Borromeo v. Court Of Appeals

BARREDO, J.:

Cross-petitions for the review of the per curiam resolution of the Court of Appeals in CA-G.R. No. 30092-R, Juan T. Borromeo etc. vs. Emmanuel B. Aznar, et al, dated November 19, 1969 which review entirely its previous decision of January 30, 1968 thereby ultimately holding that the transactions in question are equitable mortgages instead of absolute sales of real properties and granting the heirs of the deceased Simeon Rallos a period of one year from the finality of the resolution within which to effect a redemption of said properties, without prejudice to the right of the opposing party to foreclose the declared mortgages if no such redemption takes place and the amounts stated in the documents are not fully paid, arid ordering furthermore the Aznars to pay said heirs P10,000 for and as attorney's fees and the costs. In G.R. No. L-31342, petitioner Juan T. Borromeo, as administrator of the estate of the deceased Simeon Rallos, prays for the modification of the per curiam resolution in order to include an award of moral and exemplary damages of P200,000 and P50,000, respectively, and to increase the award of attorney's fees to not less than P75,000, whereas in G.R. No. L-31740, the Aznars are asking that said resolution be set aside and that the decision of January 30, 1968 be reinstated and affirmed.

There are three preliminary questions We have to resolve. First, Borromeo contends that this Court has no jurisdiction to entertain the petition of the Aznars in G.R. No. L-31740 because the latter failed to file said petition within fifteen days from December 20, 1969, the date they were notified of the resolution now under review. Borromeo's theory is that upon the filing of his own petition in G.R. No. L-31342 on December 20, 1969, by way of appeal from the aforesaid resolution in so far as it failed to grant him the awards referred to in said petition, the Court of Appeals was divested of jurisdiction to entertain the motion for reconsideration which the Aznars filed on the same date, December 22, 1969, in the Court of Appeals praying for the reversal of the same resolution, copy of which had been received by them only on December 20, 1969.

According to Borromeo, what the Aznars should have done upon being notified of the filing of the petition in G.R. No. L-31342 should have been to file already their petition for review with this Court instead of filing or continuing with their motion for reconsideration in the Appellate Court, and that since the latter court had lost its jurisdiction over the case by reason of his (Borromeo's appeal), citing in this respect the resolution of this Court of September 3, 1965 in G.R. No. L-24762 (Manila Electric Co. vs. Public Service Commission et al.), the Aznars' motion for reconsideration did not suspend their period for appeal to this Court which they made only on February 27, 1970 (erroneously alleged as March 11, 1970 by Borromeo). Obviously, Borromeo's. contention has absolutely no merit.

To start with, when We issued Our resolution of January 13, 1970, granting the Aznars an extension of fifteen (15) days from the time they were to be notified of the resolution of the Court of Appeals of its action on their motion for reconsideration then still pending therein. We already knew that the petition of Borromeo against the same resolution of the Court of Appeals had already been filed with Us.

In other words, in that resolution, the Court already recognized the right of the Aznars to file their own separate appeal from the resolution of the Court of Appeals after the reconsideration thereof was to be denied by the Court of Appeals notwithstanding Borromeo's appeal was already with Us. Besides, to sustain Borromeo's theory would lead to the absurd proposition that one party may be deprived of the right to appeal from the portion of a decision against him just because the other party who had been notified of the decision ahead had already perfected his appeal in so far as the said decision adversely affects him. Indeed, We have already virtually ruled against such pose of Borromeo in Timoteo Simsim vs. The Hon. Judge Feliciano Belmonte etc.

et al., 34 SCRA 536 and People vs. Ursua, 60 Phil. 252. The Meralco resolution invoked by Borromeo is not in point. Borromeo secondly tries to make capital of the fact that while it is true that the brief of the Aznars was filed on time, on August 31, 1970, the last day therefor, it did not contain a digest of the arguments nor the text of the resolution sought to be reviewed, which are required by the rules (Sections 1 and 6 of Rule 56 read together with Section 16 of Rule 46) and that these requirements were complied with only on September 19, 1970, for which reason, he prays that their appeal should be dismissed pursuant to Section 1 (b) of Rule 50.

