Crisologo v. Centeno
REITERATIONFacts
The Antecedents: Spouses Francisco and Consolacion Crisologo filed an ex parte petition for consolidation of ownership over two parcels of land they purchased with pacto de retro from spouses Isaac and Asuncion Centeno. The Crisologos claimed the Centenos failed to exercise their right of repurchase within the stipulated periods. Procedural History: The Court of First Instance (CFI) initially granted the consolidation order ex parte. Subsequently, the CFI set aside this order upon motion by the Centenos, finding they were not duly notified. The CFI later reinstated the consolidation order, stating the Centenos had been notified by registered mail. The Centenos appealed to the Court of Appeals (CA), which set aside the CFI's order, ruling that the Centenos had not been legally notified and the initial consolidation order was a nullity. The CA remanded the case for further proceedings. After the Centenos were duly summoned and filed an answer, they alleged the contracts were equitable mortgages for usurious loans. The CFI, after trial, ruled in favor of the Centenos, declaring the contracts as equitable mortgages and ordering redemption upon settlement of accounts, denying the consolidation of title. The Appeal: The Crisologos appealed to the Supreme Court, contending that the initial CFI order of January 28, 1955, was valid, final, and executory, and that all subsequent proceedings, including the CA's decision and the CFI's final judgment, were null and void.
Issue(s)
Whether the Order of January 28, 1955, granting the consolidation of ownership, was valid, final, and executory. Whether all subsequent proceedings, including the Court of Appeals' decision and the final judgment of the lower court declaring the contracts as equitable mortgages, were null and void.
Ruling
The Supreme Court affirmed the judgment of the lower court dated October 26, 1960, in all its parts. The petition for consolidation of title was denied, and the contracts were declared equitable mortgages, entitling the respondents to redeem the property.
Ratio Decidendi
On Issue 1: The Supreme Court held that the Order of January 28, 1955, was a patent nullity and not valid, final, or executory. This was because the petition for consolidation of ownership was filed ex parte and did not name the vendors (Centenos) as respondents, nor were they duly summoned and heard. Article 1607 of the Civil Code explicitly requires a judicial order for consolidation of ownership in real property, which can only be granted after the vendor has been duly heard. The Court emphasized that the lower court did not acquire jurisdiction over the persons of the vendors, rendering the order void. On Issue 2: The Supreme Court ruled that the subsequent proceedings were valid. The Court of Appeals' judgment, which set aside the lower court's order of February 27, 1957, and declared the earlier consolidation order of January 28, 1955, a nullity due to lack of jurisdiction, had the effect of res judicata on the issue of the nullity of those orders. Furthermore, after the remand, the proceedings were conducted in accordance with Article 1607 of the Civil Code, with the vendors duly summoned and heard as respondents. The subsequent trial and the rendition of the judgment on October 26, 1960, declaring the contracts as equitable mortgages, were therefore valid and binding.
Main Doctrine
The consolidation of ownership in the vendee in a sale with pacto de retro involving real property requires a judicial order obtained through a contentious proceeding where the vendor a retro is duly heard. This means the vendor must be named as a respondent and properly summoned. An ex parte petition that does not afford the vendor an opportunity to be heard violates due process and results in a void order, as the court fails to acquire jurisdiction over the person of the vendor.