Rosales vs. Reyes

In a sale with pacto de retro, where the contract prohibits the exercise of the right to repurchase for a specified period, the four-year prescriptive period under Article 1508 of the Civil Code runs from the date the prohibition expires, not from the date of the contract, provided the total life of the contract does not exceed ten years. Additionally, where the redemption price is fixed and certain, a bona fide tender of payment, upon the vendee’s refusal to accept and surrender the property, is sufficient to preserve the vendor’s cause of action; the prior deposit of the price with the court is not a prerequisite.

On July 29, 1902, Maximino Rivera sold a parcel of land to Vicente Reyes and Juan Ordoveza for P800 under a pacto de retro, with the express condition that repurchase could not be made until after three years from the date of the sale. In the deed, Rivera declared he was of age. Less than a year later, on May 29, 1903, Rivera sold his right to repurchase to Fausto Rosales for P1,075, again stating he was twenty-three years old. In January 1908, Rosales tendered the P800 redemption price to Reyes and Ordoveza and demanded the return of the land; they refused. Rosales filed suit seeking annulment of the 1902 contract on the ground of Rivera’s minority or, alternatively, specific performance of the repurchase. The defendants demurred, raising three objections: the complaint was inconsistent, the right to redeem had prescribed, and no judicial deposit of the price was alleged.

• The 1902 Sale with Pacto de Retro: Maximino Rivera sold a parcel of land to defendants Vicente Reyes and Juan Ordoveza on July 29, 1902, for P800, under a pacto de retro. The notarial deed contained a stipulation that “the repurchase shall not take place until three years from this date.” In the same instrument, Rivera declared he was of age.
• Assignment of the Right to Repurchase: On May 29, 1903, Rivera sold his right to repurchase to Fausto Rosales for P1,075. The deed of assignment again stated that Rivera was twenty-three years old.
• Tender and Refusal: In January 1908, Rosales tendered the sum of P800 to Reyes and Ordoveza and requested that the land be surrendered in accordance with the original pacto de retro. The defendants refused to accept the money and declined to deliver the property.
• Complaint: Rosales filed a complaint seeking either the annulment of the 1902 contract on the ground of Rivera’s minority or, in the alternative, an order compelling the defendants to accept the redemption price and reconvey the property.
• Demurrer: The defendants demurred, asserting that (1) the complaint was inconsistent because it sought both annulment and enforcement of the contract; (2) the right to repurchase had already expired under the first paragraph of Article 1508 of the Civil Code, more than four years having elapsed since July 29, 1902; and (3) the complaint did not allege that the redemption price had been judicially deposited upon defendants’ refusal, relying on Angao vs. Clavano and Spanish authorities. The trial court sustained the demurrer on the ground that the complaint stated no cause of action.

• Inconsistency in the Prayer: Petitioner maintained that any inconsistency between the prayer for annulment and the prayer for specific performance did not defeat the cause of action, because the demand is not part of the statement of the cause of action; a plaintiff is entitled to whatever relief the facts alleged will warrant.
• Computation of the Redemption Period: Petitioner argued that the four-year period under Article 1508 should be counted not from the date of the contract but from the expiration of the three-year prohibition, so that the tender in January 1908 was well within the extended period.
• Sufficiency of Tender: Petitioner contended that under settled Philippine jurisprudence, a bona fide tender of the redemption price, when refused by the vendee, is sufficient to preserve the right to repurchase, and that a prior judicial deposit is unnecessary.

• Inconsistency: Respondents asserted that the complaint was fatally inconsistent because it simultaneously sought annulment and enforcement of the same contract, failing to state a clear cause of action.
• Prescription: Respondents maintained that Article 1508’s first paragraph applied: absent an express agreement on the duration of the right to repurchase, the right expired four years from the date of the contract (July 29, 1902). Since the tender occurred in 1908, the right had already lapsed. The prohibition against repurchase within three years did not constitute an agreement on the length of the redemption period.
• Necessity of Deposit: Respondents relied on the second paragraph of Article 1618 of the Spanish Code of Civil Procedure, the commentaries of Manresa, and the ruling in Angao vs. Clavano, arguing that the vendor cannot exercise the right of redemption without either paying back the price or, upon refusal, depositing it judicially. The complaint’s failure to allege such a deposit was fatal.

