G.R. No. 155018
December 11, 2003
HEIRS OF SPS.
NUEVA AND DIOSDADA NUEVA,
R E S O L U T I O N
Mistake, to constitute a ground for petition for relief, refers to a mistake of fact, not of law. The Court finds occasion to reiterate this basic principle in this case.
The narration of facts by the Court of Appeals is not disputed:chanrobles virtual law library
On April 13, 1988, Diosdada Nueva, with marital consent, sold under a pacto de retro, a parcel of land with an area of 2,033 square meters situated in Kauswagan, Cagayan de Oro City, to Philadelphia Agan for P21,000.00. The property is covered by Transfer Certificate of Title (TCT) No. 25370 and registered in the name of Spouses Andres and Diosdada Nueva. chan robles virtual law library
The agreement is evidenced by a public instrument entitled "Deed of Sale under a Pacto de Retro" executed and duly signed by the late Diosdada Nueva with the marital consent of her husband, Andres Nueva, and Philadelphia Agan. The parties agreed that the Nuevas are granted the right to repurchase the property sold, within six (6) months from and after the date of the document for the same consideration of P21,000.00. chan robles virtual law library
Petitioners failed to repurchase the property within the stipulated six-month period.cralaw
On July 5, 1991, upon the death of Diosdada Nueva, the property was extrajudicially partitioned where Andres sold his interest in the land in question to his daughter Ann and son Lou. Since the title to the property was allegedly lost during the fire that razed the property on March 19, 1990 where Diosdada died, title was reconstituted and subsequently transferred and registered in the name of Ann and Lou Nueva under TCT No. 63403. chan robles virtual law library
On June 19, 1992, Philadelphia Agan filed a petition for consolidation of ownership against Spouses Andres and Diosdada Nueva with the Regional Trial Court (RTC), Branch 19, of Cagayan de Oro City x x x In their answer filed on October 28, 1998, the Nuevas alleged that the pacto de retro sale was actually an equitable mortgage, the consideration for the sale being only P21,000.00 as against its Fair Market Value of P81,320.00 pursuant to Tax Declaration No. 34661.cralaw
Trial proceeded. On May 10, 2000, the RTC admitted Agan's exhibits and submitted the case for decision in view of the absence despite due notice of the Nuevas and their counsel on record. A motion for reconsideration filed by the Nuevas couple was denied. On August 3, 2000, the judgment consolidating ownership over the disputed property in favor of the vendee, Philadelphia Agan, was rendered by the trial court. However, the second paragraph of the dispositive portion gave the vendors a period of thirty days from receipt of the decision within which to redeem the property. The dispositive portion of the decision reads:chanroblesvirtuallawlibrary chan robles virtual law library
Because of the refusal of Agan to accept the amount of P52,080.00 as redemption price, the Nuevas were constrained to consign the amount with the court.
On September 12, 2000, Philadelphia Agan filed a petition for relief from the August 3, 2000 decision. She argued that she did not find it necessary to file an appeal from the said decision considering that the grant of the third-day period to redeem the property is a mere surplusage and hence, unenforceable and illegal in view of the court's order consolidating ownership of the property in her favor. Respondent Agan prayed for the court to delete the said portion of the decision. chan robles virtual law library
On October 9, 2000, the trial court rendered its questioned Order, thus:chanrobles virtual law library
On October 31, 2000, a motion for reconsideration of the above-quoted resolution was filed by the Nuevas, but the court denied the same in its resolution dated November 17, 2000.  chan robles virtual law library
Respondent heirs filed a petition for certiorari before the Court of Appeals, contending that the RTC gravely abused its discretion in granting the petition for relief. In its Decision dated August 21, 2002, the Court of Appeals reversed the Order of the RTC and rendered judgment in favor of respondent heirs. It held that:chanrobles virtual law library
Petitioner reiterates her argument that a mistake prevented her from filing an appeal. She believes that an appeal was unnecessary because the inclusion of the second paragraph in the RTC Order of October 9, 2000 was mere surplusage. Petitioner further submits that the Court of Appeals erred in ruling that respondents had thirty (30) days within which to redeem the property under the third paragraph of Article 1606 of the Civil Code, which states:chanroblesvirtuallawlibrary chan robles virtual law library
The Court, however, finds no reversible error in the foregoing discussion of the Court of Appeals. chan robles virtual law library
Relief from judgment or order is premised on equity. It is granted only in exceptional cases. It is an act of grace. It is not regarded with favor.  For relief to be granted the petitioner must show that the judgment or final order was entered, or the proceeding thereafter against him was taken, through fraud, accident, mistake, or excusable negligence.  chan robles virtual law library
The mistake contemplated by Rule 38 of the Rules of Court, as the Court of Appeals correctly held, pertains generally to one of fact, not of law. In Guevara v. Tuason & Co.,  the Court held that the "word 'mistake,' according to its signification in the act referred to, does not apply, and never was intended to apply, to a judicial error which the court in question might have committed in the trial referred to. Such errors may be corrected by means of an appeal. The act in question can not in any way be employed as a substitute for the said remedy." The Court in Guevara elaborated:chanroblesvirtuallawlibrary chan robles virtual law library
The above illustration applies equally in this case where petitioner believed that an appeal from the Decision of the RTC would be "unnecessary."
