Catangcatang vs Legayada
00 suspended the running of the period to
Facts:
On May 19, 1952, respondent executed in favor of petitioner a deed of sale with pacto de retro,
with a five-year period of redemption, over a parcel of land situated at Lambunao, Iloilo, with a
stated area of 8.8272 hectares more or less, for a specified consideration of P1,400.00. Of the total
consideration, the amount of P1,200.00 was paid upon the execution of the deed and the balance of
P200.00, covered by a promissory note, was agreed to be payable at a later date.
Petitioner found that the area of the land actually delivered to her was only 5.0779 hectares.
She sought to recover the witheld area in a civil case. In his answer, respondent filed a counterclaim
for recission of the contract of sale with pacto de retro because of plaintiff's failure to pay the 200
peso balance on due date.
During the pendency of the aforementioned case, respondent forcibly took back the possession of
the land from petitioner. On May 19, 1957, the period for the repurchase of the land expired,
allegedly without respondent having availed himself of his right to repurchase the same.
The Court of First Instance of Iloilo dismissed the complaint, having found that the parcel of land
subject matter of the deed of sale was described by metes and bounds, has an actual area of 5.0779
hectares, notwithstanding that the stated area in the tax declaration was 8.8272 hectares. In the
same decision, the counterclaim of Paulino Legayada was likewise dismissed. The decision of the
Court of First Instance became final, neither party having appealed therefrom.
Petitioner instituted the present petition for consolidation of title and restoration of possession. In
his answer, Legayada admitted that on May 19, 1952, he, as vendor, executed a Deed of Sale with
Right of Repurchase in favor of petitioner but denied that he failed to repurchase the property on
or before May 19, 1957 because on May 10, 1957 he took possession of the property "because the
redemption amount is already deposited in the hands of undersigned counsel to be paid" to
petitioner Salvacion Catangcatang.
RTC ruled for petitioner (respondent was not able to effect the repurchase within the period
stipulated). The CA reversed (The failure to pay the full purchase price suspends the running of the
period of redemption. Contrary to the finding of the court a quo. the stipulated five-year period of
redemption did not expire since said period never commenced to run. Further Petitioner as owner
during the redemption period failed to pay taxes on the land, which shall be deducted to the
P1,200.00 price to be returned.)
ISSUE:
Whether or not the non-payment of the P200.
repurchase.
Whether or not respondent was able to effect redemption of the property in question within the
period stipulated in the contract.
RULING:
We are unable to find any support for the holding of the Appellate Court that the failure to pay the
balance of the purchase price embodied in the agreement in the amount of P200.00 resulted in the
suspension of the running of the period for redemption.
The sale under consideration was perfected from the moment Legayada consented to sell the land
in question and Catangcatang agreed to purchase it for the sum of P1,400.00 and the latter had
partially complied with his obligation by paying the sum of P1,200.00 and the former by delivering
possession of the land to the vendee. There was nothing whatsoever in the deed of sale to indicate
that the agreement of the parties was to suspend the running of the period of redemption until full
payment of the purchase price. On the contrary, said period was agreed to be five (5) years from the
date of the execution of the deed.
The more basic issue is whether or not respondent was able to effect redemption of the property
in question within the period stipulated in the contract. Pursuant to Article 1616 of the Civil Code,
"the vendor cannot avail himself of the right of repurchase without returning to the vendee the
price of the sale, and in addition: (1) the expenses of the contract, and any other legitimate
payments made by reason of the sale; (2) the necessary and useful expenses made on the thing
sold."
The records reveal that on May 10, 1957, respondent, without the knowledge of petitioner, took
possession of the subject property. It is claimed that on the same date, respondent's counsel wrote
a letter to petitioner, informing her that the redemption money was already in his (counsel's)
possession This letter never reached petitioner, and was allegedly returned to said counsel. The
reason given by respondent for the non-delivery of the letter is that petitioner could not be found.
This was found by the trial court to be unworthy of credence. Apart from this letter, no further
effort to effect redemption was made. Respondent could have deposited the amount for the
redemption with the court, but this he did not do. In the exercise of the right to repurchase, it is
not sufficient that the vendor a retro manifests his desire to repurchase. This statement of
intention must be accompanied with an actual and simultaneous tender of payment which
constitutes the legal exercise of the right to repurchase.
While consignation of the redemption price is not necessary in order to allow the repurchase within
the time provided by law or by contract, a mere tender being enough, said tender does not relieve
the vendor from the obligation of paying the price.
In case of absence of the vendee a retro, the right of redemption may still be exercised, as a vendor
who decides to redeem a property sold with pacto de retro stands as the debtor and the vendee as
the creditor of the purchase price. The vendor could and should have exercised his right of
redemption against the vendee by filing a suit against him and making a consignation with the
court of the amount due for the redemption. The period for redemption having lapsed without
respondent having validly effected redemption, petitioner is entitled to consolidation of
ownership over the property sold.
WHEREFORE, the decision appealed from is hereby REVERSED, and the decision of the Court of First
Instance of Iloilo is AFFIRMED, with costs against respondent.
VILLARICA v. COURT OF APPEALS
Facts:
On May 19, 1951, the spouses Angel Villarica and Nieves Palma Gil de Villarica sold to the spouses
Gaudencio Consunji and Juliana Monteverde a lot containing an area of 1,174 sq. meters, situated in
the poblacion of the City of Davao, for the price of P35,000. The instrument of absolute sale dated
May 19, 1951 in the form of a deed poll, drafted by Counselor Juan B. Espolong who had been
appointed by the Villaricas as their agent to sell the lot, was acknowledged on May 25, 1951, before
the same Juan B. Espolong who was also a Notary Public. The public instrument of absolute sale and
the vendors' TCT were delivered to the vendees. On the same day, the spouses Consunji executed
another public instrument whereby they granted the spouses Villarica an option to buy the same
property within the period of one year for the price of P37,750. In July, same year, the spouses
Consunji registered the absolute deed of sale in consequence of which TCT in the names of the
spouses Villarica was cancelled and a new TCT was issued in the names of the spouses Consunji. In
February, 1953, the spouses Consunji sold the lot to Jovito S. Francisco for the price of P47,000 by
means of a public instrument of sale. This public instrument of sale was registered in view of which
the TCT in the names of the spouse Consunji was cancelled and a new TCT in the name of Jovito S.
