Catangcatang vs Legayada

Facts:

said period never commenced to run. Further Petitioner as owner during the
redemption period failed to pay taxes on the land, which shall be deducted to
the P1,200.00 price to be returned.)

On May 19, 1952, respondent executed in favor of petitioner a deed of sale with
pacto de retro, with a five-year period of redemption, over a parcel of land
situated at Lambunao, Iloilo, with a stated area of 8.8272 hectares more or less,
for a specified consideration of P1,400.00. Of the total consideration, the amount
of P1,200.00 was paid upon the execution of the deed and the balance of
P200.00, covered by a promissory note, was agreed to be payable at a later
date.

ISSUE:

Petitioner found that the area of the land actually delivered to her was only
5.0779 hectares.

RULING:

She sought to recover the witheld area in a civil case. In his answer, respondent
filed a counterclaim for recission of the contract of sale with pacto de retro
because of plaintiff's failure to pay the 200 peso balance on due date.
During the pendency of the aforementioned case, respondent forcibly took back
the possession of the land from petitioner. On May 19, 1957, the period for the
repurchase of the land expired, allegedly without respondent having availed
himself of his right to repurchase the same.
The Court of First Instance of Iloilo dismissed the complaint, having found that
the parcel of land subject matter of the deed of sale was described by metes and
bounds, has an actual area of 5.0779 hectares, notwithstanding that the stated
area in the tax declaration was 8.8272 hectares. In the same decision, the
counterclaim of Paulino Legayada was likewise dismissed. The decision of the
Court of First Instance became final, neither party having appealed therefrom.
Petitioner instituted the present petition for consolidation of title and restoration
of possession. In his answer, Legayada admitted that on May 19, 1952, he, as
vendor, executed a Deed of Sale with Right of Repurchase in favor of petitioner
but denied that he failed to repurchase the property on or before May
19, 1957 because on May 10, 1957 he took possession of the property
"because the redemption amount is already deposited in the hands of
undersigned counsel to be paid" to petitioner Salvacion Catangcatang.
RTC ruled for petitioner (respondent was not able to effect the repurchase within
the period stipulated). The CA reversed (The failure to pay the full purchase price
suspends the running of the period of redemption. Contrary to the finding of the
court a quo. the stipulated five-year period of redemption did not expire since

Whether or not the non-payment of the P200.00 suspended the running of the
period to repurchase.
Whether or not respondent was able to effect redemption of the property in
question within the period stipulated in the contract.

We are unable to find any support for the holding of the Appellate Court that the
failure to pay the balance of the purchase price embodied in the agreement in
the amount of P200.00 resulted in the suspension of the running of the period for
redemption.
The sale under consideration was perfected from the moment Legayada
consented to sell the land in question and Catangcatang agreed to purchase it
for the sum of P1,400.00 and the latter had partially complied with his obligation
by paying the sum of P1,200.00 and the former by delivering possession of the
land to the vendee. There was nothing whatsoever in the deed of sale to indicate
that the agreement of the parties was to suspend the running of the period of
redemption until full payment of the purchase price. On the contrary, said period
was agreed to be five (5) years from the date of the execution of the deed.
The more basic issue is whether or not respondent was able to effect
redemption of the property in question within the period stipulated in
the contract. Pursuant to Article 1616 of the Civil Code, "the vendor
cannot avail himself of the right of repurchase without returning to the
vendee the price of the sale, and in addition: (1) the expenses of the
contract, and any other legitimate payments made by reason of the
sale; (2) the necessary and useful expenses made on the thing sold."
The records reveal that on May 10, 1957, respondent, without the knowledge of
petitioner, took possession of the subject property. It is claimed that on the same
date, respondent's counsel wrote a letter to petitioner, informing her that the
redemption money was already in his (counsel's) possession This letter never
reached petitioner, and was allegedly returned to said counsel. The reason given
by respondent for the non-delivery of the letter is that petitioner could not be
found. This was found by the trial court to be unworthy of credence. Apart from

this letter, no further effort to effect redemption was made.

Respondent could have deposited the amount for the redemption with
the court, but this he did not do. In the exercise of the right to
repurchase, it is not sufficient that the vendor a retro manifests his
desire to repurchase. This statement of intention must be accompanied
with an actual and simultaneous tender of payment which constitutes
the legal exercise of the right to repurchase.
While consignation of the redemption price is not necessary in order to allow the
repurchase within the time provided by law or by contract, a mere tender being
enough, said tender does not relieve the vendor from the obligation of paying
the price.
In case of absence of the vendee a retro, the right of redemption may still be
exercised, as a vendor who decides to redeem a property sold with pacto de
retro stands as the debtor and the vendee as the creditor of the purchase price.
The vendor could and should have exercised his right of redemption
against the vendee by filing a suit against him and making a
consignation with the court of the amount due for the redemption. The
period for redemption having lapsed without respondent having validly
effected redemption, petitioner is entitled to consolidation of
ownership over the property sold.
WHEREFORE, the decision appealed from is hereby REVERSED, and the decision
of the Court of First Instance of Iloilo is AFFIRMED, with costs against respondent.

instrument whereby they granted the spouses Villarica an option to buy the
same property within the period of one year for the price of P37,750. In July,
same year, the spouses Consunji registered the absolute deed of sale in
consequence of which TCT in the names of the spouses Villarica was cancelled
and a new TCT was issued in the names of the spouses Consunji. In February,
1953, the spouses Consunji sold the lot to Jovito S. Francisco for the price of
P47,000 by means of a public instrument of sale. This public instrument of sale
was registered in view of which the TCT in the names of the spouse Consunji was
cancelled and a new TCT in the name of Jovito S. Francisco was issued.
On April 14, 1953, the spouses Villarica brought an action in the Court of First
Instance of Davao against the spouses Consunji and Jovito S. Francisco for the
reformation of the instrument of absolute sale into an equitable mortgage as a
security for a usurious loan of P28,000 alleging that such was the real intention
of the parties. Defendants answered that the deed of absolute sale expressed
the real intention of the parties and they also alleged a counterclaim for sums of
money borrowed by the plaintiffs from the Consunjis which were then due and
demandable.
- CFI says yes it is an equitable mortgage. Francisco deemed purchaser in good
faith.
- CA reversed the decision. Case is not one of those under art. 2208 ncc.

