FIRST DIVISION
|
DOMINGO R.
LUMAYAG and FELIPA N. LUMAYAG, Petitioners, - versus - HEIRS OF
JACINTO NEMEÑO and DALMACIA DAYANGCO-NEMEÑO, represented by MELITON NEMEÑO, Respondents. |
|
G.R. No. 162112 Present: PUNO, C.J., Chairperson, *SANDOVAL-GUTIERREZ, AZCUNA,
and GARCIA, JJ. Promulgated: July
3, 2007 |
x----------------------------------------------------------------------------------------x
D E C I S I O N
GARCIA, J.:
Challenged and sought to be set aside
in this petition for review on certiorari under Rule 45 of the Rules of Court
is the decision[1] dated September 30, 2003
of the Court of Appeals (CA), as reiterated in its resolution[2] of
January 9, 2004 in CA-G.R. CV No. 63230,
affirming, with modification, an earlier decision of the Regional Trial Court
(RTC) of Ozamiz City which ruled that the instrument
entitled Deed of Sale with Pacto De Retro
executed in favor of the herein petitioners by the respondents is actually an
equitable mortgage.
The facts:
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,
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 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
On
More than a decade later, or on
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. In their complaint, docketed in the trial
court as Civil Case No. 96-69 and raffled to Branch 35 thereof, the plaintiff
heirs prayed that the Deed of Sale with
Pacto De Retro executed on February 25, 1985 in favor of the defendant spouses
Domingo Lumayag and Felipa N. Lumayag over Lot Nos. 4049 and 4035 C-4 be declared
as an equitable mortgage and considered as already redeemed, with accounting
and 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. Thus, the heirs pray for
a judgment (a) declaring the subject Deed
of Sale with Pacto de Retro as an equitable mortgage and considering the
lots subject thereof as redeemed; (b) ordering the defendant spouses to render
an accounting of the fruits and/or income of the coconut lands from 1985 to
1996 and to return whatever remains of the amount with interest at the legal
rate after deducting the P20,000.00 loan; and (c) ordering the same
defendants to pay litigation expenses and attorney’s fees.
In their Answer,[6]
the spouses Lumayag denied that the contract in question was an equitable
mortgage and claimed that the amount of P20,000.00
received by the plaintiff heirs was the consideration for the sale of the two
lots and not a loan. By way of
affirmative defenses, the spouses Lumayag asserted that the action was already
barred by laches and prescription and
the complaint itself states no cause of action.
With the pre-trial conference having
failed to bring the parties to any amicable settlement, trial on the merits ensued.
Eventually, in a decision[7]
dated P20,000.00. We quote the fallo of the
decision:
WHEREFORE, in the light of the foregoing, judgment is hereby rendered to wit:
1. Declaring the Deed of Sale with Pacto de Retro marked annex “A” to the Complaint as equitable mortgage;
2. Ordering the defendants to reconvey the properties in litigation to the plaintiffs in the amount of P20,000.00 within 30 days after the decision has become final and executory;
3. Ordering the defendants to pay the cost of this suit.
SO ORDERED.
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
which was docketed as CA-G.R. CV No.
63230.
As stated at the threshold hereof, the appellate court, in its Decision of
WHEREFORE, premises
considered, the Decision dated February 3, 1999 rendered by the Regional Trial
Court, Branch 35, Ozamiz City in Civil Case No. 96-69 is hereby AFFIRMED with MODIFICATION, in that [petitioners] could foreclose the mortgaged
properties in the event [private respondents] fail to exercise their right of
redemption within thirty (30) days from the finality of this decision.
SO ORDERED. (Words in brackets supplied.)
Explains the CA in its decision:
xxx xxx xxx
In the instant case, we hold that the deed of sale with pacto de retro is actually an equitable
mortgage. For one, the supposed price for the sale with pacto de retro in the amount of P20,000.00
is unusually inadequate for the two (2) parcels of land, the total area of
which is almost 5.5 hectares. Also, [respondents heirs]
remained in possession of the subject properties even after the execution of
the subject instrument. Not only did [respondent heirs] retain possession of
the subject properties, they also paid for the realty taxes of the same.
Indeed, as the trial court found the transaction was one of an equitable
mortgage,
Finally, the subject instrument provides
that if the vendors a-retro, herein plaintiffs-appellants, fails to exercise
their right to redeem or repurchase the subject properties within the period
stipulated upon, then the conveyance shall be deemed to be an absolute and
irrevocable sale, without the necessity of executing any further deed. Such
stipulation is void for being a pactum
commissorium. xxx
Having
ruled that the instrument executed by the parties is one of an equitable
mortgage, [respondent heirs] can now redeem the mortgaged properties from [petitioner
spouses] within thirty (30) days from finality of this decision. Otherwise, [petitioner
spouses] would be given the option to foreclose the mortgaged properties, for
as a rule, in a real estate mortgage, when the principal obligation is not paid
when due, the mortgagee has the right to foreclose the mortgage and to have the
property seized and sold with the view of applying the proceeds to the payment
of the obligation. xxx. (Words in brackets supplied).