Francisco was issued.
On April 14, 1953, the spouses Villarica brought an action in the Court of First Instance of Davao
against the spouses Consunji and Jovito S. Francisco for the reformation of the instrument of
absolute sale into an equitable mortgage as a security for a usurious loan of P28,000 alleging that
such was the real intention of the parties. Defendants answered that the deed of absolute sale
expressed the real intention of the parties and they also alleged a counterclaim for sums of money
borrowed by the plaintiffs from the Consunjis which were then due and demandable.
- CFI says yes it is an equitable mortgage. Francisco deemed purchaser in good faith.
- CA reversed the decision. Case is not one of those under art. 2208 ncc.
Issue related to topic: Does villarica have the right of redemption?
Held:
No, the court has held that Consunjis as new owners of the lot granted the Villaricas an option to
buy the property within the period of one year from May 25, 1951 for the price of P37,750. Said
option to buy is different and distinct from the right of repurchase which must be reserved by the
vendor, by stipulation to that effect, in the contract of sale. This is clear from Article 1601 of the Civil
Code, which provides:
Conventional redemption shall take place when the vendor reserves the right to repurchase the
thing sold, with the obligation to comply with the provisions of article 1616 and other stipulation
which may have been agreed upon.
The right of repurchase is not a right granted the vendor by the vendee in a subsequent instrument,
but is a right reserved by the vendor in the same instrument of sale as one of the contract. Once the
instrument of absolute sale is executed, the vendor can no longer reserve the right to repurchase,
and any right thereafter granted the vendor by the vendee in a separate instrument cannot be a
right of repurchase but some other right like the option to buy in the
instant case. Hence, Exhibits "B" and "D" cannot be considered as evidencing a contract of sale with
pacto de retro. Since Exh. "D" did not evidence a right to repurchase but an option to buy, the
extension of the period of one year for the exercise of the option by one month does not fall under
No. 3, of Article 1602 of the Civil Code, which provides that:
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.
PREMISES CONSIDERED, the judgment of the Court of Appeals is hereby affirmed, with costs against
petitioners also in this instance.
Diamante v CA
Facts:
A fishery lot, encompassing an area of 9.4 hectares and designated as Lot No. 518-A of the Cadastral
Survey of Dumangas, Iloilo, was previously covered by Fishpond Permit No. F-2021 issued in the
name of Anecita Dionio. Upon Anecita's death, her heirs, petitioner Diamante and Primitivo Dafeliz,
inherited the property which they later divided between themselves; petitioner got 4.4. hectares
while Dafeliz got 5 hectares. It is the petitioner's share that is the subject of the present controversy.
Primitivo Dafeliz later sold his share to private respondent.
On 21 May 1959, petitioner sold to private respondent his leasehold rights over the property in
question for P8,000.00 with the right to repurchase the same within three (3) years from said date.
On 16 August 1960, private respondent filed an application with the Bureau of Fisheries, dated 12
July 1960, for a fishpond permit and a fishpond lease agreement over the entire lot, submitting
therewith the deeds of sale executed by Dafeliz and the petitioner.
Pressed by urgent financial needs, petitioner, on 17 October 1960, sold all his remaining rights over
the property in question to the private respondent for P4,000.00.
On 25 October 1960, private respondent, with his wife's consent, executed in favor of the petitioner
an Option to Repurchase the property in question within ten (10) years from said date, with a ten-
year grace period.
Private respondent submitted to the Bureau of Fisheries the definite deed of sale; he did not,
however, submit the Option to Repurchase.
Thereafter, on 2 August 1961, the Bureau of Fisheries issued to private respondent Fishpond Permit
On 11 December 1963, petitioner, contending that he has a valid twenty-year option to repurchase
the subject property, requested the Bureau of Fisheries to nullify FLA No. 1372 insofar as the said
property is concerned. On 18 December 1964, his letter-complaint was dismissed. Petitioner then
sought a reconsideration of the dismissal; the same was denied on 29 April 1965. His appeal to the
Secretary of the DANR was likewise dismissed on 30 October 1968. Again, on 20 November 1968,
petitioner sought for a reconsideration; this time, however, he was successful.
Issue: Is there an option to repurchase?
Held:
No, the court has held that the Option to Repurchase executed by private respondent in the present
case, was merely a promise to sell, which must be governed by Article 1479 of the Civil Code which
reads as follows:
Art. 1479. A promise to buy and sell a determinate thing for a price certain is reciprocally
demandable.
An accepted unilateral promise to buy or to sell a determinate thing for a price certain is binding
upon the promissor if the promise is supported by a consideration distinct from the price.
An agreement to repurchase becomes a promise to sell when made after the sale, because when
the sale is made without such an agreement, the purchaser acquires the thing sold absolutely, and if
he afterwards grants the vendor the right to repurchase, it is a new contract entered into by the
purchaser, as absolute owner already of the object. In that case the vendor has not reserved to
himself the right to repurchase."
A copy of the so-called Option to Repurchase is neither attached to the records nor quoted in any of
the pleadings of the parties. This Court cannot, therefore, properly rule on whether the promise was
accepted and a consideration distinct from the price, supports the option. Undoubtedly, in the
absence of either or both acceptance and separate consideration, the promise to sell is not binding
upon the promissor (private respondent).
A unilateral promise to buy or sell is a mere offer, which is not converted into a contract except at
the moment it is accepted. Acceptance is the act that gives life to a juridical obligation, because,
before the promise is accepted, the promissor may withdraw it at any time. Upon acceptance,
however, a bilateral contract to sell and to buy is created, and the offeree ipso facto assumes the
obligations of a purchaser; the offeror, on the other hand, would be liable for damages if he fails to
deliver the thing he had offered for sale.
