G.R. No. 42108 - DECEMBER 1989 - PHILIPPINE JURISPRUDENCE CASE NUMBERCASE TITLE G.R. No. 42108December 29, 1989Oscar D. Ramos vs. Court of Appeals G.R. Nos. 58768-70December 29, 1989Liberty Flour Mills Employees vs. Liberty Flour Mills, Inc. G.R. No. 65376December 29, 1989People of the Philippines vs. Mauricio Petalcorin G.R. No. 68422December 29, 1989People of the Philippines vs. Restituto B. Bravo G.R. No. 72313December 29, 1989Ricardo Cruz vs. Hon. Intermediate Appellate Court G.R. No. 75602December 29, 1989Trans-Orient Overseas Contractors, Inc. vs. National Labor Relations Commission G.R. No. 75618December 29, 1989People of the Philippines vs. Alfredo Marmita Jr. G.R. No. 77418December 29, 1989Roderick Casis vs. Court of Appeals G.R. No. 79025December 29, 1989Benguet Electric Cooperative, Inc. vs. Hon. Pura Ferrer-Calleja G.R. No. 80612-16December 29, 1989Airtime Specialists, Inc. vs. Ferrer-Calleja G.R. No. 81798December 29, 1989Lao Gi vs. Court of Appeals G.R. No. 82121December 29, 1989People of the Philippines vs. Arturo B. Cruz G.R. No. 83885December 29, 1989Sps. Nicanor A. Catral vs. Court of Appeals G.R. No. 58122December 29, 1989Mobil Oil Philippines, Inc. vs. Court of Appeals G.R. No. 59581December 29, 1989Tarcisio Icao vs. Simplicio M. Apalisok G.R. No. 72085December 28, 1989Cagayan Electric Power and Light Company vs. National Power Corporation G.R. No. 52159December 22, 1989Jose Pilapil vs. Court of Appeals G.R. No. 55159December 22, 1989Philippine Airlines, Inc. vs. National Labor Relations Commission G.R. No. 60741-43December 22, 1989Needle Queen Corporation vs. Manuela A. Nicolas, et al. G.R. No. 69260December 22, 1989Mun. of Biñan vs. Jose Mar Garcia G.R. No. 84111December 22, 1989Jimmy O. Yaokasin vs. the Commissioner of Customs G.R. No. 86625December 22, 1989Development Bank of the Philippines vs. Court of Appeals G.R. No. 88243December 22, 1989Rogelio O. Garcia vs. National Labor Relations Commission G.R. No. 19328December 22, 1989Alejandro Katigbak vs. Epifanio Villegas G.R. No. 87687December 26, 1989Isabelo T. Sabello vs. Department of Education, Culture and Sports G.R. No. 73887December 21, 1989Great Pacific Life Assurance Corporation vs. Honorato Judico G.R. No. 82170 & 82372December 21, 1989Teodoro Ybañez vs. Court of Appeals G.R. No. 82303December 21, 1989People of the Philippines vs. Rodrigo Pascua G.R. No. 85847December 21, 1989Belen Gregorio vs. Hon. Judge Zosimo Z. Angeles G.R. No. 86344December 21, 1989Rep. Raul A. Daza vs. Rep. Luis C. Singson G.R. No. 87721-30December 21, 1989Benjamin P. Abella vs. Adelina Inday Larrazabal G.R. No. 88265December 21, 1989Santiago A. Del Rosario vs. Hon. Alfredo R. Bengzon G.R. No. 89572December 21, 1989Department of Education, Culture and Sports vs. Roberto Rey C. San Diego G.R. No. 51449December 20, 1989People of the Philippines vs. Ricardo Hizon G.R. No. 69969December 20, 1989Antonio L. Tottoc vs. Intermediate Appellate Court G.R. No. 72883December 20, 1989People of the Philippines vs. Aurelio Espinosa G.R. No. 76148December 20, 1989Eliseo Caro vs. Court of Appeals G.R. No. 81403December 20, 1989People of the Philippines