SECOND DIVISION
|
ROCKVILLE EXCEL INTERNATIONAL EXIM CORPORATION,
Petitioner, - versus - SPOUSES OLIGARIO CULLA and BERNARDITA
MIRANDA,
Respondents. |
G.R. No. 155716 Present: *ynares- santiago, **CARPIO-MORALES, Acting
Chairperson, Brion, DEL CASTILLO, and ABAD, JJ. Promulgated: October 2, 2009 |
x
----------------------------------------------------------------------------------------
x
|
|
D
E C I S I O N
|
|
BRION, J.:
Whether a Deed
of Absolute Sale is really an absolute sale of real property or an equitable
mortgage is the main issue now before us. Petitioner Rockville Excel
International Exim Corporation (Rockville)
prays in this petition[1]
that we reverse the October 9, 2002 decision[2] of
the Court of Appeals (CA) in CA G.R.
SP No. 66070, denying its appeal and affirming the decision of the Regional
Trial Court (RTC),
BACKGROUND FACTS
The spouses
Oligario and Bernardita (Sps. Culla) are
the registered owners of a parcel of land covered by Transfer Certificate of
Title (TCT) No. 5416. They mortgaged
this property to PS Bank to secure a loan of P1,400,000.00.
Sometime in 1993, the Office of the
Clerk of Court and the Ex-Officio Sheriff issued a Sheriff’s Notice of Sale for
the extrajudicial foreclosure of the property. To prevent the foreclosure, Oligario
approached P1,400,000.00. This amount was increased by P600,000.00
for the cash advances Oligario requested, for a total loan amount of P2,000,000.00.
According to Rockville, when Oligario
failed to pay the P2,000,000.00 loan after repeated demands and promises
to pay, the Sps. Culla agreed to pay
their indebtedness by selling to P2,000,000.00 loan, the parties agreed to fix the
purchase price at P3,500,000.00.
As narrated by P1,500,000.00 after Bernardita affixes her
signature to the Deed of Absolute Sale.
P1,500,000.00.
In fact,
On
In their Answer, the Sps. Culla
alleged that the purported Deed of Absolute Sale failed to reflect their true
intentions, as the deed was meant only to guarantee the debt to Diana Young,
not to P1,500,000.00 had to be paid before
Bernardita would sign the Deed of Absolute Sale. When neither P1,500,000.00,
the Sps. Culla volunteered to repay the P2,000,000.00
and opted to rescind the sale.
On
WHEREFORE, in view of all the foregoing, the complaint filed by the plaintiff, Rockville Excel International Exim Corporation against defendants Oligario Culla and Bernardita Miranda is hereby DISMISSED. The Absolute Deed of Sale executed between the said plaintiff and defendants on June 25, 1994 is hereby declared as an equitable mortgage and, defendants are hereby entitled to redeem the mortgaged property upon full payment of their mortgaged debt to the plaintiff in the total amount of two million pesos (P2,000,000.00) with legal rate of interest from June 25, 1994, the time the loan matured, until it is fully satisfied. With costs against the plaintiff.
SO ORDERED.
THE CA DECISION
P1,500,000.00 balance in the purchase price; and
(d) Rockville’s continuous grant of extensions to the Sps. Culla to pay their
loan despite the execution of the deed of sale.
THE PETITION
The present
petition – filed after the CA denied
P2,000,000.00 loan and for the additional
payment of P1,500,000.00 P1,400,000.00
of the purchase price having been used to redeem the mortgaged conjugal
property,
The Sps.
Culla, on the other hand, maintain the contrary view and insist that the RTC
and the CA were correct in holding that the sale was in fact an equitable
mortgage.
THE COURT’S RULING
We find the petitioner’s arguments to be legally flawed,
and therefore deny the petition for lack of merit.
