severino tolentino and potenciana manio, plaintiffs-appellants,

7/25/2019 Severino Tolentino and Potenciana Manio, Plaintiffs-Appellants,

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EN BANC

G.R. No. 26085 August 12, 1927

SEVERINO TOLENTINO and POTENIANA !ANIO,plaintiffs-appellants,

vs.

"ENITO GON#ALE# S$ %IA!,defendants-appellee.

Araneta and Zaragoza for appellants.

Eusebio Orense for appelle.

&O%NSON, J.:

PRINCIPAL QUESTIONS PRESENTED BY TE APPEAL

T!e p"in#ipal $%esti&ns p"esented '( t!is appeal a"e)

*a+ Is t!e #&nt"a#t in $%esti&n a pacto de retro&" a &"tae

*b+ Unde" apacto de retro, /!en t!e vend&" 'e#&es a tenant &f t!e p%"#!ase" and a"ees t& pa( a #e"tain a&%nt pe" &nt! as

"ent, a( s%#! "ent "ende" s%#! a #&nt"a#t %s%"i&%s /!en t!e a&%nt paid as "ent, #&p%ted %p&n t!e p%"#!ase p"i#e, a&%nts t&

a !i!e" "ate &f inte"est %p&n said a&%nt t!an t!at all&/ed '( la/

*c+ 0a( t!e #&nt"a#t in t!e p"esent #ase a( 'e &dified '( pa"&l eviden#e

ANTECEDENT 1ACTS

S&etie p"i&" t& t!e 23t! da( &f N&ve'e", 4522, t!e appellants p%"#!ased &f t!e L%6&n Ri#e 0ills, In#., a pie#e &" pa"#el &f land /it!

t!e camarinlated t!e"e&n, sit%ated in t!e %ni#ipalit( &f Ta"la# &f t!e P"&vin#e &f Ta"la# f&" t!e p"i#e &f P27,888, p"&isin t& pa( t!e"ef&" in

t!"ee installents. T!e fi"st installent &f P2,888 /as d%e &n &" 'ef&"e t!e 2d da( &f 0a(, 45249 t!e se#&nd installent &f P3,888 /as d%e &n&" 'ef&"e :4st da( &f 0a(, 45249 t!e 'alan#e &f P47,888 at 42 pe" #ent inte"est /as d%e and pa(a'le &n &" a'&%t t!e :8t! da( &f N&ve'e",

4522. One &f t!e #&nditi&ns &f t!at #&nt"a#t &f p%"#!ase /as t!at &n fail%"e &f t!e p%"#!ase" *plaintiffs and appellants+ t& pa( t!e 'alan#e &f

said p%"#!ase p"i#e &" an( &f t!e installents &n t!e date a"eed %p&n, t!e p"&pe"t( '&%!t /&%ld "eve"t t& t!e &"iinal &/ne".

T!e pa(ents d%e &n t!e 2d and :4st &f 0a(, 4524, a&%ntin t& P48,888 /e"e paid s& fa" as t!e "e#&"d s!&/s %p&n t!e d%e dates. T!e

'alan#e &f P47,888 d%e &n said #&nt"a#t &f p%"#!ase /as paid &n &" a'&%t t!e 4st da( &f De#e'e", 4522, in t!e anne" /!i#! /ill 'e

e;plained 'el&/. On t!e date /!en t!e 'alan#e &f P47,888 /it! inte"est /as paid, t!e vend&" &f said p"&pe"t( !ad iss%ed t& t!e p%"#!ase"s

t"ansfe" #e"tifi#ate &f title t& said p"&pe"t(, N&. 723. Said t"ansfe" #e"tifi#ate &f title *N&. 723+ /as t"ansfe" #e"tifi#ate &f title f"& N&.


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S&&s de ?d. atent&s ( S. S.

S0IT, BELL CO., LTD.

B( *Sd.+ 1. I. IA0

T"eas%"e".

ene"al 0anae"s

LUON RICE 0ILLS INC.

A##&"din t& E;!i'its B and D, /!i#! "ep"esent t!e a##&%nt "ende"ed '( t!e vend&", t!e"e /as d%e and pa(a'le %p&n said #&nt"a#t &f p%"#!ase

&n t!e :8t! da( &f N&ve'e", 4522, t!e s% P4,57.85. Up&n "e#eivin t!e lette" &f t!e vend&" &f said p"&pe"t( &f N&ve'e" =, 4522, t!e

p%"#!ase"s, t!e appellants !e"ein, "eali6in t!at t!e( /&%ld 'e %na'le t& pa( t!e 'alan#e d%e, 'ean t& ae an eff&"t t& '&""&/ &ne( /it!

