HEIRS OF CAYETANO PANGAN AND CONSUELO PANGAN VS.

SPOUSES ROGELIO
PERRERAS AND PRISCILLA PERRERAS

Facts:
 Consuelo Pangan agreed to sell their lot and two-door apartment in Sampaloc,
Manila to spouses Perreras for P540,000 and received P20,000 as earnest money from
the latter. Spouses Perreras issued two checks payable to Consuelo amounting to
P450,000,
however, Consuelo refused to accept the checks because of the refusal of her
children/heirs.
 Complaint for consignation filed by Consuelo in RTC Manila Institution of action of
specific performance by the Perreras in RTC Manila to execute a Deed of Absolute Sale
over the subject properties.
 Consuelo’s Answer: because of her husband’s death, their children as heirs became
co-owners of the subject properties and their consent are needed to execute the sale.
RTC ruled in favor of the Perreras: it upheld the existence of a perfected contract of
sale, at least insofar as the sale involved Consuelos conjugal and hereditary shares in
the
subject properties.
 CA ruling: it found that the payment and receipt of earnest money was the operative
act that gave rise to a perfected contract, and that there was nothing in the parties
agreement that would indicate that it was subject to a suspensive condition.

Issue:
Was there a perfected contract executed by the Pangans and Perreras?

Held:
There was a perfected contract between the parties since all the essential requisites
of a contract were present. Article 1318 of the Civil Code declares that no contract
exists unless the following requisites concur: (1) consent of the contracting parties; (2)
object certain which is the subject matter of the contract; and (3) cause of the
obligation established. Since the object of the parties agreement involves properties co-
owned by Consuelo and her children, the petitioners-heirs insist that their approval of
the sale initiated by their mother, Consuelo, was essential to its perfection.
Accordingly, their refusal amounted to the absence of the required element of consent.
However, a thing sold without the consent of all the co-owners does not invalidate
the sale or render it void. Article 493 of the Civil Code recognizes the absolute right of a
co-owner to freely dispose of his pro indiviso share as well as the fruits and other
benefits arising from that share, independently of the other co-owners. Thus, when
Consuelo agreed to sell to the respondents the subject properties, what she in fact sold
was her undivided interest that, as quantified by the RTC, consisted of one-half
interest, representing her conjugal share, and one-sixth interest, representing her
hereditary share. Furthermore, the existence of a perfected contract between the
parties are evidenced by the payment and receipt of P20,000.00, an earnest money by
the contracting parties common usage. Article 1482 of the Civil Code provides that
whenever earnest money is given in a contract of sale, it shall be considered as part of
the price and proof of the perfection of the contract.
RAMOS VS. SARAO (461 SCRA 103)

FACTS:
Spouses Jonas Ramos and Myrna Ramos executed a contract over their
conjugal house and lot in favor of respondent for and in consideration
of P1,310,430.  Entitled “DEED OF SALE UNDER PACTO DE RETRO,” the
contract, inter alia, granted the Ramos spouses the option to repurchase the
property within six months plus an interest of 4.5 percent. Petitioner
tendered to Sarao the amount of P1,633,034.20 in the form of two manager’s
checks, which the latter refused to accept for being allegedly insufficient.
Myrna filed a Complaint, and she deposited with the RTC two checks that
Sarao refused to accept. Sarao filed against the Ramos spouses a Petition
“for consolidation of ownership in pacto de retro sale”. Both RTC and CA
dismissed petitioner’s complaint and appeal respectively in favor of
respondent Sarao.

ISSUE:
Whether or not the pacto de retro sale was in reality an equitable
mortgage?