VILLARICA v. COURT OF APPEALS

Issue related to topic: Does villarica have the right of redemption?

Facts:

Held:

On May 19, 1951, the spouses Angel Villarica and Nieves Palma Gil de Villarica
sold to the spouses Gaudencio Consunji and Juliana Monteverde a lot containing
an area of 1,174 sq. meters, situated in the poblacion of the City of Davao, for
the price of P35,000. The instrument of absolute sale dated May 19, 1951 in the
form of a deed poll, drafted by Counselor Juan B. Espolong who had been
appointed by the Villaricas as their agent to sell the lot, was acknowledged on
May 25, 1951, before the same Juan B. Espolong who was also a Notary Public.
The public instrument of absolute sale and the vendors' TCT were delivered to
the vendees. On the same day, the spouses Consunji executed another public

No, the court has held that Consunjis as new owners of the lot granted the
Villaricas an option to buy the property within the period of one year from May
25, 1951 for the price of P37,750. Said option to buy is different and distinct
from the right of repurchase which must be reserved by the vendor, by
stipulation to that effect, in the contract of sale. This is clear from Article 1601 of
the Civil Code, which provides:

Conventional redemption shall take place when the vendor reserves the right to
repurchase the thing sold, with the obligation to comply with the provisions of
article 1616 and other stipulation which may have been agreed upon.

On 21 May 1959, petitioner sold to private respondent his leasehold rights over
the property in question for P8,000.00 with the right to repurchase the same
within three (3) years from said date.

The right of repurchase is not a right granted the vendor by the vendee in a
subsequent instrument, but is a right reserved by the vendor in the same
instrument of sale as one of the contract. Once the instrument of absolute sale is
executed, the vendor can no longer reserve the right to repurchase, and any
right thereafter granted the vendor by the vendee in a separate instrument
cannot be a right of repurchase but some other right like the option to buy in the

On 16 August 1960, private respondent filed an application with the Bureau of

Fisheries, dated 12 July 1960, for a fishpond permit and a fishpond lease
agreement over the entire lot, submitting therewith the deeds of sale executed
by Dafeliz and the petitioner.

instant case. Hence, Exhibits "B" and "D" cannot be considered as evidencing a
contract of sale with pacto de retro. Since Exh. "D" did not evidence a right to
repurchase but an option to buy, the extension of the period of one year for the
exercise of the option by one month does not fall under No. 3, of Article 1602 of
the Civil Code, which provides that:

Pressed by urgent financial needs, petitioner, on 17 October 1960, sold all his
remaining rights over the property in question to the private respondent for
P4,000.00.
On 25 October 1960, private respondent, with his wife's consent, executed in
favor of the petitioner an Option to Repurchase the property in question within
ten (10) years from said date, with a ten-year grace period.

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.

Private respondent submitted to the Bureau of Fisheries the definite deed of sale;
he did not, however, submit the Option to Repurchase.

PREMISES CONSIDERED, the judgment of the Court of Appeals is hereby

affirmed, with costs against petitioners also in this instance.

Thereafter, on 2 August 1961, the Bureau of Fisheries issued to private

respondent Fishpond Permit

Diamante v CA
Facts:
A fishery lot, encompassing an area of 9.4 hectares and designated as Lot No.
518-A of the Cadastral Survey of Dumangas, Iloilo, was previously covered by
Fishpond Permit No. F-2021 issued in the name of Anecita Dionio. Upon Anecita's
death, her heirs, petitioner Diamante and Primitivo Dafeliz, inherited the
property which they later divided between themselves; petitioner got 4.4.
hectares while Dafeliz got 5 hectares. It is the petitioner's share that is the
subject of the present controversy. Primitivo Dafeliz later sold his share to private
respondent.

On 11 December 1963, petitioner, contending that he has a valid twenty-year

option to repurchase the subject property, requested the Bureau of Fisheries to
nullify FLA No. 1372 insofar as the said property is concerned. On 18 December
1964, his letter-complaint was dismissed. Petitioner then sought a
reconsideration of the dismissal; the same was denied on 29 April 1965. His
appeal to the Secretary of the DANR was likewise dismissed on 30 October 1968.
Again, on 20 November 1968, petitioner sought for a reconsideration; this time,
however, he was successful.
Issue: Is there an option to repurchase?
Held:

No, the court has held that the Option to Repurchase executed by private
respondent in the present case, was merely a promise to sell, which must be
governed by Article 1479 of the Civil Code which reads as follows:
Art. 1479. A promise to buy and sell a determinate thing for a price certain is
reciprocally demandable.
An accepted unilateral promise to buy or to sell a determinate thing for a price
certain is binding upon the promissor if the promise is supported by a
consideration distinct from the price.
An agreement to repurchase becomes a promise to sell when made after the
sale, because when the sale is made without such an agreement, the purchaser
acquires the thing sold absolutely, and if he afterwards grants the vendor the
right to repurchase, it is a new contract entered into by the purchaser, as
absolute owner already of the object. In that case the vendor has not reserved to
himself the right to repurchase."
A copy of the so-called Option to Repurchase is neither attached to the records
nor quoted in any of the pleadings of the parties. This Court cannot, therefore,
properly rule on whether the promise was accepted and a consideration distinct
from the price, supports the option. Undoubtedly, in the absence of either or
both acceptance and separate consideration, the promise to sell is not binding
upon the promissor (private respondent).
A unilateral promise to buy or sell is a mere offer, which is not converted into a
contract except at the moment it is accepted. Acceptance is the act that gives
life to a juridical obligation, because, before the promise is accepted, the
promissor may withdraw it at any time. Upon acceptance, however, a bilateral
contract to sell and to buy is created, and the offeree ipso facto assumes the
obligations of a purchaser; the offeror, on the other hand, would be liable for
damages if he fails to deliver the thing he had offered for sale.