/!i#! t& pa( t!e 'alan#e d%e, 'ean t& ae an eff&"t t& '&""&/ &ne( /it! /!i#! t& pa( t!e 'alan#e &f t!ei" inde'tedness &n t!e p%"#!ase

p"i#e &f t!e p"&pe"t( inv&lved. 1inall( an appli#ati&n /as ade t& t!e defendant f&" a l&an f&" t!e p%"p&se &f satisf(in t!ei" inde'tedness t& t!e

vend&" &f said p"&pe"t(. Afte" s&e ne&tiati&ns t!e defendants a"eed t& l&an t!e plaintiffs t& l&an t!e plaintiffs t!e s% &f P4=,788 %p&n

#&nditi&n t!at t!e plaintiffs e;e#%te and delive" t& !i apacto de retro &f said p"&pe"t(.

In a##&"dan#e /it! t!at a"eeent t!e defendant paid t& t!e plaintiffs '( eans &f a #!e# t!e s% &f P4,57.85. T!e defendant, in additi&n

t& said a&%nt paid '( #!e#, delive"ed t& t!e plaintiffs t!e s% &f P:7


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Se%nd&. Q%e es #&ndi#i&n de esta venta la de $%e si en el pla6& de #in#& *7+ a@&s #&ntad&s desde el dia 4.H de di#ie'"e de

4522, dev&lve&s al e;p"esad& D&n Benit& &n6ale6 S( C!ia el "efe"id& p"e#i& de die#isiete il $%inient&s pes&s *P4=,788+

$%eda &'liad& di#!& S". Benit& &n6ale6 ( C!ia a "et"&vende"n&s la fin#a a""i'a des#"ita9 pe"& si t"ans#%""e di#!& pla6& de #in#&

a@&s sin e>e"#ita" el de"e#!& de "et"a#t& $%e n&s !e&s "ese"vad&, ent&n#es $%eda"a esta venta a's&l%ta e i""eva'le.

Te"#e"&. Q%e d%"ante el e;p"esad& te"in& del "et"a#t& tend"e&s en a""endaient& la fin#a a""i'a des#"ita, s%>et& a #&ndi#i&nes

si%ientes)

*a+ El al$%ile" $%e n&s &'lia&s a paa" p&" ens%alidades ven#idas a D&n Benit& &n6ale6 S( C!ia ( en s%

d&i#ili&, e"a de t"es#ient&s setenta ( #in#& pes&s *P:=7+ &neda filipina, #ada es.

*b+ El ailla"aient& de la fin#a a""endada se"a p&" #%enta de di#!& D&n Benit& &n6ale6 S( C!ia, asi #&& ta'ien

la p"ia del se%"& #&nt"a in#endi&s, si el #&nvinie"a al "efe"id& S". Benit& &n6ale6 S( C!ia ase%"a" di#!a fin#a.

*c+ La falta de pa& del al$%ile" a$%i estip%lad& p&" d&s eses #&nse#%tiv&s da"a l%a" a la te"ina#i&n de este

a""endaien& ( a la pe"dida del de"e#!& de "et"a#t& $%e n&s !e&s "ese"vad&, #&& si nat%"alente !%'ie"a e;pi"ad&

el te"in& pa"a ell&, p%diend& en s% vi"t%d di#!& S". &n6ale6 S( C!ia t&a" p&sesi&n de la fin#a ( desa!%#ia"n&s de

la isa.

C%a"t&. Q%e (&, Benit& &n6ale6 S( C!ia, a i ve6 &t&"& $%e a#ept& esta es#"it%"a en l&s p"e#is&s te"in&s en $%e la de>an

&t&"ada l&s #&n(%es Seve"in& T&lentin& ( P&ten#iana 0ani&.

En testi&ni& de t&d& l& #%al, fi"a&s la p"esente de n%est"a an& en 0anila, p&" #%ad"%pli#ad& en 0anila, !&( a 23 de

n&vie'"e de 4522.

*1d&.+ SE?ERINO TOLENTINO

*1da.+ POTENCIANA 0ANIO

*1d&.+ BENITO ONALE SY CIA0

1i"ad& en p"esen#ia de)

*1d&s.+ 0OISES 0. BUAIN

B. S. BANAA

An e;ainati&n &f said #&nt"a#t &f sale /it! "efe"en#e t& t!e fi"st $%esti&n a'&ve, s!&/s #lea"l( t!at it is a pacto de retro and n&t a &"tae.

T!e"e is n& p"etensi&n &n t!e pa"t &f t!e appellant t!at said #&nt"a#t, standin al&ne, is a &"tae. T!e pe"tinent lan%ae &f t!e #&nt"a#t is)

Se%nd&. Q%e es #&ndi#i&n de esta venta la de $%e si en el pla6& de #in#& *7+ a@&s #&ntad&s desde el dia 4.H de di#ie'"e de

4522, dev&lve&s al e;p"esad& D&n Benit& &n6ales S( C!ia el "efe"id& p"e#i& de die#isiete il $%inient&s pes&s *P4=,788+

$%eda &'liad& di#!& S". Benit& &n6ales S( C!ia a "et"&vend&"n&s la fin#a a""i'a des#"ita9 pe"& si t"ans#%""e di#!& pla6& de#in#& *7+ a@&s sin e>e"#ita" al de"e#!& de "et"a#t& $%e n&s !e&s "ese"vad&, ent&n#es $%eda"a esta venta a's&l%ta e i""eva'le.

