Maria Christina E.

Gaviola LEGFORMS 3B

Republic of the Philippines

National Capital Judicial Region
REGIONAL TRIAL COURT
Branch 14, Manila

PATRICIA VILLANUEVA
Plaintiff-Appellee,

-versus Civil Case No. 187560

For: Unlawful Detainer
(Ejectment)

JOSE ANTONIO ANG

Defendant-Appellant,
x----------------------------------------------------------x

MEMORANDUM OF APPEAL

Defendant-Appellant, JOSE ANTONIO ANG, by undersigned counsel and to this

Honorable Court, respectfully submits this Memorandum of Appeal and state that:

STATEMENT OF THE CASE

1. On 4 July 2006, Defendant-Appellant received summons to file an Answer to the

Complaint of Complainant-Appellee dated 9 May 2006, from the Municipal Trial Court of
Manila, Branch 12.

2. On 13 July 2006, Defendant-Appellant filed an Answer which was duly received by

the Honorable Court on the same day and by the Defendant-Appellant through his counsel by
registered mail dated 13 July 2006.

3. On 14 July 2006, a Supplemental Answer with Compulsory Counterclaim was filed y

the Defendant-Appellant and was duly received by the Honorable Court on the same day.

4. On 11 August 2006, Summons for Preliminary Conference dated 29 July 2006 was
received by Defendant-Appellant. The preliminary conference was calendared on 9 September
2006 at 10:30 in the morning, in the Municipal Trial Court of Manila, Branch 12. On the same
day, the Presiding Judge referred the case for mediation proceedings and ordered the parties to
appear before the Philippine Mediation Center Unit in the GSIS Compound, Ermita, Manila on
27 September 2006. The said office, however, returned the case to the Honorable Court without
the parties arriving at an amicable settlement.

5. On 16 June 2007, Defendant-Appellant received the Order of the Honorable Court

dated 30 May 2006 requiring the parties to file their respective position papers, affidavits and
evidence marked ten (10) days from receipt thereof.

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 6. On 26 June 2007, Defendant’s Position Paper was filed and was duly received by the
Honorable Court on the same day and was delivered to Plaintiff-Appellee’s counsel by registered
mail. Plaintiff-Appellee likewise filed their Position Paper dated 26 June 2007 and was received
by Defendant-Appellant on 3 July 2007.

7. On 2 August 2007, Defendant-Appellant received the assailed decision dated 25 July

2007 the dispositive part of which states:

“WHEREFORE, in light of all the foregoing, judgment is hereby rendered in

favor of plaintiff and against the defendant. The Defendant JOSE ANTONIO ANG and
all persons claiming rights under him are hereby ordered to vacate the property located at
10 Alunan Street, Manila and to restore the plaintiff to the peaceful possession thereof.

The defendant is further ordered to pay the plaintiff the following:

1. The sum of P5,000.00 per month as reasonable compensation for the use and
occupancy of the subject premises starting January 2005 until she
surrenders its possession to the plaintiff; and
2. The sum of P50,000.00 as attorney’s fees and costs of suit.

The counterclaim of defendant Jose Antonio An is hereby dismissed.

SO ORDERED.”

8. On 15 August 2007, Defendant-Appellant filed a Notice of Appeal with the Regional

Trial Court, Clerk of Court, pursuant to Section 2 of Rule 40 of the 1997 Revised Rules of Civil
Procedure.

9. On 29 August 2007, a Motion to Reduce Supersedeas Bond was filed by Defendant-

Appellant and hearing for said motion was set on 1 September 2007 at 1:30 in the afternoon.
Defendant-Appellant and counsel was present, however, neither Plaintiff-Appellee nor his
counsel appeared on the said hearing.

10. Finally, on 20 September 2007, Defendant-Appellant received from the Regional

Trial Court, Branch 14, of Manila an Order dated 11 September 2007 requiring Defendant-
Appellant to file a Memorandum within fifteen (15) days from receipt of such order.

STATEMENT OF FACTS

1. Defendant-Appellant, Jose Antonio Ang, is the lawful owner of a parcel of land

described as:
“A parel of alnd (Lot 2, Block 4, of the subdivision plan, Pcs-102829, being a
portion of Lots 1, 3, 4, 5, 6, 7, 8, 9 & Alley 3, all of Block 1, Psd-13-00145738; Lot 13
Block 3345, Manila Cadastre & Lots 15-A-4, Psd-80996, L.R.C. (GLRO Rec. No 13),
situated in the District of ______, City f Manila, Island of Luzon. Bounded on the SE,
along line 1-2 by Lot 4; on the SW., along line 2-3 b Lot 4; on the NW, along line 3-4 by
Footpath 11; and on the NE., along line 4-1 by Lot 7, all of the const. Subd. Plan.
Beginning at the point marked “1” on plan…”

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 A copy of the Transfer Certificate of Title is marked as “Exhibit 1”

2. That in early 2001, Rona Caritos visited the Defendant-Appellant in his house.
Caritos noticed that there was no roof yet on the structure that the Defendant-Appellant built on
the latter’s property. Aware of Defendant-Appellant’s financial position, Caritos offered that her
niece, Plaintiff-Appellee Patricia Ang can extend him a loan. Defendant-Appellant then
approached said Plaintiff-Appellee and informed her of about the offer of Caritos.