vs. Bonifacio Ando, Jr. G.R. No. 86074December 20, 1989Lilia Liwag vs. Court of Appeals G.R. No. 87676December 20, 1989Republic of the Philippines vs. Court of Appeals G.R. No. L-43236December 20, 1989Olympia International, Inc. vs. Court of Appeals G.R. No. 67548December 20, 1989Ireneo Odejar vs. Isidro P. Guico G.R. Nos. 88075-77December 20, 1989Maximo Tacay vs. Regional Trial Court of Tagum G.R. No. 29627December 19, 1989Ramon A. Gonzales vs. Hon. Antonio V. Raquiza G.R. No. 58168December 19, 1989Concepcion Magsaysay-Labrador vs. Court of Appeals G.R. No. 67938December 19, 1989Commissioner of Internal Revenue vs. American Airlines, Inc. G.R. No. 72572December 19,1989San Miguel Corporation vs. National Labor Relations Commission G.R. No. 74182December 19, 1989People of the Philippines vs. Leonardo L. Llarena G.R. No. 75530December 19, 1989People of the Philippines vs. Vicente Tan G.R. No. 77582December 19, 1989People of the Philippines vs. Lorenzo Sayang-Od G.R. No. 81563December 19, 1989Amado C. Arias vs. Sandiganbayan G.R. No. 82753December 19, 1989Estela Costuna vs. Laureana Domondon G.R. No. 86675December 19, 1989Mrca, Inc. vs. Court of Appeals G.R. No. 88218December 19, 1989Carcon Development Corporation vs. Court of Appeals A.C. No. 3195December 18, 1989Ma. Libertad Sj Cantiller vs. Atty. Humberto V. Potenciano G.R. No. 78787December 18, 1989Coca-Cola Bottlers Philippines, Inc. vs. National Labor Relations Commission G.R. No. 80593December 18, 1989Philippine National Bank vs. Teresita Cruz G.R. No. 84818December 18, 1989Philippine Communications Satellite Corporation vs. Jose Luis A. Alcuaz G.R. No. 88105December 18, 1989Nicolas Fecundo vs. Ramon Berjamen G.R. No. 72623December 18, 1989Teodosia C. Lebrilla vs. Intermediate Appellate Court G.R. No. 57415December 15, 1989People of the Philippines vs. Pascual Baylon Rillorta G.R. No. 71566December 15,1989Francisco D. Palanca vs. Intermediate Appellate Court G.R. No. 75875December 15, 1989Wolrgang Aurbach vs. Sanitary Wares Manufacturing Corporatoin G.R. No. 76509December 15, 1989Pioneer Insurance & Surety Corporation vs. Court of Appeals G.R. No. 81788December 15, 1989Natl. Investment Dev. Corporation vs. Court of Appeals G.R. No. 84992December 15,1989Philippine Rock Industries, Inc. vs. Board of Liquidators G.R. No. 90426December 15, 1989Sime Darby Pilipinas, Inc. vs. Buenaventura C. Magsalin G.R. No. 75934December 15, 1989Willy Carson vs. Honorable Gregorio D. Pantanosas G.R. Nos. 67170-72December 15,1989People of the Philippines vs. Herson Maghanoy G.R. No. 82813December 14, 1989Emilia S. Blas vs. Court of Appeals G.R. No. 82870December 14, 1989Nemesio E. Prudente vs. Abelardo M. Dayrit G.R. No. 88052December 14, 1989Jose P. Mecenas, et al. vs. Court of Appeals G.R. No. 79554December 14, 1989Leopoldo G. Dizon vs. National Labor Relations Commission G.R. No. 84195December 11, 1989Lucio C. Tan vs. Sandiganbayan G.R. No. 79060December 8, 1989Aniceto C. Ocampo vs. The Court of Appeals, et al. G.R. No. 74027December 7, 1989Silahis Mktng. Corporation vs. Intermediate Appellate Court G.R. Nos. 76203-04December 6,1989Enrico M. Perez vs. People