No
dacion en pago
Dacion en pago is
the delivery and transmission of ownership of a thing by the debtor to the
creditor as an accepted equivalent of the performance of an existing
obligation. It is a special mode of
payment where the debtor offers another thing to the creditor who accepts it as
equivalent to the payment of an outstanding debt.[4] For dacion en pago to exist, the following elements must concur: (a)
existence of a money obligation; (b) the alienation to the creditor of a
property by the debtor with the consent of the former; and (c) satisfaction of
the money obligation of the debtor.[5]
P2,000,000.00 debt;
the transaction is therefore a dacion en
pago. It also repeatedly emphasized that Bernardita admitted in her
testimony that she would have signed the Deed of Absolute Sale if P1,500,000.00.
P2,000,000.00 indebtedness. In
fact, as Diana Young admitted in her testimony,
Q. Why, he was asking for the extension of P2 million pesos that he barrowed (sic) from you to be paid by him?
A. He asked me for the extension of time to pay.
Q. After the execution of the deed of sale
(Exhibit “C”)?
A. On the very day. Yes, after the lapse of the six (6) months to pay back the property.
Q. So what appears was a document of sale Exhibit “C” was executed signed by the defendant, Oligario Culla, signed by you and then notarized by a Notary Public.
A. Yes, sir.
Q. On same occasion he asked from you that he be given an extension of six (6) months within which to pay the loan of P2 million pesos?
A. Yes, sir.[6]
If the parties had truly intended a dacion
en pago transaction to extinguish the Sps. Culla’s P2,000,000.00 loan and Oligario had
sold the property in payment for this debt, it made no sense for him to continue
to ask for extensions of the time to pay the loan. More
importantly,
On several
occasions, we have decreed that in determining the nature of a contract, courts
are not bound by the title or name given by the parties. The decisive factor in
evaluating an agreement is the intention of the parties, as shown, not
necessarily by the terminology used in the contract but, by their conduct,
words, actions and deeds prior to, during
and immediately after executing the
agreement.[7]
Thus, to ascertain the intention of the parties, their contemporaneous and
subsequent acts should be considered. Once the intention of the parties is duly
ascertained, that intent is deemed as integral to the contract as its originally
expressed unequivocal terms.[8]
Thus, we agree with the factual
findings of the RTC and the CA that no agreement of sale was perfected between
Definition of equitable mortgage
An equitable mortgage has been
defined “as one which although lacking in some formality, or form or words, or
other requisites demanded by a statute, nevertheless reveals the intention of
the parties to charge real property as security for a debt, there being no
impossibility nor anything contrary to
law in this intent.”[9]
A contract of sale is presumed to be an equitable
mortgage when any of the following circumstances, enumerated
in Article 1602 of the Civil Code, is present:
Art. 1602. The contract shall be presumed to be an equitable mortgage, in any of the following cases:
(1) When the price of a sale with right to repurchase is unusually inadequate;
(2) When the vendor remains in possession as lessee or otherwise;
(3) When upon or after the expiration of the right to repurchase another instrument extending the period of redemption or granting a new period is executed;
(4) When the purchaser retains for himself a part of the purchase price;
(5) When the vendor binds himself to pay the taxes on the thing sold;
(6) In any other case where it may be fairly
inferred that the real intention of the parties is that the transaction shall
secure the payment of a debt or the performance of any other obligation.
In any of the foregoing cases, any money, fruits, or other benefit to be received by the vendee as rent or otherwise shall be considered as interest which shall be subject to the usury laws. [Emphasis supplied.]
The provisions of Article
1602 shall also apply to a contract purporting to be an absolute sale.[10]
For the presumption of an
equitable mortgage to arise under Article 1602, two (2) requisites must concur:
(a) that the parties entered into a contract denominated as a contract of sale;
and, (b) that their intention was to secure an existing debt by way of a
mortgage. Any of the circumstances laid out
in Article 1602, not the concurrence nor an overwhelming number of the enumerated
circumstances, is sufficient to support the conclusion that a contract of sale is
in fact an equitable mortgage.[11] In several cases, we have not hesitated to
declare a purported contract of sale to be an equitable mortgage based solely on
one of the enumerated circumstances under Article 1602.[12] This
approach follows the rule
that when doubt exists on the nature of the parties’ transaction, the law
favors the least transmission of property rights.[13]
Indicators
of equitable mortgage
In the present case, three attendant circumstances indicate that the
purported sale was in fact an equitable mortgage. First, the Sps. Culla retained possession of the property. Second,
That a contract where the vendor remains in physical possession of the
land, as lessee or otherwise, is an equitable mortgage is
well-settled.[14] The
reason for this rule lies in the legal reality that in a contract of sale, the
legal title to the property is immediately transferred to the vendee; retention by the vendor of the possession of the
property is inconsistent with the vendee’s acquisition of ownership under a
true sale.[15] It discloses, in the alleged vendee, a lack
of interest in the property that belies the truthfulness of the sale.[16]
According to
We cannot agree with these positions.
