Heirs of Jose Reyes vs Amanda Reyes
GR 158377, August 13, 2010
Bersamin, J.:
Facts:
Leoncia and her 3 sons executed the Kasulatan ng Biling Mabibiling Muli by which
they sold their parcel to Sps. Francia for P500, subject to the vendors'
right to repurchase for the same amount sa oras na sila'y makinabang. Potenciana's
heirs did not assent to that deed. Nonetheless, Teofilo and Jose, Jr. and their
respective families remained in possession of the property and paid the realty
taxes thereon. Leoncia and her children did not repay the amount of P500.00.
Alejandro, the son of Jose, Sr., first partially paid to
the Sps Francia P265.00 for the obligation of Leoncia, his uncles and
his father. Alejandro later paid the balance of P235.00. Thus, on
August 11, 1970, the heirs of Spouses Francia executed a deed entitled Pagsasa-ayos
ng Pag-aari at Pagsasalin, whereby they transferred and conveyed to
Alejandro all their rights and interests in the property for P500.00.
Leoncia
and her 3 sons excuted the Kasulatan ng Biling
Mabibiling Muli by which they sold their parcel to Sps. Francia for P500, subject to the vendors'
right to repurchase for the same amount sa oras na sila'y makinabang. Potenciana's
heirs did not assent to that deed. Nonetheless, Teofilo and Jose, Jr. and their
respective families remained in possession of the property and paid the realty
taxes thereon. Leoncia and her children did not repay the amount of P500.00.
On August 21, 1970, Alejandro executed a Kasulatan
ng Pagmeme-ari, wherein
he declared that he had acquired all the rights and interests of the heirs of
the Sps Francia, including the ownership of the property, after the vendors had
failed to repurchase within the given period. From then on, he had paid the
realty taxes for the property.
Nevertheless, on October 17, 1970, Alejandro, his
grandmother (Leoncia), and his father (Jose, Sr.) executed a Magkasanib
na Salaysay, by which Alejandro acknowledged the right of Leoncia,
Jose, Jr., and Jose, Sr. to repurchase the property at any time for the same
amount of P500.00.
Amanda filed a suit to quiet the title.
Issues:
- Whether the transaction entered into by Alejandro, Leoncia, Jose Sr., Jose Jr. and Teofilo was an equitable mortgage and not a pacto de retro sale;
- Whether upon the execution of the Kasulatan ng Pagmeme-ari, ownership was consolidated to Alejandro upon failure of Leoncia and her sons to redeem within the agreed period; and
- Whether the Magkasanib na Salaysay executed by Alejandro granted Leoncia and her three sons a right to repurchase at any time for P500.
Held:
1. It
was an equitable mortgage.
There was no dispute that
the purported vendors (Leoncia and sons) had continued in the possession of the
property even after the execution of the agreement; and that the property had
remained declared for taxation purposes under Leoncia's name, with the realty
taxes due being paid by Leoncia, despite the execution of the agreement. Such
established circumstances are among the badges of an equitable mortgage
enumerated in Article 1602, paragraphs 2 and 5 of the Civil Code, to wit:
Art. 1602. The contract
shall be presumed to be an equitable mortgage, …:
x x x
(2) When the vendor remains
in possession as lessee or otherwise;
x x x
(5) When the vendor binds
himself to pay the taxes on the thing sold;
x x
x
The existence of any one of the conditions enumerated
under Article 1602 of the Civil Code, not a concurrence of all or of a majority
thereof, suffices to give rise to the presumption that the contract is an
equitable mortgage. Consequently, the contract between the vendors and
vendees (Spouses Francia) was an equitable mortgage.
Considering that sa oras na sila'y makinabang, the
period of redemption stated in the Kasulatan ng Biling Mabibiling Muli, signified
that no definite period had been stated, the period to redeem should be ten years
from the execution of the contract, pursuant to Articles 1142 and 1144 of the
Civil Code. Thus, the full redemption price should have been paid by July 9,
1955; and upon the expiration of said 10-year period, mortgagees Sps Francia or
their heirs should have foreclosed the mortgage, but they did not do so.
Instead, they accepted Alejandro's payments, until the debt was fully satisfied
by August 11, 1970.
The acceptance of the payments even beyond the 10-year
period of redemption estopped the mortgagees' heirs from insisting that the
period to redeem the property had already expired. Their actions impliedly
recognized the continued existence of the equitable mortgage. The conduct of
the original parties as well as of their successors-in-interest manifested that
the parties to the Kasulatan ng Biling Mabibiling Muli really
intended their transaction to be an equitable mortgage, not a pacto de
retro sale.
2. No, ownership was not
consolidated to Alejandro upon failure of Leoncia and her sons to redeem within
the agreed period.
It is true that Alejandro became a co-owner of the
property by right of representation upon the death of his father, Jose Sr. As
a co-owner, however, his possession was like that of a trustee and was not
regarded as adverse to his co-owners but in fact beneficial to all of them.
Yet, the respondents except to the general rule,
asserting that Alejandro, having earlier repudiated the co-ownership, acquired
ownership of the property through prescription.
The Court cannot accept the respondents' posture.