of the Philippines G.R. No. 82341December 6, 1989Sundowner Dev. Corporation vs. Franklin M. Drilon G.R. No. 84516December 5, 1989Dionisio Carpio vs. Hon. Sergio Doroja A.C. No. 3049December 4, 1989Perla Y. Laguitan vs. Salvador F. Tinio G.R. No. 66437December 4, 1989People of the Philippines vs. Jaime A. Guevarra G.R. No. 76342December 4, 1989Sonida Industries, Inc. vs. Cornelio W. Wasan, Sr. G.R. No. 81327December 4, 1989Crispina Vano vs. Government Service Insurance Sys. G.R. No. 82264-66December 4, 1989People of the Philippines vs. Isagani A. Gulinao G.R. No. 82588December 4, 1989People of the Philippines vs. Romeo Fuster G.R. No. 83175December 4, 1989Fredillo Guillen vs. Court of Appeals G.R. No. 83281December 4, 1989Florentino Ozaeta vs. Court of Appeals G.R. No. 83693December 4, 1989Leandro Alazas vs. Bernardo Ll. Salas G.R. No. 84419December 4, 1989Board of Liquidators vs. Jose Roxas G.R. No. 84908December 4, 1989Felix Abad vs. Court of Appeals G.R. No. 87001December 4, 1989La Union Electric Cooperative, Inc. vs. Braulio D. Yaranon G.R. No. 30453December 4, 1989Angelina Puentevella Echaus vs. Ramon Blanco G.R. No. 41295December 4, 1989Alfredo C. Ramos vs. Court of Appeals G.R. No. 69078December 4, 1989Central Bank of the Philippines vs. Intermediate Appellate Court G.R. Nos. 66059-60December 4, 1989Filipinas Investment and Finance Corporation vs. Intermediate Appellate Court G.R. No. 56402-03December 1, 1989Efren Cunanan vs. Angelina Sengson G.R. No. 55963December 1, 1989Jose Fontanilla vs. Inocencio D. Maliaman The Lawphil Project - Arellano Law Foundation, Inc. Oscar D. Ramos vs. Court of AppealsLiberty Flour Mills Employees vs. Liberty Flour Mills, Inc.People of the Philippines vs. Mauricio PetalcorinPeople of the Philippines vs. Restituto B. BravoRicardo Cruz vs. Hon. Intermediate Appellate CourtTrans-Orient Overseas Contractors, Inc. vs. National Labor Relations CommissionPeople of the Philippines vs. Alfredo Marmita Jr.Roderick Casis vs. Court of AppealsBenguet Electric Cooperative, Inc. vs. Hon. Pura Ferrer-CallejaAirtime Specialists, Inc. vs. Ferrer-CallejaLao Gi vs. Court of AppealsPeople of the Philippines vs. Arturo B. CruzSps. Nicanor A. Catral vs. Court of AppealsMobil Oil Philippines, Inc. vs. Court of AppealsTarcisio Icao vs. Simplicio M. ApalisokCagayan Electric Power and Light Company vs. National Power CorporationJose Pilapil vs. Court of AppealsPhilippine Airlines, Inc. vs. National Labor Relations CommissionNeedle Queen Corporation vs. Manuela A. Nicolas, et al.Mun. of Biñan vs. Jose Mar GarciaJimmy O. Yaokasin vs. the Commissioner of CustomsDevelopment Bank of the Philippines vs. Court of AppealsRogelio O. Garcia vs. National Labor Relations CommissionAlejandro Katigbak vs. Epifanio VillegasIsabelo T. Sabello vs. Department of Education, Culture and SportsGreat Pacific Life Assurance Corporation vs. Honorato JudicoTeodoro Ybañez vs. Court of AppealsPeople of the Philippines vs. Rodrigo PascuaBelen Gregorio vs. Hon. Judge Zosimo Z. AngelesRep. Raul A. Daza vs. Rep. Luis C. SingsonBenjamin P. Abella vs. Adelina Inday LarrazabalSantiago A. Del Rosario vs. Hon. Alfredo