We are not impressed. The digest of arguments and the copy of the appealed resolution are not in strict sense parts of the brief so as to justify the charge that the Aznars filed their brief in two parts. No conceivsble prejudice could have been caused to anyone concerned by their late filing nineteen days after the reglementary period had expired, the brief itself, with the assignments of error and the arguments supporting them, having been filed already within said period.

Of course, it would be Ideal if all the requirements of the rules were complied with on time, but there is nothing in principle or in the precedents relied upon by Borromeo that makes it imperative for Us to dismiss an appeal upon no more ground than such obviously unintentional and harmless technicality as the omission of the requirements herein complained of. The third preliminary issue raised by Borromeo is that the appeal of the Aznars in G.R. No. L-31342 involves purely questions of fact. It is argued that the reversal by the Court of Appeals of its original conclusion, upholding the trial court, that the transactions in question were absolute sales, by holding in its per curiam resolution that they were actually equitable mortgages, does not constitute an error of law but a mere reappraisal or reweighing of the evidence which it has the power to do.

Borromeo insists that a ruling as to whether a transaction is a sale or a mortgage involves no more than evaluation of the evidence and is consequently a factual matter beyond the Supreme Court's authority to review except under peculiar circumstances that do not obtain here. To be sure, this is not the first instance that a reversal by the Court of Appeals of its own original decision has been brought to Our attention. And indeed, where the reversal was the result exclusively of a reevaluation or reweighing of the evidence, this Court has refrained from interfering.

No doubt, it would be inimical to the interests of justice and would not be conducive to the fair and just resolution of judicial controversies to deprive a court of the power to reconsider possible errors committed by it in any of its actuations. It is in fact one of the inherent powers of courts "to amend and control its process and orders so as to make them conformable to law and justice." (Section 5 (g), Rule 135) And the Court of Appeals is certainly included in the contemplation of such rule.

The only limitation to this power is that it cannot be exercised anymore after the action or judgment concerned has already become final and executory by the expiration of the corresponding reglementary period for the purpose, this as a matter of public policy requiring that litigations should from the very nature of things have a definite conclusion at a given time even at the risk of occasional errors or unintended injustice. We perceive however that the instant case does not fall under the foregoing principles. While the main impugned resolution does relate ultimately to factual conclusions of the Court of Appeals, We see that in reversing its previous findings of fact, which it arrived at after excluding on grounds of legal incompetency the corresponding evidence presented by Borromeo, the Appellate Court first reversed those rulings on the admissibility of said evidence and declared them competent, and then predicated its new factual conclusions on these subsequently admitted evidence it had rejected in its original decision.

And so, it is safe to presume that had not the Appellate Court reversed its legal rulings on the admissibility or competency of the evidence referred to, it would not have reversed its actual conclusion as to the nature of the transactions in controversy. Accordingly, and on the theory that if this Court should hold that the later rulings of the Court of Appeals on the admissibility of evidence are erroneous in law, the inevitable result would be that the factual conclusions of said court in its original decision, which were favorable to the Aznars, would be revived, it is now the position of the Aznars that their attack against said later rulings constitute legal issues over which this Court has jurisdiction. After carefully studying all the points respectively raised by the parties, We are convinced that this contention is well taken and We shall now proceed to resolve the legal issues on admissibility of evidence which are extensively, exhaustively and very well discussed by both counsel in their briefs and other papers filed with the Court and for which they are both worthily deserving of commendation for unusual diligence and expertise in the work of advocacy, thereby lightening considerably the work of the Court.

We refer equally to the late Senator Vicente J. Francisco, counsel for Borromeo, and Atty. Ciriaco Lopez Jr., who is appearing for the Aznars. As already stated, the main controversy here centers on the true nature of the three documents, Exhibits A, B and C, which on their faces are unquestionably deeds of absolute sale of the real properties therein described executed by the deceased Simeon Rallos on various dates in favor of Emmanuel Aznar, in Exhibits A and C, and his sister, Alma Aznar, in Exhibit B. In his complaint in the court below, Juan T. Borromeo, as administrator of the estate of Simeon Rallos, alleged that these documents were in fact equitable mortgages to secure loans granted to Rallos by Matias Aznar, deceased father of Emmanuel and Alma, and prayed for their reformation. The trial court dismissed the said complaint and on appeal, said dismissal was affirmed by the Court of Appeals in its original decision of January 30, 1968 penned by Justice Ramon NOLASCO and concurred in by Presiding Justice Francisco B. Capistrano and Justice Antonio Cañizares The pertinent portions of said decision read thus: We have examined Exhibits A, B and C carefully, and we find them clear, unambiguous and unequivocal.

