Conde vs. Court of Appeals

A repurchase of property sold pacto de retro may be validly effected through a son-in-law of the vendees-a-retro even without express written authority, where the vendees' prolonged silence, failure to repudiate the act, and continued acquiescence in the vendor a retro's possession give rise to implied agency under Article 1869 of the Civil Code. The vendees-a-retro's 24-year inaction likewise constitutes laches, and purchasers who buy property with an uncancelled encumbrance on the title and with possession admittedly in another person are not purchasers in good faith.

The case involves a parcel of agricultural land (Lot 840) of approximately one hectare in Maghubas, Burauen, Leyte, originally co-owned by siblings Margarita Conde, Bernardo Conde, and petitioner Dominga Conde as heirs of Santiago Conde. On April 7, 1938, the siblings sold the lot with right of repurchase within ten years to the spouses Pio Altera and Casimira Pasagui for P165.00. The pacto de retro deed contained a special stipulation that if the land was not repurchased within ten years, a new agreement would be made and title would never vest in the vendees. The Cadastral Court of Leyte subsequently adjudicated the lot to the Alteras subject to petitioner's right of redemption, and Original Certificate of Title No. N-534 was issued in the Alteras' name bearing that encumbrance.

On April 7, 1938, Margarita Conde, Bernardo Conde, and Dominga Conde, as heirs of Santiago Conde, sold with right of repurchase within ten years a parcel of agricultural land (Lot 840) of approximately one hectare in Maghubas, Burauen, Leyte, to Casimira Pasagui, married to Pio Altera, for P165.00. The pacto de retro deed contained a special stipulation that if at the end of ten years the land was not repurchased, a new agreement would be made between the parties and in no case would title and ownership vest in the vendees. On April 17, 1941, the Cadastral Court of Leyte adjudicated Lot 840 to the Alteras subject to the right of redemption by Dominga Conde within ten years from April 7, 1938, upon return of the P165.00 purchase price and amounts paid as land tax. Original Certificate of Title No. N-534 was issued in the name of the Alteras bearing that condition, transcribed in the Registry of Deeds of Leyte on November 14, 1956.

On November 28, 1945, Paciente Cordero, son-in-law of the Alteras, signed a document in the Visayan dialect entitled "Memorandum of Repurchase Over a Parcel of Land Sold with Repurchase Which Document Got Lost." The document stated that Pio Altera had bought with right of repurchase two parcels of land from Dominga Conde, Bernardo Conde, and Margarita Conde, that the deed of sale had been lost during the war, and that the repurchase price of P165.00 had been received by Pio Altera together with Paciente Cordero. The document further covenanted that from that day the Conde siblings would again take possession of the land because they had repurchased it, and that if their possession were disturbed, Pio Altera and Paciente Cordero would defend their behalf. Neither of the vendees-a-retro, Pio Altera nor Casimira Pasagui, signed the document. Petitioner maintained that Pio Altera was very ill at the time and that Cordero executed the deed on behalf of his father-in-law; she also stated that she redeemed the property with her own funds, as her co-heirs lacked the means.

From the execution of the repurchase document in 1945, possession of the lot — which had theretofore been with the Alteras — passed to petitioner, as stipulated in the memorandum. Petitioner paid land taxes yearly from 1947 to 1969. The Alteras never repudiated the deed their son-in-law had signed, nor did they take any steps to clear their title of the encumbrance regarding petitioner's right to repurchase. No new agreement was entered into by the parties as stipulated in the pacto de retro deed in the event of non-repurchase within ten years. On June 30, 1965, Pio Altera sold the disputed lot to spouses Ramon Conde and Catalina T. Conde; the document of sale was not exhibited, and the Condes' relationship to petitioner does not appear from the records.

On January 16, 1969, petitioner filed a Complaint for quieting of title and declaration of ownership in the Court of First Instance of Leyte against Paciente Cordero and his wife Nicetas Altera, Ramon Conde and his wife Catalina T. Conde, and Casimira Pasagui (Pio Altera having died in 1966). Petitioner's evidence showed that Cordero signed the Memorandum of Repurchase in representation of his father-in-law, who was seriously ill, and of his mother-in-law, who was in Manila, and that Cordero received the P165.00 repurchase price. Private respondents adduced evidence that Cordero signed merely to show he had no objection to the repurchase and that he did not receive the P165.00, having no authority from his parents-in-law. At pre-trial, private respondents admitted that petitioner had been in possession since 1945. The trial court dismissed the complaint and ordered petitioner to vacate; the Court of Appeals affirmed, finding that Cordero lacked authority from the vendees-a-retro.