R. BengzonDepartment of Education, Culture and Sports vs. Roberto Rey C. San DiegoPeople of the Philippines vs. Ricardo HizonAntonio L. Tottoc vs. Intermediate Appellate CourtPeople of the Philippines vs. Aurelio EspinosaEliseo Caro vs. Court of AppealsPeople of the Philippines vs. Bonifacio Ando, Jr.Lilia Liwag vs. Court of AppealsRepublic of the Philippines vs. Court of AppealsOlympia International, Inc. vs. Court of AppealsIreneo Odejar vs. Isidro P. GuicoMaximo Tacay vs. Regional Trial Court of TagumRamon A. Gonzales vs. Hon. Antonio V. RaquizaConcepcion Magsaysay-Labrador vs. Court of AppealsCommissioner of Internal Revenue vs. American Airlines, Inc.San Miguel Corporation vs. National Labor Relations CommissionPeople of the Philippines vs. Leonardo L. LlarenaPeople of the Philippines vs. Vicente TanPeople of the Philippines vs. Lorenzo Sayang-OdAmado C. Arias vs. SandiganbayanEstela Costuna vs. Laureana DomondonMrca, Inc. vs. Court of AppealsCarcon Development Corporation vs. Court of AppealsMa. Libertad Sj Cantiller vs. Atty. Humberto V. PotencianoCoca-Cola Bottlers Philippines, Inc. vs. National Labor Relations CommissionPhilippine National Bank vs. Teresita CruzPhilippine Communications Satellite Corporation vs. Jose Luis A. AlcuazNicolas Fecundo vs. Ramon BerjamenTeodosia C. Lebrilla vs. Intermediate Appellate CourtPeople of the Philippines vs. Pascual Baylon RillortaFrancisco D. Palanca vs. Intermediate Appellate CourtWolrgang Aurbach vs. Sanitary Wares Manufacturing CorporatoinPioneer Insurance & Surety Corporation vs. Court of AppealsNatl. Investment Dev. Corporation vs. Court of AppealsPhilippine Rock Industries, Inc. vs. Board of LiquidatorsSime Darby Pilipinas, Inc. vs. Buenaventura C. MagsalinWilly Carson vs. Honorable Gregorio D. PantanosasPeople of the Philippines vs. Herson MaghanoyEmilia S. Blas vs. Court of AppealsNemesio E. Prudente vs. Abelardo M. DayritJose P. Mecenas, et al. vs. Court of AppealsLeopoldo G. Dizon vs. National Labor Relations CommissionLucio C. Tan vs. SandiganbayanAniceto C. Ocampo vs. The Court of Appeals, et al.Silahis Mktng. Corporation vs. Intermediate Appellate CourtEnrico M. Perez vs. People of the PhilippinesSundowner Dev. Corporation vs. Franklin M. DrilonDionisio Carpio vs. Hon. Sergio DorojaPerla Y. Laguitan vs. Salvador F. TinioPeople of the Philippines vs. Jaime A. GuevarraSonida Industries, Inc. vs. Cornelio W. Wasan, Sr.Crispina Vano vs. Government Service Insurance Sys.People of the Philippines vs. Isagani A. GulinaoPeople of the Philippines vs. Romeo FusterFredillo Guillen vs. Court of AppealsFlorentino Ozaeta vs. Court of AppealsLeandro Alazas vs. Bernardo Ll. SalasBoard of Liquidators vs. Jose RoxasFelix Abad vs. Court of AppealsLa Union Electric Cooperative, Inc. vs. Braulio D. YaranonAngelina Puentevella Echaus vs. Ramon BlancoAlfredo C. Ramos vs. Court of AppealsCentral Bank of the Philippines vs. Intermediate Appellate CourtFilipinas Investment and Finance Corporation vs. Intermediate Appellate CourtEfren Cunanan vs. Angelina SengsonJose Fontanilla vs. Inocencio D. MaliamanThe Lawphil Project - Arellano Law Foundation, Inc.

