FACTS:
Petitioners
Jose and Anita Fabia were originally the defendants in a case filed by the
respondents with the Court of First Instance of Pangasinan, Branch II.
Respondents filed the case entitled "Angel Mararac, et al.,
plaintiffs versus Jose Fabia, et al., defendants" to
exercise their right of legal redemption under
Article 1621 of the Civil Code over a parcel of land sold to the petitioners.
ISSUE:
Whether
or not the land in question may be considered rural for purposes of legal redemption under
Section 2, Chapter 7, Title VI, New Civil Code; and (2) if so, are respondents
guilty of laches so as to prevent them, nevertheless, from redeeming the
property in question?
HELD:
The
respondents have failed to satisfy the above criterion. The land in question
cannot be legally classified as rural land since it is principally used for
residential rather than agricultural purposes.
No
such palpable mistake has been shown. Evidence militates against the
respondents' contention that the above description does not bind them. The
description was merely copied from the deed of sale between the property's
original owners and the petitioners when the self-same document was presented
by the respondents as their own evidence. The character of the locality,
the streets, the neighboring and surrounding properties give a clear picture of
a residential area. Lots, including the disputed property, with residential
houses line the streets. There are concrete and semi-concrete houses, a chapel,
an elementary school, and a public artesian well. Evidence consisting of
photographs of the petitioners' land show a one-storey nipa and bamboo house.
Trees and plants abound on the petitioner's property, yet, the same do not, by
their mere presence make the lot agricultural. In fact, the lots neighboring
the land in question are likewise planted with trees and plants and some even
have fishwells. Truly a residential home lot is not converted into agricultural
land by the simple reservation of a plot for the cultivation of garden crops or
the planting of bananas and some fruit trees. Nor can an orchard or
agricultural land be considered residential simply because a portion thereof
has been criss-crossed with asphalt and cement roads with buildings here and
there. We have to apply the rule of reason based on the specific facts of each
case. The land, subject matter of the petition, being primarily residential,
cannot be considered as rural for purposes of legal redemption under the law.
A further requisite laid down by the law to enable legal redemption of adjoining lands is that both the land of the one exercising the right and the adjacent property sought to be redeemed should be rural or destined for agricultural exploitation. If either is urban or both are urban, there is no right of redemption. Again, the intention of the law in providing for this right of redemption must be borne in mind. If the land adjacent to that which is sought to be redeemed is not agricultural, then the redemption is in vain, - it does not answer the purpose behind the law. So that, if one of the tenements is urban, the right of legal redemption allowed under this article cannot be invoked.
Undeniably, the land adjoining that which is sought to be redeemed is a piece of residential land on which the respondents live.
Again,
this is deemed an admission by the respondents of the residential character of
their own land thus disqualifying them from rightfully redeeming the property
in question.
Thus, the circumstances under which legal redemption may be exercised not having been found present in the case at bar, the respondents have no right to enforce against the petitioners.
Thus, the circumstances under which legal redemption may be exercised not having been found present in the case at bar, the respondents have no right to enforce against the petitioners.
FACTS:
Plaintiff
seeks to exercise the right of legal redemption over one-half undivided
interest in a parcel of land under article 1523 of the old Civil Code.
The case was submitted on a stipulation of facts. This stipulation shows that Laureana Torio, plaintiff herein, and Julian Raymundo, her husband, were co-owners pro-indiviso of a parcel of land containing an area of 21 ares and 84 centares. This co-ownership came about when Julian Raymundo transferred to his prospective wife, Laureana, one-half of said property by virtue of a donation propter nuptias executed on April 14, 1937. On May 4, 1944, Julian Raymundo sold his undivided one-half interest to Nicanor Rosario the deed of sale having been registered in the office of the register of deeds on the same date. The vendee, Nicanor had been in possession of the portion purchased by him from the date of transfer up to the present time. On May 12, 1944, Laureana Torio filed the present action for legal redemption, and on August 17, 1949, she deposited the amount of P40 as redemption price.
Upon the foregoing facts 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 assigning several errors.
There is no dispute that the facts involved in this case give rise tp a case of legalredemption. 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 legalredemption before the expiration of said period.
The case was submitted on a stipulation of facts. This stipulation shows that Laureana Torio, plaintiff herein, and Julian Raymundo, her husband, were co-owners pro-indiviso of a parcel of land containing an area of 21 ares and 84 centares. This co-ownership came about when Julian Raymundo transferred to his prospective wife, Laureana, one-half of said property by virtue of a donation propter nuptias executed on April 14, 1937. On May 4, 1944, Julian Raymundo sold his undivided one-half interest to Nicanor Rosario the deed of sale having been registered in the office of the register of deeds on the same date. The vendee, Nicanor had been in possession of the portion purchased by him from the date of transfer up to the present time. On May 12, 1944, Laureana Torio filed the present action for legal redemption, and on August 17, 1949, she deposited the amount of P40 as redemption price.
Upon the foregoing facts 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 assigning several errors.
There is no dispute that the facts involved in this case give rise tp a case of legalredemption. 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 legalredemption before the expiration of said period.
ESSUE:
Is there any need of making a previous tender
of the redemption money
before the right of redemption can
be exercised?
HELD:
The lower court is of the opinion that there is and so dismissed the complaint. We find this to be an error not only because the law does not so require but because this court has already stated in a similar case that such tender is not necessary.
The lower court is of the opinion that there is and so dismissed the complaint. We find this to be an error not only because the law does not so require but because this court has already stated in a similar case that such tender is not necessary.