With their motion for reconsideration
having been denied by the appellate court in its equally impugned Resolution of January 9, 2004, petitioners
are now with this Court via the
instant recourse on their submission
that:
I
HON.
COURT OF APPEALS GRAVELY ERRED IN NOT REVERSING THE DECISION OF THE TRIAL COURT
AND DISMISSING THE PRIVATE RESPONDENTS’ COMPLAINT ON GROUNDS OF LACHES AND OR
PRESCRIPTION.
II
HON.
COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT THE DEED OF
III
THE
DECISION RENDERED BY THE HON. COURT OF APPEALS IS NOT SUPPORTED BY THE EVIDENCE
AND CONTRARY TO LAW.[8]
We DENY.
Petitioners initially put the CA to task for not dismissing the case
considering that the titles to the subject parcels of land had already been
consolidated to them by operation of law because the five (5)-year prescriptive
period for the respondents to repurchase expired in 1990.
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 De Retro provided for a 5-year redemption
period which expired on
The two (2) courts below unanimously found that the subject Deed of Sale with Pacto De Retro, 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.
Article 1604 of the Civil Code provides that the provisions of Article
1602 shall also apply to a contract purporting to be an absolute sale, and, in
case of doubt, a contract purporting to be a sale with right to repurchase
shall be construed as an equitable mortgage.[13]
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. So it is that in Socorro Taopo Banga v. Sps. Jose and
Emeline Bello,[14]
this Court, citing Aguirre v. CA,[15] unequivocally ruled:
The presence of even one of the circumstances in Article 1602
is sufficient basis to declare a contract as one of equitable mortgage. The
explicit provision of Article 1602 that any of those circumstances would
suffice to construe a contract of sale to be one of equitable mortgage is in
consonance with the rule that law favors the least transmission of property
rights. To stress, the existence of any
one of the conditions under Article 1602, not a concurrence, nor an
overwhelming number of such circumstances, suffices to give rise to the presumption
that the contract is an equitable mortgage. (Emphasis ours)
Here, the CA correctly found the
presence of not merely one but four (4) circumstances indicative of the true
nature of the subject transaction as an equitable mortgage, to wit: (a) gross
inadequacy of the contract price of P20,000.00 for two (2) parcels of
land, the total area of which is almost 5.5 hectares; (b) respondent heirs remained in possession
of the subject property even after the execution of the supposedly Deed of Sale with Pacto de Retro; (c) said
respondents’ payment of realty taxes; and (d) the provision on pactum commissorium.
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.[16]
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.[18] 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.
WHEREFORE, the instant petition is DENIED, and the assailed decision and resolution
of the CA in CA-G.R. CV No. 63230 are
AFFIRMED.
Costs against petitioners.
SO ORDERED.
CANCIO C. GARCIA
Associate Justice
WE CONCUR:
REYNATO S. PUNO
Chief Justice
Chairperson
(On leave)
|
ANGELINA SANDOVAL-GUTIERREZ Associate Justice |
RENATO C. CORONA Associate Justice |
ADOLFO S. AZCUNA
Associate Justice
C
E R T I F I C A T I O N
Pursuant to Section 13, Article VIII
of the Constitution, I certify that the conclusions in the above decision had
been reached in consultation before the case was assigned to the writer of the
opinion of the Court’s Division.
REYNATO S. PUNO
Chief Justice
* On leave.
[1] Penned by Associate Justice Juan Q. Enriquez, Jr. with Associate Justices Roberto A. Barrios (deceased) and Arsenio J. Magpale, concurring; rollo, pp. 52-59.
[2]
[3] Original Records, pp. 163-164.
[4]
[5]
[6]
[7]
[8]
[9] Vda. de Rigonan et al.
v. Zoroaster Derecho representing the Heirs of Ruben Derecho et al., G.R. No. 159571,
[10] Luis Misterio et al. v. Cebu State Colleg of Science and Technology, G.R. No. 152199, June 23, 2005, 461 SCRA 122.
[11] Gregorio
Amante v. Vicente Serwelas,
G.R. No. 143572,
[12] Benny Go v. Eliodoro Bacaron, G.R. No.
159048,
[13] Article 1603, Civil Code.
[14] G.R. No. 156705,
[15] G.R. No. 131520,
[16] Bernice Legaspi v. Spouses Rita and Francisco Ong, G.R. No. 141311,
[17] Go v. Bacaron,
supra at p. 352.
[18] Bernice Legaspi v.
Spouses Rita and Francisco Ong, supra at p. 144.
[19] Article 2088. The creditor cannot appropriate the things
given by way of pledge or mortgage , or dispose of
them. Any stipulation to the contrary is
null and void.