Manila

SECOND DIVISION

G.R. No. 42108 December 29, 1989

OSCAR D. RAMOS and LUZ AGUDO,petitioners,
vs.
HON. COURT OF APPEALS, ADELAIDA RAMOS and LAZARO E. MENESES,respodents.

Godofredo V. Magbiray for petitioners.

Joselito Lim for private respondents.

REGALADO,J.:

The instant petition for review oncertiorariimpugns the decision of the Court of Appeals dated October 7, 1975,1which affirmed in toto the decision of the Court of First Instance of Tarlac in Civil Case No. 4168, entitled "Adelaida Ramos, et al. vs. Oscar D. Ramos, et al.," holding that the contracts between the parties are not ventas con pacto de retro but are equitable mortgages.

Sometime in January 1959, private respondent Adelaida Ramos borrowed from her brother, petitioner Oscar D. Ramos, the amounts of P 5,000.00 and P 9,000.00 in connection with her business transaction with one Flor Ramiro, Fred Naboa and Atty. Ruperto Sarandi involving the recovery of a parcel of land in Tenejeros, Malabon. The said amount was used to finance the trip to Hawaii of Ramiro, Naboa and Atty. Sarandi. As security for said loan, private respondent Adelaida Ramos executed in favor of petitioners two (2) deeds of conditional sale dated May 27, 1959 and August 30, 1959, of her rights, shares, interests and participation respectively over Lot No. 4033 covered by Original Certificate of Title No. 5125 registered in the name of their parents, Valente Ramos and Margarita Denoga, now deceased;2and Lot No. 4221 covered by Transfer Certificate of Title No. 10788 then registered in the names of Socorro Ramos, Josefina Ramos and Adelaida Ramos,3said properties being of the Cadastral Survey of Paniqui, Tarlac.

Upon the failure of said private respondent as vendor a retro to exercise her right of repurchase within the redemption period, aforenamed petitioner filed a petition for consolidation and approval of the conditional sale of Lot No. 4033 in Special Proceedings No. 5174, entitled "Intestate Estate of the late Margarita Denoga,"4and a petition for approval of the pacto de retro sale of Lot No. 4221 in the former Court of First Instance of Tarlac acting as a cadastral court.5On January 22, 1960, the said probate court issued an order with the following disposition:

The cadastral Court also issued a similar order dated April 18, 1960, the dispositive portion of which reads:

Private respondents had been and remained in possession of these properties until sometime in 1964 when petitioner took possession thereof.

On February 28, 1968, private respondent filed Civil Case No. 4168 with the then Court of First Instance of Tarlac for declaration of nullity of orders, reformation of instrument, recovery of possession with preliminary injunction and damages. The complaint therein alleged that the deeds of conditional sale, dated May 27, 1959 and August 30, 1959, are mere mortgages and were vitiated by misrepresentation, fraud and undue influence and that the orders dated January 22, 1960 and April 18, 1960, respectively issued by the probate and cadastral courts, were null and void for lack of jurisdiction. Petitioners, in their answer to the complaint, specifically deny the allegations of fraud and misrepresentation and interposed as defense the fact that the questioned conditional sales of May 27, 1959 and August 30, 1959 were voluntarily executed by private respondent Adelaida Ramos and truly expressed the intention of the parties; that the action, if any, has long prescribed; that the questioned orders of January 22, 1960 and April 18, 1960, approving the consolidation of ownership of the lands in question in favor of petitioner were within the jurisdiction of the lower court, in its capacity as a probate court insofar as Lot No. 4033 is concerned, and acting as a cadastral court with respect to Lot No. 4221; and that said lands subject of the conditional sales were in custodia legis in connection with the settlement of the properties of the late Margarita Denoga, the predecessor in interest of both petitioners and private respondents.

