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[G.R. No. 142596. July 10, 2006]

RUDENCIO TIU AND CLARITA TIU, PETITIONERS, versus COURT OF APPEALS AND SPS. EXEQUIEL MONTEBON AND JACINTA MAXILOM, RESPONDENTS

Third Division

Sirs/Mesdames:

Quoted hereunder, for your information, is a resolution of this Court dated JULY 10, 2006 .

RUDENCIO TIU and CLARITA TIU������������ G.R. No. 142596

Petitioners,

- versus -

COURT OF APPEALS and

SPS. EXEQUIEL MONTEBON and

JACINTA MAXILOM,

Respondents.

x ------------------------------------------------------------------------------------------------------------------------- x

RESOLUTION

The core issue in this Petition for Review on certiorari under Rule 45 is whether the document labeled "Deed of Absolute Sale" is an unconditional, irrevocable and complete conveyance of the subject house and lot or is actually a sale con pacto de retro (with right of repurchase).

The Facts

The following are the facts as extracted by the Court of Appeals from the evidence on record:

On August 1, 1979, spouses Exequiel Montebon and Jacinta Maxilom (or "Montebon spouses") executed a document denominated as Deed of Absolute Sale (or "questioned instrument") whereby, in consideration of the sum of P15,000,00, they purportedly sold, transferred and conveyed, absolutely and irrevocably, to Rudencio Tiu x x x his house and lot (or "subject property") situated at Poblacion, Tuburan, Cebu. The lot, consisting of 400 square meters, was covered by Tax Declaration No. 05800. [1] cralaw

Of the P15,000.00 price, Exequiel Montebon (or "Exequiel") received advance payment in the sum of P1,000.00 from appellant Tiu on July 10, 1979. For said advance payment, Exequiel issued a receipt of even date (Exh. "D"), which pertinently reads:

Received from Rudencio Tiu One Thousand Pesos (P1,000.00) Philippine Currency as part payment of my house and lot located at Tabotabo St., Tuburan, Cebu which I am selling under pacto de retro.

Upon instruction of appellant Tiu, Exequiel brought the receipt to Judge Vicente Bornia (or "Judge Bornia") for the latter's signature. After reviewing the receipt, Judge Bornia signed it as an instrumental witness (Exh. "D-1"). On July 19, 1979, an additional amount of P200.00 was obtained by Exequiel from appellant Tiu per his receipt of even date (Exh. "E").

The two receipts (Exhs. "D" and "E") were surrendered by appellant Tiu to Exequiel on August 1, 1979 upon execution of the questioned instrument and remittance of the sum of P13,800.00 representing the balance of the price. [2] cralaw

Upon learning that the questioned instrument states that the sale of the subject property was absolute and not with right of repurchase, the Montebon spouses, thru (sic) their lawyer, wrote a letter to (Rudencio) Tiu under date of September 5, 1979 (Exh. "B") asking for its reformation. The request was reiterated in the letter dated September 24, 1979 (Exh. "C"). However, their efforts to forge an amicable settlement were unsuccessful.

Consequently, on October 5, 1979, the Montebon spouses filed an action against (Rudencio) Tiu and his wife Clarita Parrilla in the Court of First Instance (now Regional Trial Court) of Cebu (Branch IX) for reformation of instrument or rescission of contract and damages. The action is anchored on the averments that the questioned instrument does not express the true intention of the contracting parties; which is sale con pacto de retro; that the subject property could easily fetch a price of P50,000.00; and that the Montebon spouses agreed to the price of P15,000.00 because it was their covenant with (Rudencio) Tiu that they could repurchase the subject property within one year and they were in dire need of money.

Because of their death pendente lite, the Montebon spouses were substituted by their children x x x as plaintiffs.

