Dacquel Vs Sps Sotelo 2 PDF Free

ARTURO A. DACQUEL, PETITIONER, VS.
SPOUSES ERNESTO SOTELO AND

FLORA DACQUELSOTELO, REPRESENTED BY THEIR ATTORNEY-IN-FACT,
IMELDA SOTELO, RESPONDENTS
G.R. No. 203946, August 04, 2021
Hernando, J. – Second Division
NATURE OF THE ACTION:
Petition for Review on Certiorari assailing the Decision and Resolution of the Court of
Appeals, which reversed the Decision of the Regional Trial Court.
FACTS:
In 1994, spouses Ernesto Sotelo and Flora Dacquel-Sotelo started the construction of a 7-
door apartment on a parcel of land located in Malabon City. Due to budget constraints, the
Sotelos had to borrow the amount of P140,000.00 from Arturo Dacquel. Consequently, on
September 1, 1994, the parties executed a Deed of Sale7 in consideration of the amount of
P140,000.00. TCT No. 738 in the names of the Sotelos was thereafter cancelled and TCT No. M-
10649 was issued, constituting Dacquel as the new registered owner of the subject land. In
March 2000, when Dacquel had collected the full amount of P280,000.00 in rental income from
the four apartment units, the Sotelos asked for the return of the subject lot. Dacquel, however,
allegedly held on to the title and refused to yield the subject lot to the Sotelos. Thus, on May 29,
2000, the Sotelos filed a Complaint for annulment of title and reconveyance against Dacquel.
The Sotelos alleged in their Complaint that Dacquel held the title to the subject land only as
security for the loan and in trust for the Sotelos, who remained the beneficial owners of the
subject lot.
The RTC ruled in favor of Dacquel. On appeal, The CA reversed the RTC and decided in
favor of the Sotelos. Applying the provisions of Articles 1602 and 1604 of the Civil Code, the
CA declared the September 1, 1994 Deed of Sale to be one of equitable mortgage. It found two
badges of fraud: gross inadequacy of the price and the continued possession by the Sotelos of the
subject property. Dacquel insists on the validity of the September 1, 1994 Deed of Sale. He
asserts his lawful ownership over the subject property, and that the Decision declaring the nullity
of his title and ordering the reconveyance of the subject property to the Sotelos is grave error on
the part of the CA. The parties clearly intended to be bound by the Deed of Sale and what was
concealed was only the actual price of the subject property.
ISSUE:
Whether petitioner's title to the subject property should be nullified and reconveyed to
respondents-spouses.
RULING:
The Petition is GRANTED IN PART.
Title may be nullified and real property may be reconveyed in case of equitable
mortgage.
As the transaction between the parties herein was demonstrated to be one of equitable
mortgage, petitioner did not become owner of the subject property but a mere mortgagee thereof.
As such, petitioner was bound by the prohibition against pactum commissorium as embodied in
Article 2088 of the Civil Code:
Art. 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.
The mortgagee's consolidation of ownership over the mortgaged property upon the
mortgagor's mere failure to pay the obligation is the essence of pactum commissorium. The
mortgagor's default does not operate to automatically vest on the mortgagee the ownership of the
encumbered property. This Court has repeatedly declared such arrangements as contrary to
morals and public policy and thus void. If a mortgagee in equity desires to obtain title to a
mortgaged property, the mortgagee's proper remedy is to cause the foreclosure of the mortgage
in equity and buy it at a foreclosure sale.
Having proceeded to cause the cancellation of respondents-spouses title to the mortgaged

property and its transfer to his name without availing of the remedy of foreclosure, petitioner can
be concluded to have dabbled in the prohibited practice of pactum commissorium. The
transaction is consequently rendered void, and title to the subject property should be reverted to
respondents-spouses.

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ARTURO A. DACQUEL, PETITIONER, VS.

SPOUSES ERNESTO SOTELO AND

G.R. No. 203946, August 04, 2021

Hernando, J. – Second Division

NATURE OF THE ACTION:

The Petition is GRANTED IN PART.

Having proceeded to cause the cancellation of respondents-spouses title to the mortgaged

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