Moreover, the Court is not convinced that petitioner sincerely believed in her theory that the second paragraph of the dispositive portion of the RTC decision was surplusage. Had it been so, she would have moved to rectify the alleged error immediately, not after respondents had offered to repurchase the property in question. Her failure to file a motion for reconsideration or to appeal before the lapse of the reglementary period constitutes an acceptance of the trial court's judgment, and her rationalization now appears to have been made only on hindsight. chan robles virtual law library
Petitioner submits that the RTC had no jurisdiction to allow the respondents to repurchase the property, such judgment purportedly being contrary to prevailing jurisprudence. This contention has no merit. If there were any error at all in the Decision of the RTC, the same would be a mere error in judgment, not one of jurisdiction. chan robles virtual law library
Petitioner likewise invokes the case of Ilacad v. Court of Appeals,  holding that:chanrobles virtual law library
There is no ambiguity at all in the decision that would warrant clarification. If at all, the ambiguity is merely ostensible. At first blush, the dispositive portion of the RTC Decision declaring the consolidation of ownership of the property in petitioner, on one hand, and granting respondents thirty (30) days to repurchase the property, on the other, appears inconsistent. The dispositive portion, however, also makes reference to the third paragraph of Article 1606 of the New Civil Code. Taken together, it becomes obvious that the consolidation of the property in petitioner is subject to the suspensive condition of respondents' failure to repurchase within the thirty-day period. chan robles virtual law library
At any rate, the grant of the right to repurchase to respondents is in accordance with the third paragraph of Article 1606, a provision not found in the old Civil Code. The legislative intent behind this Article, along with Articles 1602-1605 and 1607 of the same Code, is "to accord the vendor a retro the maximum safeguards for the protection of his legal rights under the true agreement of the parties. Experience has demonstrated too often that many sales with right to repurchase have been devised only to circumvent or ignore our usury laws and for this reason, the law looks upon then with disfavor." 
Article 1606 is intended to cover suits where the seller claims that the real intention was a loan with equitable mortgage but decides otherwise.  The seller, however, must entertain a good faith belief that the contract is an equitable mortgage. In Felicen, Sr., et al. v. Orias, et al.,  cited by petitioner, the Court explained:chanroblesvirtuallawlibrary chan robles virtual law library
This court has already had occasion to rule on the proper interpretation of the provision in question. In Adorable v. Inacala, where the proofs established that there could be no honest doubt as to the parties' intention, that the transaction was clearly and definitely a sale with pacto de retro, the Court adjudged the vendor a retro not to be entitled to the benefit of the third paragraph of Article 1606.  chan robles virtual law library
The RTC in this case made no finding in its Decision that respondents' defense that the pacto de retro sale was an equitable mortgage was not made in good faith. Indeed, it does not appear that petitioner even attempted to prove bad faith on the part of respondents during the trial, which accounts for the RTC Decision's utter silence on the matter. chan robles virtual law library
Moreover, respondents alleged in their answer that the consideration for the alleged sale, which was P21,000.00 was inadequate, considering that the fair market value of the property was P81,320.00.  Respondents also averred that they remained in possession of the subject property and paid the real taxes thereon, and that their predecessor continued to pay the loan under which the mortgage was constituted.  Respondents even reconstituted their title over the property, and partitioned the property with the other heirs, after which respondents purchased the latter's share and caused the issuance of a Transfer Certificate of Title in their name.  Such title, however, was subsequently annulled. chan robles virtual law library
The law presumes good faith and, in the absence of a contrary finding by the RTC in its Decision, respondents are entitled to the right to redeem the property pursuant to the third paragraph of Article 1606 of the New Civil Code. chan robles virtual law library
The Court also notes that the RTC erred in allowing petitioners the right to repurchase said property within thirty (30) days from receipt of the RTC Decision. By express provision, Article 1606 grants the vendor a retro thirty (30) days "from the time final judgment was rendered," not from the defendant's receipt of the judgment. The Court has construed "final judgment" to mean one that has become final and executory.  chan robles virtual law library
This observation, of course, is moot, as it is not disputed that respondents offered to pay petitioner the redemption price within the period fixed by the trial court and, subsequently, consigned the amount in court. The Court makes the observation only for the enlightenment of the RTC. chan robles virtual law library
ACCORDINGLY, the Court Resolves to DENY the petition for lack of merit. chan robles virtual law library
SO ORDERED. chan robles virtual law library
Puno, Quisumbing, Austria-Martinez
and Callejo, Sr., JJ., concur.
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Rollo, pp. 40–42.
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