Vda. De Urbano v GSIS

Facts: Petitioners mortgaged their property to GSIS to secure a housing loan.
Petitioners failed to pay and GSIS foreclosed the mortgage. Petitioners wrote to
the GSIS Board of Trustees to inform them of their desire to redeem the property
and for advice on how to redeem it. GSIS advised to pay the total redemption
price of P154,896 before the expiration date of the redemption. Petitioners
requested for remortgage through repurchase of the subject property.
Respondent dela Cruz commenced negotiations with respondent GSIS for her
purchase of the foreclosed property. A deed of absolute sale was executed
between dela Cruz and the GSIS and upon discovery, petitioner Arrienda wroteo
to the GSIS protesting the said sale and requesting its reconsideration and recall.
RTC of Quezon City dismissed the complaint and this was affirmed by the CA.
Issue:
Do petitioners have a right to repurchase the subject property?
Was Gsis in bad faith in dealing with petitioners?
Held:
No. Basically the GSIS as provided in their charter has the discretion in handling
real or personal properties in the Philippines. It is in PD 1146 amended by PD
1981. Petitioner was visibly unable to pay and was even given an extension on
GSIS part but to no avail petitioners lacked the capacity to pay up. The
petitioners are not entitled to a request for repurchase as a matter of right. The
Board exercised its discretion in accordance with law in denying their requests
and the GSIS cant be faulted for their failure to repurchase as it acted under the
petitioners application under Operation Pabahay. The sale to respondent cant
be annulled on such invoked right.
No.

Even if the promise was accepted, private respondent was not bound thereby in
the absence of a distinct consideration.

GSIS denial of petitioners further requests for repurchase of subject property

was based on a factual determination of the petitioners financial capacity and

the GSIS charter, PD 1146. Also, GSIS sold the property to dela Cruz only after
giving them one year to repurchase.
The petitioners, on the strength of the Valmonte case, cant also impute bad
faith on GSIS when it was secretly negotiating with Dela Cruz. In the Valmonte
case, the court held that the constitutional right to information was limited to
matters of public concern to transactions involving public interest.The sale of the
property was not imbued by public interests as it was a purely private
transaction. Pets. Cant demand to be informed of such public negotiation since
they had no interest on the subject property since they failed to comply with the
GSIS terms of repurchase and the denial to repurchase under the GSIS terms.

San Pedro vs Lee

Facts:
Erlinda San Pedro initiated a suit against the spouses Ruben Lee and Lilian Sison
on November 23, 1994, praying for a declaration that the document entitled
Kasulatan ng Ganap na Bilihan ng Lupa is an equitable mortgage and not a
sale, the reconveyance of the property subject of the Kasulatan ng Ganap na
Bilihan ng Lupa, and for damages. San Pedro claims that she desperately
needed money to support her childrens college education, and approached one
Philip dela Torre, who introduced her to respondent Ruben Lee. From Lee and his
wife Lilian Sison, San Pedro was able to secure a loan in the amount of P
105,000.00, with interest of P 45,000.00, or a total indebtedness of P150,000.00.
As security for this loan, she agreed to mortgage a 17,235-square meter parcel
of agricultural land located at San Juan, Balagtas, Bulacan, covered by Transfer
Certificate of Title (TCT) No. T-290387.
This transaction took place in the office of Atty. Venustiano Roxas, where she met
Lee for the first time. San Pedro claims that Atty. Roxas and Lee coerced her to
sign the document and alleges that Atty. Roxas and Lee told her that the
document was just a formality, with the assurance from Atty. Roxas and Lee that
the spouses would never enforce the contract against her. She readily agreed
because she believed in good faith that the spouses were in good faith. She

further claims that she continued in possession of the parcel of land through her
tenant, Federico Santos, and continued to receive her landowners share of the
harvest from 1985 until 1995. But in 1986, San Pedro attempted to pay the real
property tax on the subject agricultural land and to her surprise, she learned that
the property had already been transferred to the names of the spouses. She also
learned that TCT No. T-290387 had been cancelled and TCT No. RT-41717 (T305595) had been issued in the name of Ruben Lee.
After saving enough money to pay her indebtedness, San Pedro attempted to
redeem her mortgage. She approached Ruben Lees brother, Carlito, offering to
pay her debt, but she was continually rebuffed. Nine years after the contract was
executed, she initiated this suit to recover title to the subject property.
The spouses, on the other hand, presented an entirely different version of
events. They claim that the sale of the property in question was brokered by
their mutual acquaintance and broker, Philip dela Torre. Spouses Lee and Sison
are engaged in the real estate business, and believed that San Pedros
agricultural property would be a good investment. It was disclosed to them that
the property had no existing right of way, that it was not tenanted, and that it
was low-lying real estate which was prone to flooding during the rainy season.
They thus negotiated for the purchase of the property, which had an initial
asking price of P 200,000.00, but offered to pay P 150,000.00 for it. San Pedro
accepted their offer and agreed to sell the land. The spouses even requested
that San Pedro execute an affidavit of non-tenancy and a written power of
attorney authorizing the former to pay the capital gains taxes and expenses on
the registration of the property in their name.
Issue: Whether the contract in question is an equitable mortgage or a deed of
absolute sale?
Held: It is a deed of absolute sale. The document appears on its face to be a
contract of sale, but its nomenclature notwithstanding the Court still tested
against the statutory presumptions of Art. 1602 of the Civil Code. Article 1602
provides:
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;

witnesses who testified as to the market values of real estate in the subject
locale.