Even if the promise was accepted, private respondent was not bound thereby in the absence of a
distinct consideration.
Vda. De Urbano v GSIS
Facts: Petitioners mortgaged their property to GSIS to secure a housing loan. Petitioners failed to
pay and GSIS foreclosed the mortgage. Petitioners wrote to the GSIS Board of Trustees to inform
them of their desire to redeem the property and for advice on how to redeem it. GSIS advised to pay
the total redemption price of P154,896 before the expiration date of the redemption. Petitioners
requested for remortgage through repurchase of the subject property. Respondent dela Cruz
commenced negotiations with respondent GSIS for her purchase of the foreclosed property. A deed
of absolute sale was executed between dela Cruz and the GSIS and upon discovery, petitioner
Arrienda wroteo to the GSIS protesting the said sale and requesting its reconsideration and recall.
RTC of Quezon City dismissed the complaint and this was affirmed by the CA.
Issue:
Do petitioners have a right to repurchase the subject property?
Was Gsis in bad faith in dealing with petitioners?
Held:
No. Basically the GSIS as provided in their charter has the discretion in handling real or personal
properties in the Philippines. It is in PD 1146 amended by PD 1981. Petitioner was visibly unable to
pay and was even given an extension on GSIS part but to no avail petitioners lacked the capacity to
pay up. The petitioners are not entitled to a request for repurchase as a matter of right. The Board
exercised its discretion in accordance with law in denying their requests and the GSIS cant be
faulted for their failure to repurchase as it acted under the petitioners application under Operation
Pabahay. The sale to respondent cant be annulled on such invoked right.
No.
GSIS denial of petitioners further requests for repurchase of subject property was based on a
factual determination of the petitioners financial capacity and the GSIS charter, PD 1146. Also, GSIS
sold the property to dela Cruz only after giving them one year to repurchase.
The petitioners, on the strength of the Valmonte case, cant also impute bad faith on GSIS when it
was secretly negotiating with Dela Cruz. In the Valmonte case, the court held that the constitutional
right to information was limited to matters of public concern to transactions involving public
interest.The sale of the property was not imbued by public interests as it was a purely private
transaction. Pets. Cant demand to be informed of such public negotiation since they had no interest
on the subject property since they failed to comply with the GSIS terms of repurchase and the denial
to repurchase under the GSIS terms.
San Pedro vs Lee
Facts:
Erlinda San Pedro initiated a suit against the spouses Ruben Lee and Lilian Sison on November 23,
1994, praying for a declaration that the document entitled Kasulatan ng Ganap na Bilihan ng Lupa
is an equitable mortgage and not a sale, the reconveyance of the property subject of the Kasulatan
ng Ganap na Bilihan ng Lupa, and for damages. San Pedro claims that she desperately needed
money to support her childrens college education, and approached one Philip dela Torre, who
introduced her to respondent Ruben Lee. From Lee and his wife Lilian Sison, San Pedro was able to
secure a loan in the amount of P 105,000.00, with interest of P 45,000.00, or a total indebtedness of
P150,000.00. As security for this loan, she agreed to mortgage a 17,235-square meter parcel of
agricultural land located at San Juan, Balagtas, Bulacan, covered by Transfer Certificate of Title (TCT)
No. T-290387.
This transaction took place in the office of Atty. Venustiano Roxas, where she met Lee for the first
time. San Pedro claims that Atty. Roxas and Lee coerced her to sign the document and alleges that
Atty. Roxas and Lee told her that the document was just a formality, with the assurance from Atty.
Roxas and Lee that the spouses would never enforce the contract against her. She readily agreed
because she believed in good faith that the spouses were in good faith. She further claims that she
continued in possession of the parcel of land through her tenant, Federico Santos, and continued to
receive her landowners share of the harvest from 1985 until 1995. But in 1986, San Pedro
attempted to pay the real property tax on the subject agricultural land and to her surprise, she
learned that the property had already been transferred to the names of the spouses. She also
learned that TCT No. T-290387 had been cancelled and TCT No. RT-41717 (T-305595) had been
issued in the name of Ruben Lee.
After saving enough money to pay her indebtedness, San Pedro attempted to redeem her mortgage.
She approached Ruben Lees brother, Carlito, offering to pay her debt, but she was continually
rebuffed. Nine years after the contract was executed, she initiated this suit to recover title to the
subject property.
The spouses, on the other hand, presented an entirely different version of events. They claim that
the sale of the property in question was brokered by their mutual acquaintance and broker, Philip
dela Torre. Spouses Lee and Sison are engaged in the real estate business, and believed that San
Pedros agricultural property would be a good investment. It was disclosed to them that the
property had no existing right of way, that it was not tenanted, and that it was low-lying real estate
which was prone to flooding during the rainy season. They thus negotiated for the purchase of the
property, which had an initial asking price of P 200,000.00, but offered to pay P 150,000.00 for it.
San Pedro accepted their offer and agreed to sell the land. The spouses even requested that San
Pedro execute an affidavit of non-tenancy and a written power of attorney authorizing the former to
pay the capital gains taxes and expenses on the registration of the property in their name.
Issue: Whether the contract in question is an equitable mortgage or a deed of absolute sale?
Held: It is a deed of absolute sale. The document appears on its face to be a contract of sale, but its
nomenclature notwithstanding the Court still tested against the statutory presumptions of Art. 1602
of the Civil Code. Article 1602 provides:
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.
It is well-settled that the presence of even one of the foregoing circumstances is sufficient to declare
a contract as an equitable mortgage, in consonance with the rule that the law favors the least
transmission of property rights. For the presumption of an equitable mortgage to arise under Article
1602, two requisites must concur: (1) that the parties entered into a contract denominated as a sale;
and (2) that their intention was to secure an existing debt by way of a mortgage. In a civil case, the
burden of proof never parts with the plaintiff. Plaintiff must establish her case by a preponderance
of evidence and has the burden of presenting evidence required to obtain a favorable judgment,
and she, having the burden of proof, will be defeated if no evidence were given on either side.