Lan%ae #ann&t 'e #lea"e". T!e p%"p&se &f t!e #&nt"a#t is e;p"essed #lea"l( in said $%&tati&n t!at t!e"e #an #e"tainl( 'e n&t d&%'t as t& t!e

p%"p&se &f t!e plaintiff t& sell t!e p"&pe"t( in $%esti&n, "ese"vin t!e "i!t &nl( t& "ep%"#!ase t!e sae. T!e intenti&n t& sell /it! t!e "i!t t&

"ep%"#!ase #ann&t 'e &"e #lea"l( e;p"essed.


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It /ill 'e n&ted f"& a "eadin &f said sale &f pacto de retro, t!at t!e vend&", "e#&ni6in t!e a's&l%te sale &f t!e p"&pe"t(, ente"ed int& a

#&nt"a#t /it! t!e p%"#!ase" '( vi"t%e &f /!i#! s!e 'e#ae t!e FtenantF &f t!e p%"#!ase". T!at #&nt"a#t &f "ent appea"s in said $%&ted d%ent

a'&ve as f&ll&/s)

Te"#e"&. Q%e d%"ante el e;p"esad& te"in& del "et"a#t& tend"e&s en a""endaient& la fin#a a""i'a des#"ita, s%>et& a #&ndi#i&nes

si%ientes)

*a+ El al$%ile" $%e n&s &'lia&s a paa" p&" ens%alidades ven#idas a D&n Benit& &n6ale6 S( C!ia ( en s% d&i#ili&, se"a de

t"es#ient&s setenta ( #in#& pes&s *P:=7+ &neda filipina, #ada es.

*b+ El ailla"aient& de la fin#a a""endada se"a p&" #%enta de di#!& D&n Benit& &n6ale6 S( C!ia, asi #&& ta'ien la p"ia del

se%"& #&nt"a in#endi&s, si le #&nvinie"a al "efe"id& S". Benit& &n6ale6 S( C!ia ase%"a" di#!a fin#a.

1"& t!e f&"e&in, /e a"e d"iven t& t!e f&ll&/in #&n#l%si&ns) )irst, t!at t!e #&nt"a#t &fpacto de retro is an a's&l%te sale &f t!e p"&pe"t( /it!

t!e "i!t t& "ep%"#!ase and n&t a &"tae9 and, se#&nd, t!at '( vi"t%e &f t!e said #&nt"a#t t!e vend&" 'e#ae t!e tenant &f t!e p%"#!ase",

%nde" t!e #&nditi&ns enti&ned in pa"a"ap! : &f said #&nta#t $%&ted a'&ve.

It !as 'een t!e %nif&" t!e&"( &f t!is #&%"t, d%e t& t!e seve"it( &f a #&nt"a#t &f pacto de retro, t& de#la"e t!e sae t& 'e a &"tae and n&t a

sale /!eneve" t!e inte"p"etati&n &f s%#! a #&nt"a#t >%stifies t!at #&n#l%si&n. T!e"e %st 'e s&et!in, !&/eve", in t!e lan%ae &f t!e #&nt"a#t&" in t!e #&nd%#t &f t!e pa"ties /!i#! s!&/s #lea"l( and 'e(&nd d&%'t t!at t!e( intended t!e #&nt"a#t t& 'e a F&"taeF and n&t apacto de

retro. *Inte"nati&nal Banin C&"p&"ati&n vs.0a"tine6, 48 P!il., 2729 Padilla vs.Linsanan, 45 P!il., 79 C%a%n vs.Alina(, 45 P!il.,


5/8

Refe""in aain t& t!e "i!t &f t!e pa"ties t& va"( t!e te"s &f /"itten #&nt"a#t, /e $%&te f"& t!e dissentin &pini&n &f C!ief J%sti#e Ca(etan&

S. A"ellan& in t!e #ase &f &ve"nent &f t!e P!ilippine Islands vs.P!ilippine S%a" Estates Devel&pent C&., /!i#! #ase /as appealed t& t!e

S%p"ee C&%"t &f t!e United States and t!e #&ntenti&n &f t!e C!ief J%sti#e in !is dissentin &pini&n /as affi"ed and t!e de#isi&n &f t!e

S%p"ee C&%"t &f t!e P!ilippine Islands /as "eve"sed. *See de#isi&n &f t!e S%p"ee C&%"t &f t!e United States, J%ne :, 4543.+4T!e C!ief

J%sti#e said in dis#%ssin t!at $%esti&n)