(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.
It is well-settled that the presence of even one of the foregoing circumstances is
sufficient to declare a contract as an equitable mortgage, in consonance with the
rule that the law favors the least transmission of property rights. 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.
In a civil case, the burden of proof never parts with the plaintiff. Plaintiff must
establish her case by a preponderance of evidence and has the burden of
presenting evidence required to obtain a favorable judgment, and she, having
the burden of proof, will be defeated if no evidence were given on either side.
In this case, it was incumbent upon San Pedro to adduce sufficient evidence to
support her claim of an equitable mortgage. Petitioner relies on paragraphs 1, 2,
5 and 6 of Article 1602. Upon an examination of the evidence, we find
insufficient basis to conclude the existence of any of the grounds she relied
upon. Anent alleged inadequacy of the purchase price, petitioner presented two

Neither of these witnesses, however, was able to conclusively demonstrate that

the purchase price of the property was grossly inadequate. The testimony of the
purported broker, Adela Ortega, was not given any credence by the Court of
Appeals due to not being aware or familiar with the factors or bases that affect
the increase in the value of realty, or how it influence the zonal valuation made
by the local government, which should be very basic to a real estate broker. The
second witness, BIR Revenue Supervisor Juanito Angeles, testified as to the
market value of properties but it must be noted that Angeles did not testify as to
the market value of the locale as of May 23, 1985, the date of the contract in
question. Neither did petitioner present any other evidence of the real estate
market values as of that date. 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, or purely shocking to the conscience
San Pedro then presented Federico Santos to prove that he was the agricultural
leasehold tenant of the former on the parcel of land which was described in the
complaint. However, while the witness may have established that he was,
indeed, the agricultural tenant of San Pedro, the identity of the parcel of land
which he tills and the parcel of land described in the complaint was not
established. Although a landowner-tenant relation has been established between
San Pedro and Santos, the Court cannot conclude therefrom that San Pedro was
in possession of the property subject of the Kasulatan ng Ganap na Bilihan ng
Lupa through her tenant Federico Santos.
As a third ground for the establishment of the purported equitable mortgage,
San Pedro argues that paragraph 5 of Article 1602 is present but presented no
proof that she, as vendor of property, bound herself to pay taxes on the thing
sold. Finally, San Pedro relies on Article 1602, paragraph 6, which applies to 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 contrast, the witnesses of the spouses all testified as to the
existence of a contract of sale between San Pedro and Ruben Lee. Pertinently,
dela Torre, who brokered the sale, and Atty. Roxas, who prepared the contract in
question, were both unequivocal as to the nature of the contract. These two
witnesses, whose impartiality was not impugned, both affirmed the sale of the
subject property. Furthermore the spouses presented documentary evidence
which shows that the contract was indeed a sale: (1) a receipt for P150,000.00
dated May 23, 1985, issued by Erlinda San Pedro, attesting full receipt of the
amount in question; (2) an authority to pay capital gains tax, executed by Erlinda
San Pedro in favor of Ruben Lee;and (3) an affidavit of non-tenancy executed by
Erlinda San Pedro. Lastly, 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,
and is entitled to full faith and credit upon its face.
Petition dismissed ---> Contract is an absolute deed of sale

Ceballos vs. Intestate Estate of the Late Emigdio Mercado

Facts: Leonora Emparado Ceballos is the registered owner of a certain parcel of
land situated in Bato, Badian, Cebu, consisting of 53,301 square meters and
covered by Transfer Certificate of Title No. T-948 of the Register of Deeds for the
Province of Cebu. Sometime in October 1980,Ceballos was introduced to Emigdio
Mercado for the purpose of obtaining a loan as the latter was also known to be in
the business of lending money. Ceballos was able to borrow the amount of
P12,000.00 payable in two (2) months and to secure said loan, she executed in
favor of Mercado a Deed of Real Estate Mortgage over the subject property. The
said mortgage deed was not registered by the mortgagee. Ceballos was not able
to pay her mortgage indebtedness to Mercado within the stipulated period and
on February 13, 1982, a Deed of Absolute Sale was executed whereby the
mortgaged property was sold to Mercado for the price of P 16,500.00. Said
instrument contained the signatures of Ceballos and her husband Narciso
Ceballos and notarized by Atty. Elias V. Ortiz. It appears that sometime in 1990,

Ceballos offered to buy back the property from Mercado for the price of
P30,000.00 but the latters wife refused since the same was already transferred
in their names under TCT No. TF-3252 issued on June 1, 1987. Mercado died on
January 12, 1991 and a petition for the issuance of letters of administration over
his intestate estate was filed by her daughter Thelma M. Aranas before the RTCCebu City, Branch 11.
On August 18, 1990, Ceballos instituted the present suit against the Intestate
Estate of the Late Emigdio Mercado, Teresita Mercado as the Administrator,
and/or the Heirs of the Late Emigdio Mercado. She claims, among other things,
that she is the is the owner of the subject property, the same being her
hereditary share from the property of her late father Rufo Emparado. That
sometime in the early part of December 1980, to accommodate a friend who
was hospitalized, she went to the Mercado, who was known, besides his other
businesses, to be also in the business of lending money, although at exorbitant
rate of interest. A Real Estate Mortgage was drawn on December 31, 1980 for P
12,000.00 although only P 8,000.00 was actually delivered, the difference
represents the interest for the use of money, for a period of two (2) months.
Since the accommodated party could not yet produce the redemption money,
Ceballos periodically went to the mortgagee to beg him not to foreclose the
mortgage. On February 13, 1982, Ceballos was made to execute a Deed of Sale
with Pacto de Retro for an increased consideration, from P 12,000.00 to
P16,500.00 for a period of one (1) year from date of execution thereof, which
contract was in fact an equitable mortgage. In November 1990, she went to the
deceased mortgagee to redeem the property to which the latter agreed but the
wife, Teresita Mercado vehemently objected saying that it could no longer be
done because the title had been transferred in their names. Such transfer of title
was based on a document, Deed of Absolute Sale, purportedly executed by
Ceballos and her husband on February 13, 1982, the same date when deceased
Mercado and Ceballos executed the Deed of Sale With Pacto de Retro and for the
same consideration of P 16,500.00, the latter document turned out not to have
been submitted by the deceased for notarization. Said Deed of Absolute Sale is
an absolute fabrication with the signatures therein appearing to have been of
Ceballos and her husband, were absolute forgeries. Ceballos thus prayed for a
judgment (1) declaring the Deed of Absolute Sale void from the beginning; (2) to
allow her to redeem her property; (3) ordering defendant, after redemption, to

