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BAUTISTA V. UNANGST (2008)

THIRD DIVISION

[ G.R. No. 173002, July 04, 2008 ]

BENJAMIN BAUTISTA, PETITIONER, VS. SHIRLEY G. UNANGST AND OTHER UNKNOWN PERSONS, RESPONDENTS.

D E C I S I O N

FACTS:

In 1996, Hamilton Salak rented a car from Benjamin BAUTISTA who failed to return the car after three (3) days prompting the latter to file a complaint against him demanding the sum of P232,372.00 as payment for car rental fees, fees incurred in locating the car, attorney's fees and other incidental expenses. Salak and his common-law wife, Shirley UNANGST, expressed willingness to pay but since they were then short on cash, they sold to BAUTISTA a house and lot with right to repurchase, specifying, among others, that: (1) UNANGST, as vendor, shall pay capital gains tax, current real estate taxes and utility bills pertaining to the property; (2) if UNANGST fails to repurchase the property within 30 days from the date of the deed, she and her assigns shall immediately vacate the premises and deliver its possession to petitioner without need of a judicial order; and (3) UNANGST refusal to do so will entitle petitioner to take immediate possession of the property.

UNANGST failed to repurchase the property within the stipulated period. As a result, BAUTISTA filed a complaint for specific performance or recovery of possession, for sum of money, for consolidation of ownership and damages against UNANGST.

UNANGST argued that her consent to the deed of sale with right to repurchase was procured under duress and that even assuming that her consent was freely given, the contract partakes of the nature of an equitable mortgage.

BAUTISTA alleged taht the deed should not be construed as an equitable mortgage as it does not fall under any of the instances mentioned in Article 1602 of the Civil Code where the agreement can be construed as an equitable mortgage. He added that the "language and terms of the Deed of Sale with Right to Repurchase executed by UNANGST in favor of him are clear and unequivocal. Said contract must be construed with its literal sense."

ISSUE:

Should the deed of sale with right to repurchase executed by the parties be construed as an equitable mortgage?

HELD:

The Deed of Sale with Right of Repurchase executed by the parties was an equitable mortgage.

First, before executing the deed, respondent and Salak were under police custody due to the complaint lodged against them by petitioner. They were sorely pressed for money, as they would not be released from custody unless they paid petitioner. It was at this point that respondent was constrained to execute a deed of sale with right to repurchase. It is established that respondent signed the deed only because of the urgent necessity of obtaining funds.

Second, petitioner allowed respondent and Salak to retain the possession of the property despite the execution of the deed. In fact, respondent and Salak were not bound to deliver the possession of the property to petitioner if they would pay him the amount he demanded.

In a contract of sale with pacto de retro, the legal title to the property is immediately transferred to the vendee, subject to the vendor's right to redeem. Retention, therefore, by the vendor of the possession of the property is inconsistent with the vendee's acquisition of the right of ownership under a true sale.

Third, the purchase price stated in the deed was the amount of the indebtedness of both respondent and Salak to petitioner.

The above-mentioned circumstances show that the true intention of the parties is to secure the payment of said debts. The decisive factor in determining the true nature of the transaction between the parties is the intent of the parties, as shown not necessarily by the terminology used in the contract but by all the surrounding circumstances having a tendency to fix and determine the real nature of their design and understanding.Verily, an equitable mortgage under paragraphs 2 and 6 of Article 1602 exists here. The presumption enunciated by Article 1602, the existence of one circumstance is enough to construe a contract of sale to be one of equitable mortgage.

CARDENTE V. RUBIN (1987)

SECOND DIVISION

[ G.R. No. 73651, November 27, 1987 ]

IGNACIO CARDENTE AND ANASTACIA T. CARDENTE, PETITIONERS, VS. THE INTERMEDIATE APPELLATE COURT AND SPOUSES RUPERTO RUBIN AND PRIMITIVA C. RUBIN, RESPONDENTS.

FACTS:

Sometime in 1956, CARDENTE purchased from Isidro Palanay one hectare of land. The sale was by public document. Immediately after the purchase, the Cardentes took possession of the land and planted various crops and trees thereon.  They have been in continuous possession ever since, adverse to the whole world. Four years later, Isidro Palanay sold the entire property to the private respondents, RUPERTO RUBIN who was informed by the former of the first sale of the one-hectare portion to CARDENTE.  The deed of sale was registered and a new title was issued.

ISSUE:

Who has the better right over the property?

Whether or not the private respondents acted in good faith when they registered the deed of sale.

HELD:

1) CARDENTES. Because of the notorious and continuous possession and full enjoyment by petitioners of the disputed one-hectare property long before the private respondents purchased the same from Palanay.

2) RUBIN's failure to inquire and to investigate the basis of CARDENTE's actual occupation of the land forming a substantial part of what they were buying militates against their posited lack of knowledge of the first sale.