In order that a co-owner's possession may be deemed
adverse to that of the cestui que trust or the other
co-owners, the following elements must concur:
1. The co-owner has performed unequivocal acts
of repudiation of the co-ownership amounting to an ouster of the cestui
que trust or the other co-owners;
2. Such positive acts of repudiation have
been made known to the cestui que trust or the other
co-owners;
3. The evidence on the repudiation is clear
and conclusive; and
4. His possession is open, continuous,
exclusive, and notorious.
The concurrence of the foregoing elements was not
established herein. For one, Alejandro did not have adverse and exclusive
possession of the property, as, in fact, the other co-owners had continued to
possess it, with Alejandro and his heirs occupying only a portion of it.
Neither did the cancellation of the previous tax declarations in the name of
Leoncia, the previous co-owner, and the issuance of a new one in Alejandro's
name, and Alejandro's payment of the realty taxes constitute repudiation of the
co-ownership. The sole fact of a co-owner declaring the land in question in his
name for taxation purposes and paying the land taxes did not constitute an
unequivocal act of repudiation amounting to an ouster of the other co-owner and
could not constitute adverse possession as basis for title by prescription.
Moreover, according to Blatero v. IAC, if
a sale a retro is construed as an equitable mortgage, then the
execution of an affidavit of consolidation by the purported buyer to
consolidate ownership of the parcel of land is of no consequence and the
"constructive possession" of the parcel of land will not ripen into ownership,
because only possession acquired and enjoyed in the concept of owner can serve
as title for acquiring dominion.
In fine, the respondents did not present proof showing
that Alejandro had effectively repudiated the co-ownership. Their bare claim
that Alejandro had made oral demands to vacate to his co-owners was
self-serving and insufficient. Alejandro's execution of the affidavit of
consolidation of ownership on August 21, 1970 and his subsequent execution
on October 17, 1970 of the joint affidavit were really equivocal and
ambivalent acts that did not manifest his desire to repudiate the co-ownership.
The only unequivocal act of repudiation was done by the
respondents when they filed the instant action for quieting of title on
September 28, 1994, nearly a year after Alejandro's death on September 2, 1993.
However, their possession could not ripen into ownership considering that their
act of repudiation was not coupled with their exclusive possession of the property.
The Kasulatan ng Pagmeme-ari executed by
Alejandro on August 21, 1970 was ineffectual to predicate the exclusion of the
petitioners and their predecessors in interest from insisting on their claim to
the property. Alejandro's being an assignee of the mortgage did not authorize
him or his heirs to appropriate the mortgaged property for himself without
violating the prohibition against pactum commissorium contained
in Article 2088 of the Civil Code, to the effect that "[t]he creditor
cannot appropriate the things given by way of pledge or mortgage, or dispose of
them[;] [a]ny stipulation to the contrary is null and void." Aptly did the
Court hold in Montevirgen v. Court of Appeals:
The declaration, therefore, in the decision
of July 1, 1971 to the effect that absolute ownership over the subject premises
has become consolidated in the respondents upon failure of the petitioners to
pay their obligation within the specified period, is a nullity, for
consolidation of ownership is an improper and inappropriate remedy to enforce a
transaction declared to be one of mortgage. It is the duty of respondents, as
mortgagees, to foreclose the mortgage if he wishes to secure a perfect title to
the mortgaged property if he buys it in the foreclosure sale.
Moreover, the respondents, as Alejandro's heirs, were
entirely bound by his previous acts as their predecessors-in-interest. Thus,
Alejandro's acknowledgment of the effectivity of the equitable mortgage
agreement precluded the respondents from claiming that the property had been
sold to him with right to repurchase.
3. No,
the
Magkasanib na Salaysay executed by
Alejandro did not grant Leoncia and her three sons a right to repurchase at any
time for P500.
The provisions of the Civil Code governing equitable
mortgages disguised as sale contracts are primarily designed to curtail the
evils brought about by contracts of sale with right to repurchase, particularly
the circumvention of the usury law and pactum commissorium. Courts
have taken judicial notice of the well-known fact that contracts of sale with
right to repurchase have been frequently resorted to in order to conceal the
true nature of a contract, that is, a loan secured by a mortgage. It is a
reality that grave financial distress renders persons hard-pressed to meet even
their basic needs or to respond to an emergency, leaving no choice to them but
to sign deeds of absolute sale of property or deeds of sale with pacto
de retro if only to obtain the much-needed loan from unscrupulous
money lenders. This reality precisely explains why the pertinent provision
of the Civil Code includes a peculiar rule concerning the period of redemption,
to wit:
Art. 1602. The contract
shall be presumed to be an equitable mortgage, in any of the following cases:
x x x
(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;
x x x
Ostensibly, the law allows a new period of redemption to
be agreed upon or granted even after the expiration of the equitable
mortgagor's right to repurchase, and treats such extension as one of the
indicators that the true agreement between the parties is an equitable
mortgage, not a sale with right to repurchase. It was indubitable, therefore,
that the Magkasanib na Salaysay effectively afforded to
Leoncia, Teofilo, Jose, Sr. and Jose, Jr. a fresh period within which to pay to
Alejandro the redemption price of P500.00.