reconvey the property to her; (4) ordering defendant to reimburse her attorneys
fees of P50,000.00 and litigation expenses of P10,000.00, and to pay moral
damages in the sum of P100,000.00.
In their Answer with Counterclaim, the Heirs of the Late Emigdio Mercado
asserted that what was written on the deed of real estate mortgage was the
truth and that the deed of sale with pacto de retro was not pushed through
because Ceballos decided to sell the property to the late Mercado absolutely for
the price of P16,500.00. Ceballos already knew that she had sold the property to
Mercado and she was even the one who delivered to him the Deed of Absolute
Sale already signed by her and her husband, and already notarized by the notary
public; and since that time respondents have been in possession of said property
and were the ones paying the realty taxes thereon. The signatures appearing on
the deed of sale are genuine, and the property can no longer be redeemed as it
had already been sold in an absolute manner to
Mercado. Respondents thus prayed that the complaint be dismissed and on the
counterclaim, that Ceballos be ordered to pay respondents the amounts of
P30,000.00 as attorneys fees, P20,000.00 as litigation expenses, P1,000,000.00
as moral damages and P200,000.00 as exemplary damages.
To prove her allegations in the complaint, Cebalos presented documentary
evidence and her own testimony and those of her witnesses Romeo Varona
,document examiner of the PNP Crime Laboratory, Camp Sotero Cabahug, and
Jovencio Virtucio. Respondents, on the other hand, presented the testimonies of
Atty. Ortiz, Teresita Virtucio Mercado and SPO2 Wilfredo Espina ,member of the
PNP assigned at the Crimes Record Section. In rebuttal, Ceballos returned to the
witness stand and also presented the testimony of Pio Delicano ,alleged overseer
of the subject land since 1990. Respondents sur-rebuttal evidence consisted of a
copy of tax declaration in the names of Ceballos and Francisca Emparado and
copy of the complaint in Civil Case No. CEB-13680 pending before RTC-Cebu City,
Branch 22 between Ceballos and her own brothers and sisters over the same
property subject of the present litigation.
Issue: Whether the signatures of Ceballos and her husband on the subject
document were forged and, if valid, whether the document is that of an absolute
deed of sale or an equitable mortgage?

Held: The signatures on the document were not forged. Petitioner failed to
convince the Court that the CA committed reversible error in affirming the trial
court and in giving no weight to expert opinion. The RTC made an impressively
thorough study, which the CA based their decision, and arrived at a wellreasoned resolution of the issue of forgery. As a public document, the subject
Deed of Absolute Sale has in its favor the presumption of regularity. To contradict
it, one must present evidence that is clear and convincing; otherwise, the
document should be upheld.
The document was also ruled as an absolute deed of sale. Ceballos failed to
present clear and convincing evidence to overcome the presumption of validity
of the notarized Deed conveying the land to private respondents. Her testimony
denying the validity of the sale, having been made by a party who has an
interest in the outcome of the case, is not as reliable as written or documentary
evidence. Moreover, self-serving statements are inadequate to establish ones
claims. Proof must be presented to support the same.
As proof on the alleged unconscionably low selling price of the subject land,
Ceballos points out that it is located in a tourist area and golf haven in Cebu.
Notably, she has failed to prove that on February 13, 1982, the date of the sale,
the area was already the tourist spot and golf haven that she describes it to be.
In 1990, the property might have been worth ten million pesos,as she claimed;
however, at the time of the sale, the area was still undeveloped. Hence, her
contention that the selling price was unconscionably low lacks sufficient
substantiation.
Ceballos also argues that Mercados delay in registering the Deed of Absolute
Sale and transferring the land title shows that the real agreement was an
equitable mortgage.
An equitable mortgage is one that -- although lacking in some formality, form or
words, or other requisites demanded by a statute -- nevertheless reveals the
intention of the parties to charge a real property as security for a debt and
contains nothing impossible or contrary to law. Delay in transferring title is not
one of the instances enumerated by law -- instances in which an equitable
mortgage can be presumed. Moreover, throughout the testimony of Cebalos
before the trial court, she never claimed that after the Deed of Absolute Sale had

been executed in February 13, 1982, the land continued to be intended merely
to secure payment of the P 12,000 loan taken on December 31, 1980.

doesnt ripen into ownership). Pinagbili eventually ni Josefa kay Florencio yung
portion lang naman ng lupa which is the subject of litigation.

Petition was dismissed except for the fact that the award for attorneys fees and
expenses of litigation were not sustained.

Eto yung contentions: Anacleto says ang pinagbili lang ay yung bahay, hindi
kasama yung lupa. Spanish kasi yung wordings ng kontrata. Sabi floor lang
pinagbili. Sabi pa nya, ndi daw applicable yung 1602 ng NCC kasi OCC daw yung
prevailing nung nagkabilihan. Take note: Walang 1602 sa OCC, bago lang yung
provision sa NCC, hihi malamang.