A##&"din t& a"ti#le 4232 &f t!e Civil C&de, in &"de" t& >%de &f t!e intenti&n &f t!e #&nt"a#tin pa"ties, #&nside"ati&n %st #!iefl( 'e paid t&t!&se a#ts e;e#%ted '( said pa"ties /!i#! a"e #&ntep&"a"( /it! and s%'se$%ent t& t!e #&nt"a#t. And a##&"din t& a"ti#le 423:, !&/eve"

ene"al t!e te"s &f a #&nt"a#t a( 'e, t!e( %st n&t 'e !eld t& in#l%de t!ins and #ases diffe"ent f"& t!&se /it! "ea"d t& /!i#! t!e

inte"ested pa"ties a"eed t& #&nt"a#t. FT!e S%p"ee C&%"t &f t!e P!ilippine Islands !eld t!e pa"&l eviden#e /as adissi'le in t!at #ase t& va"(

t!e te"s &f t!e #&nt"a#t 'et/een t!e &ve"nent &f t!e P!ilippine Islands and t!e P!ilippine S%a" Estates Devel&pent C&. In t!e #&%"se &f

t!e &pini&n &f t!e S%p"ee C&%"t &f t!e United States 0". J%sti#e B"andeis, speain f&" t!e #&%"t, said)

It is /ell settled t!at #&%"ts &f e$%it( /ill "ef&" a /"itten #&nt"a#t /!e"e, &/in t& %t%al istae, t!e lan%ae %sed t!e"ein did n&t

f%ll( &" a##%"atel( e;p"ess t!e a"eeent and intenti&n &f t!e pa"ties. T!e fa#t t!at inte"p"etati&n &" #&nst"%#ti&n &f a #&nt"a#t

p"esents a $%esti&n &f la/ and t!at, t!e"ef&"e, t!e istae /as &ne &f la/ is n&t a 'a" t& "antin "elief. . . . T!is #&%"t is al/a(s

disp&sed t& a##ept t!e #&nst"%#ti&n /!i#! t!e !i!est #&%"t &f a te""it&"( &" p&ssessi&n !as pla#ed %p&n a lal stat%te. B%t t!at

disp&siti&n a( n&t 'e (ielded t& /!e"e t!e l&/e" #&%"t !as #lea"l( e""ed. e"e t!e #&nst"%#ti&n ad&pted /as "ested %p&n a #lea"l(

e""&ne&%s ass%pti&n as t& an esta'lis!ed "%le &f e$%it(. . . . T!e '%"den &f p"&&f "estin %p&n t!e appellant #ann&t 'e satisfied '(

e"e p"ep&nde"an#e &f t!e eviden#e. It is settled t!at "elief '( /a( &f "ef&"ati&n /ill n&t 'e "anted %nless t!e p"&&f &f %t%al

istae 'e &f t!e #lea"est and &st satisfa#t&"( #!a"a#te".

T!e eviden#e int"&d%#ed '( t!e appellant in t!e p"esent #ase d&es n&t eet /it! t!at st"inent "e$%i"eent. T!e"e is n&t a /&"d, a p!"ase, a

senten#e &" a pa"a"ap! in t!e enti"e "e#&"d, /!i#! >%stifies t!is #&%"t in !&ldin t!at t!e said #&nt"a#t &fpacto de retrois a &"tae and n&t a

sale /it! t!e "i!t t& "ep%"#!ase. A"ti#le 4234 &f t!e Civil C&de p"&vides) FIf t!e te"s &f a #&nt"a#t a"e #lea" and leave n& d&%'t as t& t!e

intenti&n &f t!e #&nt"a#tin pa"ties, t!e lite"al sense &f its stip%lati&ns s!all 'e f&ll&/ed.F A"ti#le 4232 p"&vides) Fin &"de" t& >%de as t& t!e

intenti&n &f t!e #&nt"a#tin pa"ties, attenti&n %st 'e paid p"in#ipall( t& t!ei" #&nd%#t at t!e tie &f ain t!e #&nt"a#t and s%'se$%entl(

t!e"et&.F

e #ann&t t!e"et& #&n#l%de t!is '"an#! &f &%" dis#%ssi&n &f t!e $%esti&n inv&lved, /it!&%t $%&tin f"& t!at ve"( /ell "eas&ned de#isi&n &f t!e

late C!ief J%sti#e A"ellan&, &ne &f t!e "eatest >%"ists &f !is tie. e said, in dis#%ssin t!e $%esti&n /!et!e" &" n&t t!e #&nt"a#t, in t!e #ase

&f %ic$auco vs. !erenguer *28 P!il., 42+, /as apacto de retro&" a &"tae)

T!e p%'li# inst"%ent, E;!i'it C, in pa"t "eads as f&ll&/s) FD&n 0a#a"i&n Be"en%e" de#la"es and states t!at !e is t!e p"&p"iet&" in

fee siple &f t/& pa"#els &f fall&/ %napp"&p"iated #"&/n land sit%ated /it!in t!e dist"i#t &f !is p%e'l&. T!e fi"st !as an a"ea &f

=: -uiones, 3 balitas and 3 loanes, lated in t!e sitio&f Batasan, and its '&%nda"ies a"e, et#., et#. T!e se#&nd is in t!e siti& &f

