Bundalian v. De Vera
REITERATIONFacts
The Antecedents: Carolina Triviño, as guardian of minors Josefa, Bienvenida, and Buenaventura Bundalian, obtained court authority to mortgage their land for P6,000. Subsequently, she secured authority to sell the land under pacto de retro due to the inability to secure a mortgage. On September 25, 1931, she entered into a contract with Juan de Vera for the sale of the land for P5,000, payable upon court approval. The contract stipulated that the sale would be rescinded if the guardian repaid the P5,000 within two years from court approval; otherwise, it would remain in full force. The guardian submitted the contract to the court, citing a decline in coconut land prices as justification for the P5,000 price. The court approved the deed. A final deed of sale with the right to repurchase was executed and registered. After the guardian failed to repurchase within the stipulated period, Juan de Vera granted an extension, which was also not utilized. Juan de Vera then executed an affidavit of consolidation and registered it. Subsequently, he sold the land to Jacinto Alvero and Carmen Alvero, who then mortgaged it to People's Bank & Trust Company. Procedural History: On March 13, 1936, Carolina Triviño, as guardian, and Josefa Bundalian filed an action to annul the sales and the mortgage. The Court of First Instance of Laguna ruled in favor of the defendants. The Court of Appeals affirmed this decision on May 31, 1940. The Petition: The plaintiffs filed a petition for review by certiorari.
Issue(s)
Whether the contract entered into between Carolina Triviño and Juan de Vera is a mortgage or a sale with pacto de retracto. Whether the order of the Court of First Instance authorizing the sale by the guardian is invalid due to non-compliance with statutory provisions.
Ruling
The petition is dismissed, and the judgment of the Court of Appeals is affirmed, with costs against the petitioners.
Ratio Decidendi
On the nature of the contract: The Court held that the contract between Carolina Triviño and Juan de Vera is a sale with pacto de retracto. The Court emphasized that in construing contracts, the intention of the parties must be given effect, and the entire instrument must be examined to ascertain this intention. While courts will not consider a contract as one with pacto de retracto merely because it is so denominated, they must give effect to the parties' will when the terms leave no shadow of doubt. The guardian's petition to the court explicitly requested approval for a "venta con pacto de retro," and the attached contract was also titled as such. Furthermore, the guardian acknowledged receiving the P5,000 "como importe de la venta con pacto de retro." The price paid was not considered decisive given the prevailing market for coconut lands, nor was the guardian's continued occupation of the land, as it was proven she occupied it as a lessee. The clear language and actions of the parties indicated their intent to enter into a sale with a right to repurchase. On the validity of the guardian's sale authorization: The Court found no error in the lower courts' rulings regarding the validity of the guardian's sale authorization. It was contended that the provisions of section 569 of the Code of Civil Procedure, as amended, were not complied with. However, the Court noted that these alleged irregularities were not distinctly, clearly, or directly alleged in the complaint, nor were they proven during the trial. The lower court's finding on this matter was not disturbed. The Court also considered the rights of innocent third parties, finding that Juan Alvero and Carmen Alvero were purchasers in good faith, as was the defendant People's Bank and Trust Company.
Main Doctrine
The terms of a deed of sale with pacto de retro must be given effect if they clearly express the intention of the parties, and the court must ascertain this intention by examining the entire instrument. The denomination of a contract does not control its nature, but clear terms indicating a pacto de retro sale must be respected.