Resisting the suit, (the Tius) averred that the value of the subject property was not more than P20.00 per square meter. They raised the defenses that the complaint states no cause of action; that the court has no jurisdiction over the nature of the action; and that the complaint does not state with definiteness the fraud allegedly committed by (them) in preparing the questioned instrument. [3] cralaw

The Ruling of the Regional Trial Court

On April 19, 1990, the trial court ruled in favor of plaintiffs Montebon spouses as follows:

WHEREFORE, premises considered and by preponderance of evidence, the court hereby renders judgment in favor of plaintiffs and against the defendants by ordering the defendants to:

1.������ Allow the reformation of the deed of absolute sale into one of "Pacto de retro" sale over the house and lot alleged in the complaint, with a provision that said property may be repurchased by the substitute plaintiffs within one (1) year from the date of execution of this order: Provided, further, that in case the substitute plaintiff shall strictly comply with the provisions of Articles 1612 and 1613 of the Civil Code; Provided, finally, that the redemption shall only be deemed consummated when the plaintiffs shall RETURN to defendants the purchase price of P15,000.00, PLUS (a) expenses of the contract, and any other legitimate payments made by reason of the sale; and (b) the necessary and useful expenses made on the thing sold (of, Article 1616 of the Civil Code);

2.������ Pay the plaintiffs the sum of P10,000.00 as moral and exemplary damages;

3.������ Reimburse the plaintiffs the sum of P7,500.00 as attorney's fees;

4.������ Reimburse the plaintiffs the sum of P2,000.00 for litigation expenses; and

5.������ Costs of these suit. [4] cralaw

Unconvinced, defendants Tiu spouses challenged the April 19, 1990 Decision before the Court of Appeals, raising the following alleged errors of the trial court, viz:

I.������� THE COURT A QUO ERRED IN ORDERING THE REFORMATION OF THE DEED OF ABSOLUTE SALE INTO ONE OF "PACTO DE RETRO" SALE;

II.������ THE COURT A QUO ERRED IN AWARDING MORAL AND EXEMPLARY DAMAGES OF P10,000.00 AND ATTORNEY'S FEES OF P7,500.00;

III.����� THE COURT BELOW ERRED IN NOT GIVING CREDENCE TO THE TESTIMONY OF RETIRED JUDGE VICENTE BORNIA WHO WAS THE NOTARY PUBLIC OF THE DEED OF SALE. [5] cralaw

The Appellate Court's Ruling

On the first issue, the Court of Appeals agreed with the ruling of the trial court that the Deed of Absolute Sale should be reformed into one of pacto de retro sale. It concluded that the Montebon spouses were victims of misrepresentation. Judge Bornia who was asked by appellant Rudencio Tiu to prepare the agreement made it appear to the spouses that it was a sale with right of repurchase. The 75-year old Exequiel, who only reached Grade VI, was misled to sign the document without comprehending it while Jacinta, blind on account of diabetes, affixed her thumbmark to the document. Judge Bornia then took all copies of the agreement without giving any copy to the Montebon spouses on the pretext that he will have it notarized. Appellant Rudencio Tiu later admitted that he asked Judge Bornia to draft and notarize the deed of sale.

In addition, the price of PhP 15,000.00 is grossly inadequate. The lot in question located at Poblacion, Tuburan, Cebu has a fair market value of PhP 100.00 per square meter. The 400 square meter lot should at least fetch a price of PhP 40,000.00 as of August 1, 1979.

The most convincing proof that the sale is with the right of repurchase is the receipt dated July 10, 1979 (Exhibit "D") issued by Exequiel Montebon which explicitly states he is selling the properties under pacto de retro. This receipt was countersigned by Judge Bornia upon the instruction of appellant Tiu which is an implied admission as to the nature of the sale. Furthermore, Exhibit "D" is also Exhibit "6" of appellant Rudencio Tiu. [6] cralaw

On the second issue relative to the award of moral and exemplary damages and attorney's fees, the court a quo ruled that appellees Montebon spouses are entitled to the award because appellant Rudencio Tiu concealed the true nature of the document and did not apprise Judge Bornia that said deed did not reflect the true agreement between the parties. Despite the valid and just pleas from appellees Montebon spouses, appellant Rudencio Tiu unjustifiably refused to reform the document which compelled the former to incur unnecessary legal expenses.

On the third issue on the weight of the deposition of Judge Bornia, the appellate court agreed with the trial court that said deposition should be disregarded as it was not formally offered in evidence.

