Sales Case Digest PRTB
Sales Case Digest PRTB
Sales Case Digest PRTB
Court of Appeals reversed the trial court, and rendered a decision in favor of
respondents.
Issues:
1. Whether the contract in question is an equitable mortgage or a deed of
absolute sale. Absolute sale
2. WoN the price of the sale is unusually inadequate -NO
HELD:
It is well-settled that the presence of even one of the circumstances in Art.1402
of the Civil Code is sufficient to declare a contract as an equitable
mortgage,65 in consonance with the rule that the law favors the least
transmission of property rights.66 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.67
Here, it was incumbent upon San Pedro to adduce sufficient evidence to
support her claim of an equitable mortgage. However, upon an examination of
the evidence, we find insufficient basis to conclude the existence of any of the
grounds she relied upon. Hence, 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,90 and is entitled to full faith and credit upon its face
2. NO.
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,74 or purely shocking to the
conscience.75
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.
BUNDALIAN v CA
Facts:
On July 1, 1975, the petitioners purchased from the Estate of the Deceased Agapita Sarao Vda. de
Virata three (3) contiguous parcels of land located at San Juan, Rizal.
The following day, \ the petitioners, in a contract denominated as Deed of Sale with Right to
Repurchase, sold to the private respondents the same three lots for the same amount. One of the
terms and conditions was that the repurchase price would escalate month after month, depending on
when repurchase would be effected. It was also stipulated in the same contract that the vendor shall
have the right to possess, use, and build on, the property during the period pending redemption.
In 1976, the petitioners filed a petition for declaratory relief and/or reformation of instrument before the
CFI to declare the Deed of Sale with Right to Repurchase an equitable mortgage and the entire portion
of the same deed referring to the accelerating repurchase price null and void for being usurious.
The private respondents, in turn, filed a petition for the consolidation of ownership on the ground that
"more than a year has elapsed since the execution of the Deed of Sale with Right to Repurchase by the
vendor on July 2, 1975." They contended that "notwithstanding which the vendor has failed to avail of
its rights under the provisions of Article 1607 in relation to Article 1616 of the New Civil Code, the
vendor has lost all his rights to avail himself of the right to consolidate ownership of the property subject
of the Deed of Sale."
trial court rendered the decision in favor of the private respondents. CA affirmed.
ISSUE: whether or not the deed of sale with right to repurchase should be declared as an equitable
mortgage.
HELD: YES
A portion of the document in question reads:
(The vendor) having just purchased the same from the Intestate estate of the deceased
Agapita Sarao Vda. de Virata (Special Proceedings No. B-710 of the Court of First
Instance of Cavite), with funds loaned to him by the herein VENDEES. (Emphasis
supplied).
This statement appearing in the supposed pacto de retro sale confirms the real intention of the parties
to secure the payment of the loan acquired by the petitioners from the private respondents. The sale
with the right to repurchase of the three parcels of land was for P499,200.00, which was exactly the
same amount paid to the estate of the deceased Agapita Sarao Vda. de Virata- After having purchased
the three lots, the vendors should at least have earned a little profit or interest if they really intended to
resell the lots the following day. Instead, they suffered a loss of P25,000.00 because the amount
borrowed, and we find grounds to believe their statement of having advanced P25,000.00 of their own
funds as earnest money, was actually only P474,000.00. The petitioners also bound themselves to pay
exceedingly stiff prices for the privilege of repurchase.
The stipulation in the contract sharply escalating the repurchase price every month enhances the
presumption that the transaction is an equitable mortgage. Its purpose is to secure the return of the
money invested with substantial profit or interest, a common characteristic of loans.
The contract also provides that "it is agreed that the vendor shall have the right to possess, use, and
build on, the property during the period of redemption." When the vendee acknowledged the right of the
vendor to retain possession of the property the contract is one of loan guaranteed by mortgage, not a
conditional sale or an option to repurchase. (Macoy vs. Trinidad, et al., 95 Phil. 192).
The Bundalians paid the real estate taxes on the lots. As against the express provision of the contract
and the actual possession by the petitioners, the private respondents come up with a far fetched
argument that since the titles to the lots were in their hands, they were the ones in legal possession.
Parenthetically, the titles in their hands were still in the name of the estate of Agapita Sarao Vda. de
Virata, the original vendor-owner.
Hence, the deed of sale with right to repurchase is an equitable mortgage.