In this case, it was incumbent upon San Pedro to adduce sufficient evidence to support her claim of
an equitable mortgage. Petitioner relies on paragraphs 1, 2, 5 and 6 of Article 1602. Upon an
examination of the evidence, we find insufficient basis to conclude the existence of any of the
grounds she relied upon. Anent alleged inadequacy of the purchase price, petitioner presented two
witnesses who testified as to the market values of real estate in the subject locale.
Neither of these witnesses, however, was able to conclusively demonstrate that the purchase price
of the property was grossly inadequate. The testimony of the purported broker, Adela Ortega, was
not given any credence by the Court of Appeals due to not being aware or familiar with the factors
or bases that affect the increase in the value of realty, or how it influence the zonal valuation made
by the local government, which should be very basic to a real estate broker. The second witness, BIR
Revenue Supervisor Juanito Angeles, testified as to the market value of properties but it must be
noted that Angeles did not testify as to the market value of the locale as of May 23, 1985, the date
of the contract in question. Neither did petitioner present any other evidence of the real estate
market values as of that date. Absent any evidence of the market value of the locale as of the date
of the contract, it cannot be concluded that the price at which the property was sold, or about P8.70
per square meter, was grossly inadequate. Mere inadequacy of price would not be sufficient. The
price must be grossly inadequate, or purely shocking to the conscience
San Pedro then presented Federico Santos to prove that he was the agricultural leasehold tenant of
the former on the parcel of land which was described in the complaint. However, while the witness
may have established that he was, indeed, the agricultural tenant of San Pedro, the identity of the
parcel of land which he tills and the parcel of land described in the complaint was not established.
Although a landowner-tenant relation has been established between San Pedro and Santos, the
Court cannot conclude therefrom that San Pedro was in possession of the property subject of the
Kasulatan ng Ganap na Bilihan ng Lupa through her tenant Federico Santos.
As a third ground for the establishment of the purported equitable mortgage, San Pedro argues that
paragraph 5 of Article 1602 is present but presented no proof that she, as vendor of property,
bound herself to pay taxes on the thing sold. Finally, San Pedro relies on Article 1602, paragraph 6,
which applies to 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
contrast, the witnesses of the spouses all testified as to the existence of a contract of sale between
San Pedro and Ruben Lee. Pertinently, dela Torre, who brokered the sale, and Atty. Roxas, who
prepared the contract in question, were both unequivocal as to the nature of the contract. These
two witnesses, whose impartiality was not impugned, both affirmed the sale of the subject
property. Furthermore the spouses presented documentary evidence which shows that the contract
was indeed a sale: (1) a receipt for P150,000.00 dated May 23, 1985, issued by Erlinda San Pedro,
attesting full receipt of the amount in question; (2) an authority to pay capital gains tax, executed by
Erlinda San Pedro in favor of Ruben Lee;and (3) an affidavit of non-tenancy executed by Erlinda San
Pedro. Lastly, The Kasulatan ng Ganap na Bilihan ng Lupa unequivocally states the absolute sale of
the property covered by Transfer Certificate of Title No. T-290387. Being a notarized document, it
carries the evidentiary weight conferred upon duly executed instruments provided by law, and is
entitled to full faith and credit upon its face.
Petition dismissed ---> Contract is an absolute deed of sale
Ceballos vs. Intestate Estate of the Late Emigdio Mercado
Facts: Leonora Emparado Ceballos is the registered owner of a certain parcel of land situated in
Bato, Badian, Cebu, consisting of 53,301 square meters and covered by Transfer Certificate of Title
No. T-948 of the Register of Deeds for the Province of Cebu. Sometime in October 1980,Ceballos
was introduced to Emigdio Mercado for the purpose of obtaining a loan as the latter was also known
to be in the business of lending money. Ceballos was able to borrow the amount of P12,000.00
payable in two (2) months and to secure said loan, she executed in favor of Mercado a Deed of Real
Estate Mortgage over the subject property. The said mortgage deed was not registered by the
mortgagee. Ceballos was not able to pay her mortgage indebtedness to Mercado within the
stipulated period and on February 13, 1982, a Deed of Absolute Sale was executed whereby the
mortgaged property was sold to Mercado for the price of P 16,500.00. Said instrument contained
the signatures of Ceballos and her husband Narciso Ceballos and notarized by Atty. Elias V. Ortiz. It
appears that sometime in 1990, Ceballos offered to buy back the property from Mercado for the
price of P30,000.00 but the latters wife refused since the same was already transferred in their
names under TCT No. TF-3252 issued on June 1, 1987. Mercado died on January 12, 1991 and a
petition for the issuance of letters of administration over his intestate estate was filed by her
daughter Thelma M. Aranas before the RTC-Cebu City, Branch 11.