3. On 3 July 2001, Defendant-Appellant proceeded to Plaintiff-Appellee’s house, where

Caritos also lives, to obtain the money. Defendant-Appellant was surprised when Caritos handed
over to her a prepared document already signed by Plaintiff-Appellee titled “Deed of Sale with
Right of Repurchase”.

4. Defendant-Appellant objected to sign such document for the reason that his agreement
with Plaintiff-Appellee was that of loan with her property merely as collateral. However, Caritos
prevailed over the Defendant-Appellant that it has been their practice to require borrowers to sign
documents denominated as such.

5. Defendant-Appellant eventually agreed and signed the document aforementioned,

relying upon the assurances of Caritos and Plaintiff-Appellee.

6. From the time of the signing of the alleged “Deed of Sale with Right of Repurchase”
on 3 July 2001 up to the present, Defendant-Appellant has remained in possession of the property
and, in fact, has been paying the pertinent taxes.

7. Moreover, the alleged Deed of Sale itself betrays the true intention of the parties.
Number Three (3) of the provision in the Deed of Sale states:

“3. Vendor is under the obligation to surrender the Transfer Certificate of Title
once it is redeemed, and is likewise bound to pay the monthly 5% interest every end of
the month effective July 2001”

8. With respect to such aforementioned clause submitted and offered as evidence before
the court a quo were receipts. Verily, Defendant-Appellant has been paying such exorbitant
interests, which are actually repayments for his loan.

9. The fact that both parties recognize the agreement as a loan and not a sale is further
bolstered by the fact of such subsequent loan with Caritos amounting to Two Hundred and Fifty
Thousand Pesos (P250,000.00) on 22 November 2002, as evidenced by another loan agreement,
but denominated as another “Deed of Sale with Right of Repurchase”.

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 10. Defendant-Appellant was informed by Caritos that the amount of Two Hundred and
Fifty Thousand Pesos (P250,000.00) indicated in the contract would already cover the amount of
the previous loan with defendant and the interest thereof.

11. Thus, the previous loan has been extinguished through the agreement between
Caritos and Plaintiff-Appellee, which fact is indicated at the back of alleged “Deed of Sale with
Right of Repurchase” and was countersigned by Caritos herself.

12. After the execution of yet another prepared “Deed of Sale with Right of Repurchase”
with Caritos covering the subsequent loan, Plaintiff-Appellee ceased to demand payment from
Defendant-Appellant for the One Hundred Thousand (P100,000.00) loan and the monthly interest
payments. Indubitably, defendant has recognized the Defendant-Appellant’s loan by payment
through the loan agreement with Caritos.

13. Defendant-Appellant has already made payments to Plaintiff-Appellee and Caritos of

at least Two Hundred Thousand Pesos (P200,000.00) since 2001, as evidenced by the receipts
attached herewith as “Exhibits 2, 3, 4, 4-A”.

STATEMENT OF ISSUES

I. Whether or not the issue of possession is inseparably linked with the issue on
ownership, thus, the lower court can receive evidence on possession to determine the nature of
possession.

II. Whether or not the contract between the parties is indeed a loan, thus the Deed of Sale
with Right of Repurchase is in reality an equitable mortgage.

ARGUMENTS AND DISCUSSION

I. The issue of ownership is

inseparably linked with the issue on
ownership. Thus, the lower court can
receive evidence on possession de jure
to determine the nature of possession

Section 17 of Rule 70 of the Rules of Court provides that: “When the defendant raises the
defense of ownership in his pleadings and the question of possession cannot be resolved without
deciding the issue of ownership, the issue of ownership shall be resolved only to determine the
issue of possession”.

Thus, in Corpus vs. Court of Appeals [G.R. No. 117005, 19 June 1997], the Supreme
Court held that:

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 “It is elementary that the MTC has exclusive jurisdiction over ejectment cases.
As the law now stands, the only issue to be resolved in forcible entry and unlawful
detainer cases is the physical or material possession over the real property, that is,
possession de facto”.

However, in the recent case of Refugia v. Court of Appeals [G.R. No. 118284, 15 July
1996], we ruled that:
“In the case of De la Santa vs. Court of Appeals, et. al., this Court, in making a
distinction between the reception of evidence and the resolution of the issue of
ownership, held that the inferior court may look into the evidence of title or the
ownership and possession de jure insofar as said evidence would indicate or determine
the nature of possession. It cannot, however, resolve the issue of ownership, that is, by
declaring who among the parties is the true and lawful owner of the subject property,
because the resolution of the said issue would effect an adjudication on ownership which
is not sanctioned in the summary action for unlawful detainer. With this as a premise and
taking into consideration the amendment introduced by Batas Pambansa Blg. 129, it may
be suggested that inferior courts are now conditionally vested with adjudicatory power
over the issue of title or ownership raised by the parties in an ejectment suit”.