On January 7, 1970, the court below issued a pre-trial order to the effect that petitioners admit the genuineness and due execution of the promissory notes marked as Exhibits "F" and "F-1 " and that the principal triable issue is whether or not the documents purporting to be deeds of conditional sale, marked as Exhibits "B", "B-1" and "G" were in fact intended to be equitable mortgages.8In its order dated February 17, 1971, the trial court also declared: "Both parties agreed and manifested in open court the principal obligation in the transaction reflected in Exhibits 'B' and 'B-l' and 'G' is one of loan. The parties differ, however, on the nature of the security described therein.9

On May 17, 1971, the court a quo rendered a decision the decretal part of which reads:

On June 14, 1971, petitioners appealed said decision to the Court of Appeals which, on October 7, 1975; affirmed in all respects the judgment of the trial court. Petitioners' motion for reconsideration of said decision was denied on November 27, 1975.11

On January 8, 1976, petitioners filed the petition at bar anchored on the following assignments of errors:

We find the petition devoid of merit.

Article 1602 of the Civil Code provides:

The Court of Appeals, in holding that the two (2) deeds purporting to bepacto de retrosale contracts are equitable mortgages, relied on the following factual findings of the trial court, to wit:

Even if we indulge the petitioners in their contention that they are justified in not taking possession of the lots considering that what were allegedly sold to them were only the rights, shares, interests and participation of private respondent Adelaida Ramos in the said lots which were under administration,14however, such fact will not justify a reversal of the conclusion reached by respondent court that the purported deeds of sale con pacto de retro are equitable mortgages. Such a conclusion is buttressed by the other circumstances catalogued by respondent court especially the undisputed fact that the two deeds were executed by reason of the loan extended by petitioner Oscar Ramos to private respondent Adelaida Ramos and that the purchase price stated therein was the amount of the loan itself.

The above-stated circumstances are more than sufficient to show that the true intention of the parties is that the transaction shall secure the payment of said debt and, therefore, shall be presumed to be an equitable mortgage under Paragraph 6 of Article 1602 hereinbefore quoted. Settled is the rule that to create the presumption enunciated by Article 1602, the existence of one circumstance is enough.15The said article expressly provides therefor "in any of the following cases," hence the existence of any of the circumstances enumerated therein, not a concurrence nor an overwhelming number of such circumstances, suffices to give rise to the presumption that the contract with the right of repurchase is an equitable mortgage. As aptly stated by the Court of Appeals:

Equally puerile is the other contention of petitioners that respondent court erred in not applying the exclusionary parol evidence rule in ascertaining the true intendment of the contracting parties. The present case falls squarely under one of the exceptions to said rule as provided in then Section 7 of Rule 130, thus:

Moreover, it is a well entrenched principle in the interpretation of contracts that if the terms thereof are clear and leave no doubt as to the intention of the contracting parties the literal meaning of the stipulation shall control but when the words appear to be contrary to the evident intention of the parties, the latter shall prevail over the former.18

The admission of parol testimony to prove that a deed, absolute in form, was in fact given and accepted as a mortgage does not violate the rule against the admission of oral evidence to vary or contradict the terms of a written instrument.19Sales with a right to repurchase, as defined by the Civil Code, are not favored. We will not construe instruments to be sales with a right to repurchase, with the stringent and onerous effects which follow, unless the terms of the document and the surrounding circumstances require it. Whenever, under the terms of the writing, any other construction can fairly and reasonably be made, such construction will be adopted and the contract will be construed as a mere loan unless the court can see that, if enforced according to its terms, it is not an unconscionable one.20

On the faces thereof, the contracts purport to be sales with pacto de retro; however, since the same were actually executed in consideration of the aforesaid loans said contracts are indubitably equitable mortgages. The rule is firmly settled that whenever it is clearly shown that a deed of sale with pacto de retro, regular on its face, is given as security for a loan, it must be regarded as an equitable mortgage.21

With respect to the orders dated January 22, 1960 and April 18, 1960, issued by the Court below acting as a probate court and cadastral court, respectively, the same could not preclude the institution of the case now under review.