On August 18, 1990, Ceballos instituted the present suit against the Intestate Estate of the Late
Emigdio Mercado, Teresita Mercado as the Administrator, and/or the Heirs of the Late Emigdio
Mercado. She claims, among other things, that she is the is the owner of the subject property, the
same being her hereditary share from the property of her late father Rufo Emparado. That
sometime in the early part of December 1980, to accommodate a friend who was hospitalized, she
went to the Mercado, who was known, besides his other businesses, to be also in the business of
lending money, although at exorbitant rate of interest. A Real Estate Mortgage was drawn on
December 31, 1980 for P 12,000.00 although only P 8,000.00 was actually delivered, the difference
represents the interest for the use of money, for a period of two (2) months. Since the
accommodated party could not yet produce the redemption money, Ceballos periodically went to
the mortgagee to beg him not to foreclose the mortgage. On February 13, 1982, Ceballos was made
to execute a Deed of Sale with Pacto de Retro for an increased consideration, from P 12,000.00 to
P16,500.00 for a period of one (1) year from date of execution thereof, which contract was in fact an
equitable mortgage. In November 1990, she went to the deceased mortgagee to redeem the
property to which the latter agreed but the wife, Teresita Mercado vehemently objected saying that
it could no longer be done because the title had been transferred in their names. Such transfer of
title was based on a document, Deed of Absolute Sale, purportedly executed by Ceballos and her
husband on February 13, 1982, the same date when deceased Mercado and Ceballos executed the
Deed of Sale With Pacto de Retro and for the same consideration of P 16,500.00, the latter
document turned out not to have been submitted by the deceased for notarization. Said Deed of
Absolute Sale is an absolute fabrication with the signatures therein appearing to have been of
Ceballos and her husband, were absolute forgeries. Ceballos thus prayed for a judgment (1)
declaring the Deed of Absolute Sale void from the beginning; (2) to allow her to redeem her
property; (3) ordering defendant, after redemption, to reconvey the property to her; (4) ordering
defendant to reimburse her attorneys fees of P50,000.00 and litigation expenses of P10,000.00, and
to pay moral damages in the sum of P100,000.00.
In their Answer with Counterclaim, the Heirs of the Late Emigdio Mercado asserted that what was
written on the deed of real estate mortgage was the truth and that the deed of sale with pacto de
retro was not pushed through because Ceballos decided to sell the property to the late Mercado
absolutely for the price of P16,500.00. Ceballos already knew that she had sold the property to
Mercado and she was even the one who delivered to him the Deed of Absolute Sale already signed
by her and her husband, and already notarized by the notary public; and since that time
respondents have been in possession of said property and were the ones paying the realty taxes
thereon. The signatures appearing on the deed of sale are genuine, and the property can no longer
be redeemed as it had already been sold in an absolute manner to
Mercado. Respondents thus prayed that the complaint be dismissed and on the counterclaim, that
Ceballos be ordered to pay respondents the amounts of P30,000.00 as attorneys fees, P20,000.00 as
litigation expenses, P1,000,000.00 as moral damages and P200,000.00 as exemplary damages.
To prove her allegations in the complaint, Cebalos presented documentary evidence and her own
testimony and those of her witnesses Romeo Varona ,document examiner of the PNP Crime
Laboratory, Camp Sotero Cabahug, and Jovencio Virtucio. Respondents, on the other hand,
presented the testimonies of Atty. Ortiz, Teresita Virtucio Mercado and SPO2 Wilfredo Espina
,member of the PNP assigned at the Crimes Record Section. In rebuttal, Ceballos returned to the
witness stand and also presented the testimony of Pio Delicano ,alleged overseer of the subject land
since 1990. Respondents sur-rebuttal evidence consisted of a copy of tax declaration in the names
of Ceballos and Francisca Emparado and copy of the complaint in Civil Case No. CEB-13680 pending
before RTC-Cebu City, Branch 22 between Ceballos and her own brothers and sisters over the same
property subject of the present litigation.
Issue: Whether the signatures of Ceballos and her husband on the subject document were forged
and, if valid, whether the document is that of an absolute deed of sale or an equitable mortgage?
Held: The signatures on the document were not forged. Petitioner failed to convince the Court that
the CA committed reversible error in affirming the trial court and in giving no weight to expert
opinion. The RTC made an impressively thorough study, which the CA based their decision, and
arrived at a well-reasoned resolution of the issue of forgery. As a public document, the subject Deed
of Absolute Sale has in its favor the presumption of regularity. To contradict it, one must present
evidence that is clear and convincing; otherwise, the document should be upheld.
The document was also ruled as an absolute deed of sale. Ceballos failed to present clear and
convincing evidence to overcome the presumption of validity of the notarized Deed conveying the
land to private respondents. Her testimony denying the validity of the sale, having been made by a
party who has an interest in the outcome of the case, is not as reliable as written or documentary
evidence. Moreover, self-serving statements are inadequate to establish ones claims. Proof must be
presented to support the same.
As proof on the alleged unconscionably low selling price of the subject land, Ceballos points out that
it is located in a tourist area and golf haven in Cebu. Notably, she has failed to prove that on
February 13, 1982, the date of the sale, the area was already the tourist spot and golf haven that
she describes it to be. In 1990, the property might have been worth ten million pesos,as she
claimed; however, at the time of the sale, the area was still undeveloped. Hence, her contention
that the selling price was unconscionably low lacks sufficient substantiation.
Ceballos also argues that Mercados delay in registering the Deed of Absolute Sale and transferring
the land title shows that the real agreement was an equitable mortgage.
An equitable mortgage is one that -- although lacking in some formality, form or words, or other
requisites demanded by a statute -- nevertheless reveals the intention of the parties to charge a real
property as security for a debt and contains nothing impossible or contrary to law. Delay in
transferring title is not one of the instances enumerated by law -- instances in which an equitable
mortgage can be presumed. Moreover, throughout the testimony of Cebalos before the trial court,
she never claimed that after the Deed of Absolute Sale had been executed in February 13, 1982, the
land continued to be intended merely to secure payment of the P 12,000 loan taken on December
31, 1980.
Petition was dismissed except for the fact that the award for attorneys fees and expenses of
litigation were not sustained.
Balatero vs IAC
The Contract consummated was an Equitable Mortgage.
Facts: There are 4 claimants with respect to the subject parcel of land.
1. Petitioner Florencio Balatero, for a portion of both lots by purchase from Josefa I. de Badelles and
Leona, Salvacion, Jose, Catalina and Dominga, as surnamed Badelles;
2. Josefa Iglupas Badelles, for Lot No. 433 having inherited the same from her parents. Josefa died
during the pendency of the case and was substituted by her heirs, petitioners herein;
3. Private respondent Juan A. Veloso, for Lot No. 433, having purchased the same from Josefa
Iglupas; and
4. Anacleto Iglupas for Lot No. 433, having inherited the same from his deceased parents Alejo
Iglupas and Tomasa Ronda.