Panantala(, 'a""i& &f Cal%pan !as as a"ea &f =: !e#ta"es, 22 a"es, and #enta"es, and is '&%nded &n t!e n&"t!, et#., et#.F

In t!e e;e#%t&"( pa"t &f t!e said inst"%ent, it is stated)

GT!at %nde" #&nditi&n &f "i!t t& "ep%"#!ase *pacto de retro+ !e sells t!e said p"&pe"ties t& t!e af&"eenti&ned D&@a

C&"nelia La!an#& f&" P


6/8

; ; ; ; ; ; ; ; ;

T!e &pp&nent aintained, and !is t!e&"( /as a##epted '( t!e t"ial #&%"t, t!at Be"en%e"Gs #&nt"a#t /it! La!an#& /as n&t &ne &f

sale /it! "i!t &f "ep%"#!ase, '%t e"el( &ne &f l&an se#%"ed '( t!&se p"&pe"ties, and, #&nse$%entl(, t!at t!e &/ne"s!ip &f t!e lands

in $%esti&ns #&%ld n&t !ave 'een #&nve(ed t& La!an#&, inas%#! as it #&ntin%ed t& 'e !eld '( Be"en%e", as /ell as t!ei"

p&ssessi&n, /!i#! !e !ad n&t #eased t& en>&(.

S%#! a t!e&"( is, as a"%ed '( t!e appellant, e""&ne&%s. T!e inst"%ent e;e#%ted '( 0a#a"i& Be"en%e", t!e te;t &f /!i#! !as 'een

t"ans#"i'ed in t!is de#isi&n, is ve"( #lea". Be"en%e"Gs !ei"s a( n&t & #&%nte" t& t!e lite"al ten&" &f t!e &'liati&n, t!e e;a#t

e;p"essi&n &f t!e #&nsent &f t!e #&nt"a#tin #&ntained in t!e inst"%ent, E;!i'it C. N&t 'e#a%se t!e lands a( !ave #&ntin%ed in

p&ssessi&n &f t!e vend&", n&t 'e#a%se t!e latte" a( !ave ass%ed t!e pa(ent &f t!e ta;es &n s%#! p"&pe"ties, n&" (et 'e#a%se

t!e sae pa"t( a( !ave '&%nd !iself t& s%'stit%te '( an&t!e" an( &ne &f t!e p"&pe"ties /!i#! i!t 'e dest"&(ed, d&es t!e

#&nt"a#t #ease t& 'e /!at it is, as set f&"t! in detail in t!e p%'li# inst"%ent. T!e vend&" #&ntin%ed in t!e p&ssessi&n &f t!e lands,

n&t as t!e &/ne" t!e"e&f as 'ef&"e t!ei" sale, '%t as t!e lessee /!i#! !e 'e#ae afte" its #&ns%ati&n, '( vi"t%e &f a #&nt"a#t

e;e#%ted in !is fav&" '( t!e vendee in t!e deed itself, E;!i'it C. Ri!t &f &/ne"s!ip is n&t iplied '( t!e #i"#%stan#e &f t!e

lesseeGs ass%in t!e "esp&nsi'ilit( &f t!e pa(ent is &f t!e ta;es &n t!e p"&pe"t( leased, f&" t!ei" pa(ent is n&t pe#%lia"l(

in#%'ent %p&n t!e &/ne", n&" is s%#! "i!t iplied '( t!e &'liati&n t& s%'stit%te t!e t!in s&ld f&" an&t!e" /!ile in !is p&ssessi&n

%nde" lease, sin#e t!at &'liati&n #ae f"& !i and !e #&ntin%es %nde" an&t!e" #!a"a#te" in its p&ssessi&nKa "eas&n /!( !e

%a"antees its inte"it( and &'liates !iself t& "et%"n t!e t!in even in a #ase &fforce ma/eure. S%#! lia'ilit(, as a ene"al "%le, is

f&"ein t& #&nt"a#ts &f lease and, if "e$%i"ed, is e;&"'itant, '%t p&ssi'le and la/f%l, if v&l%nta"il( a"eed t& and s%#! a"eeent d&es

n&t &n t!is a##&%nt inv&lve an( sin &f &/ne"s!ip, n&" &t!e" eanin t!an t!e /ill t& ip&se %p&n &neself s#"%p%l&%s dilien#e in

t!e #a"e &f a t!in 'el&nin t& an&t!e".

T!e p%"#!ase and sale, &n#e #&ns%ated, is a #&nt"a#t /!i#! '( its nat%"e t"ansfe"s t!e &/ne"s!ip and &t!e" "i!ts in t!e t!in

s&ld. Apacto de retro, &" sale /it! "i!t t& "ep%"#!ase, is n&t!in '%t a pe"s&nal "i!t stip%lated 'et/een t!e vendee and t!e vend&",

t& t!e end t!at t!e latte" a( aain a#$%i"e t!e &/ne"s!ip &f t!e t!in alienated.