ART. 1544.  If the same thing should have been sold to different vendees, the ownership shall be transferred to the person who may have first taken possession thereof in good faith, if it should be movable property.

Should it be immovable property, the ownership shall belong to the person acquiring it who in good faith first recorded it in the Registry of Property.

Should there be no inscription, the ownership shall pertain to the person who in good faith was first in the possession; and, in the absence thereof, to the person who presents the oldest title, provided there is good faith.

It is undisputed that the private respondents registered the sale in their favor whereas the petitioners did not.  But mere registration of the sale is not enough.  Good faith must concur with the registration.  Bad faith renders the registration nothing but an exercise in futility.

GO V. BACARON (2005)

THIRD DIVISION

[ G.R. NO. 159048, October 11, 2005 ]

BENNY GO, PETITIONER, VS. ELIODORO BACARON, RESPONDENT.

FACTS:

Eliodoro BACARON conveyed a 15.3955-hectare parcel of land  in favor of Benny GO for P20,000.00. He however averred that prior to extending said loan to him, GO required him to execute a document purporting to be a Transfer of Rights but was told that the same would only be a formality as he could redeem the unregistered land the moment he pays the loan. BACARON remains in possession of the property even after the conclusion of the transaction and continued paying  the real property taxes subsequent to the alleged sale. About a year thereafter, BACARON, seeking to recover his property, went to GO to pay his alleged "loan" but the latter refused to receive the same and to return his property saying that the transaction between them was a sale and not a mortgage.

ISSUE:

Whether the agreement entered into by the parties was one for equitable mortgage or for absolute sale.

HELD:

The instances in which a contract of sale is presumed to be an equitable mortgage are enumerated in Article 1602 of the Civil Code as follows:

Art. 1602. The contract shall be presumed to be an equitable mortgage, in any of the following cases:

(1) When the price of a sale with right to repurchase is unusually inadequate;
(2) When the vendor remains in possession as lessee or otherwise;
(3) When upon or after the expiration of the right to repurchase another instrument extending the period of redemption or granting a new period is executed;
(4) When the purchaser retains for himself a part of the purchase price;
(5) When the vendor binds himself to pay the taxes on the thing sold;
(6) In any other case where it may be fairly inferred that the real intention of the parties is that the transaction shall secure the payment of a debt or the performance of any other obligation.

In any of the foregoing cases, any money, fruits, or other benefit to be received by the vendee as rent or otherwise shall be considered as interest which shall be subject to the usury laws.

Furthermore, Article 1604 of the Civil Code provides that the provisions of Article 1602 shall also apply to a contract purporting to be an absolute sale.

The present Contract, which purports to be an absolute deed of sale, should be deemed an equitable mortgage for the following reasons: (1) the consideration has been proven to be unusually inadequate; (2) the supposed vendor has remained in possession of the property even after the execution of the instrument; and (3) the alleged seller has continued to pay the real estate taxes on the property.

LUMAYAG V. NEMEñO (2007)

FIRST DIVISION

[ G.R. NO. 162112, July 03, 2007 ]

DOMINGO R. LUMAYAG AND FELIPA N. LUMAYAG, PETITIONERS, VS. HEIRS OF JACINTO NEMEÑO AND DALMACIA DAYANGCO-NEMEÑO, REPRESENTED BY MELITON NEMEÑO, RESPONDENTS.

D E C I S I O N

FACTS:

On 1985, JACINTO NEMENO, conveyed to LUMAYAG the two parcels of coconut land. The instrument of conveyance is denominated as Deed of Sale with Pacto De Retro. It was stipulated that the consideration for the alleged sale was P20,000.00 and that the vendors a retro have the right to repurchase the same lots within five years from the date of the execution of the instrument. It was likewise agreed thereunder that in the event no purchase is effected within the said stipulated period of five years "conveyance shall become absolute and irrevocable without the necessity of drawing up a new absolute deed of sale, subject to the requirements of law regarding consolidation of ownership of real property."

The NEMENOs filed against the LUMAYAGs on December 1996 a complaint for Declaration of Contract as Equitable Mortgage, Accounting and Redemption with Damages. LUMAYAG denied that the contract in question was an equitable mortgage and claimed that the amount of P20,000.00 received by the plaintiff heirs was the consideration for the sale of the two lots and not a loan and asserted that the action was already barred by laches and prescription and the complaint itself states no cause of action.

ISSUE:

Whether or not the deed of sale executed by the parties with pacto de retro is actually an equitable mortgage.

Were the titles to the subject parcels of land had already been consolidated to petitioners by operation of law because the five (5)-year prescriptive period for the respondents to repurchase expired in 1990?

Was the action to redeem the property already time-barred?