• Authority of Cordero: Petitioner maintained that Paciente Cordero executed the Memorandum of Repurchase for and on behalf of his father-in-law Pio Altera, who was very ill at the time, and of his mother-in-law Casimira Pasagui, who was in Manila.
• Source of Funds: Petitioner stated that she redeemed the property with her own money, as her co-heirs were bereft of funds for the purpose.
• Possession and Tax Payments: Petitioner relied on her uninterrupted possession since 1945 and yearly payment of land taxes from 1947 to 1969 as evidence of valid repurchase.

• Lack of Authority: Private respondents argued that Paciente Cordero signed the Memorandum of Repurchase merely to indicate that he had no objection to the repurchase, and that he did not receive the P165.00 from petitioner, as he had no authority from his parents-in-law who were the vendees-a-retro.
• Possession as Tenant: Private respondents asserted that petitioner merely took advantage of the Alteras' abandonment of the land due to the spouses' separation, and that petitioner's possession was in the concept of a tenant.

• Implied Agency: Whether the Memorandum of Repurchase signed by Paciente Cordero without express written authority from the vendees-a-retro could validly effect a repurchase, given the Alteras' silence and failure to repudiate the act.
• Laches: Whether the vendees-a-retro's 24-year inaction and acquiescence in petitioner's possession constituted laches barring private respondents' claim.
• Good Faith of Purchasers: Whether Ramon Conde and Catalina Conde, who bought the property from Pio Altera in 1965, were purchasers in good faith despite the uncancelled encumbrance on the title and petitioner's open possession.
• Parol Evidence Rule: Whether Paciente Cordero's oral testimony that he signed the memorandum merely to indicate lack of objection could be admitted to vary the plain terms of the written document.

• Implied Agency: Yes. An implied agency was created from the vendees-a-retro's silence, lack of action, and failure to repudiate the agency, pursuant to Article 1869 of the Civil Code.
• Laches: Yes. The Alteras' 24-year inaction and neglect, during which petitioner held adverse and uninterrupted possession and paid taxes, constituted laches in petitioner's favor.
• Good Faith of Purchasers: No. Ramon Conde and Catalina Conde were not purchasers in good faith because OCT No. N-534 bore an uncancelled encumbrance regarding the right of repurchase, and possession was admittedly with petitioner since 1945.
• Parol Evidence Rule: No. Cordero's oral testimony that he signed merely to indicate lack of objection could not prevail over the plain terms of the written Memorandum of Repurchase, which he understood and signed.

• Implied Agency: Neither vendee-a-retro signed the Memorandum of Repurchase, and there was no formal authorization for Paciente Cordero to act on their behalf. However, from the execution of the repurchase document in 1945, possession passed to petitioner as stipulated therein, and petitioner paid land taxes yearly from 1947 to 1969. If petitioner had done nothing to formalize her repurchase, neither had the vendees-a-retro done anything to clear their title of the encumbrance regarding her right to repurchase. No new agreement was entered into as stipulated in the pacto de retro deed. If petitioner exerted no effort to procure Pio Altera's signature after his recovery, neither did the Alteras repudiate the deed their son-in-law had signed. An implied agency was therefore created from their silence, lack of action, or failure to repudiate the agency, under Article 1869 of the Civil Code.

• Laches: Possession of the disputed lot had been adversely and uninterruptedly with petitioner from 1945, when the repurchase document was executed, to 1969, when she instituted the action — a span of 24 years. The Alteras must be deemed to have incurred in laches through their prolonged inaction and neglect. The assertion that petitioner merely took advantage of the Alteras' abandonment and that her possession was that of a tenant remained bare assertions without proof. The imperatives of substantial justice and the equitable principle of laches weighed in petitioner's favor.

• Good Faith of Purchasers: OCT No. N-534 in the name of the Alteras specifically contained the condition that it was subject to the right of repurchase within ten years from 1938. Although the ten-year period had lapsed by 1965 and no annotation of repurchase by petitioner appeared, neither had the title been cleared of that encumbrance. The purchasers were thereby put on notice that some other person could have a right to or interest in the property. It behooved Ramon Conde and Catalina Conde to have looked into the right of redemption inscribed on the title and particularly the matter of possession, which they themselves admitted at pre-trial had been with petitioner since 1945. They could not be considered purchasers in good faith.