Balatero vs IAC
Issue: Is there a Contract of Sale or Equitable mortgage? Who is the true owner?
The Contract consummated was an Equitable Mortgage.
Facts: There are 4 claimants with respect to the subject parcel of land.
1. Petitioner Florencio Balatero, for a portion of both lots by purchase from Josefa
I. de Badelles and Leona, Salvacion, Jose, Catalina and Dominga, as surnamed
Badelles;
2. Josefa Iglupas Badelles, for Lot No. 433 having inherited the same from her
parents. Josefa died during the pendency of the case and was substituted by her
heirs, petitioners herein;
3. Private respondent Juan A. Veloso, for Lot No. 433, having purchased the same
from Josefa Iglupas; and
4. Anacleto Iglupas for Lot No. 433, having inherited the same from his deceased
parents Alejo Iglupas and Tomasa Ronda.
Tagalugin ko nalang ha, magulo si Justice Gutierrez mag-kwento e.
Pag-aari talaga ni Josefa Iglupas ang lupa tska nung brother nya na si Alejo. After
mamatay kasi nung parents nilang dalawa binigay yung admin works kay Alejo.
Take note, si Alejo ay ama ni Anacleto Iglupas na asawa ni Tomasa. After Alejo
died, Tomasa and son Severo sold for 111 pesos the land to Josefa IglupasBadelles(nag asawa siya e, Juan pangalan.) Tumira sina Josefa kasama mga anak
nya dun sa lupa. After sometime, Josefa mortgaged it for 68 to Juan Veloso who
never gets possession of the land. (thats why in the end of the story, his right

Held: Equitable Mortgage said the court. Art. 1602 par. 2 provides When the
vendor remains in possession as lessee or otherwise; there is a presumption that
the contract is an equitable mortgage. Hindi naman kasi umalis sina JOSEFA
IGLUPAS at mga anak nya hanggang mamatay si Josefa at magka-asawa mga
anak nya.
With respect to Juan Veloso na mortgagee with PACTO DE RETRO agreement,
hindi nya inassert agad agad, at the same time, ndi nya naposess yung lupa.
Therefore nganga sya.
Kagaguhan yung sinabi ni Anacleto with respect to his contentions, the principal
contract doesnt necessarily provides that the sale is all about the house and not
the land. The boundaries are properly describe e! tsaka applicable daw yung
1602 sabi ng COURT kasi the purpose of the law is to exonerate the evils and
abuses of the old law with respect to the gaps hidden there. Kaya nga may new
law para maayos yung dapat ayusin. Isa pa, retroactive and procedural laws.
SIMON LACORTE, ROSARIO LACORTE, SEVERINO LACORTE, JEROSALINA
LACORTE-FERNANDEZ and CIRILA LACORTE-ANGELES, petitioners, vs. THE
HONORABLE COURT OF APPEALS, SPOUSES PEREGRINO and ADELA LACORTE,
and JOSE ICACA, respondents.
FACTS:
May lupa pag-aari ni MARIA INOCENCIO LACORTE. Malapit na kasi ma-forclose
yung mortgage kaya binili out of his kindness ni JOSE ICACA yung lot.

Petitioners and Respondents are siblings. They are the heirs of one MARIA
INOCENCIO LACORTE. On October 17, 1983, respondent Jose Icaca and petitioner
Simon Lacorte, in behalf of the heirs of Maria Lacorte, entered into an Agreement
whereby the former was authorized to purchase the subject property from the
bank provided that the heirs of Maria Lacorte shall be given the right to
repurchase the same in the amount of P33,090.00 within a period of one year
from that date. The one-year redemption period was later extended to March,
1987 pursuant to another Agreement dated October 16, 1984. Both agreements
were signed by petitioner Simon Lacorte for himself and in representation of the
heirs of Maria Lacorte. On November 4, 1984, respondent Peregrino Lacortes
wife, Adela, paid to respondent Icaca the amount of P26,000.00 as deposit for
the repurchase of the property. It appears, however, that without the knowledge
and consent of herein petitioners, and before the expiration of the grace period,
private respondents Peregrino Lacorte and his wife were able to purchase the
land in their names by virtue of a Deed of Reconveyance executed by
respondent Icaca dated February 3, 1987.

ISSUE: Is there a contract of equitable mortgage? Should the contract of

reconveyance be annulled or reformed?

That prompted herein petitioners to commence this action on December 9, 1988

for annulment of the contract on the ground that the same was entered into in
evident bad faith and in violation of the previous agreements between the
parties, thereby resulting in prejudice to the property rights of herein petitioners.
In their Answer, respondents Peregrino and Adela Lacorte denied that there was
an agreement to sell the property collectively to the heirs of Maria Lacorte, and
argued that since the land was legally sold by the bank to respondent Icaca,
then the sale thereof by the latter to the former is likewise valid.

explanation therefor. Indeed, it is highly improbable that, sine stipulatio, Icaca

would still have accepted payment of the balance despite the lapse of a long
period of time, contrary to the ordinary and normal course of things.

CONTENTIONS:
Sabi ni Peregrino at Adela, ndi daw nila alam yung pag-uusap ni Simon at Jose
ICACA. Kaya lang daw nila binili na agad kasi tinutulungan nila ung mga kapatid
nila na makapag raise agad ng pera para maging absolute owner silang
magkakapatid.
Sabi ni Jose ICACA, akala daw nya nag-usap na sina Simon at Peregrino na si
latter na muna bibili lhat, then reimburse nalang. Should he had known it before,
he will not compel himself to sell the subject land and let the siblings fight inside
the court.