• Inconsistency in the Prayer: Whether the complaint’s inclusion of both a prayer for annulment and a prayer for specific performance rendered it insufficient to state a cause of action.
• Prescription of the Right to Repurchase: Whether the right to repurchase had prescribed under Article 1508 of the Civil Code, where the contract prohibited repurchase within three years and tender was made more than four years after the contract date but within four years after the expiration of the three-year ban.
• Necessity of Judicial Consignation: Whether the complaint must allege that the redemption price was judicially deposited upon the vendee’s refusal, or whether a bona fide tender of the fixed price is sufficient to preserve the vendor’s right of action.

• Inconsistency in the Prayer: The inconsistency in the prayer did not vitiate the complaint. The demand or prayer for relief forms no part of the statement of the cause of action; it is the facts alleged that determine the sufficiency of the complaint. A single right of action may entitle a plaintiff to several kinds of relief, and any relief warranted by the pleaded facts can be granted. The trial court therefore erred in deeming the complaint defective on this ground.
• Prescription of the Right to Repurchase: The right to repurchase had not prescribed. Although the contract contained no express period for redemption, the stipulation that repurchase could not take place within three years suspended the enforceability of the right. The four-year period under the first paragraph of Article 1508 began to run only from the expiration of that three-year prohibition on July 29, 1905. The tender in January 1908 was thus timely. The effect of the stipulation was to extend the life of the pacto de retro to seven years from the contract date, well within the ten-year maximum fixed by the second paragraph of Article 1508. A contrary interpretation would produce the absurd result that a prohibition longer than four years would completely extinguish the right before it could ever be exercised. Because the provision is susceptible of two constructions, the one favoring the natural right to redeem was adopted, consistent with the Code of Civil Procedure’s rule that a statute equally open to two interpretations should receive that which favors natural right. The reasoning in Yadao vs. Yadao regarding the legislative policy of limiting the suspension of title to ten years further supported this conclusion.
• Necessity of Judicial Consignation: A prior judicial deposit of the redemption price was not required to state a cause of action. Under the settled rule in this jurisdiction, where the amount of the redemption price is fixed and certain, a bona fide tender of payment, coupled with the vendee’s refusal to accept it and surrender the property, is sufficient to preserve the vendor’s right to repurchase. This rule had been established in a consistent line of decisions — Lafont vs. Pascasio, Villegas vs. Capistrano, Fructo vs. Fuentes, and Retes vs. Suelto — and constituted a rule of property that would not be lightly disturbed. The contrary suggestion in Angao vs. Clavano was obiter dictum; the case itself was decided on the ground that more than a year had elapsed after the contractual period, without any tender having been made. The Spanish procedural requirement of deposit under Article 1618 of the Spanish Code of Civil Procedure was no longer in effect. Analogies to the rules on redemption from execution sales and the Chattel Mortgage Law reinforced the principle that tender of performance suffices.

• Computation of the Redemption Period in Pacto de Retro Sales When Exercise Is Prohibited for a Time — Where a pacto de retro contract expressly prohibits the exercise of the right of repurchase for a specified period, the four-year prescriptive period under Article 1508 of the Civil Code runs from the expiration of that prohibition, not from the date of the contract. The contract’s life is extended by the length of the prohibition, provided the total period does not exceed ten years. This interpretation gives the vendor the full four-year benefit of the law when the right becomes exercisable, avoids absurdities, and aligns with the legislative policy of limiting the uncertain suspension of title to a maximum of ten years.
• Tender of Payment in Pacto de Retro as an Alternative to Consignation — A bona fide tender of the redemption price, where the amount is fixed and certain, is sufficient to preserve the vendor’s right of action to compel repurchase upon the vendee’s refusal to accept payment and surrender the property. The vendor is not required to first deposit the price in court. This rule, crystallized in a series of Philippine Supreme Court decisions, constitutes a rule of property and dispenses with the former Spanish procedural requirement of judicial consignation.