Tagalugin ko nalang ha, magulo si Justice Gutierrez mag-kwento e.
Pag-aari talaga ni Josefa Iglupas ang lupa tska nung brother nya na si Alejo. After mamatay kasi nung
parents nilang dalawa binigay yung admin works kay Alejo. Take note, si Alejo ay ama ni Anacleto
Iglupas na asawa ni Tomasa. After Alejo died, Tomasa and son Severo sold for 111 pesos the land to
Josefa Iglupas-Badelles(nag asawa siya e, Juan pangalan.) Tumira sina Josefa kasama mga anak nya
dun sa lupa. After sometime, Josefa mortgaged it for 68 to Juan Veloso who never gets possession of
the land. (thats why in the end of the story, his right doesnt ripen into ownership). Pinagbili
eventually ni Josefa kay Florencio yung portion lang naman ng lupa which is the subject of litigation.
Eto yung contentions: Anacleto says ang pinagbili lang ay yung bahay, hindi kasama yung lupa.
Spanish kasi yung wordings ng kontrata. Sabi floor lang pinagbili. Sabi pa nya, ndi daw applicable
yung 1602 ng NCC kasi OCC daw yung prevailing nung nagkabilihan. Take note: Walang 1602 sa OCC,
bago lang yung provision sa NCC, hihi malamang.
Issue: Is there a Contract of Sale or Equitable mortgage? Who is the true owner?
Held: Equitable Mortgage said the court. Art. 1602 par. 2 provides When the vendor remains in
possession as lessee or otherwise; there is a presumption that the contract is an equitable
mortgage. Hindi naman kasi umalis sina JOSEFA IGLUPAS at mga anak nya hanggang mamatay si
Josefa at magka-asawa mga anak nya.
With respect to Juan Veloso na mortgagee with PACTO DE RETRO agreement, hindi nya inassert
agad agad, at the same time, ndi nya naposess yung lupa. Therefore nganga sya.
Kagaguhan yung sinabi ni Anacleto with respect to his contentions, the principal contract doesnt
necessarily provides that the sale is all about the house and not the land. The boundaries are
properly describe e! tsaka applicable daw yung 1602 sabi ng COURT kasi the purpose of the law is to
exonerate the evils and abuses of the old law with respect to the gaps hidden there. Kaya nga may
new law para maayos yung dapat ayusin. Isa pa, retroactive and procedural laws.
SIMON LACORTE, ROSARIO LACORTE, SEVERINO LACORTE, JEROSALINA LACORTE-FERNANDEZ and
CIRILA LACORTE-ANGELES, petitioners, vs. THE HONORABLE COURT OF APPEALS, SPOUSES
PEREGRINO and ADELA LACORTE, and JOSE ICACA, respondents.
FACTS:
May lupa pag-aari ni MARIA INOCENCIO LACORTE. Malapit na kasi ma-forclose yung mortgage kaya
binili out of his kindness ni JOSE ICACA yung lot.
Petitioners and Respondents are siblings. They are the heirs of one MARIA INOCENCIO LACORTE. On
October 17, 1983, respondent Jose Icaca and petitioner Simon Lacorte, in behalf of the heirs of
Maria Lacorte, entered into an Agreement whereby the former was authorized to purchase the
subject property from the bank provided that the heirs of Maria Lacorte shall be given the right to
repurchase the same in the amount of P33,090.00 within a period of one year from that date. The
one-year redemption period was later extended to March, 1987 pursuant to another Agreement
dated October 16, 1984. Both agreements were signed by petitioner Simon Lacorte for himself and
in representation of the heirs of Maria Lacorte. On November 4, 1984, respondent Peregrino
Lacortes wife, Adela, paid to respondent Icaca the amount of P26,000.00 as deposit for the
repurchase of the property. It appears, however, that without the knowledge and consent of herein
petitioners, and before the expiration of the grace period, private respondents Peregrino Lacorte
and his wife were able to purchase the land in their names by virtue of a Deed of Reconveyance
executed by respondent Icaca dated February 3, 1987.
That prompted herein petitioners to commence this action on December 9, 1988 for annulment of
the contract on the ground that the same was entered into in evident bad faith and in violation of
the previous agreements between the parties, thereby resulting in prejudice to the property rights
of herein petitioners. In their Answer, respondents Peregrino and Adela Lacorte denied that there
was an agreement to sell the property collectively to the heirs of Maria Lacorte, and argued that
since the land was legally sold by the bank to respondent Icaca, then the sale thereof by the latter to
the former is likewise valid.
CONTENTIONS:
Sabi ni Peregrino at Adela, ndi daw nila alam yung pag-uusap ni Simon at Jose ICACA. Kaya lang daw
nila binili na agad kasi tinutulungan nila ung mga kapatid nila na makapag raise agad ng pera para
maging absolute owner silang magkakapatid.
Sabi ni Jose ICACA, akala daw nya nag-usap na sina Simon at Peregrino na si latter na muna bibili
lhat, then reimburse nalang. Should he had known it before, he will not compel himself to sell the
subject land and let the siblings fight inside the court.
ISSUE: Is there a contract of equitable mortgage? Should the contract of reconveyance be annulled
or reformed?
HElD: important points:
1. The initial payment of P26,000.00 was made on November 4, 1984, immediately after the
Agreement of October 16, 1984 extending the redemption period was executed. The balance of
P7,090.00 was paid only in February, 1987 when the Deed of Reconveyance was executed, which
was well within the extended period granted to herein petitioners. If respondent spouses really
knew nothing about the previous agreements with Icaca, it is an incredible accident that the dates of
payment of the purchase price coincided quite closely with the periods stipulated by the parties.
And, if ever there was any other agreement entered into exclusively between respondent spouses
and Jose Icaca, the records are completely bereft thereof and respondent spouses conveniently
failed to give any
explanation therefor. Indeed, it is highly improbable that, sine stipulatio, Icaca would still have
accepted payment of the balance despite the lapse of a long period of time, contrary to the ordinary
and normal course of things.