HElD: important points:

1. The initial payment of P26,000.00 was made on November 4, 1984,
immediately after the Agreement of October 16, 1984 extending the redemption
period was executed. The balance of P7,090.00 was paid only in February, 1987
when the Deed of Reconveyance was executed, which was well within the
extended period granted to herein petitioners. If respondent spouses really knew
nothing about the previous agreements with Icaca, it is an incredible accident
that the dates of payment of the purchase price coincided quite closely with the
periods stipulated by the parties. And, if ever there was any other agreement
entered into exclusively between respondent spouses and Jose Icaca, the records
are completely bereft thereof and respondent spouses conveniently failed to give
any

2. Respondent Adela Lacorte claimed that she informed herein petitioners about
the sum of P26,000.00 she had paid to Jose Icaca. According to her, she did that
on purpose because she wanted petitioners to help her raise the amount
necessary to pay the balance of the purchase price.[12] If what she alleges is
true, then it is perplexing why she would still ask for money from petitioners and
thereby involve them in the contract with Icaca although that was supposed to
be for respondent spouses exclusively.
3. Adela Lacorte likewise admitted that her mother-in-law and two of herein
petitioners remain and continue to be in possession of the property even after
the sale thereof to Icaca. The only plausible and explicative reason for this is that
petitioners were merely enforcing the rights vested in them under those
aforementioned agreements with Icaca.
4. Also, by her own admission, Adela Lacorte knew that petitioners were very
interested in redeeming the property from Icaca. On the witness stand, she

stated that when she met with Icaca to negotiate for the repurchase of the
property, she was accompanied by both her husband and petitioner Rosario
Lacorte.[13] It will be recalled that Rosario Lacorte is one of the petitioners who
has been continuously occupying the subject land from the time it was still
owned by Maria Lacorte up to the present. Logically, it is Rosario Lacorte who,
among the heirs, is most interested in regaining ownership of the property. Thus,
Adela Lacorte cannot make it appear that Rosarios presence in that meeting was
inconsequential; on the contrary, Adelas close contact with petitioners during the
negotiations is clear proof that she was privy to the agreements between
petitioners and Icaca.
5. Petitioner Simon Lacorte testified that they were the ones who negotiated with
the bank for the reduction of the redemption price from P45,000.00 to
P21,000.00. After the bank had agreed to their proposal, Simon Lacorte
immediately consulted with Icaca, to whom the land had also been mortgaged
for P12,500.00, on the possibility of the latter paying the redemption price while
petitioners still did not have the money to buy back their property. Icaca acceded
and, consequently, an agreement was executed between the parties.
Therefore, walang equitable mortgage. Reformation yung sinabing remedy ng
court kasi yung contract of reconveyance ay act of defrauding the co-heirs daw.
It doesnt necessarily coincide with the true intention of the parties.
-Camus v. CA-Dapitan v. CA-Alonzo v. IAC-

Primary Structures Corp. v. Sps. Valencia

Facts: Primary Structures Corp is the registered owner of a situated in Cebu.
Adjacent to it lot were three lots (combined area of 3,751 sq m) which was
bought by Sps. Valencia from a Hermogenes Mendoza. Primary learned of the
sale of the lots only in January, 1996, when Hermogenes Mendoza sold to the
former a parcel also adjacent to the lot which it already owns. Immediately, it

sent a letter to Sps. Valencia, on 30 January 1996, signifying its intention to

redeem the three lots.
On 30 May 1996, Primary sent another letter to the Valencias, tendering
payment of the price paid to Mendoza by the Valencias for the lots. The
Valencias, in response, informed Primary that they had no intention of selling the
parcels
Invoking the provisions of Articles 1621 and 1623, Primary filed an action against
the Valencias to compel the latter to allow the legal redemption, claming that
neither Mendoza, the previous owner, nor Vallencia gave formal or even just a
verbal notice of the sale of the lots as so required by Article 1623 of the Civil
Code.
Issue: Whether Primary Structure can invoke its right of redemption?
Held: Yes. Whenever a piece of rural land not exceeding one hectare is
alienated, the law grants to the adjoining owners a right of redemption
except when the grantee or buyer does not own any other rural land. In
order that the right may arise, the land sought to be redeemed and the
adjacent property belonging to the person exercising the right of
redemption must both be rural lands. If one or both are urban lands,
the right cannot be invoked. The appellate court, sustaining the trial court,
has said that there has been no evidence proffered to show that Sps. Valencia
are not themselves owners of rural lands for the exclusionary clause of the law
to apply.
Article 1623 of the Civil Code provides that the right of legal pre-emption or
redemption shall not be exercised except within thirty days from notice in writing
by the prospective vendor, or by the vendor, as the case may be. In stressing the
mandatory character of the requirement, the law states that the deed of sale
shall not be recorded in the Registry of Property unless the same is accompanied
by an affidavit of the vendor that he has given notice thereof to all possible
redemptioners.
Valencia overlook the fact that Primary Structures is not a party to the
deed of sale between them and Mendoza and has had no hand in the

preparation and execution of the deed of sale. It could not thus be

considered a binding equivalent of the obligatory written notice prescribed by
the Code. Applying an earlier decision, the SC held that the thirty-day period
of redemption had yet to commence. The written notice of sale is
mandatory. This Court has long established the rule that notwithstanding
actual knowledge of a co-owner, the latter is still entitled to a written
notice from the selling co-owner in order to remove all uncertainties
about the sale, its terms and conditions, as well as its efficacy and status.

Lee Chuy Realty Corporation vs. Court of Appeals

G.R. No. 104114
December 4, 1995
Facts:

A piece of land in Malhacan, Meycauayan, Bulacan with an area of 24,576 square

meters is disputed by Lee Chuy Realty Corporation (Lee Chuy) and private
respondent Marc Realty and Development Corporation (Marc Realty). The land is
originally co-owned by Ruben Jacinto and Dominador, Arsenio, Liwayway, all
surnamed Bascara owning 1/6 and 5/6 of the property respectively. Ruben
Jacinto sold his share to Lee Chuy and the sale was registered on April 30, 1981.
The Bascaras and Ernesto Jacinto sold their share to Marc Realty. It appears that
Lee Chuy was not informed of the sale between the Bascaras and Marc Realty
and only knew of the sale when he made an inquiry in the Register of Deeds of
Bulacan. Therefore, Lee Chuy filed a complaint for legal redemption against Marc
Realty and consigned in court a managers check for P614,400. Marc Realty in its
answer contends that Lee Chuy has no cause of action there being no allegation
of prior valid tender of payment nor a prior valid notice of consignation. The trial
court ruled in favor of Lee Chuy holding there was a prior valid tender of
payment and consignation and further reasons that a separate offer to redeem
nor a formal notice of consignation are not necessary for the filing of the action
itself within the period of redemption is equivalent to a formal offer to redeem.
The Court of Appeals reversed the decision stating that a prior tender or offer of
redemption is a prerequisite to the filing of an action for legal redemption.
Issue:
Is a prior valid tender of payment a prerequisite before filing an action for legal
redemption?
Held:
No. Arts. 1620 and 1623 of the Civil Code on legal redemption provide:
Art. 1620. A co-owner of a thing may exercise the right of redemption in case the
shares of all the other co-owners or of any of them are sold to a third person. If
the price of the alienation is grossly excessive, the redemptioner shall pay only a
reasonable one.
xxx xxx xxx