"The trial Judge held that a
previous tender was a condition precedent to the right of redemption, because article 1525 makes
applicable to legal redemption the provisions of articles 1511 and
1518, and the last one says that the co-owner may not exercise the right
of redemption without
returning to the third person the price of the sale, plus (1) the expenses of the
contract and the lawful payments by reason of the sale and (2) the useful and
necessary expenditures incurred upon the thing sold.
"The position is not entirely groundless; but it is the consensus among the members of this court that the above articles merely enumerate the amounts to be paid by the co-owner who wishes to redeem. They do not postulate any previous notice to the new owner nor a meeting between him and the redemptioner, much less a previous formal tender, before any action is begun in court to enforce the right. A sensible and prudent man would naturally endeavor to present the offer privately, to avoid the inconvenience of court proceedings. But it is not always just to graft into the statute such rules of common sense as may be deemed appropriate. And then, considering that the co-owner has nine days only, the 'previous tender' requisite might in some instances frustrate the assertion of the co-owner's prerogative. He might not know the third person's whereabouts. The latter might even conceal himself to prevent redemption.
"Wherefore the declaration is imperative that such offer or tender is not an essential condition precedent to the co-owner's right to redeem. The important thing is to assert it in time and in proper form. This action and the consequent consignation must be held proper. Plaintiff's right to redeem must be upheld. Observe that nobody claims the amount deposited is insufficient to satisfy the expenses chargeable to the redeemer."
"The position is not entirely groundless; but it is the consensus among the members of this court that the above articles merely enumerate the amounts to be paid by the co-owner who wishes to redeem. They do not postulate any previous notice to the new owner nor a meeting between him and the redemptioner, much less a previous formal tender, before any action is begun in court to enforce the right. A sensible and prudent man would naturally endeavor to present the offer privately, to avoid the inconvenience of court proceedings. But it is not always just to graft into the statute such rules of common sense as may be deemed appropriate. And then, considering that the co-owner has nine days only, the 'previous tender' requisite might in some instances frustrate the assertion of the co-owner's prerogative. He might not know the third person's whereabouts. The latter might even conceal himself to prevent redemption.
"Wherefore the declaration is imperative that such offer or tender is not an essential condition precedent to the co-owner's right to redeem. The important thing is to assert it in time and in proper form. This action and the consequent consignation must be held proper. Plaintiff's right to redeem must be upheld. Observe that nobody claims the amount deposited is insufficient to satisfy the expenses chargeable to the redeemer."
It appearing that the action
for legal redemption was
instituted by the plaintiff before the expiration of the period of nine days
from 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, we find that the lower court erred in holding
that plaintiff has already lost her right to exercise such legal redemption.
FACT:
During their lifetime, the spouses Jacinto Nemeño and Dalmacia Dayangco-Nemeño, predecessors-in-interest of the herein respondent heirs, owned two (2) parcels of coconut land located in Manaca, Ozamiz City. The parcels are: Lot No. 4049, with an area of five (5) hectares and covered by Original Certificate of Title (OCT) No. 0-1743 and Lot No. 4035 C-4, consisting of 4,420 square meters and covered by Tax Declaration No. 13750.
In 1979, Dalmacia died survived by her husband, Jacinto, and their six (6) children, to wit: Meliton, Eleuteria, Timoteo, Justo, Saturnino (now deceased) and Felipa.
On February 25, 1985, Jacinto, joined by his five (5) children, namely, Meliton, Eleuteria, Timoteo, Justo and Saturnino, conveyed to his daughter Felipa and the latter's husband Domingo Lumayag the aforementioned Lot Nos. 4049 and 4035 C-4. The instrument of conveyance is denominated as Deed of Sale with Pacto De Retro.[3] Thereunder, it was stipulated that the consideration for the alleged sale of the two (2) aforementioned lots was Twenty Thousand Pesos (P20,000.00) and that the vendors a retro have the right to repurchase the same lots within five (5) years from the date of the execution of the instrument on February 25, 1985. It was likewise agreed thereunder that in the event no purchase is effected within the said stipulated period of five (5) 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."
On April 4, 1985, Jacinto died while undergoing treatment at the MHARS General Hospital in Ozamiz City.
More than a decade later, or on August 28, 1996, the spouses Domingo Lumayag and Felipa Nemeño-Lumayag filed with the RTC of Ozamiz City a petition for the reconstitution of the owner's duplicate copy of OCT No. 0-1743 covering Lot No. 4049, one of the two lots subject of the earlier Deed of Sale with Pacto De Retro. In that petition, the Lumayags alleged that said owner's duplicate copy of OCT No. 0-1743 was in Domingo's possession but the same was lost when a typhoon hit and destroyed the couple's house in Talisay, Cebu on November 12, 1990. The petition was opposed by the other heirs of Jacinto and Dalmacia who claimed that the owner's duplicate copy of the same OCT was actually in the possession and custody of their brother Meliton Nemeño, the administrator of the property, when it was burned in a fire on May 22, 1992. In an order dated December 20, 1996,[4] the RTC resolved said petition by ordering the issuance of a new owner's duplicate copy of OCT No. 0-1743 and its delivery to the heirs of Jacinto and Dalmacia.
Such were the state of things when, on December 24, 1996, in the same RTC, the heirs of Jacinto and Dalmacia, namely, their children Meliton, Eleuteria, Timoteo and Justo and grandchildren Ricky and Daisy who are the heirs of Saturnino, (hereinafter collectively referred to as the respondent heirs) filed against the spouses Domingo Lumayag and Felipa N. Lumayag a complaint[5] for Declaration of Contract as Equitable Mortgage, Accounting and Redemption with Damages.