On November 17, 1999, the Court of Appeals rendered its decision, as quoted below:

WHEREFORE, the appealed decision is AFFIRMED with the following modifications: (i) that the one-year period for the repurchase of the property in question, covered by Original Certificate of Title No. P-21964 of the Registry of Deeds for the Province of Cebu, shall commence from finality of this decision and (ii) that the repurchase price in the amount of P15,000.00 shall bear interest at the legal rate from August 1, 1979 until full payment thereof. [7] cralaw

Still unconvinced, the Tiu spouses interposed this instant petition under Rule 45 raising the following issues:

7.������ Again, the respondent Court of Appeals made a sweeping statement as to the value of the lot in question in supporting its conclusion that the consideration of the subject land is grossly inadequate which conclusion is contrary to the provision of Articles 1305, 1315, 1320, 1322 and other pertinent provisions of the Civil Code that governs contracts;

8.������ That in order to justify the declaration of nullity of the Contract of Sale (Exhibit "A") between the herein parties, the respondent Court of Appeals ruled to disregard the deposition of Judge Vicente Bornia, to wit:

Appellants further contend that the lower court erred in disregarding the deposition of Judge Bornia. Not formally offered in evidence, the deposition could not have been considered by the lower court (Sec. 34, Rule 132, Revised Rules of Court)

Besides, the rules on deposition were not observed. The deposition was not signed by the deponent (Sec. 19, Rule 24, id). It does not contain a certification of the deposition officer that it was duly sworn to by the deponent and is a true record of the latter's testimony (Sec. 20, id). Finally, no notice of filing of the deposition was given by the deposition officer to the parties (Sec. 21, id).

which rulings is contrary to the provision of Sec. 4 of Rule 23 of the 1997 Rules of Civil Procedure;

9.������ That in rendering said decision and the consequent order of denial of the petitioners' Motion for Reconsideration, the respondent Court of Appeals acted with grave abuse of discretion amounting to lack or in excess of jurisdiction as it is clearly contrary to the provisions of law quoted above and of the ruling of a case of similar nature or issues. In the case of Luctan vs. Court of Appeals (266 SCRA 663), it was ruled that:

The meeting of the minds in a contract speaks of the intent of the parties inentering into the contract reflecting the subject respecting the subject matter and the consideration thereof, and if the words of the contract appear to be contrary to the evident intention of the parties, the latter shall be prevail over the former. [8] cralaw

Rule 45 on appeal by certiorari from a decision or final order or resolution of the Court of Appeals, Sandiganbayan, Court of Tax Appeals or the Regional Trial Court to this Court clearly declares that a review thereof is not a matter of right but of sound judicial discretion. As such, it is incumbent upon petitioners Tiu spouses to present special, strong and convincing reasons to obtain the nod of approval by the Court. A scrutiny of the aforequoted grounds in support of the instant petition reveals that petitioner has fallen short of the standards set by the rules of procedure and jurisprudence. The petition has failed to convince the Court that the appellate court has ruled on a question of substance not previously decided by the Court; or has decided it in a way not in accord with the law or jurisprudence or that the court a quo has deviated from the normal judicial proceedings as to call for judicial supervision. On this score alone, the court is constrained to disregard this action as wanting in substance or importance.

Petitioners Tiu spouses question the CA's conclusion that the price of the lot is grossly inadequate considering its value at the time of the sale, which conclusion allegedly runs counter to Articles 1305, 1315, 1320, 1322, 1332 of the Civil Code. [9] cralaw This posture is bereft of merit. Petitioners ask this Court to scrutinize findings of fact of the CA which is taboo under Rule 45 of the 1997 Rules of Civil Procedure.

For the Court to reevaluate and reassess the conclusion of the court a quo on the value of the lot would unsettle the established rule that the findings of fact of the CA are final, conclusive and cannot be reviewed on appeal to the Supreme Court. [10] cralaw In the exercise of the power of review, the findings of fact of the Court of Appeals are conclusive and binding; and consequently, it is not the Supreme Court's function to analyze or weigh evidence all over again. [11] cralaw In addition, petitioners were not able to show that said finding was not borne out by the record or that it was covered by one of the exceptions to the general rule. They cite Article 1305 of the Civil Code which explains the meaning of a contract, Article 1315 that clarifies perfection of contracts, Article 1320 which dwells on expressed or implied acceptance of contracts, Article 1322 that describes acceptance of offer by an agent and Article 1332 which makes clear the duty of the party enforcing the contract to show that its terms have been fully explained to a person unable to read or understand such agreement. Petitioners' reliance on said Civil Code provisions will not suffice as they have not satisfactorily explained to this Court how said legal provisions can overturn the findings of the court a quo-that the price of PhP 15,000.00 fixed in the Deed of Absolute Sale is grossly inadequate in view of the finding that the actual value of the lot as of August 1, 1979 is PhP 40,000.00 exclusive of the house on the lot. Thus, petitioners' argument has no legal moorings.

