Cordovero v. Villaruz
REITERATIONFacts
The Antecedents: Plaintiffs Miguel Cordovero and Ambrosia Alcazar sold an hacienda known as San Jose to Januario Borromeo for P31,000. Marciano Borromeo was later subrogated into his father Januario's rights and obligations. None of the installments were paid, leading the plaintiffs to sue for rescission of the sale. The Court of First Instance (CFI) ruled in favor of the plaintiffs, ordering rescission and the return of the property, declaring a sale to Jose Araneta void. This was affirmed by the Supreme Court. Procedural History: Upon remand for execution, two parcels of the San Jose estate were returned, but the parcel in Camalignon was not due to an opposition by Jose Villaruz, who claimed to have acquired it from Marciano Borromeo by exchange on December 23, 1913. The CFI initially ruled in favor of the plaintiffs, declaring Villaruz's acquisition void. However, in an amended decision, the CFI absolved both Villaruz and Borromeo, upholding the validity of the exchange against the plaintiffs. The Petition: The plaintiffs appealed the amended decision, seeking to recover the land in Camalignon from Jose Villaruz.
Issue(s)
Whether the amended decision of the trial court was validly rendered. Whether the contract of exchange between Marciano Borromeo and Jose Villaruz is valid and effective against the plaintiffs. Whether Jose Villaruz is a lawful possessor in good faith, protected by Article 1295 of the Civil Code. Whether the plaintiffs are entitled to recover the land in Camalignon. Whether the plaintiffs are entitled to damages.
Ruling
The Supreme Court reversed the amended decision of the Court of First Instance. It ruled that the contract of exchange between Marciano Borromeo and Jose Villaruz, not having been registered, cannot prejudice the plaintiffs' right to recover the land in Camalignon. The defendants Jose Villaruz and Marciano Borromeo were ordered to deliver the land in Camalignon to the plaintiffs. No special pronouncement as to costs was made.
Ratio Decidendi
On the validity of the amended decision: The Court held that the trial judge had the power to render and sign decisions after trial within the Philippine Islands, even if rendered during vacation. Furthermore, the filing of a motion for a new trial does not deprive the court of its power to alter or modify its decrees and decisions before they become final. The amended decision was considered a correction of an error in the weighing of evidence, and a new trial was not necessary as no new evidence was proposed by the appellants. On the validity and effect of the contract of exchange: The Court found that the contract of exchange between Borromeo and Villaruz, executed on December 23, 1913, was not registered in the registry of property. Article 194 of Act No. 2711 (Civil Code) provides that unregistered instruments concerning real estate are not valid except between the parties thereto. Moreover, a precautionary note of the exchange was made on November 22, 1916, which was subsequent to the annotation of lis pendens on October 17, 1916, concerning the San Jose estate. Therefore, the unregistered exchange could not prejudice the plaintiffs, who were seeking to enforce a rescinded sale. On Jose Villaruz's status as a lawful possessor in good faith: The Court noted circumstances that raised suspicion of the exchange being simulated, such as Borromeo's subsequent mortgages and sale of the San Jose estate, including Camalignon, and Villaruz's silence in the rescission case despite the lis pendens. While Article 1295 of the Civil Code protects third persons in lawful possession who acted in good faith, the Court found that Villaruz's acquisition was not protected because the contract was not registered and thus could not prejudice third parties like the plaintiffs. The Court also found no convincing evidence that the plaintiffs had consented to the exchange. On the plaintiffs' right to recover the land: The Court reiterated that the rescission of the sale of the San Jose estate, affirmed by a final judgment, entitled the plaintiffs to recover the property, including the parcel in Camalignon. Since the exchange was not registered and could not prejudice the plaintiffs, their right to recover remained intact. On damages: The Court found the evidence presented by the appellants regarding damages to be speculative and insufficient to justify a judgment for damages. Furthermore, the assignment of error concerning damages referred to the original judgment, not the amended one under appeal.
Main Doctrine
A contract of exchange, even if valid between the parties, cannot prejudice third persons if it is not registered in the registry of property, especially when a notice of lis pendens has already been annotated.