A reading of the order of the probate court will show that it is merely an approval of the deed of conditional sale dated May 27, 1959 executed by petitioner Adelaida Ramos in favor of petitioners. There is nothing in said order providing for the consolidation of ownership over the lots allegedly sold to petitioners nor was the issue of the validity of said contract discussed or resolved therein. "To give approval" means in its essential and most obvious meaning, to confirm, ratify, sanction or consent to some act or thing done by another.22The approval of the probate court of the conditional sale is not a conclusive determination of the intrinsic or extrinsic validity of the contract but a mere recognition of the right of private respondent Adelaida Ramos as an heir, to dispose of her rights and interests over her inheritance even before partition.23As held inDuran, et al., vs. Duran24the approval by the settlement court of the assignment pendente lite, made by one heir in favor of the other during the course of the settlement proceedings, is not deemed final until the estate is closed and said order can still be vacated, hence the assigning heir remains an interested person in the proceeding even after said approval.

Moreover, the probate jurisdiction of the former court of first instance or the present regional trial court relates only to matters having to do with the settlement of the estate and probate of wills of deceased persons, and the appointment and removal of administrators, executors, guardians and trustees. Subject to settled exceptions not present in this case, the law does not extend the jurisdiction of a probate court to the determination of questions of ownership that arise during the proceeding. The parties concerned may choose to bring a separate action as a matter of convenience in the preparation or presentation of evidence.25Obviously, the approval by the probate court of the conditional sale was without prejudice to the filing of the proper action for consolidation of ownership and/or reformation of instrument in the proper court within the statutory period of prescription.

The same jurisdictional flaw obtains in the order of consolidation issued by the cadastral court. The court of first instance or the regional trial court, acting as cadastral court, acts with limited competence. It has no jurisdiction to take cognizance of an action for consolidation of ownership, much less to issue an order to that effect, such action must have been filed in the former court of first instance, now in the regional trial court, in the exercise of its general jurisdiction. That remedy, and the procedure therefor, is now governed by Rule 64 of the Rules of Court as a special civil action cognizable by the regional trial court in the exercise of original general jurisdiction.

Antecedent thereto, Article 1607 of the Civil Code provided for consolidation as follows:

Hence inCrisologo, et al. vs. Centeno, et al.,26we ruled that said Article 1607 contemplates a contentious proceeding wherein the vendor a retro must be named respondent in the caption and title of the petition for consolidation of ownership and duly summoned and heard. An order granting the vendee's petition for consolidation of ownership, without the vendor a retro being named as respondent, summoned and heard, is a patent nullity for want of jurisdiction of the court over the person of the latter.

The questioned order of consolidation issued by the cadastral court, being void for lack of jurisdiction, is in contemplation of law non-existent and may be wholly disregarded. Such judgment may be assailed any time, either directly or collaterally, by means of a separate action or by resisting such judgment in any action or proceeding whenever it is invoked.27It is not necessary to take any step to vacate or avoid a void judgment; it may simply be ignored.28

On the issue of prescription, in addition to what has been said, the present case, having been filed on February 28, 1960, approximately seven (7) years from the execution of the questioned deeds, was seasonably instituted. The prescriptive period for actions based upon a written contract and for reformation is ten (10) years under Article 1144 of the Civil Code. Such right to reformation is expressly recognized in Article 1365 of the same code.29

Article 1602 of the Civil Code is designed primarily to curtail the evils brought about by contracts of sale with right of repurchase, such as the circumvention of the laws against usury and pactum commissorium.30In the present case before us, to rule otherwise would contravene the legislative intent to accord the vendor a retro maximum safeguards for the protection of his legal rights under the true agreement of the parties. The judicial experience in cases of this nature and the rationale for the remedial legislation are worth reiterating, considering that such nefarious practices still persist:

WHEREFORE,the instant petition is herebyDENIEDand the assailed decision of the Court of Appeals is herebyAFFIRMED.

SO ORDERED.

Melencio-Herrera (Chairperson), Paras, Padilla and Sarmiento, JJ., concur.

Footnotes