Art. 1623. The right of legal pre-emption or redemption shall not be exercised
except within thirty days from the notice in writing by the prospective vendor, or
by the vendor, as the case may be. The deed of sale shall not be recorded in the
Registry of Property unless accompanied by an affidavit of the vendor that he
has given written notice thereof to all possible redemptioners.
A judicious scrutiny of the cases impugns the impression of MARC REALTY that
they enunciate conflicting doctrines. On the contrary, we view them as
complementing one another. The Court of Appeals erroneously concluded that a
prior tender or offer of redemption is a prerequisite or precondition to the filing
of the action for legal redemption, notwithstanding prevailing jurisprudence
holding that to avail of the right of redemption what is essential is to make an
offer to redeem within the prescribed period. There is actually no prescribed
form for an offer to redeem to be properly effected. Hence, it can either be
through a formal tender with consignation, or by filing a complaint in court
coupled with consignation of the redemption price within the prescribed period.
What is condition precedent to a valid exercise of the right of legal redemption is
either the formal tender with consignation or the filing of a complaint in court.
What is paramount is the availment of the fixed and definite period within which
to exercise the right of legal redemption.
In Hulganza v. Court of Appeals the Court, citing previous decisions, declared
that the formal offer to redeem, accompanied by a bona fide tender of the
redemption price, within the prescribed period is only essential to preserve the
right of redemption for future enforcement beyond such period of redemption
and within the period prescribed for the action by the statute of limitations.
Where, as in the instant case, the right to redeem is exercised through judicial
action within the reglementary period the formal offer to redeem, accompanied
by a bona fide tender of the redemption price, while proper, may be unessential.
The filing of the action itself is equivalent to a formal offer to redeem. In sum,
the formal offer to redeem is not a distinct step or condition sine qua non to the
filing of the action in Court for the valid exercise of the right of legal redemption.
What constitutes a condition precedent is either a formal offer to redeem or the
filing of an action in court together with the consignation of the redemption price
within the reglementary period.

Lee Chuy Reality Corporation v. CA

Facts: A land in Meycauayan, Bulacan (24,6576 sqm) was originally Co owned
by Ruben Jacinto (1/6th of the property) and Dominador, Arsenio, Liwayway, all
surnamed Bascara, and Ernesto Jacinto (remaining 5/6th). On Feb. 4, 1981,
Ruben Jacinto sold his undivided share to Lee Chuy Reality, which was registered
on April 30, 1981. On May 5, 1989, the Baracas and Ernesto Jacinto sold their
share top Marc Reality, which was registered on Oct. 16, 1989.
Lee Chuy claims that it was never informed of the existence of the sale between
Marc Reality and the Bascaras and Jacinto and it was only upon inquiry from the
Register of Deeds of Bulacan that the sale was brought to its attention. Marc
Reality claims that Lee Chuy was verbally notified of the sale and was in fact
given a copy of the deed of sale.
This caused Lee Chuy to file a complaint for legal rededmption against Marc
Reality and consigned a Managers Check fo P614,400.

RTC held in favor of Lee Chuy: there was a prior valid tender of payment
and consignation. It further decreed that (neither a separate offer to
redeem nor a formal notice of consignation is necessary for the reason
that the filing of the action itself, within the period of redemption, is
equivalent to a formal offer to redeem.
CA reversed: a prior tender or offer of redemption is a prerequisite or
precondition to the filing of an action for legal redemption; there must be
tender of the redemption price within the required period because the
policy of the law is not to leave the purchaser's title in uncertainty beyond
the established 30-day period.

Lee Chuy Realitys Contention: The filing of the action itself is equivalent to a
formal offer to redeem, which is a condition precedent to the valid exercise of
the right of legal redemption.
Marc Realitys Contention: Prior tender of payment is a condition precedent
to the filing of an action in court in order to validly exercise the right of legal
redemption.
Issue: Is a formal offer a condition sine qua non to the exercise of the right to
legal redemption.
Held: NOOOOOOOOOOOO! The SC held in favor of Lee Chuy Reality holding that
The Court of Appeals erroneously concluded that a prior tender or offer of
redemption is a prerequisite to the filing of the action for legal redemption. The

prevalent jurisprudence holds that to avail of the right of redemption what is

essential is to make an offer to redeem within the prescribed period.
There is actually no prescribed form for an offer to redeem to be properly
effected. Hence, it can either be through a formal tender with consignation, or
by filing a complaint in court coupled with consignation of the redemption price
within the prescribed period. What is condition precedent to a valid
exercise of the right of legal redemption is either the formal tender
with consignation or the filing of a complaint in court. What is
paramount is the availment of the fixed and definite period within
which to exercise the right of legal redemption.

The formal offer to redeem, accompanied by a bona fide tender of the

redemption price, within the prescribed period is only essential to preserve the
right of redemption for future enforcement beyond such period of redemption
and within the period prescribed for the action by the statute of limitations.
Where, as in the instant case, the right to redeem is exercised through judicial
action within the reglementary period the formal offer to redeem, accompanied
by a bona fide tender of the redemption price, while proper, may be unessential.
The filing of the action itself is equivalent to a formal offer to redeem.