It is t"%e, ve"( t"%e indeed, t!at t!e sale /it! "i!t &f "ep%"#!ase is epl&(ed as a et!&d &f l&an9 it is lie/ise t"%e t!at in p"a#ti#e

an( #ases #%" /!e"e t!e #&ns%ati&n &f apacto de retrosale eans t!e finan#ial "%in &f a pe"s&n9 it is als&, %n$%esti&na'le

t!at inpacto de retrosales ve"( ip&"tant inte"ests &ften inte"vene, in t!e f&" &f t!e p"i#e &f t!e lease &f t!e t!in s&ld, /!i#! is

stip%lated as an additi&nal #&venant. *0an"esa, Civil C&de, p. 2=


7/8

T!e #&lle#ti&n &f a "ate &f inte"est !i!e" t!an t!at all&/ed '( la/ is #&ndened '( t!e P!ilippine Leislat%"e *A#ts N&s. 277, 22 and 2552+.

B%t is it %nla/f%l f&" t!e &/ne" &f a p"&pe"t( t& ente" int& a #&nt"a#t /it! t!e tenant f&" t!e pa(ent &f a spe#ifi# a&%nt &f "ent f&" t!e %se and

#%pati&n &f said p"&pe"t(, even t!&%! t!e a&%nt paid as F"ent,F 'ased %p&n t!e val%e &f t!e p"&pe"t(, i!t e;#eed t!e "ate &f inte"est

all&/ed '( la/ T!at $%esti&n !as neve" 'een de#ided in t!is >%"isdi#ti&n. It is &ne &f fi"st ip"essi&n. N& #ases !ave 'een f&%nd in t!is

>%"isdi#ti&n ans/e"in t!at $%esti&n. A#t N&. 277 is FAn A#t fi;in "ates &f inte"est %p&n Gl&ansG and de#la"in t!e effe#t &f "e#eivin &" tain

%s%"i&%s "ates.F

It /ill 'e n&ted t!at said stat%te ip&ses a penalt( %p&n a Fl&anF &" f&"'ea"an#e &f an( &ne(, &&ds, #!attels &" #"edits, et#. T!e #ent"al idea

&f said stat%te is t& p"&!i'it a "ate &f inte"est &n Fl&ans.F A #&nt"a#t &f Fl&an,F is ve"( diffe"ent #&nt"a#t f"& t!at &f F"entF. A Fl&an,F as t!at te" is

%sed in t!e stat%te, sinifies t!e ivin &f a s% &f &ne(, &&ds &" #"edits t& an&t!e", /it! a p"&ise t& "epa(, '%t n&t a p"&ise t& "et%"n t!e

sae t!in. T& Fl&an,F in ene"al pa"lan#e, is t& delive" t& an&t!e" f&" tep&"a"( %se, &n #&nditi&n t!at t!e t!in &" its e$%ivalent 'e "et%"ned9 &"

t& delive" f&" tep&"a"( %se &n #&nditi&n t!at an e$%ivalent in ind s!all 'e "et%"ned /it! a #&pensati&n f&" its %se. T!e /&"d Fl&an,F !&/eve",

as %sed in t!e stat%te, !as a te#!ni#al eanin. It neve" eans t!e "et%"n &f t!e sae t!in. It eans t!e "et%"n &f an e$%ivalent &nl(, '%t

neve" t!e sae t!in l&aned. A Fl&anF !as 'een p"&pe"l( defined as an advan#e pa(ent &f &ne(, &&ds &" #"edits %p&n a #&nt"a#t &"

stip%lati&n t& "epa(, n&t t& "et%"n, t!e t!in l&aned at s&e f%t%"e da( in a##&"dan#e /it! t!e te"s &f t!e #&nt"a#t. Unde" t!e #&nt"a#t &f Fl&an,F

as %sed in said stat%te, t!e &ent t!e #&nt"a#t is #&pleted t!e &ne(, &&ds &" #!attels iven #ease t& 'e t!e p"&pe"t( &f t!e f&"e" &/ne"

and 'e#&es t!e p"&pe"t( &f t!e &'li&" t& 'e %sed a##&"din t& !is &/n /ill, %nless t!e #&nt"a#t itself e;p"essl( p"&vides f&" a spe#ial &"

spe#ifi# %se &f t!e sae. At all events, t!e &ne(, &&ds &" #!attels, t!e &ent t!e #&nt"a#t is e;e#%ted, #ease t& 'e t!e p"&pe"t( &f t!e

f&"e" &/ne" and 'e#&es t!e a's&l%te p"&pe"t( &f t!e &'li&".