During their lifetime, the spouses Jacinto Nemeño and Dalmacia Dayangco-Nemeño, predecessors-in-interest of the herein respondent heirs, owned two (2) parcels of coconut land located in Manaca, Ozamiz City. The parcels are: Lot No. 4049, with an area of five (5) hectares and covered by Original Certificate of Title (OCT) No. 0-1743 and Lot No. 4035 C-4, consisting of 4,420 square meters and covered by Tax Declaration No. 13750.
In 1979, Dalmacia died survived by her husband, Jacinto, and their six (6) children, to wit: Meliton, Eleuteria, Timoteo, Justo, Saturnino (now deceased) and Felipa.
On February 25, 1985, Jacinto, joined by his five (5) children, namely, Meliton, Eleuteria, Timoteo, Justo and Saturnino, conveyed to his daughter Felipa and the latter's husband Domingo Lumayag the aforementioned Lot Nos. 4049 and 4035 C-4. The instrument of conveyance is denominated as Deed of Sale with Pacto De Retro.[3] Thereunder, it was stipulated that the consideration for the alleged sale of the two (2) aforementioned lots was Twenty Thousand Pesos (P20,000.00) and that the vendors a retro have the right to repurchase the same lots within five (5) years from the date of the execution of the instrument on February 25, 1985. It was likewise agreed thereunder that in the event no purchase is effected within the said stipulated period of five (5) 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."
On April 4, 1985, Jacinto died while undergoing treatment at the MHARS General Hospital in Ozamiz City.
More than a decade later, or on August 28, 1996, the spouses Domingo Lumayag and Felipa Nemeño-Lumayag filed with the RTC of Ozamiz City a petition for the reconstitution of the owner's duplicate copy of OCT No. 0-1743 covering Lot No. 4049, one of the two lots subject of the earlier Deed of Sale with Pacto De Retro. In that petition, the Lumayags alleged that said owner's duplicate copy of OCT No. 0-1743 was in Domingo's possession but the same was lost when a typhoon hit and destroyed the couple's house in Talisay, Cebu on November 12, 1990. The petition was opposed by the other heirs of Jacinto and Dalmacia who claimed that the owner's duplicate copy of the same OCT was actually in the possession and custody of their brother Meliton Nemeño, the administrator of the property, when it was burned in a fire on May 22, 1992. In an order dated December 20, 1996,[4] the RTC resolved said petition by ordering the issuance of a new owner's duplicate copy of OCT No. 0-1743 and its delivery to the heirs of Jacinto and Dalmacia.
Such were the state of things when, on December 24, 1996, in the same RTC, the heirs of Jacinto and Dalmacia, namely, their children Meliton, Eleuteria, Timoteo and Justo and grandchildren Ricky and Daisy who are the heirs of Saturnino, (hereinafter collectively referred to as the respondent heirs) filed against the spouses Domingo Lumayag and Felipa N. Lumayag a complaint[5] for Declaration of Contract as Equitable Mortgage, Accounting and Redemption with Damages.
Essentially, the complaint alleged that the subject Deed of Sale with Pacto De Retro was executed only for the purpose of securing the payment of a loan of P20,000.00 obtained from the defendant spouses in connection with the medication and hospitalization of the then ailing Jacinto Nemeño.
To support their claim
that the contract in question was an equitable mortgage, the plaintiff heirs
materially pointed out the following: (1) the grossly inadequate price of the
subject lots considering that Lot No. 4049 with an area of 5 hectares has a market
value of P40,760.00 and an assessed value of P15,230.00, as shown by Tax
Declaration No. 94-07335-A, while Lot No. 4035 C-4 with an area of 4,420 square
meters has a market value of P4,120.00 and an assessed value of P1,460.00, per
Tax Declaration No. 94-07355-A; (2) their (plaintiffs') continued payment of
realty taxes; (3) the land title and tax declaration remained in the names of
Jacinto Nemeño and Dalmacia Dayangco-Nemeño; (4) their possession, particularly
Justo Nemeño's, of the subject lots with the petitioner spouses only given
two-thirds share of the harvest therefrom; and (5) the pactum commissorium stipulation in the subject contract.
Eventually, in a decision[7] dated February 3, 1999, the trial court adjudged the subjectDeed of Sale with Pacto De Retro as an equitable mortgage and ordered the defendant spouses to reconvey Lot Nos. 4049 and 4035 C-4 to the plaintiff heirs for P20,000.00.
Dissatisfied, both parties appealed to the CA. Unfortunately,
for failure of the plaintiff heirs to submit their appeal brief, their appeal
was dismissed, leaving that of the defendant spouses.
As stated at the threshold hereof, the appellate court, in its Decision of September 30, 2003, affirmed that of the trial court but with the modification that the mortgaged properties are subject to foreclosure should the respondents fail to redeem the same within thirty (30) days from finality of the decision..
As stated at the threshold hereof, the appellate court, in its Decision of September 30, 2003, affirmed that of the trial court but with the modification that the mortgaged properties are subject to foreclosure should the respondents fail to redeem the same within thirty (30) days from finality of the decision..
ISSUE:
Whether or not the transaction between the parties was not a sale but an equitable
Whether or not the transaction between the parties was not a sale but an equitable
mortgage?
RULING:
Petition denied….
Under a pacto de retro sale, title to and ownership of property are immediately vested in the vendee a retro, subject only to the resolutory condition that the vendor repurchases it within the stipulated period.[9] The failure of the vendor a retro to repurchase the property vests upon the vendee a retro by operation of law the absolute title and ownership over the property sold.[10]
Here, there is no issue as regards the fact that the subject Deed of Sale with Pacto DeRetro provided for a 5-year redemption period which expired on February 25, 1990. Evidently, then, 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.