If the terms of a contract are clear and leave no doubt upon the intention of the contracting parties, the literal meaning of its stipulations shall control.

(Article 1370, Civil Code.) The intention of the parties is to be deduced from the language employed by them, and the terms of the contract, where unambiguous, are conclusive, in the absence of averment and proof of mistake, the question being, not what intention existed in the minds of the parties, but what intention is expressed by the language used. When a written contract is clear and unequivocal, its meaning must be determined by its contents alone; and a meaning' cannot be given it other than that expressed. (City of Manila vs. Rizal Park C., 53 Phil. 515; 17 C.J.S. 700.).

According to the testimony of Crispina Rallos Alcantara, who claimed to have been present when the transactions took place, her deceased father merely borrowed money from the late Matias Aznar in the sums of P6,000.00 and P35,000.00 and to secure the repayment thereof mortgaged to the latter the properties described in Exhibits A, B and C. She testified that the transactions were disguised as absolute sales and Rallos was assured by Matias Aznar that he could exercise the right to repurchase the lots and would deliver to him the corresponding options in writing. We find the testimony of Crispina Rallos Alcantara in this respect unreliable and insufficient to justify the reformation of the instruments in question. While it is true that relationship does not disqualify a witness, it calls for a close scrutiny of his testimony.

For obvious reasons, the testimony of close relatives by affinity or consanguinity to corroborate a claim is not given much credence. (People vs. Guzman, 70 Phil. 23.) As correctly observed by the trial court, her testimony cannot be considered as absolutely unbiased or impartial, as she was naturally interested in an outcome of the case favorable to the plaintiff. More than this, however, the record shows that Rallos was even cautioned by his daughter Crispina and her husband before signing Exhibit A. The fact remains that Exhibits A, B and C were signed by Rallos himself as a party thereto.

His successors-in-interest cannot now be heard to complain that the parties to said exhibits intended the same to be loans with mortgages contrary to what are clearly expressed therein. The natural presumption is that one does not sign a document without first informing himself or its contents, and that presumption acquires greater force where, as in the case at bar, not only one but several documents, executed at different times, were signed by Rallos. (Javier vs. Javier, 7 Phil. 261.) It is the duty of every contracting party to learn and know the contents of a contract before he signs and delivers it.

He owes this duty to the other party to the contract, because the latter may, and probably will pay his money and shape his action in reliance upon the agreement. To permit a party, when sued on a written contract, to admit that he signed it but to deny that it expresses the agreement he made, or to allow him to admit that he signed it but did not read it, or know its stipulations, would absolutely destroy the value of all contracts. (Tan Tun Sia vs. Yu Bino Sentua, 56 Phil. 711; Moran, Idem pp. 123-124.).

The appellant urges that Exhibits A-2, A-3, B-3 and C-5, which, according to Crispina Rallos Alcantara, were her notations allegedly representing the deductions made by Matias Aznar for advance interest, attorney's fees and miscellanous expenses are corroborative of her testimony that the transactions in controversy were really loans with mortgages. We, likewise, find the said exhibits weak and unsatisfactor as evidence of the facts asserted. They are clearly self-serving, as they were admittedly prepared by the declarant herself (2 Wharton's Criminal Evidence, Sec. 690; 2 Jones on Evidence, 2d., Ed., Sec. 895), who was a daughter of the deceased Rallos and who cannot, therefore, be said to be disinterested witness.

With respect to Exhibit J, the option to repurchae Lots Nos.

462 and 7032, also relied upon by the appellant as allegedly corroborative of the testimony of Crispina Rallos Alcantara that all the transactions in question were loans secured by mortgages, it is to be noted that said exhibit his to do with the two lots mentioned therein and none other. Certainly, it is no proof that Rallos was similarly given a written option to redeem any of the lots covered by Exhibits B and C, which, according to Crispina Rallos Alcantara, was taken back by Matias Aznar but never renewed. The evidence shows that the period fixed in Exhibit J expired without the lots involved being redeemed.