A #&nt"a#t &f Fl&anF diffe"s ate"iall( f"& a #&nt"a#t &f F"ent.F In a #&nt"a#t &f F"entF t!e &/ne" &f t!e p"&pe"t( d&es n&t l&se !is &/ne"s!ip. e

sipl( l&ses !is #&nt"&l &ve" t!e p"&pe"t( "ented d%"in t!e pe"i&d &f t!e #&nt"a#t. In a #&nt"a#t &f Fl&anF t!e t!in l&aned 'e#&es t!e p"&pe"t(

&f t!e &'li&". In a #&nt"a#t &f F"entF t!e t!in still "eains t!e p"&pe"t( &f t!e less&". e sipl( l&ses #&nt"&l &f t!e sae in a liited /a( d%"in

t!e pe"i&d &f t!e #&nt"a#t &f F"entF &" lease. In a #&nt"a#t &f F"entF t!e "elati&n 'et/een t!e #&nt"a#t&"s is t!at &f landl&"d and tenant. In a

#&nt"a#t &f Fl&anF &f &ne(, &&ds, #!attels &" #"edits, t!e "elati&n 'et/een t!e pa"ties is t!at &f &'li&" and &'liee. FRentF a( 'e defined as

t!e #&pensati&n eit!e" in &ne(, p"&visi&ns, #!attels, &" la'&", "e#eived '( t!e &/ne" &f t!e s&il f"& t!e #%pant t!e"e&f. It is defined as t!e

"et%"n &" #&pensati&n f&" t!e p&ssessi&n &f s&e #&"p&"eal in!e"itan#e, and is a p"&fit iss%in &%t &f lands &" teneents, in "et%"n f&" t!ei"

%se. It is t!at, /!i#! is t& paid f&" t!e %se &f land, /!et!e" in &ne(, la'&" &" &t!e" t!in a"eed %p&n. A #&nt"a#t &f F"entF is a #&nt"a#t '( /!i#!

&ne &f t!e pa"ties delive"s t& t!e &t!e" s&e n&n#&ns%a'le t!in, in &"de" t!at t!e latte" a( %se it d%"in a #e"tain pe"i&d and "et%"n it t& t!e

f&"e"9 /!e"eas a #&nt"a#t &f Fl&anF, as t!at /&"d is %sed in t!e stat%te, sinifies t!e delive"( &f &ne( &" &t!e" #&ns%a'le t!ins %p&n

#&nditi&n &f "et%"nin an e$%ivalent a&%nt &f t!e sae ind &" $%antit(, in /!i#! #ases it is #alled e"el( a Fl&an.F In t!e #ase &f a #&nt"a#t &f

F"ent,F %nde" t!e #ivil la/, it is #alled a F#&&dat%.F

1"& t!e f&"e&in it /ill 'e seen t!at t!e"e is a /!ile distin#ti&n 'et/een a #&nt"a#t &f Fl&an,F as t!at /&"d is %sed in t!e stat%te, and a

#&nt"a#t &f F"entF even t!&%! t!&se /&"ds a"e %sed in &"dina"( pa"lan#e as inte"#!anea'le te"s.

T!e val%e &f &ne(, &&ds &" #"edits is easil( as#e"tained /!ile t!e a&%nt &f "ent t& 'e paid f&" t!e %se and #%pati&n &f t!e p"&pe"t( a(

depend %p&n a t!&%sand diffe"ent #&nditi&ns9 as f&" e;aple, fa" lands &f e;a#tl( e$%al p"&d%#tive #apa#it( and &f t!e sae p!(si#al val%e

a( !ave a diffe"ent "ental val%e, dependin %p&n lati&n, p"i#es &f #&&dities, p"&;iit( t& t!e a"et, et#. &%ses a( !ave a diffe"ent

"ental val%e d%e t& lati&n, #&nditi&ns &f '%siness, ene"al p"&spe"it( &" dep"essi&n, adapta'ilit( t& pa"ti#%la" p%"p&ses, even t!&%! t!e(

!ave e;a#tl( t!e sae &"iinal #&st. A st&"e &n t!e Es#&lta, in t!e #ente" &f '%siness, #&nst"%#ted e;a#tl( lie a st&"e lated &%tside &f t!e

'%siness #ente", /ill !ave a %#! !i!e" "ental val%e t!an t!e &t!e". T/& pla#es &f '%siness lated in diffe"ent se#ti&ns &f t!e #it( a( 'e

#&nst"%#ted e;a#tl( &n t!e sae a"#!ite#t%"al plan and (et &ne, d%e t& pa"ti#%la" lati&n &" adapta'ilit( t& a pa"ti#%la" '%siness /!i#! t!e

less&" desi"es t& #&nd%#t, a( !ave a ve"( %#! !i!e" "ental val%e t!an &ne n&t s& lated and n&t s& /ell adapted t& t!e pa"ti#%la" '%siness.