In the first place, the Sps. Culla retained actual possession of the property
and this was never disputed.
Moreover,
we observe that while P2,000,000.00 loan.
In addition, P1,500,000.00 balance to the Sps. Culla.
As found by the RTC, while
Lastly, the numerous extensions
granted by
All told, we see no reason to depart
from the findings and conclusions of both the trial court and the Court of
Appeals.
WHEREFORE, premises considered, we DENY the petition for lack of merit; the
assailed Decision dated
SO ORDERED.
ARTURO
D. BRION
Associate Justice
WE CONCUR:
CONCHITA CARPIO-MORALES
Associate Justice Acting Chairperson |
|
|
CONSUELO YNARES-SANTIAGO Associate
Justice |
MARIANO C. Associate Justice |
ROBERTO A. ABAD
Associate Justice
ATTESTATION
I attest 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.
CONCHITA CARPIO-MORALES
Associate Justice
Acting
Chairperson
CERTIFICATION
REYNATO S. PUNO
Chief Justice
*
Designated additional Member of the Second Division per Special Order
No. 691 dated
** Designated Acting Chairperson of the
Second Division per Special Order No. 690 dated
[1] For review on certiorari under Rule 45. Dated
[2] Penned by Associate Justice Elvi John Asuncion and concurred in by Associate Justices Portia Alino-Hormachuelos and Juan Q. Enriquez, Jr.; id, pp. 69-74.
[3] Id; pp. 108-127.
[4] Vda.
de Jaime, et al. v. CA, G.R. No. 128669,
[5] Pineda, Obligations and Contracts (2000 ed.), p. 212.
[6] TSN,
[7] Aguirre v. Court of Appeals, G.R. No. 131520, January 28, 2000, 323 SCRA 771, citing Zamora v. Court of Appeals, G.R. No. 102557, 260 SCRA 10 (1996).
[8] Sps. Romulo v. Sps. Layug, G.R. No. 151217, September 8, 2006, 501 SCRA 262, citing Lorenzo Shipping Corp. v. BJ Marthel International, Inc., G.R. No. 145483, November 19, 2004, 443 SCRA 163.
[9] Go v. Bacaron, G.R. No. 159048, October 11, 2005, 472 SCRA 339, citing Villanueva, Ceasar L. Philippine Law on Sales (1998 ed.), p. 271 (citing Matanguihan v. Court of Appeals, 341 Phil. 379 [1997] ).
[10] Article 1604 of the Civil Code.
[11] Lorbes
v. Court of Appeals, G.R. No. 139884,
[12] See Lustan v. Court of Appeals, 334 Phil. 609 (1997); Ramirez v. Court of Appeals, 356 Phil. 1 (1998); Martinez v. Court of Appeals, G.R. No. 123547, May 21, 2001, 358 SCRA 38.
[13] Oronce v. Court of Appeals, G.R. No. 125766,
[14] Bernice Legaspi v. Spouses Rita and Francisco Ong, G.R. No.
141311,
[15]Tolentino,
A.M., Commentaries and Jurisprudence on the Civil Code of the Philippines, Vol.
V, 1992 ed., p. 159, citing Labasan v.
Lacuesta, G.R. No. L-25931,
[16] Padilla, A., Civil Law, Civil Code Annotated, Vol. V, 1987 ed., p. 454.