To show, too, that Matias Aznar had agreed to the repurchase of the lots in question by Rallos, the plaintiff presented at the trial of the case Exhibit L, which appears to be a copy of a draft of deed of absolute sale. This exhibit deserves but the scantest consideration, it being undated, unsigned and unsubscribed by any purported party thereto. Besides, even granting arguendo that the same was prepared by a lawyer of the Aznars, as alleged by Crispina Rallos Alcantara, we fail to see its materiality to the resolution of the main issue involved in this case of whether or not reformation is proper or justified, as the draft appears to have been drawn in favor of Crispina RalloE Alcantara who was not a party to the instruments sought to be reformed, and there is nothing in said exhibit to indicate that the contested transactions were really loans secure by mortgages.

As to Exhibits Q, Q-1, Q-2 Q-3, R and R-1, which, according to the appellant, were erroneously ignored by the court below, the same invariably refer to an alleged indebtedness of Rallos to Matias Aznar and not to the defendants, Emmanuel and Alma Aznar, to whom the properties in question appear to have been sold (Exhibits A, B and C). The said exhibits fail to show clearly and satisfactorily that the transactions mentioned therein relate to the same transactions and the same parcels of land involved in the case at bar. The appellant further contends that the considerations paid for the lots in dispute were very inadequate or unusually low which would justify reformation under the provisions of Articles 1602, paragraph 1, and 1604, of the Civil Code.

This contention is untenable. The evidence shows that Lot No. 7032 was sold to the defendant Emmanuel for P6,000.00 (Exhibit A), which was higher than its assessed value of P4,447.25 in 1954 when the transaction took place (Exhibit A-1). The price paid for Lots Nos. 519-B, 519-C, 467 and 490 is P40,000.00 also in lump sum (Exhibit C).

The total consideration for said six lots is P45,000.00, which was more than one-half, or approximately 60%, of their total assessed value of P74,647.00 at the time of transaction in 1954 (Exhibits B-1, B-2, C-1, C-2, C-3 and C4). It is to be noted that at the time of the sale, there was a mortgage encumbrance of P5,000.00 on Lots Nos. 2713 and 7728 in favor of the Go Chan & Sons Realty Corporation, while Lots Nos. 519-B, 519-C, 467 and 490 had a mortgage encumbrance of P20,000.00 in favor of the Philippine National Bank, which obligations were assumed by the defendants-vendees (Exhibits 27, 28, 29, 30, 32, 33 and 34). In fact, when Exhibit C was executed, the indebtedness to the bank was already due and demands for the payment thereof had been made upon Rallos (Exhibits H and H-1).

On this question of the vsluation of the subject lots, the plaintiff presented HIPOLITO S. Ricardo, at one time Deputy City Assessor in Cebu City, who testified that the assessment of a real estate property was only about 40% of its fair market value, but the same was not the basis for determining the fair market value of a real estate property; that the factors considered by their office in appraising the fair market value of a real estate property were the transactions of the parties and the prices appearing in the deeds of sale of the adjacent or neighboring lots, but in the absence thereof, the capitalization system was used, based upon the investment in the property, its income, plus 6% interest annually after deductions for taxes paid, insurance premiums, repairs, losses and other miscellaneous expenses; and that in the assessment of real properties their office had a schedule of values to be followed, and a partial revision of the assessments was made yearly.

According to him, however, their scheal of was not applied in the assessment of Lots Nos. 2713 and 7728, covered by tax declarations, Exhibits B-1 and B-2, and subject matter of Exhibit B, and of Lots Nos. 519-C, 619-B, 46'7 and 490, covered by tax declarations, Exhibits C-1, C-2, C-3 and C4 and subject matter of Exhibit C. As to the assessment of Lot No. 7032, covered by tax declaration, Exhibit A-1, and subject matter of Exhibit A, the said schedule was used. At any rate, taking the assessment of the seven lots involved in this case as a reasonable basis for determining their actual valuation at the time of the transactions, and considering the encumbrances existing on six of the lots and their purchase by the defendants, Emmanuel and Alma Aznar, at one time and in lump sums, this Court is not prepared to conclude that under the attendant circumstances, the considerations paid for the lots in question were unusually inadequate or shockingly low to warrant the application of the provisions of paragraph No. I of Article 1602 of the Civil Code on equitable mortgage.