RULING:
YES. In order to judge the intention of the contracting parties, their
contemporaneous and subsequent acts shall be principally considered
(Art.1371, NCC). 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. (Art. 1602, NCC.
ROBERTS VS. PAPIO

FACTS
Spouses Martin and Lucina Papio (sellers-lessees) obtained loan from
Amparo Investments Corporation (AIC) secured by a real estate mortgage on
their property. They defaulted, and to prevent the foreclosure of the property,
they sold it to Amelia Roberts (buyer-lessor). They executed a Deed of Sale
and also and lease agreement, whereby the sellers lease the property back
from the buyer, that is, so that they can remain in its possession. The buyer-
lessor then went to USA and the sellers-lessees stopped paying rentals. The
latter refused to pay despite demands. The buyer-lessor then demanded that
they vacate the subjects property, lessees still did not heed.
Thus the buyer filed a complaint for unlawful detainer against the
sellers.
As defense, the sellers-lessees claim that the agreement was sale with a right
to repurchase, and that they were able to redeem the property by remitting
the redemption price to the buyer’s agent in the Philippines, and that said
agent misappropriated portion of said price. It also filed a separate civil case
for specific performance under the alledge pacto de retro sale. Nonetheless,
on appeal to CA, they raised the defense that the transaction was an
equitable mortgage.

Issue:
Was the transaction entered into between the parties
under the Deed of Absolute Sale and the Contract of Lease
an equitable mortgage over the property?

HELD – NO.
The seller-lessee intransigently alleged in his answer, and even in his
affidavit and position that the contract is a pacto de retro sale. This is
evident in the letters presented. He even filed a complaint against the buyer
in the RTC for specific performance. His claim that the buyer had given him
the right to repurchase the property is antithetical to an equitable mortgage.
By insisting that he had repurchased the property, the seller thereby
admitted that the deed of absolute sale executed by him and the buyer was,
in fact and in law, a deed of absolute sale and not an equitable mortgage;
hence, the buyer had acquired ownership over the property based on the
said deed. This amounts to a judicial admission, and the seller is estopped
from claiming otherwise. Given that the contract of sale was absolute in
character, the seller must prove that his right to repurchase the property
was granter thereafter. The seller failed to establish such a right.
The Court added: an agreement to repurchase becomes a promise to sell
when made after the sale because when the sale is made without such
agreement the purchaser acquires the thing sold absolutely and, if he
afterward grants the vendor the right to repurchase, it is a new contract
entered into by the purchaser as absolute owner. There is no evidence in this
case that the buyer’s agent was authorized to enter into such a separate
promise to sell. Even assuming there was such an agreement allowing the
sellers to repurchase, the same will be void. Furthermore, there was no such
perfected contract since what is shown on the records is the seller’s refusal
to accept the buyer’s offer to sell the property.

CADUNGOG VS. YAP

FACTS:
VirgilioCadungog executed a deed of sale with the right to repurchase on
August 17, 1979. Through thedocument, Cadungog sold to his cousin
Franklin Ong six parcels of land. Based on the deed of sale, Cadungoghad
the right to repurchase within 10 years from the mentioned date. Virgilio,
however, failed to redeem the subject property. Subsequently, he executed a
deed of absolute sale in favour of Jocelyn Yap, Franklin’s sister.
Such sale covered three parcels of land for P5,000. Thereafter, Virgilio
filed a complaint for the declaration of nullity of the deed of absolute sale
against Yap. Virgilio asseverated that the deed was fictitious because it
hadbeen merely executed to afford Yap claim for the reduction of her tax
liabilities in Canada. Furthermore, hepointed out that after the supposed
sale, Yap made no move in order to consolidate her ownership over
theproperty. The trial court held that Cadungog was able to repurchase the
six parcels of land on May 25-26, 1997which was after the lapse of 18 years,
upon payment to Ong of the amount of P50k. Moreover, the court heldthat
the 10-year redemption period was to be regarded as extended because of
the failure of Ong to consolidatehis title over the property.

ISSUE:
Whether or not there was impairment of the title over the property of the
vendee a retro because of hisfailure to consolidate the sale.