2. Respondent Adela Lacorte claimed that she informed herein petitioners about the sum of
P26,000.00 she had paid to Jose Icaca. According to her, she did that on purpose because she
wanted petitioners to help her raise the amount necessary to pay the balance of the purchase
price.[12] If what she alleges is true, then it is perplexing why she would still ask for money from
petitioners and thereby involve them in the contract with Icaca although that was supposed to be
for respondent spouses exclusively.
3. Adela Lacorte likewise admitted that her mother-in-law and two of herein petitioners remain and
continue to be in possession of the property even after the sale thereof to Icaca. The only plausible
and explicative reason for this is that petitioners were merely enforcing the rights vested in them
under those aforementioned agreements with Icaca.
4. Also, by her own admission, Adela Lacorte knew that petitioners were very interested in
redeeming the property from Icaca. On the witness stand, she stated that when she met with Icaca
to negotiate for the repurchase of the property, she was accompanied by both her husband and
petitioner Rosario Lacorte.[13] It will be recalled that Rosario Lacorte is one of the petitioners who
has been continuously occupying the subject land from the time it was still owned by Maria Lacorte
up to the present. Logically, it is Rosario Lacorte who, among the heirs, is most interested in
regaining ownership of the property. Thus, Adela Lacorte cannot make it appear that Rosarios
presence in that meeting was inconsequential; on the contrary, Adelas close contact with
petitioners during the negotiations is clear proof that she was privy to the agreements between
petitioners and Icaca.
5. Petitioner Simon Lacorte testified that they were the ones who negotiated with the bank for the
reduction of the redemption price from P45,000.00 to P21,000.00. After the bank had agreed to
their proposal, Simon Lacorte immediately consulted with Icaca, to whom the land had also been
mortgaged for P12,500.00, on the possibility of the latter paying the redemption price while
petitioners still did not have the money to buy back their property. Icaca acceded and,
consequently, an agreement was executed between the parties.
Therefore, walang equitable mortgage. Reformation yung sinabing remedy ng court kasi yung
contract of reconveyance ay act of defrauding the co-heirs daw. It doesnt necessarily coincide with
the true intention of the parties.
-Camus v. CA-
-Dapitan v. CA-
-Alonzo v. IAC-
Primary Structures Corp. v. Sps. Valencia
Facts: Primary Structures Corp is the registered owner of a situated in Cebu. Adjacent to it lot were
three lots (combined area of 3,751 sq m) which was bought by Sps. Valencia from a Hermogenes
Mendoza. Primary learned of the sale of the lots only in January, 1996, when Hermogenes Mendoza
sold to the former a parcel also adjacent to the lot which it already owns. Immediately, it sent a
letter to Sps. Valencia, on 30 January 1996, signifying its intention to redeem the three lots.
On 30 May 1996, Primary sent another letter to the Valencias, tendering payment of the price paid
to Mendoza by the Valencias for the lots. The Valencias, in response, informed Primary that they
had no intention of selling the parcels
Invoking the provisions of Articles 1621 and 1623, Primary filed an action against the Valencias to
compel the latter to allow the legal redemption, claming that neither Mendoza, the previous owner,
nor Vallencia gave formal or even just a verbal notice of the sale of the lots as so required by Article
1623 of the Civil Code.
Issue: Whether Primary Structure can invoke its right of redemption?
Held: Yes. Whenever a piece of rural land not exceeding one hectare is alienated, the law grants to
the adjoining owners a right of redemption except when the grantee or buyer does not own any
other rural land. In order that the right may arise, the land sought to be redeemed and the
adjacent property belonging to the person exercising the right of redemption must both be rural
lands. If one or both are urban lands, the right cannot be invoked. The appellate court, sustaining
the trial court, has said that there has been no evidence proffered to show that Sps. Valencia are not
themselves owners of rural lands for the exclusionary clause of the law to apply.
Article 1623 of the Civil Code provides that the right of legal pre-emption or redemption shall not be
exercised except within thirty days from notice in writing by the prospective vendor, or by the
vendor, as the case may be. In stressing the mandatory character of the requirement, the law states
that the deed of sale shall not be recorded in the Registry of Property unless the same is
accompanied by an affidavit of the vendor that he has given notice thereof to all possible
redemptioners.
Valencia overlook the fact that Primary Structures is not a party to the deed of sale between them
and Mendoza and has had no hand in the preparation and execution of the deed of sale. It could
not thus be considered a binding equivalent of the obligatory written notice prescribed by the Code.
Applying an earlier decision, the SC held that the thirty-day period of redemption had yet to
commence. The written notice of sale is mandatory. This Court has long established the rule that
notwithstanding actual knowledge of a co-owner, the latter is still entitled to a written notice
from the selling co-owner in order to remove all uncertainties about the sale, its terms and
conditions, as well as its efficacy and status.
Lee Chuy Realty Corporation vs. Court of Appeals
G.R. No. 104114
December 4, 1995
Facts:
A piece of land in Malhacan, Meycauayan, Bulacan with an area of 24,576 square meters is disputed
by Lee Chuy Realty Corporation (Lee Chuy) and private respondent Marc Realty and Development
Corporation (Marc Realty). The land is originally co-owned by Ruben Jacinto and Dominador,
Arsenio, Liwayway, all surnamed Bascara owning 1/6 and 5/6 of the property respectively. Ruben
Jacinto sold his share to Lee Chuy and the sale was registered on April 30, 1981. The Bascaras and
Ernesto Jacinto sold their share to Marc Realty. It appears that Lee Chuy was not informed of the
sale between the Bascaras and Marc Realty and only knew of the sale when he made an inquiry in
the Register of Deeds of Bulacan. Therefore, Lee Chuy filed a complaint for legal redemption against
Marc Realty and consigned in court a managers check for P614,400. Marc Realty in its answer
contends that Lee Chuy has no cause of action there being no allegation of prior valid tender of
payment nor a prior valid notice of consignation. The trial court ruled in favor of Lee Chuy holding
there was a prior valid tender of payment and consignation and further reasons that a separate
offer to redeem nor a formal notice of consignation are not necessary for the filing of the action
itself within the period of redemption is equivalent to a formal offer to redeem. The Court of
Appeals reversed the decision stating that a prior tender or offer of redemption is a prerequisite to
the filing of an action for legal redemption.