A ve"( #!eap '%ildin &n t!e #a"nival "&%nd a( "ent f&" &"e &ne(, d%e t& t!e pa"ti#%la" #i"#%stan#es and s%""&%ndins, t!an a %#!&"e val%a'le p"&pe"t( lated else/!e"e. It /ill t!%s 'e seen t!at t!e "ent t& 'e paid f&" t!e %se and #%pati&n &f p"&pe"t( is n&t ne#essa"il(

fi;ed %p&n t!e val%e &f t!e p"&pe"t(. T!e a&%nt &f "ent is fi;ed, 'ased %p&n a t!&%sand diffe"ent #&nditi&ns and a( &" a( n&t !ave an(

di"e#t "efe"en#e t& t!e val%e &f t!e p"&pe"t( "ented. T& !&ld t!at F%s%"(F #an 'e 'ased %p&n t!e #&pa"ative a#t%al "ental val%e and t!e a#t%al

val%e &f t!e p"&pe"t(, is t& s%'>e#t eve"( landl&"d t& an ann&(an#e n&t #&nteplated '( t!e la/, and /&%ld #"eate a ve"( "eat dist%"'an#e in

eve"( '%siness &" "%"al #&%nit(. e #ann&t '"in &%"selves t& 'elieve t!at t!e Leislat%"e #&nteplated an( s%#! dist%"'an#e in t!e

e$%ili'"i% &f t!e '%siness &f t!e #&%nt"(.


8/8

In t!e p"esent #ase t!e p"&pe"t( in $%esti&n /as s&ld. It /as an a's&l%te sale /it! t!e "i!t &nl( t& "ep%"#!ase. D%"in t!e pe"i&d &f "edepti&n

t!e p%"#!ase" /as t!e a's&l%te &/ne" &f t!e p"&pe"t(. D%"in t!e pe"i&d &f "edepti&n t!e vend&" /as n&t t!e &/ne" &f t!e p"&pe"t(. D%"in

t!e pe"i&d &f "edepti&n t!e vend&" /as a tenant &f t!e p%"#!ase". D%"in t!e pe"i&d &f "edepti&n t!e "elati&n /!i#! e;isted 'et/een t!e

vend&" and t!e vendee /as t!at &f landl&"d and tenant. T!at "elati&n #an &nl( 'e te"inated '( a "ep%"#!ase &f t!e p"&pe"t( '( t!e vend&" in

a##&"dan#e /it! t!e te"s &f t!e said #&nt"a#t. T!e #&nt"a#t /as &ne &f "ent. T!e #&nt"a#t /as n&t a l&an, as t!at /&"d is %sed in A#t N&. 277.

As &'n&;i&%s as #&nt"a#ts &fpacto de retroa"e, (et neve"t!eless, t!e #&%"ts !ave n& "i!t t& ae #&nt"a#ts f&" pa"ties. T!e( ade t!ei" &/n#&nt"a#t in t!e p"esent #ase. T!e"e is n&t a /&"d, a p!"ase, a senten#e &" pa"a"ap!, /!i#! in t!e sli!test /a( indi#ates t!at t!e pa"ties t& t!e

#&nt"a#t in $%esti&n did n&t intend t& sell t!e p"&pe"t( in $%esti&n a's&l%tel(, sipl( /it! t!e "i!t t& "ep%"#!ase. Pe&ple /!& ae t!ei" &/n

'eds %st lie t!e"e&n.

!at !as 'een said a'&ve /it! "efe"en#e t& t!e "i!t t& &dif( #&nt"a#ts '( pa"&l eviden#e, s%ffi#ientl( ans/e"s t!e t!i"d $%esti&ns p"esented

a'&ve. T!e lan%ae &f t!e #&nt"a#t is e;pli#it, #lea", %na'i%&%s and 'e(&nd $%esti&n. It e;p"esses t!e e;a#t intenti&n &f t!e pa"ties at t!e

tie it /as ade. T!e"e is n&t a /&"d, a p!"ase, a senten#e &" pa"a"ap! f&%nd in said #&nt"a#t /!i#! needs e;planati&n. T!e pa"ties t!e"et&

ente"ed int& said #&nt"a#t /it! t!e f%ll %nde"standin &f its te"s and s!&%ld n&t n&/ 'e pe"itted t& #!ane &" &dif( it '( pa"&l eviden#e.

it! "efe"en#e t& t!e ip"&veents ade %p&n said p"&pe"t( '( t!e plaintiffs d%"in t!e life &f t!e #&nt"a#t, E;!i'it C, t!e"e is !e"e'( "ese"ved

t& t!e plaintiffs t!e "i!t t& e;e"#ise in a sepa"ate a#ti&n t!e "i!t %a"anteed t& t!e %nde" a"ti#le :4 &f t!e Civil C&de.

1&" all &f t!e f&"e&in "eas&ns, /e a"e f%ll( pe"s%aded f"& t!e fa#ts &f t!e "e#&"d, in "elati&n /it! t!e la/ appli#a'le t!e"et&, t!at t!e

>%dent appealed f"& s!&%ld 'e and is !e"e'( affi"ed, /it! #&sts. S& &"de"ed.

Avancea #. +. Street ,illamor &omualdez and ,illa0&eal ++. concur.

severino tolentino and potenciana manio, plaintiffs-appellants,

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