HELD:
The Supreme Court answered in the negative. The court ruled that the
failure of the vendee a retro toconsolidate the title under Article 1607 of the
Civil Code did not impair such title and ownership because themethods and
procedure prescribed was merely for the purpose of registering and
consolidating the titles to theproperty. It declared that it was Franklin Ong
and not petitioner should be regarded as the lawful owner of thesix parcels
of land. Cadungod had therefore no right to mortgage or sell the land to Yap
on September 10, underthe deed of absolute sale. The decision of the
appellate court that Yap had acquired ownership over the threeparcels of
land was declared erroneous. Cadungod, not being the owner of the land,
could not have been thensold lawfully the parcels to responded Jocelyn Yap.
SAN PEDRO V. LEE

FACTS:
Petitioner Erlinda San Pedro initiated this suit against the spouses Ruben1 Lee and
Lilian Sison on November 23, 1994, praying for: (1) a declaration that the document
entitled “Kasulatan ng Ganap na Bilihan ng Lupa” is an equitable mortgage and not a
sale; (2) the reconveyance of the property subject of the “Kasulatan ng Ganap na Bilihan
ng Lupa”; and (3) damages.
San Pedro’s version of events paints a portrait of an unscrupulous couple,
usuriously taking advantage of her financial straits to enrich themselves. Petitioner
claims that she desperately needed money to support her children’s 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
P105,000.00, with interest of P45,000.00, 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.
Petitioner claims that Atty. Roxas and Lee coerced her to sign the “Kasulatan ng
Ganap na Bilihan ng Lupa” and that the document was executed merely as written
evidence of the loan and mortgage. She alleges that Atty. Venustiano Roxas and Ruben
Lee told her that the document was just a formality, with the assurance from Atty. Roxas
and Lee that respondents would never enforce the contract against her. She readily
agreed because she believed in good faith that the spouses were “tunay na tao”. She
further claims that she continued in possession of the parcel of land through her tenant,
Federico Santos, and continued to receive her landowner’s share of the harvest from
1985 until 1995.
ISSUE:
Whether or not the contract in question is an equitable mortgage or a deed of absolute
sale?
RULING:
The contract was a deed of absolute sale.
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. Since the
property in question could have been worth as little as P20.00 per square meter in 1994,
the price of P8.70 per square meter nine years earlier, in 1985, does not seem to be
grossly inadequate. Indeed, respondents’ Declaration of Real Property No. 10786, for the
year 1987, shows the market value of the property to be only P34,470.00 for that year.
However, while the witness may have established that he was, indeed, the agricultural
tenant of the petitioner, the identity of the parcel of land which he tills and the parcel of
land described in the complaint was not established. The “Kasunduan sa Buwisan”
entered into between Federico J. Santos and Lourdes Manalo Vda. De San Pedro dated
May 14, 1975 reiterates the tenancy relation between witness Santos and the San Pedro
family.
The parcel of land described therein has an area of 1.5 hectares, while the property
subject of the contract in question has an area of 17,235 square meters, or 1.72
hectares. There is therefore no clear indicator that the parcel of land being tilled by
Santos is, indeed, the parcel of land subject of the contract between San Pedro and Lee.
Although a landowner-tenant relation has been established between San Pedro and
Santos, we 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.

VILLARICA VS. COURT OF APPEALS

FACTS:
Spouses Villarica sold a parcel of land in Davao with an area of 1,174
sq. meters for P35,000 to spouses Consunji and Montaverde. The
instrument of absolute sale and vendors’ transfer of certificate of title was
delivered to the vendees. On the same day, Spouses Consunji executed
another instrument granting the spouses Villarica an option to buy the same
property within one year for P37, 750.00. The spousces Consunji registered
the absolute deed of sale and a new certificate was issued in their names.
The Spouses Consunji then sold the lot to Jovito Francisco for P47, 000.00
by means of a public instrument which was registered and issued a new
title. The spouses Villarica brought an action for the reformation of the
instrument of absolute sale between Spouses Consunji and Francisco into
an equitable mortgage as a security for a usurious loan of P28,000.00
alleging that such was the real intention of the parties. Spouses Villarica
contended that it should be presumed as an equitable mortgage on the
grounds that (1) the price of P35,000 was unusually inadequate; (2) the
vendors remained in possession of the property sold; (3) the period of one
year for repurchase granted in the instrument was extended for one month;
and (4) the vendors pay the taxes on the land sold.

