G.R. No.

L-24772 May 27, 1968

RUPERTO G. CRUZ, ET AL., plaintiffs-appellees,

Facts:
This is an appeal by Filipinas from the decision of the CFI of Rizal. In the action of Cruz for the
cancellation of the real estate mortgage constituted on the land of Cruz in favor of Filipinas,

Issue:

Whether Filipinas may foreclose the real estate mortgage.

Ruling:

There is no controversy that, involving as it does a sale of personal property on installments, the
pertinent legal provision in this case is Article 1484 of the Civil Code of the Philippines, 2 which
reads:

ART. 1484. In a contract of sale of personal property the price of which is payable in
installments, the vendor may exercise any of the following remedies:

(1) Exact fulfillment of the obligation, should the vendee fail to pay;

(2) Cancel the sale, should the vendee's failure to pay cover two or more installments;

(3) Foreclose the chattel mortgage on the thing sold, if one has been constituted, should the
vendee's failure to pay cover two or more installments. In this case, he shall have no further
action against the purchaser to recover any unpaid balance of the price. Any agreement to
the contrary shall be void.

The aforequoted provision is clear and simple: should the vendee or purchaser of a personal
property default in the payment of two or more of the agreed installments, the vendor or seller has
the option to avail of any one of these three remedies — either to exact fulfillment by the purchaser
of the obligation, or to cancel the sale, or to foreclose the mortgage on the purchased personal
property, if one was constituted. These remedies have been recognized as alternative, not
cumulative, 3 that the exercise of one would bar the exercise of the others.
VIRGILIO A. CADUNGOG, G.R. No. 161223
Petitioner,

versus

JOCELYN O. YAP, Promulgated:

Facts:

On August 17, 1979, Virgilio executed a Deed of Sale with Right of Repurchase, in which he sold to
his cousin, Franklin Ong, the following six parcels of land located in Ginatilan, Cebu.
Under the deed, Virgilio had the right to repurchase the property within 10 years from the said date.
Virgilio failed to redeem the property. Nevertheless, upon the prodding of Franklin, Virgilio, who
was merely a letter-carrier, executed a Deed of Absolute Sale. n favor of Jocelyn in which it appears
that he sold Parcel Nos. 1, 2 and 3 for the price of P5,000.00. Virgilio declared therein that he
inherited Parcel Nos. 2 and 3 from his mother, Soledad, who inherited the same from her parents,
Jose Aranas and Basilia Rocaberte, under a Deed of Partition executed by their heirs. Franklin signed
as one of the witnesses to the deed.

Issues:

Whether or not there was a deed of absolute sale between Virgilio an Jocelyn?

Ruling:

The failure of the vendee a retro to consolidate his title under Art. 1607 of the New Civil Code does
not impair such title and ownership because the method prescribed thereunder is merely for the
purpose of registering and consolidating titles to the property. Franklin Ong, and not the petitioner,
was the lawful owner of the six parcels of land. The petitioner, thus, had no right to mortgage or sell
the same to the respondent on September 30, 1991 under the deed of absolute sale.
SPOUSES NATALIO and G.R. No. 151333
FELICIDAD SALONGA,

Versus

SPOUSES MANUEL and NENITA Promulgated:

Facts:
To finance their business, the petitioner-spouses secured a loan from the Associated Bank. To
secure the payment thereof, they executed a Real Estate Mortgage in favor of the bank over the
property covered by TCT Nos. 40886, 40887, 43547, 35156 and 49459. The spouses likewise
secured a loan from the Philippine National Bank (PNB), and also executed a real estate mortgage
over their property covered by TCT No. 26506. A real estate mortgage over their property covered
by TCT No. 53650 was also executed, including the commercial building thereon, as security for
their loan from the Development Bank of the Philippines (DBP). Their loan from the Rural Bank
of Malasiqui, Inc. (Pangasinan) was secured by a real estate mortgage over their property covered
by TCTNo. 49460. they defaulted in the payment of their loans. The creditor banks foreclosed or
threatened to foreclose their real estate mortgages.
he spouses Salonga secured a loan, this time, from the spouses Manuel and Nenita Concepcion, who
were engaged in the business of lending money, to repay their loan. The spouses Concepcion
required the spouses Salonga to pay 3% of the loans as monthly interest, on top of a 5%
commission if the property was sold to third-parties.

Issue:

Whether or not the deed of sale in favor of the respondents is null and void?