The two (2) courts below unanimously found that the subject Deed of Sale with Pacto DeRetro, while purporting to be a sale, is in truth and in fact an equitable mortgage. Such factual finding, more so when supported by the evidence, as here, commands not only respect but even finality and is binding on this Court.[11]
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."[12]
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:
Petition denied….
Under a pacto de retro sale, title to and ownership of property are immediately vested in the vendee a retro, subject only to the resolutory condition that the vendor repurchases it within the stipulated period.[9] The failure of the vendor a retro to repurchase the property vests upon the vendee a retro by operation of law the absolute title and ownership over the property sold.[10]
Here, there is no issue as regards the fact that the subject Deed of Sale with Pacto DeRetro provided for a 5-year redemption period which expired on February 25, 1990. Evidently, then, 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.
The two (2) courts below unanimously found that the subject Deed of Sale with Pacto DeRetro, while purporting to be a sale, is in truth and in fact an equitable mortgage. Such factual finding, more so when supported by the evidence, as here, commands not only respect but even finality and is binding on this Court.[11]
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."[12]
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.
In any of the foregoing case, 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.
The law requires the presence of any one and not the concurrence of all of the circumstances enumerated under Article 1602, supra, to conclude that the transaction is one of equitable mortgage.
While we are not in full accord with the CA in its observation that the consideration of the sale with right to repurchase is grossly inadequate since the market value and assessed value of the two lots were not made on or before the date the subject contract was executed on February 25, 1985 but only on June 8, 1994, still, there are other circumstances convincing enough to support a conclusion that the transaction in question is really an equitable mortgage.
Evidence is extant on record that the respondent heirs, as vendors a retro, remained in possession of the subject lots after the execution of the deed of sale with right to repurchase. In stark contrast, evidence is wanting that petitioners ever enjoyed possession thereof. If the transaction was really a sale with right to repurchase, as claimed by the petitioners, then the latter should have asserted their rights for the immediate delivery of the lots to them instead of allowing some of the respondents to freely stay in the premises. Well-settled to the point of being elementary is the doctrine that where the vendor remains in physical possession of the land as lessee or otherwise, the contract should be treated as an equitable mortgage.
As well, that the parties intended to enter into an equitable mortgage is further accentuated by respondents' continued payment of the real property taxes subsequent to the alleged sale. Payment of those taxes is a usual burden attached to ownership and when, as here, such payment is coupled with continuous possession of the property, it constitutes evidence of great weight that a person under whose name the realty taxes were declared has a valid and rightful claim over the land.[17]
Lastly, the stipulation in the subject deed reading: "if we fail to exercise our rights to repurchase as herein granted within the period stipulated, then this conveyance shall become absolute and irrevocable without the necessity of drawing a new absolute Deed of Sale, subject to the requirements of law regarding consolidation of ownership of real property," - is considered a pactum commissorium. This stipulation is contrary to the nature of a true pacto de retro sale since in such sale, ownership of the property sold is immediately transferred to the vendee a retro upon execution of the sale, subject only to the repurchase of a vendor a retro within the stipulated period.
Undoubtedly,
the aforementioned stipulation is a pactum commissorium because it enables the mortgagee to acquire ownership
of the mortgaged properties without need of any foreclosure proceedings which
is a nullity being contrary to the provisions of Article 2088[19] of the Civil Code. Indeed, the inclusion of such
stipulation in the deed shows the intention to mortgage rather than to sell.
FACT:
The spouses Oligario and Bernardita (Sps. Culla) are the registered owners of
a parcel of land. They mortgaged this property to PS Bank to secure a loan.
Sometime in 1993, the Office of the
Clerk of Court and the Ex-Officio Sheriff issued a Sheriff’s Notice of Sale for
the extrajudicial foreclosure of the property. To prevent the foreclosure, Oligario
approached Rockville – represented by its president and chairman, Diana Young –
for financial assistance. Rockville
accommodated Oligario’s request and extended him a loan. The amount was
increased for the cash advances Oligario requested, for a total loan amount of P2,000,000.00.
When Oligario failed to pay the loan after repeated demands and promises to
pay, the Sps. Culla agreed to pay their indebtedness by selling to Rockville
another property the spouses. Since a survey of the surrounding properties
revealed that the property is worth more than the Sps. Culla’s P2,000,000.00
loan, the parties agreed to fix the purchase price at P3,500,000.00.
They accepted the offer for a dacion en
pago; on June 25, 1994, Rockville and Oligario executed a Deed of Absolute
Sale over the property. While the property was a conjugal property of the Sps.
Culla, only Oligario signed the Deed of Absolute Sale. Rockville asserted that,
by agreement with the Sps. Culla, Rockville would pay the additional P1,500,000.00
after Bernardita affixes her signature to the Deed of Absolute Sale.
Rockville claimed that it had always
been ready and willing to comply with its obligation to deliver the P1,500,000.00.
In fact, Rockville initially deposited this whole amount with May Bank of
Malaysia, with notice to Oligario, which amount was subsequently transferred to
Rockville’s law firm. However, when Bernardita continued to refuse to sign the
Deed of Absolute Sale, Rockville caused the annotation of an adverse in order
to protect its interest in the property. Furthermore, Rockville tried to
transfer the title of the property in its name but the Registry of Deeds
refused to carry out the transfer, given the absence of Bernardita’s signature
in the Deed of Absolute Sale.
On February 4, 1997, Rockville filed a
complaint for Specific Performance and Damages before the Regional Trial Court
(RTC) of Batangas City, Branch 2
against the Sps. Culla, praying that the lower court order Bernardita
to sign the Deed of Absolute Sale or, in the alternative, to authorize the sale
even without Bernardita’s signature.