ISSUE:
WON the public instrument between the spouses Villarica and Spouses
Consunji is one of absolute sale or equitable mortgage.

HELD:
The instrument thereof was one of absolute sale. The court found
Spouses Villarica’s contentions unmeritorious on the grounds that the price
was not inadequate; Spouses Consunji does not remain in possession of the
property but instead were allowed to collect monthly rents; the taxes paid
were back taxes which a vendor has an obligation to pay as they sell the
land free from all liens; and said option to buy is different and distinct from
the right of repurchase.
In the latter basis, it was discussed that 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.
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.
Vda. De Urbano v. GSIS

FACTS:

In 1971, petitioners mortgaged their 200-square meter property in Quezon City to

the respondent GSIS to secure a housing loan of P47,000.00. As petitioners failed to
pay their loan when it fell due, GSIS foreclosed the mortgage on October 28, 1983.
With a bid of P154,896.00, GSIS emerged as the highest bidder in the public auction of
the property.

In a bid to redeem their property, petitioner Arnel Arrienda wrote on September 26,
1984 to the Acquired Assets Department (AAD) of the GSIS signifying the petitioners’
intention to redeem their property. Two days after or on September 28, petitioner vda.
de Urbano wrote the GSIS Board of Trustees (the “Board”) to inform them of her desire
to redeem the subject property and for advice on the procedure for redemption.3 GSIS
responded on October 16, 1984 advising her to pay the total redemption price of
P154,896.00 on or before the expiry date of redemption on November 18, 1984 in full
and in cash, failing which the property would be offered for sale through public
bidding.

On October 29, 1984, petitioner vda. de Urbano requested for more time to redeem the
subject property. In a letter dated January 10, 1985, AAD Manager Marcial Secoquian
informed petitioners that the Board adopted Resolution No. 929 on November 16, 1984
approving the “sale of the subject property to petitioner Purificacion Urbano for the
sum of P174,572.62, provided that the aforesaid price shall be paid in CASH, within
sixty (60) days from notice of this resolution, failing which, the property shall be sold
thru public bidding with the fair market value of the property as the minimum bid
price.

ISSUE:

Whether or not petitioners have the right to repurchase?

RULING:

They are not entitled to repurchase as a matter of right. The Board exercised its
discretion in accordance with law in denying their requests and the GSIS cannot be
faulted for petitioners’ failure to repurchase as it acted upon petitioners’ application
under the Operation Pabahay. The sale of the subject property to respondent dela Cruz
cannot therefore be annulled on the basis of petitioners’ alleged right to repurchase.
 The above laws grant the GSIS Board of Trustees (the “Board”) the power, nay, the
responsibility, to exercise discretion in “determining the terms and conditions of
financial accommodations to its members” with the dual purpose of making the GSIS
“more responsive to the needs of the members of the GSIS” and assuring “the actuarial
solvency of the Fund administered by the GSIS.” As mandated by P.D. 1146, this
discretion may be exercised in acquiring, utilizing or disposing of, in any manner
recognized by law, “real or personal properties in the Philippines or elsewhere
necessary to carry out the purposes of this Act.” Contrary to petitioners’ position, there
is no restriction or qualification that the GSIS should dispose of its real properties in
favor only of GSIS members. Based on these laws, the Board could exercise its
discretion on whether to accept or reject petitioners’ offer to repurchase the subject
property taking into account the dual purpose enunciated in the “whereas clause” of
P.D. 1981, i.e., making the GSIS “more responsive to the needs of the members of the
GSIS” and assuring “the actuarial solvency of the Fund administered by the GSIS.