Consequently, since the present petition involves the issue of possession intertwined with
the issue of ownership, the doctrine of Refugia is applicable.

In the present case, the title of the land in question is exactly in issue, necessarily
affecting the Plaintiff-Appellee’s cause of action. It is necessary to determine which of the
conflicting claims of the parties are true and to decide whether the alleged “Sale with Right of
Repurchase” is what it purports to be or merely a mortgage and whether it is still valid and
subsisting. Consequently, to determine whether Plaintiff-Appellant can judicially eject
Defendant-Appellant from her property.

The ownership of the subject parcel of land which belongs to Defendant-Appellant is

undisputed as shown by the Transfer Certificate of Title marked as “Exhibit 1” and the Real
Property Tax Receipts as “Exhibits 5, 6, and 7”. Moreover, the Defendant-Appellant is in
possession of the property even at the time when the alleged Deed of Sale with Right of
Repurchase was executed between the parties. There was no point in time wherein Defendant-
Appellant surrendered her possessory rights in favor of Plaintiff-Appellee. Defendant-Appellant
continued in possession of the property despite the alleged sale. This fact is clearly inconsistent
with the allegation of Plaintiff-Appellee that I bought the subject property.

II. The contract between the parties a

loan. Thus, the Deed of Sale with
Right of Repurchase is, in reality, an
Equitable Mortgage

The Defendant-Appellant simply loaned Two Hundred and Fifty Thousand Pesos
(P250,000.00) from the Plaintiff-Appellant with the understanding that such amount shall be
secured by a mortgage on her property in favor of Plaintiff-Appellee.

Plaintiff-Appellee and Rona Caritos, however, induced Defendant-Appellant to sign a

prepared document denominated as a “Deed of Sale with Right of Repurchase”.

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 Defendant-Appellant objected to signing the document for the reason that the agreement
was only that of loan, with his property merely as collateral. However, Caritos convinced
Defendant-Appellant, being a good friend of the latter.

In the recent case of Ramos vs. Sarao [G.R. No. 149756, 11 February 2005], the Supreme
court distinguished the Deed of Sale with Right of Repurchase, otherwise known as “pacto de
retro”, with that of an equitable mortgage, viz:
“In a pacto de retro, ownership of the property sold is immediately transferred to
the vendee a retro, subject only to the repurchase by the vendor a retro within the
stipulated period. The vendor a retro’s failure to exercise the right of repurchase within
the agreed time vests upon the vendee a retro, by operation of law, absolute title to the
property. Such title is not impaired even if the vendee a retro fails to consolidate title
under Article 1607 of the Civil Code.

On the other hand, an equitable mortgage is a contract that – although lacking

the formality, the form of words, or other requisites demanded by a statute – nevertheless
reveals the intention of the parties to burden a piece or pieces of real property as security
for a debt. The essential requisites of such a contract are as follows: (1) the parties enter
into what appears to be a contract of sale, but (2) their intention is to secure an existing
debt by way of a mortgage. The nonpayment of the debt when due gives the mortgagee
the right to foreclose the mortgage, sell the property, and apply the proceeds of the sale to
the satisfaction of the loan obligation.

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Furthermore, a contract purporting to be a pacto de retro is construe as an
equitable mortgage when the terms of the document and the surrounding circumstances
so require. The law discourages the use of a pacto de retro because the scheme is
frequently used to circumvent to a contract known as a pactum commissorium. The
Court has frequently noted that the pacto de retro is used to conceal a contract of loan
secured by a mortgage. Such construction is consistent with the doctrine that the law
favors the least transmission of rights.

Article 1608 of the Civil Code enumerates when a contract may be presumed to be an
equitable mortgage:
(1) When the price of a sale with right to repurchase is usually 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.

Furthermore, Article 1604 of the Civil Code provides that “the provisions of Article 1604
shall also apply to a contract purporting to be an absolute sale.” And in Article 1603, “In case of
doubt, a contract of sale purporting to be a sale with right to repurchase shall be construed as an
equitable mortgage”

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 PRAYER

WHEREFORE, premises considered, it is humbly prayed of this Honorable Court that the
Decision dated 25 July 2007 of the court a quo be set aside and that the Complaint for Ejectment
be dismissed for lack of merit.

Other reliefs just and equitable under the premises are likewise prayed for.

Makati City, 04 October 2007.

DIAZ, DOMINGUEZ, ALCANTARA LAW OFFICE

Counsel for Defendant-Appellant
No. 66 Starboard Street, La Hista, Makati City

By:

Maria Christina E. Gaviola

Copy Furnished:

Hon. Judge Arturo Pano

Municipal Trial Court Branch 12
Manila

Buensenco & Baluyot Law Office

Counsel for Plaintiff-Appellee
110 Zobel Street, Makati City

EXPLANATION
(Pursuant to Section 11, Rule 13
1997 Rules of Civil Procedure)

Undersigned counsel informs this Honorable Court that this Memorandum of Appeal was
furnished and filed by registered mail due to lack of messengerial services.