In their Answer, the Sps. Culla alleged
that the purported Deed of Absolute Sale failed to reflect their true
intentions, as the deed was meant only to guarantee the debt to Diana Young,
not to Rockville. Contrary to Rockville’s contention, the agreement was that
the P1,500,000.00 had to be paid before Bernardita would sign the Deed
of Absolute Sale. When neither Rockville nor Diana Young paid the P1,500,000.00,
the Sps. Culla volunteered to repay the P2,000,000.00
and opted to rescind the sale.
ISSUE:
Whether a Deed of Absolute Sale
is really an absolute sale of real property or an equitable mortgage?
HELD:
In the present case, three
attendant circumstances indicate that the purported sale was in fact an
equitable mortgage. First, the Sps. Culla retained possession of the property.
Second, Rockville kept a part of the purchase price. Third, as previously discussed,
Rockville continued to give the Sps. Culla extensions on the period to repay
their loan even after the parties allegedly agreed to a dacion en pago. These circumstances, coupled with the clear and
unequivocal testimonies of Oligario and Bernardita that the purpose of the Deed
of Absolute Sale was merely to guarantee their loan, clearly reveal the
parties’ true intention to execute an equitable mortgage and not a contract of
sale.
That a contract where the vendor remains
in physical possession of the land, as lessee or otherwise, is an equitable
mortgage is well-settled. The reason for this rule lies in the legal reality
that in a contract of sale, the legal title to the property is immediately
transferred to the vendee; retention by the vendor of the possession of the
property is inconsistent with the vendee’s acquisition of ownership under a
true sale. It discloses, in the alleged vendee, a lack of interest in the
property that belies the truthfulness of the sale.
FACT:
“As evidenced by the Transfer of
Rights dated October 1, 1993, Eliodoro Bacaron conveyed a 15.3955-hectare
parcel of land located in Langub, Talomo, Davao City, in favor of Benny Go for P20,000.00.
“About
a year thereafter, Bacaron, seeking to recover his property, went to Go to pay
his alleged P20,000.00 ‘loan’ but the latter refused to receive the same
and to return his property saying that the transaction between the two of them
was a sale and not a mortgage as claimed by Bacaron.
ESSUE:
(1) whether the agreement entered
into by the parties was one for equitable mortgage or for absolute sale; and
(2)
whether the grant of the relief of contract reformation was proper.
HELD:
1.) In
the present case, three of the instances enumerated in Article 1602 -- grossly
inadequate consideration, possession of the property, and payment of realty
taxes -- attended the assailed transaction and thus showed that it was indeed
an equitable mortgage.
The
parties intended to enter into an equitable mortgage is also shown by the fact
that the “seller” was driven to obtain the loan at a time when he was in urgent
need of money; and that he signed the Deed of Sale, despite knowing that it did
not express the real intention of the parties. In the present proceedings, the
collapse of his business prompted respondent to obtain the loan.
Petitioner himself admitted that at the time they entered into the alleged
absolute sale, respondent had suffered from serious business reversals.
Petitioner
claims that the CA erred in granting the remedy of reformation of
contracts. He avers that the failure of the instrument to express the
parties’ true agreement was not due to his mistake; or to fraud, inequitable
conduct, or accident.
2.)
Ultimately, it is the intention of the parties that determines whether a
contract is one of sale or of mortgage. In the present case, one of the parties
to the contract raises as an issue the fact that their true intention or
agreement is not reflected in the instrument. Under this circumstance,
parol evidence becomes admissible and competent evidence to prove the true
nature of the instrument. Hence, unavailing is the assertion of
petitioner that the interpretation of the terms of the Contract is unnecessary,
and that the parties clearly agreed to execute an absolute deed of sale.
His assertion does not hold, especially in the light of the provisions of
Article 1604 of the Civil Code, under which even contracts purporting to be
absolute sales are subject to the provisions of Article 1602.
Moreover, under Article 1605 of the New Civil Code, the supposed vendor may ask
for the reformation of the instrument, should the case be among those mentioned
in Articles 1602 and 1604. Because respondent has more than sufficiently
established that the assailed Contract is in fact an equitable mortgage rather
than an absolute sale, he is allowed to avail himself of the remedy of
reformation of contracts.
FACT:
On
November 15, 1996, Hamilton Salak rented a car from GAB Rent-A-Car, a
car rental shop owned by petitioner Benjamin Bautista. The lease
was for three (3) consecutive days at a rental fee of P
1,000.00 per day.
However,
Salakfailed to return the car after three (3) days prompting petitioner to
file a complaint against him for estafa, violation of BatasPambansa Blg.
22 and carnapping.On February 2, 1997, Salak and his common-law wife,
respondent Shirley G. Unangst,were arrested by officers of the Criminal
Investigation Service Group (CISG) of the Philippine National Police while
ridingthe rented car along Quezon City. The next day, petitioner demanded
from Salak at the CISG Office the sum of P232,372.00 as payment for car
rental fees, fees incurred in locating the car, attorney's fees, capital
gains tax, transfer tax, and other incidental expenses.Salak and
respondent expressed willingness to pay but since they were then short on cash,
Salak proposed tosell to petitioner a house and lot titled in the name of
respondent. Petitioner welcomed the proposal after consulting hiswife, Cynthia.