(Manalo vs. Gueco, 42 Phil. 925; Cabigao vs. Lim, 50 Phil. 844.) The appellant points out that, according to the bank records, Exhibits T, T-1, U U-1, V, V-1, W and W-1, the appraised values of the lots mortgaged with the bank were considerably higher than the prices paid for them. The fact remains, however, that the mortgage obligation of Rallos secured by the same six lots was only P20,000.00, which was assumed by the defendants-vendees. Besides, no bank appraiser or representative was presented by the plaintiff at the trial to testify as to how the appraised values appearing in said exhibits were arrive at.

On the other hand, the testimony of Vicente Kyamko also relied upon by the appellant to prove the alleged fair market values of the subject lots, deserves but scant consideration.ℒαwρhi৷ The said witness admitted that he was not a licensed appraiser, and that he did not know what the assessed values of the lots in question were in 1954, although, according to him, the assessed value of a real property was the basis for computing or estimating its fair market value. However, even granting arguendo that there were differences in value or some inadequacy of consideration here, nevertheless; the same cannot be said to be controlling when viewed in the light of the entire evidence Page 341 adduced in this case. A difference in value is not always a decisive factor for determining whether the contract is one of sale with right to repurchase or a mere loan with guaranty.

(Ocuma vs. Olandesca [CL] 47 O.G. 1902.) Mere inadequacy is not a sufficient ground for the rescission or resolution of a contract when both parties, as in the instant case, were in a position to form an independent judgment concerning the transaction. (Askay vs. Coselan 46 Phil. 179.) In its tenth assignment of error, the appellant assails the trial court's finding that the defendant vendees were in possession of the lots in question after the execution of the deeds of absolute sale, Exhibits A, B, and C. It contends that the defendants never possessed the contested lots. We see no merit in this contention.

The records show that after the execution of the documents in question, the defendants, Emmanuel and Alma Aznar, transferred in their names the tax declarations covering the properties sold to them, paid the taxes thereon and caused the issuance of new certificates of title accordingly (Exhibits 7, 8, 9, 10, 11, 12, 21, 22, 24, 25, 26, 35, 36, 37, 38, 39 and 40). They demanded for the payment to them of the rentals due from the tenants of the lots, and began to collect the rentals from them after the maturity of the promissory note of Rallos for P1,800.00, Exhibit I, which, according to the defendant, Emmanuel, represented the rentals for one year collected in advance by Rallos from the lessees. Thereafter, defendants Emmanuel and Alma Aznar filed detainer suits against those occupants who failed to pay their rents to them (Exhibits D to D-21, inclusive, 41, 41-A, 41-B, 41-C and 41-D).

Certainly, those facts belie the appellant's claim that the defendant vendees were never in possession of the lots in dispute. From the evidence adduced, we are satisfied that after the execution of the deeds of absolute sale, Exhibits A, B and C, the defendants vendees took possession of the subject lots, and they were in possession thereof and collected the rentals due until the plaintiff's administrator was authorized by the court a quo to collect the rents and deposit them in a bank, subject to the court's disposition. The appellant capitalizes, too, on the statement, Exhibit K, which allegedly shows that Matias Aznar charged Rallos with the payment of the taxes due on the contested lots.

According to Crispina Rallos Alcantara, the said exhibit was prepared by an employee of Matias Aznar upon the latter's orders, when she went to see him concerning the repurchase of the lots. This, however, was denied by the defendant, Emmanuel Aznar, who claimed that after the sale, neither Rallos nor his daughter Crispina went to see any of the Aznars in their office for the redemption of the lots. The exhibit in question, allegedly a statement of account of Rallos to Matias Aznar involving the disputed transactions is neither dated nor signed.

much less by the party sought to be charged. The alleged writer thereof was not presented at the trial of the case, and we have only the biased testimony of Crispina as to its authenticity or preparation. Even if it were true, however, that the writing was made, as alleged by Crispina, we cannot consider the name as proof of what was said or transacted then.

