REYES, et. al. vs. DE LEON (Case No.

22)
Digested by Jommel Jaucian

Spouses Lanuza sold their two-story house to petitioner and Aurelia Navarro together with the
leasehold rights to the lot, a television set and a refrigerator in consideration of the sum of
P3,000, with a right to repurchase such properties for the same amount for a period of 3 months
(this was made even without the signature of the wife nor registration to the Registry of Deeds).
Such period was extended to 12 July 1961 (this time with the wife’s signature). However, after
the execution of the Deed of Sale, the Spouses mortgaged the same house in favor of Martin de
Leon to secure the payment of P2,720 within one year (this was registered in the Registry of
Deeds). When the spouses failed to pay their obligation, de Leon filed a petition for extra-
judicial foreclosure of mortgage, while on the other hand Reyes and Navarro filed a petition for
the consolidation of ownership of the house on the ground that the period of redemption expired
on July 12, 1961 without the vendees exercising their right of repurchase.

On October 23, the house was sold to De Leon as the only bidder at the sheriff’s sale, in which
the former immediately took possession of the property. He also intervened in court and asked
for the dismissal of the petition filed by Reyes and Navarro on the ground that “the unrecorded
pacto de retro sale could not affect his rights as a third party.” He further argued that “the sale in
question is not only voidable but void ab initio for having been made by Lanuza without the
consent of his wife.”

ISSUE: Who has the right over the contested property?

RULING: It is de Leon who has the right over the property.

Although it is true that a conveyance of real property of the conjugal partnership made by the
husband without the consent of his wife is merely voidable, Article 173 of the Civil Code gives
the wife ten years within which to bring an action for annulment, and as such it could also be
ratified as the wife did in the case at bar when she signed the annotation that the redemption
period is extended up to 12 July 1961. Furthermore, a provision in the Deed of Sale in question
which states that if the Lanuzas fail to pay said amount of P3,000.00 within the stipulated period
of three months, their right to repurchase the said properties shall be “forfeited and the ownership
thereto automatically pass to Mrs. Maria Bautista Vda. de Reyes… without any Court
intervention and they can take possession of the same” is contrary to the nature of a true pacto de
retro sale under which a vendee acquires ownership of the thing sold immediately upon
execution of the sale, subject only to the vendor's right of redemption, since what has been
established is an odious pactum commissorium which enables the mortgages to acquire
ownership of the mortgaged properties without need of foreclosure proceedings. Therefore, such
sale is a nullity, being contrary to law.

Another point made by the Supreme Court is that the mortgage was first registered than the Deed
of Sale. By following the principle of “prior tempore potior jure” (he who is first in time is
preferred in right), the latter cannot prevail over the registered mortgage of De Leon.