Cynthia, on the other hand, further agreed to pay the mortgage loan of
respondent over the subject propertyto a certain Jojo Lee in the amount of
P295,000.00 as the property was then set to be publicly auctioned
on February 17,1997.To formalize their amicable settlement, Cynthia, Salak
and respondent executed a written agreement.Theystipulated that respondent
would sell, subject to repurchase, her residential property in favor of
Cynthia for the totalamount of P527,372.00 broken down, as follows: (1)
P295,000.00 for the amount paid by Cynthia to Lee to release themortgage
on the property; and (2) P232,372.00, which is the amount due to GAB
Rent-A-Car. Cynthia also agreed todesist from pursuing the complaint against
Salak and respondent.
Respondent
and petitioner also executed a separate deed of sale with right to
repurchase, specifying, amongothers, that: (1) respondent, as vendor, shall pay
capital gains tax, current real estate taxes and utility
bills pertaining tothe property; (2) if respondent 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) respondent's
refusal to do so will entitle petitioner to take immediate possession of
the property.Respondent failed torepurchase the property within the
stipulated period. As a result, petitioner filed, on June 5, 1998, a
complaint for specificperformance or recovery of possession, for sum of money,
for consolidation of ownership and damages againstrespondent and other
unnamed persons before the RTC of Olongapo City.
On July
29, 2004, after due proceedings, the RTC rendered a decision in favor
of petitioner,In a Decision dated April 7, 2006, the CA reversed and set aside
the RTC judgment.
ISSUE:
Whether
or not the deed of sale with right to repurchase executed by the parties
be construed as an equitablemortgage.
RULING:
Respondent
is correct in alleging that the deed of sale with right to repurchase qualifies
as an equitable mortgage under Article 1602. She merely secured the
payment of the unpaid car rentals and the amount advanced by
petitioner to JojoLee. The transaction between the parties is one of
equitable mortgage and not a sale with right to purchase as
maintained bypetitioners.
Article
1602 of the New Civil Code provides that the contract is presumed to be an
equitable mortgage in anyof 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 shallsecure 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.
This is a case of double sale of real property where both
vendees registered the sales with the Register of Deeds and each produced their
respective owner's duplicate copy of the certificate of title to the property.
FACT:
Spouses Francisco Ante and Manuela Ante
were the registered owners of a parcel of land located at 20th Avenue, Murphy,
Quezon City, with an area of approximately 625.70 square meters as evidenced by
Transfer Certificate of Title (TCT) No. 141582 issued by the Register of Deeds
of Quezon City. Said spouses executed a special power of attorney in favor of
their son, Antonio Ante, a lawyer, authorizing him to execute any document conveying
by way of mortgage or sale a portion or the whole of said property, to receive
payment and dispose of the same as he may deem fit and proper under the
premises. 1
Antonio Ante offered to sell the lot to
Eliseo Viernes, who was occupying the same with the permission of Ante.
Viernes, however, turned down the offer as he did not have money. Antonio Ante
then told Viernes that he will instead sell the property to Pastor Valdez and
Virginia Valdez. 2
Antonio Ante had the
said lot subdivided into Lot A with an area of 280 square meters and Lot B with
an area or 345.70 square meters, each lot having its corresponding technical
description.
On
June 15, 1980, Antonio Ante, as attorney in fact, executed a deed of sale of
Lot A in favor of spouses Pastor Valdez and Virginia Valdez, for and in
consideration of the amount of P112,000.00 3
On February 12, 1987, in the same
capacity, Antonio Ante sold to said Valdez spouses, Lot B for the amount of
P138,000.00. 4
The Valdez spouses demanded from Antonio Ante the delivery of
the owner's duplicate copy of TCT No. 141582 covering said two (2) lots. Ante
promised them that he will deliver the title to them in a few days.
In the meanwhile
petitioners started fencing the whole lot with cement hollow blocks in the
presence of spouses Eliseo and Felicidad Viernes. Except for the gate, it took
them two weeks to finish fencing the whole lot. On said occasion the Viernes
spouses were informed by the Valdez spouses that they were fencing the same as
they purchased the land from Antonio Ante.
As Ante failed to deliver the owner's
duplicate certificate of title demanded by the Valdez spouses, the latter filed
their affidavit of adverse claim over the subject lot with the Register of
Deeds of Quezon City on September 6, 1982 as the vendees of the property.
Upon inquiries made, the Valdez spouses
learned that Antonio Ante had delivered the owner's duplicate certificate of
title as a collateral to one Dr. Camilo Garma of Purdue Street., Cubao Quezon
City to secure his rentals in arrears in the amount of P9,000.00. On September
13, 1983, upon the prodding of the Valdez spouses, Antonio Ante wrote to Dr.
& Mrs. Garma to request them to entrust the owner's duplicate copy of the
title of the questioned lot to the Valdez spouses with the assurance that Ante
will pay his indebtedness to them. 6 The Garma spouses turned over to
the Valdez spouses the said owner's duplicate certificate of title after said
Valdez spouses paid for the obligation of Antonio Ante to the Garma spouses.
The Valdez spouses then proceeded to
register the two deeds of sale dated June 15, 1980 and February 12, 1981 7 with the Register of Deeds of Quezon
City by presenting the owner's duplicate copy of the title. They were, however,
informed that the said owner's duplicate certificate of title had been declared
null and void per order of Judge Tutaan dated November 10, 1982. They also
found out that spouses Francisco and Manuela Ante earlier filed a petition for
the issuance of a new owner's duplicate certificate of title and to declare
null and void the lost owner's duplicate certificate of title.
The Valdez spouses also
discovered that the Register of Deeds cancelled TCT No. 141582 and in lieu
thereof issued TCT No. 293889 in the name of Felicidad Viernes on the basis of
a deed of assignment of the same property dated February 17, 1982 executed by
Antonio Ante in her favor.