The mere making of written -memorandum immediately after the interview does not make the memorandum affirmative intrinsic proof of the things said or transacted. (32 CJS 948.) Knowledge on the part of the person who made the memorandum, at the time it was made, that the statements or entries therein were correct must be shown (32 OJS 947), and this the plaintiff failed to do. On the other hand, the record indubitably shows that after the execution of the questioned instruments, the taxes on the lots subject matter thereof were paid by the defendants vendees.

Consequently, we hold that Exhibit K has no evidentiary value, and the lower court was correct in disregarding it ( Pp 82- 95, Record of L-31740.) However, in its per curiam resolution of November 19, 1969, wherein Presiding Justice Capistrano who had by then been elevated to this Court was substituted by his successor Presiding Justice Julio Villamor, this rather strong position taken by the appellate court was completely reversed by itself as follows: While it is true that in our decision rendered in this case, we held that the notations or memoranda of Crispina Rallos Alcantara marked as Exhibits A-2, A-3, B3 and C5 were self-serving and unsatisfactory as evidence of the facts asserted (Decision, p.

24), the same, however, as now correctly contended by the plaintiff-appellant in his motion for reconsideration, may be considered as constituting part of the res gestae, and as such, are admissible in evidence to show the nature of the contracts in question and the relation of the parties involved. Statements, acts or conduct accompanying or so nearly connected with the main ion as to form a part of it, and which illustrate, elucidate qualify, or the act, are admissible as part of the res gestae. Accordingly, the attendant circumstances and the statements then made by the pudes are admissible as part of the res gestae to show the execution of a contract, and, where relevant, matters said and done which are parts of the res gestae of the negotiation and execution of a contract are admissible to show the existence and nature of the contract and the relation of the parties.

Matters attendant upon a sale or conveyance may also be admissible m part of the res gestae. (32 CJS 30-32.) Coversations occurring during the negotiation of a loan or other transaction, as well as the instrument given or received, being part of the res gestae, are competent evidence to show the Page 343 nature of the transaction and the parties for whose benefit it was made, where that fact is material. (National Bank vs Kennedy, 17 Wall.

[U.S.] 19, 21 L. Ed. 554, cited in 20 Am. Jur. 57.) ...

The character of the transaction is precisely what the intention of the parties at the time made it. It will therefore be discovered that the testimony of those who were present at the time the instrument was made, and especially of those who participated in the transaction, becomes most important. (Cuyugan vs. Santos, 34 Phil. 100, 114-115.) Thus, while the testimony of Crispina Rallos Alcantara may nor, be free from bias, she being the daughter of the deceased, Simeon Rallos, the same should not, however, be totally rejected on the ground of bias alone (U.S. vs. Mante, 27 Phil. 124; People vs. Pagaduan 37 Phil. 90), considering that it appears to be clearly and sufficiently supported by memoranda which, as already stated, are admissible in evidence as part of the res gestae (Exhibits A-2, A-3, B-3 and C-5) and by the ledgers of the Philippine National 7 Bank .(Exhibits X and Y).

Besides, mere relationship of a witness to a party does not discredit his testimony in court, (U.S. vs. Mante, supra.) In this connection, the appellant has pointed out in his motion under consideration that on of this Court's decision, there was an erroneous citation of C.J.S., i.e., Vol. 32 pp. 947-948 thereof. The said citation, however, appears and may be found in the 1964 edition of the Corpus Juris Secundum, Vol.

32, pages 947-948. In the case at bar, there is another factor why the transactions in question should be considered as equitable mortgages. This factor consists of the unusual inadequacy of the prices of the sale of the properties involved.

For purposes of comparison, the prices paid for the properties mentioned in Exhibits A, B and C and the asses values thereof are hereunder tabulated: Lot No. Purchase Price Assessment as per Tax declaration 7032 P6,000.00 (Exh. A) P4.447.25 (Exh. A-1) 2713) 4,679.00 (Exh.

B-1) 7728) 5,000.00 (Exh, B, 9,308.00 (Exh. B- 2) 519-C) 150.00 (Exh. C-1) 519-B) 31.300.00 (Exh.

C-2) 467 ) 17,760.00 (Exh. C-3) 490 ) 40,000.00 (Exh. C)