• Parol Evidence Rule: Paciente Cordero was bound by the clear terms of the Memorandum of Repurchase he had signed, wherein he acknowledged receipt of P165.00 and assumed the obligation to maintain the repurchasers in peaceful possession. The document was in the Visayan dialect, which he understood. Nothing in the document indicated that he signed merely to show lack of objection; besides, he would have had no personality to object. To uphold his oral testimony on that point would be a departure from the parol evidence rule, whose purpose is to give stability to written agreements and remove the temptation and possibility of perjury.

• Implied Agency (Article 1869, Civil Code) — Agency may be implied from the conduct of the principal, including silence, lack of action, or failure to repudiate acts performed by another on the principal's behalf. In this case, the vendees-a-retro's 20-year failure to repudiate their son-in-law's execution of a memorandum of repurchase, coupled with their acquiescence in the vendor a retro's possession, gave rise to implied agency validating the repurchase.

• Laches — The failure or neglect, for an unreasonable and unexplained length of time, to do that which, by exercising due diligence, could or should have been done earlier, whereby a party is prejudiced. The Alteras' 24-year inaction while petitioner held adverse, uninterrupted possession and paid taxes constituted laches barring private respondents' claim.

• Purchaser in Good Faith — A purchaser in good faith relies on the clean title of the seller and has no notice of another's right or interest in the property. Where the certificate of title bears an uncancelled encumbrance and possession is admittedly in another person, the purchaser is charged with notice and cannot be deemed a buyer in good faith.

• Parol Evidence Rule — When the terms of an agreement have been reduced to writing, the contents of the writing are the sole evidence of the terms, except where a mistake or imperfection of the writing is put in issue or there is intrinsic ambiguity. Oral testimony cannot vary or contradict the plain terms of a written agreement the party signed and understood.

• "Thus, an implied agency must be held to have been created from their silence or lack of action, or their failure to repudiate the agency." — This passage articulates the ratio decidendi on implied agency: the vendees-a-retro's prolonged failure to repudiate their son-in-law's act of repurchase constituted implied authorization under Article 1869 of the Civil Code.

• "Possession of the lot in dispute having been adversely and uninterruptedly with petitioner from 1945 when the document of repurchase was executed, to 1969, when she instituted this action, or for 24 years, the Alteras must be deemed to have incurred in laches." — This passage states the laches holding: 24 years of adverse possession and tax payments by petitioner, against the vendees-a-retro's inaction, barred private respondents' claim.

• "OCT No. 534 in the name of the Alteras specifically contained the condition that it was subject to the right of repurchase within 10 years from 1938. Although the ten-year period had lapsed in 1965 and there was no annotation of any repurchase by petitioner, neither had the title been cleared of that encumbrance. The purchasers were put on notice that some other person could have a right to or interest in the property." — This passage defines why the 1965 purchasers were not in good faith: the uncancelled encumbrance on the title and the admitted possession by petitioner charged them with notice of another's potential interest.

• Arcuino vs. Aparis, 22 SCRA 407 (1968) — Cited as authority for the doctrine of laches, supporting the holding that the Alteras' prolonged inaction barred their successors' claim.
• Mejia de Lucas vs. Gamponia, 100 Phil. 278 (1956) — Cited alongside Arcuino as additional authority for the application of laches.
• Tan Tua Sia vs. Yu Biao Sontua, 56 Phil. 711 (1932) — Cited for the principle that a contracting party is bound by the plain and unequivocal terms of a contract he signs and delivers, and for the parol evidence rule's purpose of giving stability to written agreements.
• Lim Yhi Luya vs. Court of Appeals, 99 SCRA 692 (1980) — Cited in the footnote on the parol evidence rule for the statutory definition of "agreement" encompassing wills.

• Article 1869, Civil Code — Provides that agency may be express or implied. The Court applied this provision to hold that the vendees-a-retro's silence and failure to repudiate their son-in-law's execution of the repurchase memorandum created an implied agency.
• Section 7, Rule 130 (Rules of Court / Evidence) — The parol evidence rule: when the terms of an agreement have been reduced to writing, the contents of the writing are the sole evidence of the terms, except in cases of mistake, imperfection, or intrinsic ambiguity. The Court invoked this rule to bar Cordero's oral testimony contradicting the plain terms of the Memorandum of Repurchase.

Justices Teehankee (Chairman), Plana, Vasquez, Relova, and Gutierrez, Jr. concurred in the decision.