When Virginia Valdez
inquired from Antonio Ante why he executed the said deed of assignment when he
had previously sold the same lot to them, Ante replied that they could sue him
in court.
Thus, the Valdezes
filed their adverse claim over the lot covered by TCT No. 293889 in the name of
Felicidad Viernes. They filed the complaint in Barangay office of San Roque,
Quezon City against Felicidad Viernes but as no amicable settlement was
reached, the Valdezes filed a complaint in the Regional Trial Court of Quezon
City seeking among others, that the order dated November 10, 1982 of the Court
of First Instance of Quezon City authorizing the issuance of a new owner's
duplicate certificate of title in the name of Francisca Ante be declared null
any void; that the deed of assignment dated February 17, 1982 executed by
Antonio Ante in favor of Felicidad Viernes be cancelled and revoked; that TCT
No. 293889 in the name of Felicidad Viernes in the Register of Deeds of Quezon
City be cancelled and declared null and void; that the Register of Deeds of
Quezon City be ordered to reinstate, revalidate and give full force and effect
to the owner's duplicate copy of TCT No. 141582 in the name of spouses
Francisco and Manuela Ante and declare petitioners as the true and lawful
owners of the property; ordering respondents Viernes and all persons claiming
right under them to vacate the property, and to pay damages and costs to
petitioners.
ISSUE:
1. Whether the Order dated November 10,
1983 declaring as null and void the Owner's copy of Transfer Certificate of
Title No. 141582 and ordering the issuance of a new Owner's copy of said title
should be set aside having been secured fraudulently and in bad faith by
Francisco Ante and Antonio Ante who had already sold the property to the
spouses Pastor and Virginia Valdez and who knew fully well that the said
Owner's copy of said title has never been lost.
2. As between plaintiff-spouses Pastor
and Virginia Valdez, petitioners in this case and defendant Felicidad Viernes,
one of the private respondents, who is entitled to the subject lot?
3. Who is entitled to damages?
RULING:
From the aforesaid
provision of the law, it is clear that if movable property is sold to different
vendees, the ownership shall be transferred to the person who may have first
taken possession thereof in good faith. However, should the subject of the sale
be immovable property, the ownership shall vest in the person acquiring it who
in good faith first recorded it in the registry of property. Should none of the
vendees inscribe the sale in the Registry of Property, then the ownership of
the subject real property shall pertain to the person who in good faith was
first in possession; and, in the absence thereof, to the person who presents
the oldest title, provided there is good faith.
A Deed of Assignment of the same
property was executed by Antonio Ante in favor of respondent Felicidad Viernes. Ante filed a petition for the
issuance of another owner's duplicate copy of TCT No. 141582 with the then
Court of First Instance of Quezon City on the ground that the owner's duplicate
copy had been lost. The petition was granted in an order dated November 10,
1983 declaring null and void the lost owner's duplicate copy of the title and
ordering the issuance of a new owner's duplicate copy of the title in favor of
the Antes. Said owner's duplicate copy was delivered by Ante to respondent
Viernes who thereafter together with the Deed of Assignment presented the same
to the Register of Deeds of Quezon City for registration on November 11, 1982.
Thus, on the basis thereof, TCT No. 141582 was cancelled and TCT No. 293889 was
issued in the name of respondent Felicidad Viernes.
The rule is clear that a prior right
is accorded to the vendee who first recorded his right in good faith over an
immovable property. In this case, the petitioners 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 of Quezon
City they thereby established a superior right to the property in question as against
respondent Viernes.
On the other hand,
respondent Viernes cannot claim good faith in the purchase of the subject lot
and the subsequent registration of the Deed of Assignment in her favor. Even
before the petitioners purchased the lot from the Antes respondent Viernes'
husband was first given the option to purchase the same by Antonio Ante but he
declined because he had no money and so he was informed that it would be sold
to petitioners. After petitioners 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.
Respondent Ante obviously in
collusion with respondent Viernes sold the same property to Viernes which was
earlier sold to petitioners, by virtue of a subsequent Deed of Assignment. It
was fraudulently made to appear that the owner's duplicate copy of TCT No.
141582 was lost through a petition filed with the trial court to nullify the
said owner's duplicate copy and for the issuance of another owner's duplicate
copy.
Unfortunately, such fraud was unmasked
as early as July 14, 1981 when respondent Francisco Ante, in Civil Case No.
29617, filed an urgent motion for the issuance of a subpoena and subpoena
duces tecum to require Paz
Garma of 8 Purdue Street, Cubao, Quezon City to produce before the court on
July 16, 1981 at 2:00 o'clock p.m. at the scheduled pre-trial of the case, the
owner's duplicate copy of TCT No. 141582 issued by the Register of Deeds in the
name of the Antes as the same was entrusted to Paz Garma as a realtor for the
proposed sale of the property which did not materialize. Respondent Viernes
admitted in her answer dated January 7, 1984 that she knew of the filing in
court of said urgent motion and that the branch clerk of court issued the
corresponding subpoena. Thus, respondent Ante, as well as respondent
Viernes, knew that the owner's duplicate copy of certificate of title No.
141582 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.
As a matter of fact, as hereinabove
discussed, upon the urging of petitioners, respondent Antonio Ante wrote to the
Garma spouses to entrust the TCT to petitioners on September 30, 1983 and
when petitioners paid the standing account of Ante to the Garmas said owner's
duplicate copy was delivered by the Garmas to the petitioners. The bad faith of
respondents Viernes and Ante is obvious.