• “We are of the opinion that the effect of the express stipulation or agreement in the contract which we have been discussing was to extend the life of the contract to seven years from the date of its execution.” — The Court’s conclusion on the effect of the three-year prohibition clause on the redemption period.
• “In all such cases it would seems that the vendor should be allowed four years from the expiration of the time within which the right to redeem could not be exercised, or in the event that four years would extend the life of the contract beyond ten years, the balance of the ten-year period, on the ground that vendors, where the right to redeem is not thus suspended and no express agreement as to the length of time during which it may be exercised is made, are also allowed four years. This construction, it must be conceded, is the most logical and just.” — The ratio decidendi for computing the period from the time the right becomes exercisable.
• “But the settled rule in this jurisdiction upon the precise question involved in this case is that an offer of the money, where the sum required is fixed and certain, is sufficient, and that it is unnecessary to deposit it.” — The declaration crystallizing the rule on tender in pacto de retro.

• Yadao vs. Yadao, 20 Phil. 260 — Cited for the public policy behind the ten-year maximum in pacto de retro: to prevent the indefinite suspension of title to real estate.
• Lafont vs. Pascasio, 5 Phil. 391 — Foundational authority that an offer of payment and tender through a notary is sufficient to preserve the right to repurchase when the vendee refuses.
• Villegas vs. Capistrano, 9 Phil. 415 (416) — Affirmed that presenting the money at the vendee’s residence and offering it constitutes all that the law requires when the vendee refuses.
• Fructo vs. Fuentes, 15 Phil. 362 — Held that a diligent effort to tender the redemption price on and after the maturity date preserves the right, even if actual payment is delayed by circumstances beyond the vendor’s control.
• Retes vs. Suelto, 20 Phil. 394 — Reiterated that a legal offer of payment, followed by deposit with municipal authorities after refusal, is sufficient to entitle the vendor to possession.
• Angao vs. Clavano, 17 Phil. 152 — Distinguished; its pronouncement that deposit is required was obiter dictum. The actual basis of the decision was the expiry of the contractual period long before any tender was made.

• Article 1508, Spanish Civil Code — Prescribes the periods for conventional redemption: in the absence of an express agreement, the right lasts four years counted from the date of the contract; with an agreement, the period cannot exceed ten years. The Court construed the first paragraph’s four-year period to run from the time the right becomes exercisable when a prohibition suspends it, and the ten-year limit to apply to the total contract life.
• Article 1518, Spanish Civil Code — Provides that the vendor cannot exercise the right of redemption without returning to the vendee the price of the sale. The Court held that a bona fide tender satisfies the requirement of “returning” when the vendee unjustifiably refuses, consistent with its prior decisions.
• Article 1311, Spanish Civil Code — Deals with implied confirmation of voidable contracts. The Court noted it in passing to explain that the 1902 contract could no longer be annulled for minority because Rivera’s 1903 declaration of majority constituted ratification.
• Section 294, Code of Civil Procedure — When a statute is equally susceptible of two interpretations, the one in favor of natural right is to be adopted. Applied to the construction of Article 1508 in favor of the vendor.

Arellano, C.J., Johnson and Carson, JJ., concurred.

• Justice Torres — Dissented on two grounds. First, Article 1508 provides that the four-year period runs from the date of the contract when no express period is stipulated; the clause merely prohibiting redemption for three years is not a stipulation of a redemption period, and therefore the right expired in 1906, long before the 1908 tender. Second, Article 1518 requires actual repayment, not a mere offer; upon the vendee’s refusal, the price must be deposited, consistent with the Spanish authorities and Angao vs. Clavano. Justice Torres would have affirmed the dismissal.
• Justice Moreland — Joined the dissent with respect to the prescription issue. The prohibition clause is the “reverse” of a redemption period; it states when repurchase cannot be made, not when it must be made. Hence the case falls under the first paragraph of Article 1508, and the four-year period ran from the contract date, expiring in 1906. The time for repurchase is a condition of the contract’s validity, not a statute of limitations, and the complaint on its face showed that the action was barred.