. 3 & 7) which was not even denied by the respondents," which citation of the
record is not denied in respondent's brief.

3. The final error of the appellate court flowed from its erroneous conclusion that "the consent of
spouses Gil Joaquin and Sabina Reyes to the document, Exhibit A, is null and void," hence "it
follows that the present action may be treated as one for declaration of the inexistence of the
contract which does not prescribe." The sale at bar is governed by the provisions of the old civil
code, and as was appointed out by Mr. Justice Reyes in one case , "(U)nder Article 1509 of the old
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Code, the vendee irrevocably acquires ownership over the thing sold upon failure of the vendor to
redeem — i.e. ownership is consolidated in the vendee by operation of law." The court's
jurisprudence has been uniform in support of petitioner's submittal that the rights vested in her as
vendee under the provisions of the old Code could not be impaired by the provisions of the new Civil
Code which took effect only in 1950. 7

On the question of prescription of action, the Court, per Mr. Justice Reyes, in Fernandez vs.
Fernandez, has held that "the right of action to question the nature of the original transaction as well
8

as any action to recover the land, if any such rights ever existed, were extinguished by prescription
ten years after the appellant consolidated his ownership in 1936." Respondents' right to question the
nature of the deed and to seek reconveyance must be held therefore to have prescribed in 1951, ten
years after petitioner's consolidation of ownership of the land on July 7, 1941, when a new certificate
of title was issued in her favor and that of Gil Joaquin was cancelled, and the filing of the present
action almost twenty years after such consolidation is barred by prescription.
ACCORDINGLY, the judgment of the Court of Appeals appealed from is hereby reversed and set
aside. Without costs.

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