Further, even while the
notice of adverse claim of September 6, 1982 filed by the petitioners on TCT
No. 141582 in the Register of Deeds was still existing and had not been
cancelled, on November 11, 1982 the Register of Deeds nevertheless cancelled
said TCT and issued a new title in favor of respondent Viernes. The annotation
was not even carried over nor was it ordered cancelled under the new title
issued to respondent Viernes. The Register of Deeds and/or his subordinates
apparently yielded to the fraudulent design of respondents Viernes and Ante.
This is not what is
contemplated under the Constitution and the Rules as a clear and distinct
statement of the facts on the basis of which the decision is rendered. The
foregoing one paragraph statement constitutes a mere conclusion of facts and of
law arrived at by the trial court without stating the facts which serve as the
basis thereof. Indeed the conclusion of fact therein that petitioners had not
registered the sale to them is traversed by the records which show on the
contrary, petitioners earlier registered the sale to them. The court statement
in the decision that a party has proven his case while the other has not, is
not the findings of facts contemplated by the Constitution and the rules to be
clearly and distinctly stated.
As it is now, this
Court has before it a challenged decision that failed to state clearly and
distinctly the facts on which it is predicated. This Court has said again and
again that it is not a trier of facts and that it relies, on the factual
findings of the lower court and the appellate court which are conclusive. But
as it is, in this case, the Court has to wade through the records and make its
own findings of facts, rather than further delay the disposition of the case by
remanding the records for further proceedings.
Hence, the appealed decision should be struck down.
WHEREFORE, the petition is GRANTED.
The appealed decision of the appellate court dated September 12, 1988 is hereby
SET ASIDE and another judgment is hereby rendered declaring the order of the
trial court dated November 10, 1982 null and void and reinstating the owner's
duplicate copy of TCT No. 141582 in the possession of the petitioners;
declaring the petitioners to have the superior right to the property in question
and to be the true and lawful owners of the same; directing the Register of
Deeds of Quezon City to cancel TCT No. 293889 in the name of respondent
Felicidad Viernes and to issue a new title in favor of petitioners spouses
Pastor and Virginia Valdez upon the presentation of the owner's duplicate copy
of TCT No. 141582; directing respondent Felicidad Viernes and other persons
claiming rights under her residing in the premises of the land in question to
vacate the same immediately and to remove whatever improvement she has placed
in the premises; and ordering private respondents to jointly and severally pay
the petitioners the amounts of P15,000.00 as moral damages, P5,000.00 exemplary
damages, and P20,000.00 as attorney's fees. The docket fees for the amount of
damages and attorney's fees awarded to the petitioners, if not yet duly paid,
shall constitute a prior lien in favor of the government, before the
satisfaction of the judgment in favor of the petitioners. Costs against private
respondents.
SO ORDERED.
FACT:
Isidro Palanay sold a one hectare portion of his land to Francisca
Cardente, Grandmother of IgnacioCardente in 1956. which they took possession
after the sale, planted crops and trees thereon. However,without registering
the said sale.On August 18, 1960 Isidro Palanay sold the entire property
including the one-hectare portion sold toCardente to private respondents
Ruperto and Primitiva Rubin. The Deed of Sale was registered and the newtitle
was issued on their favor.On December 9, 1972, Isidro Palanay executed Deed of
Sale in favor of petitioner Ignacio Cardente.The deed of confirmation states
that the subsequent vendee, Rubin, was informed of the first sale of
theone hectare to Cardente.On February 18, 1977, the house of the Cardente was
burned. The Cardente filed an arson caseagainst the Rubin.On March 31, 1977,
the Rubin filed a complaint of Quieting of Title against the Cardente.The trial
court ruled in favor of the Cardente and ordered the Rubins to convey the
one hectare to theCardentes. On appeal the IAC reversed the decision of the
RTC, hence this appeal.
ISSUE:
WHETHER OR NOT THE SECOND SALE TO CARDENTE IS VALID.
DECISION:
The heart of the problem is whether or not the private respondents acted
in good faith when theyregistered the deed of sale dated August 18, 1960 more
than six months later, on March 7, 1961.Inextricably, the inquiry must be
directed on the knowledge, or lack of it, of the previous sale of the
one-hectare portion on the part of the second buyers at the time of
registration. The trial court found that thesecond vendees had knowledge.DOUBLE
SALE: Mere registration of the sale not enough, good faith must concur
with registration, bad faithrenders the registration futile.It is undisputed
that the private respondents, the second vendees, registered the sale in their
favorwhereas the petitioners, the first buyers, did not. But mere registration
of the sale is not enough. Goodfaith must concur with registration. Bad faith
renders the registration nothing but an exercise in futility. Thelaw and
jurisprudence are very clear on this score.It is true that good faith is always
presumed while bad faith must be proven by the party alleging it.In this case,
however, viewed in the light of the circumstances obtaining, we have no doubt
that the privaterespondents presumed good faith has been sufficiently overcome
and their bad faith amply established.A buyer of real property in the
possession of persons other than the seller must be wary and shouldinvestigate
the rights of those in possession.
Facts:
Mabanta spouses were the registered owners of two lots. They
mortgaged the said properties to DBP as collateral.
Later, the spouses sold the land to Susana
Soriano (“Deed of sale of parcels of land with assumption of mortgage) with a right to repurchase; they failed
to buy
it back. Susanaexecuted a document entitled "Cancellation of Contract" whereby shetransferred
to Alejandro all her rights over the two lots. Alejandro and his son Alfredo cultivated the lots. However, when they
were ready to pay the entire loan, they found that Tan’s daughter
already bought the land.
Issue:
WON the Tan-Reyes is in good faith when she bought and registered the land.
Ruling:
No.
Good faith is something internal;
hence, we must rely on the conduct and outward acts of TanReyes. Good faith must concur
with registration.
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