Issue:
Is a prior valid tender of payment a prerequisite before filing an action for legal redemption?
Held:
No. Arts. 1620 and 1623 of the Civil Code on legal redemption provide:
Art. 1620. A co-owner of a thing may exercise the right of redemption in case the shares of all the
other co-owners or of any of them are sold to a third person. If the price of the alienation is grossly
excessive, the redemptioner shall pay only a reasonable one.
xxx xxx xxx
Art. 1623. The right of legal pre-emption or redemption shall not be exercised except within thirty
days from the notice in writing by the prospective vendor, or by the vendor, as the case may be. The
deed of sale shall not be recorded in the Registry of Property unless accompanied by an affidavit of
the vendor that he has given written notice thereof to all possible redemptioners.
A judicious scrutiny of the cases impugns the impression of MARC REALTY that they enunciate
conflicting doctrines. On the contrary, we view them as complementing one another. The Court of
Appeals erroneously concluded that a prior tender or offer of redemption is a prerequisite or
precondition to the filing of the action for legal redemption, notwithstanding prevailing
jurisprudence holding that to avail of the right of redemption what is essential is to make an offer to
redeem within the prescribed period. There is actually no prescribed form for an offer to redeem to
be properly effected. Hence, it can either be through a formal tender with consignation, or by filing
a complaint in court coupled with consignation of the redemption price within the prescribed
period. What is condition precedent to a valid exercise of the right of legal redemption is either the
formal tender with consignation or the filing of a complaint in court. What is paramount is the
availment of the fixed and definite period within which to exercise the right of legal redemption.
In Hulganza v. Court of Appeals the Court, citing previous decisions, declared that the formal offer to
redeem, accompanied by a bona fide tender of the redemption price, within the prescribed period is
only essential to preserve the right of redemption for future enforcement beyond such period of
redemption and within the period prescribed for the action by the statute of limitations. Where, as
in the instant case, the right to redeem is exercised through judicial action within the reglementary
period the formal offer to redeem, accompanied by a bona fide tender of the redemption price,
while proper, may be unessential. The filing of the action itself is equivalent to a formal offer to
redeem. In sum, the formal offer to redeem is not a distinct step or condition sine qua non to the
filing of the action in Court for the valid exercise of the right of legal redemption. What constitutes a
condition precedent is either a formal offer to redeem or the filing of an action in court together
with the consignation of the redemption price within the reglementary period.
Lee Chuy Reality Corporation v. CA
Facts: A land in Meycauayan, Bulacan (24,6576 sqm) was originally Co owned by Ruben Jacinto
(1/6th of the property) and Dominador, Arsenio, Liwayway, all surnamed Bascara, and Ernesto
Jacinto (remaining 5/6th). On Feb. 4, 1981, Ruben Jacinto sold his undivided share to Lee Chuy
Reality, which was registered on April 30, 1981. On May 5, 1989, the Baracas and Ernesto Jacinto
sold their share top Marc Reality, which was registered on Oct. 16, 1989.
Lee Chuy claims that it was never informed of the existence of the sale between Marc Reality and the redemption price, while proper, may be unessential. The filing of the action itself is equivalent
the Bascaras and Jacinto and it was only upon inquiry from the Register of Deeds of Bulacan that the to a formal offer to redeem.
sale was brought to its attention. Marc Reality claims that Lee Chuy was verbally notified of the sale
and was in fact given a copy of the deed of sale.

This caused Lee Chuy to file a complaint for legal rededmption against Marc Reality and consigned a
Managers Check fo P614,400.

RTC held in favor of Lee Chuy: there was a prior valid tender of payment and consignation.
It further decreed that (neither a separate offer to redeem nor a formal notice of
consignation is necessary for the reason that the filing of the action itself, within the period
of redemption, is equivalent to a formal offer to redeem.
CA reversed: a prior tender or offer of redemption is a prerequisite or precondition to the
filing of an action for legal redemption; there must be tender of the redemption price within
the required period because the policy of the law is not to leave the purchaser's title in
uncertainty beyond the established 30-day period.

Lee Chuy Realitys Contention: The filing of the action itself is equivalent to a formal offer to
redeem, which is a condition precedent to the valid exercise of the right of legal redemption.

Marc Realitys Contention: Prior tender of payment is a condition precedent to the filing of an
action in court in order to validly exercise the right of legal redemption.

Issue: Is a formal offer a condition sine qua non to the exercise of the right to legal redemption.

Held: NOOOOOOOOOOOO! The SC held in favor of Lee Chuy Reality holding that The Court of
Appeals erroneously concluded that a prior tender or offer of redemption is a prerequisite to the
filing of the action for legal redemption. The prevalent jurisprudence holds that to avail of the right
of redemption what is essential is to make an offer to redeem within the prescribed period.

There is actually no prescribed form for an offer to redeem to be properly effected. Hence, it can
either be through a formal tender with consignation, or by filing a complaint in court coupled with
consignation of the redemption price within the prescribed period. What is condition precedent to
a valid exercise of the right of legal redemption is either the formal tender with consignation or
the filing of a complaint in court. What is paramount is the availment of the fixed and definite
period within which to exercise the right of legal redemption.

The formal offer to redeem, accompanied by a bona fide tender of the redemption price, within the
prescribed period is only essential to preserve the right of redemption for future enforcement
beyond such period of redemption and within the period prescribed for the action by the statute of
limitations. Where, as in the instant case, the right to redeem is exercised through judicial action
within the reglementary period the formal offer to redeem, accompanied by a bona fide tender of