HELD:

1) The transaction was one of an equitable mortgage. First, the supposed price for the sale with pacto de retro in the amount of P20,000.00 is unusually inadequate for the two (2) parcels of land, the total area of which is almost 5.5 hectares. Seocnd, REPONDENTs remained in possession of the subject properties even after the execution of the subject instrument. Third, they also paid for the realty taxes of the same. Fourth, the attendance of a pactum commissorium renders the stipulation contrary to the nature of a true pacto de retro sale.

An equitable mortgage has been defined "as one which although lacking in some formality, or form or words, or other requisites demanded by a statute, nevertheless reveals the intention of the parties to charge real property as security for a debt, and contains nothing impossible or contrary to law."

Article 1602 of the Civil Code enumerates the instances when a contract, regardless of its nomenclature, may be presumed to be an equitable mortgage, to wit:

(1) When the price of a sale with right to repurchase is unusually inadequate;
(2) When the vendor remains in possession as lessee or otherwise;
(3) When upon or after the expiration of the right to repurchase another instrument extending the period of redemption or granting a new period is executed;
(4) When the purchaser retains for himself a part of the purchase price;
(5) When the vendor binds himself to pay the taxes on the thing sold;
(6) In any other case where it may be fairly inferred that the real intention of the parties is that the transaction shall secure the payment of a debt or the performance of any other obligation.

The presence of even one of the circumstances in Article 1602 is sufficient basis to declare a contract as one of equitable mortgage.

2) Evidently, the failure of the respondent heirs to redeem the properties within the stipulated period indubitably vested the absolute title to and ownership thereof to the petitioners. But such consequence would only be true if the contract that was executed between the parties was indeed a pacto de retro sale and not an equitable mortgage. Having ruled that the instrument executed by the parties is one of an equitable mortgage, RESPONDENTS can now redeem the mortgaged properties from PETITIONER within thirty (30) days from finality of this decision. Otherwise, the latter would be given the option to foreclose the mortgaged properties, for as a rule, in a real estate mortgage, when the principal obligation is not paid when due, the mortgagee has the right to foreclose the mortgage and to have the property seized and sold with the view of applying the proceeds to the payment of the obligation.

ROCKVILLE V. CULLA (2009)

SECOND DIVISION

[ G.R. No. 155716, October 02, 2009 ]

ROCKVILLE EXCEL INTERNATIONAL EXIM CORPORATION, PETITIONER, VS. SPOUSES OLIGARIO CULLA AND BERNARDITA MIRANDA, RESPONDENTS.

D E C I S I O N

FACTS:

The spouses Culla are the registered owners of a parcel of land.They mortgaged this property to PS Bank to secure a loan of P1,400,000.00. To prevent the foreclosure, HUSBAND approached ROCKVILLE for financial assistance. Rockville extended him total loan amount of P2,000,000.00. When HUSBAND failed to pay the loan after repeated demands and promises to pay, he agreed to pay their indebtedness by selling to ROCKVILLE another property the spouses owned. The parties agreed to fix the purchase price at P3,500,000.00 since a survey revealed that the property is worth more than the P2,000,000.00 loan.

ROCKVILLE and HUSBAND executed a Deed of Absolute Sale over the property with an agreement that the former would pay the additional P1,500,000.00 after WIFE affixes her signature to the Deed of Absolute Sale since the land is a conjugal property. ROCKVILLE filed a complaint for Specific Performance and Damages when WIFE continued to refuse to sign,  insisting that the transaction was an absolute sale by way of dacion en pago.

ISSUE:

Whether the transaction entered by the parties is therefore an absolute sale or an equitable mortgage.

RULING:

The transaction between the parties was in reality an equitable mortgage, not an absolute sale. First, the SPOUSES retained possession of the property. Second, ROCKVILLE kept a part of the purchase price. Third, ROCKVILLE continued to give the SPOUSES extensions on the period to repay their loan even after the parties allegedly agreed to a dacion en pago. Fourth, unequivocal testimonies of H & W that the purpose of the Deed of Absolute Sale was merely to guarantee their loan.

In determining the nature of a contract, courts are not bound by the title or name given by the parties. The decisive factor in evaluating an agreement is the intention of the parties, as shown, not necessarily by the terminology used in the contract but, by their conduct, words, actions and deeds prior to, during and immediately after executing the agreement. After all an equitable mortgage has been defined as one which although lacking in some formality, or form or words, or other requisites demanded by a statute, nevertheless reveals the intention of the parties to charge real property as security for a debt, there being no impossibility nor anything contrary to law in this intent.

 TORIO V. ROSARIO (1953)

[ G. R. No. L-5536, September 25, 1953 ]

LAUREANA TORIO, PLAINTIFF AND APPELLANT, VS. NICANOR ROSARIO, DEFENDANT AND APPELLEE.