Ruling:

Articles 1602, 1603 and 1604 of the New Civil Code were designed to prevent the circumvention of
the use of usury. and the prohibition against the creditor appropriating the mortgaged properties.
Besides, in times of grave financial distress which render persons hard-pressed to answer an
emergency, such persons would have no choice but to sign a deed of absolute sale of property if
only to obtain a much-needed loan from unscrupulous money lenders. After a thorough
examination of the records, we find and so hold that the August 31 and October 18, 1993 Deeds of
Absolute Sale are mere equitable mortgages and not bona fide absolute sale of the parcels of land
therein described.
G.R. No. 159048 October 11, 2005

BENNY GO, Petitioner,

Facts:

As evidenced by the Transfer of Rights dated October 1, 1993, Eliodoro Bacaron conveyed a 15.3955-
hectare parcel of land located in Langub, Talomo, Davao City, in favor of Benny Go for ₱20,000.00.

About a year thereafter, Bacaron, seeking to recover his property, went to Go to pay his alleged
₱20,000.00 ‘loan’ but the latter refused to receive the same and to return his property saying that the
transaction between the two of them was a sale and not a mortgage as claimed by Bacaron.

Issue:

Whether or not there is a contract of sale between Go and Bacaron?

Ruling:

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.”
The instances in which a contract of sale is presumed to be an equitable mortgage are enumerated in
Article 1602 of the Civil Code as follows:
"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."
Furthermore, Article 1604 of the Civil Code provides that "[t]he provisions of Article 1602 shall also
apply to a contract purporting to be an absolute sale."
In the present case, three of the instances enumerated in Article 1602 -- grossly inadequate
consideration, possession of the property, and payment of realty taxes -- attended the assailed
transaction and thus showed that it was indeed an equitable mortgage.
G.R. No. L-32670 December 29, 1977

ARSENIO GERARDINO, SR., VIRGINIA GERARDINO SY, ANGELINA GERARDINO

Facts:

The complaint stated that on October 10, 1964 Rosario Artuz executed in favor of Jovito Gloria a
deed of sale with right to repurchase within a period of one (1) year of a parcel of residential land
located in Poblacion, Tapaz, Capiz, containing an area of 750 square meters and embraced in Tax
Declaration No. 3516 for a consideration of P2,025.00; that the defendant allegedly failed to exercise
her right to repurchase within the stipulated period; that the plaintiff had been in possession of the
property immediately after the execution of the document; and that said plaintiff had been paying
the taxes thereon.

Issue:

Whether or not the the lower court erred in holding and declaring that the contract in question is a
true sale with right of repurchase and not an equitable mortgage.

Ruling:

The nature of the document in question was squarely placed in issue. The defendants contend that
the document was only an equitable mortgage The third paragraph of Article 1606 of the Civil Code
of the Philippines provides that "the vendor may still exercise the right to repurchase within thirty
days from the time final judgment was rendered in a civil action on the basis that the contract was a
true sale with right to repurchase." Hence even if after a new trial it is found that the document in
question is a true sale with right of repurchase, the defendants may still exercise the right to
repurchase the land in question within thirty days from the time final judgment is rendered.
G.R. No. L-31586 February 28, 1972

ERNESTO, FORTUNATA, MONTANO, ZOSIMA, RAMON, GUADALUPE, LUIS,

Facts:

On May 30, 1952, Damaso Yturralde and Margarita de los Reyes executed a deed of sale with right
of repurchase in favor of the respondent herein, Isabelo Rebollos, covering the above-mentioned
property in consideration of the sum of P1,715.00. The vendors a retro failed to exercise the right to
repurchase the property within the three-year period agreed upon, which expired on May 30, 1955.
In 1961, Margarita de los Reyes died.

Issue:

Whether or not there was a valid sale between Petitioner Yturralde and respondent Rebollos?

Ruling:

The pacto de retro sale executed by Margarita de los Reyes, expressly stipulates that she only sold all
her rights, interests and participation in the lot covered by O.C.T. No. 2356. Margarita therefore,
could not, for she had no right to, sell the entire lot, which is registered under O.C.T. No. 2356
"inthe name of Francisco Yturralde married to Margarita de los Reyes." Said lot is acknowledge by
herein petitioners as the conjugal property of Francisco and Margarita. Consequently, the vendee a
retro, Isabelo Rebollos, cannot legally petition for the consolidation of his ownership over the entire
lot.