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[G.R. No. 4863. July 20, 1910. ]

RICARDO NOLAN, Plaintiff-Appellee, v. CRISTETA GONZAGA, personally and as the administrate of the estate of Emilio Escay, deceased, Defendant-Appellant.

M. Fernandez Yanson, for Appellant.

R. Nolan, in his own behalf.


1. SALE WITH RIGHT OF REPURCHASE; VENDEE’S RIGHT OF ACTION; SPECIFIC PERFORMANCE. — When the debtor, upon acknowledging in an instrument the existence of a loan and the exact amount thereof, executes with the creditor a formal contract of sale of certain property under pacto de retro for a stipulated term and for the amount of the debt as the selling price, if after the lapse of the said term the vendor has not still continue to possess, the vendees right of action is not that provided for the collection of the selling price but that for the recovery of the property purchased by him, the sale of which has become operative and has acquired an absolute and irrevocable character.

2. ID.; ID.; ID.; MORTGAGE. — In an instrument of purchase and sale of the property under the pacto de retro, the mere reference made therein to a mortgage upon the same, stipulated in a previous instrument and as security for a certain lesser sum, and afterwards included in another larger amount which, according to the agreement between the parties, constitutes the selling price, does not prove the existence of a real and effective mortgage that may warrant a foreclosure action for a collection of a certain debt and support a proper judgment under such construction.

3. ID.; ID.; ID. — The action lies with the vendee of property under pacto de retro which has not been delivered to him by the vendor, notwithstanding the lapse of the term for its repurchase, is that of the recovery of possession, which is a right belonging to the legitimate owner.



On September 7, 1907, Ricardo Nolan filed an amended complaint in the Court of First Instance of Occidental Negros against Emilio Escay and Cristeta Gonzaga, alleging that by means of instrument ratified on the 6th of June, 1903, the defendant Escay acknowledged that he was owing to Compañia General de Tabacos de Filipinas the sum of P22,086.43, with interest at 9 per cent per annum, and he bound himself to pay it, together with the interest, on or before the 1st day of March, 1905; that in order to guarantee the payment of the said sum and the interest due thereon, the defendant debtor executed a lien on the hacienda called Lanoglanog, now known by the name of Teresa, and on all the buildings, machinery, and other appurtenances thereof, and, further, on a house of strong materials, the property of defendant’s wife, Cristeta Gonzaga who conferred upon her husband power for this purpose; that the instrument above referred to set forth the location of the said house and the area, the metes and bounds of the land; that the said Hacienda Teresa is situated in the pueblo of Saravia and has the area and boundaries mentioned in the complaint; that on the 30th of June, 1905, the defendant Escay, while still living, was owing the said company the sum of P29,824.43, with interest at 9 per cent per annum from the said date; that on the 25th of October of that year, Luis G. Espoy, the head of the Iloilo branch of the aforementioned company, delivered to Alejandro Montelibano y Ramos, among other credits, that of the defendant Escay, for collection; that, on the 3d of August, 1906, Vicente Muntadas, the head of the said Iloilo branch, transferred to the said Montelibano y Ramos by a public instrument, all the rights and actions that pertained to the Compañia General de Tabacos with respect to the said debt which the defendant Escay still owed, together with the interest thereon from June 30, 1905; that by an instrument of the 20th of February, 1907, Montelibano y Ramos transferred to the plaintiff Nolan all his rights in the said credit against the defendant Escay, who was duly notified of the transfer made by the company of his debt in favor of Montelibano y Ramos and of the transfer effected by the latter in favor of the plaintiff Nolan; that, notwithstanding the demands which several times were made to Escay for the payment of his debt, he had not paid the same in whole or in part, not the interest thereon; that, one day in May, 1907, Emilio Escay died, and by an order issued by the judge of the Tenth District, on the 14th of August following, his widow, Cristeta Gonzaga, was appointed administratrix of his intestate estate, she having been duly sworn for the purpose on the 2d of September of the same year; that to the amended complaint is attached as a part thereof Exhibit 1, a copy of the public instrument of June 6, 1903, executed by the deceased Escay during his lifetime in favor of the said Compañia General Tabacos; and that a copy of the present complaint has been filed with the land registry office of the province; and therefore this court is prayed to render a decision against Cristeta Gonzaga, personally and as the administratrix of the intestate estate of the deceased Escay, by ordering her to pay to the plaintiff the sum of P29,824.43, with interest thereon at the rate of 9 per cent per annum from the 30th of June, 1905, until its complete payment, and to pay the costs of the suit, and that, in case of insolvency, the sheriff proceed to sell the property given as security, or the part thereof that it be necessary to sell; and to provide any other just and adequate remedy.

The document Exhibit 1, which accomplishes the complaint, is the instrument executed on the 6th of June, 1903, before the notary Gregorio Yulo, by Emilio Escay y Hernandez and Eduardo Cedrun, as the representative of Iloilo of the Compañia General de Tabacos, and it appears therein that, according to an instrument of the 30th of June, 1902, the said company granted to Emilio a loan of 8,000 pesos, Mexican currency, wherewith to pay the expenses to the Hacienda Lanoglanog, belonging to him and situated within the district of Saravia, Island of Negros, which loan was made for a period of two years from the said date, with interest at 9 per cent per annum , and that as a guaranty and security for compliance with the obligation the debtor, Escay mortgaged to the said company the said Hacienda Lanoglanog, subsequently called Teresa, of 179 hectares in ares, bounded as described therein, the same being provided with a warehouse of strong materials, a stem engine of 9 horse power, a furnace and other appurtenances for the making of sugar; that, according to the settlement had on the 21st of March, it was found that Escay owed the creditor company the sum of P15,086.43; that notwithstanding this debt, the Compañia General de Tabacos granted another new credit of 7,000 pesos to the same party. Escay, on order that he might continue the work of grinding, on his aforesaid hacienda, which sum was to be delivered to him in installments in the months and for the purposes expressed in the instrument and, added to the previous sum of 15,086.43 pesos, made a total of P22,086.43, the debtor being allowed, by regular deliveries of sugar in Iloilo, P1.50 for each picul of sugar; that the debtor Escay agreed to deliver to the creditor company the entire crop of the years 1903 and 1904 that should be produced on his hacienda, estimated at 5,000 piculs of sugar, without his selling or assigning to anyone else or deducting therefrom the smallest portion for any consideration or under any pretext; that the deliveries of the sugar were to be made until the 1st of March, 1905 fixed as the date when the entire crop should be ground, the company reserving the right to place an agent on the hacienda, at the expense of the debtor Escay, whenever it should consider proper; that the amounts received, as well as those the debtor should received upon to the total of the credit allowed, should draw interest at the rate of 9 per cent per annum, from the date of their receipt, the aforesaid 1st of 1st of March, 1905, being fixed as the date of the settlement of the payments of capital and interest; that it was agreed that, if the sugar of the crop of 1903-4 should be insufficient to balance the accounts of the debtor, the crop of 1904-5 should be delivered to the creditor company in the same manner and under the same conditions, the date for the complete payment and settlement of the capital and interest in such case to be extended; that, among other conditions and in all cases, Escay should allow the company 1
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