FACTS:

Laureana Torio and Julian Raymundo were co-owhers pro indiviso of a parcel of land of small area.  Raymundo sold his share to Nicanor Rosario.  The transfer was recorded in the office of the register of deeds.  The period for legal redemption is nine days (Article 1524, old Civil Code).  Without making any previous offer to repurchase the property, Laureana Torio brought the present action to exercise her right of legal redemption before the expiration of said period. 

The lower court held that plaintiff has lost her right to redeem the property because of her failure to offer to repurchase the property before she instituted the present action which is a sine qua non requirement before she could exercise the right of legal redemption and as a consequence it dismissed the complaint with costs. 

Plaintiff has appealed from this decision.

ISSUE:

Is there any need of making a previous tender of the redemption money before the right of redemption can be exercised?

HELD:

The tender of redemption price is not essential or a condition precedent to the co-owner's right to redeem a parcel of land. The important thing is to assert it in time and in proper form. It appeared that the deed of sale of the property in question was recorded in the office of the register of deeds, which step has the effect of an offer or tender to redeem contemplated by the law.  Plaintiff's right to redeem must be upheld. 

Wherefore, the decision appealed from is reversed.  Judgment is hereby rendered ordering defendant to execute a deed of reconveyance in favor of plaintiff.

VALDEZ V. VIERNES (1991)

FIRST DIVISION

[ G.R. No. 85082, February 25, 1991 ]

SPOUSES PASTOR VALDEZ AND VIRGINIA VALDEZ, PETITIONERS, VS. HONORABLE COURT OF APPEALS AND FELICIDAD VIERNES, FRANCISCO ANTE, AND ANTONIO ANTE, RESPONDENTS.

D E C I S I O N

FACTS:

Spouses Ante were the registered owners of a parcel of land. Antonio Ante, there son, as attorney in fact, executed a deed of sale in favor of spouses VALDEZ who started fencing the whole lot in the presence of the VIERNESes. Since the owner’s duplicate certificate of title was not delivered in due time despite ANTE's promise to deliver the same in a few days, petitioners registered their notice of adverse claim over the said property on September 6, 1982 with the Register of Deeds. Thereupon, they learned that ANTE had delivered the owner’s duplicate certificate of title as a collateral Dr. Garma who then turned over to the Valdez spouses the said title after spouses paid for the obligation of ANTE.

The spouses then proceeded to register the deeds of sale in 1981 with the Register of Deeds and was informed that the title had been declared null and void because the ANTE spouses had filed a petition earlier for the issuance of a new owner’s duplicate certificate of title on the ground that the owner’s duplicate copy had been lost. Said owner’s duplicate copy was delivered by ANTE to  Felicidad  VIERNES who thereafter together with the Deed of Assignment of the same property  presented the same to the Register of Deeds for registration in 1982.

ISSUES:

1) Who has the better right over the property?

2) Can VIERNES claim good faith on her part?

3) Whether or not the subsequent owner's duplicate title be declaared null and void and the previous one be reinstated?

HELD:

1) The VALDEZes acquired subject lot in good faith and for valuable consideration from the ANTEs and as such owners petitioners fenced the property taking possession thereof.  Thus, when petitioners annotated their adverse claim in the Register of Deeds they thereby established a superior right to the property in question as against respondent Viernes.

"Art. 1544.  If the same thing should have been sold to different vendees, the ownership shall be transferred to the person who may have first taken possession thereof in good faith, if it should be movable property.

Should it be immovable property, the ownership shall belong to the person acquiring it who in good faith first recorded it in the Registry of Property.

Should there be no inscription, the ownership, shall pertain to the person who in good faith was first in the possession; and, in the absence thereof, to the person who presents the oldest title provided there is good faith."

The sale of the subject lot to VALDEZes was made long before the execution of the Deed of Assignment of said lot to VIERNES and that petitioners annotated their adverse claim as vendees of the property as early as September 6, 1982 with the Register of Deeds.On the other hand the deed of Assignment in favor of Viernes of the said lot was registered with the Register of Deeds of Quezon City only on November 11, 1982 whereby a new title was issued in the name of Viernes.

2) VIERNES cannot claim good faith in the purchase of the subject lot and the subsequent registration of the Deed of Assignment in her favor.  After VALDEZes purchased the lot they immediately fenced the same with the knowledge and without objection of respondent Viernes and her husband and they were informed by the petitioners about their purchase of the same.  Moreover, when petitioners annotated their adverse claim as vendees of the property with the Register of Deeds of Quezon City, it was effectively a notice to the whole world including respondent Viernes.

3) ANTE, as well as VIERNES, knew that the owner’s duplicate copy of certificate of title was never lost, consequently the filing of the petition in court for the issuance of a new one was attended with fraud and gross misrepresentation and thus null and void.


WHEREFORE, the judgment in favor of the the VALDEZes.