Furthermore, petitioners challenge the ruling of the court a quo that the deposition of Judge Bornia should be discarded as violative of Section 4, Rule 23 of the 1997 Rules of Civil Procedure which allows the use of a deposition against any party who was present or represented at its taking when the witness is unable to testify because of illness. In this case, Judge Bornia is alleged to be sick at the time of trial. The Court finds that the ruling of the appellate court adheres to Rule 23 on depositions considering that Judge Bornia's deposition was not offered in evidence-it was not signed by him, it does not contain the certification of the deposition officer and there was no notice of the filing of the deposition given to the parties. Section 19 of Rule 23 requires that the deposition shall be signed by the witness; Section 20 directs the officer to certify on the deposition that the witness was duly sworn to by him and that the deposition is a true record of the testimony given by the witness; Section 21 requires that the officer taking the deposition shall give prompt notice of its filing to all the parties; and Section 4 allows the use of deposition only in so far as admissible under the rules of evidence. These requirements must be met to enable petitioners to avail themselves of the benefits of Rule 23. However, they failed to show compliance to these prerequisites.

Lastly, petitioners cite the ruling in Lustan v. Court of Appeals (not Luctan as indicated by petitioners) where it was held that "the meetings of minds in a contract speaks of the intent of the parties x x x and if the words of the contract appear to be contrary to the evident intention of the parties, the latter shall prevail over the former." [12] cralaw This Lustan case however has done more harm than good to petitioners' cause. This Court ruled that even when a document appears on its face to be a sale, the owner of the property may prove that the contract is really a loan with mortgage. Thus the Deed of Definite Sale was declared as an equitable mortgage. In the case at bar, the stipulation in the Deed of Absolute Sale that respondents Montebon have agreed to unconditionally sell their lots to petitioners must give way to the true intent of the parties-that the sale is subject to the right of repurchase in favor of private respondents. This is unequivocally revealed in the receipt issued by respondent Exequiel Montebon [13] cralaw signed by petitioners' witness, Judge Bornia. Thus, it was clearly established that the conveyance is one with pacto de retro and not an absolute and unrestricted transfer.

WHEREFORE, the petition is DENIED. The Decision dated November 17, 1999 of the Court of Appeals in CA-G.R. CV No. 26966, modifying the Decision dated April 19, 1990, of the Regional Trial Court of Cebu (Branch IX), is AFFIRMED.

SO ORDERED.

Very truly yours,

(Sgd.) LUCITA ABJELINA-SORIANO
Clerk of Court


Endnotes:

[1] cralaw CA Decision, p. 1, rollo, p. 10. [Penned by Associate Justice Edgardo P. Cruz and concurred in by Associate Justices Eugenio S. Labitoria (now retired) and Marina L. Buzon]

[2] cralaw Id., p. 13, rollo, p. 13.

[3] cralaw Id., pp. 1-2, rollo, pp. 10-11.

[4] cralaw Id., pp. 2-3, rollo, pp. 11-12.

[5] cralaw Id., p. 3, rollo, p. 12.

[6] cralaw Id., pp.4-5, rollo, pp. 13-14.

[7] cralaw Id., pp. 6-7, rollo, pp. 15-16.

[8] cralaw SC Petition, pp. 2-3, rollo, pp. 4-5.

[9] cralaw Id., p. 2, rollo, p. 4.

[10] cralaw Samahan ng Magsasaka sa San Josep v. Valisno, 430 SCRA 629, 635, June 3, 2004.

[11] cralaw Go v. Court of Appeals, 430 SCRA 358, 364, May 28, 2004.

[12] cralaw 266 SCR A 663, 670, January 27, 1997.

[13] cralaw Petitioners' Exhibit "D" and "6".


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